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Di Leo: The Job Creation Machine of the Free World



Spare Parts Solutions crew in Rockford, IL – TMA Photo

By John F. Di Leo - 

We talk about unemployment numbers… so many statistics, so many challenges.  People looking for work, people who’ve given up looking… 5% judged this way, 10% judged that way… it seems we have talked about joblessness – especially industrial joblessness – for decades, actually, ever since the industrial age began. 

In the end, though, the numbers that really matter are these: how many people are in the workforce, and how many are outside it? And how many of those working are in fact working to the best of their potential? 

Do you earn minimum wage, part time, because that’s all you’re capable of, or because that’s all you could find?  If you run a business, is that business as productive and lucrative as it could and should be, or would it be a hundred times better if the economy at large were booming, as it should be?

These are the questions on which economists, and government officials, must concentrate.

America has driven too many whole industries offshore, by crippling taxes, destructive regulations, oppressive bureaucracies, greedy unionizers, and activists with an axe to grind… leaving devastation and poverty in their wake.  The time has come to welcome employment – of all kinds! – back to the United States.

The Jobs We Know

There was a time when people who wanted to work in manufacturing would start out on the line, rise from assemblyman to shift lead, then to foreman, then to plant manager… perhaps venture out on their own, or move from company to company.  The variety in wages – between an entry level job on the line and the middle class level of the plant manager, and hopefully, eventually, the upper class position of the company owner – was what inspired the young to get started, and what made upward mobility possible. 

You may start at the bottom, but if you’re good and you work hard, in a good economy, you can end at the top.

This happens in every industry, both the industries we still have and the ones we’ve lost.  So this still happens where we make cars, pumps, furniture, firearms, and all the other industries we still have in America.

And it still happens elsewhere, where they make the products we’ve lost – toys, clothing, so many industries.  People still start on the line, climb up to shift lead, then foreman, then plant manager, then owner… but now they they do it in China, India, Nicaragua, South Korea… because we’ve driven these industries – and opportunities – out of the United States.

The key expectation of the incoming administration is that we will stop driving companies away.  We will stop using punitive taxes and crippling regulations to clear our nation of employers.  America will again be a mecca for domestic expansion, aggressive entrepreneurship and foreign investment… at least, that is the hope, if it goes as expected, and if foolish trade protectionism doesn’t counteract the good policies.

So we think of the steel industry, and rejoice: there will again be jobs for steelworkers.  The return of toys and textiles may bring the same opportunities for molders and assemblers, cutters and tailors.  So many industries should be reawakened across the America landscape… though of course each will meet with varying levels of success.

We therefore look to a time, hopefully not too far off now, when assemblymen, welders, CNC operators, and every other kind of blue-collar laborer will again have opportunity to ply their craft and shine.

The Jobs We Forget

There is, however, a secondary aspect of this job market, just as important, perhaps even more so, that is rarely discussed – and that’s all the other jobs – the non-manufacturing line jobs – that manufacturing brings.

Described above was the obvious path – and yes, it’s the path of numbers.  A 1000-person manufacturing company may well have 900 people on the line, as entry-level assemblers, finishers, packers, team leads, foremen, etc.  But in addition, the company produces another hundred jobs that aren’t on the line at all, and are just as critical for the economy.

This 1000-man manufacturing company must have an engineering department, an accounting department, a quality team and a Health/Safety/Environmental team, maybe a lab for testing and a couple onsite nurses in case of injuries.  The site must have a sales force, perhaps both outside salesmen and inside customer service… buyers to bring in the raw materials for manufacture; a legal team to review contracts and trade compliance, and a transportation/logistics team to handle warehousing and shipping.  Plus facilities, human resources, I.T….  

These “blue collar” industries, in fact, require a great deal of "white collar" workers as well!

The presence of that 1000-man company is therefore not only important to produce work for the 900 people on the line – both skilled and unskilled – it’s also critical for the office personnel, creating generally better-paying jobs for accountants, lawyers, product managers, marketing executives, engineers, MIS directors, and so forth.

When we complain about a failed economy that has shed so many factories, we must remember that we have shed both kinds of employment – so when an economic boom enables the creation of new factories, we must also remember that we are creating so many other jobs too.  A steel factory doesn’t just employ steelworkers, it also employs accountants, salesmen, buyers, clerks, management…

And the lines between the two are not as extreme as one might expect.  People on the line may take evening classes and get their degrees, then break through that wall into the main office, changing their collars from blue to white.  The path to CEO runs through both areas; there have always been CEOs who started on the assembly line and others who started in the mailroom.

When we speak of bringing back industries, we often hear complaints: “But we don’t want THOSE jobs; they don’t pay well!”  and “Have you seen the starting salary working at a toy factory? Who wants THOSE jobs?”

