A SPECIAL SUPPLEMENT TO NATIONAL JOURNAL

Next Economy
the
WINTER 2010 A JOINT PROJECT WITH THE ATLANTIC
BACK
TO
THE
FUTURE
IS THERE A SECOND ACT FOR
U.S. MANUFACTURING?
BY BRUCE STOKES
PLUS:
WHITE-COLLAR
EXPORTS

ARTICLES BY
JAMES FALLOWS and
RONALD BROWNSTEIN
Next Economy
the
1203 suppcov3_fx4.indd 1 12/2/10 11:55 AM
1HL NLX1 LCONOMY WI N1LR 2 u I u 3
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iurniinNiI c. cor
NniI oNniaounNni. cor
wI n1sn 20I0
Next Economy
the
A SPECIAL SUPPLEMENT AND JOINT PROJECT OF THE ATLANTIC AND NATIONAL JOURNAL
4 Making Things, Again
A hoped-for revival in U.S.
manufacturing reveals itself
in a familiar place using
unfamiliar techniques.
BY BRUCE STOKES
8 Success Stories
Two U.S. manufacturers are
mastering the art of exports.
BY DEREK THOMPSON
10 Municipal Exports
The U.S. cities that make goods
to sell abroad arent conned to
the coasts.
BY RONALD BROWNSTEIN
14 The Big Picture
Manufacturing plunges and
shifts, services rise, and other
lessons of history.
BY BRIAN McGILL
AND PETER BELL
16 Services Set Sail
American brainwork nds
a surging market abroad.
BY T.A. FRANK
19 Jobs Amid Chaos
It isnt easy to nd a dream
job in an uncooperative market-
place, but there are ways.
BY ALINA TUGEND
21 Obamas Man
Commerce Secretary Gary
Locke on how the United
States can compete.
BY JIM TANKERSLEY
22 Still No. 1
Three reasons for optimism
that American economic
power will endure.
BY JAMES FALLOWS
From the Editors

T
uIs IsN i voun cnnNurniurns rcoNorv. We
used io maLe siu; nov ve shue aei (and eIeciions).
1he Ameiican economy Lees evoIving in uniediciabIe
vays. So vhai is ii iuining inio? 1he ihiid in a seiies oI
quaiieiIy suIemenis joiniIy iesenied by The Atlantic
and National Journal exIoies ihe Iuiuie oI U.S. manuIaciuiing
and vhiie-coIIai seivices in a gIobaI maiLeiIace. And ihe iciuie
isni as giim as you mighi guess.
Maybe ihe besi Iace io siaii in iiying io undeisiand ihe
economys iecionic shiIis is by examining ihe hisioiicaI giahs
on . I4-I, vhich shov hov U.S. manuIaciuiing has coIIased
and been iiansIoimedsince WoiId Wai II vhiIe vhiie-coIIai
seivices have gained ieeminence. 1his anaIysis oIIeis a use-
IuI coniexi Ioi ihe covei aiiicIe, vhich asLs: Is iheie a second
aci Ioi Ameiican manuIaciuiing? Biuce SioLes, vho iiaveIed
io vesiein PennsyIvania, Iinds ihai ihe nexi vave oI manu-
Iaciuiing may beai a assing iesembIance io ihe isi. In Iace
oI ihe humongous sieeI miIIs IeIi emiy by Ioieign comeiiiion,
seciaIiy miIIssmaIIei and smaiieiaie ihiiving, each suiiound-
ed by a cIusiei oI businesses ihai Ioim a soii oI indusiiiaI ecosysiem.
Where ihis Iuiuie viII haen may come as a suiiise. RonaId
Biovnsiein iiaces ihe geogiahy oI U.S. ciiies ihai manuIaciuie
goods Ioi exoii and nds Iaces ihai you mighi noi execi. Dei-
eL 1homson IooLs ai ivo domesiic manuIaciuieisa biggie and
a smaII Iiyihai have Ieained hov io seII iheii vaies abioad. 1he
gIobaI maiLeiIace, oI couise, iiades moie ihan manuIaciuied
goods. 1.A. IianL deIves inio ihe success oI U.S. vhiie-coIIai busi-
nesses in seIIing iheii seivices oveiseas, vheihei by eddIing -
nanciaI advice oi Iicensing Caie Beais.
1heie aie oihei ieasons noi io desaii. On a eisonaI IeveI,
AIina 1ugend oeis some oinieis on nding a job ihai youII IiLe
even iI ihe economy zigs vhiIe you vouId iaihei zag. On ihe bacL
age, 1ames IaIIovs oeis ihe mosi comIoii oI aII, in desciibing
ihe siiuciuiaI siiengihs ihai ihe U.S. economy coniinues io vieId
againsi iis comeiiiois. 1his is a iesiIieni couniiy, aIiei aII, and ii
has suivived ihe joIi oI economic iiansiiions beIoie. Why noi again?
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1203supp-TOC-editors note.indd 3 12/3/10 11:31 AM
4 WI N1LR 2 u I u 1HL NLX1 LCONOMY
L
vNuonn, Pa.Is Ameiican manuIaciuiing dead?
1hose vho ihinL so oini io manuIaciuiings Ium-
meiing shaie oI ihe naiionaI economy as a iedicioi
oI iis eveniuaI demise. Bui ihey IiLeIy have nevei
been io BuiIei Couniy. Heie, noiih oI Piiisbuigh, in
ihe heaii oI vesiein PennsyIvania, basic manuIac-
iuiing siiII diives ihe IocaI economy. Ii has suivived
aiound heieindeed, ihiivedsuggesiing ihai Ameiica, ioo, has
an indusiiiaI Iuiuie.
BuiIei Couniys economy has Iong deended on maLing
sieeI and Iashioning ii inio iecision iooIs, indusiiies ihai mosi
Ameiicans ihinL have IaigeIy ed oveiseas. 1o suivive, coma-
nies heie have successIuIIy adaied, using exibIe manuIaciui-
ing iechniques ihai maiiy comuieis viih a sLiIIed voiLIoice
io ciaIi ioducis Ioi inieinaiionaI maiLeis. And in ihe vaLe oI
ihe voisi economic dovniuin since ihe Gieai Deiession, ihe
unemIoymeni iaie in BuiIei Couniy siood ai jusi 6.8 eiceni
in Seiembei, Iai Iovei ihan ihe naiionaI aveiage.
1he Obama adminisiiaiions hoes Ioi a second aci Ioi U.S.
manuIaciuiing ceniei on high-iech, Iuiuie-oiienied ioducis
such as soIai aneIs and bioiechnoIogy. 1heie is ieason io ihinL
ihese goods viII Iay a big ioIe. 1heii iiacL iecoid has been im-
iessive, and iheii cuiiing-edge naiuie insiies ubIic imagina-
iion. 1he vind-eneigy indusiiy, Ioi insiance, is ioughIy a $2u
biIIion business and is gioving by Ieas and bounds. SiiII, ihese
iechnoIogies coniiibuiions io ihe oveiaII economy aie siaiisii-
caIIy insignicani. 1obs in ienevabIe eneigy, bioadIy dened
(incIuding vind, soIai, and hydioeIeciiiciiy), accounied Ioi jusi
u.I eiceni oI ioiaI emIoy-
meni in ihe Uniied Siaies in
2uu7, accoiding io Moodys
AnaIyiics. 1he maLeis oI
sieeI, aIuminum, and oihei
iimaiy meiaIs emIoyed
ihiee iimes as many eoIe.
When ii comes io nev in-
dusiiies, ii iaLes a vhiIe Ioi
ihem io giov, said Sohia
KoioecLyj, a managing di-
iecioi ai Moodys AnaIyiics. So, Ioi ihe IoieseeabIe Iuiuie, iheyII
be dvaiIed in economic signicance by exisiing manuIaciuiing.
Desiie ihe neai-disaeaiance oI ihe Ameiican iexiiIe, aaieI,
and shoe indusiiies, and ihe ieceni iioubIes oI ihe auio indusiiy,
ihe Uniied Siaies iemainsiI ienuousIy soihe voiIds Ieading
manuIaciuiei, Ied by indusiiies ihai ieIy moie on iechnoIogicaI
iecision and biainovei ihan on Iov-sLiIIed IaboiaiiciaIi,
sohisiicaied machineiy, medicaI devices, and ihe IiLe. Bui
manuIaciuiings siaying ovei is aIso ihanLs io oId dogs, such
as high-end sieeImaLeis, ihai have Ieained nev iiicLs.
An unIiLeIy iesiing giound Ioi ihe second aci in Ameiican
manuIaciuiing is in vesiein PennsyIvania, vheie ihe isi aci had
iis heyday. 1o ihe uniiained eye, ihe ivo eias IooL much ihe same.
Shoveis oI saiLs and unseaLabIe heai siiII maiL ihe ouiing oI
sieeI. Bui Andiev Cainegie vouId noi iecognize ihis sieeImaLing.
1o comeie in an incieasingIy comeiiiive voiId maiLei, even
iiadiiionaI manuIaciuieis musi oeiaie on ihe iechnoIogicaI
snv vvr-vvr io iur iIxrs of
River Rouge, and hello to smaller, smarter
factories surrounded by industrial
ecosystems that nourish innovation. But
the next wave of manufacturing may
require governments helping hand.
Cover Story
By BRUCE STOKES
Act II for
American
Manufacturing?
1203supp-Stokes-cover story.indd 4 12/6/10 11:03 AM
1HL NLX1 LCONOMY WI N1LR 2 u I u 5
Iioniiei. In iis Lyndoia Iani, AK SieeI oeiaies ihe voiIds Iasiesi
and mosi ioduciive coaiing and naI anneaIing iocess, vhich
chemicaIIy aIigns giains on ihe suiIace oI eIeciiicaI sieeI so ihai
vhen ii is used in a iiansIoimei ihai geneiaies eIeciiiciiyihe
eIeciions ass ovei ii moie quicLIy.
1his is ihe Iuiuie oI Ameiican manuIaciuiing, accoiding io
SheiIe Schvenningei, vho diiecis ihe economic giovih io-
giam ai ihe Nev Ameiica Ioundaiion in Washingion. We need
a bioad-based manuIaciuiing economy io iovide jobs in ihe
Uniied Siaies, he said. And ii can be done, he beIieves, because
Ameiicas comeiiiive advaniage in ihe voiId maiLei Iies in
sohisiicaied and highei-vaIue-added, IundameniaI manu-
Iaciuiingihings such as eaiih-moving equimeni and saIei
mining and diiIIing iechnoIogiesihai can meei ihe needs oI
emeiging economies.
1his is manuIaciuiings momeni, said 1ohn LngIei, iesi-
deni oI ihe NaiionaI Associaiion oI ManuIaciuieis,ieciseIy
ihe iighi iime Ioi manuIaciuiing io have a comebacL. A bioad-
based manuIaciuiing economy, hovevei, may veII deend on
ihe iighi oIicy enviionmeni: Iovei iaxes, smaii ieguIaiion, a
veaLei doIIai, beiiei iiaining Ioi voiLeis, and ihe ieseiva-
iion oI IocaI indusiiiaI cIusieis oI Iaige and smaII ims ihai
Ieed o one anoihei.1hai, in iuin, iequiies ihe ubIics iec-
ogniiion ihai manuIaciuiing has a meaningIuI ioIe io Iay in
Ameiicas Iuiuie and a goveinmeni-guided Ian io maLe ii
haen. Wiihoui a Ian, vained Leo Geiaid, iesideni oI
Uniied SieeIvoiLeis InieinaiionaI, Ameiican manuIaciuiing
viII coniinue io aiiohy.

sscns1 1o sunvIvnI
1he deaiiuies Iiom ihe isi aci in Ameiican manuIaciui-
ing may be moie ihan iechnoIogicaI. 1he geogiahy viII change,
as viII iis conguiaiion. Huge IaciIiiies viih iens oI ihousands
oI voiLeis aie oui. Iacioiies voni IooL IiLe ihe giganiic Rivei
PATRICE GILBERT
I To the untrained eye, the new-wave manufacturing
at AK Steels Lyndora plant looks a lot like the old.
