The Reindustrialization of Washington

It was three decades ago that business magazines first started talking about the deindustrialization of America. A tsunami of competition from Japan had devastated United States industries such as steel, machine tools and consumer electronics, forcing companies to slash hundreds of thousands of jobs.

U.S. companies responded by cutting costs and improving quality only to face a second attack, this time from the tigers: Taiwan, South Korea and Singapore. Now, the threat we face is from the BRICs (Brazil, Russia, India and China).

Washington businesses also face competition from fellow Americans. Attracted by generous state subsidies, Boeing chose to build a second plant for its 787 airliners in South Carolina while Dendreon opted to open a factory in Atlanta. Just as we adapt to one new competitor, another wave follows. Its no surprise that many of our entrepreneurs simply throw up their hands and dont even consider manufacturing here in our state.

They should. Nationwide, the American manufacturing sector is far stronger than many people realize, generating $3 trillion in value last year, making us the worlds largest manufacturer. Here in Washington, manufacturing accounts for about a fifth of the total gross business income. We have cutting-edge manufacturers in such sectors as aerospace, shipbuilding and food processing.

We may even be gaining back some consumer products businesses. David Giuliani, inventor of the Sonicare toothbrush, made a conscious decision to manufacture his follow-up product, an ultrasonic skin cleaner called the Clarisonic, in Bellevue. He says its a decision that was good for his company as well as for the community.

Having a manufacturing base is important to the state not least of all because of the many benefits it provides in the form of jobs and economic infrastructure. Manufacturers establish a foundation on which many other industries can develop. When Joe Foggia of Vancouvers Christensen Yachts experienced declining demand for his yachts, he began applying his composites expertise to building windmill blades, establishing a new manufacturer in Washington.

Our universities and tech companies do advanced research in areas like biotech, renewable energy and new materials, certainly creating many important jobs for scientists, technicians and others. But its when such research becomes a product that is manufactured locallywhether its a biomedical device or a system for generating clean energythat the research truly has a big impact on the economy.

Sure, our overseas competitors have a large cost advantage as a result of low wages. But those advantages will shrink over time. In China, for example, rising wages and an appreciating currency should gradually erode some of its competitive advantages. Meanwhile, new labor-saving technologies have reduced the relative importance of cheap wages.

With the combination of technology and ingenuity we have, Washingtons manufacturing sector has a great future. But it may take a conscious effort on the part of state government, business and consumers to keep it that way.