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This Detroit watchmaker is showing that investing in people has long-term payoffs


It's not a secret that manufacturing is changing. Over the years, the industry has been battered and forced to modernize, but after decades of off-shoring, it's flourishing again.

Manufacturing makes up about 12.5 percent of the country's GDP, contributing $2.18 trillion to the U.S. economy, according to data from the U.S. Bureau of Economic Analysis (BEA). What's more, the National Association of Manufacturers calculates that for every dollar spent in manufacturing, the economy gains $1.81. Workers are also getting paid better – manufacturing employees make $26 an hour on average, per BEA research.

Some roles, particularly jobs that can be done by machines or by overseas workers for cheaper, are slowly disappearing. However, manufacturing is not going away in the U.S. Far from it. In the early aughts, the sector shed about 6 million jobs, according to the Manufacturing Institute, but since 2010, manufacturing has added about 1 million back.

The catch is the jobs gained require advanced training... which has created a serious skills gap.

The catch is the jobs gained require advanced training or specific degrees, which has created a serious skills gap. By 2025, the Manufacturing Institute expects there to be 3.5 million new jobs added to manufacturing. But it also expects 2 million of those to go unfilled.

"The jobs we lost were the low-skilled, low-paying jobs. We're now replacing them with higher-skilled, higher-paid jobs," AJ Jorgenson, AVP at the Manufacturing Institute, told Circa. "But… the skills that they have are still applicable. It's just they need to be up-skilled."

Entering the era of modern manufacturing

A lot of renewal within manufacturing has been because of companies like Ford and GMC investing in education, more specifically in transferring and updating workers' skills. Detroit-based Shinola, for example, has provided tools and training to bring its workers up to speed with modern manufacturing.

"We’ve brought in a Swiss group to teach our teams how to build movements and watches," Jacques Panis, president of Shinola, told Circa. "Teach your teams how to do these things, and then ensure that the training can be replicated into more people as these operations scale out."

"Teach your teams how to do these things, and then ensure that the training can be replicated."
Jacques Panis, President, Shinola

Another unique aspect of Shinola's set up is that in the building where they're based, there is a school downstairs. The American brand has sponsored classes – from marketing to design – as a way to encourage kids from a younger age to enter into this line of work.

Shinola opened it's Detroit assembly and manufacturing plant in 2011. (Circa)

Jorgenson says that in addition to getting children excited about different types of manufacturing earlier on, players in the space also need to help people see it from an updated perspective.

"We need manufacturers to open their doors, so that middle schools and high schools can go and see what manufacturing is actually like. We need to dispel the misperceptions of what manufacturing is, and show it as high tech and innovative," Jorgenson said. Engineers, developers, scientists, machinists, designers and welders – those are all manufacturers, Jorgenson explained.

Beyond opening their doors, manufacturers also need to help longtime workers update their skill sets. Because, as The Atlantic has reported, America's economic advantage is "the kind of high-cost, high-skilled manufacturing that capitalizes on the country’s technology and educated labor pool."

Damon Love, who works as an incoming leather specialist at Shinola, is one such worker. Since he was 15, Love has worked in manufacturing, most recently at a carmaker before getting laid off during the 2008 Recession.

"I didn't expect I'd be this far in such a short time," Love told Circa. "I've been here three years. I enjoy my job... This is the first time I’m ever dealing with leather."

"I didn't expect I'd be this far in such a short time."
Damon Love, Incoming Leather Specialist, Shinola

As Panis puts it, "People here in Detroit have sewn leather seats. So we have been able to bring people over to this operation who are now sewing leather straps." Shinola sent Love to a leather authentication class in Ohio to get his certificate, and while he may not be one of the workers with a previous background as a leather craftsman, he has been able to transfer his skills.

"All leather, before it gets distributed or when we receive it, I check it, I grade it, and I make sure it's okay for us to use on the floor. If not, I'll send it back to the tanners," he explained while showing Circa the many different leather pieces he surveys and for what products they're used.

American-made goods

Shinola opened its assembly and manufacturing plant doors in 2011, quickly becoming a symbol of what manufacturing can be. Politicians from Bill Clinton to Barack Obama have touted it as an American success story – Obama even gifted then-UK Prime Minister David Cameron a Shinola custom timepiece during a visit in 2016.

The American brand specializes in high-end watches and leather goods like handbags and wallets. It has added bikes and record players to its roster of products recently, too.

But despite its success and investment in retraining, Shinola has been criticized for exaggerating its "Made in America" claims. As an article in Inc. put it: "In Shinola, [Tom] Kartsotis has managed to engineer a brand that feels authentic despite being largely contrived. How he's done that is a study in new-age marketing."

What critics argue is that Shinola may be producing some products in Detroit, but a large amount of its parts are shipped in from overseas. Panis doesn't deny that, but says the company was launched to create jobs and revive industry – and it's done that.

"The premise was creating great manufacturing jobs here in the United States. We've since done that."
Jacques Panis, President, Shinola

"We are a brand that is making things here in the U.S. We have a global supply chain that comes in from different parts of Asia, different parts of Europe, into our facilities here in Detroit," Panis said. "The premise was creating great manufacturing jobs here in the United States. We've since done that, but it hasn't just been manufacturing jobs."

Shinola's leaders have said as the company grows, it will only help to reshore jobs and supply chains.

The conversation around American made products has swelled in recent years, as survey after survey shows American shoppers want products made in the U.S. The problem with that is when it comes down to it, what consumers really want is a good deal. A recent Associated Press-GFK survey that revealed another problem for the Made in America movement is that Americans might say they prefer to buy domestic products, but a scant 30 percent are actually willing to pay more for them.

For reference, the average Shinola watch retails at $750; handbags start at $395.

The "Made in America" conundrum isn't unique to Shinola. It implicates manufacturers, large and small batch. To be purely American-made is an expensive gamble, given current U.S. consumer shopping habits outlined in the AP-GFK survey.

That said, in Detroit, where companies are investing in people, there's long-term payoff.

"This is a company that I could see myself retiring from," Love said. "I want to actually be one, what do they call it, the big wigs? I actually want to be one."

See more related Circa stories:
Detroit Bikes is transforming America’s car capital into a bike town
Here's how startups are helping mega-brand Coca-Cola take on the future
These businesses have pledged job creation in the US, but how much credit can Trump take?

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