1203supp-Stokes-cover story.indd 5 12/3/10 12:37 PM
6 WI N1LR 2 u I u 1HL NLX1 LCONOMY
Rouge auio-maLing comIex
ihai Heniy Ioid buiIi in
Deaiboin, Mich., in ihe I92us.
Comaci Ianis suiiounded
by cIusieis oI smaII ims ihai
seivice ihem viII IiLeIy ou-
Iaie iomoiiovs manuIaciui-
ing Iandscae. Many oI ihe
Iacioiies viII be in ihe Souih,
vheie Iovei vages may heI
esiabIish a nev indusiiiaI
heaiiIand.
ManuIaciuiing can aIso
suivive in ihe Rusi BeIi. AK
SieeI, Ioi examIe, isni meie-
Iy suiviving; iis IIouiishing.
Wiih moie ihan I,8uu em-
Ioyees, ii is BuiIei Couniys Iaigesi indusiiiaI emIoyei. 1he
comany seciaIizes in ioducing eIeciiicaI sieeI (used in ovei
iiansmission and disiiibuiion) and exoiis haII oI ihai. AK SieeI
is in ihe midsi oI a $I8 miIIion caiiaI-exansion iogiam, ie-
Iacing ihiee I96us-eia Iuinaces viih a singIe, iechnoIogicaIIy
advanced Iuinace. 1his viII inciease ihe Ianis ioduciion ca-
aciiy by 4u eiceni vhiIe imioving ioduciiviiy and quaIiiy.
Ii viII aIso give AK SieeI ihe exibiIiiy io maLe vaiious sieeIs,
deending on cusiomei demand.
A Iev miIes avay, in dovniovn BuiIei, Wise Machine is
heIing AK SieeI become moie ioduciive. WoiLeis ai Wise aie
adaiing one oI AK SieeIs coniinuous casieis io iesoIve iou-
iine mainienance iobIems in houis, iaihei ihan days. Wises
ivo-dozen voiLeis aie iiadiiionaI machinisis vho may soon
be ouiiied viih iPads io boosi iheii ioduciiviiy.
In ihe neaiby iovn oI Caboi, Pa., moie ihan uu machin-
isis ai Penn Uniied 1echnoIogies iuin oui a vaiieiy oI iecision
aiis, some Ioi insiiumenis used by oiihoedic suigeons, oih-
eis Ioi ihe aimaiuie ihai ieads comuiei haid diives. 1hanLs
io auiomaiion, one eisoninsiead oI Iouinov oeiaies Ioui
machines ihai Ioad, moniioi, and soi-checL ihe quaIiiy oI each
machine iooI io ioduce moie vidgeis, viih no deIecis, Ioi cus-
iomeis voiIdvide.
1he seciei io BuiIei Couniys manuIaciuiing success is noi
onIy a viIIingness io adai bui aIso ihe iesence oI an indusiiiaI
ecosysiem oI soiis: a IocaI neivoiL oI comanies and iesouices
ihai heI one anoihei suivive. Ai iis coie is AK SieeI, vhich
siayed in business vhiIe couniIess oihei sieeI miIIs in ihe Rusi
BeIi succumbed io Ioieign comeiiiion. As a iesuIi, smaIIei busi-
nessessuch as Wiseihai buiId aiis and eiIoim ieaiis Ioi
AK SieeI have aIso suivived. 1hese comanies aie hoihouses oI
innovaiion, savning eniieieneuis vho sin o io Ioim iheii
ovn ims. 1his, in iuin, has ieseived a sLiIIed, IocaI voiLIoice.
IndusiiiaI ecosysiems aie imoiiani boih in ieseiving iia-
diiionaI manuIaciuiing and in deveIoing cuiiing-edge, ienev-
abIe-eneigy iechnoIogies, such as soIai and vind. RenevabIes
have ihe benei oI being ihe nev Lid on ihe bIocL, said Biuce
Sohn, iesideni oI Iiisi SoIai in 1eme, Aiiz., ihe voiIds Iaig-
esi manuIaciuiei oI ihin-Im soIai moduIes. Bui nding ihe
abiIiiy io comeie and manuIaciuie in ihe Uniied Siaies viII be
an ongoing chaIIenge even Ioi us, unIess ve maLe signicani
changes in oui ubIic oIicy.
no. I, eu1
Measuied as an engine Ioi
emIoymeni oi as a chunL oI
ihe economy, Ameiican man-
uIaciuiing has been ieiieai-
ing Ioi ivo geneiaiions. 1he
economy has shiIied sieadiIy
Iiom geneiaiing veaIih by
maLing ihings io couniing on
nance, insuiance, ieaI esiaie,
and oihei vhiie-coIIai ac-
iiviiies io IueI giovih. In I947,
manuIaciuiing accounied Ioi
moie ihan 2 eiceni oI ihe
naiions gioss domesiic iod-
uci, vhiIe nance, insuiance,
and ieaI esiaie ioduced Iess
ihan II eiceni. (See graphs on p. 14.) By 2uu9, manuIaciuiing
had shiunL io II eiceni oI ihe economy, vhiIe ihose oihei ac-
iiviiies shaie had doubIed io 2I eiceni.
Moieovei, ihe ioIe oI Ameiican manuIaciuiing has been
iiansIoimed. Laboi-iniensive, Iov-vaIue-added ioduciion has
aII bui disaeaied. 1he iexiiIe, Ieaihei, and aaieI indusiiies,
vhich in I977 accounied Ioi neaiIy 7 eiceni oI aII manuIaciui-
ing aciiviiy, shianL io Iess ihan 2 eiceni by 2uu8.
IncieasingIy, U.S. manuIaciuieis have Iocused on ioducing
caiiaI-iniensive goods: comuieis, eIeciionic ioducis, chemi-
caIs, and, soon, eneigy iechnoIogies. 1he nucIeai business has
come aIive again, said Liic Gaiiaid, iesideni oI Wise Machine,
vhose sho is maLing coiIs Ioi a nucIeai ieacioi. |Ii] may be ihe
saving giace Ioi a Ioi oI ihe manuIaciuiing ims.
Bui ihe nev Ameiican manuIaciuiing secioi emIoys Iai
Ievei voiLeis. OnIy II miIIion eoIe nov maLe ihings in ihe
Uniied Siaies, ihe Iovesi numbei since WoiId Wai II.
BeIoie ihe ieceni iecession, hovevei, ihe vaIue oI U.S. man-
uIaciuiing ouiui had ieached an aII-iime high. 1he Uniied
Siaies siiII hosis ihe voiIds mighiiesi manuIaciuiing economy,
ioducing 2I eiceni oI aII goods made gIobaIIy. 1aan is a dis-
iani second, ai I8 eiceni. China, ai I2 eiceni, ianLs ihiid.
1he ieason ihai ihe Uniied Siaies has iemained ihe voiIds
manuIaciuiing Ieadei vhiIe in ieIaiive decIine is, in a void,
ioduciiviiy. U.S. manuIaciuieis aie ihe mosi ecieni in ihe
voiId. AK SieeI, Ioi insiance, ioduces moie sieeI ioday ihan
in ihe I97us, viih a ihiid oI ihe voiLIoice. 1his ioduciiviiy
has aIso heIed IueI ihe iesi oI ihe economy. Ioi eveiy doI-
Iai ihai manuIaciuieis send diieciIy, ihey Iosiei anoihei
$I.4u in economic aciiviiya muIiiIiei Iaigei ihan Ioi any
oihei secioi.
ManuIaciuiing iemains ciiiicaI io Ameiican economic suc-
cess. Lxoiis oI goods accouni Ioi ihiee-Iihs oI aII U.S. saIes
abioad, aying ihe biII Ioi imoiis oI consumei ioducis and
oiI. Wiihoui ihem, ihe U.S. iiade deciiai iecoid IeveIs beIoie
ihe iecessionvouId be even voise.
Desiie ihe ieceni boom in exoiis oI goods, ihe naiions
shaie oI ihe voiIds manuIaciuiing iiade has been shiinLing.
China is iedicied io oveiiaLe ihe Uniied Siaies nexi yeai as
ihe voiIds Ieading ioducei oI manuIaciuied iiems measuied
by vaIue. And ihe Iuiuie IooLs bIeaL. Iiom I989 io 2uuI, ihe
Uniied Siaies iecoided a iiade suiIus in advanced-iechnoIogy
I Technologically advanced steelmaking has sustained
western Pennsylvanias economy.
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8 WI N1LR 2 u I u 1HL NLX1 LCONOMY
jobs, aIihough vages have ieceniIy been gioving sIovIy, iI ai aII.
II you give u on manuIaciuiing, Nev Ameiicas Schven-
ningei cauiioned, you give u Iois oI Iuiuie ioduciiviiy gains
and gains in ihe siandaid oI Iiving.
now 1o Innovn1s
1he conveniionaI visdom is ihai ihe Uniied Siaies can ihiive
simIy as a Iace Ioi ieseaich and deveIomeniihai ihe coun-
iiy no Iongei needs io aciuaIIy maLe ihings. Bui ihis assumes
ihai nev ioducis siing IuII-bIovn Iiom ihe minds oI Iaboia-
ioiy scieniisis. 1he ieaIiiy is ihai in mosi indusiiies, ihe manu-
Iaciuiing iocess iiseII is a ciiiicaI Iacioi in deveIoing iadicaIIy
nev ioducis.
In BuiIei Couniy, ihe iesence oI muIiiIe manuIaciuieis
has been seII-ieinIoicing. PeoIe doni undeisiand hov much
manuIaciuieis Ieed o each oihei, said Diane Sheeis, ihe business-
deveIomeni managei oI ihe BuiIei Couniy Communiiy DeveI-
omeni Coi. 1hai symbioiic ieIaiionshi is viiaI, she said, in
iomiing innovaiion and an eniieieneuiiaI siiii.
Ioi one ihing, cieaiing and susiaining a neivoiL oI com-
eiiiive manuIaciuiing eniaiIs day-io-day inieiaciion beiveen
suIieis and cusiomeis, vhich aIIovs each io Ieain Iiom ihe
ioducis, incIuding bioiech. 1hose aie ihe same caiiaI-inien-
sive goods ihai economisis have Iong aigued vouId naiuiaIIy be
Ameiicans domain, as ihe ioduciion oI Iaboi-iniensive vaies,
such as aaieI, moved oveiseas. Since 2uu2, hovevei, ihe U.S.
has iun a decii in advanced-iechnoIogy iiade.
Oihei hindiances may Iie ahead. WoiLeis can ioduce
onIy as much as iheii Iani and equimeni eimii, and uniiI
ieceniIy, U.S. indusiiiaI ioduciion caaciiy had giovn iobusi-
Iyihiough good iimes and bad. In ihe asi decade, hovevei,
comanies have shovn a ieIuciance io invesi in nev caaciiy,
vhich has giovn ai a ihiid oI iis I99us ace. When ihe economy
eveniuaIIy iebounds, ihis may Iimii U.S. manuIaciuieis in saiis-
Iying domesiic and Ioieign demand.
ManuIaciuieis aie aIso an imoiiani souice oI innovaiion,
accouniing Ioi moie ihan ivo-ihiids oI aII ieseaich and deveI-
omeni conducied in ihe Uniied Siaies. Since I999, hovevei,
Ameiican manuIaciuieis have incieased iheii ieseaich-and-
deveIomeni invesimenis ouiside ihe Uniied Siaies ihiee iimes
as Iasi as ai home.
