Electrolux Manufacturings Wake Up Call

October 24, 2003
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Perhaps the misery-loves-company syndrome led some people to take temporary comfort recently in reading that Michigan is not alone — that manufacturing is declining worldwide, even among mainland Chinese competitors.

But then last week, Electrolux Home Products announced that — thanks to “weak economic performance” — its Greenville plant may close in two years, exporting 2,700 production jobs to Mexico.

The Electrolux announcement cast a stark light on a fundamentally disturbing reality: West Michigan may be losing in the cutthroat international competition for a larger share of a diminishing number of jobs. Since the turn of this century, more than 200,000 Michigan jobs — many manufacturing jobs among them — ceased to exist.

At this point, it’s hard to believe city, county and state officials could do anything to strengthen economic performance at the Electrolux plant. The operation recently underwent a $100 million upgrade and received numerous tax and public works incentives to do so.

Substantive help possibly could come from Washington, perhaps not in time to save 2,700 Greenville jobs, but to dam the apparent steady flow of losses among smaller manufacturers.

In a recent letter, Congressman Peter Hoekstra, R-Holland, noted that 95 percent of all manufacturers are small- and medium-sized businesses. “They employ half of all manufacturing workers,” he wrote, “account for more than $1 trillion in receipts, compensate their workers at least 20 percent more than other small businesses and account for the vast majority of the basic products (e.g. tools, dies, molds) and inputs (e.g. specialty metals) essential and critical to our national security.”

Being small, such firms fall below the public radar screen when they close. Their size also makes them more vulnerable to policies which Hoekstra said hurt the manufacturing sector: surging health care costs, inaccessible federal procurement, foreign currency manipulation, trade barriers, protective steel tariffs, misdirected export policy and the auto manufacturers’ compulsion to ship work overseas.

None of those issues is new, but Hoekstra finds encouragement that manufacturing finally has its own voice in the president’s cabinet — an assistant secretary of commerce whose full-time job is to represent and advocate manufacturing, to help develop manufacturing expansion policies, and to critique policies militating against manufacturing.

Hoekstra reported, too, that he and an Illinois colleague recently formed a bipartisan manufacturing caucus to “dissect our national tax policy and regulatory framework to ensure that we are doing everything possible to keep manufacturing jobs.”

Reflecting on the Byzantine policies afflicting manufacturing, Hoekstra wrote that Congress soon must eliminate a tax break for U.S. exporters in order to avoid fines by the World Trade Organization. “However, this creates an opportunity to replace this tax break with targeted tax cuts that will provide significant relief to the ailing manufacturing sector.”

He said such cuts are critical to the medium and small firms that provide at least half the manufacturing sector’s jobs. “Manufacturing in the United States is in a crisis,” Hoekstra wrote. “We cannot afford to allow one of the most critical sectors of the American economy to continue to suffer.”           

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