Manufacturing Media Network Since 2013.

After 10 years of expansion, is U.S. (and Colorado) manufacturing’s improbable comeback story finally over?

By Bart Taylor January 5, 2020, 08:55 am MST

The answer is no, the party's not over. But as we begin the decade, I think factors have aligned to create some stiff barriers. Manufacturing will have to work harder for its gains.  

Here’s why 2020 is shaping up to be a tough year:

A trade deal will still leave manufacturing investment lacking 

Last week's report from the Federal Reserve confirmed that tariffs have been a net drag on manufacturing. 

As positive a new new deal will be for some, like U.S. farmers, it still leaves us where we were before, lacking a grand strategy to rebuild American manufacturing. Until manufacturers have more options and incentive to make things here, and consumers and businesses are rewarded for buying products made in America where they wouldn't have before, a China deal alone won't change manufacturing's prospects. 

America needs an enhanced manufacturing supply chain. We're focused on the wrong tactics.

Cutting the corporate tax rate emboldened manufacturers, sort of. What's left in the quiver? 

President Trump's most decisive move in support of manufacturing was cutting the corporate tax rate. But it's unclear whether enthusiasm for improved balance sheets and stock prices has translated into investments in long-term competitiveness. 

Consumers are powering this phase of the expansion. Business needs to do its part. But new trade and monetary tactics that would inspire confidence the way tax relief did, don't seem to be on the horizon.

Besides, manufacturers and farmers want a fair playing field and the tools to compete, not handouts.

Manufacturing's vision vacuum

Who's providing a compelling vision for manufacturing's next phase? 

It would be reassuring if we could agree on what constitutes success and failure. We can't.  Each year the Center for Business and Economic Research at Ball State University publishes an annual Manufacturing Scorecard, and each year, as we've reported, the Report rewards states with high per-capita manufacturing employment. That's not a measure of prosperity.

Ball State's home state of Indiana received an A for overall health (as it does every year), despite losing nearly 6,000 manufacturing jobs year-over-year for the first time since 2009.

Indiana Governor Eric Holcomb pointed to a changing economy. "Older manufacturing jobs are becoming advanced manufacturing jobs . . . but also where we're excelling is we're attracting more life sciences and more high tech, more IT jobs," Holcomb said. Huh?

Manufacturing's future indeed lies in technology -- but also in industries powering net job growth in other states. Jobs lost to automation are being replaced with jobs from manufacturing's new industry mix. As his state earns the nation's highest manufacturing grade every year, the governor should have an airtight explanation as to why that's not happening in Indiana. 

Manufacturing's leadership vacuum

As China pursues its national manufacturing and industrial strategy -- Made in China 2025 -- manufacturers in the U.S. are left to assemble workable supply chains wherever they can find them. 

The tactics to rehabilitate American manufacturing aren't a mystery. States and regions must be cognizant of those industries suited to place and people; manufacturers must be transparent about what they do and who they work with to fuel collaboration and new domestic orders; and policymakers must develop a toolbox of incentives that keep companies and jobs home. Punishing companies for finding the shortest path to raw materials, cost-effective services, and skilled labor isn't an answer. Developing them here is.

Who will be manufacturing's champions in 2020? By year's end, we'll need every one.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.

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