Manufacturing Matters
For years, the “postindustrial” paradigm was king in the West: we thought we could locate plants and machinery offshore without significant economic cost. But is this true?
by Yan Barcelo illustration by Michelle Thompson
D
URING A CONFERENCE AT ÉCOLE POLYTECHNIQUE DE MONTRÉAL IN THE LATE 1980S, economist Kimon Valaskakis rhetorically asked, “What is the difference between an entertainer earning $3 million to sing the American anthem at the opening of the Super Bowl and a company like Bombardier selling a jet plane for the same amount?” In his view, it was obvious there is no difference.
Is there really no economic difference between a plane and a song? Doesn’t the vast infrastructure of manufac-
turing contribute something to the economy? Until recently, there was a notion in some quarters that developed countries lived in a postindustrial world, which seemed to mean that manufacturing was neither important nor necessary. “It was a very narrow view that claimed that manufacturing was dirty and primitive and that we could let the Chinese do most of it for us,” says Harry Moser, founder and president of Illinois-based Reshoring Initiative, a not-for-profit aimed at bringing manufacturing back to North America. The idea was that “the economy could make it by design, innovation and financial manipulation alone. But it doesn’t work.” Over the past 40 years, the postindustrial view has provided intellectual support for the considerable erosion
of manufacturing’s relative share of GDP in advanced economies. In a blog posted on the US Chamber of Commerce Foundation website, Mark Perry, professor of economics at the University of Michigan, reports that manufacturing’s share of US GDP slid to 12.8% in 2010 from 24.3% in 1970. In Japan, over the same period, it fell
32 | CPA MAGAZINE | MARCH 2015
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