President Puts American Manufacturing Front and Center in State of the Union

President Obama put American manufacturing literally at the front and center of his State of the Union speech. American manufacturing was at the front of the speech and at the center of a "blueprint" for bringing back jobs and strengthening our economy. By placing manufacturing front and center he has taken this conversation further than any president before him.

There is good reason to cheer, but also good reason to ask for even more. He outlined steps to stop the outsourcing and start the insourcing, but there is not yet a comprehensive, overall government strategy to fix trade and capture the industries of the future.

The Speech

Right up front the president talked about building "an America that attracts a new generation of high-tech manufacturing and high-paying jobs." Then,

"Tonight, I want to speak about how we move forward and lay out a blueprint for an economy that's built to last, an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

This blueprint begins with American manufacturing."

Bob Borosage, in "The Obama State of the Union: A Progressive View,"

On the economy, the speech led with more discussion of manufacturing than anyone has heard in years. The president wanted and deserved credit for saving Detroit -- a key to his campaign in the Midwest -- and wanted to highlight the uptick in manufacturing jobs and "insourcing," the movement of some jobs back to the U.S.

Again, his agenda focused on mostly symbolic measures of populist appeal. In addition to the tax on multinationals, he promised a new trade enforcement effort to challenge China and others who trample global trade rules. With Romney promising to cite China for currency violation on day one if elected, the administration seems likely to finally challenge China, at least symbolically.

Steps, But Not an Overall Picture

The President outlined steps to stop the outsourcing and start the insourcing. There are things that the Congress can do right now. These include but are not limited to,

• Eliminate existing tax deductions for outsourcing
• Big multinational corporations should pay a minimum tax
• Use some of the money this brings in to cover the expenses of bringing jobs home
• Pass tax cuts for manufacturing here
• A trade enforcement unit to look at bringing cases against countries like China that cheat, use piracy, give subsidies
• Steps to train skilled workers, with a national commitment to train 2 million with skills that will lead to a job
• Do something about the maze of confusing training programs
• Turn our unemployment system into a reemployment system
• Instead of bashing teachers and laying them off, give schools resources to keep good teachers
• Reduce the cost of college. Stop student loan interest rates from doubling in July. Condition federal assistance on lowering tuition.

This "blueprint" has a number of good, solid steps that will help stop the outsourcing and start the insourcing. But it is not a comprehensive national industrial/economic strategy that addresses the overall picture of all of the components of a national manufacturing ecosystem. To begin to address this, the president has established a cabinet-level Office of Manufacturing Policy to coordinate efforts of various government agencies.

Coordinating the efforts of various government agencies to help American exports is important, but this does not address the development of a national plan, like other countries have. We need this, too. A national plan would seek to cover all the elements of a healthy "industrial commons" -- meaning all of the components of a healthy manufacturing ecosystem. These include government efforts to make sure the components are ready, funded and functioning:

• The necessary educational components to provide people ready to do all of the jobs an industry requires;
  
• The financing to build factories and obtain inventory;
  
• The modern infrastructure of roads, electrical power, Internet, posts and airports, to support the companies;
  
• Trade and tax policies to help these companies locate and export;
  
• R&D facilities and researchers for innovation and design;
  
• Local suppliers to support the companies;
  
• Legal structures and fully-funded and staffed court systems to support the industry;
  
• The entire "chain of experience" located in an area, often around a "cluster" of businesses, required for an industry to develop and thrive.
  

Countries like China are engaged in national efforts to get all of these components lined up to capture industries like the new green energy revolution that is taking place. China is working to capture solar and wind energy manufacturing. They are working to capture high-speed rail manufacturing. The news about the reasons Apple and other high-tech manufactures have had to locate in China show how hard China has worked to capture that industry -- and not without quite a bit of cheating that we are not stopping.

Our competitors are engaging in national efforts to line up all of these components to capture other new industries as they emerge. We are not.

Ideology Holds Us Back From Competing

This list of components of a national industrial/economic policy describes the kind of national effort that competitors like China are engaged in, and is the reason they are bringing in such a share of new industrial growth. To address this we have to see ourselves as a country, as China does, mutually supporting each other to be able to embark on an undertaking like this. We have to abandon the "each of us on our own" and selfish, "in it only for ourselves" mentality that has set us apart, preventing national government efforts like other countries engage in.

