11 June 2009

Pinto's Point

Decline of American manufacturing

By Jim Pinto

The industrial core of America is becoming marginalized as the country moves toward what seems to be a “post industrial” future.

In his recent articles in Forbes and New Geography, Joel Kotkin writes the new administration seems to have contempt for the old economy: manufacturing, agriculture, energy.

Most of the $800 billion stimulus is being used to bolster banks. What is left is going to green projects, healthcare, and education. So, what is the future role of manufacturing in America?

Look at GM and Chrysler: Their workers are being asked to make huge sacrifices, while their executives are shunned and demeaned, compared with bankers who are being supported and even protected.

The policy ends up eroding America’s industrial base. The ballyhooed expansion of “green jobs” to make up for massive manufacturing layoffs is just a fantasy. Windmills and solar panels will not rescue industrial towns, which will only see more devastation. There are many places where the American dream is dying rapidly.

If this anti-manufacturing trend continues, more of America will become even more sharply divided between a growing class of low-wage workers and relatively few wealthy. This is the hollowing out of America; the demise of the middle-class.

Perhaps even worse, by stimulating everything but manufacturing, we risk accelerating the very imbalance between production and consumption that is one key reason for the nation’s economic woes.

Padding incomes by handing out money without increasing production may prove a great way to stimulate other countries’ economies—industrial exporters like Germany, Japan, and China.

American manufacturing adds significant core value to the country’s economy and well-being, and must be protected. I will be addressing this key point in a future issue of InTech e-News.

Related Links:

• Joel Kotkin – We Must Remember Manufacturing:
  http://www.newgeography.com/content/00756-we-must-remember-manufacturing
• The Decline of Manufacturing?
  http://www.aier.org/research/commentaries/206-the-decline-of-manufacturing
• Understanding manufacturing decline and its challenges
  http://neweconomist.blogs.com/new_economist/2006/11/manufacturing.html

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.