The New York Times gets it wrong on  the skills gap, confusing cause and effect, ignoring facts, and making a false analogy.

We’ll give you the link to their misleading article at the end of this post. It made a couple of erroneous points:

  1. Supply and demand dictate that wages should rise if their is a shortage of machinists;
  2. Wages for McDonald’s managers are better than those for skilled machinists;
  3. Demand for skills isn’t real.

In this post we’ll deal with the supply and demand wages  issue.

Supply and demand dictate that wages should rise if there is a shortage of machinists

In the NYTimes piece, economist Mark Price argues that “It’s basic economics…If there’s a skill shortage, there has to be a rise in wages.”

If only economics were so basic, Mark. Actually supply and demand is the wrong issue; the issue is actually the Elasticity of Labor Supply to an Occupation.

In “basic economics” terms this means Where jobs require specific skills and lengthy periods of training, the labor supply will be inelastic. Inelastic means that  it is not possible to expand that specific labor force in the short term; ‘raising the wages won’t just create them out of thin air…’

The NYTimes and economist Price have confused cause and effect.

You need skills, not just high pay, to properly hitch the cart to the horse.
You need skills, not just high pay, to properly hitch the cart to the horse.

Higher wages are a consequence of having skills that add value by increasing the value and or quality of the employee’s work. Raising wages does not of itself add any tangible benefit or skill to the employee’s work product. It does however raise cost. Why the wages “don’t has to rise”  is because, unlike the inelastic  supply for skilled labor in an occupation, the supply for manufacturing work  is elastic.

China and other low wage economies around the world provide lower cost often government subsidized alternatives to  U.S. manufacturing that becomes more expensive but not more productive if the wages just increased because Mr. Price thinks they should.

Precision machining is an occupation with inelastic labor supply. It requires specialized skills, ability to do math, and training and experience to safely perform the work to zero defects (Zero PPM) standards. The anti-lock brake, airbag, and aircraft parts our machinists make need to work.

Bottom line:  Skills are what is demanded, and are in short supply. Higher wages are determined by the value add of the skills obtained, and held in check by low cost competitors across the globe.

NYTimes Skills Don’t Pay the Bills

Cart before the horse

Next post, we’ll look at the false analogy of a Mc Donald’s Manager somehow being comparable work to that of an entry level precision machinist.

When Did Manufacturing Become a Dirty Word?

Guest post by Pamela Kan, President of Bishop Wisecarver

The word manufacturing has such negative connotations that it is avoided in marketing educational programs.
What has happened in our country to make our next generation so turned off by the word manufacturing?

  1. Its Dirty.Too many kids and their parents still see manufacturing as a “dirty” job.  This is far from true, especially in the state of California. Environmental, health and safety laws have created clean and safe work environments. Our facilities lead the world.  The rise of lean and continuous improvement cultures have made many manufacturing facilities almost clean enough to eat off the floor (I say this with the five-second rule in mind).
  2. It’s Dumb.Wrong! Manufacturing drives the majority of innovation and R&D investment in our country. Manufactures are leading the way in new technologies and the design and development of products that improve our daily lives and the welfare of people around the world. If you want to be on the cutting edge, then you want a job in manufacturing.
  3. It’s Boring. Images of the Henry Ford assembly line still exist in many minds. We have come a long way, baby! In fact, manufacturers like myselfnow have trouble finding the skilled workforce needed to run the type of state-of-the-art technology machines we now have on our production floors. Making chips fly takes brains and skill.
  4. It’s Cheap.Wrong again! Manufacturing jobs on average pay 20k higher than service sector jobs. Manufacturing jobs are the back bone of a strong middle class.
  5. It’s Dead. Excuse me? When is the world going to stop consuming? Why do we think manufacturing is a thing of the past when we as a nation are the largest consumer of goods in the world? The face of manufacturing may be changing in the US but it is far from dead. Just look at the DYI craze and the rise of the Maker Faire phenomena. Just thinking about the impact that additive manufacturing will have over the next decade is mind blowing.

I am happy to see that both presidential candidates are at least uttering the “M” word. But in my book, neither has really given manufacturing the credit it deserves for the role it plays in a strong US economy.

PMPA certainly agrees that manufacturing is a great career opportunity and shares the concern about not enough people entering the precision machining field. Thanks to Pamela Kan at Bishop Wisecarver for the share.
You can see Pamela’s Original Post here

October’s numbers, while up from September’s, are discouraging to our forecast of industry sales for 2012. With seasonal declines already built into November and December, we believe that the Industry will be fortunate to come in even with last year. Add in the global economic slowdown, fiscal cliff, and we believe that dreams of 2012 shipments beating 2011 are not in the cards.

Looking like a sluggish 4Q for 2012…2012 will likely finish below 2011.

You can read our October 2012 Business Trends Report here.

We had expected shipments of Precision Machined Products to increase 8% over 2011, based on First Quarter 2012 Shipments.

