This story was published on MichiganRadio.org for a program called The Next Idea (Michigan Radio’s project devoted to new innovations and ideas that will change our state) on November 20, 2017. Click here to read the full original story and listen to the podcast discussing this idea.
Michiganders know well the effects of manufacturing’s decline in this country.
But a new report points out ways to ensure manufacturing stays alive here, and with 1-in-7 workers in our state still employed in this sector, it’s a challenge that we need to address.
The report is called Making it in America: Revitalizing U.S. manufacturing. It was released this month by the McKinsey Global Institute, a leading private-sector think tank.
The report examines what hurt manufacturing in the past, and explores where it might go in the future.
Katy George, senior partner at McKinsey Global Institute and one of the lead authors on the report, joined Stateside to talk about the power of Michigan’s manufacturing sector.
“The manufacturing sector is a full fifth of Michigan’s economy, so even though we talk about the decline in manufacturing in Michigan and in the United States overall, Michigan is still a manufacturing powerhouse, as is the United States,” George said. “The United States is the second-largest manufacturing economy in the world, and Michigan is one of the real heartbeats of the American manufacturing sector.”
George said that when thinking about opportunities for revitalizing the American manufacturing sector, “Michigan’s got to be a core part of that.”
The future of manufacturing
In a modeling exercise exploring the manufacturing sector’s potential, George said, “we estimated that for Michigan it could be $30 billion more of GDP into the Michigan economy and 170,000 jobs.”
George sees three main places that Michigan needs to invest to remain competitive in manufacturing: new technology, the workforce, and a supply base of small and medium firms, not just large ones.
“One of the things we found is that even as U.S. manufacturing overall has declined, there’s actually a segment of firms—the very largest ones, over $1 billion in revenue—those large firms have continued to grow over 2% a year, so large firms are doing well, but the smaller and medium-sized manufacturers have been left behind,” George said. “They have not been able to invest in new technologies, they have not been able to get skilled workers, and that becomes a really vicious cycle downward.”