×

President Obama has come up short for manufacturing

What a difference four years make.

In 2012, President Obama's State of the Union address audaciously put American manufacturing and the middle class front and center. Later that year, as he was asking voters for four more years, he made a campaign pledge to create 1 million new manufacturing jobs during his second term, which would have been an impressive accomplishment.

While this president will have many defining legacies – particularly as we look back on his domestic policy and diplomacy – reviving American manufacturing won't be among them.


U.S. President Barack Obama holds his end of the year news conference at the White House in Washington
Carlo Barria | Reuters
U.S. President Barack Obama holds his end of the year news conference at the White House in Washington

Many indicators show that manufacturing is in a recession. For instance, the private sector economy lodged 2.65 million new jobs last year according to the Labor Department, but only 30,000 of those were in factories, an astonishingly low figure. Our trade deficit with China in 2015 will break the all-time record set in 2014. Steel mills are laying off workers in droves due to Chinese imports.

And nobody thinks 2016 will be much better, with the dollar rising, China's currency weakening, and its industrial overcapacity not abating.

In his State of the Union address on Tuesday night, President Obama will no doubt take credit for the success of the U.S. auto sector through the rescue package he secured, though last year's sales were also driven by low fuel costs, low interest rates, and pent-up demand.

And he may make mention of the network of public-private innovation institutes starting up across America. These new partnerships will be quite valuable for developing cutting edge products, processes, and training programs for the next generation of industry.

But it won't be enough. And that's not because voters, factory workers, or manufacturers are impossible to please. It's because he missed the most fundamental point: You can't get manufacturing right unless you get trade and exchange-rate policy right.

How short is President Obama of his promise to create 1 million new manufacturing jobs? Three years in, his progress stands at just 370,000, according to Labor Department statistics. That's a big miss.


If the blame could simply be chalked up to a new recession, increased automation, or market forces beyond anyone's control, then I wouldn't have much of a gripe about this shortfall in factory jobs.

But much of the fault, quite simply, lies in the fact that the president hasn't forcefully enough defended these jobs or fought to get back the ones we lost. The annual new commercial and trade "commitments" made with China are the very definition of "small ball." The proposed new Trans-Pacific Partnership agreement will really do nothing in its core to deter mercantilists from being mercantilists, and economic estimates predict the deal will make our manufacturing trade deficit even larger.

This isn't just hurt feelings over a broken campaign promise, which happens all the time. There's a strong case that many of the remaining questions about the health of the ongoing economic recovery – wage stagnation, rising inequality, and a shrinking middle class – have their roots in the struggling manufacturing sector.

Until we get serious about addressing this persistent blemish on our economic record – legitimate trade enforcement that keeps the competition from using the U.S. market as a dumping ground for subsidized goods, an acknowledgement of a goods trade deficit that breaks records every year, and a plan to do something about it – we're going to see more of the same.

In fact, it would be entirely possible to make better progress on that 1 million factory jobs goal if we shrunk the trade deficit over a period of time in which we and our trading partners are growing economically.

Out on the campaign trail, some of the leading candidates are talking about manufacturing, and have tough words for China. But will that vigor and commitment last four or eight years past all those stops at union halls and factory floors, where working men and women wear hardhats and proudly wave American flags?

The start of the race is important, always. But the finish line is what matters the most. And I'm afraid this is where President Obama has simply run out of steam.


Scott Paul is president of the Alliance for American Manufacturing. Follow him on Twitter at @ScottPaulAAM.

For the latest commentary on markets in the U.S. and around the world, follow @CNBCopinion on Twitter.