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Manufacture This

The blog of the Alliance for American Manufacturing

Richard McCormack diagnoses the true source of America's affliction.

The post below is an opinion piece written by award-winning journalist Richard McCormack, the founder and publisher of Manufacturing & Technology News. McCormack also served as the editor of the 2013 book on revitalizing manufacturing, ReMaking America. You can follow him on Twitter at @RichardAMc.

Months after riots broke out following the death of a man critically injured while in police custody, Baltimore continues to simmer; Freddie Gray’s surviving family just reached a tentative settlement with the city, and the murder trials against six police officers will soon be underway.

But the struggling city will be unsettled for many years to come -- as long as it takes for the political establishment of the United States to realize that race, poverty, and crime problems are linked to the loss of American industry.

There are good jobs in Baltimore -- good jobs, that is, for highly trained white-collar professionals working at hospitals, universities, and financial firms. But there is virtually nothing left of the manufacturing sector that made Baltimore great.

For generations, tens of thousands of Baltimore workers living in the iconic row-houses of densely populated neighborhoods went to work in nearby factories. They had full-time jobs with salaries, benefits, and maybe even small pensions. These workers made locomotives, rail cars, automobiles, defense electronics, power tools, textiles, garments, machines, ships, and steel. They made soaps, facial creams, glass bottles, and spices. They made rails for the nation's railroads and beams for skyscrapers and bridges. As one Baltimore historian put it: "What didn't Baltimore make?"

Now, for the first time in 300 years, Baltimore's population makes nothing, save for processed sugar at the 93-year-old Domino Sugar factory, the last large manufacturing plant remaining in the city.

Economic Implosion

As the factories left, the economy collapsed. Even before the riots, large portions of the city sat in ruin, boarded up.

Today, of the top 40 employers in Baltimore, only three are manufacturing companies. Under Armour, the biggest of them at number 19, does not classify itself as a manufacturer. "All of our products are manufactured by unaffiliated manufacturers in Asia, Central and South American and Mexico," the company states on its website.

The second largest manufacturer remaining in the city is Domino Sugar, ranked number 32; it remains in business due largely to federal sugar price guarantees. WR Grace is on the list at 36, since its headquarters is nearby, but it does not manufacture in Baltimore.

As for the companies at the top of the list, seven of the 10 largest employers in Baltimore are health care providers caring for the old, sick, and destitute.

More than three-quarters (33 out of 40) of Baltimore's 40 largest employers are either health care companies (13), educational organizations or universities (seven), financial firms (six), or federal government agencies (four). Along with the three manufacturing companies, the remainder are a hotel, the local newspaper, the electric utility, a security services firm and a company that provides janitorial, security and parking services to the health care industry.

Only one of the biggest employers in the city, Domino Sugar, creates wealth. The rest consume it. Baltimore is a hollowed out economy.

The “Free” Market Comes at Quite a Price

During the riots in April, Chief Operating Officer John Angelos of Baltimore’s Major League Baseball club, the Orioles, startled people with a series of observations on Twitter. Strung together they read:

My greater source of personal concern, outrage and sympathy beyond this particular case is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle-class and working-class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others, plunged tens of millions of good, hard-working Americans into economic devastation, and then followed that action around the nation by diminishing every American’s civil rights protections in order to control an unfairly impoverished population living under an ever-declining standard of living and suffering at the butt end of an ever-more militarized and aggressive surveillance state.

Since the April riots, the American political landscape seems to have experienced a fundamental change. Donald Trump has skyrocketed in the polls, in part by discussing the economic impacts of the loss of American industry and the unwillingness of politicians to address it. He has threatened Ford Motor Co. if it leaves for Mexico, and has proposed tariffs on Chinese products. In doing so he is defying Republican economic orthodoxy that free trade will benefit poor people in places like Baltimore by providing them with cheap products made in China … and sold at the CVS store that burned to the ground.

On the other side of the spectrum Democratic Sen. Bernie Sanders has struck a similar chord, attracting tens of thousands to his rallies and gaining thunderous applause when discussing trade, outsourcing, and income inequality … all while plunging Hillary Clinton's campaign into crisis.

It is all part of the narrative that American politicians have been duped into believing: The U.S. economy can be strong without a strong industrial sector.

To see where that has led, just look at Baltimore. Save for the tourist area around the new waterfront and a few trendy neighborhoods that have undergone gentrification, the city is a wreck and on edge.

It will remain so until Americans start re-making the things that we consume.