America Needs to Rebuild Industrial Base to Survive
The auto industry bailout and its repercussions are topics of hot debate. It now appears that federal money will come with some long apron strings that will force Detroit to become smarter, leaner and more forward-thinking. That’s never a bad thing for any business and could enable a mighty phoenix to arise from today’s ashes.
Detroit’s problems put a glaring spotlight on America’s loss of the massive industrial base that made us a world superpower. Many of the major industries and manufacturing enterprises that once dominated the American economy have been shipped overseas. To stay competitive with the flood of cheap foreign products that have inundated our markets, American businesses have been moving manufacturing plants overseas where labor and often transportation and natural resources are cheaper. Since 2001, millions of U.S. manufacturing jobs have been lost, contributing to the more than 10 million Americans now unemployed. Politicians are just beginning to understand the high economic price exacted by outsourcing our manufacturing base.
In a recent column posted on the Alliance for American Manufacturing’s blog ManufactureThis, the economic benefits of manufacturing jobs were explained by Peter Navarro, a CNBC contributor and professor at the Paul Merage School of Business at the University of California-Irvine. “Without a robust manufacturing base, the U.S. economy will lack the core strength to sustain any robust longer-term economic growth,” Navarro says. With nearly 3 million American workers relying on the auto industry and its supply chain for their income, America can’t afford to lose an industry that constitutes one-fifth of the 15 million manufacturing jobs left in America.
It’s the “multiplier effect,” the ability to create jobs downstream, that makes manufacturing jobs so valuable to economic stability and growth. Service jobs, which account for the bulk of U.S. jobs today, have a multiplier effect that is less than half that of manufacturing jobs. As Navarro explains, “This means that for every one job created — or saved! — in manufacturing, an additional four to five jobs are created downstream — from cops, firefighters, and teachers to dry cleaners, insurance agents, plumbers, and real estate brokers.”
But the economic effect of manufacturing jobs is even greater because they generally pay more than service sector jobs. This means more money going back into the economy, Navarro points out. Bailing out the auto industry, one of America’s last major manufacturers, is essential to our economic recovery. As Navarro says, “the U.S. economy will still never return to its former levels of long-term growth, glory and prosperity without a full restoration of its manufacturing base.”
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December 8th, 2008 at 11:41 pm
I am convinced that American consumers can stop this recession dead in its tracks. While there are many great products made abroad. We also import a lot of crap for lack of a better description. In the process we have closed our factories for many consumer products categories and moved very close to becoming a purely serviced based economy. A country that manufactures nothing is doomed to permanent decline. Do you want to be left with a country where are kids are doomed to careers flipping burgers in fast food restaurants?
While we don’t have choices to buy American products in certain categories such as televisions, where choices are available, we must as consumer patriots think hard and fast about purchasing a foreign alternative. Sure, as individuals, we have the “right” to buy the very best for our selves, but we owe it to our selves, our fellow citizens and our children to make the sacrifice and buy the best possible American made alternative in available. When we buy American but we are helping support American jobs, American companies and our tax base. The more often that we do this, the closer we get to the resurrection of the American manufacturing sector. Paying more for American goods is a great long-term investment. With more Americans back at work, all of our businesses will have more paying customers. By purchasing the BEST AVAILABLE “made in the USA” product in a category, we will support the free market forces Darwinian forces that will bring about innovation and great new American products.
We stupidly ran off to Walmart the last 30 years and destroyed our manufacturing sector. We can fairly quickly undo the error of our ways by making a concerted effort to buy American. Pretty soon it won’t be a sacrifice to make that choice. Sure, we never will be the low cost supplier. We pay our factory workers an order of magnitude more than does China (and we certainly donât want to fall to their standard of living). But, we can become the supplier of the highest quality and âbest value for the qualityâ products in the world. Who knows, maybe we can even reverse the trade deficit and turn it into a surplus.
As a small shameless plug, my blog, http://www.AmericanBoom.com/blog is devoted to the rebuilding of our manufacturing sector by developing a grassroots effort to get everyone on board to “buy American.” We welcome contributing authors to tell the story of great innovative all-American companies that need our support.