Local Manufacturing

The loss of manufacturing capability has been a disturbing trend in the U.S., California, and the Bay Area for nearly a half century.  In 1983, manufacturing jobs accounted for nearly 20% of all California jobs.  Today, that share has dropped to just 5.5%, with heavy losses in the computer, electronics, aerospace, fruit and vegetable processing, and clothing industries.1  Under stress from the one-two punch of economic recession and a fierce global labor market, the Bay Area’s manufacturing sector has taken a severe hit in recent years.  According to senior UCLA economist Joe Hurd, our region lost 117,000 manufacturing jobs – nearly 24% of the sector – between the first quarter of 2001 and the third quarter of 2003, with San Jose suffering the greatest losses.2  Longer-term trends for San Jose over the past three decades paint a similar picture.  Although a few sub-sectors experienced employment gains, the city’s manufacturing base of food and kindred products dropped 75% from 1972 to 2002, transportation equipment and some subcategories of electrical equipment and supplies fell by 50% or more, non-durable goods decreased 19%, and jobs in stone, clay, and glass products dropped 10%.3

The economic harm caused by loss of manufacturing is especially acute since economic linkages between manufacturing firms and the rest of the economy are much greater than linkages of retail or service firms.  Historically, manufacturing has been a stable source of blue-collar jobs with a living wage and benefits, accessible to residents with a minimal level of education through on-the-job training and apprenticeship programs.

Restoring manufacturing jobs in the Bay Area can begin with a thorough assessment of our historic manufacturing base.  In the decades immediately following the great San Francisco earthquake, an energized population of natives and newcomers helped mold our region into “a powerhouse of housing developments and factories that produced everything from flour and Levi’s to cars,” writes Kevin Fagan in a recent piece in the San Francisco Chronicle.4  Along with Alameda, Albany, Hayward and other smaller towns, Oakland and Berkeley went on a construction binge, building houses by the thousands, expanding the trolley system, and creating industrial clusters featuring everything from huge bakeries to automobile factories.  “[The region’s] factories included so many auto plants, including Durant and Chevrolet, that the city was dubbed the ‘Detroit of the West,’” Fagan notes.

Logically, if the skills, infrastructure, and geographic advantages that once enabled such production to exist are largely still intact, a certain amount of that manufacturing can be resuscitated by creative private and public programs and policies designed to compensate for the deleterious effects of unfair competition, corporate disinvestment, technological change, and export market orientation.

Small-scale manufacturing enterprises that meet local economic needs rather than those of export markets can help diversify the economic base and decrease dependence on imported machinery, equipment, building materials, and consumer goods.  As noted by Moody and Morley, the potential for small-scale manufacturing “in every garage” is being bolstered by technological change and an overall decline in the minimum efficient scale of manufacturing operations.5

Remanufacturing operations are another promising approach for diversifying the Bay Area’s manufacturing base consistent with environmental goals of reducing or eliminating waste and demands for virgin materials.  “Remanufacturing takes worn, defective, or discarded products and makes them new again - in some cases better than new,” notes Joan Schwartz in Boston University College of Engineering Magazine. “It preserves much of the original value of the product, conserving a good deal of the material, labor, and energy invested in the original product, contrasted with recycling, which transforms the product back into raw material.”6 The remanufacturing industry in the United States generates far more revenue than many other durable goods sectors,7 is especially suited for small scale-operations in regions with a sufficiently large and diverse waste stream, and is already economically viable for many products including computers and other electronic goods.  As energy prices rise, remanufacturing will likely become economically viable for a wider array of products and could potentially provide many more manufacturing jobs than it does now.  As the manufacturing sector is localized, care should be taken to create an industrial ecology of businesses in which wastes of one manufacturing process become the input of another (called “co-manufacturing” when the waste heat of one process is used by another process). An industrial ecology could substantially reduce waste and the use of virgin material inputs, while reducing operational costs and enhancing coordination among local businesses.

Green manufacturing provides yet another emerging opportunity.  Leading the way toward a reinvigorated “green collar” manufacturing sector in Oakland and beyond is the Apollo Alliance.  With guidance from the Apollo Alliance, a volunteer-based group called Oakland Solar has been working to build a 33-kilowatt PV system at the Crucible, a renowned non-profit educational collaboration of arts, industry, and community in the heart of West Oakland.  Because the Crucible does energy-intensive metal fabrication, including welding, blacksmithing, and casting, their energy costs are high.  The Crucible had already taken steps to reduce waste going to the landfill by reusing and re-purposing objects by finding unique new ways of using them, according to Crucible Director Michael Sturtz.   The solar installation project involves IBEW Local 595 members, students from the Crucible, and trainees from the Cypress Mandela Pre-Apprenticeship Training Program in West Oakland, which has been nationally recognized for turning people’s lives around to positive career paths through training in electrical, hazardous materials, and construction jobs.8


Footnotes:

1 California Employment Development Department, Labor Market Information Division, “Industry Employment and Labor Force by Annual Average, 1983-2006.”

2 Joe Hurd, The Bay Area Economy: The Meltdown Isn’t Over (Los Angeles: UCLA, Dec. 2003), 3.

3 California Employment Development Department, “Archived SIC Industry Employment,” EDD, http://www.labormarketinfo.edd.ca.gov/cgi/databrowsing/?PageID=165 (data from 1983 to 2002 were compiled from county-specific employment statistics spreadsheets accessed online on May 2, 2006; data from 1972-1982 were compiled from spreadsheets provided by the EDD’s Information Services Group officer Robyn Jensen on April 18, 2006).

4 Kevin Fagan, “Quake sparked boom in East Bay,” San Francisco Chronicle, April 14, 2006, http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/04/14/MNGQEASTBAY14.DTL

5 Patricia Moody and Richard E. Morley, The Technology Machine: How Manufacturing Will Work in the Year 2020 (New York New York: The Free Press, 1999).

6 Joan Schwartz, “Research Briefs” in Boston University College of Engineering Magazine (Boston: Boston University College of Engineering, Fall 2003), http://www.bu.edu/eng/magazine/fall2003/research.shtml  (accessed 7/31/06).

7 Cavanagh and Mander, 2006, pg. 193.

8 Carla Din, “Finding Opportunities in Crisis,” Yes! Magazine, Fall 2004, http://www.apolloalliance.org/apollo_in_the_news/ archived_news_articles/2004/10_04_04_yesmagazine.cfm.

aaron – 3 November, 2006 – 14:27