How Economic Developers Can Help Manufacturing Survive and Thrive in the New Global Economy

"Prince USA, Made in China." That is the label on the shipping crates sitting on Prince USA's loading dock in Carol Stream, IL.

With a new plant in Shanghai, a factory in Carol Stream, IL crammed with ultramodern equipment and a commitment to change, Prince USA President Greg Roskuszka dismisses gloomy talk of the disappearance of U.S. manufacturing. "There's a lot of crying-in-your-beer stuff going on" because of China, lost jobs and other pressures, he said. "But you (manufacturers) have to change. ... Manufacturing is hitting another level of evolution. You can't produce things the way you used to."

I agree that US manufacturers need to change how they do business. I also think it is important that US manufacturers not lose hope that they CAN make it in the new global economy. This is especially important for smaller companies that have been too busy trying to make their handful of existing big US customers happy to ask important long-term questions about their own economic future. It is especially important for small companies to play smarter in the global arena. What can they do? They need to form international partnerships to strengthen their own ability to survive. They need to develop an international customer base and diversify their market base beyond the local GM, Ford or Chrysler plant. Are these actions going to be easy? No. Can they be done? Absolutely, with the right attitude, strategy and resources.

Global manufacturing changes have claimed their share of job victims in Illinois and most other states. This is the sad news. Machine-tool makers, circuit-board makers and small tool-and-die shops, and the employees and towns who depended on them, are among those that have been knocked down or out. They need "next-gen" strategies to compete in the future.

But companies such as Prince - a contract manufacturer that makes or assembles precision metal products - have managed to prosper by adapting quickly to the changes and switching strategies, products, locations or even entire business models. There are some things to learn from Prince--not all is good news by the way for US jobs. Many US manufacturing (and service) jobs will be lost due to offshore outsourcing. Outsourcing will continue to eliminate US jobs that do not "add enough financial value" to businesses. If a job costs more than the value it creates, it's a "goner." The key is to start re-designing work and re-writing job descriptions now to make more US-based jobs larger value-adders. If we help them, American workers can make the shift. They have done it before, and they can do it again!

According to Prince USA officials, those companies which are most successful saw the tides shifting while the good times were still rolling in the 1990s, and began retooling. The point is that if you just saw offshore outsourcing as a reality in the last 2-3 years, you are ten years behind the curve in understanding where the future is headed.

The Prince USA and Carol Stream story is an all too common one in many U.S. communities. Globalization is a challenge for all manufacturers, but especially those doing contract manufacturing of parts and components. The Cleveland-NE Ohio area has been hardhit by this new global trend line. The question is: how should the local and state economic development community respond?

Read more about Prince here.

Here are my recommendations to the U.S. economic development community:

1. Economic developers across America need to do a better job of looking ahead to understand where the economy and important sectors like manufacturing are headed. We need to extend the timeframe we look at in our strategic plans. We need to give special attention to how technological innovation and globalization will play out in the form of future business strategies in important industry sectors. In this case, we need to know what the smartest of the smart corporations know.

2. We need to improve public communication with citizens, workers, small business owners, elected officials and other community-based groups about what we see in the future. Balanced communication that is factual, grounded in reason, and oriented to action is needed. The opinionated hand-wringing and whining must stop. I continue to see too much of this in the media across the US. This is a time for positive and realistic "can-do" thinking. Don't get entangled in the political churn that is aimed at only one thing--either staying in office or ousting an incumbent.

3. Identify how "big picture" technology shifts and globalization will impact businesses, jobs and communities in your area. Localize the big picture. Globalization is in your own backyard--It always has been. It's not just what is happenig in China or Mexico. This is where skill and knowledge are required. Find out how your local companies plan to design work in the context of new global realities. That is a key issue in ensuring that jobs in your area remain connected to global opportunities.

4. Build collaborative partnerships with economic developers in competing regions (in the US and abroad), labor unions, education, and other groups that can help create the "extended network" your community will need to survive and thrive in the global economy.

5. Be careful which, if any, state and federal legislative proposals regarding globalization and trade you support. The Republicans and Democrats will each produce a dozen new proposals on what to do about global competition. The truth is that these proposals will have differential impacts on states, regions and communities across the nation. One public policy solution will not help all areas equally. Beware of the many faces of protectionism. It is embedded in both liberal and conservative thinking circulating around the country. The key questions in any discussion of market protection is "what and whose interests are to be protected," and "is this action good for American companies, jobs and consumers?" Tell your federal legislative delegation that a local economic developer, or someone representing the interests of local economies, should be added to the World Trade Organization (WTO) board. That could help enormously.

6. Work on stretching your understanding of the international world. We lost touch with the international community in the 1990s because we were too self-absorbed as a nation. This is a time to fashion some really innovative approaches to trade and foreign direct investment (FDI) development. And yes, remember that trade is a two-way (multiple-way) street and FDI is about cross-investment in global industries (autos, steel, polymers, finance, etc.).

7. Finally, workers need to go to school on globalization. They need to fully understand what will impact their current jobs and future career path. This is something that every worker needs to understand. It is not enough to just do your job and hope for the best. American workers must develop new skill sets that prepare them to collaborate with workers in other US and international business operations. If you operate a machine in a plant in Cleveland, you need to know how your job connects to other jobs in the plant and how that plant connects to your employer's overall domestic and international production chain. Only jobs with a "high global multiplier" will survive in the new age of global business and work. Working smarter in the future means working in a more globally-connected way.

I think we stand a fighting chance of helping local economies, industries and jobs compete and survive globally if we are successful in doing these seven things. This is where local and state economic developers can make the biggest difference in the next 1-3 years.