TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
By: Ben Schiller
In the future, auto companies won’t just build cars. They’ll build cars that are part of the energy infrastructure, providing back up storage for the solar panels on your roof, and reinforcing the wider electricity grid. They could even play a role in developing smart homes and technologies.
You can see as much from a prototype smart home recently opened by Honda in California. It features an enormous 9.5-kilowatt solar array, a 10-kilowatt-hour home battery unit to store excess power, Honda’s home energy management system to control the whole thing, and, of course, its electric vehicle in the garage. Designed to be energy-efficient anyway, the house produces more power than it consumes, which means its owner could actually make money from the power company.
Honda isn’t the only car-maker getting into the whole sustainable lifestyle thing. Ford also built a show-home incorporating its cars and a range of green features. And Tesla is now selling batteries for home use as well as for use in its vehicles. But this house, which Honda developed with a lot of help from the University of California, Davis, might be the most impressive. See its video here.
Based on passive design principles, the house is naturally cooler in summer and warmer in winter. There’s geothermal pump system out back that reduces the cost of heating and air-conditioning. The concrete in the foundation is about half as carbon-intensive as standard, because engineers substituted the mix with pozzolan ash.
All in all, the house uses half the energy of a similar-sized abode in the area, Honda says. It is three times more water-efficient than a typical American home. And it saves 11 tons of CO2 a year, compared to an average dwelling and vehicle. It’s also designed to make its occupants feel good: Davis’s lighting research group installed LEDs throughout to match their circadian rhythms. Really.
Of course, it’s going to be some time before we see something like this in every subdivision in America. But, when we do, you can be sure auto-makers will want part of the action. If they’re not actually building the smart house, they could be selling some of the components that make it possible.
By: Dale Buss
Texas promised Toyota $40 million, or about $10,000 for each of the 4,000 jobs expected as the company moves its North American headquarters to North Texas from Southern California over the next three years. That’s more than the state’s Texas Enterprise Fund spent last year for each of 1,700 Chevron jobs in Houston and 3,600 Apple jobs in Austin.
But the incentives were relative chump change in the overall calculus that led to Toyota’s announcement of the move (MOVE -0.6%) this week. Far more important were the plans for corporate consolidation of the company’s diverse functions in the United States, as a major component of the cultural change hatched by North American CEO Jim Lentz over the last couple of years — and his determination that such deep transformation couldn’t be accomplished in California.
“I wanted to get sales, manufacturing and corporate operations in one location to be more efficient, and to put more resources against engineering and design,” Lentz told Automotive News. “If I can have supply and demand sitting next to each other, with information in real time, and collaborating with each other, that makes us a stronger player.”
Indeed, Toyota has been a heavily “siloed” company for a long time. Top executives have been discussing for years the need to remedy that problem as the U.S. market became both more important to Toyota, and more competitive. The 2010 safety-recall fiasco and 2011 earthquake and tsunami scrambled planning for that eventuality.
But when Toyota CEO Akio Toyoda appointed the company’s American veteran, Lentz, to a new position as North American CEO in 2013, this became one of his top priorities, sources said. And Lentz determined early on that Toyota couldn’t do what it needed to do on this score in either Southern California or in Northern Kentucky, near Cincinnati, where North American manufacturing operations were headquartered.
So the massive Toyota operation came into economic-development play. Denver, Atlanta and Charlotte, N.C., reportedly were finalists in addition to the Dallas-Ft. Worth area, out of 100 cities initially considered.
There’s a lot for any state to like in landing Toyota’s headquarters. The average salaries for the 4,000 jobs in Plano will be in the six figures, sources said, far more than manufacturing wages — meaning that Toyota’s Texas employees will have plenty of income to spread around.
That’s not to mention the obvious prestige of landing Japan’s largest automaker and the knock-on benefits to Texas of continuing to emerge as a new geographic powerhouse as the U.S. auto industry restructures. There are existing Toyota and General Motors truck plants in the state.
Texas also is the main gateway to the United States and Canada for a quickly growing automotive-manufacturing industry in Mexico, where the increasingly favorable labor-cost picture versus China is attracting car makers from all over the world. Mexico has broken ground on a handful of new auto plants in the last several years.
