The Global Manufacturer
The Global Manufacturer: Is US Manufacturing Worth Investing In?

The Global Manufacturer: Is US Manufacturing Worth Investing In?

It's a safe bet that if you ask Mike Garvey if manufacturing is worth investing in, you'll get a very personal and positive response. Garvey was working on Wall Street 30 years ago when he came back to Youngstown, Ohio and decided to help his father save the family business, a struggling bronze foundry.

With a huge amount of effort and determination, Garvey did just that, transforming the business into M-7 Technologies, an advanced technology provider of products and services using sophisticated digital measurement systems. Since 1985, Garvey has grown the business 18% a year on average.

Garvey was part of a recent Brookings Institution symposium looking at the role of manufacturing hubs. Garvey is a member of the first manufacturing institute founded by the Obama Administration -- the National Additive Manufacturing Innovation Institute (NAMII), which has rebranded itself as America Makes.

Garvey's story, along with comments from a number of the other participants in the Brookings event, shone a bright light on some of the critical issues facing manufacturing. Among the topics they examined:

What is manufacturing? I liked the definition of manufacturing put forward by Ed Morris, NAMII's director: "When we think of manufacturing and … advanced manufacturing, it's everything you do to conceive, design, produce, test, field, support, and ultimately dispose of a product."

There is plenty of spirited debate about what manufacturing entails, and for good reason. Henry Ford's River Rouge concept of raw material in, finished product out has all but vanished. Large manufacturers in particular depend on complex supply chains not only for materials and parts, but for a host of essential services including training, marketing, logistics, computer services and maintenance. In turn, many manufacturers see services as an essential component of their enterprise. No wonder it is increasingly difficult to figure out what a manufacturer actually does.

Is manufacturing worth saving? With due credit to Meg Ryan in "When Harry Met Sally," the answer once and for all is, "Oh God, yes, yes, yes, yes, yes, YES." At Brookings, Jason Miller, the Obama administration's point man for manufacturing policy, said manufacturing spurs job growth, builds a more innovative, prosperous economy and provides high-quality jobs that help build the middle class. Allow the industrial base to erode, he said, and we put at risk "our continuing capability to innovate and compete for future jobs."

What are U.S. manufacturing's prospects? Since 2010, manufacturing has grown at twice the rate of the overall economy, said Miller. In his view, manufacturing is not simply going through a cyclical rebound. As evidence, he points to this economic data point: "Manufacturing hours per week are at their highest level since World War II. And more than one hour per week higher than what one would consider a normal historical average." Miller says the overtime being worked represents enormous pent-up hiring demand in a sector of 12 million employees. Just reduce that one hour across the industry and it would be the equivalent of hiring 300,000 employees.

But that's not the only positive indicator. He also cites a Boston Consulting Group 2013 survey which found 54% of manufacturing executives are considering bringing production back from China to the U.S. He notes the huge advantage U.S. manufacturers have in terms of energy, with lower natural gas prices offering the manufacturing supply chain a cost advantage of 1% to 2% over global rivals. Manufacturing entrepreneurship is also on the rise, spurred by new technologies such as 3D printing.

What do we do to rebuild? M7's Garvey pointed out that Youngstown's original prosperity had been built on "world-class engineering" and a community of people imbued with a deep interest in manufacturing. National institutes like NAMII are designed to help rebuild these battered but vital industrial communities, and propel U.S. manufacturing into the future. It turns out that success in competing globally starts right here at home.

"Geography matters," Morris told the Brookings audience. "That's why regional hubs make sense, and why it matters [that] when you disconnect the design engineer from the shop floor, you're starving that engineer from the fertilizer of innovation. That feedback from the shop floor drives new products, innovative products, evolving products, so it's crucial that we reconnect the design engineer to the shop floor."

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