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Manufacturing Picks Up Steam

Walter Russell Mead

Over at NewGeography, Joel Kotkin and Michael Shires remind us that despite the steep decline in manufacturing over the last few decades, the industry is by no means finished in America:

Manufacturing may no longer drive the U.S. economy, but industrial growth remains a powerful force in many regions of the country. Industrial employment has surged over the past five years, with the sector adding some 855,000 new jobs, a 7.5% expansion.

Several factors are driving this trend, including rising wages in China, the energy boom and a growing need to respond more quickly to local customer demand and the changing marketplace.

Kotkin and Shires’ report provides an excellent survey of where, exactly, manufacturing jobs have been popping up. They highlight four major trends: the growth of manufacturing jobs in the Rust Belt (as the auto industry recovers), the Southeast (thanks in part to “major investments from German and Japanese companies”), and the Energy Belt (falling oil prices are “an enormous boon for downstream industries such as refining and petrochemicals”), as well as the shift of manufacturing jobs to suburbs and small cities, away from once-major industrial centers like Los Angeles, Chicago and New York.

To be sure, mass manufacturing cannot reclaim the place in America’s economic life that it held in the 1950s and 1960s—that is, the basis of life-long employment and relatively high incomes for much of the country. Productivity has gone up so much, and global competition remains so keen, that there will always be strong pressures for manufacturers to build more stuff using fewer human hands. Even so, the revival of manufacturing employment is excellent news for the parts of the country that can host it (too bad, NYC and LA), boosting incomes and expanding employment even as the economy transitions to something new.

But the fact that manufacturing is picking up steam is also a good sign for entrepreneurship in non-manufacturing parts of the economy. It suggests that many of the preconditions for new business formation are in place in many parts of the country: relatively cheap labor, real estate bargains, cheap energy, and a regulatory environment favorable to new business. Moreover, as the report says, much of the manufacturing surge—especially in Detroit and Houston—is being driven by engineers. So in addition to blue-collar workers, there are plenty of well-educated workers ready to join innovative new firms.

This won’t work very well for those precious snowflakes among us who cannot survive in the harsh climate outside hothouse university environments, but if you are smart, quick, tough and determined enough, this is still a land of opportunity.

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