ManuIaciuiing vages aIso boIsiei ihe economy. ManuIac-
iuiing voiLeis gei highei ay and moie geneious beneis2u
eiceni highei in 2uu7ihan Ameiicans in nonmanuIaciuiing
I How to Succeed in Exports
By Dcrck 7hnmpsnn
T
urnr wns No wnv ihai MaiL
Rice couId have Lnovn ihai ihe
nexi e-maiI he oened vouId
change his business and his IiIe. Ii vas
2uu8, and somehov ihe voiIds Iaigesi
shibuiIdei (based in Souih Koiea) had
discoveied Rices smaII shi-manuIac-
iuiing im (based in Souih BaIiimoie)
ovei ihe Inieinei. Hyundai Heavy In-
dusiiies vanied his 8u-eison coma-
nyMaiiiime AIied Physics Coi., oi
MAPC Ioi shoiiio buiId a seciaIized
iuddei ihai vouId insianiIy doubIe his
business.
Rice vas honoied. He vas aIso, by
his ovn admission, vandeiing aiound
in ihe daiL iiying io Iind iiees. He
didni undeisiand inieinaiionaI busi-
ness cusioms vhen he aiiived in Koiea
on a iyhoon-deIayed ighi. When he
ieaied ihe bid, Rice didni undei-
siand Iicensing iuIes and inadveiieniIy
vioIaied U.S. exoii Iav. 1hen, viih ihe
deaI neaiIy comIeie, his banL said ihai
ihe iojeci vas ioo iisLy and demanded
ihai ihe comany immediaieIy ieay iis
ciedii Iine.
Lven viih ihe besi iuddei in ihe
voiId, MAPC siiII Iaced dauniing
huidIes ihai neaiIy LiIIed ihe muIiimiI-
Iion-doIIai deaI. Once you undeisiand
vheie Rice veni viongai ihe bidding
IeveI, ihe nance IeveI, and ihe exoii-
coniioI IeveIyou aIso begin io undei-
siand some oI ihe baiiieis ihai U.S. ex-
oiieis Iace. 1he naiions iiade chaIIenge
is noi meieIy an issue oI high domesiic
vages and voiacious Ameiican con-
sumeisaIihough ihose maiiei, ioo. Ii
is a quesiion oI commeiciaI cuIiuie. 1he
Uniied Siaies exoiis Iess ihan Geimany
vhiIe ii manuIaciuies moie. 1he U.S.
goveinmeni oeis Iess nanciaI suoii
Ioi exoiis ihan Canadas does, desiie
gieaiei exoiis oI goods. And Washing-
ion aIies byzaniine iuIes io moniioi
seciaIized ioducis, even ihough ihe
naiions comeiiiive edge Iies ieciseIy
in ihose seciaIized vaies ihai onIy
Ameiicans have designed and buiIi.
nn unosnooc ovsncomss
1he obsiacIe couise Ioi exoiis IooLs
dauniing Ioi smaII, inexeiienced com-
anies such as MAPC, bui ii isni io-
hibiiive. Rice uIiimaieIy Iound a banL,
secuied Iinancing, von ihe bid, and
doubIed his business.
1he Koiean deaI changed MAPC.
Ii aIso changed MaiL Rice. He became
assionaie aboui oveiseas iiade and ihe
iomise ii heId Ioi oihei smaII Iiims
aiound BaIiimoie. Wiih ihe heI oI BiII
BuiveII ai ihe Commeice Deaiimenis
Lxoii Assisiance Ceniei, he designed a
seminai io ieach iech-savvy comanies
io IoIIov in his Iooisiesviihoui mim-
icLing his misiaLes.
MaiL had ihe inieIIeciuaI Ioiesighi
io see a ieaching ooiiuniiy, said Bui-
veII, diiecioi oI ihe cenieis BaIiimoie
oIIice. Based on his exeiience, he
heIed us ciaIi ihe isi oeiing oI Lx-
oi1ech, a ihiee-day seminai Ioi execu-
iives on hov io viiie an exoii business
Ian. In MaiyIand, ii vas an insiani hii.
1oday, Lxoi1ech has been ieIicaied
in ai Ieasi I9 siaies and has assisied moie
ihan 8uu cIienis. Lven ihe IedeiaI gov-
einmeni iooL noiice, auihoiizing $II
miIIion Ioi ihe iogiam in smaII-busi-
ness IegisIaiion enacied in Seiembei.
We made eveiy misiaLe you couId
maLe in Koiea, and ve didni vani oih-
ei comanies io do ihe same, Rice ex-
Iained in his oce by a vind-vhied
BaIiimoie iei ihai once busiIed viih
shibuiIdeis. I guess ve succeeded be-
cause ve veie naive.
Bui ve veie successIuI, inieijeci-
ed 1im ChaIe, MAPC vice iesideni.
1203supp-Stokes-cover story.indd 8 12/3/10 12:37 PM
1HL NLX1 LCONOMY WI N1LR 2 u I u 9
oihei. 1he LnovIedge undeiIying emeiging iechnoIogies ie-
quiies eison-io-eison coniaci among manuIaciuiing indus-
iiies and beiveen manuIaciuiing and seivices, said Giegoiy
1assey, a senioi economisi ai ihe NaiionaI Insiiiuie oI Siandaids
and 1echnoIogy. 1hai inieiaciion is haidei vhen a comanys
suIy chain siieiches aiound ihe voiId.
Nev manuIaciuieis aIso iaieIy emeige in a vacuum. 1hey
iyicaIIy moih Iiom exisiing businesses, vhen covoiLeis vho
ihinL ihey can buiId a beiiei gadgei ihan iheii cuiieni emIoyei
go oui on iheii ovn. In ihe I97us, ihe Ioundeis oI Penn Uniied
did jusi ihai, sinning o Iiom Obeig Indusiiies, anoihei ieci-
sion-iooI im dovn ihe ioad. 1his vas hisioiy ieeaiing iiseII:
Obeig Indusiiies, ioo, goi iis siaii vhen iis Ioundei IeIi a Iaigei
IocaI comany in ihe Iaie I94us. II U.S. manuIaciuieis move
abioad, Ioieign eniieieneuis cieaie ihese siaii-us.
Considei vhai haened vhen ihe U.S.-based manuIaciui-
ing oI semiconduciois and ai-aneI disIays Ioi comuieis and
ieIevisions moved io China moie ihan a decade ago, as Haivaid
Business SchooI ioIessois Gaiy Pisano and WiIIy Shih have
iecounied. Ai isi, Ameiican economisis sav no cause Ioi con-
cein, aiguing ihai ihese veieni aii oI ihe coie manuIaciui-
ing caabiIiiy ihai ihe Uniied Siaies needed. 1he exeiience
ihai ihe Chinese gained in maLing comuiei chis and scieens,
hovevei, iaughi ihem hov io iocess uIiiauie, ciysiaIIine siIi-
con inio vaIeis and io aIy ihin Ims oI ihe siIicon onio Iaige
gIass sheeis. By so doing, ihey cieaied a soIai aneI indusiiy ihai
has become a majoi inieinaiionaI Iayei.
1he Uniied Siaies cannoi coniinue io ieIy on ouidaied eco-
nomic-giovih siiaiegies ihai IaiI io undeisiand ihe comIexiiy
oI indusiiiaI iechnoIogy and ihe syneigies among suIy chains,
economisi 1assey said.
msnns or nsvIvnI
Duiing ihe asi couIe oI yeais, a naiionaI ieoccuaiion viih
WaII Siieeis meIidovn and ihe ensuing iecession has ciovded oui
any seiious debaie aboui hov io ievive Ameiican manuIaciuiing.
So has ihe cusiomaiy aveision io goveinmeni-diiecied indusiiiaI
oIicy, oIien demeaned as icLing vinneis and Ioseis.
1hese aiiiiudes, hovevei, may be changing. Desiie ihe dis-
iiusi oI goveinmeni ihai Ameiicans disIayed in ihe Novembei
congiessionaI eIeciions, Ioui oI ve Ameiicans suoii a naiionaI
manuIaciuiing siiaiegy, accoiding io a oII ihai ihe AIIiance Ioi
By Really, Really Trying
1hais ihe dieience beiveen naivei
and gumiion.
nsnvv Inous1nv,
nsnvv nuIss
A comany ihai voni need heI
Iiom Lxoi1ech is Bucyius Inieina-
iionaI, a mining-equimeni manuIac-
iuiei in Souih MiIvauLee, Wis. A cen-
iuiy aIiei ioducing ihiee oui oI eveiy
Ioui oI ihe sieam shoveIs used io buiId
ihe Panama CanaI, ihe Fortune 7uu
comany has become one oI ihe voiIds
Iaigesi designeis and buiIdeis oI 8u-Iooi,
uu,uuu-ound sieeI coniiaiions ihai
dig inio ihe eaiih.
Iis boom iimes Ioi inieinaiionaI
mining, nov ihai ihe voiIds Iasiesi-
gioving couniiiesBiaziI, China, In-
dia, Indonesiaaie simuIianeousIy ex-
eiiencing uiban indusiiiaI ievoIuiions.
You have biIIions oI eoIe demanding
noi onIy nev buiIdings and cais, bui nev
vaiei heaieis, ceII hones, and aii-con-
diiionei uniis, Bucyius CLO 1im SuI-
Iivan said. 1o maLe ihese ihings, you
need iion oie, manganese, coLing coaI,
coei. Bucyius maLes ihe machines
ihai uneaiih ihose commodiiies.
Once a uieIy domesiic juggeinaui,
Bucyius is doing a ouiishing business
oveiseas. LiLe MAPC, ii Iaced chaIIeng-
es ihai shovcase ihe vays U.S. exoii
iuIes can voiL Ioi and againsi Ameii-
can comanies. Lasi summei, Bucyius
ieached oui io ihe Lxoii-Imoii BanL,
a IedeiaI agency ihai heIs io nance
oveiseas saIes Ioi U.S. comanies. Lx-Im
BanL objecied io Bucyiuss $6uu miIIion
deaI io seII equimeni io a ovei Iani
in India on ihe giounds ihai ii vioIaied
ihe agencys siiici enviionmeniaI sian-
daids. 1he decision caused a io-do ai
Bucyius, uniiI aII-nighi negoiiaiions and
iessuie Iiom Congiess eisuaded ihe
banL io accede.
Hovevei, viih mining bids ending
in India and Souih AIiica, Bucyius is siiII
ai ihe meicy oI ihe agencys enviion-
meniaI siandaids and iis sIov iocess-
ing oI Ioan aIicaiions.
I have no iobIem viih esiab-
Iishing enviionmeniaI benchmaiLs
in Iending oIicies, bui ihose oIi-
cies shouId noi disenIianchise U.S.
manuIaciuieis, SuIIivan said. I
doni Lnov ihe inieinaI mechanics oI
|Lx-Im BanLs] undeiviiiing iocess, bui
ii iaLes ihem ivo io ihiee iimes Iongei io
iocess Ioan aIicaiions in comaiison
io iheii Ioieign comeiiiion. 1he vaii,
he said, can iaLe u io six monihs.
ennInc on sxon1s
1hais noi jusi biiieiness iaILing.
A vide iange oI exeiis, Iiom busi-
ness execuiives io ihinL-ianL anaIysis,
say ihe same ihing: Lx-Im needs io do
moie, Iasiei. IianL Vaigo, a vice iesi-
deni ai ihe NaiionaI Associaiion oI
ManuIaciuieis, noied ihai ihe agency
guaianieed $2I biIIion oI U.S. exoiis in
2uu9, a Iiaciion oI iis Canadian couniei-
aiis $8u biIIion in a smaIIei economy.
1he 1aanese, he said, did veII ovei
$Iuu biIIion.
Lx-Im BanLs ioIe is ciuciaI in Iend-
ing money io imoiieis oveiseas and in
heIing ims on boih ends oI ihe deaI
secuie cheaei Ioans. ChaiIes 1ansey,
senioi vice iesideni ai Lx-Im BanL,
acLnovIedged ihai ihe agencys Iimiied
sia huiis iis abiIiiy io iocess aIica-
iions quicLIy. Cauiion is aIso necessaiy,
he said, io ioieci Ameiican iaxayeis
Iiom heavy Iosses. SiiII, moie govein-
meni-bacLed Iinancing vouId mean
moie U.S.-made goods soId oveiseas.
