Apprenticeships, trade surpluses and global competitiveness

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We spend a lot of time these days debating globalization: Are trade deals like NAFTA good or bad?

And who's being hurt and who's being helped by the globalization of the last few decades.

But some recent reporting got me wondering if we're ignoring an important part of the picture — the role of strong worker training programs in building global competitiveness.

We ran series of three articles and a podcast in the last few weeks on efforts among North Carolina plastics companies to build strong apprenticeship programs.

At the same time, we had this piece looking at Germany's trade surplus with the United States in the plastics sector.

I'm linking them because as I talked with the North Carolina companies and state government officials, they noted similarities between what they were trying to build and Germany's strong industrial training programs.

That got me wondering what training programs can do to make a country more globally competitive.

Germany is very competitive with the U.S. plastics industry. We reported that industry statistics show that Germany runs a trade surplus in plastics with the United States in all four of the industry's major segments: resin, plastic products, machinery and molds.

In 2015, the total surplus was $2.1 billion, which was the second-highest trade deficit faced by the U.S. plastics industry, after a $9.9 billion deficit with China.

It's a little surprising to me to see that the second-biggest trade deficit for the U.S. plastics industry is with Germany.

Not a low-cost, low-regulation nation, but Germany. Let that sink in. Economy-wide, Germany runs a $65 billion trade surplus with the United States.

And then I read the March 17 transcript of the news conference between President Donald Trump and German Chancellor Angela Merkel.

The two of them talked a lot about trade and training. After a short welcome to Merkel, in fact, the first topic Trump brings up in his opening comments is Germany's vocational training programs.

Before he even mentioned the European Union, NATO, the Ukraine or terrorism, he mentioned Germany's workforce training programs and his desire to rebuild the U.S. industrial base.

"We just concluded a productive meeting with the German and American companies to discuss workforce development and vocational training — very important words," Trump said.

"Germany has done an incredible job training the employees and future employees, and employing its manufacturing and industrial workforce," he said.

Both Trump and Merkel went on in their comments to talk about trade. Trump made it clear he wanted to change the terms of trade between the two countries.

"Germany has done very well in its trade deals with the United States, and I give them credit for it," Trump said.

"I would say that the negotiators for Germany have done a far better job than the negotiators for the United States," he said. "But hopefully we can even it out. We don't want victory; we want fairness."

I've read that Trump administration economic advisers argue that German exports benefit from an undervalued euro.

Germany's VDMA machinery association, on the other hand, argues that Germany does well in world trade because of German manufacturing quality and innovation, and not because of currency manipulation.

I'm not an economist, and I'm not an expert on German-U.S. trade. Currency could be factor in Germany's favor, but it seems like there could be other reasons for the German surplus. I have a feeling some of our readers have a better sense of that than me.

But it brings me back to apprenticeships.

I've seen other reports that calculate that Germany has a lot more apprenticeships than the U.S. does — more than 10 times as many, when you adjust for population.

The companies I met in North Carolina all said their apprenticeship programs were big commitments for them, in time and money. But they also said the training programs were vital to their ability to compete.

It's another perspective on how to build competitiveness. My sense from seeing what North Carolina is doing to build up its apprenticeship system, is that we in the U.S. could benefit from the kind of serious investment in industrial training Germany has done.

Toloken is Plastics News' news editor-international. Follow him on Twitter @Steve_Toloken.

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