On Topic: Economists cite ‘dangerous sense of complacency’

About a half-dozen years ago, during the depth of the Great Recession, for a story I was writing on supply-chain issues for the metals industry, I included a comment by a warehouse CEO who said he allowed his customers access to his online inventory database. That way, the executive contended, they could see firsthand and without delay if his facility had the quantity of steel, aluminum or whatever they might need.

When I turned in the completed story, the senior editor refused to believe anyone would permit such unfettered entree. Why, that means anyone, including competitors, could see how much metal was coming into and going out of that warehouse. And if you sidestepped that initial contact between buyer and seller, how would that affect corporate sales strategy?

I guess he thought I was making it all up.

He cut the quote.

But I think the key point my editor was missing was that at that time, when the American economy appeared to nearly out on its back, manufacturing companies - indeed, businesses in many fields - desperately needed to try out almost any idea that might help nudge their profit needle - no matter how wacky or even reckless the notion could have become in the long term.

More than once in this column over the past four years I've moaned about our country's lack of a national manufacturing policy, and our apparent shallow appetite for even any general federal direction. Evidence keeps mounting why we need one - or if we aren't going to get such guidance, why companies must countenance all the innovation and nimbleness they can muster.

Here's what I mean.

According to the Iowa's Business Conditions Index, a survey complied by Creighton University of purchasing managers and released earlier this month, metal manufacturers and ag machinery makers are cutting jobs. Not at a rapid pace, but still.

'With recent pullbacks, compared with pre-recession levels, this heavy manufacturing sector has lost more than 13,000 jobs,” noted Ernie Goss, Creighton's Economic Forecasting Group director.

A January report from the Washington, D.C.-based Information Technology and Innovation Foundation suggests things don't look so hot nationwide, either.

'American manufacturing has still not recovered to 2007 output or employment levels,” the less-than-cheery authors say. 'Moreover, the lion's share of growth that has occurred appears to have been driven by a cyclical, rather than structural, recovery, and as such may represent only a temporary trend.”

The writers - Adams Nager, an economic researcher, and Robert Atkinson, the foundation's president - concede our country's economy is improving, but hardly at any terrific pace. A federal jobs report released March 6 claimed the United States picked up some 295,000 jobs. (A revised tally dutifully will follow, no doubt, in a week or two.)

But manufacturing isn't doing its share, Nager and Atkinson argue.

'Manufacturing job growth has scarcely kept up with the growth of the overall work force,” the pair adds. 'In the beginning of 2010, manufacturing employment constituted 4.76 percent of the U.S. workforce. By the end of 2013, it had climbed a modest tenth of a percent to 4.86 percent.”

At the conclusion of their findings - you can find the foundation's report, 'The Myth of America's Manufacturing Renaissance: The Real of U.S. Manufacturing,” at http://smgs.us/3k0j - the authors say they have sincere motives for raining on so many optimists' parades.

Nager and Atkinson say they want to shake business leaders and policymakers out of their 'dangerous sense of complacency” about economic growth. Only then, once we get our bearings as to where we really are, can we determine where we want to go and how best to get there.

' Michael Chevy Castranova is enterprise editor and Sunday business editor of The Gazette. (319) 398-5873; [email protected]

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