Release Date: November 14, 2016
President-elect Donald J. Trump has made it clear he will focus his efforts on re-creating manufacturing jobs in the United States.
But it won’t happen overnight, according to Nallan Suresh, professor and chair of the University at Buffalo School of Management’s Operations Management and Strategy Department.
“It will take time to accomplish, but the good thing is that we will now have a president who is likely to address this important issue squarely, rather than getting distracted by other issues,” he says.
Bringing back manufacturing jobs, and creating new ones, will take two sets of actions – one within the U.S. and one in our external dealings, according to Suresh, an expert in manufacturing and strategy.
Internally, we need to induce manufacturing entrepreneurship, which is really a long-term initiative. As part of this, we need to motivate large firms to build more domestic sourcing capabilities through domestic supplier development activities, and provide tax and other incentives for both domestic and foreign companies undertaking greater domestic sourcing.
Suresh says we also simply need to find more low-cost ways to manufacture goods, through wholescale process improvements.
To address the problem of mounting deficits, Suresh says that “the government should identify and work with the large, deficit-creating firms first.”
Externally, the U.S. needs to renegotiate trade deals into more win-win partnerships, rather than take a confrontational approach with leading economies, Suresh says.
“We should negotiate with China to strengthen the yuan with respect to the dollar, but we risk having inflation in the process in the short-term,” he says. “China has, in fact, slowly increased the value of the yuan by 10 percent over the last four or five years.”
And while imposing duties and tariffs are also an option, Suresh says we run the risk of retaliatory duties and restricted access to overseas markets for our own exporters. So this can only be done very selectively.
“My sense is that China will cooperate, since both the U.S. and China are significantly, and overly dependent on each other, but both are looking for ways to diversify,” Suresh says.