In the news:
Originally published February 17, 2012 at 9:29 AM | Page modified February 17, 2012 at 6:21 PM
Easy to talk about supporting manufacturing, harder to rebuild
Rebuilding domestic large-scale manufacturing is essential to help stop the collapse of the middle class.
![]() |
Special to The Seattle Times
![]()
One key question surrounding President Obama's plans to enhance American manufacturing is whether they are serious measures or campaign-year window dressing?
After all, it's easy to come to the Puget Sound and tout the many benefits of our aerospace cluster. It's one of the last such bastions in America, and has been maintained with great help from the federal and state governments.
Rebuilding large-scale manufacturing across the country is another, more difficult proposition.
It's good that Obama appears to understand the unique benefits of manufacturing. It results in better paychecks for more people, as well as greater export power. It accounts for two-thirds of the research and development, as well as contributing in an outsized way to productivity.
Many mainstream economists don't get it. For example, Christina Romer, once head of Obama's Council of Economic Advisers, wrote in The New York Times that manufacturing shouldn't get special treatment over services. Tellingly, she used the example of hairdressers.
The reality is that most service jobs aren't software engineers or architects but lower-wage positions with few benefits. The former factory worker in the Midwest displaced by China and offshoring is lucky to be working in a call center making half of her former wages, or at Wal-Mart making even less.
On top of this, as manufacturing withered in the 1990s and 2000s, it was overshadowed in the economy by a huge and risky deregulated financial-services sector. We saw how that turned out.
And while the world is awash in surplus labor, the labor-cost differential between the United States and Asia is not the key reason for the decline of large manufacturing here. Japan and Germany are higher-cost manufacturing export powerhouses. (They have the added advantage of universal health care.)
The big difference is that the United States has not provided the same support for manufacturing as China and some other nations.
Measures to help small businesses will be welcome. For example, Ron and Elizabeth Russell of Ocean Concepts in Kenmore have designed a computer for scuba divers that's being made by contract manufacturers here and in California for world export.
"There is a new sort of manufacturing economy emerging, of which we are an example," he told me.
In addition to such entrepreneurs, high-end niche manufacturing has staged an impressive comeback. The Seattle area has an abundance of these players. But many are desperate to find skilled machinists and other high-end employees. We haven't invested in education to train these workers.
But rebuilding large-scale manufacturing is also essential, not only for competitiveness but to help stop the collapse of the middle class. Boeing in the Puget Sound region is Exhibit A in how this succeeds, not only by directly supporting thousands of good Boeing jobs but thousands more among smaller aerospace vendors.
This kind of cluster has been lost in scores of industries that abandoned manufacturing in the United States. This loss of scale has been catastrophic. This is why it was important to save General Motors and Chrysler from bankruptcy, which would have destroyed hundreds of suppliers.
It can be turned around, but only if we begin to both adopt some of the tactics of China such as subsidies and other protection of strategic industries. In addition to a greater emphasis on high-skilled manufacturing education, the federal government must be willing to tax products made with offshore jobs while rewarding job-creating manufacturers here.
It must also be prepared to more aggressively push back against Beijing's demands that U.S. firms share vital technology and make products in China.
Is the president prepared to do that?
The agenda he unveiled Friday appears promising, but doesn't go far enough. Until it does, American can't return to the dynamic growth needed to be, well, America.
You may reach Jon Talton at jtalton@seattletimes.com.
On Twitter @jontalton.

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest
jtalton@seattletimes.com





