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Posted on Wed, May 23, 2012 : 2:58 p.m.

Does the U.S. risk losing manufacturing operations to overseas factories?

By Lizzy Alfs

Will the U.S. lose a large portion of its manufacturing industry to competition from other countries?


Memebers of the press are given a tour of the GE Advanced Manufacturing and Software Technology Center last month in Van Buren Township.

Chris Asadian |

That’s the question posed by Wally Hopp and Roman Kapuscinski of the University of Michigan’s Ross School of Business in their new study: “Manufacturing’s Wake-Up Call.”

The study says U.S. factories produce about 74 percent of what the country consumes, but decisions by business and political leaders may determine whether as much as 40 percent of that stays here or moves overseas in the coming years.

Policy decisions related to education, worker training, the tax code, the regulatory environment and America’s relationship with Mexico are critical to defining the future of the industry, the study says.

“Manufacturing is still here, it's big, and it's helping us out right now,” Hopp says. “Are we going to line up enough factors to keep it here, or will we let it trickle away like we did during the lost decade of 2000-10?"

One important factor, the researchers say, is to promote vocational education and industrial arts studies — an issue that has been a hot topic recently among Michigan business and political leaders.

Bob Lutz, the former vice chairman of global product development for General Motors, recently said young people should be trained with “real world, necessary skills,” such as automotive maintenance and automotive repair, rather than earning degrees in the liberal arts sector.

Michael Finney, CEO of the Michigan Economic Development Corporation, made a similar declaration recently at a Washtenaw Economic Outlook Luncheon.

“When I was in high school, you had a choice of two educational tracks you could get on: a tradesperson and college prep,” he said. “We’ve gotten away from that as a country and a state and maybe it’s time for us to reconsider vocational education as a serious way for some of our young people to build a future for themselves.”

The study also says the U.S. loses manufacturing operations to overseas and doesn’t collect the full tax rate, whereas a simpler code with a competitive tax rate would help the industry.

Another critical factor the study cites: building a stronger relationship with Mexico.

“While some low-skill operations will be sent offshore every year, keeping them closer will allow R&D and engineering jobs to stay stateside.”

Read the full study.

Lizzy Alfs is a business reporter for Reach her at 734-623-2584 or email her at Follow her on Twitter at


Patrick Haggood

Thu, May 24, 2012 : 2:30 p.m.

Perhaps its not a question of whether manufacturing, but what type and at what scale. i read an article a few years back that explained how a single farmer in a giant harvester picks cotton on hundreds of acres by himself, making his cotton price competitive with that using cheap labor overseas. There was also an NPR segment on Pittsburgh which showed the amount of steel produced has gone up 50% over the 1950 when hundreds of thousands worked in the steel mils, now there are the low tens of thousands. Manufacturing could just be following this trend - especially in light of this DARPA/TechShop effort on slashdot:


Thu, May 24, 2012 : 11:06 a.m.

Good points Dug. The question is where do we apply our scarce resources? On unskilled less value add manufacturing (e.g. metal stamping) or in skilled manufacturing (e.g. aviation industry) where we have an advantage? BTW, I believe that much of the lower-end manufacturing will ultimately return to this country as manufacturing technology (read automation) eliminates the current cost advantages that low cost offshore labor provides. I agree with Dug, no easy answers here - lots of short term dislocation & pain.

Dug Song

Thu, May 24, 2012 : 6:13 a.m.

Technology has quickly obsoleted many forms of manual labor, and the rate of displacement is increasing. There is no getting around this fact. Just as FedEx is basically a software network with planes and trucks at the edges (as Marc Andreesen says), Kiva Systems (now Amazon) turns warehouses into software systems *that operate humans* ( Some jobs are never coming back - not without artificially impairing the march of technical progress (e.g. North Korea). Even more troubling - in a few years, 90% of all engineers in the world will be in Asia: (jump to 20:40) Where education is valued, labor is cheap, environmental regulations are weak, and high-tech manufacturing is flourishes as a result. How many of the expensive consumer electronics you have in your house (or pocket) were manufactured anywhere near North America? There are no easy answers here. Our educational system increasingly produces savants who only know how to extract value, not create it. We need to value making things again.

Basic Bob

Thu, May 24, 2012 : 11:46 a.m.

"90% of all engineers in the world will be in Asia" We've heard that song. In some places, ANYONE can be called an engineer. That doesn't mean they can do the job. And it doesn't help that American parents and schools are discouraging graduating high school students from pursuing engineering as a career. Sure it's hard, but one busy engineer keep a lot of other folks working.

Stuart Brown

Thu, May 24, 2012 : 3:48 a.m.

This article is more of the "lower wages equal higher living standards" drivel. Just tell businesses they can't sell things here unless they keep the jobs here as well; that would fix the unemployment problem! If businesses want to outsource the jobs, the country should outsource the sales as well; let the Chinese buy the stuff the Chinese make. Top Cat is right, tariffs would keep the jobs here as well as the income tax revenue that is now free to exit the country.


Thu, May 24, 2012 : 2:48 a.m.

Seems to me we could help ourselves by helping other countries build up the rule of law, promote workplace safety, environmental protection, and labor organizing. Workers in other countries want to be safe at work, want their families to be protected from pollution, and want to have some legal protection against exploitation by employers. We talk a lot about lowering the cost of labor here. Maybe we should also talk about helping increase the cost of labor elsewhere.


Thu, May 24, 2012 : 2:38 p.m.

Actually the UAW is BIG on this philosophy. Unfortunately I liken it to leaving food out in the woods for the deer and hoping all the other animals don't get it first. We need to keep it close to the house so we can watch it first. Can't help others when you are struggling yourself. I don't disagree with your sentiment by any means. Jus sayin'


Thu, May 24, 2012 : 1:44 a.m.

