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The United States has lost more than a third of its manufacturing jobs, 5.73 million, in the last decade. Left behind have been empty factories, towns coping with depleted tax revenues, and families struggling to survive. Yet rarely in the public discussion of the economy or the nation’s struggle to remain solvent does the subject come up of the need to bring manufacturing back home.
Behind the mainstream headlines, however, a movement is afoot to convince American consumers, business owners and politicians that bringing manufacturing back to the United States would, ultimately, be the solution to the nation’s economic woes, even if it meant higher prices for goods currently being make more cheaply overseas.
BusinessNewsDaily asked five heavy hitters – an investor, an author, a manufacturer and two thought leaders – to explain how manufacturing could play a big role in saving the American economy.
The loss of manufacturing jobs to overseas sites means the loss of job opportunities for middle-class Americans, according to Scott Paul, executive director of the Alliance for American Manufacturing.
"The downside of losing manufacturing jobs is that it puts a strain on families that reduces their quality of life," Paul said. "It puts more of a demand on public services and decreases [tax] revenue coming into local and state governments."
Though there are major companies, like McDonaldâs , that are hiring thousands of new workers, Paul said those aren’t the types of jobs that will really help the economy.
"We are not going to build an economy by flipping Big Macs," Paul told BusinessNewsDaily. "We need a diverse economy."
Paul believes the U.S. needs to look outside its borders to countries like Germany that are providing incentives for businesses to manufacture there.
"They are investing in skills and innovation," he said of the Germans. "There is a premium placed on having a strong manufacturing sector."
Paul believes consumers want to support American manufacturers, and he points to the positive reaction Chrysler received for its “Made in Detroit” commercial that aired during this year’s Super Bowl.
"The response that Chrysler got shows it is clearly something that is appealing to people," Paul said.
Diversity in the economy is critical, and manufacturing is a particularly important part of the mix, according to Michael Ettlinger, vice president for economic policy at the Center for American Progress, a Washington, D.C., research institute.
And the role it plays in creating jobs, Ettlinger said, cannot be understated.
Manufacturing today accounts for 12 percent of the U.S. economy and about 11 percent of the private-sector work force – but Ettlinger said its significance is greater than the numbers suggest.
"Manufacturing creates jobs far beyond the narrow confines of the manufacturing floor," Ettlinger told BusinessNewsDaily.
U.S.-based manufacturing supports a number of higher-skill service jobs, including the accountants, bankers, and lawyers that are associated with any industry, as well as jobs including basic research and technology development, product and process engineering and design, operations and maintenance, transportation, testing and lab work.
As more of those manufacturing jobs go overseas, though, so do all the other jobs manufacturing supports.
"The technology and innovation that goes with it ends up leaving the country” as well, Ettlinger said.
One area for huge manufacturing growth potential in the United States, Ettlinger said, surrounds clean energy.
"If we had policies to promote clean energy, it would create a huge boom of manufacturing," Ettlinger said.
Overall, Ettlinger believes the strength or weakness of American manufacturing carries implications for the entire economy, national security, and the well-being of all Americans.
“Rebuilding America: One Company at a Time, One Job at a Time.”
That’s the first thing you see when you visit the website of the private equity firm Patriarch Partners, founded by self-made billionaire Lynn Tilton.
The company, of which Tilton is CEO, makes its money by investing in struggling small and midsize businesses, nursing them back to health and eventually selling them.
She admits it’s not the easiest way to make money.
“It’s not glamorous and it’s not easy,” Tilton told BusinessNewsDaily. “It’s the most difficult way to make money. But it’s also the most rewarding.”
Tilton has purchased and revived many businesses – ranging in size from a few dozen employees to 25,000. The process, she said, can be very complex, particularly because the companies she purchases are already in trouble.
“Most of them are already following a path of a downward spiral,” she said. “There’s litigation, financial issues, morale issues, loss of creativity and innovation. Everything that could go wrong has gone wrong. There is a long list of difficult and painful issues that must be faced. We need to cut costs, innovate, bring in new people, inspire people who’ve been beaten down and exist in a market that’s left them behind.”
Tilton believes it’s all worth the effort.
“There are so many American workers who only want to work hard and make a living with dignity,” she said.
“When we walk into manufacturing companies, these are good people who want to work hard and make a living and support a family. It’s what industrial America was built upon. That’s what inspires me to do this.”
Tilton believes we have all contributed to the loss of American manufacturing jobs as our quest for the least- expensive goods has driven manufacturing offshore.
“But I’m not sure everybody understands the consequences of their behavior,” she said.
“Thirty million Americans are underemployed. If one really knew the truth and what it [buying products made domestically instead of overseas] would mean to their families and neighbors, we would be willing to pay a little bit more,” she said.
Tilton thinks that much of the solution lies with larger retailers beginning to add more American-made products to their product mix.
“I’m holding out hope that we’re going to see this change. The shortest distance between problem and solution is manufacturing,” Tilton said.
Todd Lipscomb, founder of MadeinUSAForever.com and author of “Re-Made in the USA: How We Can Restore Jobs, Retool Manufacturing, and Compete with the World” (Wiley, 2011), said businesses that make a commitment to manufacturing products domestically will find a growing consumer base.
Over the past several years, Lipscomb said, there has been a 50 percent increase in the number of people seeking out products made only in the United States.
"There is a real resurgence of ‘Made in the USA,’" Lipscomb told BusinessNewsDaily. "Small businesses can find a new passionate customer base that much prefers, and are willing to pay more for, American-made products.”
With the “Made in the USA” consumer base growing so quickly, Lipscomb believes many of the smaller companies that are manufacturing in the U.S. will be the ones reaping the benefits.
"Our future lies in these small suppliers," Lipscomb said. "I think we will eventually see them as some of the big suppliers that people buy every day."
The increasing number of American-made products won’t be good just for the retailers who sell them, Lipscomb said, but for the nation’s economy as a whole.
“We need to re-spark manufacturing here, because our nation’s future depends on it,” he said. “We can’t only be a nation of consumers.”
Allen Edmonds Shoe Corporation, a Port Washington, Wis., business with 33 retail stores across the country and production companies in Wisconsin and Maine, is among a small minority of shoe companies manufacturing their products domestically.
In the last year, President and CEO Paul Grangaard said, he has seen a real increase in consumers looking for American-made products.
"People are caring again about ‘Made in the USA,’" he said. "They are recommitting to things that are classic – and in our world, ‘classic’ means American.”
While it may initially seem easier to manufacture overseas, Grangaard said manufacturing in the United States allows the company to respond quickly to its customers, and provides a level of control that removes the burdens of outsourcing, such as additional customs protocols and longer transit times.
In order to better compete in the marketplace, Allen Edmonds underwent a total manufacturing overhaul in 2003 that included purchasing new equipment, changing the factory layout, implementing rigorous quality processes and developing comprehensive training programs.
"It isn't the easy route to prosperity," Grangaard said of manufacturing in the United States. "It takes a real strong commitment."
Those changes have paid off by reducing costs, increasing production and enhancing quality.
While the lure of producing overseas at a cheaper cost may be tempting, Grangaard said his company will always remain committed to offering a ‘Made in the USA’ product.
"It is part of who we are," Grangaard said. "We are being true to our customers and employees."