By Kevin Meyer
Yours truly was quoted in the latest issue of M&A journal The Deal Magazine in a cover story titled Revisiting Manufacturing. I was happy to see that it was one of the more balanced articles on manufacturing I've seen in a while, while covering the usual regulatory and tax burdens it also described how manufacturing could thrive in the U.S. with the proper focus.
For almost every example of manufacturing that has fled the U.S.,
there's a counterexample of one that's holding on. That's true even in
long-buried American industries such as garments and electronics. "You
have to see where the value flows from. If you only do what others can
do, then it will flow to where the lowest costs are," says Kevin Meyer,
who heads the consultancy Factory Strategies Group LLC. But if
American manufacturers can add value is some way, he continues, whether
that be technology, innovation or proprietary design, it's possible to
overcome labor cost disadvantages. "I believe it can be done with some
effort in any industry," Meyer says.
And some other notable quotes:
So manufacturing in America isn't dead, but does it have much
of a pulse? The knee-jerk tendency in everything from politicians' stump
speeches to Chamber of Commerce luncheons is to come down hard one way
or the other: feast or famine.
As Timothy Sturgeon, senior research affiliate at Massachusetts
Institute of Technology's Industrial Performance Center, says: "The
debate is almost childish. On one side, it's the end of the world; on
the other, everything is peachy." Instead, Sturgeon says, the role and
status of American manufacturing equates to a very complicated formula.
"I don't think we understand how all these things [related to
manufacturing] play out."
And a topic we've covered in the past on the impact of offshore outsourcing on productivity:
Sturgeon cites one study that questions the accepted wisdom of
productivity gains in U.S. domestic industry and suggests that at least
part of this could be the result of offshore-made components being
transferred back into the U.S. Other issues include everything from the
oft-debated role Washington plays in research and development to the
notion of China as a trade predator. The prognosis varies from sector to
sector, sometimes from product to product within an industry. And it
changes over time.
The bottom line:
There's one constant that nearly everyone agrees on: Manufacturing
remains vital to America's economic engine. For all sorts of important
reasons, from wages to trade to social cohesion, from community
well-being to education, manufacturing has outsized importance. "By any
measure, it's a strong driver of our economic prosperity," says Timothy
Sheehy, president of the Metropolitan Milwaukee Association of Commerce.
"Manufacturing is the goose that lays the golden jobs. We have to make
sure it's healthy."
A pretty good, fairly-balanced article, even in an M&A journal. I'm glad I could contribute.