One more thing: Texas remains the reputed frontrunner for landing the giant Tesla “gigafactory” that promises to be a multi-billion-dollar boon for whichever of four states — also including Nevada, New Mexico and Arizona — manages to land Elon Musk’s dream fabrication and research facility.
So, sure, Texas wasn’t going to be caught offering Toyota nothing. But the financial incentives were only a sweetener. By contrast, in 2005 Tennessee offered state and local incentives totaling about $182 million to Nissan when it established its new North American headquarters there, involving white-collar jobs mostly similar to those that Toyota is bringing to Texas, according to the Center for Automotive Research in Ann Arbor, Mich. That came out to about $140,000 in incentives for each of the 1,300 jobs Nissan promised.
In the recent controversy over the United Auto Workers’ attempts to unionize the Volkswagen plant in Tennessee, it became public that state and local officials were offering the company about $300 million in new incentives if VW would add another assembly line at the plant to build a new SUV in addition to the Passat sedan now built there. With about 2,000 employees expected to be added to do that work, such incentives would work out to about $150,000 per promised worker.
For Toyota, the $40 million in state incentives presumably isn’t the whole of what Texas offered; Plano’s city council is scheduled to vote soon on its package of additional incentives, presumably including property-tax abatement related to the site of Toyota’s planned campus there. But Toyota likely could have gotten more in financial incentives from other cities.
It isn’t surprising to some corporate-location consultants, in fact, that Toyota might have left a lot on the table in financial incentives. “Many companies from Asia tend to be a little bit more careful on the incentive side in terms of how they’re viewed when they go into an area,” said Larry Gigerich, managing director of Ginovus, an Indianapolis-based consultant. “Culturally, they’re often very focused on making sure they don’t look like they’re taking every dollar available, and on doing things to help their new community as well.”
So from the start, cash wasn’t the main game for Toyota in deciding to leave southern California, or deciding to land in Texas.
The appeal of setting up a new shop in the logistical heart of North America and much closer to all of Toyota’s manufacturing operations was obviously a huge lure.
So was the chance for lower corporate operating costs across the board. “The business climate in Texas is very good overall, but particularly for large corporations,” Gigerich said. “That’s a tremendous positive. There will be enormous savings for Toyota right off the bat.”
It also helped the case for Texas that the costs of living will be much lower for Toyota managers in North Texas than in Southern California, that they’ll be able to afford bigger houses, that they won’t have to pay state income taxes — and that there’s a local NFL team to root for.
But from the beginning and in the end, Toyota’s Texas decision was mainly about the company’s goals for competing better long-term in the U.S. market. And for that, only vistas as big as Texas would do.
Office And Administrative Support Occupations Make Up Nearly 16 Percent Of U.S. Employment, May 2013
In May 2013, office and administrative support was the largest occupational group, making up nearly 16 percent of total U.S. employment. The next largest groups were sales and related occupations and food preparation and serving related occupations, which made up about 11 and 9 percent, respectively. Seven of the 10 largest occupations were in one of these three groups.
Click here for interactive version
The smallest occupational groups included legal occupations and life, physical, and social science occupations, each making up less than 1 percent of total employment in May 2013.
The highest-paying occupational groups were management, legal, computer and mathematical, and architecture and engineering occupations. Most detailed occupations in these groups were also high paying. For example, all 19 computer and mathematical occupations had average wages above the U.S. all-occupations mean of $46,440, ranging from $50,450 for computer user support specialists to $109,260 for computer and information research scientists.
The lowest-paying occupational groups were food preparation and serving related; farming, fishing, and forestry; personal care and service; building and grounds cleaning and maintenance; and healthcare support occupations. Annual mean wages for these groups ranged from $21,580 for food preparation and serving related occupations to $28,300 for healthcare support occupations. With few exceptions, the detailed occupations in these groups had below-average wages. For example, occupational therapy assistants and physical therapy assistants were the only healthcare support occupations with mean wages above the U.S. all-occupations mean.
Among 665,850 employed persons in the District of Columbia in May 2013, there were about 3,370 political scientists—accounting for 50.6 out of every 10,000 jobs in the District of Columbia. In all of the United States there were 5,570 political scientists employed out of a total of 132,588,810 employed people—meaning less than 1 (0.42) out of every 10,000 jobs in America were political scientists. The ratio that compares the concentration of employment in a defined area (in this case, the District of Columbia) to that of a larger area (the United States) is referred to by the Bureau of Labor Statistics as the “location quotient.”
