The True Story of Manufacturing

When Brian Papke talks about manufacturing in North America, his speech is a mixture of buoyant optimism and more than a hint of frustration.
"The public suffers from a misconception that all manufacturing has gone offshore," says Papke, president of machine-tool builder Mazak Corp., who charges that the media, politicians and educational institutions have all fostered that misperception. "It is really hard to get out the true story of what is going on."

So what is the true story? Papke says U.S. manufacturing is producing one-fifth of the world's goods and has registered 26 straight months of growth, according to the Institute for Supply Management. His customers, small and large, cutting across a wide swath of industries, are busy and would be even busier if they could get all the skilled workers they need. Both domestic companies and foreign firms want to invest in this country, he says, but they need to see government provide a "framework that is conducive to manufacturing to drive work into the U.S."

Papke recently spoke at one of the roundtables being held by the White House Business Council on U.S. manufacturing. I asked him what his message was to the political establishment. He said while the manufacturing of many commodity items is not coming back to the United States, that doesn't mean that all manufacturing here is dead. Instead, he noted, there is a bright future for making precision equipment in the United States. He said companies that need critical parts in a just-in-time environment would be foolish to have them shipped from overseas when they can be delivered by a domestic manufacturer. He noted that factors such as rising fuel and shipping costs, better protection of intellectual-property rights and a drop in the value of the dollar make domestic manufacturing more attractive.

To help U.S. manufacturers, Papke reasons, Washington needs to provide them with a long-term, predictable "framework" for growth. He hears pro-manufacturing rhetoric from the Obama administration but then sees actions by agencies such as the National Labor Relations Board and EPA that send a very different message to employers.

Manufacturers also need to do their part, Papke notes. He said in the past, industry leaders got together and the conversation turned to "what are you doing in China." Now, he believes, the paradigm is changing and the focus will be on "how are you making it work in the U.S."

Papke cites Mazak as an example of a manufacturer that is flourishing in the United States. Over the past 30 years, the Japanese-owned company has expanded 15 times in the United States. In 2009, the company added 50,000 square feet to its Lexington, Ky., plant and invested $13 million. In the past 18 months, Mazak has hired 275 people. Last month, Mazak announced it was exporting machines to China, Brazil and other countries.The company recently reinstituted an apprenticeship program in an effort to attract skilled workers. Papke told me sales for 2011 were up about 90%. "July was the biggest month in our history," he reports.

Of course, one reason Mazak is prospering is because its products help improve manufacturing productivity. He cites Mazak machines that cover five levels of multitasking, from smaller, simpler machines to complex five-axis machining centers. "If you can describe the geometry of a part and we can partner with the tooling and accessories people, you can pretty much create any part shape you can imagine," he says. As a result, machines can be built with fewer but more complex parts. This evolution of technology illustrates one of Papke's other points about manufacturing misperceptions. Increasingly, it is a high-technology business.

Papke is no isolationist. He works for a Japanese-owned firm and extols the cross-cultural influences that he believes have led to a "unique multinational culture" within the company. He also has no problem with investing in China or other countries in order to service those domestic markets. But he believes with the right encouragement, manufacturing can grow significantly in the U.S. His advice: "We need to get this out of the campaigning agenda and make it real."