The unemployment rate in Illinois broke double-digits in May to hit a seasonally adjusted 10.1 percent, a 26-year high. Of course, double-digit unemployment rates are nothing new here in Rockford; we have been above ten percent for the better part (so to speak) of a year now, hitting a high of 13.5 percent in March before gaining a little ground in April, then slipping back to 13.4 percent in May. And the last time Illinois’ unemployment rate was this high, Rockford’s was roughly double.
As has been the case for the past decade, if not the past three-and-a-half decades, manufacturing has been the hardest hit. It has been several months since manufacturing fell to less than ten percent of the U.S. economy, and while a properly managed implosion of a building sends out minimal shock waves, the implosion of the U.S. auto industry has been anything but properly managed. While NAFTA and outsourcing gave the Big Three incentives to reduce their reliance on domestic parts suppliers, many small manufacturers throughout the Midwest still receive business from the domestic auto industry, and many others depend on business from those who do.
In other words, 2009 is going to be a painful year for Midwestern cities like Rockford whose economies are still heavily dependent on manufacturing. Yet Bob Trojan, president of Rockford Linear Actuation and board member of the Rockford Area Chamber of Commerce, thinks the worst may be over. On his Manufacturing 2.0 blog on the website of the Rockford Register Star, Bob argues that the economy is pulling out of recession, in large part because of a turnaround in manufacturing, and predicts that economic statistics will prove him right within a few months.
Bob knows his business far better than I do as a mere observer, though I would not hesitate to take the bet if he were to offer one. But one of Bob’s reasons for believing that we have reached the recession’s trough sparked some thoughts about the future of manufacturing. Bob sees an increase in spending on advertising, which, he notes, tends to track consumer spending. Of course, it can also stimulate consumer spending, or at least redirect it.
And one of the ways that advertising has successfully redirected consumer spending in the United States for several decades now is from saving to purchase a more expensive, higher-quality item in the future to buying a less expensive, lower-quality item that will satisfy one’s desires right now. This move toward lower-cost but more frequent purchases has had economic effects that partly explain the current weaknesses in the U.S. economy—for instance, a lower (even negative) personal savings rate, which reduces the capital available for long-term investment, and a greater reliance on consumer credit, which helped fuel the housing bubble through second mortgages and home-equity lines.
Indeed, lower prices are a powerful means of encouraging impulse buying over savings, as the empire that Sam Walton built attests. But one cannot lower prices and maintain profit margins without lowering costs. Sometimes, economies of scale and new production processes allow a company to lower costs while maintaining quality; more often, the savings come from cutting corners and making a product that is “good enough.”
And so the cycle continues—and it is even presented as one of the glories of our “free-enterprise system.” Several years ago, a prominent paleolibertarian scoffed that those who would pay $70 for an American-made blender that would last for decades over a $10 Chinese-made blender were depriving themselves of the frequent advances in “blender technology.” The “planned obsolescence” (read: shoddy construction) of the cheaper product thus becomes a virtue.
But is this what manufacturing should be? One needn’t dive into etymology and point out that manufacturing, at its root, is more akin to the English handiwork or handicraft than it is to modern mechanized mass production. Yet the decline in quality and the “consumer preference” for disposable goods cannot be blamed (at least not entirely) on the techniques of modern manufacturing. Those techniques may make it easier to produce shoddy products, but they do not make it inevitable. We do, by making the choice to satisfy our desires now, rather than to save for the future.
The first men whom Henry Ford paid five dollars per day put together automobiles that lasted far longer than anything made by Detroit today—or even by Toyota or Nissan or Honda. Rather than use their pay to “stimulate the economy,” many of them saved and paid cash for their homes, which they furnished with mass-produced yet high-quality furniture made in Rockford or in Grand Rapids, Michigan. That furniture commands high prices in antiques stores today.
If Bob Trojan is right and we have not seen the end of manufacturing in the United States, then we need to start asking ourselves a question that few have entertained: What is the end—that is, the purpose—of manufacturing? There is no future in competing with China on price. There may be one, however, in producing the kinds of goods that we can hand down to our children, and to our children’s children.