The Economist - USA (2020-07-25)

New-styleproductionline

M

idwesterners stilllike tomakestuff.Manufacturingmay

haveslid,buttheydomoreofit thanotherAmericans.InIn-

diana,it makesup29%ofgrossstateproduct(andemploys17%of

workers).InMichiganitis19%(and14%ofjobs).Ineachofthe

“core”eightstates,itisabovethenationalaverageof12%ofgdp.

Companiesplugintosupplychainsforcar,aviationandretailin-

dustries,orformedicalequipment,machinepartsandtheenergy

industry.Older-stylework,suchasfurniture-making,persists.

Yetthemassemploymentoflow-skilledworkershaslargely

gone.Thathurtsthosedivertedtolow-paidworkinservices.Tony

Flora,a unionleaderinSouthBend,asks“Howcanyouprovidea

middle-classwayoflifeifthejobsareservingomelettesina res-

taurant?”Harvard’sEdwardGlaeserobservesthat,asrecentlyas

2000,manufacturingwasthelargestemployernationallyoflow-

er-skilledworkers.Nowit isoneofthesmallest.

PaulKrugman,aneconomist,suggeststhatrisingeconomic

nationalism,confrontationwithChinaandpandemic-induced

anxietyoversupplychainscouldnudgesomemanufacturingback

totheMidwest.SherrodBrown,a senatorfromOhio,seesthisasa

goldenopportunity.Anyrecoverywouldbecentredonthosewith

skillsinscience,technology,engineeringormaths(stem). Bruce

KatzandJeremyNowakfromBrookingssaystem-relatedjobs

(mostlyinmanufacturing)arebetterpaidthanaverage,employing

9%ofAmericansbutcontributing17%ofgdp.

Trainingdoesnothavetomeanfour-yeardegrees.Insteadwhat

isneededarevocationalskillsthatcanbetaughtsimultaneously

bycompaniesandcolleges.ScotMcLemore,ofHonda,praisesthe

communitycollegeinColumbus,Ohio,notingthat“thereareno

moreskilledtrades,weneedmulti-crafttechnicians”,suchasthe

computersavvy.DavidHarrison,wholeadsthecollege,sayshis 60

traineesstudyfortwodaysa weekinclassandworkforthreeata

firm.“Fiveyearsagotherewasnopathforthis,now 30 manufac-

turersareintheprogramme.”It isanattemptata German-styleap-

prenticeshipscheme.

HowcanMidwesternersdevelopmore

advancedmanufacturing?Anexampleof

whattoavoidisinMountPleasantvillage,

insouthernWisconsin.A 20m-square-foot

factorycomplex,plannedinthepasttwo

years, belongs to Foxconn, aTaiwanese

giant.In 2018 DonaldTrump,wieldinga

golden shovel, vowed it would be the

“eighthwonderoftheworld”,employing

13,000factoryworkersonhighwages.Sup-

posedlyWisconsin’seconomywouldgain

$51bnover 15 years.Hetalkedlessabout

promisestoFoxconnofbillionsofdollars

insubsidies.

Theprojectalwayshada Potemkinair.It

wasa mysterywhatFoxconnwouldmake,

thoughtelevisionscreensweretalkedof.It

wasrushedthroughastheshowpieceofa

manufacturing renaissance in a swing

state.ButTimBartik,attheUpjohnInsti-

tuteforEmploymentResearchinMichi-

gan,saysit wasmisconceived.Thesubsidiesweretentimesbigger

thanusualasa shareoffuturewages,suggestingtheunderlying

economicsmadenosense.Foxconnnowtalksofinnovationand

researchinstead.

Abetterexample,saysMrBartik,isGrandRapids,Michigan,

“themostsuccessfulintensivemanufacturingcityinAmerica”.It

oncemadefurnitureandcarparts,butsince 1985 hasbeentrans-

formedbya projectcalled“theRightPlace”.Changecamefromthe

groundup,startingwith 13 businesspeoplefrombanksandphilan-

thropy,includingtheVanAndelandDeVosfamilies,whowanted

tomaketheirhomemoreattractive.The

earlyideawastogetexistingfirmstostay,

butlaterit becametolurenewcomers.The

burghers first restored thetowncentre.

Theybuilta 12,000-seatarenathathosted

big-nameperformerslikeEltonJohn.Ho-

tels,restaurants,coffeebarsandotheren-

tertainment flourished.Students flocked

in.TheVanAndelssetuptheVanAndelIn-

stitute,a biosciencecluster.MichiganState

Universityopeneda bigmedicalschoolto

trainhealth-carestaff.MichiganTechUni-

versitysetupa branch.

Manufacturerswerepressedtomoder-

nise. Birgit Klohs, a German transplant

whohasruntheRightPlacesince1987,says

“We’restillamanufacturingcentre, like

theMittelstand.Thebulkofoursuccessis

in advanced manufacturing, in family-

owned,mid-sizedfirmsintheirthirdor

fourthgenerationofownership,justlikein

Germany.”Sheseeksforeignideas.Inthe

America’sMittelstand

Advancedmanufacturingcanthrive,asGrandRapidsshows

Industry

Middlemakers

US,manufacturingas%ofgrossstateproduct

2019

Sources:BEA;BLS *%ofGDP †Non-farm

Nebraska

UnitedStates*

Missouri

Illinois

Minnesota

Kansas

Ohio

Iowa

Michigan

Wisconsin

Indiana

0 10 20 30

9.7

8.5

9.5

9.6

10.9

11.7

12.6

14.3

14.1

16.2

17.1

Manufacturing

employment,

%oftotal†

8 Special reportThe Midwest The EconomistJuly 25th 2020

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