To Save The American Rust Belt, Stop Looking Backward
This story was published in Forbes on August 12, 2018.
American manufacturing is thriving, not dying. The Rust Belt still makes stuff – and a lot of it.
In fact, according to the Bureau of Labor Statistics, real manufacturing output has nearly doubled in the past 30 years. The Rust Belt of the future is not just processed foods, coal products and a Carrier plant in Indianapolis – it is data, robotics, engineering and design.
As we have transitioned to this fast-changing manufacturing economy, some low- and medium-skilled workers have suffered in long-declining commodity sectors such as steel and mining. For those workers, wage stagnation and job loss are realities. Politicians have disingenuously tapped into this anguish, promising a return to the “Golden Age” of American manufacturing. But nostalgia-driven policies will only hurt the very businesses that are best positioned to create the next 10 million jobs and ensure American manufacturing primacy in the 21st century.
Tomorrow’s great American Rust Belt will be defined by how innovations in nanomaterials, 3-D printing, robotics and automation are integrated into the automotive, industrial machinery, electronics and biotechnology sectors. It won’t be just about what we assemble inside the plant, but the accompanying software, data and services that help deliver high-quality, on-demand products to the world. It will be about the people on hand to make that happen: Investing in technology is ultimately about investing in the people who make that technology.
I am the founder of a company based in Skokie, Illinois, that is working on this new Rust Belt economy. My team’s experiences have led to a few insights that I believe are key to accelerating an economically vibrant manufacturing sector in the Rust Belt and beyond:
Welcome Global Talent
Washington, D.C., should make it easier, not harder for American manufacturers and the technology providers who support them to hire global knowledge workers. These workers – engineers, scientists, software programmers – are complements to, not substitutes for, American talent.
I myself come from a family of immigrants, Mexican-Japanese and Jews from Eastern Europe who came here to pursue the American dream. And my business partner is a Palestinian Muslim from the West Bank who came to America with nothing, yet rose to become one of its leading minds in nanotechnology. He’s now known as the “patriotic chemist” for his work protecting American soldiers and civilian populations from chemical weapon attacks.
To sustain our competitive advantage, the United States must invest in its workforce while also tapping the world’s best minds to develop the innovations that create new industries, products and jobs. America’s tightening immigration policy and rhetorical retreat from the fight for global talent is music to the ears of our competitors. Even Canada is getting in on the action, launching targeted programsto poach highly skilled workers who might otherwise have emigrated to the United States.
There is also a place for lower-skilled workers who are willing to do the thankless, tough jobs that Americans won’t. I agree with Senator Jeff Flake’s view that “working hard is a skill.” The people of the Rust Belt value hard work, as demonstrated through a long tradition and infrastructure of skilled manufacturing.
Reduce Trade Barriers
The United States should be a world leader in negotiating trade agreements that reduce export barriers for American innovations while aggressively protecting their underlying intellectual property. Although highly imperfect, the Trans-Pacific Partnership agreement got several things right: removing more than 18,000 tariffs on American goods, helping small businesses reduce export red tape, and standardizing the enforcement of intellectual property and labor practices in member nations (albeit, not raising them).
In our Skokie facility, we build “Made in America” products that are being sold to the world. Walking away from trade agreements may feel like a temporary reprieve to non-competitive sectors in the old manufacturing economy, but it’s to the detriment of the new economy.
In this new manufacturing economy, sustained competitive advantage will be anchored in innovation and intellectual property, not labor or commodity costs. Automation and artificial intelligence will continue to dramatically increase productivity and manufacturing competitiveness. It will also lead to the displacement of workers who may not have the skills, mobility or motivation to adapt. The implications of this are painfully real for too many families in long-forgotten communities. However, fear of the rise of the robots is misplaced. The new manufacturing economy requires a combination of advanced technology and motivated workers at all skill levels. They are inseparable. Elon Musk recently acknowledgedthat “humans are underrated,” noting that excessive automation at Tesla was a mistake.
We’ve been here and done it before. While Ford’s Model T assembly line reduced the number of workers required to assemble a car by 75%, it led to vast improvements in productivity, quality and cost — catalyzing the growth of an industry that now employs over 4 million American workers. We need more of that — we need to be creating the kinds of jobs that allow people to build better lives for themselves and their families.
If politicians, interest groups and voters truly care about the Rust Belt, they need to stop trying to bring back the manufacturing economy of yesteryear. It’s too late when goods can be mass produced at lower cost and comparable quality elsewhere. We must arm American manufacturing with the tools needed to win in a global economy; if we don’t, others will.
Return to Material Insights