We believe that special causes- uncertainty regarding the November election and the upcoming fiscal cliff- derailed the strong demand for manufactured goods after August.

Now everyone’s eyes are glued to reports of Housing recovery as a good omen, but sales to that sector are a small part of our industry’s demand.

I’m thinking coal in our stockings thanks to the shenanigans in Washington.

I’m thinking coal in our stockings thanks to the shenanigans in Washington.

Chicago Dope

Inspection of all lifting devices was a monthly “Must Do” when I was supervisor at the steel company.

Is it even an assigned responsibility to anyone in your shop?


Here is a photo of a strap I found- would you like it to be holding a 4000# bundle of steel over your half million dollar (or so) production machine as it carried barstock to the job?

(I’m sure that you’ve  already trained (and documented that training for) everyone on your crew to never be “caught beneath” any overhead lift.)

Whose responsibility is it to inspect these in your shop? When was last time that they did? Show me the record.

Rigging and lifting devices are an important responsibility.

Who has it in your shop?

Can you show me records of their diligence?

Dan’s comments were a response he shared with PMPA members regarding the charge of one talking head on last week’s 60 Minutes that ‘there is no Skills Gap… industry would have skilled workers if we only paid higher wages.’

Guest Post by Dan Murphy, REM Sales

Part of the problem is that nowadays most of the manual labor has been automated out of manufacturing processes.When you had a large pool of unskilled workers performing simple tasks, a company could find the hard working person that had math skills and mechanical aptitude and put them into an apprenticeship program and that person could advance. Today companies need to find that person right out of the box which is very difficult to do.

There are some people that will never be good at math, and the more time I spend in this business, I truly believe that mechanical aptitude is genetic. You either have it or you don’t, and it can’t be taught. Perhaps the solution is to recruit seniors from high schools. There is a standardized test for mechanical aptitude and I think that test, administered along with something like the Predictive Index and a math test, would yield better candidates.

At the end of the day, no school is going to give you a guy that can hit the ground running on an eight-axis Swiss, or be able to set up and troubleshoot a multispindle cam automatic. Companies still have to develop employees with those skills and offer continuous training to keep their employees skill set up to date. Raising wages alone does not create great machinists. Aptitude, attitude, talent, training, and experience do.

These do not arrive by merely raising wages. Higher wages are a reflection of these in an employee.

Just boosting wages will not magically (nor immediately) create 8 axis qualified machinists.

We need to create a pipeline of talent for our machining craft. Working in conjunction with local community colleges is an ideal way to help take some of the training burden off of small companies. But we have to get involved so that the school gives us what we  need in our workforce today.

I just returned from a trip to China. China is different than I imagined.

I was surprised by the number of big American and European cars on the roads. And the factory I visited was world class.

The companies in China are doing plenty of training too. they do because they need machinists too.

It’s not about raising wages. It’s about finding talent and providing training.

As a company, we have always been willing to share our training materials with our customers.

Surprisingly few ask for it.

Over 70 years working the forge.

“It’s a wonderful craft, the king of trades, really.”

We’ve come a long way in our shops from the days of the blacksmith, but Hardy Fred Harriss explains the love all of us as craftsmen have for our Craft.



What is your “love of craft story/ How did you get interested in precision machining?

When I first started in the industry the focus was on cycle time.

Cycle-time dictated how many parts you could make, that told you how much money you could make.

Pretty clear.

As a foreman and later as plant manager, I focused on eliminating down-time.

Down-time dictated how many parts I couldn’t make, and that told me how much money I would lose off plan.

As our sales increased, I learned that up-time was probably more important than cycle-time, as with no up-time, cycle-time just didn’t matter.

When lean -six- sigma became the fashion, all of us found out that it was SET-UP time where we could identify our next great contributions to eliminating waste and increasing profits.

So my question to you is about time- which aspect of time do you think is the most important to your competitiveness? Sustainability? Profitability?

What we really sell is the time on our machines.

It’s about time.

Really. Our business is really about time.

May I have your ideas please?

G.M. (27% owned by the federal government) is close to making a bid on Ally Financials’ (74% owned by U.S. Government; 9.9% owned by G.M.) Latin American and European Operations, according to the Wall Street Journal

So will the money G.M. uses be from its corporate performance or will it be a  “Wash Sale” – a return of Government monies?


It sounds like money laundering  if you or I did it, but they have lawyers and stuff so it must be okay, Right?

Enron power barges.

Nigerian Barge Scam.

Here’s my suggestion of a logo:

Parts of Ally Financial owned by US Government and GM (which is part owned by the U.S. government) will be sold to GM to pay back the U.S. Government?

If you can figure out why  GM’s repurchase of  some of Ally operations from the U.S. Government to pay back the U.S. Government, while GM is still owned in part by the U.S. Government, is NOT Money Laundering, please let me know…

Logo idea


Enron Power Barges