Manufacturing a Better Future for America
A new book provides insights into why the U.S. faces another “jobless recovery” plagued by long-term economic weaknesses, even when the current recession technically ends. Citing numerous shortcomings in economic, trade and workforce training policies, the volume is the most up-to-date and comprehensive overview of American manufacturing—“one of the only sectors of the economy that creates wealth”—explaining its value, the obstacles it faces and the danger of its continuing demise in the absence of major policy changes.
"Manufacturing a Better Future for America," written by leading academic and industry experts, outlines why manufacturing is vital to the U.S. economy and provides objective information and analysis on a full range of topics—from the current state of U.S.-based producers and industry trends, the history of U.S. trade and industrial policies and other countries’ unfair trade practices to the impact on workers, society, training, research and defense.
The United States “is broke because it has stopped producing what it consumes,” writes the book’s editor, Richard McCormack. Even an increase in consumer demand, he notes, “will not put Americans back to work” as the “spending will only help workers making products overseas.” Offshoring of production is also of great concern because, “The United States is not generating enough wealth to pay its mounting and massive debts.”
“To build a strong economy that works, we must understand what’s really happening today,” said Scott Paul, executive director of the Alliance for American Manufacturing (AAM), the book’s publisher. “Much of the conventional wisdom about manufacturing is wrong or out of date. The book provides a fresh look and sets the record straight on myths that skew the economic debate. With its objective analysis, it should spur a more informed national discussion.”
About 40,000 U.S. manufacturing plants closed between 2001 and 2008, resulting in the loss of millions of good-paying jobs. From 2001 to 2007, 2.3 million jobs were lost just from the U.S.’s huge trade deficit with China.
“The mindset among America’s economic elite—that the country does not need an industrial base—has put the country and the world economy in a ditch,” writes McCormack, who is also the editor and publisher of Manufacturing & Technology News. “Only with a revitalized manufacturing base can America assure itself a prosperous and hopeful future.” The book, he said, “can help set the foundation for a new economic era based on the necessity of creating millions of good-paying jobs.”
The book refutes some widely promoted myths, including that the U.S. economy can thrive with just service industries as good-paying jobs are replaced by other sectors. It also debunks the notion that lost manufacturing plants will not mean lost research and development. It details the unfair trading practices China employs, and explains the social costs of the decline in manufacturing. And it outlines recent trends, not only about trade policies and practices, but also the exporting of innovation, the shift away from job training and the threat to national security.
International trade has had a major impact on the “hollowing out” of American manufacturing resulting in the loss of millions of jobs and depressed wages. “China stands head and shoulders above all other trading partners as a source of America’s chronic trade deficits,” writes one of the book’s co-authors, Peter Navarro of the University of California, Irvine. In 2008, the U.S.-China trade gap was $266 billion, more than one-third of the entire U.S. trade deficit.
A key chapter on the history of U.S. trade policy shows how a shift in post-World War II policies contributed to the decline in manufacturing. “For the past 60 years, the needs and interests of American manufacturers have taken a back seat to the country’s geopolitical interests and the interests of the U.S. financial sector,” write Clyde Prestowitz and Kate Heidinger of the Economic Strategy Institute.
One of the biggest myths promoted by those favoring status-quo globalization is that losing manufacturing isn’t harmful (and maybe even good) because the United States can specialize in technology and innovation. Low-skill jobs would be replaced by high-skilled, well-paid jobs. In fact, writes Ron Hira of the Rochester Institute of Technology, “some high-tech jobs and sectors have already moved to low-cost countries like India and China, and there is even more evidence that this migration will increase.”
Hira shows that not only is the United States running trade deficits in high-tech products, but research and development facilities are moving overseas as well. Even U.S. universities are moving to train American competitors overseas. At the same time, federal funding for research and development is declining, while most other countries are increasing their R&D investments.
Likewise, the rhetoric of the 1990s promising that “competitiveness” would be enhanced by education and training was replaced by a focus on boosting profits through overseas investments. “The ‘high road’ strategies of the 1990s . . . were jettisoned in favor of earning tons of money from easily exploitable low-wage workers,” writes James Jacobs, the president of Macomb Community College. Corporate and public dollars moved abruptly from training incumbent workers to assessing potential workers. Today, “education and training is shifting from being a responsibility of the employers to being the responsibility of the employees.”
All of this offshoring of industries and jobs has a high cost. “Youngstown’s [Ohio] story in the 1980s is America’s story today,” write Youngstown State University professors John Russo and Sherry Lee Linkon. Communities with even once strong high-tech industries are shedding jobs. Russo and Linkon catalogue the social cost of deindustrialization—from loss of jobs and eroding tax bases to decaying cities and rising crime—and how it produces “declining economic security of the entire American middle and working class.”
And deindustrialization now poses a threat to national security. Research by Michael Webber of the University of Texas at Austin shows that, “For 13 of the 16 industries that comprise the defense industrial manufacturing support base, significant erosion took place in two or more indicators without any signs of recovery.”
Finally, several chapters focus on future prospects. One, by Pennsylvania State University’s Irene Petrick, outlines opportunities for small- and medium-sized manufacturers. And David Bourne of Carnegie Mellon University discusses trends and factors—such as energy costs, technology and environmental regulation—that will shape the future of manufacturing.
AAM’s Scott Paul says the book will be valuable for anyone who wants a better understanding of the American economy and its future, especially policymakers, economists and the media. It also will be used as a textbook in universities throughout the country.