We need ihe Iinancing iocess
io be quicLei, Bucyiuss SuIIivan said.
Iis ihis simIe. We need io be Iasiei
ioo iI ve vani io be moie comeiiiive.
The author is an associate editor at The Atlantic.
(Continued on p. 12)
1203supp-Stokes-cover story.indd 9 12/3/10 12:37 PM
1 0 WI N1LR 2 u I u 1HL NLX1 LCONOMY
By Ronald Brownstein
I
is vnovnviv No suiiise ihai Se-
aiiIe and iis suiiounding ciiies have
deveIoed an innovaiive and com-
iehensive iogiam io encouiage IocaI
businesses io inciease iheii exoiis.
AIiei aII, SeaiiIe is coasiaI and cosmo-
oIiian, Asia-Iacing and iechnoIogy-
embiacing, home io voiId-giidIing
biands such as MiciosoIi, Boeing, and
SiaibucLs. 1he iiadiiion oI iiading
abioad is as dee as ihe ciiys sec-
iacuIai oii.
Iis a bii moie unexecied io nd
noiiheasi Ohio uisuing ooiiuni-
iies in Luioe, Asia, and ihe deveIo-
ing voiId. In ouIai imaginaiion,
CIeveIand and neaiby ciiies such as
Youngsiovn aie viciims oI gIobaI-
izaiion siianded in a bIasied Biuce
Siingsieenesque Iandscae oI de-
seiied sieeI miIIs and iusied cais. In
aII oI ihese communiiies, ihe scais oI
Ameiicas manuIaciuiing decIine aie
eiched in Iosi jobs and abandoned Iac-
ioiieshuILing ieIics oI ihe naiions in-
dusiiiaI mighi ihai aie nov, as Siing-
sieen iecoided in his ieicing ode io
Youngsiovn, jusi scia and iubbIe.
Yei Iiom ihai siony giound, ienevaI
is siouiing. Comanies ihai ioduce
cuiiing-edge medicaI devices, ihin-Im
oIymeis Ioi disIay moniiois, sohis-
iicaied heai-iiaing comonenis ciii-
icaI io ceII hones, and dozens oI oihei
advanced ioducis aie exanding
ioduciion acioss noiiheasiein Ohio,
hiiing voiLeisand seIIing io maiLeis
aiound ihe voiId. 1heie is ihis ei-
vasive sense ihai gIobaIizaiion hasni
been good io us, said Biad Whiiehead,
iesideni oI ihe Iund Ioi Oui Lconom-
ic Iuiuie, a CIeveIand-based nonioi
ihai undeiviiies economic deveIo-
meni voiL. Bui eiceiion has noi
caughi u io ihe Iaci ihai ihe indusiiiaI
Midvesi can be, and incieasingIy is,
comeiiiive in gIobaI maiLeis.
OveiaII, ihe Uniied Siaies siiII im-
oiis moie ihan ii exoiis, and ihe
Iisi oI ioducis ihai veie IoimeiIy
made in Ameiica iemains dauniing.
Oinion oIIs shov ihai ihe ubIic is
incieasingIy souiing on Iiee iiade. Bui
ihe IamiIiai naiiaiive oI decIine and
ieiieai beIoie a iide oI Iov-cosi im-
oiis doesni caiuie ihe IuII Iedgei oI
Ameiicas Iace in ihe gIobaI economy.
Lxoiis nov equaI aboui II eiceni
oI ioiaI U.S. economic ouiui, aboui
doubIe ihe IeveI oI I97u. And moie cii-
ies aie beneiing Iiom ihai iising iide
oI Ioieign saIes ihan mosi Ameiicans
iecognizeoIien, even in ihose ciiies
ihemseIves. Access io inieinaiionaI
maiLeis is aIieady ceniiaI io ihe ios-
eiiiy oI many Iaces vheie ioiec-
iionism is oIien a vinning oIiiicaI
aigumeni.
1he BiooLings Insiiiuiion, in an iI-
Iuminaiing siudy Iasi summei, Iound
ihai exoiis aIieady accouni Ioi ai
Ieasi Iu eiceni oI ihe ioiaI economic
ouiui in 8 oI ihe Iuu Iaigesi U.S.
meiiooIiian aieas. Acioss ihose Iuu
communiiies, ihe siudy Iound, exoiis
iovide Ioi moie ihan 8 eiceni oI ioiaI
emIoymeni7.7 miIIion jobs. IuIIy 4u
meiiooIiian aieas have incieased iheii
exoiis by ai Ieasi Iu eiceni annuaIIy
since 2uu8, aIiei adjusiing Ioi inaiion.
Piesideni Obama has sei ihe ambiiious
goaI oI doubIing Ameiican exoiis ovei
ihe nexi ve yeais. Bui ve aIieady aie
moie exoii-oiienied ihan ve ihinL ve
aie, said Biuce Kaiz, diiecioi oI BiooL-
ings MeiiooIiian PoIicy Piogiam,
vhich conducied ihe siudy.
Peihas ihe siudys mosi siiiLing
concIusion vas ihe bieadih oI exoii
aciiviiy. 1he 2u ciiies ihai mosi ieIy on
exoii-ieIaied jobs incIude, noi sui-
iisingIy, San 1ose, CaIiI., SeaiiIe, and
PoiiIand, Oie.Asia-oiienied hubs
oI high-iechnoIogy innovaiion IiIIed
viih young ioIessionaIs, biLe aihs,
and coIIee bais ihai oIIei oiions oI
LucIidean comIexiiy. Bui ihe Iisi aIso
incIudes Iaces vheie ihe moining
coee iun is moie IiLeIy io McDonaIds
oi DunLin Donuis: HaiiIoid, Conn.;
Rochesiei, N.Y.; MiIvauLee; Gieens-
boio, N.C.; and 1oIedo and Youngsiovn
in Ohio. OnIy San 1ose (ai 22.7 eiceni)
geneiaied a Iaigei shaie oI iis emIoy-
meni Iiom exoiis ihan did Wichiia,
Kan. (22.8 eiceni), vheie a vibiani
gIobaI-saIes neivoiL has deveIoed
aiound civiI-aviaiion oveis such as
Cessna and HavLei BeechciaIi.
Yei in many, iI noi mosi, Ameiican
ciiies, ihe imoiiance oI exoiis io
ihe IocaI economy is a mysieiy, Kaiz
said. When ihe iesideni geis u and
says, Leis doubIe exoiis, many IocaI
I Trade Cities
The Other Global Cities
The metropolitan areas where exports share
of total economic output is greatest are
mostly inland, and their exports are growing.
Top metro areas by export intensity
*Exports as share of total metro economic output, 2008.
Source: Brookings Institution
Albuquerque, N.M.
Dallas, Texas
Palm Bay, Fla.
Milwaukee, Wis.
Dayton, Ohio
Tulsa, Okla.
Greenville, S.C.
Houston, Texas
Detroit, Mich.
Oxnard, Calif.
Grand Rapids, Mich.
Indianapolis, Ind.
Toledo, Ohio
Greensboro, N.C.
Youngstown, Ohio
New Orleans, La.
Baton Rouge, La.
San Jose, Calif.
Portland, Ore.
Wichita, Kan. +112
+101
+27
+83
+101
+40
+35
+29
+30
+12
+39
0
+100
-11
+78
+18
+36
+63
+65
+27
28
21
20
19
18
18
17
16
15
15
15
15
15
14
14
14
14
14
13
13
% %
Growth,
2003-08
Export
intensity*
Metro
area
U.S.
avg.
+46%
1203supp-Stokes-cover story.indd 10 12/6/10 1:25 PM
1HL NLX1 LCONOMY WI N1LR 2 u I u 1 1
Yei in many, iI noi mosi, Ameiican
ciiies, ihe imoiiance oI exoiis io ihe
IocaI economy is a mysieiy, Kaiz said.
When ihe iesideni geis u and says,
Leis doubIe exoiis, many IocaI gov-
einmeni, civic, and economic ociaIs
doni see ihemseIves in ihai naiiaiive.
Mosi ciiies, Kaiz said, siiII dene eco-
nomic deveIomeni as buiIding siadi-
ums oi aiiiaciing Iu,uuu eoIe io Iive
dovniovn. Iev have consiiucied a
siiaiegy io cieaie jobs by sysiemaiicaIIy
encouiaging iheii businesses io seII inio
ihe gIobaI maiLei. IoimuIaiing such a
Ian, he Iamenied, is an unnaiuiaI aci
in mosi Ameiican meiios.
BiII Siaoid agiees. Ioi ivo decades,
he has headed ihe 1iade DeveIomeni
AIIiance oI Gieaiei SeaiiIe, a aihbieaL-
ing eoii io exand ihe iegions ooi-
iuniiies in ihe inieinaiionaI economy.
Ovei ihai eiiod, he said, ihe aIIiances
eoiis have been coied moie oveiseas
aImosi ihan in ihe Uniied Siaies.
1he SeaiiIe iiade aIIiance shovs
vhai ciiies and iegions can do vhen
ihey iecognize ihai ihey aie comei-
ing in a gIobaI iace. Launched in I99I, ii
oiganizes an annuaI siudy mission io
Ieain Iiom ihe economic siiaiegies oI
majoi ciiies aiound ihe voiId (ieceni
iaigeis have incIuded Abu Dhabi, in ihe
Uniied Aiab Lmiiaies; HeIsinLi, Iin-
Iand; and MeIbouine, AusiiaIia) as veII
as an annuaI iiade mission ihai uisues
maiLei ooiiuniiies in such couniiies
as China, India, 1aivan, and Vieinam. Ii
assembIes deIegaiions ihai combine ie-
ieseniaiives oI smaIIei comanies and
execuiives Iiom MiciosoIi, Boeing, and
oihei iiians. We use ihe big guys io oen
doois, Siaoid said unaoIogeiicaIIy.
Ai home, ihe aIIiance has oiganized
voiLshos ihai iovide iechnicaI as-
sisiance on eveiy aseci oI exoiiing,
buiIi a daiabase ihai aIIovs Ioieign
economic ociaIs io nd IocaI suIi-
eis, and sysiemaiicaIIy maiLeied Wash-
ingion siaie coIIeges and univeisiiies io
Ioieign siudenisaiiIy in ihe hoe oI
aiiiaciing Iuiuie eniieieneuis vho viII
siaii IocaI businesses. Iis an iniegiaied
aioach, Siaoid said. 1he game is
Iayed so dieieniIy aiound ihe voiId.
1his couniiy and, Ioi ihai maiiei, oui
siaie and oui iegion have been abIe io
ignoie |ihai]. Weve been smug.
Smugness isni a iobIem in noiih-
easi Ohio. Since ihe I97us, ihe iegion
has been baiieied by Iani cIosings and
ouIaiion decIine. Youngsiovn has Iosi
aboui a quaiiei oI iis iesidenis jusi since
I99u. 1he iegions chaIIenges ioday
iemain IoimidabIe: In Youngsiovns
Mahoning Couniy, unemIoymeni a-
ioaches II eiceni.
Bui ihe ciiy and ihe iegion no Iongei
IeeI ihai ihey aie in Iiee IaII. LocaI gov-
einmenis and nonioi oiganizaiions
have deveIoed an aiiay oI iogiams
io nuiiuie nev manuIaciuiing Iiims,
and amid aII ihe chaIIenges oI ihe Gieai
Recession, ihose eoiis aie ioducing
gieen shoois. We have a gioving seg-
meni oI advanced-iechnoIogy coma-
nies, said 1ay WiIIiams, Youngsiovns
dynamic young bIacL mayoi. 1hese
aie aII IaiiIy smaII, noi ihe sieeI miIIs oI
ihe oId days viih ihousands oI emIoy-
ees, bui ihey aie sLiIIed and aie seeing
giovih even in ihis economy. Cen-
iiaI io ihai giovih siiaiegy, WiIIiams
said, is exanding inio exoiis and
oihei maiLeis.
