Fact Check: Obama and the Resurgence of American Manufacturing

Feb 16, 2012 6:30am
ap obama wisconsin dm 120216 wblog Fact Check: Obama and the Resurgence of American Manufacturing

Susan Walsh/AP Photo

LOS ANGELES — President Obama is this week heralding the resurgence of American manufacturing as a leap toward an “economy built to last,” and a sign that he deserves a second term.

“For the first time since 1990, American manufacturers are creating new jobs,” Obama said at a Master Lock facility in Milwaukee on Tuesday. “That’s good for the companies, but it’s also good up and down the supply chain.”

Obama’s claim — an apparent bright spot in a sea of still gloomy economic news — is corroborated by government statistics, which show an undeniable rebound for manufacturers during his term, both in terms of productivity and employment of American workers.

When Obama took office in January 2009, unemployment in the manufacturing sector stood at 10.9 percent and spiked to 13 percent a year later, according to the Labor Department. But in the two years since, unemployment has fallen precipitously, now holding at 8.4 percent in January 2012.

In terms of raw manufacturing jobs, the trajectory is similarly positive, though job growth has not yet fully recouped all the losses incurred during the Great Recession or the decades before.

Roughly 12.5 million Americans were employed in manufacturing when Obama took office, according to government data, as hundreds of thousands were being laid off. The picture has turned around since January 2010, but 690,000 jobs remain lost, according to Labor Department statistics.

Master Lock recently brought back 100 jobs from China to the U.S. thanks to improving domestic economic conditions, making it a poster child of a trend Obama seeks to encourage.

U.S. manufacturers have also increased production by 15 percent since the recession officially ended in late 2009, and Master Lock’s Milwaukee plant is operating at capacity for the first time in 15 years.

But as for whether it was Obama who made it happen — and whether it can be sustained — many economists and some business leaders remain circumspect.

They say shifting business conditions and consumer demand abroad, coupled with a transition to more efficient practices and new technologies at home largely explain the trend.

Master Lock CEO Jon Heppner, as an example, has said higher labor and logistical costs in Asia spurred his decision to look for workers in Wisconsin rather than China.

And, they note, the recent gains of tens of thousands of jobs have made little dent in the 6 million manufacturing jobs lost since 1997.

“Job creators across the country are pretty clear that any economic improvements are in spite of, not because of, this president’s anti-growth agenda,” said Republican National Committee spokeswoman Kirsten Kukowski, offering her spin on nascent revitalization of the manufacturing sector.

And there’s no guarantee the currently favorable conditions will last, leading economists say.

“I don’t think any of us know what the future of the American economy is,” former Obama economic adviser Christina Romer told NPR Wednesday. “I think we have to be careful not to hold onto this idea that it was good in the past. It must be what’s going to be good in the future.”

Federal Reserve Chairman Ben Bernanke warned last week that the “pace of growth in business investment has slowed, likely reflecting concerns about both the domestic outlook and developments in Europe.” Such a change has implications for manufacturers across the globe.

Still, the Obama administration is eager to “highlight” the short-term positive trend in part to appeal to voters in manufacturing-focused swing states, like Wisconsin, and pressure Congress to enact policies in their favor.

The messaging blitz is also a tacit effort to remind voters more broadly that the economic recovery is real and there are signs of life in front of their eyes.

“Here’s what I want everybody to remember,” Obama said Tuesday. “Manufacturing is coming back. Companies are starting to bring jobs back. The economy is getting stronger. The recovery is speeding up.”

“We have to do everything in our power to keep our foot on the gas,” he said. “And the last thing we can afford to do is go back to the same policies that got us into this mess.”

Obama wants to provide tax incentives to companies that shift foreign jobs back to the U.S., and rescind existing credits for those that move work overseas. He also wants to cut the corporate tax rate, while imposing a new tax on companies’ overseas profits.

 

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