Tuesday December 4, 2012

Over the past two decades, and especially since the economic crash of 2007, the media and politicians have been shrieking about the decline of manufacturing in the United States and the future of the country as a post-industrial nation.

In 2010, one writer said America is becoming "a rotting, post-industrial, post apocalyptic wasteland."

"Things are going to get even worse," posted the writer on the website End of the American Dream. "Thousands more factories and millions more jobs will be sent overseas. ... city after city is going to start looking like something out of a third-world country."

"All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing," wrote Michael Snyder for The Business Insider.

Since 2001, wrote Snyder, America has lost more than 56,000 factories, with the number of workers in manufacturing at less than 12 million.

Meanwhile, wages for the working class have stagnated if not declined, costs continue to rise and long-term unemployment or semi-employment has become the norm for millions of Americans.

But all is not doom and gloom, at least not if you believe Charles Fishman and James Fallows, writing in the December 2012 edition of The Atlantic.


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According to Fishman, General Electric is bringing manufacturing back to the United States, and it’s not the only company doing so.

GE’s mythic Appliance Park in Louisville, Kentucky, which employed 23,000 people in 1973 -- but only 1,863 in 2011 -- is seeing a renaissance of sorts as manufacturing is coming back from China.

Earlier this year, a building that had been vacant for 14 years was reopened with a new assembly line to build energy efficient water heaters that had previously been built in China. And those water heaters are being sold for $300 less than those built overseas.

A month later, a new assembly line for refrigerators was opened and a third line for dishwasher parts will also soon be opening. The good news doesn’t end there: Appliance Park will soon house an assembly line for washers and dryers.

Bringing manufacturing back to America isn’t only happening in Kentucky, wrote Fishman, it’s happening in Ohio with Whirlpool, in South Carolina with elevator-manufacturer Otis, in Georgia with Caterpillar and in California, with Wham-O bringing Frisbees back to their country of origin.

"This is the beginning of a manufacturing renaissance," Nancy Lazar, co-author of an ISI Group report about the future of American industry, told Fishman.

When companies began to ship our jobs overseas, they didn’t calculate all the costs, wrote Fishman.

"Many offshoring decisions were based on a single preoccupation -- cheap labor. The labor was so cheap, in fact, that it covered a multitude of sins in other areas. Jobs are coming back not for a single, simple reason, but for may intertwined reasons ..."

Those include increasing wages in countries such as China, protests against environmental degradation where outsourcing has occurred, the cost of fuel to ship finished products, the drop in the price of natural gas, greater productivity in America, and, not necessarily a good thing, the diminishment of labor unions, which has meant a drop in wages in the United States, wrote Fishman.

Another reason manufacturing is coming back is companies realized they suffered when their designers were worlds away from their factories.

But most importantly, Lime Lab’s Linus Chung told Fallows, "A revolution is coming to the creation of things, comparable to the Internet’s effect on the creation and dissemination of ideas."

"Three dimensional printing and related technologies are making it easier for entrepreneurs interested in making physical goods to expose their products to the worldwide market," wrote Fallows. "The terrain is shifting in a way that should draw more entrepreneurs to manufacturing and let more of their ideas succeed. This should in turn foster more manufacturing work with the United States than was feasible a few years ago."

Why is that possible?

"America has more than its fair share of such potential innovators, thanks to immigration, our still-strong university and public research centers, and the financial and cultural underpinning of a start-up culture," wrote Fallows.

Michael Lind, writing for the New Geography, said there are two visions for the future of America: Post industrial and neo-industrial.

Post-industrial America is "a consumerist paradise populated by investors, executives of multinational companies, rentiers, (real estate agents), government and non-profit bureaucrats, and a supporting cast of service sector proletarians including nursing aides, nannies, gardeners, security guards and restaurant and hotel workers."

But a neo-industrial infrastructure is one that is tailored "to the needs of an entire complex ecosystem of factories, design offices, and their suppliers and contractors," wrote Lind. "And that infrastructure not only must be rebuilt in industrial areas like Detroit but also built from scratch in areas such as the Great Plains. It would aim to put many of tomorrow’s factories and research parks in today’s depopulating rural areas and derelict inner cities."

No simple task though, considering the nature of discourse in Washington, D.C., because the question must be asked: Who will pay for the new infrastructure?

"The rich, who will remain concentrated in a few metro areas, where they can socialize, compete and conspire with one another, must be taxed by the federal government ..." wrote Lind.

There is a way to arrest the loss of manufacturing jobs in the United States and actually turn that train around, but it will take political will power, a sense of shared sacrifice and common pride, a selfless committment by the wealthy to the working class and a culture that fosters innovation, rewards hard work and values long-term returns over short-term profits.

If any country can do so, this is it.