NaiionaIIy, BiooLings ieoiis,
onIy aboui one in eveiy Iuu U.S. busi-
nesses exoiis io Ioieign maiLeis. As
aii oI ihe siiaiegy io iomoie exoii
giovih, noiiheasi Ohio has sysiem-
aiicaIIy voiLed io bioaden ihai ciicIe.
1he ieaIIy inieiesiing iece oI ihis is
hov ihe exoiiing economy is becom-
ing incieasingIy ciiiicaI io ihe midsized
manuIaciuieis and even many oI ihe
siaiius, said CIeveIands Whiiehead.
Comanies aie going inio Ioieign mai-
Leis eaiIiei and as a moie IundameniaI
aii oI iheii siiaiegy ihan ihey mighi
have a decade ago.
One iogiam heIing Ohio coma-
nies iaLe ihai Iea is ihe ManuIaciuiing
Advocacy and Giovih NeivoiL. Ioi ve
yeais, ii has oeiaied a gIobaI-seivices
iogiam ihai iovides iaciicaI guid-
ance io businesses on hov io eniei Ioi-
eign maiLeis; jusi since 1uIy, aboui uu
comanies have aiiended iis iogiams.
Dan Beiiy, MAGNL1s iesideni, said
ihai ihe giou is Iuiihei exanding
iis assisiance Ioi smaII and midsized
enieiiises because aII manuIaciuieis
viII need some IeveI oI comeiency
voiLing viih inieinaiionaI maiLeis
IooLing ahead.
Iai ioo Iev uiban ociaIs aie moving
as sysiemaiicaIIy io heI IocaI businesses
ciacL Ioieign maiLeis and oveicome ob-
siacIes ihai iange Iiom Ianguage baiii-
eis io inieIIeciuaI-ioeiiy iheIi. BiooL-
ingss Kaiz aigued ihai ihe Uniied Siaies
is unIiLeIy io doubIe iis exoiis unIess
ciiies and couniies sei goaIs oI iheii
ovnand esiabIish concieie Ians io
meei ihem. 1his ieaIIy is a chaIIenge io
ihe cuiieni geneiaiion oI ciiy and meiio
ociaIs io u iheii game, he said.
Siaoid, in SeaiiIe, simiIaiIy aigues
ihai ihe Uniied Siaies needs ihe equiva-
Ieni oI a oIiiicaI camaign io Iocus
IocaI ociaIs and business execuiives
on boih ihe ooiiuniiy and imeiaiive
oI seIIing moie io naiions vhose econo-
mies aie gioving Iasiei ihan ouis. Iis
going io iaLe a majoi eoii io gei ihis
couniiy io IooL ai exoiis and inieina-
iionaI comeiiiiveness as a majoi ihing
veie going io need io do, Siaoid said.
Weie iobabIy going io Lee giinding
aIong ai I io 2 eiceni giovih iI ve doni
siaii exoiiing.
The author is the editorial director of National
Journal. NJ researcher Scott Bland contributed
to this report.
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1203supp-Stokes-cover story.indd 11 12/3/10 12:37 PM
1 2 WI N1LR 2 u I u 1HL NLX1 LCONOMY
Ameiican ManuIaciuiing conducied Iasi siing. Pioonenis oI a
goveinmeni-Ied siiaiegy say ihai ii needs io be comiehensive,
viih iax cuis, heIIuI ieguIaiions, and inieiieIaied eoiis io ie-
seive and iebuiId coie indusiiies, ihe smaII comanies ihai cIus-
iei aiound ihem, and iheii sLiIIed manageis and voiLeis.
So Iai, ihe seciei oI such a siiaiegy hasni iaised ihe iea
aiiys hacLIes oi iovoLed a oIiiicaI Iuioi ovei goveinmenis
ioei ioIe. Indeed, oIiiicaI aniagonisis have Iound oinis oI
agieemeni. Recommendaiions issued in
Novembei by a biaiiisan budgei com-
mission suggesi gioving seniimeni ihai
ihe coioiaie iax iaieamong ihe high-
esi in ihe voiIdoughi io be ieduced io
encouiage comanies io base iheii oeia-
iions in ihe Uniied Siaies.
SimiIaiIy, Demociais as veII as Reub-
Iicans suoii a iax ciedii Ioi ieseaich and deveIomeni, vhich
Iased a yeai ago Ioi ihe I4ih iime in ihe asi ihiee decades. 1he
Uniied Siaies accounis Ioi aboui a ihiid oI ihe voiIds R&D
sending, Iai moie ihan ihe second-Iace Luioeans. SiiII, ieIa-
iive io ihe size oI iis economy, Ameiicas sending on ieseaich and
deveIomeni ianLs eighih among majoi indusiiiaI economies.
Bui R&D isni enough. An R&D oIicy shouId noi be con-
Iused viih a manuIaciuiing oIicy, Iiisi SoIais Sohn vained.
1he voisi ihing vouId be Ioi us io ia inio ihe ingenuiiy oI oui
engineeis and come u viih ioducis and manuIaciuiing io-
cesses, and ihen go and ui |ihem] oveiseas because ihai is ihe
onIy Iace ihai ii maLes sense io maLe ihings.
ManuIaciuieis giaviiaie io socieiies ihai shov ihey vani ihem,
said Sohn, vhose comany oeiaies Iacioiies in Geimany, MaIay-
sia, and Peiiysbuig, Ohio. We veie aiiiacied io MaIaysia, he noi-
ed, because oI iheii Iocus on manuIaciuiing. Ii siaiis viih a ione
in ihe couniiy. PoIiiicians and businessmen iheie have acLnovI-
edged ihe uiiIiiy and vaIue oI having manuIaciuiing as a base, and
ihey have esiabIished a sei oI oIicies ihai veie aiiiaciive, incIud-
ing Ioveiing iaxes and ioviding access io Iov-cosi caiiaI.
Subsidies can diy u, oI couise, and iax beneis can be viih-
diavn. ManuIaciuieis aIso IooL Ioi siabIeieIeiabIy gioving
domesiic demand. 1hais one ieason Iiisi SoIai buiIi a Iacioiy
in Geimany and is exanding ii. Geiman uiiIiiies aie iequiied
io buy eIeciiiciiy ioduced by consumeis iooI-io soIai aneIs
ai a iice sei high enough io enabIe ihem io ay Ioi iis insiaIIaiion.
Giving eveiy consumei a chance io eain money as an eIeciiiciiy
ioducei has seni Geiman demand Ioi soIai aneIs sLyiocLeiing.
A vibiani Ameiican maiLei Ioi manuIaciuied goods viII be
haidei io achieve, given ihe IiLeIihood oI coniinuaI sIov giovih.
1he 2uu9 economic-siimuIus acLage soughi io encouiage ihe
maiLei by iequiiing ihai iojecis ii Iunded incIude subsianiiaI
U.S.-made conieni. Many economisis and Ioieign goveinmenis
deciied ihe iovision as inecieni and jingoisiic. Yei ii enabIed
Uniied Siieeicai in CIacLamas, Oie., io begin ihe isi ioduciion oI
siieeicais in Ameiica in moie ihan haII a ceniuiy. 1he buy-Amei-
ica iovision iooL ihe iisL Iacioi oui, so ve couId maLe ihe siaii-u
invesimeni, said Chandia Biovn, Uniied Siieeicais iesideni.
Ioieigneis, ioo, can be Iuied inio maLing in ihe Uniied Siaies
moie oI vhai ihey seII io Ameiicans and io ihe iesi oI ihe voiId.
Because oI ihe ieceni decIine in ihe doIIai and ihe sIov giovih
in Ameiican vages, iis become cheaei in many cases io manu-
Iaciuie in ihe Uniied Siaies ihan in Geimany oi 1aan. As a ie-
suIi, VoILsvagen is buiIding a Iani in 1ennessee, and BMWs
Iacioiy in Souih CaioIina has become ihe Iaigesi exoiiei oI
U.S.-buiIi cais. 1he IedeiaI goveinmeni mighi aIso aiiiaci and
Lee manuIaciuieis by maiching ihe invesimeni subsidies and
iax bieaLs ihai China and Singaoie oei.
Loveiing ihe vaIue oI ihe doIIai vouId ieseive and exand
ihe U.S. manuIaciuiing base by maLing homemade goods a bei-
iei buy Ioi Ameiicans and Ioieigneis. 1he doIIai is esiimaied
io be oveivaIued againsi ihe Chinese
ienminbi by ai Ieasi 2u eiceni. Reduc-
ing ihai io zeio, accoiding io ihe Peieison
Insiiiuie Ioi InieinaiionaI Lconomics in
Washingion, vouId cieaie aboui a haII-
miIIion veII-aying Ameiican jobs, main-
Iy in manuIaciuiing.
1ns sIII, 1ns ossIns
Bui someihing moie is needed io assuie a vibiani Iuiuie Ioi
Ameiican manuIaciuiing: a sLiIIed voiLIoice. 1hais a scaice
commodiiy ihese days, even in BuiIei Couniy. Lveiy Lid vho
giovs u heie vanis io go io coIIege and voiL on WaII Siieei, said
Wise Machines Gaiiaid, noi IoIIov iheii Iaiheis inio AK SieeI.
BuiIei High SchooI has a highIy iegaided vocaiionaI edu-
caiion iogiam ihai ieaches ihe Iaiesi in manuIaciuiing iech-
niques. AImosi aII oI iis giaduaies nd jobs. Bui iheie aie onIy 48
aiiicianismoie siudenis choose iiaining io become beauii-
cians ihan machinisis. II ve vani io ieIicaie ihe highIy sLiIIed
Geiman voiLIoice, said Scoii PauI, execuiive diiecioi oI ihe
AIIiance Ioi Ameiican ManuIaciuiing, ve need a seamIess
Ioui-yeai iogiam ihai siaiis in high schooI and goes ihiough
communiiy coIIege oi iechnicaI schooIs ihai ieaie siudenis
Ioi manuIaciuiing jobs.
1hai ioosaI cosis money. BuiIei Couniy Communiiy CoI-
Iege conducis exiensive iiaining iogiams Ioi IocaI manuIac-
iuieis, bui demand is dovn, aiiIy because oI cuis in ihe siaie
Iunding ihai icLed u much oI ihe cosi. NaiionaIIy, onIy u.I7
eiceni oI Ameiicas GDP is invesied in voiLei iiaining. Gei-
many sends neaiIy ve iimes as much.
II sLiIIs aie an obsiacIe, moie money can heI. Bui iI iis de-
siie ihais IacLing, aII beis aie o. In ihe asi Iev decades, as
manuIaciuiings shaie oI ihe Ameiican economy and voiL-
Ioice has sIied ieciiiousIy, ihe eiceiion has giovn ihai
U.S. manuIaciuiing has no Iuiuie. No doubi ihis has coniiibuied,
in iuin, io ihe BuiIei Couniy youihs ieid desiie io uisue a
manuIaciuiing caieei.
Yei in BuiIei Couniy, vheie ihe suiviving manuIaciuieis aie
shoving some sunL, ihese Ieais seem iemaiuie. 1heie viII
aIvays be a manuIaciuiing secioi in ihe Uniied Siaiesiheie
has io be one, said IianL Vaigo, NAMs vice iesideni Ioi iniei-
naiionaI economic aaiis. 1he quesiion is vhai Lind oI manu-
Iaciuiing. And ihai is a maiiei Ioi oIicymaLeis io shae.
In any eveni, iheie is ieason io hoe. 1he Iuiuie is siiII in oui
hands, said Keni Hughes, diiecioi oI ihe iogiam on Ameiica
and ihe gIobaI economy ai ihe Woodiov WiIson InieinaiionaI
Ceniei Ioi SchoIais in Washingion, iI ve doni sii on ihem. I
The author, a senior fellow at the German Marshall Fund, is a contributing
editor to National Journal.
R&D alone wont
assure a future
for American
manufacturing.
