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Remarks on Revitalizing American Manufacturing, Spartanburg, South Carolina

Friday, February 15, 2013

Deputy Secretary of Commerce Rebecca Blank
Remarks on Revitalizing American Manufacturing, Spartanburg, South Carolina

Thank you, Josef (Kerscher), and thanks to BMW for that great tour of the X3 assembly line. I’m delighted to have a chance to be in Spartanburg with your employees and business leaders from the community.

In his State of the Union address on Tuesday, the president said that we must make America a magnet for manufacturing and good jobs. I believe we are poised to do that.

Manufacturing has been one of the top drivers of GDP growth since 2009. And, after a decade of losing manufacturing jobs, we’ve now added back nearly a half million jobs in these past three years.

Spartanburg is one of the reasons for that. This community has been a model for how we can reinvigorate manufacturing, drive innovation, and boost our global competitiveness.

You all know the story.   

In the 20th century, Spartanburg—like many American cities—had a local economy that relied heavily on agriculture and textiles.  

But a couple decades ago, folks here realized that Spartanburg might have to reinvent itself in order to survive and grow.

So as the auto industry began to take hold in this part of the country, you saw an opportunity. You knew that you’d need to make some up-front investments in infrastructure, in research, and in your workforce. And, I’m sure that those decisions weren’t easy to make.

But today, with companies like BMW adding hundreds of jobs and exporting record numbers of American-made cars around the world, it’s clear that your actions paid off.
As a result, even more companies from around the world are bringing jobs here, lifting middle-class families back into prosperity.

We want to grow more of these strong, 21st century, American manufacturing hubs. So the big question we need to ask today is this: How can we replicate the lessons you’ve learned, so other communities can learn from your success?  

The answer to this question is simple: More community-based investments. And more innovation.

For starters, we need to realize that the 20th-century models of business investment don’t work anymore. In the past, a big company would pick a city, build a plant, and then make investment after investment to support production.  

If they needed raw materials, they’d start mining nearby. If they needed a new component, they’d build a new factory from scratch down the road. If they needed their workers to learn new skills, they’d establish their own training program and hire teachers to run it.

But today, as companies and their supply chains have gone global, that kind of vertical integration has largely disappeared. Some manufacturers have moved and others have closed up shop, leaving a big hole in the ecosystem of too many local economies.

Here’s the good news: Many global manufacturers are now looking to come back, to expand operations here, or to start investing in the U.S. for the first time. They see a stable supply of oil and gas, coupled with lower energy costs. They see our workers being more productive than ever before. They see Americans buying again and our economy growing faster than others.

We need to be ready to attract these investments. When a global CEO looks at an American community, we want them to know that all of the pieces are coming together to help them make it in America.

So we need to make sure our American communities have the strategic assets they need:

We need to build the right infrastructure, improving our highways, ports, and airports. The president himself proposed a Fix-it-First program this week to target pressing problems like our 70,000 structurally deficient bridges. That’s the infrastructure companies need to connect with their suppliers and to deliver products. South Carolina made investments like that 10 years ago here for BMW.

In addition, local research institutions need to be ready to partner with companies that want to stay at the cutting edge of new technologies. Clemson did that by raising over $200 million for an auto research center.

We need a growing flow of skilled workers, trained in our local colleges and vocational training institutions. Spartanburg Community College, Greenville Technical College, and Tri-County are all playing their part.

And the federal government needs to do all it can to support these efforts. That means reforming our tax code to make it more competitive and to encourage manufacturers to keep jobs here—a major part of the president’s new plan. His plan also includes a tax credit for hard-hit communities that face high job losses or layoffs due to a manufacturer leaving. Of course, it also means working with the local community. For example, our Foreign Trade Zone Board helped BMW reduce costs for getting components from its supply chain, while also incentivizing suppliers to relocate here. 

Communities across the country need to do the strategic planning and make the kind of investments and partnerships I’ve mentioned, just as Spartanburg did. All of the people and the assets in a community need to be aligned, because, in this day and age, that’s what often makes the difference between winning or losing a big investment.

Under the new proposals that the president outlined this week, the Commerce Department is going to play a more active role than ever in helping attract more manufacturing investment to U.S. communities.  

First, we’re going to lead a team of federal agencies through the new Investing in Manufacturing Communities Partnership.  