Click here for interactive version
The location quotient of political scientists in the District of Columbia is 50.6 divided by 0.42 (the location quotient of political scientists in the United States), which equals about 120.5—indicating there are about 120.5 times as many political scientists per 10,000 total employed people in the District of Columbia as in the United States as a whole.
These data are from the Occupational Employment Statistics program. To learn more, see, “Occupational Employment and Wages — May 2013″ (HTML) (PDF), news release USDL-14-0528.
By: Rob Sentz
Click here to see the interactive map
Which industries are the top drivers of job growth for each of the 100 largest U.S. markets? Which metros have added the most jobs post-recession? Which metros have the biggest concentration of jobs in healthcare, technology, construction, manufacturing, energy and other top fields?
The U.S. economy is composed of hundreds of industries that are spread across thousands of counties, and the interactions of these industries are huge engines for job formation and economic prosperity.
CareerBuilder and EMSI have teamed up to create a powerful interactive map that applies big data to visualize the enormous size, scope and diversity of the U.S. economy. The map uses EMSI’s rich labor market database of over 90 national and state employment resources to identify key industries that are driving job growth for the 100 most populous U.S. metros. 1
Viewers can click on each metro and the map reveals 10 of the most important detailed industries for that location, based on number of 2013 jobs, job growth since 2010 and job concentration. From well-known economic forces (e.g., finance in New York City and aerospace products and parts manufacturing in Seattle) to emerging sectors (e.g., motor vehicle body and trailer manufacturing in Nashville and data processing and hosting in San Antonio), the map provides comprehensive – and often surprising – insights.
Viewers can also click on an industry menu to see a list of metros where a specific industry is a major economic driver.
“Since 2010, the national workforce has grown four percent, but more than 40 large metros have eclipsed the national growth rate,” said Matt Ferguson, CEO of CareerBuilder. “These are metros with a strong concentration of computer systems design, software publishing and data processing and hosting firms. These are metros benefiting from the resurgence in U.S. manufacturing, and the nation’s need to find new energy sources and expand healthcare services.”
In a separate study of the same 100 metros, CareerBuilder and EMSI discovered which metros have added the most jobs per capita post-recession:
1. Salt Lake City, UT – added over 62,000 jobs since 2010, up 9% (534 new jobs per 10,000 people)
Originally a farming community, Salt Lake City has grown into an industrial center for the state. Industries that have experienced strong job growth in this metro include electronic shopping and mail order houses (up 43%), software publishing (up 28%), specialized freight trucking (up 23%) and credit intermediation (up 22%).
2. Grand Rapids-Wyoming, MI – added over 39,000 jobs since 2010, up 10% (513 new jobs per 10,000 people)
This manufacturing heavyweight has benefited from the rebound of production jobs after the recession. The metro saw job increases in various manufacturing segments such as plastics product (up 35%), motor vehicle parts (up 33%), metalworking machinery (up 30%) and office furniture (up 12%). Hospitals also accounted for an upswing in jobs (up 16%).
3. San Jose-Sunnyvale-Santa Clara, CA – added over 91,000 jobs since 2010, up 10% (498 new jobs per 10,000 people)
It’s no surprise that software publishing (up 30%), computer systems design (up 19%), data processing and hosting (up 16%), computer manufacturing (up 12%) and scientific research (up 9%) are big contributors to employment for this Silicon Valley metro.
4. Austin-Round Rock- San Marcos, TX – added over 90,000 jobs since 2010, up 11% (488 new jobs per 10,000 people)
Austin has made a name for itself as a technology and business hub, fueling job growth in management, scientific and consulting services (up 35%), computer systems design (up 35%), data processing and hosting (up 35%) and semiconductor manufacturing (up 17%).
5. Houston-Sugar Land-Baytown, TX – added over 281,000 jobs since 2010, up 10% (451 new jobs per 10,000 people)
Energy-rich Houston continues to see job growth in utility system construction (specifically, oil and gas pipeline, up 45%), mining support (up 38%), metal and mineral (except petroleum) wholesalers (up 31%), oil and gas extraction (up 25%), and architectural and engineering services (21%).
