Just when we thought we had a handle on the status quo, the universe decided to shake things up a bit.
For me and a few million of my closest friends, the Chicago Cubs kicked off November with the most stunning comeback victory in World Series history: on the road… in Game 7… after a rain delay… in extra innings. The losing streak is over, the “lovable losers” are now just lovable, and the Eamus Catuli sign outside Wrigley reads 000000. Nothing could shock the nation quite like the Cubbies. Right?
On Nov. 8, my wife and I went to bed wondering if the American voters had a rain delay in store for us. The shock set in on Nov. 9 when the United States elected its first reality television star to the highest office in the land. It has been some weeks since the election, and the world is still trying to understand what happens next. I, personally, find myself quite conflicted.
As a third-generation manufacturer, I often find myself in the middle of many (conflicting) ideological perspectives. We make medical devices that save lives, and we make firearms components that take them. We make electrical safety components for airplanes, and we make the heat-seeking missile tubes that bring aircraft down. Lucky for us, as manufacturers, we are used to a manic roller coaster of economic volatility. The Trump victory has been widely embraced by manufacturers across the country as a victory for our various industries. However, the effects on U.S. manufacturing are less clear-cut.
For manufacturers of firearms components, Trump has ushered in a reverse course of continued growth. Both Sturm Ruger & Co. and Smith & Wesson Corp. have seen their market value drop nearly 25 percent in a week. Before his hand has even rested on the Bible, Trump has eased the fears of gun buyers and given them confidence that the Second Amendment will remain, (just as it has for the last eight years, though the dash to obtain firearms reflected a fear of its reversal), and the result is lowered demand in the industry.
On the contrary, oil and gas in Colorado has the potential of making a serious comeback. Many in the manufacturing supply chain have seen work related to oil and gas slow to a grinding halt in the last 18 months. Trump doesn’t have a seat on the Organization of Petroleum Exporting Countries board, but he is viewed as a friend of carbon dioxide, and the prospects of renewed pipeline construction and expanded drilling permits could bring increased opportunity to the Front Range manufacturing supply chain.
There is, of course, tempered excitement as the boom/bust cycles of oil and gas are as certain as a Colorado sunrise. Colorado oil and gas has lost nearly 7,000 jobs in the last year. Some of those folks have found a home in other parts of the manufacturing supply chain, which has provided a phenomenal opportunity for small manufacturers. The influx of talent comes at a time when manufacturing companies’ No. 1 concern is an aging workforce and continued growth of the skills gap.
Another reality of 21st century manufacturing is the fact that we are part of a global marketplace. Most of our customers are U.S.-owned, publicly traded corporations who source parts and components from all over the world. Many of Qualtek’s customers, for example, have set up assembly operations in Mexico, and they receive parts from the U.S., Europe and Asia.
With populist rhetoric threatening to dismantle long-standing trade deals with U.S. partners, the prospect of losing significant export business has become a real threat. The president-elect’s campaign promises would lead us to believe manufacturing will have a resurgence as corporations are dissuaded from offshoring jobs, and tariffs are placed on goods being imported. But for small manufacturers supplying original equipment manufacturers in Mexico, the near-term reality of a more costly relationship between our two countries would expedite Mexico’s investment in manufacturing technology domestically, and thus make it more difficult for U.S. manufacturers to compete.
Every major automaker in the world has either already built full-scale production facilities in Mexico, or they are in the process of doing so. It would be very surprising if one of the most well-funded industries on earth simply rolls over and abandons billions of dollars in sunk capital. Most of the suppliers to automakers in the U.S. and Mexico are small- to mid-sized manufacturers and they are typically family owned. That goes for the companies who have set up shop in Mexico as well. Drive through any business park in Queretaro, Monterrey or Puebla, and you will see U.S.-owned companies doing business (often as a supplement to their existing U.S. businesses) right next to their large original equipment customers. If trade between the U.S. and Mexico is negatively impacted, the burden will not be only Mexico’s to bear.
One of the leaders of re-shoring manufacturing jobs to the U.S., Harry Moser, commented earlier in the election process that Trump’s aspirations of bringing jobs back to the U.S. are rightly focused. However, Moser also noted that reversing 70 years of economic policy would take decades. The good news is that U.S. manufacturers have been planting the seeds of reshoring for years now. As mentioned briefly above, the biggest concern for American manufacturers is the skills gap on the shop floor. We as an industry sector are not developing human capital fast enough to make up for the loss of institutional knowledge that retires every year.
If we are going to be successful, we will need all hands on deck. We cannot afford to alienate immigrant populations who bring years of experience in machining, tool making and fabricating. Furthermore, the industry needs women on the shop floor, in management positions and in the board rooms. Organizations like Women in Manufacturing are highlighting the benefits of diverse perspectives in engineering and corporate leadership.
Our nation’s success in bringing manufacturing jobs back to our shores cannot rest on the tiny shoulders of outdated chauvinistic misogynists.
The strength of Colorado (as well as U.S.) manufacturers will not be defined by what does or does not come out of Washington, D.C., in the next four years. Our strength will be defined by how we innovate and endure. Manufacturing is embedded in the fabric of our economy and culture. That culture, just like our economy, continues to change.
It is my sincere hope our president-elect is able to embrace that change.
Chris Fagnant is president of Qualtek Manufacturing. He can be reached at 719-598-3394.