After decades of decline, U.S. manufacturing shows signs of rebound–what does it mean for Whatcom County?
By John Stark
At last week’s Gateway Pacific Terminal meeting in Ferndale, nearly all of the support for the Cherry Point coal export facility seemed to be based on its potential to create both jobs and tax revenue.
Supporters tend to portray Gateway Pacific as the only local project now on the table that could provide industrial jobs with decent wages, plus the millions of dollars in new tax revenues that heavy industries provide. More than one speaker mentioned the other G-P: the Georgia-Pacific pulp and paper mill on the Bellingham waterfront that subtracted hundreds of jobs when it closed down in stages during the first decade of this century.
Other pulp mills in the region, such as Kimberly-Clark in Everett, have also closed. (The Everett Herald observed that a town that once proudly called itself “The City of Smokestacks” no longer has any.) Alcoa Intalco Works still makes aluminum at Cherry Point, but similar smelters around the Northwest have been shut down for years.
We have heard so much about the decline of industry in this country that we tend to think of U.S. industrial prowess in the past tense. We all know that U.S. manufacturing simply can’t compete against low-wage workers in China. It’s hopeless.
But what if what we all know is wrong? In the current issue of Atlantic Monthly, Charles Fishman digs up some encouraging news: Major U.S. companies are discovering that in many cases, it is cheaper to manufacture products in the United States, despite the wage differential. Fishman’s example is General Electric, an old-line pillar of U.S. industry that is ramping up appliance production in Louisville, Ky. at a giant manufacturing complex that had become a near-ghost town until recently. Appliances once built in China are now rolling off the line in the Bluegrass State again. And make no mistake: Patriotism has nothing to do with it. Fishman describes in vivid detail how GE is saving money and making its products more price-competitive by bringing jobs home.
In the same issue of The Atlantic, James Fallows describes the same phenomenon from his own vantage point in China. He describes the pitfalls for U.S. firms trying to manufacture in China, and the competitive edge that many smaller firms achieve by keeping designing and manufacturing side by side in this country.
But China does enjoy another competitive advantage: cheap energy. In this country, the cost of environmental controls add to the cost of energy used for manufacturing. China, with fewer environmental constraints, gets an economic edge.
It’s an edge that the U.S. could blunt with one fell swoop, says economist Jeff Rubin. In his book “Why Your World is About to Get a Whole Lot Smaller,” Rubin says the U.S. could impose a countervailing tariff — a carbon tax, if you will — to make Chinese manufacturers pay the true global cost of their carbon emissions. That would shift more jobs back to North America, argues Rubin, a former chief economist at big Canadian bank CIBC. It’s also an idea that appeals to both labor unions and environmental activists.
Larry Horowitz, who alerted me to Rubin’s book, provides a link to this excerpt from the Montreal Gazette.
What does all this have to do with the local debate over Gateway Pacific? Maybe it’s a bit of a reach, but I can’t help but wonder if this project would look different to some people if the overall outlook for industrial jobs did not seem so bleak.
Is Whatcom County well-situated to benefit from the shift of manufacturing back to this country–assuming that this shift lives up to the expectations that Fishman’s article creates? Maybe not. This county’s industries have generally been extractive and resource-based: Coal, lumber, paper pulp, seafood processing, aluminum, petroleum.
GE’s Louisville plant enjoys a strategic, central location for access to retail markets. Whatcom County’s location is the opposite of central. What do you think?