By Jamie Smith Hopkins, The Baltimore Sun
10:54 AM EST, November 17, 2013
The General Motors factory in Baltimore, the Solo Cup plant in Owings Mills and the steel mill at Sparrows Point all made things for decades. And all closed in the past 10 years.
It's a familiar tale for much of the country. But Maryland's manufacturing job losses — the result of cutbacks, shutdowns and technological innovations requiring fewer people — are among the nation's steepest.
The state saw a faster pace of job reductions in the sector than all but seven other states and the District of Columbia in the past six years, according to a Baltimore Sun analysis comparing the most recent Labor Department figures with the period just before the recession.
Maryland has lost 25,000 manufacturing jobs — nearly 20 percent of its base — since August 2007. It hasn't enjoyed even the partial rebound the United States as a whole saw after deep declines.
The problem isn't new. Maryland has shed manufacturing jobs since the 1970s. Since 1990, it has lost more of them than all but four states and the District of Columbia, part of a deindustrialization that hit the entire Mid-Atlantic region harder than much of the country.
Advocates say it's not too late for Maryland to rewrite this story line and rebuild its manufacturing base, perhaps by focusing on high-tech niches. They warn that people without a college education — and some with one — have been harmed by the long shrinkage.
"Manufacturing was steppingstones to middle-class America," said Mike Galiazzo, president of the Regional Manufacturing Institute of Maryland, a nonprofit advocacy group. "When we lose manufacturing, that just means nobody's knocking on the door to Bethlehem Steel, they're knocking on the door to Walmart."
As the state reliably added jobs over the decades in such fields as information technology, health care and government contracting, it was easy for state leaders to shrug off losses in manufacturing as inevitable, even acceptable. That appears to be changing: Last year the state convened a commission on manufacturing competitiveness, which is due to make recommendations next month.
Industry was once a linchpin of Maryland's economy. In 1912, The Baltimore Sun reported that Maryland had more manufacturing plants than all but 14 states. Manufacturing accounted for one-third of the jobs in Maryland just before World War II engulfed the country — and nearly half the state's jobs at the height of war production.
The losses in more recent decades are part technology-driven — machines enable one worker today to accomplish what it took several or many manufacturing workers to do years ago — and part geographic shift. Every state in the Mid-Atlantic, from New York to Virginia, saw cuts in the past quarter-century that outpaced the country as a whole.
American auto companies consolidated, favoring Midwestern and Southern locations, said Howard Wial, director of the Center for Urban Economic Development at the University of Illinois at Chicago. The region's steel mills — such as Sparrows Point — were buffeted by newer "mini mill" competitors in the South and Midwest and by foreign producers.
Other manufacturers moved south for lower wages and taxes, cheaper land and less regulation. And some sent production out of the country.
This happened to Mid-Atlantic states both blue and red, ones (like Virginia) that do well on business-climate rankings and even those (like Delaware) considered relatively low-tax.
Still, Michael Hicks, director of the Center for Business and Economic Research at Ball State University in Indiana, says Maryland does itself no favors with its tax rates. In a 2013 state-by-state score card, he gave Maryland a "D" for both its manufacturing health and its tax climate.
"Firms vote with their feet," he said. "Manufacturing is one where people can easily vote."
While he acknowledged that the state's well-educated workforce is a plus, companies are more likely to employ labor-saving technology in higher cost, higher-educated areas. He thinks that explains part of the region's losses in recent years.
"All the productivity gains in manufacturing are designed to kill jobs," Hicks said.
But Wial doesn't see job loss as the final result of innovation. He thinks it would be well worth Marylanders' time to help manufacturing flourish.
"Don't assume that just because factories are more automated that that limits manufacturing job growth in the future," he said. "What has usually happened in the past is that automation reduces the cost of the product and enables the market to expand."
Wial is also a nonresident senior fellow at the Washington-based Brookings Institution, which has called on the Baltimore region to increase manufacturing as part of a strategy to expand middle-class jobs. Brookings warned that low-wage fields account for a growing share of area employment.
Wial thinks Maryland can make inroads with manufacturing. The low-wage competition for manufacturing jobs that dominated the late 20th century, benefiting first the South and then countries such as China, doesn't strike him as the 21st-century fighting ground. China's wages are rising. And automation has made labor costs less significant for manufacturers.
In his view, the key to future manufacturing growth is innovation, a better battleground for both the U.S. and Maryland. He suggests that the state look to Europe's manufacturing powerhouse for ways to get in the game, rather than the lower-cost South or developing countries.
In Germany, he said, businesses, nonprofits and the government work together to strengthen the sector. There's a vibrant apprenticeship system and lenders that specialize in manufacturing.
The United States has a broken training system for technical skills and a financial system that ill serves manufacturers, especially smaller firms and startups, Wial said. An enterprising state could tackle both problems, he said, opening the door for more people to make things locally with emerging technologies such as 3-D printing, sensors and nanomaterials.
"They are going to create opportunities," he said.
Suzy Ganz, CEO of Lion Brothers Co., which makes emblems and other forms of brand identification, thinks so, too.
Twenty-five years ago, the Owings Mills manufacturer had about 350 employees in Maryland and a small workforce in China. Now it is essentially the reverse, with 400 to 500 people overseas and about 60 locally. But she expects that Lion will take on its first "reshoring" project next year, bringing work for one customer back to Maryland.
Though the number of jobs associated with that work will be fairly small, she said, she believes in the potential of new technology to make more reshoring — and small startups — possible.
"We're a research-and-development state," Ganz said. "I'm actually very hopeful about the return of advanced manufacturing."
Galiazzo, with the Regional Manufacturing Institute, is also feeling more hopeful these days. When the institute held a candidates forum in October, five of the six people vying to become governor showed up. Four proposed tax cuts.
"We need to look at existing companies in Maryland and say, 'What are the two or three things that would most significantly help them to be globally competitive?' and do those," Galiazzo said.
Jeff Fuchs, chairman of the Maryland Advisory Commission on Manufacturing Competitiveness, expects that the group's report next month will include recommendations to expand the research and development tax credit, reinstate a training-grant fund and start a statewide manufacturing association. He thinks the suggestions would help, but warns not to expect a fast turnaround.
"What we're seeing nationally and in the state has been the result of decades," he said. "These are things I would expect would slow and eventually reverse the trend."
Amazon is building a distribution center on the site of the former GM plant on Broening Highway, and razing began on the Solo Cup factory last spring to clear the way for the Foundry Row shopping center.
Galiazzo said there's still time to turn part of the sprawling Sparrows Point complex into a different sort of center, one for next-generation manufacturing. He's on the hunt for business, government and civic support.
"Given our proximity to Washington, we should be the think tank, the showcase, the experimental lab for this continuous evolution of 21stt-century American manufacturing," he said. "We should be showing the rest of the country how to do it."
Michael Lewis, who went to work for Sparrows Point after graduating from Patterson High School 35 years ago, would like to see companies making things where steel once flowed.
But new manufacturers don't seem to replace the old. Much more common, he said, is what happened after the fence factory down the street from his high school relocated to Edgewood. Now the Baltimore site has fast-food restaurants, a grocery store and shops.
"I'm not saying we don't need supermarkets, but what replaces what's lost never equals out for the working man," said Lewis, financial administrator for the local United Steelworkers union. "It's a race to the bottom."
Baltimore Sun researcher Paul McCardell contributed to this article.
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