For more than 40 years, through economic downturns and boom times alike, Seymour Melman, a Columbia faculty member and authority on industrial production, has warned about the consequences of industrial decline through the export of manufacturing jobs abroad. Now, he is attempting to reverse the trend in his own backyard, New York City.
Melman is leading a working group from the academy, including industry representatives, which is exploring the prospects for reviving manufacturing in the city. Coming at a time of increased layoffs from the economic downturn and post-Sept. 11 dislocations, Melman feels some urgency to the task. The group's second meeting will take place on the Columbia campus on Friday, April 12 (The meeting is open to interested members of the public. Please RSVP to 212-854-2936 or email@example.com).
Melman, who turns 84 in December, has taught at Columbia for more than half a century. The professor emeritus of industrial engineering at Columbia's Fu Foundation School of Engineering and Applied Science remembers when much of Manhattan below 34th Street was given over to small manufacturing lofts, many of them family-owned factories that turned out knitwear, leather goods and other consumer products while supplying steady and substantial jobs for the New York working class. Melman counted himself lucky to have landed a good-paying summer job in one of these knitwear factories when he was a high school student during the Depression years.
These Manhattan factory lofts disappeared decades ago – their goods now produced overseas, a story that is retold in former manufacturing centers across the nation. But Melman believes passionately that factories can be wooed back to New York through the lure of a computer-literate population. The classic argument for why U.S. manufacturing declined—that union laborers priced themselves out of competition, leading industry to move to the developing world for cheaper labor—is dead wrong, says Melman, who makes the case for reindustrialization in his latest book, "After Capitalism: From Managerialism to Workplace Democracy," published this fall by Alfred A. Knopf. Melman notes that by 1996 Germany and Japan had combined merchandise exports of $935 billion, compared to $625 billion by the United States. But their higher exports were achieved even though hourly compensation for production workers in Germany averaged $31.20 and in Japan, $21.00, compared to $17.70 in the United States.
Melman argues that deindustrialization is a dangerous course that leaves the country too dependent on imports, notably for capital goods. He says this danger is particularly evidenced now with layoffs occurring in many service-dominated industries since the Sept. 11 terrorist attacks.
"After Capitalism" lists dozens of industries that have experienced a catastrophic drop in production in the second half of the 20th century, including machine tools, whose workforce was cut by more than one half from 1977 to 1996, office machines, ball and roller bearings and construction, mining and textile machinery.
The factories of today, says Melman, are less dependent on the sweat of their workers; much more important are their computer skills. To be competitive today, manufacturers need workers who are able to operate highly sophisticated computer-based operating equipment. Melman gathered together a group of 40 like-minded academics in November to shape a strategy for reindustrialization, with New York City as its main target.
"We believe a highly educated, high-wage labor force affords unmatched opportunities for economic growth. Deindustrialization can be reversed," says Melman. In addition to political scientists, urbanists and business experts, some from the ranks of his former students, the Melman group also included administrators from the East New York Transit Technology High School in Brooklyn, who are interested in the possibility of a revival in light rail manufacturing in the metropolitan area.
The group began to explore the prospects for reinvigorating two product classes, representing capital goods and consumer goods—subway cars and knitwear. Melman notes that northern Italy has established a thriving knitwear manufacturing center, using computerized machines that require a technologically savvy workforce. Melman was distressed to discover some time ago that subway cars are no longer made in the United States, and that when New York City invited bids for $1.5 billion in new subway equipment, companies in Japan and Canada responded but no U.S. firm sought the contract. Prospects for high-tech knitwear production will be examined during the meeting on Feb. 1.
The disturbing implications of deindustrialization, Melman warns, is the prospect that America will become a third-rate economy unable to repair the damaged parts. In his new book, he describes parallels between the corrosive militarized economic system that collapsed in the Soviet Union and our own management-dominated "state capitalism" with its emphasis on decision-process activity. "Russia has suffered the consequences of exactly those processes that we have seen at work in the U.S. economy," writes Melman in 'After Capitalism.' The difference is merely of degree, not of kind. There is no law of nature or man that exempts the United States from the devastating effects of the processes that ultimately ran the Soviet Union into the ground."
"After Capitalism," Melman's ninth book, explores many of the excesses of American industrial management—particularly what he sees as its chief offense, seeking profit above all else—and of military budget planners that have absorbed the interests of this longtime nuclear disarmament activist in previous works like "Profits without Production;" "The Permanent War Economy: American Capitalism in Decline," and "Pentagon Capitalism: The Political Economy of War."
But Melman is heartened by a new development on the factory floor that he believes can point the United States toward a stronger, more resilient and more equitable economy – what he describes as the movement toward workplace democracy. Decision-making at General Motors' Saturn plant near Nashville, Tenn. is a model of this movement. Production is organized around work units of eight to 10 members and the emphasis is on group effort instead of individual performance. These teams are responsible for a range of tasks, including scheduling, budget analysis, training and housekeeping. This authority and responsibility, which traditionally belong to plant management, empowers workers and represents the best hope for reversing a sense of powerlessness and threats of unemployment and displacement among American workers, Melman says.
Click to view the Video Interview.