Either We Make Stuff — Or We Go Out Of Business
An article published in today’s NY Times Magazine section asks the global question, “Does America Need Manufacturing?”
Now, for purposes of discussion here, I’d like to ask some slightly different questions, some of which we have discussed numerous times here, but which I think is far more important than the specific item discussed in the NY Times Magazine. That article discusses the money which was put out by you and me through the federal government which went to companies developing lithium batteries, mostly in Michigan. It also discusses whether or not this investment was ‘worth it’ or a complete waste of money; whether it was the cutting edge of a renewal of manufacturing in this country or another bone-headed mistake which will end up creating over-capacity.
Personally, I think that’s moot entirely and the more important questions deal with the following:
— If we can all agree that as a business activity, a country’s involvement in manufacturing is ‘a good thing,’ ‘an important thing,’ ‘has value in terms of national knowledge assets,’ and so on, that leads us down a certain path. This path as far back as Ronald Reagan has been degraded and ignored; not only at the governmental level, but also at the financial level, as investment money went to companies such as Google and Facebook. These are not companies which ‘make stuff.’ So, the question is – if the so-called smart money is not going to companies ‘making stuff,’ how do we get financial support for stuff making entities?
— If we can all agree that as a business activity, manufacturing actually does a far more efficient and effective job of creating jobs for people than companies such as Google and Facebook do; then given the situation we are currently in, encouraging companies that do the stuff that Google and Facebook do appears to be not the path that we as a country should be traveling. In my little place, IBM used to make stuff – it made computers and it made printers. And because they also used local sourcing, we had probably 20-30 companies locally that did everything from populating circuit boards to making the metal cabinets, to making plastic housings, and so on… for IBM. When IBM decided they no longer wanted to make stuff in our little place, they not only threw several thousand people out of work (and actually they had been reducing their workforce locally for years), they also harmed a lot of small local businesses which were tied to IBM. IBM sold their personal computer product lines to Legend Holdings of China. That’s right. The American engineers and scientists who worked for IBM (and whose patents were therefore owned by IBM) – their work was sold to the Chinese who renamed the computers Lenovo.
— If we can all agree that manufacturing is a good thing and that we want to encourage it – is it best to encourage manufacturing across the board? Or only high tech stuff like lithium batteries or solar or wind turbines? The reason I ask that is because there is a growing movement in the US to actually make stuff here that people think is no longer made here. My two examples are Texas Jeans and Allen Edmonds Shoes, which is expanding their factory in Wisconsin. Even under regular pricing, Texas Jeans competes very aggressively with Levi’s and Wranglers, which are no longer made in the US.
— If we can agree that it is important for US taxpayer dollars, through such agencies as the National Science Foundation, to support scientific, engineering and commercial research to encourage the development of competitive American products, can we also agree that it is time to change national industrial policy (which is no policy at all) away from ‘let the market take care of it’ to ‘anything that is developed with US dollars is a national asset and must stay here and not be sold to foreign entities’? If this policy had been in place, perhaps the technology which had been developed at MIT and used to start the Evergreen Solar Company in Devan, MA (the massive amounts of Massachusetts government support) would not have been transferred to a Wuhan, China plant. This plant was built precisely by the Chinese government to attract Evergreen Solar. The management of Evergreen Solar transferred much of the manufacturing to this new plant, took the Massachusetts-based company into bankruptcy, and fired the 800 local workers. This is wrong. The Chinese were not interested in Evergreen Solar merely because they were producing solar PV – they have their own solar PV technology. The Chinese government did this to make sure they got the absolutely cutting edge solar technology – something referred to as ‘string ribbon.’ This move by the Chinese is consistent with their moves in aluminum, carbon fiber, and other high tech manufacturing. If we want stuff that we pay to get developed here, stay here, we need to do something about how federal R&D dollars are handled.
So – what are we going to do about this? We need jobs and we need lots of them. We need jobs and we need training to make sure that the people out there can do the work that needs doing.
Sure seems like we need a whole heckuva lot of investment to make that happen. Ideas, people?
(photo courtesy of dziner)