Will mega-corporations give way to a local manufacturing renaissance?

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Mike Guillen works on the assembly line at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. General Motors Co is raising the stakes on its bet that sales of fuel-thirsty sport utility vehicles will keep driving its global profits as Chinese and other markets sag. GM said on July 14, 2015 that it plans to spend $1.4 billion to modernize the factory in Arlington, Texas, that builds the Cadillac Escalade, Chevrolet Suburban and GMC Yukon sport utility vehicles. It's the largest single investment in a $5.4 billion, three-year plant upgrade program announced earlier this year. Picture taken June 9, 2015. To match Insight GM-SUVS/ REUTERS/Mike Stone	 - RTX1L9A9

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JUDY WOODRUFF: But first: Big companies today are not creating nearly as many middle-income jobs as they once did, and that’s been one of the concerns in this campaign.

Economics correspondent Paul Solman went to Detroit, where ideas for spurring a new era of local manufacturing are taking shape. It’s part of his weekly series, Making Sense.

PAUL SOLMAN: A must-see stop on the grand tour of decaying Detroit, the plant that, for decades, clanked out auto chassis for GM.

GERALD DAVIS, University of Michigan: General Motors at its height had 900,000 employees, career ladders galore. They were providing a lot of benefits, creating good middle-class jobs. GM today has about 220,000 employees around the world. It’s about as many as it had in 1928.

PAUL SOLMAN: But sociologist Jerry Davis says the GMs of yesteryear, though models of productivity and even of economic equality, are history.

JERRY DAVIS: What happened to General Motors didn’t just happen to General Motors. There are about half as many public corporations today as they were 20 years ago.

PAUL SOLMAN: So, instead of General Motors, U.S. Steel, Eastman Kodak, and I could go on and on, what have we got?

JERRY DAVIS: The big corporations today don’t really have that many employees. They’re not providing career ladders. They’re not creating middle-class jobs. Blockbuster had 80,000 employees and 9,000 stores across the country. Netflix does the same thing with fewer than 4,000 people.

If anybody tells you they work at Facebook, probably they mean they are a contractor, because only about 12,000 people actually work at Facebook. They are worth $300 billion, but very few people actually work there.

PAUL SOLMAN: In a new book, Davis calls it the vanishing American corporation and poses a pivotal question: What will rise from the wreckage? Mega-firms that hire relatively few workers? Made-anywhere product peddlers like Nike?

JERRY DAVIS: They’re the biggest sneaker and sporting goods company in the world, but they don’t actually make most of the stuff with their name brand on it. They design it, they market it from Oregon, but the production is done by contractors all around the world. And that model is spread widely.

It’s not just sneakers, it’s not just garments. Electronics, pharmaceuticals, pet food, you name the product, and you can find somebody to manufacture it and put your name on it.

PAUL SOLMAN: Nikefication, Davis has dubbed it, exemplified by another multinational with a Detroit foothold, Ikea.

JERRY DAVIS: The Ikea model is you manufacture it somewhere, you ship it out around the world, flat pack. So this model might be a very good model for customers because it’s very inexpensive. It’s not the world’s best furniture, but you can live with it.

PAUL SOLMAN: And you do have to assemble it yourself or hire someone to do it for you. Indeed, these days, a world of temps is only a moment away.

JERRY DAVIS: A business like Upwork allows you to find contractors to do programming and other tasks available around the world.

Czech Republic.

PAUL SOLMAN: Czech Republic, U.S., Croatia, Philippines.

But the technology that allows for such wonders, and the wage exploitation of a global race to the bottom, also suggests a more appealing future for work in America.

JERRY DAVIS: You can go to this Web site and see these great designs for beds, chairs, tables and so on, the kind of thing that you might buy at Ikea. But these are designs that you can download and create locally.

PAUL SOLMAN: Instead of assembling Ikea furniture themselves, that is, why can’t Americans also make it to their own specifications?

JERRY DAVIS: So, this is basically an Ikea-like chair that’s made out of metal, but you could make it out of plastic or wood.

PAUL SOLMAN: These are just prototypes or models.

JERRY DAVIS: Yes. These are the designs online shrunk to a tiny version. But you could make a full-sized version of this, this afternoon.

PAUL SOLMAN: So Davis took us to TechShop Detroit, where Vasile Vincent was using a computer-controlled cutting machine to carve a table leg based on an online design. For a monthly fee, members of TechShop, a nationwide chain, access all manner of gadgetry.

Faithe Olsen was working the water jet cutter.

