I can’t quite say that Mr. Engler wrote this while wearing rose-tinted glasses. But the article below is somewhat optimistic–not that there’s anything wrong that. He does make some important points that coincide with my upcoming June article for the Tool, Die & Authority publication from PMA.
For those that don’t know, I’ll be officially launching a new sales, marketing & communications venture–Lintrio LLC– for the tooling industry in the coming weeks.
Regards,
Joe Brown
Made In America
Forging A Second American Century
John Engler,
05.28.09, 06:00 PM EDT
Despite excessive taxation and regulation, the U.S. remains the largest manufacturing nation in the world
The 20th Century is often called the American Century, marking the
U.S. rise to global pre-eminence. Manufacturing powered our ascendance,
factories created our prosperity.
But the American Century is
nearly a decade gone, manufacturing jobs are dwindling, and the future
promises fierce competition from the new industrial giants of China and
India (and the old giants of Europe). The recession drags painfully on,
and dozens of other competitor countries target what they sense is a
new U.S. vulnerability.
It is time to finally resign ourselves to becoming a second-rate manufacturing nation?
Not
if manufacturers have anything to say about it. Manufacturers in the
United States have adapted before to survive, and they will again.
First,
the good news. The United States remains the world’s largest
manufacturing nation, accounting for more than 19.5% of global
manufacturing output. In 2007, the U.S. produced more volume of
products than ever before, and manufacturing represented $1.6 trillion
of our economy, or about 11.6% of gross domestic product.
Manufacturing
in the United States accounts for more than 12 million jobs and
supports millions more in other sectors. And manufacturing jobs are
among the most highly compensated in the nation, paying on average
about 20% more than those in other sectors.
Yes, we are shedding
manufacturing jobs. In the U.S., manufacturing has lost some 1.5
million jobs since the current downturn started, continuing a long-term
trend that dates back at least until the early 1980s. But to
concentrate on aggregate job losses masks a more profound trend–vastly
improved productivity. Americans are making a lot more stuff with a lot
fewer people. This increased productivity is largely due to continuous
innovation in the manufacturing sector and high investment levels in
new technology.
Examples abound. In the northwestern Pennsylvania
town of Meadville, a group of businesses evolved over a century into a
tool-and-die sector of more than 130 companies. The companies had grown
with the American auto industry, and their fates were tied to Detroit.
Ten years ago Meadville’s Starn Tool & Manufacturing, with 54
employees, did the overwhelming majority of its business with auto
suppliers. Today, the auto industry represents only 5% of its business.
Like other companies in the area, Starn adapted to changing markets and
is now producing tools and parts for everything from satellites to
Segway scooters.
Down in Pittsboro, N.C., a former hosiery mill
where 400 laborers once worked on looms is now home to a biotechnology
company, Biolex Therapeutics, where 90 workers use advanced laboratory
equipment to develop a drug for a serious liver ailment. Even the
lowest paid of the lab technicians earns far more than the seamstresses
in the old hosiery mill.
In Haleyville, Ala., Exxel Outdoors
recently revved up to produce up to 2 million of its top-end line of
sleeping bags. Exxel was manufacturing in China, but as costs of
production and shipping rose, it made economic sense to move production
back to the United States.
In general as manufacturing becomes
more automated, both in the U.S. and abroad, lower labor costs in
places like China and India are increasingly less important to the
competitive picture. But the bad news is that regardless of labor
costs, U.S. manufacturers face disadvantages that are largely beyond
the control of individual firms.
A 2008 study by National
Association of Manufacturers affiliate organization The Manufacturing
Institute and the Manufacturer’s Alliance/MAPI compared the cost of
manufacturing in the U.S. to a group of nine industrial nations
including Germany, Japan, China and Mexico. Because of higher taxes,
energy and regulatory costs, U.S. manufacturers face a 17.6% structural
cost disadvantage when competing against firms from these nine
countries. But progress is being made. The same group estimated that
just two years earlier, in 2006, American firms faced a 31.7%
structural cost disadvantage.
History provides some reassurance
regarding recovery. American manufacturing has always come back after
past downturns, and most economists forecast recovery by the second
quarter of next year 2010. For U.S. manufacturers, the American Century
lives on, and there is no reason to accept–or expect–a second-rate
status.
John Engler, the former three-term governor of Michigan, is
president of the National Association of Manufacturers, the nation’s
largest industrial trade association.
