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Ron Bloom, Manufacturing Advisor
By BrianHull | September 8, 2009
The White House announced yesterday that Ron Bloom, Obama’s “car czar,” will be the administration’s senior counselor for manufacturing policy. The hope is that Bloom will “provide leadership … for the president’s agenda to revitalize the manufacturing sector.” Bloom will still advise Treasury Secretary Tim Geithner on the car industry, but will also report to the National Economic Council on ways to bring back strong manufacturing growth. This is really important for America, and doubly important for Rhode Island.
Rhode Island has never really grown an alternative economy during the 20+ years of progressive shrinkage in the manufacturing sector starting in the 1980s. Most recently, the manufacturing sector lost 1,916 (-3.6%) workers between 2006 and 2007, the largest employment decline among the 19 private industry sectors in Rhode Island, and this is before the recession took hold.
As of 2007, the manufacturing sector comprises 12.2% of the state’s total private employment of about 428,000, and is the third largest private employment segment of the economy, after Health Care & Social Assistance, and Retail Trade (these numbers exclude the roughly 65,000 people who work in state and local governments). Unfortunately, the prediction is for a 9.2% decline in manufacturing during the 2006-2016 decade, dropping from 52,726 jobs to 47,900 jobs.
Nationally, the trend is the same. 49 states lost manufacturing jobs during the past 12 months, and Alaska, the only state that didn’t lose manufacturing jobs, didn’t gain any either. The overall national loss was 1.52 million manufacturing jobs, from 13.44 million in July 2008 to 11.92 million in July 2009. Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent, and in the last decade, America has lost more than 40,000 factories. The U.S. used to be the world’s leading net exporter, but we are now the world’s leading net importer.
Many people had great hope that the changing economy during the 1990s would bring about renewed growth for our nation. We would substitute our manufacturing industry that has been slowly offshored to lower-wage countries since the 1980s, and especially after NAFTA, for much more “lucrative” service industry jobs. The unfortunate reality is that with information flows being as cheap, fast, and easy as they are, most things can be done overseas for cheaper (although not always better). The only real job security a person has, inasmuch as it can’t be sent to another country, is a career dependent upon face-to-face interactions.
Even corporate executives are now beginning to view the wholesale dismantling of U.S. manufacturing as a mistake. In a letter to shareholders, G.E.’s Jeffrey Immelt went so far as to say that the “popular 30-year notion that the U.S. can evolve from being a technology and manufacturing leader to a service leader is just wrong.” Similarly, Nucor (a U.S. steel manufacturer) CEO, Dan DiMicco echoes the same sentiment in a 60 Minutes interview.
Without a doubt, the decline in U.S. manufacturing has been and continues to be a real obstacle in our nation’s economic recovery. When things used to be “Made in America,” recessions ended when people (and governments) started buying products made in U.S. factories. With the shrinking manufacturing base, it’s no surprise that the recoveries after the Bush recessions of 2001 and 2003 were largely jobless. And it’ll be no surprise that once the current recession ends, it may take several year to regain the 7.4 million jobs lost (and counting) since the end of 2007.
As American consumers start buying more goods, it’s not American factories that recall laid-off workers, but rather factories in China. Retail outlets may hire a few more employees, but that’s generally not a substitute for the wages of those who used to work in the manufacturing industry. These wages were about 20% higher than the wages of other non-professional and non-managerial workers.
My hope is that Ron Bloom will see the dire need for a robust industrial policy for the U.S. so that states and communities won’t compete in the race to the bottom, trying to entice industries through ill-conceived tax abatements or tax credit programs. Foreign national governments’ efforts will always win out in this type of competition.
The U.S. is still one of the most productive nations on earth (although Norway, Luxembourg, Ireland, Belgium, and the Netherlands beat us - all those commie European nations), and we need to harness this productive capacity and begin to actually create things in America again. I’m not saying we should start adopting protectionist policies, but we need to understand that trade deficits matter, shuttered factories matter, and enormous job losses in specific sectors matter.
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