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Trump's Carrier deal aside, here's why most US factory jobs aren't coming back

Drew Greenblatt, owner of Baltimore-based Marlin Steel, is already seeing a revival of U.S. manufacturing — even before President-elect Donald Trump takes office next month.

His company, which makes steel wire baskets, saw an influx of new orders the day after the election that was big enough for him to hire four new workers.

Four new jobs is a start toward Trump's goal of rebuilding the U.S. manufacturing base. But no matter what policies he puts in place, or deals he strikes, it's unlikely factories will create enough new jobs to replace the millions that have been lost to offshoring and improved productivity.

And excitement over Trump's manufacturing plans was stoked this week with news that air conditioner maker Carrier had agreed to keep roughly 1,100 jobs at an Indiana plant it had scheduled to close in exchange for $7 million in tax breaks, said NBC News.

The company announced in February that it planned to move the jobs to Monterrey, Mexico, next year. Local union leaders said Carrier told them it would pay Mexican workers $3 an hour compared with more than $20 for their U.S. counterparts, according to Reuters.

Trump had attacked the plan during his campaign, vowing to impose hefty taxes on imported Carrier products if it did not reverse the move. The company is owned by United Technologies, a major federal contractor, which has a strong incentive to maintain good relations with the incoming administration. Last year, the company generated $6.8 billion of its $57 billion in revenue from government contracts.

The deal, negotiated by Vice President-elect Mike Pence and United Technologies CEO Greg Hayes, also includes $7 million in state tax breaks over 10 years, according to NBC News. The deal is being hailed as the start of a sweeping new set of policies designed to help businesses bring back the manufacturing jobs that allowed a generation of Americans to enjoy a solid middle-class living.

Trump has promised to cut corporate taxes, roll back regulations and reform the Affordable Care Act, along with pother business-friendly measures.

It remains to be seen though, whether Trump's Carrier deal can be replicated on a scale wide enough to reverse a decadeslong decline in factory jobs.

Since manufacturing employment peaked in 1979 at nearly 20 million, some 8 million of those jobs have been lost to automation and cheaper foreign labor markets. Those losses accelerated after the 2001 recession, when competition from China surged, according to MIT researchers, who estimate some 2.0 million to 2.4 million jobs left for China between 1999 and 2011.

But while the level of U.S. manufacturing employment has fallen by roughly a third, overall manufacturing output has doubled, thanks to a surge in productivity brought by increased automation, better supply chain management and other efficiency improvements. Those upgrades aren't going away.

As a result, U.S. manufacturers are able to make more of their product with fewer workers.

While improvements in productivity have slowed in recent years, those decades of efficiency upgrades aren't going away. That means it's unlikely that the U.S. will restore the bulk of lost manufacturing jobs, no matter how many deals President-elect Trump can pull off, said Greenblatt.

"When those job come back, they're going to be different jobs, and there will be less of them because we're so much more productive that we used to be," he said.

"You're going to have an American worker making 80 grand a year — one guy running a robot — rather than 10 Chinese workers in a room doing it by hand. We're not going to get the 10 jobs coming back from China."

Marlin Steel's Drew Greenblatt is shown in Baltimore, Dec. 10, 2014.
Matt McClain | The Washington Post | Getty Images
Marlin Steel's Drew Greenblatt is shown in Baltimore, Dec. 10, 2014.

For employers like Marlin Steel, that presents a new set of challenges helping to train workers to fill the new high-skilled jobs created by the hoped-for renaissance in U.S. manufacturing.

And government, Greenblatt said needs to play a role.

"We're going to have to invest in getting our eighth graders and high school grads to do well with math so they can be viable. We're not going to create the grunt work of yesterday; that's not our future."