GE’s CEO calls for American manufacturing rebirth
BIRMINGHAM, Mich. — The United States should aim to have manufacturing jobs comprise at least 20 percent of total employment, about twice what it is now, General Electric Co. Chairman and CEO Jeffrey Immelt said Friday.
Speaking to the Economic Club of Detroit, Immelt outlined what he called an American industrial renewal driven by emphasis on manufacturing and exports, investment in new technology and research and development, innovations in clean energy and affordable health care.
The U.S. has faltered as it has moved toward a service- and consumption-based economy, Immelt said. He singled out financial services, which he said comprise 45 percent of earnings of companies on the Standard & Poor’s 500 index, up from 10 percent a quarter-century earlier.
American manufacturing can be reinvigorated through investment in research and development, infrastructure and training, and by fostering public-private partnerships, Immelt said.
There is nothing “predestined or inevitable about the industrial decline of the U.S., if we as a people are prepared to reverse it,” he said.
“We would do much better to observe the example of China. They’ve been growing fast because they invest in technology and they make things. They have no intention of letting up in manufacturing in order to evolve into a service economy.
“They know where the money is and they aim to get there first,” Immelt said. “America has to get back in that game.”
Earlier Friday, Immelt announced GE is developing a $100 million research and development facility in Wayne County’s Van Buren Township, 25 miles west of Detroit. About 1,200 scientists and engineers initially will be hired to develop manufacturing technologies for GE’s renewable energy, aircraft engine, gas turbine and other products.
Skills, not labor
Labor Day was about a week ago, and I resisted the impulse then to comment on the “state” of labor: it’s too hard to be sympathetic about the significant number of job losses over the past year, while remaining realistic about the circumstances that caused this and the prospects for reversing the situation.
(The decline in employment totals is especially bad in manufacturing industries, and notably grim in metalcasting; happily, some of the Grede Foundries sites that have been spared the worst of the ongoing reorganization there are starting to recall laid-off workers.)
In view of all that, a celebration of “labor” seems to me misplaced. It’s not that I discount the hard work of good people; it’s that the work itself has become so discounted.
For a better understanding of what I mean, read this report on the prospects for a significant rebound of overall employment levels. You won’t need to take my word for it; the great economic guru of the 1990s, and now the director of the President's National Economic Council, Lawrence Summers reveals what people in manufacturing already know: almost no high-capital industry really needs “big labor.”
By contrast, they need intelligent, resourceful workers who can adapt to changing markets and fast-evolving technical standards.
Pressure to defer to the labor interests, pressure that comes from government authorities, company stockholders and directors, as well as from general social niceties, merely forestalls an inevitable realization. Companies that overpay for labor cannot compete globally, nationally, or regionally. Seeking labor peace does not bring security, and the lack of security ensures further unrest.
As I see it, the problem is the emphasis on “labor.” The word implies large forces of workers doing manual and menial tasks in cruelly unrewarding conditions. Even the workers who seek our empathy don’t want to be characterized that way.
We should refer instead to their “skills,” not their labor. That would emphasize the value those workers bring to their tasks, and direct our attention away from their struggle to earn the value created by their efforts. It would also put some substance behind the frequent (but increasingly empty) calls for training and retraining programs. If we’re going to make such efforts and investments, let’s at least change our expectations from the outcome.
People who work in U.S. manufacturing worry almost constantly about the viability of domestic manufacturing. People who are not in manufacturing sense the anxiety, but they misunderstand the problem.
A regular correspondent, who owns a manufacturing company and cares deeply about this subject, sent me a link to a letter written to The Holland (MI) Sentinel.
“Today, manufacturing is high-tech, highly automated and in need of innovative, problem-solving workers,” writes a local SME chapter president, in a letter that opens a discussion about the types of jobs available in manufacturing and the types of people needed to fill them. People who understand this need no explication, but the meaning of it is lost on the rest.
In Michigan and so many other states, and at the federal level, too, “manufacturing” is given lip service with frequent references to “innovation,” or progress. But, manufacturing is not treated as a source of anything but revenue.
First, government officials want voters to be productive, so they want to "create jobs," and they see aiding manufacturing companies as a way to accomplish this.
More generally, these government officials view manufacturing companies as just one more constituent that they can “fix,” with policies and programs, in order to create a reliable source of tax revenue: income taxes, payroll taxes, sales taxes — and now, in the minds of certain federal officials, carbon taxes. Manufacturing companies are tools for them to use to execute their own agendas, but it ought to be treated as a resource: something viable that needs to be nurtured and tended.
The letter writer references recent remarks by General Electric chairman Jeffrey Immelt that the U.S. should aim to have 20% of all employment based in manufacturing companies. This is a fine goal, but it’s unlikely to be achieved by any initiative of the sort that conglomerates like GE tend to coordinate with governments — unless GE and the like can convince the governments to step out of the way entirely, so that going concerns can plan for the future, so that start-ups will be encouraged, so that investors will have incentives to stake new projects and equipment, and so that businesses and those who rely on them can thrive.
Manufacturers know all this, but they need to recognize how they are viewed, and treated, by federal, state, and local governments who they may look to for help or direction. Making and keeping manufacturing viable is not a priority for elected officials: for them, it is an opportunity to help themselves.
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