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Will Michigan Manufacturers Play a Role in Revitalizing the Economy?

by Michael Shade, IQS Editor

If you look at the YTD Value of Manufacturers’ Shipments table for April 2012, you’ll see that the value of shipments from all manufacturing industries is 6.9% higher than the figure from April of last year. During that time, the value of shipments of primary metals – the raw materials that end up being shaped into the kinds of products that form our industrial and commercial infrastructure – rose by 25%. The value of metalworking machinery was 21% higher, and construction machinery was up by 23%. If you then take a look at the Census Bureau’s Annual Survey of Manufacturers for 2009, near the height of the recession, you’ll notice that Michigan was still the sixth most active manufacturing state in terms of production worker hours. Does the VMS report tell us that manufacturing is coming back, and if so could these kinds of gains be indicators of a sea change for places like Michigan?

Let’s not kid ourselves. Anyone who says they can definitively predict the performance of the manufacturing sector or the economy generally is selling something you shouldn’t be buying. The economic data is always “[insert adjective here] than economists predicted.” And the disparity between predictions and actual results always seems to get traders worked up in a lather, which itself amplifies volatility. The crisis of fear and pessimism that began in the late 2000s may be ebbing, but it’s still a crisis, and our august community of punditry’s hyperactive speculation serves the opposite of its intended purpose – it creates mania and panic instead of containing it.

So if we can’t rely on expertise to inform our outlook, where can we turn? Michigan and some of its neighbors have been battered by the winds of economic change for decades, and the expression of that battering includes high unemployment, decreased population and, not insignificantly, a crisis of self-esteem. Wouldn’t it be great if there was someone or something to tell us our outlook after such a long stretch of uncertainty?

Of course that would be great, but it’s impossible. However, we’ve got a lot of resources at our disposal that can help us carve out an impression of our economy’s prospects. First, there’s the data. Those 2009 CB Annual Survey of Manufacturers figures tell us that the total value of manufacturing shipments from Michigan was more than $160 billion, 8th in the country. For that same year (again, this was during one of the most grinding periods of the recession) there were 437,873 paid employees in Michigan’s manufacturing workforce. Even when the recession was at its bleakest, Michigan was still a frontrunner in manufacturing. What this makes clear is that we’ve got the infrastructure and the workforce to make a major contribution to American manufacturing.

In addition to the data, there’s the very real indicator of demand. American infrastructure – our roads, our energy generation and distribution systems and our methods of transportation – is geriatric. The reality of the need for a permanent alternative to fossil fuels is undeniable. Michigan is particularly well disposed to being the go-to source for the kinds of innovations that are needed to revitalize such important components of our economy. We will always need energy. We will always need transportation. If the will to realize Michigan’s potential to change the way we meet those needs materializes, Michigan’s image would transform from that of a rusted out relic of the glory days of American manufacturing to a new, vital model of ingenuity and innovation.

So much, too much, of the way we feel things are going influences how things actually go. Michigan, and all of American manufacturing, needs to realize its potential again, and that realization needs to be met with will power and determination – the will to change things, the optimism to believe that a transformation is possible and the determined ambition to make the investments and take the risks that are necessary. It’s possible. And maybe it’s already happening.