6. Nashville-Davidson-Murfreesboro-Franklin, TN – added over 71,000 jobs since 2010, up 9% (432 new jobs per 10,000 people)
A popular music center, Nashville saw a 25% increase in jobs for independent artists, writers and performers. The metro also saw notable jumps in jobs for motor vehicle manufacturing (up 61%), accounting services (up 37%), general freight trucking (up 17%) and specialty hospitals (up 15%).
7. Provo-Orem, UT – added over 24,000 jobs since 2010, up 12% (427 new jobs per 10,000 people)
The mid-sized Utah metro is well concentrated in a number of fast-growing tech industries: software publishing (up 51%), computer systems design (up 30%) and semiconductor manufacturing (up 14%).
8. Dallas-Fort Worth-Arlington, TX – added over 267,000 jobs since 2010, up 9% (400 new jobs per 10,000 people)
Part of the Silicon Prairie, Dallas saw a boost in jobs in computer systems design (up 32%) and communications equipment manufacturing (up 18%). Other key growth areas include oil and gas extraction (up 27%), office administration (up 22%) and credit intermediation (up 13%).
9. Bakersfield-Delano, CA – added 33,000 jobs since 2010, up 11% (394 new jobs per 10,000 people)
Growth in this metro has been fueled by agriculture-related industries such as crop production (up 14%) and dairy product manufacturing (up 11%). Bakersfield has also benefited from an upswing in utility system construction (specifically, oil and gas pipeline), an industry that has more than doubled in employment since 2010 and is nearly seven times as concentrated in Bakersfield than the national average.
10. Charlotte-Gastonia-Rock Hill, NC-SC – added over 70,000 jobs, up 8% (381 new jobs per 10,000 people)
In addition to spectator sports (up 37%), this metro also experienced growth in tech-related industries such as telecommunication carriers (up 31%), management, scientific and consulting services (up 22%), scheduled air transportation (up 17%) and data processing and hosting (up 14%).
Meanwhile, the poorest-performing labor markets are in Scranton–Wilkes-Barre and Albuquerque, both of which have roughly the same number of workers today as they did in 2010. Ten other metros, headlined by Providence, Dayton, and Syracuse, have only grown 1 percent.
The map also reveals pockets of the U.S. where key industries are clustered among the largest cities:
Oil and gas extraction is a major driver of high-wage job growth in Texas, Oklahoma and the surrounding region. It’s also becoming a driver of job growth in Denver.
General freight trucking is concentrated in the Mid-Atlantic and Southeast (Nashville, Memphis, Jacksonville, etc.), where transportation routes are plentiful and huge population centers are in close range.
Software publishing has a big presence in Silicon Valley, but is also growing in major markets such as Seattle, Boston, Atlanta and Denver.
General medical and surgical hospitals are driving jobs in Columbus, Chicago, Baltimore, Boston, Rochester and St. Louis, among others.
Highway, street and bridge construction has seen an uptick in jobs in Baton Rouge, Oklahoma City and San Antonio as cities rebuild after natural disasters and address other public concerns.
CareerBuilder and EMSI are national leaders in providing labor market data and tools to dig deeper and better understand national and local economies.
1 EMSI data is collected from more than 90 federal and state sources, such as the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and state labor departments. EMSI removes suppressions often found in publicly available data and includes proprietors, creating a complete picture of the workforce.
Economic Modeling Specialists Intl., a CareerBuilder company, turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions, workforce planners, and regional developers build a better workforce and improve the economic conditions in their regions. For more information, visit www.economicmodeling.com.
CareerBuilder is the global leader in human capital solutions, helping companies target and attract great talent. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 24 million unique visitors, 1 million jobs and 50 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and talent and compensation intelligence to recruitment solutions. More than 10,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company and The McClatchy Company (NYSE:MNI), CareerBuilder and its subsidiaries operate in the United States, Europe, South America, Canada and Asia. For more information, visit www.careerbuilder.com.
Over the past 6 months, TIP Strategies has helped the Greater Houston Partnership (GHP) facilitate their Regional Workforce Development Task Force and develop a strategic action plan.
