Manufacturing jobs and apprenticeships – a new model?

Apprenticeships were not considered ‘good deals’ in the past because the master made so much money off the apprentice – at a time when people didn’t live as long and their bodies wore out sooner the apprentice gave away his labor at the prime of his physical life. And that mattered then.

Our system here – with ‘education’ instead – was considered quite superior because although there was a chance you might not find a job at least education got you out on your own sooner and at lower cost to the student.

That was before $100K student loans and people lived and worked into their 70s.

Apprenticeships worked for centuries – costs were completely transparent – how can you beat it as a model?

Today we bury all the numbers and try to subsidize every cost we can find – then wonder why it either costs so much to ‘educate’ or why employers don’t train. Its not profitable to do!

To completely train a newbie at basic machining, on the job – take only three months and the guy could be ‘okay’ at running parts on simple machines if they were already set up for him and he was supervised. We call those people ‘chuckers’ – load and unload all day. Wages for them are barely better than McD’s. So how can you even cut it more and keep them? There is no profit to train those guys. You train them only when you have to.

The jobs that pay okay are the ones where the operator actually programs and sets up the machine [either to run himself or to have a chucker run]. These guys do okay for ‘laborers’ – $20/hr not uncommon and lots of overtime. Can easily make $50k-60K a year. More in aerospace.

To train one of them would typically take three years before they were good enough to make you money at $20/hr. They will make parts sooner than that but not fast enough, with too many errors and down time. Tight margins means that kills you.

So you would really need to subsidize his wages to the McD level for three years and accept lower productivity and higher scrap as a ‘justification’ to train him in-house.

In manufacturing – margins have always been thin – capital cost high. You make money on volume – operationally lever the variable [labor & raw material] with fixed cost capital.

It means that when you need labor – you need it REAL bad or the leverage works in reverse. That is what makes even more automation work economically – even though operational leverage increased even higher it means the variable can be smaller and you still make money.

The whole purpose of industrialization was to commoditize labor to the point where no skill was needed. The only jobs it made sense to ‘train’ after the industrial revolution were the ‘skill jobs’ that remained. That is true today except now most no-skill jobs have been automated away. In that sense the post-industrial is more like it was before the industrial revolution. Looking at the guild apprenticeship model is completely relevant when looking at ‘in-house training’… the other option is pay for it yourself education. The ‘no skill’ option is long gone.

India, China, Mexico – the state is training tons of workers so the companies don’t have to – they just show up and hire them. Some in-house company specific training after that but not a lot.

Here – the state isn’t training them, the people refuse to train themselves and likewise it doesn’t pay for companies to train in-house… so it doesn’t get done and the companies elect to make stuff in India, China and Mexico instead. Simple.  State-subsidized training brings the jobs…it’s a form of national industrial policy.

For a semi-skilled worker in Shanghai – cost is something like $3000 per year. You could probably get that same person here for $16000 a year. Yes – that low. They are advertising for $11/hr factory work on signs on the street like $11 was good money.

Even at that multiple – both China and US are now both so heavily ‘levered’ operationally that the labor differential means little. The total cost isn’t as important as the productivity & ‘currency’ differential.


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