Manufacturing Grows in Michigan, But Headwinds Loom

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From shop floors to corporate boardrooms, Chad Moutray, chief economist at the 12,000-member National Association of Manufacturers in Washington, D.C., sees bright spots in Michigan’s economy. The state is one of the employment leaders in the country, having added 7,600 manufacturing jobs in July. But challenges loom. In a recent visit to Detroit, Moutray spelled out the highs and lows of an often-turbulent global economy.

DB: How has manufacturing performed since the 2008 global financial crisis?

CM: People are talking about a renaissance and revitalization of manufacturing, and with good reason. Since the end of the recession, the manufacturing sector has added 500,000 workers. Nationally, Michigan led that growth (in July, according to the Bureau of Labor Statistics). The U.S. is becoming much more competitive, and on a different footing than in the past. Before the recession, people talked about the service economy growing in stature, and that we really don’t need to make things here. But since the recession, there’s been a greater appreciation for manufacturing.

DB: What do you attribute that to?

CM: People began looking at global competition more carefully, and there was a strong sense that we need manufacturing, and we need to remain a leader. In recent years, we’ve seen huge advances. The U.S. is a more attractive location for manufacturing. It’s more clean and efficient, there’s a greater focus on quality, and also you’re seeing rising costs elsewhere as it relates to transportation. At home, there’s been a boom in energy as shale gas has revolutionized the sector. There’s a lot of anecdotal evidence of production coming back, especially with the (recent) announcement from Ford Motor (which added Fusion production at its plant in Flat Rock, along with 1,400 workers).

DB: What impact will 3-D printing have on manufacturing?

CM: It’s very intriguing. It certainly has the ability of revolutionizing how manufacturers design products, as well as the production process. We’re at the forefront, and much more work needs to be done. I don’t think anyone believes they can make a car at home, but it is a sign that technology will improve our lives and that we’ll need to continue to train and provide for highly skilled workers. It’s certainly an encouraging development if we can capitalize on it.

DB: We’re moving into a congressional election year, what does the future hold?

CM: Manufacturers are cautiously optimistic. I expect sales and production to pick up, hiring will be a little skittish, and there are some downsized risks. We’re not out of the fiscal woods as it relates to the budget and the debt ceiling. We could see higher interest rates and higher petroleum rates, each of which could dampen growth. Manufacturers also will have to figure out how to deal with Obamacare and its implementation. While overall I think things are mostly positive, we need comprehensive tax reform, we need to open new markets and push for more FTAs and break down barriers, and we need to push back against aggressive regulatory actions by government. 

DB: How about the long term?

CM: In the U.S., manufacturing will be much more competitive on a global basis, especially with energy and other trends leading to increased investment. We project manufacturing could add half a million to a million jobs by the end of the decade. We’re bullish about the long-term prospects.

DB: If we do get those jobs, where will they come from?

CM: There is a problem of attracting well-qualified candidates. People are not going into trades as much, and we are not stressing the STEM (science, technology, engineering, and mathematics) fields like we should. There are perceptional problems. Most Americans appreciate manufacturing, but I don’t think they see it as offering highly skilled, good paying jobs. One thing we’re doing to change that is to promote National Manufacturing Day, which this year falls on October 4. It’s all about manufacturers around the country opening their doors and showing people what they do. There’s also an educational component at technical and community colleges. The day is designed to show people manufacturing is different from what they may have perceived in the past.

 

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