For years, America's manufacturers shifted jobs to cheap labor markets across the globe. Under the mantra of "free trade" and goaded by the desire to keep shareholder profits soaring and the companies globally competitive, manufacturers first moved jobs and production to nearby low-wage pockets and then further and further offshore.
Michigan has been the star witness to the global shift in manufacturing jobs. Early in my first term, Electrolux told us there was nothing we could do to prevent them from moving their Greenville, Michigan, appliance business to Mexico. Since 1892, tiny Greenville had been the refrigerator capital, serving as home to Gibson, White, Frigidaire and Electrolux. Electrolux was the last to close, in 2004, and with it some 2,700 jobs were lost. The reason why? The wages in Ciudad Juarez were just $1.57 per hour, far outweighing our offers of enormous tax abatements, supplier haircuts and skinnied union contracts. Electrolux was the tip of the iceberg. Michigan alone has lost more than 800,000 jobs since the beginning of this century.
Fortunately, sometime along the way, people began waking up.
There was rumbling in some boardrooms that things needed to be done differently. Worker representatives took crash courses in reviewing P&Ls, SEC filings and org charts. And American voters decided they needed a president and federal government that would jettison the old theories of laissez faire, supply-side and hands off -- and weigh in on the side of American workers and the U.S. economy.
While we won't be able to keep all labor-intensive manufacturing jobs in America, here's what we're finding out: We can keep skill-intensive, advanced manufacturing jobs here. We're now seeing the first real evidence that we're "cracking the code" of what it takes for advanced manufacturing to stay and grow in America. Today, as President Barack Obama visits two major auto assembly plants in the heart of the Motor City, he'll hear the heartbeat of the American economy starting to pound. The patient is alive!
At General Motors' Detroit-Hamtramck Assembly Plant, Chevrolet is building its hottest -- no, coolest -- vehicle in its lifetime, the new plug-in electric Chevrolet Volt that'll hit dealerships this fall. A few miles away, Chrysler is cranking out its new Jeep Grand Cherokee. That new Jeep, which its CEO tells me is "flawless," is not your father's Jeep -- it's designed and powered for fuel efficiency and economy.
These two plants help tell the story of the auto industry's turnaround. A year ago, they were either idled or sat static, waiting for bankruptcy issues to be resolved and the economy to improve.
But they also tell the story of what it takes to keep and grow manufacturing jobs in the United States. The old hands-off model didn't work. The new model requires a different mindset and new partnerships among the companies, labor and government. And we don't have to endure bankruptcies to do it.
First, the auto companies needed to get religion. Everyone knew they couldn't keep operating the way they always had. But it took some "tough love" to shake up both GM and Chrysler management. And new blood brought in a set of new strategies. They recognized that consumers and the country care about clean energy and reducing our dependence on oil. The car companies are making major new investments in green technology in all aspects of their business. I'm not talking just about electric engines but lightweight materials, green chemistry, full-scale recycling and even LEED gold-certified engine plants (check out the new Chrysler Trenton Engine Plant!).
Second, labor needed to be part of the solution and not part of the problem. Modern, flexible, lower-cost agreements are becoming the norm, and the UAW has become the key partner on employee training, lean processes and first-rate quality. The quality surveys that now laud the U.S. car companies are a reflection of this new day where the workers are obsessed with continually improving the product.
Finally, and this is critical, government must play a key role. We don't need Chinese-style, five-year plans or command-and-control czars. But we do need well thought-out policy, consistent enforcement of fair trade policies that level the playing field, and competitive tax laws that reward companies for creating jobs in America and not offshore. And importantly, we need smart, public direct investment in research and development, infrastructure and targeted strategic industries.
The old economic models don't apply to what we're facing in today's global economy. South Korea is investing $20 billion to create its advanced battery industry. The Chinese are directly investing to create an all-new auto supply chain. Germany and Canada advantage solar panel companies through their incentive policies. The U.S. government has started to get in the game, but it must continue to strategically co-invest with businesses to help them be globally competitive while creating jobs in America.
So I heartily welcome President Obama to Detroit today. We in Michigan know that without the wise choices he made just over a year ago by restructuring and supporting these companies, there would be no celebrating here today. The nation's manufacturing backbone is stronger as a result. And in the process, we have a better idea of how to crack the code to keeping manufacturing jobs in America... without having to go through bankruptcy.
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