What really creates manufacturing job growth…?

The October edition of Inc. magazine reports some interesting facts regarding job creation in America, and it’s not what our politicians seem to think.

Politicians have always been fond of playing up to small businesses. Small business creates most of the jobs, they say. But the statistics have long shown that new jobs actually come from young companies, not small companies. And specifically, new jobs come from young companies that are best managed and marketed. Moreover, because politicians misunderstand this situation, federal and state governments try to fuel job growth by way of direct financial assistance. This was the case with Solyndra, the green company over-funded by the federal government, which went on to fail in the areas of marketing and management, and so went under.  

One of the few people documenting the statistical reality in all of this is a research fellow of the Edward Lowe Foundation’s Institute for Exceptional Growth Companies. Gary Kunkle consults with state governments on the proper way to support job creation, and he has documented that among weaker-managed and marketed young companies, three things occur when government tries to fuel them with money:

1) They lose the incentive to manage their utilization rates and end up with too much capacity.

2) They use cheap government capital to take chances on products and services without pre-requisite marketing and market justification.

3) They build up more debt than they can handle.

So what is Mr. Kunkle telling state governors regarding effective government action for job creation? For starters, he’s telling them to stop treating job training like it’s a social program. Here again, he points to the facts:

High growth companies can usually find entry-level people, Kunkle notes. But they are having a hard time finding supervisors for these entry-level people. So if government really wants to be constructive, politicians need to recognize that what young companies need is not the funding of entry-level training to fill more entry-level jobs, but the funding of training for current hourly workers to grow them into supervisors who can get the most out of their operations and workforces.

Similarly, government needs to understand how the marketplace works. It works when young businesses grow based on good marketing management.

On this point, Inc. reports on how government actually works in such communities as Littleton, Colorado. The government there exists not just to tax its manufacturing base, but to invest in the better management and better marketing of that base by providing manufacturing leaders information on marketing, competitive intelligence, and industry trends – and by funding training and seminars in advanced management techniques.

Better management. Better marketing. These are the disciplines that create jobs.

Perhaps both political parties can agree on this at some point. After all, republicans like the idea of supporting entrepreneurs and with less government, and democrats like the idea of social equity when it comes to training.

Now, if only our politicians had the managerial and marketing know-how to see this.

jb

www.centrifuge-now.com