During the first presidential debate, Hilary Clinton and Donald TrumpDonald TrumpCheney says a lot of GOP lawmakers have privately encouraged her fight against Trump Republicans criticizing Afghan refugees face risks DeVos says 'principles have been overtaken by personalities' in GOP MORE briefly discussed manufacturing, but little mention was made of the outsized role the government has played recently in mobilizing American manufacturing. This has been unlike any time since President Truman’s Korean War era seizure of steel mills. Additionally, the campaigns have been devoid of any dialogue regarding new technology that is reshaping the American factory floor or global economics.
We need to know how the candidates will address these changes.
But to begin, let’s review what happened with one segment of our manufacturing sector — the automotive industry. Eight years ago, General Motors and Chrysler were on the verge of collapse. Their destruction would eliminate one million jobs across their supply chains. Moreover, auto dealers, creditors, and shareholders stood to be wiped out. With credit markets in turmoil, the country was in economic freefall.
Then the Feds stepped in. Through the Troubled Asset Relief Program, the government provided nearly $80 billion in support, helping to restructure GM and Chrysler into lean, forward-thinking companies. In December 2013, Treasury exited its GM investment, recouping $40 billion. Chrysler partnered with Fiat to become a viable company, returning nearly all of the government aid. Eventually, the companies emerged, boasting performance awards and setting records for U.S. auto sales. Their business performance was impacted favorably by a combination of low interest rates and depressed gas prices.
But something else was happening too. The companies were becoming renowned again for their innovation. In fact, a Bank of America study indicates that 88 percent of GM's sales will come from newly launched products by 2020; contrary to critics’ predictions, our auto industry has become self-reliant and focused on long-term competitiveness.
To aid this along, the government helped catalyze R&D in battery and electric drive technology, and it supported innovations in factory tools, with a burgeoning network of technology institutes, funded by government, industry, and academia. These collaborations accelerate adoption of new production equipment and processes.
But why do so much for manufacturing?
As perennial presidential advisor Gene Sperling has pointed out, manufacturing “punches above its weight.” It comprises a major part of our gross domestic product — some $6.2 trillion in 2015. And it advances American innovation, accounting for 70 percent of corporate research and over 90 percent of patents issued.
It is this innovation that is disrupting conventional notions of 20th century globalism, and generating great opportunities for another American century — if we can seize this moment.
Outfitted with networks of computers, robots, and “smart” machinery, today’s factories bear more resemblance to the Starship Enterprise than the dark 1960s-era image some have of a production plant. They can now build products with unparalleled precision, efficiency, and complexity. Jet engines are becoming ever more fuel efficient and powerful. Cars are increasingly autonomous and safe. Medical devices are being built to heal and continuously diagnose. Microchips are becoming even smaller, faster and more powerful.
In short, today’s manufacturing renaissance conflates the last century’s industrial and information revolutions. This phenomenon reverses decades of dispersing manufacturing supply chains across the globe. Instead, manufacturers will relocate operations to the United States, seeking to tap the abundance of talent, technology, and capital, as well as consumers. We need this capacity, not only to keep our economy strong, but to maintain our global competitiveness — in technology and even in our national defense.
Thus far, most of the campaign rhetoric associated with manufacturing has amounted to recycled protectionism or calls to “bring manufacturing back,” as if to suggest American factory workers are no longer productive or contributing to U.S. output. True, the sector lost a third of its jobs from 2000-2008, but it has mounted a comeback too. Since 2010, 800,000 manufacturing jobs have been created, and a recent Deloitte survey projects the United States to be the most competitive nation in manufacturing by 2020.
Maintaining this momentum requires a concerted focus, not only by business, but by key academic, labor, and policy leaders. So it is time to hear from the candidates on their plans. How will we marshal an innovation call to arms, to recruit a new generation of computer scientists and designers, chemists and metallurgists, electrical engineers and machinists, pipe-fitters and welders? How can we help innovators gain access to cutting-edge resources in government labs, still untapped by the general public? Are there new mechanisms for entrepreneurs to access capital markets for investing in manufacturing equipment and research? Funding for the President’s National Network for Manufacturing Innovation, aka Manufacturing USA, is drying up and industry participants seem weary of contributing further resources to them. It’s time to consider what other policies make sense to grow local support for manufacturers’ communities — community colleges, suppliers, transportation infrastructure, and research centers. Is there more the government can do?
Like other advanced industrial nations, the United States needs to get serious about incubating manufacturing innovation. That should start with a basic appreciation of today’s manufacturing economy.
Neal Orringer is an executive at a factory equipment manufacturer, a former Obama Administration official, and recipient of the Department of Defense’s Exceptional Civilian Service Medal. Ralph Resnick is President and Executive Director of the National Center for Defense Manufacturing and Machining and member of the Board of Directors at AMT – The Association For Manufacturing Technology.
The views expressed by authors are their own and not the views of The Hill.