The Greater Houston region is on the brink of unprecedented growth. With almost $20 billion in investment in new plants and facilities announced, the next 5 years are slated for rapid expansion. Employers, however, are concerned that the region does not have the talent it needs to fuel this expansion. Further complicating the labor market is the aging of the workforce and the pending wave of retirements.
In response to these concerns, the Greater Houston Partnership convened the Regional Workforce Development Task Force (RWDTF). The task force is composed of 104 members representing 79 organizations, including large employers, workforce and economic development, education, and social services. The task force met six times over the course of last half of 2013 with the intention of formulating an action plan to address the challenges over the next five years. The initiative focused in on the middle skills segment of the job market.
The RWDTF identified 4 gaps in the workforce development system that must be addressed in order to create the pipeline of talent required to meet the needs of the region’s employers. The gaps are:
Potential workers are not aware of the opportunities in the middle skills segment or hold inaccurate perceptions of the jobs.
BASIC SKILLS & EMPLOYABILITY
Many potential workers lack some of the most basic hard and soft skills needed for any middle skills job.
The landscape of programs and organizations with a focus on workforce is broad and varied, but also fragmented.
The lack of accurate, reliable data creates a disconnect between demand and supply.
The strategic action plan takes a sector-based approach to create a more demand-driven workforce system. The strategies are structured around addressing the identified gaps. The plan will be finalized at the end of February and GHP is already on the road to implementation. Stay tuned for more news as GHP hires a director of workforce development and launches its first sector council.
By: Steven Rattner
Via: The New York Times
WITH metronomic regularity, gauzy accounts extol the return of manufacturing jobs to the United States.
One day, it’s Master Lock bringing combination lock fabrication back to Milwaukee from China. Another, it’s Element Electronics commencing assembly of television sets — a function long gone from the United States — in a factory near Detroit.
Breathless headlines in recent months about a “new industrial revolution” and “the promise of a ‘Made in America’ era” suggest it’s a renaissance. This week, when President Obama gives his State of the Union address, he will most likely yet again stress his plans to strengthen our manufacturing base.
But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received.
In an article in The Atlantic in 2012 about General Electric’s decision to open its first new assembly line in 55 years in Louisville, Ky., it was not until deep in the story that readers learned that the jobs were starting at just over $13.50 an hour. That’s less than $30,000 a year, hardly the middle-class life usually ascribed to manufacturing employment.
This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.
With benefits added in, those workers cost Volkswagen $27 per hour. Consider, though, that in Germany, the average autoworker earns $67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).
All told, wages for blue-collar automotive industry workers have dropped by 10 percent, after adjusting for inflation, since the recession ended in June 2009. By comparison, wages across manufacturing dropped by 2.4 percent during the same period, while earnings for Americans in equivalent private-sector jobs fell by “only” 0.5 percent. (To be fair, including benefits, compensation for manufacturing workers remains above that of service employees.)
These dispiriting wage trends are a central reason for the slow economic recovery; without sustained income growth, consumers can’t spend.
Low wages are not the only price that America pays for its manufacturing “renaissance.” Hefty subsidies from federal, state and local government agencies often are required. Tennessee provided an estimated $577 million for Volkswagen — $288,500 per position! To get 1,000 Airbus jobs, Alabama assembled a benefits package of $158 million.
Now Boeing has just used the threat of moving to a nonunion, low-wage state to win both a record subsidy package — $8.7 billion from Washington State — and labor concessions.
Over objections from their local leadership, union workers approved a new contract that would freeze pensions in favor of less generous 401(k) plans, reduce health care benefits and provide for raises totaling just 4 percent over the eight-year term. (Boeing’s stock price rose by over 80 percent last year.)
FOR all the hoopla, the United States has gained just 568,000 manufacturing positions since January 2010 — a small fraction of the nearly six million lost between 2000 and 2009. That’s a slower rate of recovery than for nonmanufacturing employment. “We find very little real evidence of a renaissance in U.S. manufacturing activity,” a recent Morgan Stanley report stated, echoing similar findings from Goldman Sachs.
If anything, the challenges to American manufacturing have grown, as less developed countries have become more adept. In Mexico, where each autoworker earned $7.80 per hour in 2012, auto industry officials say productivity is as high as in the United States, where total compensation costs were $45.34 per hour. No surprise then that in 2013, Mexican automobile production was 50 percent higher than seven years earlier, while output in the United States was at the same 2006 levels.
