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First Person: Putting U.S. Manufacturing Front and Center

Scott N. Paul, president of the Alliance for American Manufacturing (AAM), based in Washington, D.C., is one of the most visible champions of American manufacturing. AAM is a nonprofit, non-partisan partnership found in 2007 by some of America’s leading manufacturers and the United Steelworkers union, with the goal of strengthening American manufacturing and creating new private-sector jobs through smart public policies. One of Area Development’s staff writers, Clare Goldsberry, recently interviewed Paul to find out more about the AAM’s specific agenda.

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AD: On a recent radio talk show, you commented, “We’re seeing a rebound in manufacturing — specifically in automotive supported by the government bailout of GM.” It seems, however, that the government isn’t very successful in creating manufacturing jobs.

Paul: Did the loan guarantees and restructuring work? Unequivocally yes. It’s hard to imagine what would have happened if the government hadn’t intervened. GM and Chrysler would have gone bankrupt and that would have impacted Ford. However, it wasn’t the government intervention alone that put the automotive industry back on the fast track. Many people put off buying a new car during the Great Recession. With the average age of cars being 11 years old, a lot of folks are in the market for a new vehicle. Also helping are low interest rates, which make borrowing and buying a car cheaper. That’s where focused government intervention had positive outcomes.

The results have been encouraging to me. Chrysler, GM, and Ford are no longer in dire financial straits and are investing in production in the U.S. again. And when you look at employment, manufacturing added about 500,000 jobs since the end of the recession, 320,000 of those in the automotive OEM and supplier sector. That represents an outsized contribution to the recovery in manufacturing.

AD: Manufacturers often blame government regulations for offshoring and the slow growth in jobs in the U.S. Do you think manufacturing is better-served with less government intervention?

Paul: Well, government gets some things wrong and some policies are counterproductive. But some roles that government plays do fill in the gaps that the private sector couldn’t fill alone. For example, every manufacturing firm depends on logistics and infrastructure to move its goods. There’s nothing a single firm can do about that so it takes the federal government to invest smartly in infrastructure.

Also, the basic “moon shot” R&D that we do in this country is critical to manufacturing. A lot of the private sector has reduced its investment in basic research — they’re doing more applied research — because the returns on investment aren’t there or don’t come back fast enough. Government picks up the slack along with academic institutions and industry as partners. Federally funded research puts new ideas into the pipeline and the private sector drives them into the market.

AD: What about the high corporate tax rates?

Paul: I don’t think that having regulations or taxes are necessarily bad. Often the problem is that the government doesn’t do a good job of putting manufacturing at the center of its decision-making for everything, whether it’s education, taxes, trade, or environmental regulations, and it doesn’t promote manufacturing while preserving our quality of life. That’s the prism through which we have to view overall economic development. The big challenge isn’t whether the government does or does not intervene, but that manufacturing isn’t at the center of the decisions that government makes. We need to put manufacturing at the center of everything that we do.

AD: We hear a lot about the so-called “skills gap.” Is that real?

Paul: I like the line from the movie, Field of Dreams: “If you build it they will come.” If there are real manufacturing jobs to be had, they will come. Yes, there are some shortages of skills, but reports from the Bureau of Labor Statistics show that we’re far from a crisis — there’s modest hiring. However, here’s the challenge: we’re coming off a period from 1998 to 2010 where there was a paucity of hiring in manufacturing. There was a whole half a generation where there was just a trickle of hiring compared to the boom days of the 1990s. Unfortunately, the signal that sends is that manufacturing jobs are on the way out so people need to train in jobs that can’t be outsourced, like healthcare for example. So that’s what the vocational community responded to. Everyone was focused on a four-year college degree — and that doesn’t change overnight.

AD: What should manufacturing be doing to solve this problem and drive young people into manufacturing?

Paul: We’ve found in our research that people love manufacturing and manufacturing workers. They just don’t think there are any jobs there. That’s the primary obstacle — getting more kids interested and parents educated in the fact that manufacturing offers good jobs with good wages. It’s key to begin steering them into manufacturing jobs. We’re making progress. Manufacturing Extension Partnerships (MEPs) are getting much more into skills training at community colleges. More community colleges are adding programs to train for manufacturing jobs in their areas. And many didn’t have these programs for more than a decade, so things aren’t going to change overnight. It will happen. It will take resources, and it will be frustrating. It is a management challenge but it’s solvable.

AD: “Made in America” is being promoted everywhere — even the mainstream media is picking up the mantra. Is this going to stick and will it make a difference?

Paul: I think there are two different trends driving this renewed interest: first, localization is having an impact. Take farmers’ markets, for example, which have morphed into restaurants and grocery stores also featuring local produce. The next logical step is locally made goods. Secondly, some of this is being driven by the recession and what happened to manufacturing. There’s a feeling that we can’t let this happen again. So what can we do? We can buy stuff made in America. Even Walmart has announced a “Made in America” sourcing program. It’s changing their culture — not dramatically, but somewhat. It will catch on. Every marketer, every company that makes something knows that the American flag carries a little bit of a premium. It’s great to see!

AD: Do you want to mention the new book?

Paul: We’ve put together a book entitled ReMaking America, edited by Richard McCormack, the current editor of Manufacturing & Technology News, who also contributed a chapter. We gathered a lot of different voices for the various chapters. We wanted to show there are many different reasons to be for American manufacturing. We put the book together to reinforce the thesis that manufacturing should be at the center of economic and trade decisions, of energy development, and education and training. The central question should be: “Will this strengthen American manufacturing?” That’s the government’s job — to create the environment to enable the private sector to create the jobs we need.

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