“We bet on American workers and, tonight, the American auto industry is back.”
That’s a quote from President Obama’s State of the Union Address on January 24, an hour+ plus speech that spanned the scope of America’s critical issues. One of the big messages was his support for a renaissance in domestic manufacturing to revitalize job growth. In his address, the President stated that General Motors is back to being the world’s number-one automaker, Chrysler has grown faster in the U.S. than any major car company, and Ford is investing billions in U.S. plants and factories. All told, over the last three years, the domestic auto industry added nearly 160,000 jobs.
[CLICK HERE to read more about manufacturing-related the tax breaks proposed in the President’s address: “Blueprint for an America Built to Last;” TheWhiteHouse.gov; January 24, 2012.]
The Council on Competitiveness recently published a report in support of its U.S. Competitiveness Initiative that provides a wide range of recommendations and specific measures policymakers can implement to support the revival of U.S. manufacturing in America. The report offers recommendations on how to:
· Fuel an innovation and production economy with start-up and scale-up initiatives (includes fiscal, tax, and regulatory reforms)
· Expand U.S. exports and reduce the trade deficit (includes liberalizing trade with select emerging market countries)
· Harness the power and potential of American talent (includes immigration reform to attract the world’s brightest to the U.S.)
· Achieve “next-generation” productivity through innovation in manufacturing
· Create competitive advantage through “next-generation” supply networks and logistics (includes developing a national strategy for reducing energy demand)
[CLICK HERE to read “Make: An American Manufacturing Movement;” a report from The Council on Competitiveness, December 2011.]
Safety Standards Abroad Lacking
In addition to economic growth, there are other reasons to bring manufacturing jobs back to America. Standards for acceptable worker safety practices are reportedly substantially lower – and life threatening – in many other countries. This was underscored by an explosion at a Chinese Apple iPad factory last year that killed four and injured 18. The cause of the blast was aluminum dust – an issue that the U.S. resolved in domestic plants over a century ago. The pressure on major global manufacturers (such as Apple, Dell, Hewlett-Packard, IBM, Motorola, and others) to improve hazardous conditions could make it more expensive to do business in places like China. Meanwhile, many believe those resources would be better served by transferring them to America to create more jobs in a safer, more stringently regulated environment.
[CLICK HERE to read “In China, Human Costs Are Built Into an iPad” at The New York Times; January 25, 2012.]
The Future of Domestic Manufacturing
The call for “inshoring” manufacturing jobs would mean a change in the skill set of American laborers. Because manufacturing in this country has become leaner and more reliant on technology (hence, the higher cost), tomorrow’s factory worker will require a substantially higher level of skill and knowledge – even advanced degrees – to monitor and modify machine specifications for productivity. Bringing jobs back from overseas is not as simple as it may seem.
[CLICK HERE to read “Will Inshoring Create More Manufacturing Jobs in 2012?” at Manufacturing Executive; December 22, 2011.]
[CLICK HERE to read an in depth study of one manufacturing company that underscores today’s trends, “Making It in America” at The Atlantic; January/February 2012.]
[CLICK HERE to read about one manufacturer’s approach to mentoring skilled workers: “Advancing Manufacturing, Tomorrow and Today;” ModernMachineShop.com, January 11, 2012.]
Clearly, the debate for efficiency models in manufacturing and the costs of bringing factory jobs back to America will continue – and the process will be slow. However, many of the companies considering such a move are currently priced at attractive valuations, so – if you’re in it for the long haul – they offer interesting investment options for the larger goal of creating a more self-reliant and sustainable economy. Please give us a call to discuss the potential for incorporating a “Made in America” theme into your portfolio.