(Continued from p. 9)
1203supp-Stokes-cover story.indd 12 12/3/10 12:37 PM
4
6
9
8
11
10
12
12
5
7
3
3.3
12.5
10.5
2.8
1.0
1 4 WI NTER 2 0 1 0 THE NEXT ECONOMY
The Big Picture
From Factories to Cubicles
An American economy that used to be
built on making stuff is now built on
shufing paper instead. From 1947 to
2009, manufacturing shrank from more
than a quarter of the gross domestic
product to just a ninth of it. Meanwhile,
white-collar work grew from less than a
fth of GDP to nearly half of it (counting
nance, insurance, real estate, profes-
sional and business services, informa-
tion, education, and health care).
Graphic by BRIAN McGILL
Research by PETER BELL
Sources: Bureau of Economic Analysis;
Bureau of Labor Statistics
47 50 70 90 60 80 00 55 75 95 65 85 05 09
Finance, insurance, and real estate
Ranking in 1947
Ranking in 2009
Government
Professional and business services
Wholesale and retail trade
Education, health care, and social services
Information
Construction
Arts, entertainment, and recreation
Energy and mining
Accommodations and food services
2.6
3.8
0.6
3.6
2.8
25.6
15.9
1.9
5.8
8.2
Transportation
Agriculture
Manufacturing
Value Added to the U.S. Economy by Industry
(Percentage of total gross domestic product, 1947 to 2009)
4
3
2
12
8
7
6
5
10
13
11
9
1
1
2
21.4
13.6
12.1
11.5
11.0
8.3
4.4
4.1
1.0
3.5
2.9
Proportion of GDP, increasing Proportion of GDP, decreasing
Manufacturings role in the economy
crested in 1953, when factories contrib-
uted 28.3 percent of GDP. Since 1977,
its share has declined every year except
1988 and 2004.
Educations share of the economy
has nearly quadrupled (to 1.1 percent).
Health care and social services share
has nearly quintupled (to 7.3 percent)
as a proportion of GDP.
Arts, entertainment, and recreation
began a slow-though-steady rise during
a former Screen Actors Guild presidents
presidency, but have stagnated at about
1 percent of GDP since the mid-1990s.
Governments hand has barely grown
heavier. The share of GDP accounted for
by government at all levels peaked at
15.3 percent in 1971, though its been
growing slowly again since 2006.
1203supp-graphic(mcgill_industry).indd 14 12/3/10 11:40 AM
-10
-$12 billion
-8
-6
-4
-2
0
90 00 09 90 00 09
0
0.5
1.0
1.5
2.0 million jobs
90 00 09 90 00 09
0
50
100
150
$200 billion
90 00 09 90 00 09
90 00 09 90 00 09
-10
-$12 billion
-8
-6
-4
-2
0
0
0.5
1.0
1.5
2.0 million jobs
0
50
100
150
$200 billion
THE NEXT ECONOMY WI NTER 2 0 1 0 1 5
Biggest Losses
Losses
VALUE ADDED
TO ECONOMY
19772008*
JOBS
19902009
TRADE
BALANCE
19902009*
77 $30.8
90
0.2
90 1.9
90 1.1
90
0.7
09
0.1
09
1.1
09
0.2
09
0.3
90 -$1.4
90
-$0.6
90
-$0.4
90
-$5.6
09
-$1.3
09
-$0.9
09
-$10.8
09
-$8.7
77 $97.0
77 $56.3 77 $47.4
08 $16.8 08 $14.1
08 $194.5
08 $148.7
Made in America
As the U.S. manufacturing base
has shrunk, its mix has shifted.
Electronics and petrochemicals
are playing an ever-larger role,
while the old reliablesmetals,
wood, and motor vehicles
have collapsed. The domestic
textile and apparel industries are
zombies. In 2008, 98.7 percent
of footwear sold in the United
States was made abroad,
mostly in China.
Planes,
trains, and
motorcycles
6.0
(4.6)
Petroleum and
coal products
Apparel
Petroleum and
coal products
8.6
(1.9)
Chemical products
12.9
(9.3)
Food, beverage,
and tobacco
11.2
(11.1)
Plastics and
rubber products
4.3
(3.7)
Machinery
7.8
(10.6)
Fabricated
metal
(bolts, beams)
7.8
(8.8)
Paper
products
3.4
(4.2)
Furniture
1.7
(1.9)
Nonmetallic
mineral
products
2.6
(3.2)
Electrical
equipment
and
appliances
2.6
(4.2)
Wood
products
1.7
(2.3)
Textiles
0.9
(3.2)
Miscellaneous
4.3
(2.3)
Computers and
electronics
Textiles
Computers and
electronics
12.1
(6.5)
Primary
metals
3.4
(7.4)
2.6
(2.3)
Printing
Apparel
0.9
(3.7)
Biggest Gains
Gains
Motor
vehicles
5.2
(9.3)
2.6
(4.2)
Subsectors
percentage of overall
manufacturing in 2008
Subsectors
percentage of overall
manufacturing in 1977
*Figures adjusted for ination.
1203supp-graphic(mcgill_industry).indd 15 12/3/10 11:40 AM
1 6 WI NTER 2 0 1 0 THE NEXT ECONOMY
White-Collar Outgo
Dont worry about those call centers in India. The United States is hawking more
white-collar services to foreigners than theyre snatching from us. For now.
By T.A. FRANK
I Architect Scott Johnson: His rms exportable brainwork includes plans for a mixed-use tower in Osaka, Japan.
L
Scott Johnson,
cofounder of the rm Johnson
Fain, is a trim gentleman
who sports a white plastic
wristwatch and eyewear with
oversized clear frames. His company
employs 50 workers in a former
Chrysler showroom just north of
Chinatown, an upmarket presence in a
neighborhood where nearby garment
factories still scrape by on quick-turn-
around sewing and embroidery jobs.
Johnson Fain contributes to the
construction of objects as gigantic as
oce towers in China, but what the
company sells isnt so tangible. We
are purveyors of intellectual content,
Johnson said of his architectural rm.
We dont build the buildings; we dont
supply the nails or the concrete. Peo-
ple make buildings from our drawings.
In an airy workroom where young
architects labor amid miniature
cityscapes and building models, John-
son examined a small replica of central
Dallas and then moved on to rows of
glossy printouts axed to a wall. This
Essay
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1203supp-essay-Frank.indd 16 12/3/10 11:42 AM
THE NEXT ECONOMY WI NTER 2 0 1 0 1 7
is some of our presentation in Taipei
last week, he said, pointing to ve ver-
sions of a pair of 45-story residential
towers slated for construction in Tai-
chung, a city in central Taiwan. This
building is like a kind of jewelits fac-
eted, he explained, singling out one
version. This is actually the one were
proposing and studying. It would have
a beveled-glass system, and it would
reect light.
Johnson Fain has worked with
international clients for more than
20 years, outrunning a succession of
economic upheavals: the collapse of
Japans property market in the early
1990s; the Asian nancial crisis of 1997;
and the continuing housing slump in
the United States. But the firms ex-
pansion abroad has been steady. When
it won a commission to draw up a mas-
ter plan for the central business dis-
trict of Beijing 10 years ago, an estimat-
ed 6 percent of its revenue came from
work overseas. Today, thanks to an
expansion of international business
especially in Chinathe proportion
has quadrupled to about 25 percent.
The architectural firms business
is the archetype of white-collar ser-
vice: brainwork that can fetch a high
price from customers both at home
and abroad. If more U.S. companies
resembled Johnson Fain, the service-
economy dreamin which globaliza-
tion enriches us all so that fancier and
nicer workplaces can replace the U.S.
tube-sock mills already lost to lower-
wage countriesmight come true. Its
a vision that would also help the na-
tion meet President Obamas stated
goal of doubling U.S. exports over the
next ve years.
But how realistic is this vision?
Undeniably, the United States has
been losing countless jobs to other
countriesnotably, to China and In-
dianot only in manufacturing but
increasingly in the service sector as
well. Precise estimates of outsourced
service jobs are hard to come by (un-
like goods, services dont pass through
a physical port of entry), but experts
figure that a few million have left
American shores for cheaper locations.
And no wonder. In India, call-center
employees and software programmers
cost, at most, half as much to hire.
However, we still sell more services
abroad than we import, thanks largely
to U.S. exports of higher-end, white-
collar services. The balance of trade
in manufacturing has been awful for
decades; last year, the United States
imported $507 billion more in goods
than it sold abroad. For services, the
opposite is true; the U.S. trade surplus
is well in the blackand growing.
According to the Commerce De-
partments Bureau of Economic Analy-
sis, the United States exported $132 bil-
lion more in services than it imported
in 2009, up from $80 billion in 2006.
Judging by the rst half of 2010, the
United States will record its largest sur-
plus ever this year, exceeding $140 bil-
lion. Most of this surplus is presumed
to be in high-end, white-collar serv-
icesknowledge-based, easily por-
table brainwork (architectural blue-
prints, for instance) rather than xed-
location handiwork (such as computer
repair or massage therapy). In the up-
per echelons of the service sector, the
future looks especially agreeable.
wnn1 ronsIcnsns wnn1
These trends have left many trade
enthusiasts bullish. Exporting high-
end services is denitely one of our
comparative advantages, and its a part
of our export mix that has unlimited
upside, said Dan Griswold, director
of trade-policy studies at the liber-
tarian Cato Institute. As the global
middle class grows, their appetite
for U.S. services is just going to grow
and grow.
To anticipate what foreign custom-
ers may want, its useful to look at what
theyve bought so far. In 2009, travel
($94 billion) and passenger fares ($26
billion) accounted for a quarter of this
countrys service exports. Not all of
that was white-collar, given the many
low-skill services that tourists require.
Still, this inflow can be expected to
continue as long as the dollar remains
weaksay, whenever a Belgian ies to
Seattle on Delta, stays at a Marriott,
buys breakfast at the Pike Place Mar-
ket, and ies home.
Customers abroad also paid a tidy
sum (about $90 billion, nearly a fth
of service exports) in U.S. royalties
and license fees in 2009. Those fees
paid to holders of American patents,
trademarks, and copyrights enabled
foreigners to watch our movies, use
our inventions, and produce our pills.
Intellectual property comes in
many forms. Some wouldnt consider
the Care Bears, devised in the 1980s by
American Greetings, a high-end ser-
vice, but foreign license-holders of the
franchise might disagree. Every time a
Care Bear card is printed overseas or
a stued Care Bear is manufactured,
American Greetings makes money
more than $2.6 billion in global sales
since 2001. And more than a third of the
companys revenues come from over-
seas. Thats why consumers in Japan
I Citibank in Hong Kong: Bailed out at home, expanding abroad.
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1203supp-essay-Frank.indd 17 12/3/10 11:42 AM
1 8 WI NTER 2 0 1 0 THE NEXT ECONOMY
will soon be introduced to an Asian
version of the Care Bear. That would
be the Sweet Sakura Bear, which
American Greetings describes as a
shy and modest bear that delivers a
unique message created specially to
reect the values and symbols of Ja-
pan, among them the importance of
savoring and appreciating the splen-
dor of every passing moment.
Meanwhile, the Johnson Fain ar-
chitectural rm represents what the
Commerce Departments statisticians
classify as other private services.
The value of these services comes
from brainpower honed over many
years of study and experience in elds
such as accounting, education, adver-
tising, legal counsel, medical care, and
telecommunications. Many of these
services rank among the fastest-grow-
ing U.S. exports.
For all of its faults, American culture
can be a selling pointall the more so if,
say, a foreign entity is hoping to make
Americans less angry about the ight
of jobs overseas. Thats why the Chi-
nese government hired a subsidiary
of a New York City-based advertising
agency, DDB, to plan an advertising
campaign called Made in China. Made
with the world. The result was a series
of 30-second spots on cable television
that featured, for example, a runner
lacing up his sneakers and the catch-
phrase, Made in China with American
sports technology.