The president has proposed $113 million to support communities that do the hard work and analysis to identify key projects which will bolster their ability to attract investment. We’ll run a competitive process to select communities that have done effective planning but need a little help to build the assets they need. For instance, we’ll provide matching funds to co-invest in things like a business park or a new tech transfer program with local universities.

Local leaders, however, must show that they’ve put together a strong plan to attract investments from a particular industry where their community has a comparative advantage. That means they need to collaborate closely across the public and private sectors, local foundations, and local research and teaching institutions.

By supporting these communities that are actively working to become investment hubs, we’ll help entice both manufacturers and their supply chains to come to the area.

We’re also going to synchronize programs across the federal government. We want to make sure that these communities get all the help they need—whether that be infrastructure funding from the Department of Transportation, workforce training help from the Department of Labor, or something else.

In short, we’re looking for more cities—more Spartanburgs—that are ready, willing, and able to reinvent themselves to compete globally.
Helping communities attract investments through the work of the IMC Partnership is only one step.  We’re also stepping up our international outreach to convince firms around the world that the U.S. is the right place to invest.

Back in 2011, the president launched SelectUSA at the Commerce Department—the first-ever federal effort aimed at doing just that.

Other countries have long made big national efforts to attract inbound investment. We must do the same. Our governors and mayors deserve the full support of our federal government because they often find themselves competing with other nations.

That’s why SelectUSA recently trained Commerce Department employees stationed in 25 international markets— they’re helping foreign businesses that want to learn more about investing here. 

The president proposed this week that we do even more. His budget will include about $20 million for 100 new hires for SelectUSA. And we will host what we hope is the first annual  SelectUSA summit this year, where we’ll bring global businesses to the U.S. and match them with local leaders who are ready to talk about why their community is the best place to build and hire.

Attracting new investments to our shores is one way the president wants to accelerate the resurgence in American manufacturing. I’ll mention just one other key component of this effort—promoting innovation and keeping the U.S. on the cutting edge of new manufacturing technologies.

Last year, the Commerce Department helped launch a pilot project for the National Network for Manufacturing Innovation—the NNMI—in partnership with the Defense Department. We created a regional hub based in Youngstown, Ohio. With the help of research centers, universities, community colleges, manufacturers themselves, and others—we’re going to make that region become known as a global leader in 3D printing.

If you haven’t heard of 3D printing before, you did this week. The president talked about in speeches both on Tuesday and Wednesday. It’s a technology that allows you to build customized objects by literally printing one thin layer at a time in any sort of pattern. 3D printers can make consumer goods, medical devices, military equipment, and—I suspect—even car parts.

As the president announced, the Department of Energy is coming on board as a new partner with NNMI, and we’re going to launch three more pilot institutes this year. He also reiterated his call for Congress to use $1 billion to fund 15 institutes around the country.  

Make no mistake. Many of our global competitors have had programs like NNMI in place for decades. It’s time to step up our game so that we can stay at the forefront of advanced manufacturing and the good-paying, high-tech jobs that come along with it.

Before I close, I want to emphasize that the federal government can take all the important steps I’ve mentioned today while still coming together with Congress to reduce our deficit.

However, what we don’t want to do is make across-the-board, devastating cuts to programs—known as the sequester. This would seriously hurt our ability to support manufacturers as they grow and hire.

For example, the Commerce Department would have to cut back on state-level partnerships that help small manufacturers innovate and adopt better business practices; we would be forced to reduce our support for exporters; and we would have to scale back the business data that companies use to make critical decisions.

Clearly, as our economy is showing signs of stronger growth this year, the sequester is just a really bad idea, as the president said.

I’ll close by echoing something that he said Wednesday in Asheville—just an hour and a half up I-26 from here.

He was doing what I’m doing now —talking about manufacturing at place where a foreign based company—Linamar, a Canada-based auto parts maker—had made a big investment in the U.S.

He said there’s no “magic bullet” to strengthen manufacturing in America. He said, “People still have to work hard [and] companies still have to make good products.  But if we can just do a few things, then over time what happens is that we start rebuilding our manufacturing base in a way that strengthens our economy as a whole.”

Both as an economist and as the leader of the Commerce Department, which is charged with championing American-based manufacturing, I couldn’t agree more.  
So let’s do those few key things that could make a big difference. Let’s do all we can—right now—to attract investment and drive innovation in manufacturing at this critical moment.

If we’re successful, I know that our communities will be stronger, our economy will grow faster, and the future will be brighter for the next generation of Americans.  
Thank you.