John Engler

Manufacturing is not glamorous.

When I mentioned at a family gathering that the Monitor was hosting a breakfast for the head of the National Association of Manufacturers (NAM), the response was: why?

But while it lacks the sizzle of the software, music, or movie industries, the manufacturing sector remains a major economic force in the US. According to a recent speech by NAM president John Engler, manufacturing generates about $1.4 trillion, or 12 percent of our gross domestic product. Manufacturers fund nearly two-thirds of US research and development, account for three-fourths of our nation's exports, and despite recent employment woes, still provide more than 20 million high-paying jobs.

So it is worth listening to Mr. Engler on the challenges facing a key force in the economy.

Before moving to Washington to head the NAM, Mr. Engler was the governor of Michigan for three terms. He was something of a political child prodigy, elected at age 23 to the Michigan State House of Representatives. Here are excerpts from his remarks at Wednesday's breakfast:

On the outlook for the US manufacturing sector:

"We are still the possessors of a substantial manufacturing sector. The demise of the manufacturing economy, the obituaries for that are a bit premature. 2005 was a record [year for] output in US manufacturing history, accomplished with fewer people, reflecting the incredible productivity that has been driving manufacturing.... It is a growth rate that makes us the envy of virtually all of old Europe. [The outlook is for] more modest growth this year than last, but still positive, with threats as a result of external factors [that are] hard for individual manufacturers to control."

On Treasury Secretary designate Henry Paulson's opportunities:

"I think one of the things that is interesting about Secretary Paulson, which could be a huge advantage for him, [is that] he probably has been to China ... more than 70 times. He may have been to China more than ... the entire US Senate. So there is going to be an ability on his part hopefully ... to craft a China policy and a China relationship that can be more of a win-win. We obviously share the opinion of groups like the International Monetary Fund that there is an imbalance in terms of the under-valuation of the Chinese currency. We also worry a lot about the fact that there are significant subsidies allowed Chinese enterprises that are not enjoyed by US companies and that makes it hard to compete."

On the lack of a US energy policy:

"It is pretty central to economic policy. I think America lacks an energy strategy and from a manufacturing perspective, where we use a third of the electricity generated in America, it is simply unacceptable and represents a threat to a strong manufacturing economy in America."

On the outlook for the US automobile industry:

"It is to the point now where they simply, fundamentally, have got to be fixed. And that means they are going to get smaller in order to get better."

On Congressional inaction on key national problems:

"I think there has probably never been less connection between the money people donate and the results they get than there is today, regardless of party. I think to the extent there is frustration, it is the seeming inability of Congress to find any time when it is able to do something that is in the interests of the country ... regardless of whether someone benefits more than somebody else or he or she wins.... Today the motivation so often seems to be that, 'I can't do this because if we did it and it worked, X would get credit for it. And I would rather have nothing happen than to have X get credit.' In that environment, how do you ever do anything? We are taking on, in a very tough global environment, countries that are focused on doing everything they can and whatever it takes to sort of capture investment and growth."

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