Make manufacturing great again New England

Once upon a time New England was considered the manufacturing epicenter of the entire United States. Factories ranging from large textile mills, iron works and shipyard, to small family-owned businesses, flourished throughout New England. The economy thrived. 

However, during the late 20th century our region started to see a shift of manufacturing away from the area. Lured by lower cost of manufacturing in Asia and South America that was primarily driven by low wages, factories embarked on mass offshoring of their manufacturing to these parts of the world. Additionally, our federal government policies, tax incentives, and trade agreements encouraged companies to offshore their manufacturing. The remaining factories found it difficult to stay competitive and ceased operations.

Thia deindustrialization of New England, combined with factory shutdowns, devastated the local economy and resulted in massive job losses. Today, if one drives through an old town in New England area, it is not uncommon to find abandoned factory buildings with shattered glass panes. It is truly disheartening to imagine that these were once bustling factories drove the economic health of the towns where they are locaed.

With the advent of 21st century, the tide seems to be changing again. Companies are now realizing that offshoring manufacturing may not be as advantageous as originally expected. The wage gap between U.S. and Asia is steadily shrinking. The cost of transportation of finished goods from Asia continues to rise with increasing fuel costs. We see that major companies have started to bring manufacturing back to the United States.

Already, without heavy government intervention, New England is primed for reshoring due to its quality workforce and proximity to the customer. Don’t take our word for it. Follow the money. Insulet, a medical device manufacturer, is building a $100 million production facility in Acton, Massachusetts, relocating four factories from China. Horst Engineering, which specializes in manufacturing aircraft hardware, closed their factory in Mexico and moved to South Windsor, Connecticut. Horst has two locations in Connecticut and one in Massachusetts, with approximately 150 employees.

This is great news for the local economy and job market, but vitally important is whether the region is ready to reshore manufacturing back to the New England area. In other words, what can our local, state, and federal government do to support reshoring?

Both local and federal governments need to provide incentives to bring manufacturing back. A multi-prong approach needs to be taken to attract both U.S. and foreign investors to help sustained growth of the economy. Increasing tax incentives for reshoring manufacturing and encouraging a domestic supply chain will help reshoring. Local government must incentivize companies to rebuild manufacturing locally by helping to provide discounted commercial land and energy.

We should support open markets to increase foreign investments. How do we do this? By strengthening existing trade agreements and creating new ones with emerging market countries; by investing in developing the infrastructure required for attracting quality investors, e.g. extensive transportation networks (ground, air, sea), advanced information technology (IT), steady supply of energy, providing a highly educated and skilled workforce, and providing facilities for professional training of specialized workers.

Our government must invest in educating and preparing our future work force for the ever-advancing manufacturing environment.

If these policies are executed effectively, New England will regain the old glory as the manufacturing epicenter of the United States, making American manufacturing great again. 

Ronit Elshtein, Rayhan Shaikh, and Ravi Marala are MBA Students at the University of Rhode Island. They live in New Jersey, Higganum, Connecticut and East Hampton, Connecticut, respectively.

 

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