But such complainers don’t understand that the starting salary is NEVER what you want a company for. You don’t want to stay in that role your entire career; it’s a place to get your start.  A first job, perhaps to help pay your way through college, perhaps to get something on the resume before looking at a more desirable career…

But for many, it’s the starting point in the business world… from which the employee discovers his path.  Move from the line into transportation, or into quality, or into purchasing or sales or engineering… or stay on the line and move up to foreman and maybe even plant manager.  To each the path that works for him.

When there are businesses, all doors are open to you.  And when there are no businesses, all doors are shut.

This has been one of the special pains of the workforce challenges of this past generation: fifty years ago, a bad economy meant that the company stayed in business, but shed a lot of employees from manufacturing – they still needed office people, even for reduced sales.  Today, companies may move to other countries or shut down entirely, shedding both blue and white collar jobs alike.

While politicians should of course have always valued both groups, they didn’t, necessarily.

The fact that the Obama recession has been as bad for attorneys, salesmen, buyers, marketers, and management as it’s been for assembly line workers may have had a silver lining, as the straw that broke the back of politicians blaming “the business cycle” and absolving themselves of responsibility or blaming the unemployed.  So many people of all kinds have been out of work these past few years (95 million outside the workforce today), politicians cannot just blame the unemployed as being “lazy” anymore.

The Supporting Economy

There is one more aspect to consider: the interdependence of businesses.

When we shop at our local Walmart or K-Mart, we may notice that a product was made in China, and we grumble, because there was once a US business making that product, employing all the different kinds of employees described above.

But even then, we often forget about the companies that support that manufacturer.

That factory hires a landscaping firm for its exterior and a cleaning firm for its interior. It buys raw materials (the ore and minerals for a steel factory, the fabric and thread for a clothing company, the plastic resin for an injection molder), and at least some of these raw materials come from nearby.  While some are imported, at least a decent percentage of raw materials will be local to the manufacturer.

So when the manufacturing process is driven from the USA to China, India, or South Korea, those local raw materials suppliers also lose some business, and some will eventually go out of business themselves.  Those landscaping and cleaning firms lose a customer.  The laborer-placement and executive recruiter firms that had supported the factory lose a customer as well.

Who else supports a business? Everyone else in the community!  When a factory closes, nearby restaurants shut down, because they used to cater to its employees, and to vendors making sales calls there. The hotels take a hit as well; they used to rent rooms for the night to those traveling salesmen… and to customers coming in for training or sales conferences.

Who else in town depended on that factory being there? Everyone.  Every local store, dry cleaner, plumber and electrician, even if they never did business directly with the factory, depended on doing business with its employees.  When the factory closed, their employees no longer shopped there, and perhaps even moved away to greener pastures.

We see this effect most when we look at whole cities devastated by the loss of an industry, like Gary, Indiana… or rural towns devastated by the loss of a single big employer, like the Midwest mining towns that collapsed when the Obama administration shut down their mines.

The Diverse Economy

We therefore can’t escape the fact – if we think about it – that all businesses are interconnected, whether the name of the industry sounds like a desirable one or not.  That hard assembly job may not be the most desirable role on earth – sewing suit coats or assembling toys, making pumps or filters or a thousand other boring industrial products…

…but the presence of those jobs is what creates the opportunities for all the desirable jobs.  If a too-low minimum wage or a ridiculously strict federal regulation kills an industry, what it really kills is a whole community.  Drive out the steelworker or the coal miner, and you have driven out the restauranteur and the carpenter, the electrician and the builder, the salesman and the buyer, the lawyer and the CPA, the software whiz and the mechanical engineer, the hotelier and the dry cleaner.

The lesson of the Obama Recession has been that losing one industry kills all industries.  We have seen whole towns destroyed, whole communities rendered inescapably jobless (just take a drive off the interstate, on minor highways through rural America, and you'll see the real devastation of the Obama economy).

But the lesson of the Trump Boom – if the Trump-Pence economic plan isn’t hamstrung by Democrat opposition or protectionist booby-traps, anyway – will be that the corollary is also true: That when you allow a dormant industry to again rise to prominence, the prosperity will spread, like the proverbial ripples from a pebble in a pond.  As JFK famously said, over half a century ago, "A rising tide lifts all boats."

The business that arises or expands will hire all kinds of people, and the whole community will benefit.

We must love steel, and toys, and textiles, and small industrial products, and large industrial products, and medium industrial products, not only because we love the product in question or the workers most closely associated with it…

…but also because every other career – blue collar and white collar alike – depends on it as well.

The long awaited recovery can’t start soon enough.  Here’s praying that nothing slows it down!

Copyright 2017 John F. Di Leo

John F. Di Leo is a Chicagoland-based Customs broker and international trade professional. He has worked for American manufacturers for the past 20 years; prior to that, he worked in international transportation.  In the 1980s, he served on the boards of the Illinois Right to Work Committee and the Illinois Small Business Men’s Association.

Some will find this column incredibly unnecessary, just a listing of the pronouncements of Captain Obvious.  But it was written because – to too many in the media, academia and the political class – these “obvious” facts will be a revelation!

Permission is hereby granted to forward freely, provided it is uncut and the IR URL and byline are included.


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