Made in the USA
As another political season of an endless political year drags on and candidates bat their eyelashes at various parts of the electorate, it would be easy to mistake the pandering about the damaged state of the American economy with a loving relationship with the facts. Among the many wiles that politicians are stumbling over themselves to seduce us with, the challenges to American manufacturing offer some of the biggest opportunities for half-truths—Mexican immigrants, the Chinese government, Arab oil producers being major suppliers.
At least this much is true: every year across the United States, the economy has been losing anywhere from 10,000 to 200,000 manufacturing jobs. Professional and service-sector work normally replaces enough of them to keep the unemployment rate relatively stable. The problem for local communities is that the new jobs are often being created in places with better-established educational institutions and technological infrastructures to support the transition to a new economy. While some Eastern and Western states have experienced unprecedented economic growth in the process, cities and small towns throughout the middle of the country are being left in ruins.
But contrary to popular perception, America still has by far the biggest manufacturing economy in the world, producing more by half than China and two-thirds more than Japan. Domestic manufacturing output has actually been growing faster than the rest of the economy. Many of the job losses, moreover, have come from the infusion of new technology into traditional manufacturing rather than outsourcing. This increased productivity has enabled companies to make more with fewer and better-skilled workers. The Bureau of Labor Statistics projects that another 1.5 million manufacturing jobs will be lost in the next decade. But that’s less than half of the losses of the previous decade. Businesses today are using information technology to streamline operations, rapid-prototyping to develop innovative products faster, and cutting costs by shortening supply chains and reducing waste and energy consumption. Large corporations like Boeing are thriving through a combination of better design and advanced technology. Automation and 3-D modeling are in many cases making it cheaper and easier to produce goods at home than abroad.
Small and medium-size companies, which employ about 60 percent of the country’s manufacturing labor, are being helped along by a variety of local and regional initiatives in-tended to ensure that factory work—historically the mainstay of the American middle class—remains viable in our communities. Cities and states are experimenting with new strategies to maintain their manufacturing bases by encouraging innovation, providing incentives for companies to invest in research and development, subsidizing technical training for unemployed workers, and supporting the renovation and relocation of existing factories with updated machinery and efficient space-planning. These programs are extending the benefits of the new economy into contemporary manufacturing and guiding its convergence with environmental principles and sustainable technology.
Some of the best initiatives are affiliated with the Manufacturing Extension Partnership. Sponsored by the U.S. Department of Commerce’s National Institute of Standards and Technology, the program links companies to local and regional resources through nonprofits, colleges, consultants, and municipal and state agencies. In 2003, for instance, early in the Tasty Baking Company’s transformation from a traditional manufacturer into a competitive modern company, the Delaware Valley Industrial Resource Center (DVIRC) played an important role by training workers in new technology.
With the help of the DVIRC and the Philadelphia Industrial Development Corporation, the company put together a plan to switch to automated systems and lean-and-green manufacturing that will culminate in a move from its 1922 factory to a building aiming for LEED certification in the Philadelphia Navy Yard—a process financed by low-interest loans from the city and state, tax exemptions for nearly ten years, and a grant from the city’s economic-development agency. Tasty Baking Company’s new automated equipment and efficient operations will allow it to increase productivity by 30 percent, improve flexibility, and launch new products faster. It will also result in more than 200 jobs being cut. The alternative would have been for the company not only to abandon its outmoded factory, along with its remaining 500 employees, but to leave the area altogether.
“The machinery just continues to get better and better,” says Dave Blanchard, editor of Industry Week, a trade magazine based in Cleveland. “It’s unbelievable what they can do now with automated equipment. But that requires a certain level of expertise. You still need somebody to run it, be responsible for it, and program it. The question is, if productivity continues to increase, and if manufacturing companies are able to produce the same amount or even more with fewer people, is that progress?”
For hard-hit economies in the Midwest—Michigan’s 7.6 percent unemployment rate is the highest in the nation—a lot of the strategic focus is on so-called green-collar labor, engineering new technologies that can flourish in the twenty-first-century economic landscape. Coddled and protected for decades, the region’s traditional manufacturers got everything they demanded from the corporation-friendly government and then woke up to discover that peak-oil prices and an absence of regulation left them uncompetitive both at home and in the global marketplace.
While automakers play catch-up with fuel efficiency in Europe and Japan, Michigan is positioning itself as a leader in the emerging alternative-energy industry. Tax incentives from the Michigan Economic Development Corporation, training and consulting by nonprofit Next Energy, major investments in research and development, universities with established engineering institutes, and lakefronts excellent for wind-power generation have helped establish the state as the leading manufacturer of parts and components for the rapidly growing electric-turbine industry.
