Thread: Michigan's manufacturing resurgence

August 23, 2013 at 1:00 am

OUR EDITORIAL

Michigan's manufacturing resurgence

As jobs come back to U.S., Michigan can exploit right to work, skilled labor and energy advantages

Driven by economic fundamentals like lower energy costs and more competitive labor rates, manufacturing is coming back to the United States after years of outsourcing abroad. The Boston Consulting Group predicts that rising exports and “reshoring” of production to the U.S. from China alone “could create 2.5 million to five million American factory and service jobs associated with increased manufacturing” by 2020.

If it continues to reinvent itself as a business-friendly state, Michigan stands to be the beneficiary of that manufacturing jobs resurgence. About 12 million Americans are directly employed by manufacturers, down from nearly 17 million two decades ago, but Boston Consulting says that trend is reversing. Leading American manufacturing growth are right-to-work states like North Carolina, which are attractive to employers for their flexible workforces and low energy costs. The Canadian-owned Linamar diesel-engine facility, for example, opened in an abandoned Volvo plant near Asheville two years ago in part because of the state’s right- to-work laws.

Linamar’s biggest customer is nearby Caterpillar which has brought a steady stream of manufacturing jobs to the right-to-work South and away from Big Labor strongholds like Illinois. “Right to work is something we talk about in our marketing,” says Ben Teague, a spokesman for the Asheville Chamber of Commerce. “We feel it is a competitive edge. It means you get workers that want to work at a reasonable wage.”

This is one reason Gov. Rick Snyder and Republican lawmakers followed Indiana in becoming the Midwest’s second right-to-work state last year. Riding the the auto industry’s resurgence, Michigan led the nation in new manufacturing jobs in July – a trend Michigan wants to extend to other manufacturing sectors. In addition to right to work, manufacturers and their unions are forging greater efficiencies to bring jobs to the U.S.

For example, after its near brush with insolvency, General Motors has negotiated more competitive labor contracts. Its Lake Orion facility north of Detroit now sports a two-tier wage that pays entry-level workers $33 an hour in wages-plus-benefits, compared to senior workers at $57 an hour. Along with more flexible work rules, the cost savings have enabled GM to move production of its new compact car, the Chevy Sonic, to Lake Orion from South Korea.

Other U.S. manufacturers have followed suit. Motorcycle manufacturer Harley Davidson also emerged from the Great Recession with a more flexible workforce, saving the company more than $300 million. Job classifications at its York, Pennsylvania plant, for example, fell to five from 62 so workers can be used where needed.

The U.S. also claims more competitive energy prices thanks to its recent fracking boom, opening vast new oil and gas reserves and its cheap coal, nuclear, and natural gas-driven utilities. Low energy costs are attracting firms from Europe, where industrial electricity costs can be 50 percent higher than in the U.S.

“The U.S. will have an export cost advantage of 5-25 percent. Among the biggest drivers of this advantage will be the costs of labor, natural gas, and electricity,” said Boston Consulting Group last year. America’s competitive advantages should be a lesson to the Obama administration, which has opposed the right-to-work movement in states like Michigan and South Carolina while also raising barriers to U.S. energy exploration. In Michigan, legislation restricting energy competition and mandating green energy production have resulted in 30 percent increases in electricity rates.

Michigan universities, automakers and computer firms also attract waves of young technology workers. Washington needs to do its part on immigration reform to keep those high-skilled jobs here. Many manufacturers can’t find enough skilled engineers to operate sophisticated computer-controlled machinery, a shortage worsened by low ceilings on H-1B visas.

Unless Congress raises visa caps, jobs will follow students and workers back to countries like India. “This is a fundamental economic shift” in manufacturing, Boston Consulting’s Harold Sirkin tells The Wall Street Journal. If China’s rising labor rates and Europe’s soaring energy costs continue to shift industrial jobs to U.S. shores, it’s essential that government officials provide a pro-business climate to keep them.

http://www.detroitnews.com/article/2...#ixzz2coGZwgU7

Starting factory work at $33/hr? Plus benefits??? That''s competitive against who? Factory jobs tend to be unskilled and not deserving better pay then many skilled jobs that people go to college for. Still those wages will make the products very high in price along with if they keep renegotiating the contract every couple years back to where it went bust in 20 years. I don't see why starting factory workers should get paid more then $10 an hour. A level 1 tech support these days starts off around $10-12 an hour which is crap for someone who has certifications and has gone to college. Factory workers deserve no better for an unskilled job.