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Where’s manufacturing going – and why should you care

David Chavern of the US Chamber of Commerce focused on manufacturing in his talk at NCCI, and his talk was one of the most important I’ve heard for we in the workers comp world.

Why? Because manufacturing jobs drive workers comp premium.

The manufacturing jobs we have lost are predominantly relatively low-skill level, low-tech, low-value-added sectors such as textiles, clothing.  That said off-shoring of higher-level jobs such as semi-conductors has also been significant – but this off-shoring is now viewed as a mistake.  We’ve lost the ability to innovate via rapid product evolution, by tapping into the knowledge and experience gained thru the manufacturing process companies that leads to continuous upgrades in products.  If the folks on the floor are 8 thousand miles away, don’t speak the same language, and there’s no way to for the engineers and designers to interact with the folks who make the widgets, American companies can’t increase productivity, reduce waste, eliminate unnecessary parts or processes, or improve product quality.

That’s been changing for some years now as manufacturing jobs have been returning to our shores – and this “trend” will increase.

To drive manufacturing, education and training is critical – you can’t run a CNC machine if you can’t do math.  There are 600,000 jobs open today for machinists, welders, technicians, and other higher-skill levels and many have been open for some months – there just aren’t enough trained people to meet the demand. Yet, as David Gergen noted earlier, we are failing to educate young people for the jobs that exist today; this has happened in my home town where the education budget is continually challenged as providing education on topics that voters didn’t have – and claim today’s kids don’t need.  That’s precisely the kind of short-sighted non-thinking that got us in this mess, and will keep us stuck here.

Energy cost reductions will help bring these jobs back as well; our electricity rates are much lower than competitors in Europe and some Asian countries.  Of course, energy production drives heavy industry jobs – another big driver of workers’ comp

The net – manufacturing drives workers’ comp, manufacturing is going to continue to grow. Many of these jobs are going to be higher-skilled and likely lower-risk, while others are going to be high risk – energy production and equipment manufacturing.

Again, no discussion of the impact of all this carbon production on climate change, and the impact climate change will have on the nation and the insurance industry.  Another big miss.

Much to consider.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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