NEWTON, MASS. — Manufacturing faces a daunting dilemma: move offshore, where labor is cheaper and the quality of goods continues to rise, or stay in this country and fight the increasingly frustrating battle of high labor costs and tax burdens.

However, the problem has another ominous facet, according to a recent report. The National Assn. of Manufacturers, The Manufacturing Institute and research firm Deloitte & Touche released Keeping America Competitive – How a Talent Shortage Threatens U.S. Manufacturing, which says that students in this country perceive manufacturing jobs as boring, tedious, low paying and dead-ended.

How can proponents of U.S. manufacturing fight both sides of this problem? On the one hand, they have to convince students and legislators that exciting technologies have their place in rebuilding world-class, competitive manufacturing facilities. On the other, they must compete with manufacturers around the world that pay less, get more working hours per employee, and have government-built, rather than government-taxed, plants and research facilities.

One argument why plants, jobs and corporate finances leave the country is that the United States can't compete globally, because of extremely high wages and benefits, tax burdens that dry up research funds, and a regulatory crush that prices buildings and equipment out of the market, according to the NAM. Adding to the problem are surveys of students, faculty and industrial employers that show a lack of workers skilled in manufacturing technologies, and few in the process of learning those skills. Students perceive those jobs as low paying, obsolete and likely to be exported, the authors said.

But there are exciting jobs in the manufacturing sector, the report argues, and companies need people interested in science, engineering and marketing — departments in which jobs will be increasingly available for at least another decade.

The survey contains a combination of results from two studies done in 2002. The first included interviews with 14 focus groups across the country consisting of middle- and high-school students, teachers, parents and hiring executives. The second study comprised interviews with 93 educators, manufacturing leaders, policy leaders and heads of federal agencies.

The results show a manufacturing sector, which provides about one-quarter of the nation's gross domestic product, in transition.

"Global pressures are squeezing U.S. manufacturers as they face brutal competition … manufacturing jobs are technology jobs, and employees at all levels must have a wide range of skills," the authors concluded.

The introductory letter to the Keeping America Competitive study said it best. Written by Jerry Jasinowski, president of the NAM, and Dick Gabrys, vice chairman of Deloitte & Touche, it notes the alarmingly negative attitude of young people toward manufacturing work, and the resulting loss of perceived quality of products.

"This shift could foreshadow a significant decrease in manufacturing's competitiveness, accelerate the transfer of American productive capacity and well-paid manufacturing jobs overseas – and deliver a decisive blow to the nation's long-term economic prospects," the letter stated.

Jobs, companies lost How can the battle be fought in the trenches, where customers, distributors and their American manufacturers try to sell goods and services every day? With jobs, plants and entire companies leaving the country, can distributors and customers continue to rely on American goods? Keeping those jobs in the country is the first step, say manufacturing experts.

Chuck Stockinger, executive director of the Industrial Supply Manufacturers Assn., considers the loss of manufacturing to be the greatest challenge American industry faces as a whole. From raw material suppliers to final product producers to distribution outlets of all kinds, the challenge to stem the tide of emigrating manufacturing jobs must be met head-on, Stockinger said.

When combined with the pressure to provide added value on every sale, this problem presents an unprecedented challenge to the supplier/distributor relationship. The distribution channel must immediately find innovative ways to provide increased value to the consumer. This means accelerating the urgency in sales and marketing departments toward adding measurable value to every transaction, and proving that value every day, Stockinger said.

All suppliers are trying to differentiate their products by delivering and supporting goods better than the competition, Stockinger said. Since distributors are more intimately knowledgeable of customers' needs and methods of doing business, the responsibility for more face-to-face contact falls on their shoulders.

In the trenches Steven Gold is the Washington, D.C.- based executive director of the Council of Manufacturing Assns. of the National Assn. of Manufacturers. The CMA is an independent division representing manufacturers. It addresses issues such as manufacturing migration.

Some manufacturing sectors are almost gone from the country: mold builders, some other machinery makers and toolmakers are in dire straits, Gold said. They can't raise prices because of competition, but their costs in areas such as health care rose an average of four percent per year in the 1990s. Industry tends to go where the lowest costs are, which now happens to be China.

"Perhaps in 10 years, it will be Central Africa. We don't know if China will remain the top choice for a long period, but it is certainly strong now," Gold said.

Part of the solution lies in redeveloping the United States' manufacturing base — a possibility, considering the advantages this country has over others: the rule of law, economic freedom, political freedom, stronger capital markets, and a more educated workforce, to name a few. Gold says his group believes that American businesses and the government must help create a climate that will lure back manufacturers, because competition will only become more severe.

"We must change the economic climate in this country so that manufacturers want to stay here and others want to come here," Gold said.

Businesses tend to be short sighted in difficult economic times. They need to fix the bottom line, which takes drastic, short-term decisions in many cases, Gold said.

"American corporate executives need to look at the long-term benefits of a manufacturing-based economy for their children and grandchildren. That kind of economy is far more productive than a services economy, which is about 60 percent as productive," he said.

Gains in productivity through manufacturing helped double the standard of living in the United States again and again in the last 100 years, he added.

"Why are the Chinese, Swiss, Japanese, Germans, Malaysians and others trying to build strong manufacturing bases?" Gold asked. "Because that's where the productivity gains are. That's how you increase your standard of living."

By the numbers Hardy Hamann, executive vice president of Hermes Abrasives and outgoing president of ISMA, says the expanding problem is a challenge for all manufacturers.

"We lost 1.3 million manufacturing jobs in 2001 and almost 600,000 last year. That represents more than 10 percent of our employees, with about 16.5 million left," said Hamann, citing figures from the Dismal Scientist at economy.com, an economic research and data firm.

United States manufacturers focused on quality for 20 years and, starting 10 years ago, began to focus heavily on lean manufacturing. Now, post-production costs need to be aggressively addressed, Hamann said. In addition, there are vast redundancies in the channel that should be reduced.

"We are lean manufacturers now, so the next step is to look at post-manufacturing costs that have been analyzed to be 35 to 40 percent of overall costs," according to the National Assn. of Wholesaler-Distributors, Hamann said.

Manufacturing, therefore, becomes the sum of all of its components: raw material costs, labor and management costs, shipping and receiving costs, and inventory procedure costs. And services that accompany products will be more and more important in the coming decade.

"In the end, we have to be faster than our Asian competitors, and offer more in the sale. Some [manufacturers] are providing services, such as benchmarking and training, along with the best available product quality," he said. "Products are more easily copied than services. Product life is getting shorter and shorter, but services are much more difficult. That is the one thing that can differentiate us from our foreign competitors."