Some of us hold on to an ideological fantasy that government is only in the way, but other countries do not. So the result is that we keep sending our companies out on their own against national systems. Even our largest companies cannot compete on their own against countries with national efforts to put all of these components in place. It takes a unified government effort.

We have to move to a "we are in this together" understanding of ourselves and our country if we want to bring back the shared prosperity we used to have, and can have again.

Update -- White House fact sheet: FACT SHEET: President Obama's Blueprint to Support U.S. Manufacturing Jobs, Discourage Outsourcing, and Encourage Insourcing.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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Comments

[blueken60]

10:11 AM on 01/26/2012

I heard a shoe manufacturer on NPR say that they were going to make the next generation of work boots here in the United States. One of several reasons was, that labor is so cheap in China they can't convince their vendors to automate. This leads to quality issues, with the work being done by hand and driven by low prices and the bottom line. They also end up shipping raw materials all the way to China only to have to ship the product back to the US. He also mentioned the exponential rise in wages in China. We could be reaching a tipping point where automation, quality and shipping costs make out sourcing to China less attractive.

[Under Fed yet Fed Up]

09:20 AM on 01/26/2012

How dare the president speak of regaining manufacturing jobs when his administration has been actively chasing them away.

My two overseas plants are a perfect example.

[Chris1962]

03:39 AM on 01/26/2012

>>>but there is not yet a comprehensive, overall government strategy to fix trade and capture the industries of the future>>> Gee, what a surprise. I don't suppose Obama is simply telling liberals what they want to hear... again.

[J T K]

11:59 PM on 01/25/2012

Do something about the maze of confusing training programs
- Slimming them down and working them into the next item would probably work

Turn our unemployment system into a reemployment system
- That's what real conservatives have been calling for for years, instead of welfare handouts use that money to train people to get jobs. Unless you are injured or handicapped to the point where you physically cannot work the government should be pushing for the unemployed to look for jobs to continue receiving assistance. That would cut the amount of time people are on welfare and would save money in the long run.

Instead of bashing teachers and laying them off, give schools resources to keep good teachers
- That means eliminating public sector unions, or at least the teacher's unions. You can't tell schools that they have to keep good teachers without also giving them the tools to effectively deal with bad teachers, that means disciplining them, firing them, and if need be blacklisting the worst of them so that they can't get a job at any public institution or institution that receives public funds.

Reduce the cost of college. Stop student loan interest rates from doubling in July. Condition federal assistance on lowering tuition.
- I approve this message, also working to end the textbook cartel would be a huge help, since that hits the students themselves harder than tuition since not all scholarship and financial aid opportunities include textbook assistance.

[J T K]

11:59 PM on 01/25/2012

Eliminate existing tax deductions for outsourcing
- Good idea

Big multinational corporations should pay a minimum tax
-A cop out, the whole tax code including corporate taxation has to be reformed, and this isn't the way to do it

Use some of the money this brings in to cover the expenses of bringing jobs home
- Good idea, but good luck getting both parties to agree on how to spend the money

Pass tax cuts for manufacturing here
- A pocket bailout for industrial corporations. There are better ways to do this without creating a big loophole for corporations to drive through to avoid even more of their taxes.

A trade enforcement unit to look at bringing cases against countries like China that cheat, use piracy, give subsidies
- Good idea but only if it's given teeth.

Steps to train skilled workers, with a national commitment to train 2 million with skills that will lead to a job
- Half-step, 2 million isn't enough if you want to make a real dent

... (see next post)

[becky bradshaw]

10:56 PM on 01/25/2012

Small measures are dangerous. The manufacturing industry in the U.S. lost 50,000 jobs per month for the last 10 years. Can we tolerate band-aids with little hope of success.

We should enact a graduated system of import controls by import. Using tires as an example, all tires imported into the country would face a duty. If after 1 year, the goal for trade parity is not reached, the duty is increased by 50%. Repeat the process until the goal is reached.

If the goal is reached for 2 years, the duty would be reduced by 25%. Repeat the process until the goal is reached.