VIDEO: How the Trans-Pacific Partnership will Change US Manufacturing

Distributors of imported goods could be considered manufacturing employers.

The National Retail Federation recently asked Congress to restore the trade promotion authority to President Obama so he can chase the Trans-Pacific Partnership (TPP). That partnership is a way to reduce tariff barriers to the importation of foreign goods into the US. 

It’s understandable that the Retail Federation would want this because one in four jobs in the US depends on retail. That’s 42 million jobs, many of which are selling low-cost imported goods. 

Though the real question is, what is the TPP’s impact for manufacturing in the US?

Take a look at this chart:

This chart shows how manufacturing employment in the US has climbed steadily since the great crash from about January 2011 to January 2015, but is still well below the levels we enjoyed pre-crash in 2003 to 2005.

But perhaps more significantly, a very important but little reported fact has come to light. The Office of Management and Budget (OMB), the people that sort and classify these statistics that we use for important metrics like jobs, are changing what they call the North American Industry Classification system that makes classification codes.

This means that starting in 2017, producers like Apple and Nike, people that import a lot of products but don’t actually manufacture many them in the US, will be considered manufacturing employers. This means it’s possible that US companies who don’t actually employ Americans in manufacturing will be able to count those jobs as if they did.

The implications of this are huge. However trustworthy statistics are now, from 2017 on they may be very, very suspect. If this happens it’s going to be difficult to determine whether we are winning or losing in terms of manufacturing jobs in the US.

This is a dangerous trend. 

I think this is a time when we need more clarity in the data, not less. This idea of obfuscating employment in manufacturing by allowing offshore manufacturers to count in this classification is really dangerous and I think this needs to be looked at very closely.

What do you think? Let us know in the comments below.

Written by

James Anderton

Jim Anderton is the Director of Content for ENGINEERING.com. Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.