Gozinsky: Hillary Clinton’s plan to make manufacturing ‘sexy’ lacks balance
Central New York used to be a hub for manufacturing jobs. But the economy may return to its glory days if Hillary Clinton’s plans to “make manufacturing sexy” in the Syracuse region acknowledge the importance of balance.”
The presidential hopeful proposed a manufacturer makeover earlier this month in downtown Syracuse, known as “Make it in America,” which includes a $10 billion government investment in upstate New York and United States regions that have seen economic decline. After rescinding tax breaks from corporations that have outsourced jobs to other countries, the plan would use the money to enhance all parts of the supply chain and help American companies compete with their peers.
The plan has become a focal point of Clinton’s upstate rallies leading up the New York primary on Tuesday. Theoretically, her plan to influence others to “Make it in America” has the potential to re-establish the strong manufacturing base the economy used to rely on, it is not without its flaws. The plan intends to use negative reinforcement to punish companies that outsource jobs abroad — a problem Syracuse has seen before.
From the late 1700s to the early 1900s, Syracuse was one of the nation’s leading suppliers of salt production due to Onondaga Lake, which was arguably a major reason why the “Salt City’s” economy stayed afloat. Once the industrial revolution came around, Syracuse’s economic focus shifted from salt to machinery and electrical equipment. During this time, Syracuse’s production rivaled that of New York City, considering 37 percent of local jobs were based in manufacturing in 1958, according to a report by The Brookings Institution.
In the report, Robert Crandall, an economics expert, attributed some of the loss in Syracuse’s manufacturing to the overall trend that was occurring in the U.S. at the time. The northeast was hit particularly hard with the outsourcing of jobs and more than 50 years later, Clinton’s plan would work to reverse this damage by bringing substantial employment opportunities back.
Due to strict regulations and high costs, manufacturing jobs are still leaving the U.S. in favor of countries like China to maximize profits — a factor Clinton took into consideration. In fact, 3.2 million jobs were lost to China alone between 2001 and 2013, two-thirds of which were in manufacturing, according to a report by the Economic Policy Institute. In central New York alone, at least 22 companies had sent over 1,600 jobs abroad since 2008 as of 2014, according to Syracuse.com.
Changing the mindset of manufacturers by convincing them to come back to the U.S. won’t be easy. But Isaac Ehrlich, chair of the economics department at the State University of New York at Buffalo, believes that it can be done through incentivizing businesses in the industry.
“In the current administration, there is a tendency at this point to actually punish these corporations, to take away some other benefits that they have in order to prevent inversion, to prevent them from going abroad,” said Ehrlich.
Ehrlich explained that attempting to convince corporations to manufacture in the U.S. through negative reinforcement is a bad idea because of host countries’ interest in keeping corporations there. This method is why rescinded tax breaks for companies that outsource jobs are not an effective part of Clinton’s plan.
And this balance is much needed when the region is still seeing the effects of the decline. Between 2000-08, about 105,000 manufacturing jobs were lost in upstate New York, as reported by Reuters. This mass exodus of jobs occurred slowly, but surely, and no business is safe.
In late March, for example, the demolition of the U.S. birthplace of the Nestle Crunch Bar began after having been housed in Fulton, New York, for decades. Now, the space is going to be used for retail and service purposes and has already been incorporated by companies including Aldi, Spring Storage Park, Inc. and U-Haul, according to Syracuse.com.
This was also seen in the Syracuse community, where Carrier employed upward of 7,000 workers at its peak compared to its current employment of 1,300 workers, according to The New York Times and data from the Onondaga County Office of Economic Development. Carrier has also decreased dramatically in its physical size: in 2011, 1.2 million square feet of unused factory space was demolished.
So while the closing of the Nestle factory and downsizing of Carrier don’t get all that much attention, these developments are representative of a greater problem Clinton’s plan is trying to address: the need to make manufacturing sexy again because the tendency to strive toward retail is alarming.
Whether it’s service or retail space, the overtaking of property that was formerly used for production is representative of the general attitude people have about manufacturing. Everyone loves how manufacturing sounds as far as economic benefits go, but many argue it is not worth it if it makes their neighborhood less beautiful or suburban. However, the results of the upcoming primary will reflect where New Yorkers stand when it comes to how manufacturing fits into the regional economy.
Still, people need to realize that in order for luxury brands and “nice” stores to exist, factories and manufacturers are more than just an eyesore and need support as well if they want to continue buying their favorite products and visiting their favorite shops.
It is imperative that retail and manufacturing coexist in order to preserve a healthy economy. And because manufacturing is the beginning of the supply chain, any opportunity to build it up should be taken advantage of.
Though Clinton should be commended for her attempt to bring sexy back when it comes to manufacturing, the reality is that heavy-handed negative reinforcement policies will only push businesses away.
Sam Gozinsky is a freshman finance and public relations dual major. His column appears weekly. He can be reached at email@example.com and followed on Twitter @SamGozinsky.
Published on April 13, 2016 at 10:51 pm