Where Is Manufacturing Making a Comeback?

After years of losing jobs to lower-cost, overseas operations, several Rust Belt states are seeing a resurgence of manufacturing, led surprisingly by Michigan.

In the last three years, Michigan gained nearly 70,000 manufacturing jobs, the most of any other state, according to the latest government figures. Indiana and Ohio followed with each gaining some 50,000 jobs (see list).

Nationwide, more than a half-million manufacturing jobs have been created since the end of 2009. Good news to be sure, but still not enough to make up for the more than 2 million jobs the sector lost during the 2007-2009 recession. Today, just under 12 million Americans work in manufacturing, down from a peak of 19.6 million in 1979.

The auto industry, helped by the government bailout, continues to be the driving factor in Michigan’s turn-around.  Ford Motor Co., for example, last month announced plans to hire this year another 2,200 workers in the United States, as part of its commitment to invest $16 billion in its U.S. operations by 2015. That includes bringing back about 1,000 jobs last year from countries like Japan and Mexico to states like Michigan and Ohio.

The talk these days is about “insourcing,” or bringing manufacturing jobs back to the United States. And it’s not just happening in Michigan.

Whirlpool has opened new plants in Tennessee and Ohio. General Electric opened its first new manufacturing plant  in more than 50 years in Louisville, Kentucky, as part of its promise to spend $1 billion and create 1,300 American jobs by 2014. Even Apple’s CEO Tim Cook last year pledged that one of the existing Mac lines will be manufactured in the United States.

Changes in the global economy, including higher oil prices and the natural gas boom that makes it cheaper to fuel a factory, are among the reasons for what The Atlantic last month called an “insourcing boom.”

In Michigan’s case, a dramatic overhaul of the tax system also made the state more business friendly, says Mike Johnston, vice president of government affairs at the Michigan Manufacturers Association. The state last year ended the tax on industrial machinery, and in 2011, as Stateline reported, Governor Rick Snyder eliminated the unpopular “Michigan Business Tax,” which amounted to a 22 percent surcharge on top of corporate income and gross receipts taxes that corporations paid.

Johnson says that Michigan’s becoming a “right-to-work” state this year, making it harder for unions to organize workers, also will make the state more attractive to employers.  

After having lost a whopping a quarter of all its jobs since 2005, Michigan views manufacturing  as vital to its economy despite the significant loss of those jobs in recent years. Nearly one out of every six private-sector jobs is in manufacturing, according to a new report from state Workforce Development Agency.

By sheer numbers, California, not Michigan, lost the most manufacturing jobs in the two years after the recession started in 2007, shedding 209,000 jobs. Ohio came in second, losing nearly 150,000. That could be because Michigan was in a recession years before the national downturn. The state lost more than 170,000 jobs since 2005.

While the U.S. auto industry is rebounding, a new report indicates that employment nationwide in that sector is still more than 84,000 jobs below its 2008 level.