Dean Barber

Rediscovering Our Mojo: A Conversation with Bruce Katz, Part 2

In Uncategorized on May 8, 2011 at 10:13 am

Revolutionary War patriot Paul Revere was known as a talented silversmith who made, among other things, flatware – knives, spoons and forks.

Today, flatware is no longer made in the United States. The last factory producing flatware quietly closed about a year ago in Sherrill, N.Y, in the foothills of the Adirondacks. Sherrill Manufacturing CEO Greg Owens said his company had “run into a brick wall as far as orders and competition from China.”

And of the 80 people who lost their jobs, he said, “They’ve been great employees and they’re very hard working and they’re very dedicated. Quite honestly, none of them deserve any of this but it’s just a sign of the times.”

A sign of the times, indeed.

No Longer Made in America

There are many things no longer made in America. Televisions, cell phones, laptop computers, Levi jeans, stainless steel rebar, vending machines, incandescent light bulbs are not made in America. Neither are Rawlings baseballs, Mattel toys and Radio Flyer’s Red Wagons.

But manufacturing is not dead in America. There is even some talk of a resurgence – a “re-shoring” trend, although that has yet to materialize in a big way. Still, economic activity in the manufacturing sector expanded in April for the 21st consecutive month. Representing 11 percent of the U.S. economy, manufacturing industries are likely to remain at the forefront of the recovery.

But manufacturing is not the dominant force that it used to be. Millions of manufacturing jobs have been lost in the past decade, some due to offshore competition, some due production efficiencies.

Some fear, and I think with good reason, that with the loss of manufacturing  jobs can come a loss knowledge and innovation.

A Conspiracy of Elites

“I think our policymakers have talked down manufacturing for three decades,” said Bruce Katz, with the Brookings Institution. “It’s been a conspiracy of the elites who talk about having a knowledge economy, where we are all going to have four-year bachelors degrees and be employed in the services sectors and the country will move forward. I think that is absolute nonsense.”

In short, we will innovate less in the U.S. if we do not produce more, according to Katz. And on that particular point, your humble blog writer will take the prerogative of saying: “Damn straight.”

“We must make things again in the United States. It is time to rediscover our innovation mojo in our vocational and tech schools, on our factory floors, in the tradable goods and services sectors that drive wealth creation and sustainable growth,” said Katz.

Moreover, the U.S. must be the world’s “innovation nation,” a hothouse not just of ideas and invention but a platform for advanced production.

The iPad and the iPhone, developed by Apple in the U.S., are made in Asia. The fear is that engineers and factories in Asia will come up with the next innovations precisely because they are making these technological devices now.

“To stimulate innovation, we need advanced manufacturing right here at home, so that the U.S. does not outsource the production of every idea we generate,” said Katz. “There is a long tradition of Americans being tinkerers, working with their hands and making stuff. I think we got to get back to that tradition.”

If you believe that innovation and manufacturing feed on each other as I do, and as Bruce Katz does, then here is a question to ponder. Can we as a nation produce future thinkers/tinkerers to the likes of Henry Ford, Thomas Edison or Steve Jobs if our children are no longer thinking in terms of making things?

A Need to Get Real Smart, Real Fast

And while I am an optimist that the U.S. can remain a hothouse for ideas, invention and production, here is a sobering fact: We place 45th out of 93 countries in the share that science and engineering degrees make up of bachelor’s degrees.

“In the decades ahead, upgrading the education and skills of our diverse workforce is no longer just a matter of social equity, it is fundamentally and issue of national competitiveness and national security,” Katz said.

To successfully compete, the U.S. needs to “get real smart, real fast.” Because the U.S. is diversifying radically, so too is its workforce. Soon 40 percent of the nation’s workforce will be African-American and Hispanic.

But educational attainment among minorities lags. Only 18 percent of African Americans get bachelor’s degrees. Bachelor’s degree attainment for Hispanics is even lower at 13 percent.

Still, the U.S. is “demographically blessed” to compete, said Katz.

“I think we have the perfect mix of demographics to compete globally in this century. Unlike Europe or even China, we are constantly replenishing our labor supply from both natural births and from immigration. Our challenge is education.”

The Power of Metro Engines

The overwhelming majority of minorities live in metropolitan areas, and it is Katz’s belief, another one which I share, that the next economy will be largely metropolitan in form and in function.

“Our 100 largest metropolitan areas constitute only 12 percent of our land mass, but house two-thirds of our population and generate three-quarters of our gross domestic product. These metros from a new economic geography, seamlessly enveloping cities and suburbs, exurbs and rural towns. And they pack a powerful punch,” said Katz.

So powerful in fact that in 47 out of 50 states, metropolitan areas generate the majority of state economic output, according to a Brookings study released in February. These metropolitan areas include even those states often considered to be “rural,” such as Idaho, Iowa, North and South Dakota and West Virginia.

In Arizona, California, Maryland and New York, metro areas generate at least 95 percent of state GDP. Only in Montana,Vermont, and Wyoming does a majority of economic activity occur outside metro areas, according to the Brookings report.

“The bottom line is that there is no national economy. Rather, the U.S. economy is a network of powerful metropolitan economies and metropolitan economies are powerful precisely because they bring together networks of large firms, small entrepreneurs, skilled labor, advanced research, colleges and schools, business associations, and, yes, government.”

If the U.S. is to become that innovation nation, driven by “metro engines,” it will almost by necessity be driven by exports, technological, high-value products that the world will want.

Matching Words and Action

And President Obama announced a goal of doubling U.S. exports over five years, he reasoned correctly that “Ninety-five percent of the world’s customers and fastest-growing markets are beyond our borders.” New export orders for US manufacturers in March rose to their highest level in more than 20 years, according to the Institute of Supply Management. But surprise, surprise, words and actions don’t always line up, especially if the words emanate from Washington.

Last month, Obama appointees at the National Labor Relations Board sought to punish Boeing Co., which created $30 billion in exports in 2009, for expanding 787 Dreamliner production in non-union South Carolina, to which I must say, “what are these fellows smoking?”

Still, I remain an optimist and I’m not smoking anything. There was a time when we lost our way, when we seemed to value financial chicanery over real innovation and production. I think those times are coming to an end.  My gut tells me that we are about to get our innovation mojo working.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com

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