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the most dramatic change would be to establish a cabinet level
Department of Manufacturing. We have departments of energy,
transportation, agriculture, health, housing and education, all
seeking to advance the state of the nation’s capability in their
respective “industries.” If we believe that manufacturing is an
important industry, why not a Department of Manufacturing?
Such a department would certainly bring focus and coordination
to manufacturing policy, but its real value would be to abandon
the “hope as strategy” approach that now is the
de-facto policy for manufacturing.
The needs for successful manufacturing growth are not
unknown. Manufacturing needs quality logistics and location
infrastructure. It needs trained and well-paid workers. And, the
industry certainly needs sustained demand for its output from
a weak dollar, aggressive export policy and serious economic
stimulus. Most of all, manufacturing needs an industrial policy
that promotes promising industries and protects them and
others, where needed, to keep them strong and growing.
The last of these needs – industrial policy – is the most
controversial because it goes against the grain of American
capitalism. The manufacturing capitalism to which we are
accustomed is a form of “incentivized laissez-faire,” in which
19th century norms of minimum government are combined
with 20th century tax code encouragement. It is time to
abandon this policy and recognize that national government
can, with industry’s help, identify, invest in and protect the
foundation industries of the future.
Such a policy doesn’t mean that government will be seeking
to pick businesses in popular culture that are best left to
marketplace selection. High-tech, environmental and basic
industries would be candidates for an industrial policy.
Structured along the financial models of venture capital/private
equity, and with careful tariff protection, our industrial policy
would be a uniquely American industrial model that can
revitalize manufacturing. Finally, a policy like this one can’t be
timid; substantial funding and strong political support are
critical to success.
If we are serious about getting manufacturing growing at
the rate it grew between 1970 and 1990, the American capital
system will have to undergo some wrenching cultural changes.
To maintain the current paradigm is to abandon the competitive
edge to our manufacturing rivals.
v
Gerry Najarian is the founding principal of
The Remington Group, LLC, a manufacturing
management consulting firm based in
Princeton, N.J.
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