My Altogether Brief Manufacturing Life

March 14, 2018

 “Love affair” is not quite the right terminology, but I have long had an emotional connection and attachment to manufacturing in this country.

 

Having grown up in a manufacturing family, I worked at a gray iron foundry and on an assembly line putting together small engines before I decided to go to college.

 

Admittedly, it was only for a few years, but it gave me a certain insight that has never left me. Back then, I could identify with Merle Haggard’s Working Man Blues (“I’ll drink a little beer in a tavern,”) because I lived it.

 

I was young, the days went fast, and the money was good. Back in 1974 and 1975, what my factory employers wanted was someone, a body, who would show up on time and do the required work, clock out and go home. And that was me.

 

Despite the boring and repetitive nature of the work (I took a hand grinder to castings much like in the photo), I was emotionally attached to the job, and to some degree even proud of being a working stiff. I was listening to the Grateful Dead’s rootsy album Workingman's Dead, and thinking screw those guys in the suits and ties.

 

Later, I attended (and much to my surprise graduated from) the University of Wisconsin, where I majored in business, journalism and Leinenkugel.

 

A few years afterward, during the 1980s, I was a business reporter (always wearing a jacket and tie) for The Birmingham News in Alabama covering manufacturing, something that I had experienced firsthand.

 

Walking to Local 1013

 

U.S. Steel operated Fairfield Works, an integrated steel mill, in Fairfield, a suburb community of Birmingham, and it was massive, both in terms of physical space and impact on the local community.

 

I remember attending meetings at the United Steel Workers Local 1013. Even then, there was a visceral gut reaction by the rank and file to imported foreign steel and all things made by the Japanese. (I always made a point of parking my Toyota at a discreet spot four blocks from the union hall and walking to it.)

 

To a certain extent, I understood and could relate to these high-school educated guys even if I was no longer one of them. Far from being dumb, these steel workers could sense that their way of life was slipping away from them. Again, this was in the 1980s and steel production was falling.

 

What particularly miffed them was that nobody in Washington seemed to be listening. In their minds, predatory foreign steelmakers were “dumping” cheap steel in this country to gain market share and put U.S. steelmakers out of business. On that issue, management and the union were in full agreement.

 

The rank and file would rant and rave and sometimes take sledgehammers to Japanese cars in well-publicized events, but there was this pervasive feeling of dread and helplessness.

 

Squandering An Advantage

 

Never mind for a moment that the American steel industry, a dominant worldwide force at the end of World War II, squandered its competitive advantages by not modernizing when the rest of the world did.

 

U.S. steelmakers continued to rely on the obsolete “open hearth” method of steel production well into the 1950s and 1960s, when other countries had adopted the use of basic-oxygen furnaces, a much more efficient and less costly technology.

 

And in a nutshell, that was the story of U.S. manufacturing. We didn’t modernize and innovate as quickly as we should have, until it was too late.

 

And Then Came China

 

Those bad management decisions were only exacerbated when in 2000 the U.S. granted China most-favored-nation trade status and helped the country enter the World Trade Organization.

 

A reckoning was to be paid with that move. China could make its cheap goods, which would benefit U.S. consumers, even if it cost us millions of manufacturing jobs.

 

There are today about 7 million fewer manufacturing jobs than when the sector hit its all-time high of 19.533 million jobs in June 1979. Manufacturing's share of nonfarm payroll employment has dropped from nearly 39 percent in World War II to 8.5 percent now.

 

A Longing for What Was

 

Manufacturing represented the might of the nation and who we were as a people. That’s probably still in our DNA. Were it not for our power to make things, American publisher Henry Luce would never have introduced the idea of an “American Century” into the national lexicon.

 

Say what you will about Donald Trump, but the man knows that white working-class people still identify with our manufacturing past. Much of the dislocation was concentrated in Midwestern and other Rust Belt states, states that Trump won in his bid for the presidency.

 

Regaining our manufacturing dominance was central to Trump’s “make America great again.” A nostalgic view to be sure, it resonated in communities that had been devastated by the loss of production work.

 

A New Digital Age

 

The manufacturing that I experienced decades ago would probably frighten most young people today. It little resembles the manufacturing environment of today, which is becoming increasingly digitized.

 

Far from a manufacturing collapse, in this new digital machine age, U.S. industrial production has doubled from what it was in 1979 at peak employment, although the numbers are skewed by statistical adjustments in the rising value of computer and electronics output.

 

But the fact remains that we are still producing a lot, even if  the work is increasingly done by robots.  In 1980 it took 25 jobs to generate $1 million in manufacturing output in the U.S., whereas today it takes five jobs.

 

Still, it should be noted that we have picked up 222,000 manufacturing jobs in the past year, representing nearly 10 percent of all nonfarm payroll jobs since February 2017. Much of that is due to a rebounding U.S. oil and gas industry.

 

The Net Effect of Tariffs

 

Trump fulfilled his long-running campaign promise last week by levying tariffs on imported steel and aluminum products. Not surprising the move was hailed by domestic steel and aluminum producers, while critics said the tariffs would lead to job losses in other industries.

 

The global research firm Trade Partnership Worldwide published a report stating that for every job created because of the tariffs (about 33,464 jobs total), five will be lost (for a total of 179,334), for a net loss of about 146,000 jobs. The companies that are most likely to experience job losses will be the consumers of steel and aluminum as prices will go up.

 

While the protectionist rhetoric and talk of punitive tariffs has been heating up between the president and the European Union, China says it has no desire to have a trade war with the U.S.

 

"There are no winners in a trade war, and it would bring disaster to our two countries as well as the rest of the world," Minister of Commerce Zhong Shan said at a briefing on the sidelines of China's annual parliamentary session, as reported by the Associated Press.

 

In the past, Chinese leaders have threatened to retaliate against raised trade barriers by the U.S. but have taken no action. The U.S. reported a $375 billion deficit with China last year.

 

There are tangible things that Trump administration has done to help U.S. manufacturers become more competitive. As a business consultant who works primarily with manufacturers on matters of corporate site selection, I actually believe this. A big tax cut and deregulation should create opportunities.

 

But instigating a trade war that would raise barriers to U.S. exports around the world seems to me, one who has a soft spot in my heart for American manufacturing, to be a shoot-your-own- foot kind of move. I think no good would come of it.

 

I’ll see you down the road.

 

 

 

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