Will? How about "has already lost a gigantic amount!" 50 years ago, manufacturing was 30 percent of the US economy. Now, it is less than half of that. Hello trade deficit, goodbye economy. This article is like wondering if the housing market will collapse. It already has!


Thu, May 24, 2012 : 2:09 a.m.

it's the race to the bottom more profits for the rich less for the middle class.


Thu, May 24, 2012 : 1:15 a.m.

Is this headline a trick question?

greg, too

Wed, May 23, 2012 : 11:25 p.m.

"Bob Lutz, the former vice chairman of global product development for General Motors, recently said young people should be trained with "real world, necessary skills," such as automotive maintenance and automotive repair, rather than earning degrees in the liberal arts sector." That is the first, and will probably be the only, wise thing I have ever heard old man Lutz say. As a person with a liberal arts degree, I wish someone would have told me sooner.


Wed, May 23, 2012 : 10:07 p.m.

Hmmm. I thought that many of our manufacturers have already out sourced the making of their goods. What we need to do, is "do it at home" so to speak. Manufacturers should be provided all the necessary tools etc. to continue to stay at home. Whenever shopping, I look for USA products even when I have to go on line to find the product.


Wed, May 23, 2012 : 9:43 p.m.

How can unskilled labor in the US compete with unskilled labor in Mexico? In Mexico, They get paid less, have less regulations, don't have to worry about law suits. That is why the US will loose those jobs but High Tech Jobs which involves skilled labor is where the US needs to concentrate since we will have less competition and high wages!

Basic Bob

Thu, May 24, 2012 : 1:02 a.m.

Higher productivity, higher quality, lower transportation costs, less theft, fewer bribes to pay. Don't think we're necessarily any smarter than Mexicans. There are plenty of people here who will either work an unskilled job or none at all.


Wed, May 23, 2012 : 9:13 p.m.

We're not at risk of "losing" manufacturing jobs. The big US corporations have already given them away. US clothing factories are in Central America and Asia. Car manufacturing has been moved to China, Russia, etc. Why do we still call GM, Ford, and Chrysler American companies? All these corporations will bring jobs back to the US when the people here are willing to work for less than current minimum wage with no benefits like the people in the world's poorest countries. That is already happening, too. Check out all the part time jobs available now for minimum wage and the fact that mothers receiving assistance to care for their children are required to work 20 hours/week, even if it costs the government more to provide child care. Child care will not be paid so the woman can also go to college part time.


Thu, May 24, 2012 : 2:33 p.m.

Good post G'ma...why anyone would ding this is beyond me.


Wed, May 23, 2012 : 7:54 p.m.

I disagree with the study. How can it say 74% is made here when 90% of the stuff we buy is not labeled as Made in USA??? If we made 74% of consumables we wouldn't have a deficit!


Wed, May 23, 2012 : 7:54 p.m.

What do you mean "risk losing"? It's already happening as corporations drive the race to the bottom to find out where the cheapest workers are and maximize their profits.


Wed, May 23, 2012 : 8:05 p.m.

And that ship has already sailed...


Wed, May 23, 2012 : 7:29 p.m.

Manufacturing needs to be redefined as high tech manufacturing, these are job we want to keep. Manufacturing with unskilled labor are jobs we want to loose.


Thu, May 24, 2012 : 12:28 p.m.

XMO, you are parroting the headlines of Ann Arbor News in 2002, and prompted by University of Michigan professors - also endorsed by Governor Granholm. They shouted loudly in unison that Michigan can't afford a manufacturing based economy - the future is financial, technology and healthcare. The faster the 'low-skilled' jobs leave, the sooner Michigan will flourish. The faster those kinds of companies leave the state, the better off Michigan will be. All cheered, especially my favorite ace columnist, and friend of academia and business moguls, Rick Haglund. I called him a fool for believing it then, and the proof is in the current mess the state's in. Now, you want to continue down that path, using the same unfounded logic and naive understanding about what manufacturing is and represents.


Wed, May 23, 2012 : 9:20 p.m.

Mike, Many people receiving government assistance are working those low paying jobs now, even if they have the capacity to work better, but nonexistant jobs. They don't receive enough to house, feed, and clothe their families. I live in a senior building where many of the people previously worked those jobs and now receive Social Security benefits of less than $500/month. Average rent around here is well over $500.


Wed, May 23, 2012 : 9:05 p.m.

Snyder is trying to increase immigration of people who would do those high tech jobs.


Wed, May 23, 2012 : 8:37 p.m.

Not every person can do a highly skilled job, what should they do? Maybe go on welfare, clooect medicaid, food stamps, housing assistance? I'd suggest they take a low paying job, pay into the social security system and we then give them some help if they need it.


Wed, May 23, 2012 : 8:06 p.m.

seriously...we have a plethera of jobs so we can lose some? You MUST be joking...


Wed, May 23, 2012 : 7:17 p.m.

We still have Manufacturing in this Country?


Wed, May 23, 2012 : 7:14 p.m.

This would be relevant if this was 1985.


Thu, May 24, 2012 : 2:21 p.m.

Oh yeah Mike that works just dandy! Wallstreet took that plan and ran with it...


Wed, May 23, 2012 : 8:30 p.m.

Improving the tax code and reducing regulation that drives businesses out of this country is not relevant?

Top Cat

Wed, May 23, 2012 : 7:03 p.m.

Why is the word "tariff" missing from this article ? Other nations use tariffs aggressively to promote manufacturing at home. From the dawn of our republic until 1913, tariffs were the Federal Government's primary source of revenue. The article is also silent about the fact that our recent large discoveries of natural gas and its low price are working to attract some manufacturing back to the U.S.