I still remember the first time I walked into a working factory. It was an old-school process manufacturing facility in the Midwest. In the foreground, innumerable machines whirred and clacked away in precise, interlocking dances. A massive vat shaped like a 50 foot tall Campbell’s soup can loomed in the background. It was encased in heat-trapping refractory bricks that glowed red-hot. A crane arm dumped heavy sand continuously into the top at (literally) industrial volumes, and steaming, liquid glass gushed out of the business end at the bottom in a matching stream. I couldn’t see the heating element, but it was in there somewhere, and it was working.
It’s embarrassing to admit this, but at that moment I felt the way I was always told I was supposed to feel when I saw a beautiful mountain range or something. I laughed involuntarily, and then had a thought that I never could have had about a mountain: men made this. I was looking at concretized human ingenuity.
In the auto industry, a “car guy” is a slang term for an executive who doesn’t just view the business of a car company as making money, but loves the cars themselves. I’m a factory guy. I spent the first few years of my career in the late 1980s as one small part of a self-conscious movement to rescue American manufacturing. I’ve worked in glass plants, assembly plants, oil refineries, textile plants and others from Florida to Canada, and many points in between. I’ve had a union card, and walked a picket line. I loved being in the plant, and using the old-fashioned accounting term for head office costs: “burden”. I enjoyed making fun of the guys working in finance in New York.
Reform of manufacturing was focused on changing business practices. There was no one huge insight; it was painstaking effort conducted one factory, quality improvement session and production planning algorithm at a time. Resistance was intense, and eventually I came to see that the pressure created by capital allocation from the financial sector was required to force painful but necessary change. It turned out that those finance guys in New York were doing something important to prevent the decline of American manufacturing into mediocrity and irrelevance.
Constant work has paid off – the U.S. has a very competitive manufacturing sector. The problem is that, like agriculture before it, manufacturing can support fewer and fewer employees. As this sector continues to mature, it becomes more asset-intensive and less people-intensive. Further, the jobs that it provides tend increasingly to be either low-skill / low-wage or high-skill / high-wage. The world of “get out of high school, work in a factory and have a middle class life” is pretty much gone, because the economic world of 1955 is gone. Our international position no longer allows this, and in fact, other than for those like auto workers who are protected by legacy institutional arrangements, it’s been over for many years. I take no joy in the need for restructuring the auto industry. I wish that world still existed, but it does not.
This change (including, but not limited to, manufacturing) is what “globalization” really means for America, and it is not pretty. It is the root of growing income inequality and middle-class wage stagnation. There are practical things that we can do to address these problems, but sticking our head in the sand is not one of them.