America poised to regain momentum in manufacturing

(An excerpt from an article featured on the Huffington Post: “Americans Will Need To Lower Their Expectations, Ex-GM Executive Says”)

DETROIT (Ben Klayman) – The United States has a window of opportunity to dump its reputation as a nation of importers and get back to being a global manufacturing powerhouse, a former top General Motors Co (GM.N) executive said.

In a new book, Robert Lutz, who retired last year as GM vice chairman, criticizes the “creeping malignancy” that has seen the nation lose its way as a manufacturer.

In “Car Guys vs Bean Counters: The Battle for the Soul of American Business,” which goes on sale on June 9, Lutz tells of the battles he fought after joining GM in 2001 to steer the automaker away from over-reliance on data and back to its roots making well-designed, popular cars.

More broadly, the book serves as a clarion call for all U.S. manufacturers to focus on their products rather than quarterly numerical targets.

“We are no longer the richest, most all-powerful nation in the world, where we can afford to pay each other high salaries and high wages and high benefits and import $19 DVD players from China,” Lutz said in an interview.

“That is not going to work. We pay for it in IOUs called Treasury bills,” he added. “Time is running out and the country is going to have to reestablish its industrial base.”

Lutz, who also held executive positions at Ford Motor Co (F.N) and Chrysler during his career, said the United States now has a chance to regain its footing in the manufacturing sector because of favorable exchange rates and competitive labor rates, as well as its long history of innovation.

“With the current exchange rate, a lot of this offshoring no longer makes any sense,” he said.

Our Take:
American business can also look to agriculture. Ag is America’s strongest export sector, and this has been a backstop to American equipment manufacturing when so many other elements of that demand evaporated in 2008.

Lutz is the visionary who shepherded the Chevy Volt to market. It’s that same spirit of innovation and commitment to quality production that will make value-added ag a huge growth-center for the US economy.

We may not be accustomed to speaking in this way, but ethanol makers are manufacturers–of high quality fuel and high quality animal feed. The ability to replace petroleum with biomass could be the next big expansion of US manufacturing muscle, a real job generator. And it will begin in our nation’s farm-based energy makers, who will become biorefiners–the foundation of a new carbohydrate economy in which the feedstocks for energy, textiles and many manufacturing processes and products come ultimately from the farm.


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