Manufacturing slowdown sparks new political strategies
Tuesday, June 25, 2019
The White House’s official optimistic manufacturing narrative has been seriously disjointed from real-world production and employment issues in the very important and inherently political manufacturing sector. President Trump hung his hat on increased manufacturing jobs to get elected, but a persistent trade deficit haunts his administration — increasing by $100 billion under his watch.
Now that this harsh reality can’t be ignored, we see some politicians initiating new strategies to address the slowdown. But the issue remains whether solutions are coming too little and too late for what now appears to be the new normal in the U.S. — fewer jobs in the sector.
First, let’s consider how the U.S. numbers reflect larger global trade dynamics, including negotiations with China and the establishment of new trade relations under an impending United States-Mexico-Canada Agreement (USMCA). In a quarterly survey conducted by the National Association of Manufacturers, 56% of 689 manufacturing companies stated trade is one of their biggest challenges.
The numbers reflect these challenges.
The Purchasing Managers Index (PMI), which is a number used to gauge growth, is considered productive if it’s over 50. Well, the latest PMI indicates that manufacturing has decreased almost enough to be officially unproductive.
The earliest reading of the index numbers, called the “flash manufacturing PMI” has June’s production hovering at just over 50 at 50.1. This is down from 50.5 in May, and is said to be at the lowest since 2009. The flash PMI mark is also under 50 in the EU and Japan, signaling what many market watchdogs have already surmised: we are in a global manufacturing slump.
Numbers can be useful here. As presidential campaigning heats up, there is no doubt the economy will be at the center of debates, with job growth and Trump’s own manufacturing narrative under serious scrutiny.
Democrats are beginning to get the manufacturing message, with some even proposing a new federal agency. U.S. Sen. Gary Peters, D- Mich., wants to be proactive about the problem. He proposes coordinating 58 programs, involving 11 federal agencies, under one policy roof: a new National Institute of Manufacturing. Peters, who plans to introduce legislation in the next few months, anticipates bipartisan support for the idea.
This kind of legislation should not be a surprise coming out of Michigan, which has been one of the hardest hit states in the manufacturing sector largely due to outsourced auto manufacturing jobs. This is also a political issue, as Trump marginally won the state of Michigan in 2016.
Peters blames a lack of national manufacturing vision for the problems; the U.S. has no federally coordinated policy, or even designated leaders, to spearhead manufacturing innovations.
When manufacturing jobs are added, they lack the stable qualities afforded by union positions of the past. This is a larger issue to tackle than simply creating a new federal agency. Union membership is down nationally from 20.1% in 1983 to 10.5%, or 14.7 million people, in 2018.
A new federal agency devoted to manufacturing will have to address greater labor and environmental issues, like it or not. Under the Obama administration, a focus on additive manufacturing (AM) established the Manufacturing USA network. This was Obama’s initial effort to integrate emerging technologies, such as AM and 3-D printing, into a national manufacturing strategy that even coalesces with aspects of the Green New Deal.
But this would suggest there’s cohesion among Democrats on climate change when there’s not. Peters is not in full support of the Green New Deal, and any manufacturing strategy purporting to be green will have to contend with the serious financial nature of climate change politics.
Any new national manufacturing strategy will have to address green-collar employment. Our major auto manufacturers are paying lip service to a greener future. But Oregon’s AWOL Republican congress members, who are in a militia-backed standoff over climate change legislation right now, are the latest reminder that manufacturing’s future is tied up in the broader culture war subsuming U.S. climate change politics.
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