FAITHE OLSEN, TechShop Detroit: It’s using sand. It’s using water pressure. It’s basically using erosion to cut through. We have got eighth-inch aluminum on there right now.

PAUL SOLMAN: Wow. So that’s cutting through aluminum now.

FAITH OLSEN: Yes. It’s just cutting right through it.

PAUL SOLMAN: TechShop is for polished pros and rank amateurs alike.

The manager of this Detroit site is Will Brick. So, who is this? The Red Baron?

WILL BRICK: Yes, right. I like to imagine that’s me in the cockpit there.

PAUL SOLMAN: Brick cooked up this model airplane for a summer camp.

WILL BRICK: One of the things we taught kids to do was to build an airframe and then add a radio control mechanism to actually be able to remotely pilot it.

PAUL SOLMAN: So, future makers learn how to do it themselves, while entrepreneurs hatch the products of tomorrow. The Rope Runner was the brainchild of Kevin Bingham.

WILL BRICK: He came up with this thing that allows you to scale a tree, go up and down without changing kit, and be as nimble as like a spider monkey, right? He came into TechShop, drew up some prototypes, made some wooden mockups, and cut out the finished aluminum pieces, assembled all that, and then engraved his logo and the phrase “Made in Detroit,” which I love, into the powder coating on the sides of the apparatus.

PAUL SOLMAN: What Davis sees budding in Detroit is an alternative to a world run by Nike and Ikea, manufacturing brought back to America, made possible by ever-cheaper technology, and repurposing the industrial infrastructure of the past.

Consider the Green Garage, a socially conscious business incubator housed in a former Model-T showroom.

DEVITA DAVISON, FoodLab Detroit: We are a diverse community of about 211 locally-owned food businesses.

PAUL SOLMAN: Devita Davison of FoodLab deploys local kitchens, so that entrepreneurs can bake and then sell cakes, for instance.

DEVITA DAVISON: Taking advantage of underutilized community kitchen space in churches, day care centers and Head Start.

PAUL SOLMAN: Amany Killawi co-founded LaunchGood, a crowdfunding site for Muslims.

AMANY KILLAWI, Co-founder, LaunchGood: So, it can be anything from someone creating their first children’s story, to an app, to starting their own business. But then you also have specific personal causes, like helping the first Australian hijabi ballerina.

I think many times Muslims are a seen as a source of problems in the world, and we’re here to show them there’s a source of solutions.

PAUL SOLMAN: The businesses here represent Jerry Davis’ dream of a work force that makes locally, but thinks globally.

JERRY DAVIS: These are businesses that are meant to last a long time. But really they are part of a broader ecosystem, and their goal is really, what can we do to make Detroit, as a community, stronger? It’s a very different model than, how do we create the most shareholder value, how do I retire before I have reached drinking age?

PAUL SOLMAN: A visit to the Red Panda space, a whole office, gave Davis a chance to relive his days in the college rock band Ivan Pavlov’s Salivation Army.

Today, professional groups like Wilco and the Red Hot Chili Peppers use Red Panda guitar effects to create new sounds. Owner Curt Malouin designs the pedals himself and has them made within fairly easy reach.

CURT MALOUIN, Owner, Red Panda: And that allows us to have better control over the quality and more flexibility, so that we can experiment with new products and be on the leading edge of the market, but we can also then ramp up production really easily when we get a hit product.

PAUL SOLMAN: Turns out Malouin assembled the very first pedal back at TechShop, where plenty of other do-it-your-selfers are inventing things on shared equipment.

John Osborne dreamed up a box-making machine.

JOHN OSBORNE, Inventor: It only takes about 15 seconds to change from one box to a completely different box, so it’s the only machine of its kind in the world.

PAUL SOLMAN: And with so many a folks turning out small runs of bespoke products, you need all kinds of boxes. And it’s now technically feasible, says Jerry Davis.

JERRY DAVIS: This is a place where capital equipment is so cheap and so easy to use that children can learn to use it in two hours, and if it’s that accessible, why do we need corporations?

PAUL SOLMAN: But if everybody can make everything by themselves, there are no more manufacturing jobs.

JERRY DAVIS: Why do we need to have jobs? If there are other ways to provide those same results, then maybe we could organize our time differently. Maybe we could be a maker on Tuesday morning and a farmer on Tuesday afternoon and a mash-up deejay on Tuesday evening. And we could all have more rewarding lives with more control over our time.

PAUL SOLMAN: Hey, maybe you could all make TV stories like this one.

But, until then, this is Paul Solman, economics correspondent every day of the week, reporting from Detroit.

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