It is a similar story at one of the largest manufacturing employers in the region: General Motors’ Tonawanda engine plant on the north side of Buffalo near Niagara Falls. The plant is running flat out, working three shifts a day from Sunday night to Saturday, making engines for vehicles including Chevrolet’s Suburban and Tahoe sport utility vehicles, for which sales are booming.
It is possible to walk sections of the plant’s floor and see almost no one. The 50-pound engine blocks are picked up and twirled round and worked on by robots, often out of sight. Not every task is automated. When the plant switched to making the larger V6 and V8 engines it reverted to manual assembly. But productivity has still risen rapidly. Even now, with production booming, the plant employs 400 fewer people than a decade ago.
When Steve Finch, the plant manager, came to Tonawanda, shortly before the recession and GM’s bailout, it employed 2,100. By 2009 it was down to just 800.
“Things were bad all over, but the auto industry was the worst of the worst,” he remembers. “We have been here in western New York since 1935, and I was really concerned about whether manufacturing would survive the downturn. But we did.”
Employment is now up to 1,700. The plant competed for investment from GM, pitting it against facilities in China and Mexico, and won.
“Maybe we can’t match their wage rates. But we can narrow the gap with productivity and innovation,” Mr Finch says. “That is our strategic advantage.”
China’s competitive advantage has been eroded by rapid pay growth, which has prompted a surge of investment in automation. “China is getting more expensive,” Mr Sirkin says. “And while manufacturers can move to Vietnam and other places, the infrastructure there is extremely rudimentary.”
Even so, the companies that need low-cost labour will find it outside the US. The Reshoring Initiative, which advises companies on relocating production to the US, estimates that such moves have created 265,000 jobs since the start of 2010: about 5 per cent of the number the US has lost since 2000. The key feature of a manufacturing process that makes it suitable for reshoring – a low-labour requirement – means it will not create many jobs in the US.
