American manufacturing is coming back. By how much and for how
long is uncertain, but the signs are clear and they are growing.
For example:
General Electric, a huge conglomerate, may be in the
forefront of the movement. Overall the company cut U.S. jobs when
the recession hit, but has added 9,000 since 2009 and plans to add
4,500 or more this year.
Among its products are jet engines (it’s the world’s
largest manufacturer of them). It has announced it will open three
new engine factories this year, in Ohio, Mississippi and
Alabama. When, last December, GE announced the opening
of a new X-ray machine plant in China, many worried that the 120
workers in its Wisconsin plant would lose their jobs. GE says, no,
tit wasn’t a zero-sum matter. The China plant is expansion in that
market — not an outsourcing of U.S. jobs.
Last week GE
opened a new appliance plant in Louisville, Kentucky to meet
increased demand for energy-efficient water heaters and
refrigerators. The company says it will create 1,300 new jobs there
by 2014.
A smaller conglomerate, Carlisle Companies, makes
restaurant supplies, insulation and tires.
It has announced it will open two new U.S. plants and
bring its tire manufacturing back from China.
Union Pacific plans to double its purchase of locomotives
this year, spending $400 million or so to buy them. Boeing says it
added 10,000 jobs last year in U.S. plants to fill airline customer
orders for new 737s and the much-delayed 787.
Caterpillar is closing a locomotive plant in Canada and
bringing the work into a U.S. plant where wages are lower and
productivity higher.
Where is the Obama Administration in all this? President
Obama has touted exports and U.S.-based manufacturing. He has
called for a tax credit for companies that bring jobs back
home. Generally, tax credits are not good policy because
they add new complications to an already overcomplicated Tax Code
and have very little effect on the economy. Mostly, Obama is paying
lip service, but will of course try to take credit for any
manufacturing job increases as well as increased
exports.
The reasons are elsewhere and there are several. The low
level of the dollar against several other currencies makes our
exports very competitive. Several companies, seeing India and
Brazil as promising growth markets, are building plants and
distribution systems there.
China’s domestic market is still a growth opportunity for
many American companies. On the other hand, China’s exports to here
and elsewhere are becoming less competitive. For years, as it set
out to build a major manufacturing infrastructure, China lured
ever-increasing numbers of farm workers to its cities. Result: For
years China became the favored source for inexpensive household
goods, clothing and electronics. Now, however, its urban work force
is beginning to decline. Women make up the work force in most
garment and electronics factories. The United Nations estimates
that China’s women aged 15-24 will drop from 106 million in 2010 to
92 million by 2015. Add to that increased affluence in the
population and wages that are growing faster than productivity,
plus continued international pressure on China’s currency and you
have a recipe that means manufacturing benefits for the
U.S.
A recent New York Times poll
showed 52 percent of the public said it was important that the
products they buy be made in the U.S. Two-thirds of those polled
said that U.S. companies should take much of the responsibility for
keeping manufacturing jobs on our shores.
They are, by reading the signals of the market. Will
“insourcing” and domestic demand grow sufficiently to speed up the
weak economic recovery and create enough jobs to replace the 8.7
million lost in 2008 and 2009? It was take more than manufacturing
to do it. Its work force shrunk for 14 million in 2006 to a little
under 12 million last year. Kurt Rankin, an economist at PNC
Financial Services in Pittsburgh,
predicts that job growth in 2012 will average 135,000 a month.
At that rate it would take the economy — manufacturing and service
sectors — five-and-a-quarter years, until 2016, to get
there.
Presidential pep talks and speculating taxpayer money on
risky “green” solar plants, wind farms and expensive automobiles
won’t do it Getting the government out of the way would give savvy
businesses a chance to make it happen.