These other private services in-
clude one that has had its troubles of
late: nancial services. An industry that
was exposed as having urged clients
to buy toxic assets has nearly found
forgiveness overseas. U.S. exports of
nancial services dipped from $61 bil-
lion in 2008 to $55 billion in 2009, but
they are expected to rebound a little
to $56 billion in 2010. Even bailed-out
Wall Street investment banks are ea-
gerly expanding into Asia, hoping to
tap into the wealth of the developing
continents newly rich. Although
American taxpayers still own a third
of its stock, Citigroup has been hir-
ing sta and expanding local branches
in Hong Kong, India, and Singapore.
Morgan Stanley has involved itself in
bigger deals than any of its competitors
as an adviser on mergers and acquisi-
tions in Asia.
soucn1Ion esn nIIss
Across this array of exportable
white-collar services, a key to compet-
itiveness has been the quality of Amer-
ican universities. The majority of the
worlds top universities are in the
United States, said Jonathan Roth-
well, a senior research analyst at the
Brookings Institution. When foreign
students pay tuition to U.S. schools,
the university educations themselves
count as white-collar exports. And
many of the graduates, Rothwell noted,
start architectural, R&D, and engineer-
ing rms that are penetrating foreign
markets and bolstering U.S. exports.
Its way too soon, however, for the
purveyors of U.S. white-collar exports
to break out the champagne. Even
high-end services can be vulnerable
to reversals in the ow of internation -
al trade.
Dean Baker, codirector of the Cen-
ter for Economic and Policy Research
in Washington, observed that a lack
of competition from immigrants and
outsourcing has granted many white-
collar professionals in the United
Statesdoctors and lawyers, notably
a large measure of protection. But
that could end someday. Suppose you
need expensive surgery. Your health
insurer, instead of shelling out
$150,000 to a nearby hospital, might
urge you to try a rst-rate hospital in
Bangkok. Baker imagined a sales pitch:
Well pay your airfare. You can take
your spouse, take a kid, stay there two
weeks, three weeks, or however long it
takes you to recuperate, and well give
you $10,000 on top. The insurer and
insured might stand to gain, but at the
expense of American doctors and other
well-paid practitioners in the domestic
medical industry.
Sustaining vigorous growth in
white-collar services also requires
maintaining a generous supply of
highly skilled entrepreneurs and em-
ployees. This can be done by students
getting better results from American
public schools and by recruiting the
most-skilled immigrants possible.
However, the troubles of our public
school systems are hardly news, and
our approach to immigration has been
unhelpful. Even as lax border enforce-
ment has effectively invited a great
number of unskilled laborers into the
country, complicated visa rules and
labyrinthine regulations have kept
skilled foreign workers out.
Looking at the trade picture overall,
it seems that white-collar services, for
all of their promise, still have a long way
to go before they can make up for the
U.S. manufacturing business that has
been lost. Americas $132 billion sur-
plus in the international trade of ser-
vices last year plugged barely a quarter
of the half-trillion-dollar decit in the
trade of goods. To bring the U.S. trade
back into balance, in other words, ex-
ports of services would need to increase
by nearly 300 percent. Architectural
blueprints alone arent likely to cover
the gap. In the meantime, Sweet Sakura
Bear has her work cut out for her. I
The author is a writer in Los Angeles and an
editor at the Washington Monthly.
Source: Bureau of Economic Analysis
-800
-600
-400
-200
0
$200 billion
-30 -30
0
30
60
90
120
$150 billion
Trade balance of goods
1960 $4.9 billion
1960 -$1.4 billion
2009 -$506.9 billion
2009 $132.0 billion
Trade balance of services
Hallelujah, Services!
60 70 80 90 00 09
The nations trade balance has been
negativelopsidedly sofor decades
because of the surge in imports of manufac-
tured goods from overseas. In contrast,
exports of U.S. services have been steadily
rising, faster than domestic-based services
have moved abroad. But the positive trade
balance in services remains far too modest
to offset the overall imbalance of trade.
1203supp-essay-Frank.indd 18 12/3/10 11:42 AM

J
ov uuNirns nnr oIien Iaced
viih ivo biis oI common, bui
oieniiaIIy coniiadicioiy, advice.
1he isi: Iind youi assion. 1he
second: Lniei a eId ihais giov-
ing, noi shiinLing.
So, you sii dovn and see ihai ihe ex-
eiis aie iojeciing hoi caieeis oI ihe Iu-
iuie in comuiei-sysiems design, manage-
meni, scieniic and iechnicaI consuIiing,
and heaIih caie. Bui none oI ihose ihiiIIs
you. As a coIIege siudeni, a ieceni giadu-
aie, oi someone Ianning a mid-caieei
change, hov can you osiiion youiseII io
iaLe advaniage oI ihe mosi iomising aie-
nas vhiIe siiII doing someihing you IiLe?
A savvy job seeLei has io assess boih
iheii seII-inieiesis and ihe cuiieni and
Iuiuie needs oI ihe maiLeiIace, said
CheiyI HeisIei, iesideni and Ioundei
oI Lavieinaiives, vhich heIs Iavyeis
choose aIieinaiive caieeis. One viih-
oui ihe oiheieseciaIIy in a iighi job
maiLeiis a doomed hiIosohy.
1he good nevs is ihai a Ioi oI inIoi-
maiion exisis. A useIuI Iace io siaii is
ihe Buieau oI Laboi Siaiisiics (bls.gov).
Lveiy ivo yeais, ihe agency ubIishes iis
OccuaiionaI OuiIooL HandbooL, vhich
examines ihe aniiciaied size and com-
osiiion oI ihe Iaboi Ioice ovei ihe nexi
decade and iedicis vhich eIds viII
exand and vhich viII coniiaci. Wiihin
a given eId, ii desciibes ihe dieieni
soiis oI jobs and iyicaI saIaiies. 1he
mosi ieceni ediiion, ubIished a yeai
ago, oeis iojeciions u io 2uI8.
Bui vhai does one do viih ihis
veaIih oI iojeciions on job giovih?
Considei, Ioi examIe, a eId ihai, ac-
coiding io BLS, viII giov by 4 eiceni
duiing ihe nexi eighi yeais: ihe design oI
comuiei sysiems and ieIaied seivices.
Inieiesied? Suose, hovevei, ihai you
doni vani io uisue a comuiei-ieIaied
caieei. LooL eIsevheie? Maybe.
Oi beiiei yei, give ihe IieId a cIos-
ei IooL. Bobby SchnabIe, ihe dean oI
Survival Guide
Hard World,
Dream Jobs
A few tricks for nding work that you want in a marketplace with a mind of its own.
By ALINA TUGEND
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1203supp-survival(Tugend).indd 19 12/3/10 11:33 AM
Indiana Universitys School of Informat-
ics and Computing, points out that the
category of computer-systems design in-
cludes disparate components. Twenty
years ago, the eld was about the innards
of computing, he said. These days,
the big majority will be about comput-
ing related to health care, marketing,
and social networks. At his institution,
Schnable noted, students have applied
their work in computing to elds such
as business, art, and psychology.
What is true for computing is also the
case for other careers. If youre attracted
to a particular eld, investigate the options.
For careers in technology, for example, Ad-
vanced Technological Education Televi-
sion (atetv.org) oers online videos about
numerous job opportunities and educa-
tional programs. Another source of infor-
mation about occupations is onetcenter.org.
Nancy Collamer, a career coach in
Old Greenwich, Conn., gives her clients
the same advice she oers her daugh-
ter, a college sophomore. Her daughter
started at George Washington Universi-
tys School of Media and Public Aairs,
but her focus shifted to public health.
Rather than switch majors, she plans
to combine both interests by pursuing
communications work in public health.
I told her, you need some hard
skillshow to produce a video, how to
write well, how to use social media,
Collamer said. I say follow your pas-
sion, but get good, strong skills. Find out
what is meaningful and use it as a core,
guiding mission, but know that there are
a lot of dierent avenues.
Finding dierent avenues is exactly
what Heisler was contemplating when
she started Lawternatives (lawterna
tives.com) as a business. I knew a lot of
lawyers who were unhappy, she said, so
she looked for ways that they could re-
train for another career without invest-
ing a lot of money and time.
You need to be able to see alterna-
tives and options, Heisler said. Its like
if youre into food. Theres more than be-
ing a chef at a restaurant. You can be a
food stylist, do institutional cooking, or
a lot of other things. A good lawyer, she
said, knows how to negotiate, communi-
cate, persuade, and writeskills that are
useful in running a business, working
at a nonprot, or succeeding in myriad
other vocations. You have to be willing
to do the homework for what you love.
Doing her homework was key for Eliz-
abeth Dempsey, 25, of Summit, N.J., who
recently graduated from college and was
researching job prospects and salaries. In-
terested in marketing, she applied to a few
local rms. While job hunting, she brushed
up on her computer skills through Web
sites such as lynda.com, where a monthly
fee of about $25 pays for online tutorials
in Adobe, Outlook, Photoshop, and other
computer programs. Dempseys strat-
egy worked. A nancial public-relations
rm oered her an unpaid internship in
September and, a few weeks later, a sala-
ried position.
Or try a low-tech but time-honored
way to assess whether the career of
your dreams is on the upswing or losing
ground: Check out who is advertising
jobs. Leslie Coplin, 45, of Larchmont,
N.Y., worked in television production
before taking time o to raise a family.
When looking to reenter the workforce,
I did something thats not scientic, but
something my mother always said to me
and her mother said to herlook at the
help wanted ads, she said.
For a year, Coplin combed through the
classieds in The New York Times while
keeping her possible interests, such as
physical therapy and nursing, in mind. I
kept setting my gridmy own personal
interests overlapping with whats actually
out there, she said. Coplin paid attention
to the requirements for experience and
accreditation, and she looked for oers of
part-time work, which is what she wanted.
I also know I didnt want to dabble, she
said. I wanted a career, not a job.
In the end, Coplin chose social work,
and she started pursuing a masters de-
gree this year. Its something I wouldnt
have thought about in my 20s, before I
had dealt with marriage, children, and
the elderly, she said. But its now de-
sirable, based on my age and life experi-
ence. I wanted something I could do into
my 70ssomething that I would become
better at, the more lines I have on my
face and the more years I have under my
belt. The BLS data conrm the wisdom
of Coplins decision: The number of jobs
in social work is expected to increase by
16 percent during the next eight years.
The information from BLS and other
sources can help in choosing a career,
whether youre new to the workforce or
pondering a midlife change. But beware
of becoming xated on statistical predic-
tions. Theyre nothing more than one
idea of how the future is going to look,
said David Passmore, a professor of educa-
tion at Pennsylvania State University and
the director of its Institute for Research
in Training and Development. Job pro-
jections are based on assumptions about
business decisions and growth, he noted,
but you cant predict crises, disasters, and
political foolishness. Besides, the statistics
represent macroeconomic expectations
that individuals must translate for their
personal circumstances.
Passmore offered another piece of
advice: No matter which career path
you choose, whether its as an engineer,
cosmetologist, or car mechanic, be sure
to learn what the job really entails. Do
doctors spend an inordinate amount
of their time lling out paperwork? (Yes.)
Do astronomers actually spend most
of their day gazing through telescopes?
(No.) Passmore isnt alone in conclud-
ing that too many college students have
only a vague idea about the career they
wish to pursue, and that idea is based more
on television and movies than on reality.
Rose Baker, director of Penn States Cen-
ter for Regional Economic and Workforce
Analysis, suggests a way to infuse more
realism into the process: requiring college
students to shadow workers who already
hold the jobs they covet. This might help
job seekers, especially young ones, not only
narrow down their career interests but also
focus their educational plans. They may
nd, Passmore said, that a vocational-train-
ing program or a two-year degree will prove
more useful than a costly four-year degree.
You have to look at how the world
works, he explained. As has been said,
good work involves what you can do best
and nding out what the world wants
and making a match. I
The author writes the ShortCuts column for The
New York Times. Her book, Better by Mistake, is
due out in March. Shes at twitter.com/atugend.
Assess both your
self-interests and
the needs of the
marketplaceand
make a match.