For the United States to remain competitive against countries like Mexico, productivity must continue to rise. But unlike past gains in productivity, these improvements in efficiency are not being passed along to workers.
And these necessary productivity gains often take the place of hiring more workers; the United States remains the world leader in agriculture while employing less than 2 percent of Americans.
Advanced manufacturing — a sector that many advocate as a path for the United States to remain relevant at making things — also involves a high degree of efficiency, meaning not as many hires and particularly, not as many of those old-fashioned, middle-class, assemble-a-thousand-pieces jobs.
Moreover, the lead that the United States has in some advanced manufacturing areas — notably aerospace — is being compromised by growing capabilities of workers elsewhere. Bombardier is now assembling Learjets in Mexico, and later this year Cessna will start delivering Citation XLS+ business jets that were put together in China.
Similarly, while America’s energy boom will provide an incentive for manufacturers to locate here, don’t count on cheap natural gas to fuel an employment boom. According to a 2009 study, only one-tenth of American manufacturing involved significant energy costs.
While we shouldn’t expect manufacturing to save our economy, we needn’t despair. Among other things, we need to get over the notion that service jobs are invariably inferior. The United States remains a world leader in service industries like education and medicine. Not only do these fields generate well-paying jobs, but they also help with our balance of trade: when foreigners come to America to be educated or treated, those services are tallied as exports.
Manufacturing has been an emotional American touchstone since George Washington wore a wool suit that had been woven in Hartford, Conn., to his first inauguration to illustrate the importance of making stuff at home. We do need to maintain an industrial presence, but perhaps not for the obvious reasons.
For one thing, companies often locate research and development facilities — stuffed with high-paying jobs — near their manufacturing facilities. In addition to jobs, R&D yields high-value intellectual property that spills over into still more innovation and employment. And not surprisingly, every manufacturing position requires an additional 4.6 service and supplier positions to support it.
The challenge for the United States is particularly acute because manufacturing now accounts for just 12 percent of our economy, down from a peak of 28 percent in 1953 and on a par with France and Britain as the least industrialized of major economies.
While keeping that share from dipping further should be a priority, we should be careful to avoid raising false hopes (like Mr. Obama’s unrealistic second-term goal of creating a million manufacturing jobs) and pursuing ill-conceived policies (such as special subsidies for manufacturing).
The president’s proposals — unveiled over the last several years — include the two most important elements of a sensible manufacturing strategy: more training focused on the skills needed by employers and increased spending on research and development.
The United States work force is simultaneously overqualified (15 percent of taxi drivers are college graduates) and underqualified (we rank in the bottom half of many comparisons of developed countries).
When Volkswagen arrived in Chattanooga, it found that not enough eager applicants had the requisite technical skills, so it established a German-style training system (including three-year apprenticeships) at the factory.
As for research and development, the fiscal tightening by the federal government has prevented more investment in this critical area, the exact opposite of what is required. At the same time, while subsidies to draw jobs have become a necessary evil, we should be rigorous about analyzing the value of these costs. And we must stop short of excessive meddling in the private sector, and particularly the notion of picking winners. (Think Solyndra or Fisker.)
Mr. Obama skirted this problem by proposing to create 45 “manufacturing innovation institutes,” which bring together companies, universities and government experts in a kind of laboratory setting to help develop advanced manufacturing strategies.
While these institutes are not going to turn the tide, they might help at the margin. But like the president’s other proposals, they have been largely ignored by Congress. (The White House managed to establish a pilot center in Youngstown, Ohio, and another is coming in Charlotte, N.C.)
Manufacturing would benefit from the same reforms that would help the broader economy: restructuring of our loophole-ridden corporate tax code, new policies to bring in skilled immigrants, added spending on infrastructure and, yes, more trade agreements to encourage foreign direct investment and help get closer to Mr. Obama’s seemingly unattainable goal of doubling our exports.
Those who see a brighter manufacturing picture for the United States argue that wages are rising more rapidly elsewhere, not just in China and Brazil but also in Japan, Germany and France. But just like the “feel good” stories, celebrating this fact ignores the reality that the flip side of wages’ rising faster elsewhere means they are rising more slowly here.
And that is the essence of our challenge: In a flattened world, there will always be another China.