Industry Week Magazine Chief Editor Steve Minter makes note in a recent column, The Case for Investing in U.S. Manufacturing, of a report written by Gregory Tassey, senior economist for the National Institute of Standards and Technology. The report, titled Rationales and Mechanisms for Revitalizing U.S. Manufacturing outlines a fairly comprehensive set of arguments noting that the U.S. still lacks a comprehensive manufacturing strategy, and that aggressive programs for R&D investment in newer technology manufacturing process and ongoing capability is a strong imperative. Minter cites the Tassey arguement that one of the major competitive challenges facing U.S. manufacturing firms is that they are operating as separate entities “against a growing number of national economies in Europe and Asia in which government, industry and a broad infrastructure — technical, education, economic and information — are evolving into increasingly effective technology-based ecosystems.”
While some may consider the report lengthy and laced with economic phrasing, it is worthy of a good read.
Regular SupplyChain Matters readers may note that this blog has been quite vocal in opinion that the U.S. currently lacks a comprehensive manufacturing investment strategy, and more importantly a comprehensive supply chain strategy. The Tassey report brings this fact out even more succinctly. Tassey rightfully points out that manufacturing should be viewed as a series of complex supply chains, rather than individual industries. Certain raw materials, components, technological and supplier capabilities can serve multiple strategic industries. Tassey goes on to point out: “The modern global economy is therefore constructed around supply chains, whose tiers (industries) interact in complex ways. In the U.S. economy, one supply chain after another has been hollowed out by increasing foreign competition. Most of these losses have been in manufacturing. In spite of arguments to the contrary, partial domestic supply chains often have increasing trouble competing globally. This proposition is complex, varying among technologies and hence high-tech supply chain. However, it is a real phenomenon that is receiving little analysis.”
Bravo, and well-stated.
What I also found to be insightful was Tassey’s description of the political environment. He notes that most neo-classical economists find no problem with the progressive shrinking of manufacturing’s role in U.S. economic growth. Their belief seems to be that as long as the U.S. concentrates on product innovation and technological edge, it does not matter where manufacturing is sourced. These were the same economists who felt that the U.S. could continue to prosper under a services-focused economy. Then came the severe recession of late 2008, and we now know how fragile that thesis really turned out to be.
I must admit that reading these statements penned by Tassey ignited some of my own frustrations regarding current political and industry leadership across the U.S. It seems to me as though these same head-in-the clouds economists (Tassey excluded) still cling to their beliefs that manufacturing and supply chain capability does not matter in the grand scheme of economic growth and jobs. After all, as the argument goes, manufacturing accounts for less and less of employment. Bull crap!
If an economy doesn’t build value in the manufacture of goods, which in-turn drives the need for robust supply and value-chain capabilities, than we may as well all get in line for those few jobs left on Wall Street and the financial services sector. Automobiles, apparel, drugs, mobile phones, iPods, you name it, they are all imported. And as some have rightfully argued, if the U.S. losses the battle for alternative energy, green technology and other new economy products, game over.
So one last tirade and rant from this author. The U.S. needs a comprehensive strategic manufacturing and supply chain strategy, not one solely driven by current political, labor or industry interests, but one that umbrellas all strategic industries. If any reader knows or has influence with Larry Summers, Christina Romer, Joe Biden, and especially Ron Bloom, all within the Obama administration, please pass along these blog commentaries.
Hell, if somebody needs help in understanding any of this, send me an email and I’m sure I can gather dozens of credible supply chain strategy experts in a matter of hours to write the first chapter.
As Steve Minter astutely points out, the world is upping its game for manufacturing superiority. Brazil, China, India and other developing countries are astute in understanding the strategic importance of manufacturing and supply chain capabilities.
When will the U.S. up its game?
Commentary and feedback is encouraged.