2 0 WI NTER 2 0 1 0 THE NEXT ECONOMY
1203supp-survival(Tugend).indd 20 12/6/10 1:24 PM
1HL NLX1 LCONOMY WI N1LR 2 u I u 2 1

C
orrrncr srcnrinnv Gaiy
LocLe has made himseII ihe de
Iacio inieinaiionaI iichman
Ioi Ameiican manuIaciuiing,
and viih good ieason: LocLe
beIieves ihai ihe Iuiuie oI ihe naiions
Iacioiies is diieciIy IinLed io incieased
exoiisIed by cIean eneigy, advanced
medicaI devices, aeiosace, and oihei high-
sLiIIed eIds. In an inieiviev, he decIaied
ihai Ameiicas manuIaciuiing Iuiuie is
biighi, and iouied his deaiimenis voiL
in heIing Boeing seII jumbo jeis in Russia
and HaiIey-Davidson eddIe moioicycIes
in India.
I Weve seen some signs of life in manufac-
turing in the last couple of months. Why?
What can we expect in the near future?
iocxr: ManuIaciuiing is an imoiiani
eIemeni oI ihe economic iecoveiy. Re-
iaiI saIes aie u. Consumei condence is
iebounding. Iacioiy oideis aie u. 1hai
viII siII ovei inio ihe manuIaciuiing
secioi. Quiie IianLIy, ihe aieas in vhich
ve exceI, Iiom high iech io medicaI de-
vices io aviaiion, exoiis oI ihose iiems
aie u. 1he moie U.S. comanies exoii,
ihe moie ihey ioduce. 1he moie ihey
ioduce, ihe moie eoIe ihey hiie. So
much oI vhai Ameiicans maLe is highIy
desiied aiound ihe voiId. Wiih ihe econ-
omy iecoveiing aiound ihe voiId, viih a
gioving middIe cIass in Asia and China,
ihey vani ihese ioducis.
I How competitive are American manu-
facturers on cost right now?
iocxr: Youie aciuaIIy seeing a Ioi oI man-
uIaciuieis come bacL io ihe Uniied Siaies.
LooL ai aII ihe Ioieign auio comanies ihai
aie buiIding Ianis heie some oI vhich
is aciuaIIy Ioi exoii. 1he BMW, ihe 8uu
seiies ihais being buiIi in Souih CaioIina,
is noi aII Ioi domesiic consumiion. Some
oI ihai |ouiui] viII aciuaIIy be exoiied.
Youie nding ihai ihe cosi oI Iaboi, ihe
cosi advaniage eIsevheie, is noi as shai
anymoie. |Iacioiing in] ihe iequiiemenis
oI jusi-in-iime deIiveiy, iiansoiiaiion
cosis, a vhoIe seiies oI quesiions aboui
deIiveiy, and even ihe Iaci ihai ihe cosi oI
Iaboi is no Iongei such a majoi comoneni
oI ihe naI cosi oI ihe iojecimany com-
anies aie nov IooLing moie IavoiabIy io
manuIaciuiing in ihe Uniied Siaies.
I What are our advantages?
iocxr: A highIy sLiIIed voiLIoice. A veiy
iediciabIe, siabIe oIiiicaI and economic
cIimaie. SaIeiy oI invesimeni. YouII nd
ihai iheie aie a Ioi oI nev eniieieneuis
and veaIihy individuaIs aII aiound ihe
voiId, and as ihey gain iheii veaIih,
iheyie IooLing Ioi a saIe Iace Ioi iheii
invesimeni and iheii income.
I Is there opportunity in companies from
emerging countriesIndia, Chinaopen-
ing manufacturing facilities in the U.S.?
iocxr: I ihinL youie seeing a Ioi moie
oI ihai. Youie seeing a Ioi moie inieiesi
Iiom ihe emeiging couniiies vaniing io
biing iheii IamiIies heie, and io iaLe ad-
vaniage oI ihe LnovIedge base heie, and
ihe R&D ihai occuis heie.
I Is the character of U.S. manufacturing
changing?
iocxr: Oui siiengih is going io be in
high iechnoIogy, advanced manuIaciui-
ing, ihings IiLe advanced medicaI devices,
aviaiion, cIean eneigy, eneigy-eciency
devices, semiconduciois.
I China is building up its higher-educa-
tion system. More of our foreign college
students are returning to their home coun-
tries after graduation. Are you worried
that were losing ground in the knowledge
base needed for advanced manufacturing?
iocxr: 1hais vhy ihe iesideni has aIso
been Iocusing on ihe educaiion sysiem,
and vhy I consianiIy ieII ihe business
communiiy ihai iis agenda musi incIude
educaiion. We have io ensuie ihai ve aIso
have visa oIicies ihai encouiage ihe besi
and ihe biighiesi noi onIy io come io ihe
Uniied Siaies Ioi advanced degiees bui
aIso aIIov ihem io siay heie.
I How much will the European debt crisis
aect American manufacturers?
iocxr: ObviousIy, iis a Iacioi, bui vhen you
IooL ai even ihe emeiging couniiies, Iiom
China io BiaziI, India io Russia, iheies
enoimous oieniiaI iheieabsoIuieIy
enoimous oieniiaI iheie. Weie ieaIIy
Iocusing on bieaLing dovn a Ioi oI |iiade]
baiiieis ihai Ameiican ims Iace. I
The author is economics correspondent for
National Journal.
Q&A
Uncle Sam Inc.
The Obama administrations pitchman is bullish on
manufacturing and hopeful about exports.
By JIM TANKERSLEY
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1203supp-Q&A.pag.indd 21 12/3/10 12:32 PM
2 2 WI N1LR 2 u I u 1HL NLX1 LCONOMY
I
unvr svrNi rucu oI ihe pasi quai-
iei-ceniuiy among peopIe in oihei
couniiies vho vani Ameiicas besi
jobs.
In ihe I98us, I mei ihe design-
eis and indusiiiaI engineeis in 1apan
vho dieamed ihai someday 1oyoia
vouId oveiiaLe GeneiaI Moiois as
ihe voiIds No. I caimaLeias ii nov
has done. In ihe I99us, I inieivieved
compuiei and mobiIe-phone maLeis
in Singapoie, Souih Koiea, and 1aivan
vho aspiied io move Iiom iheii ioIe
as subconiiaciois io deveIop iheii ovn
piemium biandsvhich ihe IiLes oI
Samsung and LG have achieved. Ovei
ihe pasi Ioui yeais, I have visiied com-
panies in China ihai maLe eveiyihing
Iiom eIeciiic cais io eIeciiic aiipIanes
and hope io cieaie ihe high-paying,
high-sLiII job oppoiiuniiies ihai come
viih Iuiuie iechnoIogies and indus-
iiies. And ihen iheies India
Hov can Ameiicans iespond? We
have a seiious siiuciuiaI handicap. Bui
ve aIso have some oseiiing advaniag-
es ihai, iI piopeiIy undeisiood, couId
open signicani possibiIiiies.
1he Uniied Siaies piimaiy disad-
vaniage is in misundeisianding ihe
oiigins oI iodays besi-paying, high-
iech indusiiies. Many an enieipiise
aiose Iiom a Ioundaiion Iaid by pubIic-
piivaie ieseaich paiineiships: AppIe,
GoogIe, and iheii compeiiiois in ihe
inIo-iech and Inieinei businesses;
Geneniech, PIizei, and oiheis in ihe
bioiech, genomics, and phaimaceuii-
caI eIds; Ameiicas Ieading expoiiei,
Boeing, and oiheis in ihe aeiospace
and geo-inIoimaiion indusiiies. Iedei-
aI IundingmainIy Iiom ihe Peniagon
and ihe NaiionaI Insiiiuies oI HeaIih
heIped io cieaie ihe basic iechnoIogies
upon vhich eniiepieneuis Iaiei siaiied
nev businesses. Led by China, com-
peiiiois aiound ihe voiId aie nov
appIying ihis same modeI in ihe iace
io buiId cIean-eneigy, nanoiech, and
heaIih caie indusiiies and oihei indus-
iiies oI ihe Iuiuie. U.S. ieseaich Iunding,
by coniiasi, has become spoiadic and
siop-siaii, and is IiLeIy io suei undei
acuie budgei piessuies.
Bui ihe Uniied Siaies has even moie
impoiiani siiuciuiaI advaniages. 1hiee
siand oui, paiiicuIaiIy in coniiasi viih
China. 1he pubIic and piivaie ieseaich-
univeisiiy neivoiL, apaii Iiom pioduc-
ing an educaied, high-end voiLIoice
and diaving iaIeni Iiom aiound ihe
voiId, has been ihe incubaioi Ioi mosi
high-vaIue iechnoIogies. U.S. univeisi-
iies aie undei iniense economic pies-
suie, bui ihe gap beiveen ihe besi oI
ihem and ihose in ihe iesi oI ihe voiId is
siiII enoimous. UnIess ve ihoughiIessIy
dissipaie ihis assei, ii shouId iemain a
signicani veaIih geneiaioi.
Anoihei advaniage is ihe coniinued
aiiiaciiveness oI ihe Uniied Siaies io
peopIe vho beIieve ihai iheii eneigies,
educaiion, and ambiiion viII go Iuiihei
heie ihan anyvheie eIse. 1hioughoui
Ameiican hisioiy, immigiaiion has aI-
vays been coniioveisiaI and sociaIIy
disiupiive; by hisioiicaI siandaids, ii is
Iess disiuibing nov ihan ii vas in ihe
I8$us (Geimans and Iiish on ihe Lasi
Coasi, Chinese on ihe Wesi), ihe I9Ius
(IiaIians and GieeLs, as veII as PoIes and
oihei Lasiein Luiopeans), and many
oihei iimes, ioo.
Because 9$ peiceni oI ihe voiIds
popuIaiion Iives ouiside U.S. boideis,
ihe majoiiiy oI ihe voiIds iaIeni viII
aIso siaii oui iesiding abioad. Bui im-
migiaiion has bioughi in a dispiopoi-
iionaie shaie oI ihe naiions cieaiive
iaIeni. HaII oI ihe membeis oI ihe Na-
iionaI Academy oI Sciences aie Ioieign-
boin. Ameiica beneis Iiom aiiiaciing
moie ihan oui Iaii shaie. China has
nevei von a NobeI Piize in ihe sci-
ences; ihe Chinese-boin scieniisis vho
ieceived piizes veie honoied Ioi
voiL ihey did oveiseas, IaigeIy in ihe
Uniied Siaies.
1he ihiid U.S. siiuciuiaI advaniage is
oui much-maIigned IegaI and nanciaI
IiamevoiL, vhich Iosieis ihe cieaiion
oI nev enieipiises ihai can pui discov-
eiies io pioduciive use. LiLe ihe Uniied
Siaies oI ihe mid-I9ih ceniuiy, China
oI ihe eaiIy 2Isi ceniuiy has iaLen a
shoiicui io deveIopmeni ihiough Iax
inieIIeciuaI-piopeiiy Iavs ihai peimii
ihe copying oI oiheis ideas. Many oihei
couniiies have done so io a Iess agiani
exieni. Bui ihai puis a Iov ceiIing on a
couniiys abiIiiy io deveIop iis ovn high-
vaIue indusiiies. I have inieivieved Chi-
nese eniiepieneuis vho pIan io incoi-
poiaie iheii companies in CaIiIoinias
SiIicon VaIIey Ioi Ieai oI inieIIeciuaI-
piopeiiy iheIi iI ihey veie based in iheii
ovn couniiy.
IdeniiIying ihese advaniages does
noi soIve Ameiicas compeiiiive piob-
Iems, maich individuaIs viih jobs, oi
osei ihe incieasing poIaiizaiion oI ihe
U.S. economy. Bui ii suggesis ihe Iand-
scape Ioi oppoiiuniiy. I
The author is a national correspondent for The
Atlantic.
In Perspective
Trump Cards
The American economy hasnt lost its structural
advantages over foreign competitors.
By James Fallows
U.S. universities,
immigration, and
the rule of law are
saving graces.
1203supp-Fallows.indd 22 12/3/10 11:41 AM