At a time when economists say U.S. manufacturing policy is in disarray, the Obama administration said Monday it has created a new cabinet-level Office of Manufacturing Policy to be co-chaired by the Commerce Department secretary and the director of the White House National Economic Council.
"At this make or break time for the middle class and our economy, we need a strong manufacturing sector that will put Americans back to work making products stamped with three proud words: Made in America," President Barack Obama said in his announcement.
The new office expands on a previous appointment for a White House adviser on manufacturing, known as a "manufacturing czar." Washington has had no fewer than three manufacturing czars in the course of two administrations. The most recent, Ron Bloom, resigned in August -- but only after he issued a report that found that "past manufacturing policies have largely failed."
As one of the new co-chairs, Commerce Secretary John Bryson is meant to give the position cabinet-level influence for the first time. His co-chair will be National Economic Council Director Gene Sperling, an economic pragmatist who helped negotiate China's entry into the World Trade Organization as an adviser to President Bill Clinton.
From Milwaukee's factory floors to Washington's think tanks, there is broad consensus that policy-makers have long neglected the manufacturing economy, even though manufactured goods account for 57% of the nation's exports.
"U.S. manufacturing is in crisis," according to a study this year from the Information Technology and Innovation Foundation. Last week, the Washington-based Council on Competitiveness issued a plea for a comprehensive strategy, saying manufacturing policy is in disarray. Critics at the National Association of Manufacturing complain that Washington devotes far more time and resources to the farm lobby, even though U.S. agricultural exports are only one-tenth the size of manufactured exports.
"The Germans invest 20 times what the U.S. does to promote manufacturing innovation and technology, while Japan spends 40 times more, and neither of those nations have lost manufacturing," said Rob Atkinson, president of the Information Technology and Innovation Foundation in Washington.
In Wisconsin -- the state with the nation's largest share of its workforce employed in manufacturing -- industry is hobbled by an outdated image that manufacturing is "dumb, dirty, dangerous and disappearing," according to the Milwaukee 7 economic planning consortium.
Among U.S. metro areas with a minimum of a half-million nonfarm jobs, metro Milwaukee consistently shows up with the second-highest share of its workforce in manufacturing, behind San Jose, Calif.
Economic policy is dominating election-year politics. The prospect of a viable manufacturing policy has potential to resonate in perennial swing states in the industrial Midwest.
Whether the initiative amounts to political window dressing or not, it comes at a time of rapid restructuring in the global manufacturing economy.
As China, Korea and India undercut the United States on production costs and labor rates, Germany and Japan have taken a strong lead in next-generation automation, leaving the U.S. squeezed by competition on both ends of the global spectrum, according to a consensus of manufacturing analysts.
Milwaukee-based Rockwell Automation Inc., which outfits factories with systems that increase productivity and lower costs, has taken a lead in pushing for a national manufacturing policy. Rockwell and others argue that advanced automation has opened a new front in the global technology race as nations aspire to build high-technology "smart factories." Rockwell maintains that the U.S. has the "world's oldest industrial base with no strategy to help American businesses construct or modernize factories."
Advanced automation means fewer jobs on the factory floor and diminishes the competitive significance of labor costs between nations, which in theory levels the playing field with low-cost nations. The opportunity for job creation, advocates argue, comes in the slew of ancillary suppliers and services that support the smart factories.
Welcoming the new policy team, Rockwell said in a statement that Obama needs "to pursue policies that encourage U.S. manufacturers to invest in advanced or 'smart' manufacturing technologies to increase competitiveness."
To kick off the White House initiative, Bryson is expected to give a speech Thursday saying that America cannot afford to allow next-generation advanced automation to go the way of low-skill manufacturing, according to his aides.
Manufacturing policy cannot reside within any single agency, said Atkinson of the Information Technology Association. It needs to focus on a gamut of issues that Atkinson calls the four Ts: taxes, trade, technology and talent -- the last meaning immigration.
Those suggest why manufacturing policy can be so divisive and contentious, he said.
To compete in 21st-century manufacturing means the nation needs the engineers and computer scientists to build and operate sophisticated automation networks, which in turn means that the U.S. must either increase the number of engineering graduates dramatically or reform its immigration laws to allow more engineers from China and India into the U.S. to hold those jobs. Immigration, in turn, is one of the most emotionally divisive issues in American politics.
The White House has shown an evolution in its economic thinking, Atkinson said. It has gone from advisers who were sanguine about the loss of the nation's manufacturing base -- along the lines that America would do fine as long as it had a base of innovators -- to realizing that its quality of life is at stake if it cannot compete in an age of advanced manufacturing, he said.
"They increasingly realize that a robust national recovery in the long term is impossible without a manufacturing sector," he said. "It's taken a while for them to come to that conclusion, but I give them credit for getting this far."
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