Getting Our Heads Straight

So often, separating the truth from fiction is difficult. When rumors run rampant, getting a handle on what’s really happening can be elusive. It seems to me that, currently, U.S. manufacturing finds itself in a situation where the rumors of what’s going on may be, and I emphasize MAY BE, different from reality. In other words, the reality may be less or more devastating than the rumors.

There is a migration of manufacturing from our domestic market to a variety of foreign countries. This is not in dispute. What I find troubling is, to my knowledge, there is no current quantifiable data that can tell us the actual extent of the migration. Obviously each of us knows of businesses that have closed, morphed into brokers for foreign parts, refocused on niche markets, as their traditional customers look overseas to reduce cost and so on.

Recently, on a long plane ride, I was thinking that as we move deeper into the second half of 2003 there seems to be a spark of optimism that more than sporadic signs of recovery are starting to emerge. My concern is that when the recovery comes, what is our domestic manufacturing base going to look like? How many shops have we lost? What is the nature of the work that those shops performed? Will the surviving manufacturing base be capable of sustaining a pattern of growth? And if so, at what rate? Moreover, will there be gaps in our ability to meet demand, further exacerbating the migration to foreign suppliers?

Probably the closest thing manufacturing has to a gatekeeper for capability and capacity is the Department of Commerce. Unfortunately, the time delay between its ability to gather and analyze information is not terribly helpful in a dynamic market. When business gets moving quickly, whether it is going up or down, the information needs to be timely. Too often, this is not the case with the DOC. A problem for manufacturing, in an environment where hard data is difficult to come by, is that psychology takes over and with it come rumor, innuendo and occasionally just plain panic. Sometimes, because there is a lack of good data, the true condition of an industry is masked. When anecdotal evidence is used to supplant real information, the result is usually an exaggeration of the situation. Perhaps a good look at the Department of Commerce Web site www.commerce.gov might be in order. It may not be perfect, but it may help replace guesswork with data. In an economic situation where psychology plays a prominent role, it’s just as easy to be positive as negative.