Production of the new technology is evolving naturally from the area’s automotive expertise and infrastructure. For example, Cascade Engineering, a plastics company in Grand Rapids, is parlaying its injection-molding capabilities for car interiors and power trains into the Swift Wind Turbine, a rooftop windmill for private homes and businesses being launched this year in partnership with the Scottish firm Renewable Devices. In Fort Madison, Iowa, Siemens Power Generation recently converted a closed-down semitrailer factory into a turbine-blade manufacturing plant that takes advantage of the facility’s rail, road, and water links to ship the gigantic 13-story blades.
These initiatives are not all motivated by the needs of struggling regional economies, however. An extremely idealistic example of manufacturing advocacy is the Earth Island Institute’s Bay Localize project, an effort to promote a self-reliant economy in the San Francisco Bay Area by “restoring the capacity of communities to sustainably feed, clothe, house, and power themselves with the know-how, natural resources, and financial capital inherent to their own bioregions and the people who reside there.” It’s a quaint idea that completely misses why many of the things we consume come from very far away. For each community to satisfy its own needs with a diversity of high-quality goods, it would be required to produce its own raw materials and house thousands of factories and hundreds of farms able to make at least enough for everyone in the region. It would be an extraordinarily inefficient, expensive, and energy-intensive way of doing business, and its lack of pragmatism tends to discredit the soundness of ideological localism as economic policy.
Even in a thriving economy like New York City’s, nonprofits and local agencies worry about the loss of manufacturing jobs and advocate on behalf of producers for relief from real estate pressures, limits to the re-zoning of industrial districts for housing development, and improvements to the city’s outmoded transportation infrastructure. It’s oddly discordant to hear business advocates complaining about gentrification, but a few years ago the New York Industrial Retention Network (NYIRN) produced a report on the illegal conversion of factories into residences in East Williamsburg, Brooklyn, and its impact on an area of the city zoned for manufacturing.
Real estate development is essential to New York’s tax base, but there’s undoubtedly a need to keep certain areas available for industrial uses. Often, the same people desperate for affordable housing need inexpensive industrial spaces to start small businesses, such as 4-pli, a design-build firm on the edge of Greenpoint, Brooklyn, where a Michigan expat runs a CNC mill out of a warehouse with a group of recent architecture graduates and works with upstart furniture makers and architects such as SHoP to build their computer-generated designs.
“New York still has the most diverse population imaginable,” says Adam Friedman, executive director of NYIRN. “There are people from hundreds of countries in New York—people of tremendously varying skills and interests. That diversity is one of our greatest strengths. It’s what stimulates ideas and new products. But to maintain that diversity and to provide employment and entrepreneurial opportunities, you need a diverse set of jobs and businesses. In manufacturing, a huge part of the workforce is immigrants and many haven’t completed high school, and yet they have well-paying jobs.”
NYIRN provides manufacturers with real estate listings of properties zoned for industrial use, assists companies to reduce energy consumption and convert to renewable sources, and has an online database to help consumers and other businesses identify products—including sustainable ones—manufactured in the city (www.madeinnyc.org). In fact, the organization’s argument in favor of manufacturing is as much about the sustainability of new modes of production as it is about economic diversity and equal opportunity.
“NYIRN is driven by two goals: creating decent jobs and improving the environment,” Friedman says. “It seems strange that an organization working with manufacturers is also talking about environmental concerns, but that shows how much times have changed: economic development and environmentalism have merged. When you think of the core of economic growth, it comes from increasing productivity, and that means getting the most value out of your resources—the most output for your input. That’s the same guiding principle as environmentalism: getting the most out of your scarce resources.”
America is feeling vulnerable now, with the rising power of economies in the East, the unstable transition to a new economy, the weakness of the dollar, the uncontrollable trade deficit, massive government debt, uncertainty about energy resources, and the threat of climate change. The bottom line is that the country is shifting in a more sustainable direction, but not nearly fast enough. The sooner communities begin to understand the real challenges to manufacturing, rather than the imaginary phantoms conjured by demagogic electioneering, the better it will be for all of us. As creative destruction continues to work its sloppy and unevenly distributed magic, the time to reduce energy consumption, convert to alternative sources, prepare businesses to adapt to new technology, train workers for the jobs that are emerging from it, and plan locally for what will continue to be an economic roller coaster is now.