Manufacturing Day, RIP
This column originally appeared in October, 2017.
On one hand, Manufacturing Day, an event dreamed up by the National Association of Manufacturers in 2012, serves a useful purpose. Americans are in need of a reawakening to the potential of manufacturing employment, for the benefit of their families and our communities. The Day has become a showcase of manufacturing jobs, with companies throughout the nation opening their doors to high-school kids and undergraduates. As today’s factories are certainly a far cry from several generations ago, it’s useful for kids to see the modern technology and clean rooms of today’s manufacturing and by all accounts, the Day was a rousing showcase of modern manufacturing.
On the other hand, we’ve moved on. Manufacturing is more relevant than Manufacturing Day imagines, even though we continue to conjure up the image of a Pittsburgh steel plant to contrast the new manufacturing economy and use the day to bemoan a negative perception of the sector. It’s more likely these dated images reside mostly in the minds of business columnists who’ve never made or bent or cut or shaped anything without an eraser on one end and a ballpoint on the other. (An official objective is to “change public perceptions of manufacturing.”)
Instead, Manufacturing Day should also be reimagined. Where activities and pronouncements earlier this month worked to reinforce negative stereotypes, a new Manufacturing Day would embrace a national mission to overcome shortcomings that continue to weigh on growth, in addition to workforce.
Let’s keep it simple and focus on two outcomes:
Provide direct support for early-stage and middle-market manufacturing. We could count the ways, but tax cuts masquerading as tax reform are one example of economic policy that helps large corporations and National Association of Manufacturing members, but does little to tip over decades of paltry investment in early-stage manufacturing companies and workforce.
The notion that U.S. corporations are suffering because of punitive tax rates is folly. The opposite is true. They’re killing it. The price-earnings ratio of the stock market the past 20 years has been 70 percent higher than the previous 100. The profit margins of U.S. corporations have been 30 percent higher.
But these extraordinary profits aren’t translating into jobs, into a middle-class employment rally. Again, the opposite. Companies aren’t using these dividends to build new plants in the US. They’re buying back stock, in part to drive stock prices higher. Great for stockholders, bad for growth. It’s a mindset that also diminishes the creation of new companies. The number of people working for companies one to two years old is half of what it was 20 years ago.
Tax reform would direct proceeds from any tax-cut windfall to investments in new companies and factories, capital equipment, and infrastructure. Germany and other industrial powers set a GDP target for manufacturing investment. A meaningful tax reform outcome for manufacturers would be reinvestment to drive U.S. manufacturing GDP back over 15 percent — an outcome that requires a new commitment to early-stage and middle-market companies.
A national effort to reconstitute the domestic supply chain. I’ve said it before: manufacturers need, well, everything, and much if it has been offshored or remains out of mind in our stilted view of what a ‘global’ economy should look like.
A supply-chain transformation begins with a forceful argument for what manufacturing is. For the first time in four years, since launching CompanyWeek, I heard a National Public Radio journalist refer to a distiller as a manufacturer. Progress! Manufacturing today is an eclectic mix of industries and companies.
Communities that embrace a new industrial future will develop resources, real estate, financing, talent and contract manufacturing for food startups, high-tech fabricators, brewers and distillers, outdoor industry, and bioscience and aerospace companies. And invest in services and technology that better connect manufacturers with each other and the supply chain.
This is a ground-up call to arms. It doesn’t begin in Washington D.C. It’s not a NAM-inspired marketing program. The National Association of Manufacturing is a phantom to 95 percent of manufacturers, most of whom are small businesses.
Let’s instead turn Manufacturing Day into a week or even a monthlong effort to connect entrepreneurs and middle-market companies with domestic resources that help them keep business investments in everything, including talent, local.
In other words, Manufacturing Day has runs its course. More connecting, and less caterwauling, is the true north for sector development. Let’s get on with it.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.