As we look forward to celebrating Labor Day this coming weekend, it’s clear that we are not the only ones thinking about the state of our domestic labor market and in particular the role that manufacturing plays in the U.S. economy. After all, we ourselves have a vested interest in the role that our industrial workbenches, cabinets, computer workstations and material handling stations that we build here at our factory in Austin, Texas play in our nation’s industrial economy.
Speakers at U.S. Manufacturing Summit Predict a Resurgence in American Manufacturing
Just this past week it was with great interest we watched Walmart and the National Retail Federation convene the “U.S. Manufacturing Summit” in Orlando, Florida with nearly 500 suppliers and 1,500 people in attendance. Among the speakers were U.S. Commerce Secretary Penny Pritzker (who formerly led The Aspen Institute’s ‘Skills for America’s Future’ policy initiative), the governors of eight U.S. states, and Bill Simon, Walmart President and CEO. You can watch the summit presentations online.
One of the key presenters was Hal Sirkin, Boston Consulting Group Senior Partner and Managing Director, who made the presentation: “The Case for U.S. Manufacturing”. To recap, Sirkin predicts the combined effect of domestic labor becoming less expensive relative to overseas labor and continued lower domestic energy costs into the foreseeable future (thanks to the natural gas/fracking boom) together will drive a resurgence in American manufacturing. Will this come to pass? Well Senior Vice-President for Home at Walmart, Michelle Gloeckler, speaking on Bloomberg TV, did pledge a commitment to buy an additional $50 billion in American-made products over the next 10 years, which certainly will help. And we may see a resurgence in demand for American-made products among younger consumers, like the Millennial Generation, that has already strongly adopted the DIY movement on websites like Etsy and Make Magazine.
Will this come to pass? Well Senior Vice-President for Home at Walmart, Michelle Gloeckler, speaking on Bloomberg TV, did pledge a commitment to buy an additional $50 billion in American-made products over the next 10 years, which certainly will help. And we may see a resurgence in demand for American-made products among younger consumers, like the Millennial Generation, that has already strongly adopted the DIY movement on websites like Etsy and Make Magazine.
Innovation Clusters Hold Key to American Manufacturer’s Success
Trying to capitalize on this trend, Alex Bogusky, a former ad executive, has been in the news launching the Boulder, Colorado-based ‘Made Movement’ which promotes the ‘coolness’ factor of buying American at retail stores like “STORY” in Manhattan. You can learn more about Made Movement by visiting their ‘Million American Jobs Project.’ So, if we take stock here… there are several positive trends coming together to kick start an American revolution in manufacturing. We have relatively lower domestic labor costs, quite possibly the lowest domestic energy costs in the world, the third largest employer in the world (Walmart) wanting to sell American products and perhaps now a burgeoning trend to build demand to ‘buy American.’
What else do we need? Many economic planners are zeroing in on the idea that single actors — even those as large as a Walmart, or a GE that is reportedly hiring 1,000 people to make light bulbs in the USA — are not powerful enough by themselves to give the needed boost to tip us toward sustainable growth in manufacturing. Instead, according to Rebecca O. Bagley, who spoke recently on a Brookings Institution panel with Gene Sperling, director of the National Economic Council, what we need to focus on is regional concentration centers of manufacturing supported by a balanced infrastructure in order achieve sustained manufacturing growth. In an article appearing in Forbes magazine, Bagley believes that regional innovation clusters hold the key to making American manufacturers successful over the long term.
“Since cluster development targets the entire value chain from fundamental research to final production, it recognizes the essential role manufacturers play in the commercialization process. Regional clusters also encourage businesses to share technologies and know-how, provide access to skilled employees and open doors to industry-specific funding opportunities, all of which benefits manufacturers,” wrote Bagley.
Bagley states that an economic region first needs to identify which emerging growth industries, such as high-tech energy applications, flexible electronic circuits or water technologies, it is going to pursue. Then, to be successful, it has to ensure the region has:
- Sufficient concentration of suppliers to build a regional culture of innovation
- Resilient infrastructure including energy grid, communications and transport
- Advanced research laboratories to drive product innovation
- Educational institutions providing workers with appropriate high-tech manufacturing skills
As a case study, Bagley points to promising results from the Regional Economic Development Strategy (RECS) group which was established to promote industry in the northeast Ohio region, an area once traditionally strong in manufacturing but hit very hard in the downturn of the recession. RECS has brought together businesses, foundations, universities and economic development organizations to align regional resources to support the rapid growth of emerging industries. This regional ‘holistic’ approach seeks to address each problem area one by one, including one that is bedeviling manufacturing facilities across the nation: the mismatch between the type of skills manufacturers need in their workforce and the type of education workers are getting from schools and universities. Amy Sullivan has a provocative article on this topic, titled “Why Jobs Go Unfilled Even in Times of High Unemployment.” RECS is taking this worker education issue very seriously and is working hard to make sure Ohio area schools provide the high level of skills demanded by today’s manufacturing processes.
Already, there are signs of success in the RECS region. Manufacturing grew 4.2% in 2011 and 3.1% in 2012. The area’s best known, breakthrough manufacturing success story is Reflex® brand plastic liquid crystal displays (LCDs) manufactured by Kent Displays. This company has tripled its capacity and doubled its revenue and employment in just over two years. As we look forward to celebrating the coming Labor Day, we salute the efforts of the RECS and its member manufacturers, like Kent Displays.
Formaspace helps power the labor market by supporting the Made in America Movement. We are proud to serve this country and actively participate in its economy. A resurgence in American manufacturing is something we can all celebrate together. Be safe and have a great holiday weekend!