America needs to address its labor shortage and these are the steps it can take

Supply chain troubles the time of COVID-19 revealed how dependent countries are when it comes to manufacturing. The inability of the US to produce essential items such as test kits and personal protective equipment during the pandemic reveals our weaknesses as a nation. The rise of China as a global manufacturing superpower further highlighting the weaknesses of American manufacturing.

In addition to repairing supply chain disruptions, restoring US manufacturing will benefit national security. Advanced computer chipsfor example, disproportionately produced by a company, the Taiwan Semiconductor Manufacturing Co. These microchips are critical to smartphones, medical devices and self-driving cars, as well as military technology. TSMC, from a The US national security perspective, located very close to China. Taiwan’s proximity to China makes it vulnerable because the Chinese government threatening to use force to unite Taiwan with the mainland.

My research and that others examines how the lack of competitiveness in US manufacturing leaves the US vulnerable to shortages of critical goods in an era of geopolitical disruption and global competition. The strategies used by the US to restore manufacturing, along with new practices, will be key to ensuring national security.

Strengthening national security

President Joe Biden has signed two bills that propose rebuilding American manufacturing. the CHIPS and Science Act of 2022 GIVE US$52.7 billion for American semiconductor research, development, manufacturing and workforce development.

the Inflation Reduction Act of 2022 INVEST $369 billion to promote a clean energy economy, in part by offering more incentives for US-made electric cars.

Training workers for new advanced manufacturing is another important factor in strengthening a sector that is increasingly dependent on technology. In fact, while the number of jobs in American manufacturing fell by 25% after 2000, manufacturing output did not decrease. However, American manufacturing is facing a major job shortageespecially those workers who have skills needed to power a new generation of manufacturing.

This need to train a new pool of skilled workers explains why federal funds in CHIPS Act allocated for workforce development. Complementing the federal legislation are programs such as Cutting Americais a national initiative that provides free online and in-person training designed to meet the growing demand in the US machining and machine tool industry for skilled operators, engineers and designers.

The power of innovation

It is not practical to bring all manufacturing back to the US Offshoring is usually less expensive. But research shows that certain types of manufacturing in the country not only help ensure national security but also stimulate innovation.

If research and development is done close to where things are made, this proximity increase the probability in collaboration between these two activities. Collaboration can lead to greater efficiency.

Product development will also benefit. New research shows that US firms that locate their manufacturing and R&D physically close to each other generate more patents than companies that do not.

However, the contribution of US manufacturing companies to innovation strongly refused between 1977 and 2016. That’s because the benefits of locating manufacturing and R&D close to each other depend on the nature of manufacturing itself, researchers found.

For example, the design of new drugs often requires manufacturing facilities to be located nearby. In that regard, co-locating manufacturing and research and development reasonable. This may also be true for semiconductors. Taiwan’s world-class chip manufacturers, such as TSMC, are located next to a growing chip design industrywhich allows designers to prototype and test new ideas quickly.

The US and other countries are betting on the same potential benefits from co-location. For example, to reduce dependence on TSMC and, generally, on foreign sources for chips, the European Union is spending. 43 billion euroswhile Japan encourages making a chip at home with a $6.8 billion investment.

People are the bottom line

In a 2011 op-edI argue that while federal legislation to promote US manufacturing may succeed in bringing more manufacturing back to the US, there is no guarantee that large numbers of jobs will be created – an important point made by those seeking to develop in manufacturing.

Governments are often poor for choice winning technology and industry. Government mistakes the supposed choice of industries or sectors, in general, led to a large waste of taxpayer dollars.

Indeed, market forces and informed company decisions must, I believe, come into play bigger role picking winners than federal investment. Where that investment comes from, what it supports and how much money is needed are critical questions.

If companies choose to relocate their companies to benefit from R&D synergy, then they need to attract the best human resource talent available. This is where US investment can help build a more skilled workers.

As the economist points out Gary Pisano, many US policymakers have long believed that manufacturing is an attractive sector for people with little education and training. So, as a nation, we are not devoting ourselves many resources to train people with specialized manufacturing skills.

This method is very different from Germany’s approach was followed. There, practical work is valued by employers and employees and so are apprenticeship programs used frequently to train highly qualified workers to work in the manufacturing sector. While the US approach is changing with the recently announced investments by the White House through CHIPS and the Inflation Reduction actions, more is needed.

It is my belief that if the US is to remain an economic power, then corporations must not alienate their workforce, sending cost-effective manufacturing offshore while retaining innovators. Like corporations Apple Sent almost all of their production offshore, leaving only the most skilled parts of the supply chain involved in activities such as R&D.

Instead, the U.S. should financially support companies seeking to restore manufacturing by making it easier for companies to find qualified manufacturing workers at home — and near innovators when practical. This effort will strengthen the US’s ability to be self-sufficient, innovative and secure in times of geopolitical conflicts.

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