I saw the headline that General Motors had announced they were closing four U.S. auto plants, and one of them was in Lordstown, Ohio. This announcement caused me to flash back to another Ohio plant closure—the Ford assembly plant in Lorain, Ohio.
The devastation caused by closing large plants like Lorain is far-reaching. According to the nonprofit Center for Automotive Research in Ann Arbor, Michigan, the elimination of one auto-making job causes the loss of four jobs in related industries. Tax revenue evaporates and related businesses vanish. Some companies that go out of business are suppliers that service the big plant; others are places where workers spend money: grocery stores, restaurants, day cares and barber shops.
It is important to point out that many economists do not think that offshoring production to foreign countries is a problem. They believe that the U.S. economy is transitioning out of manufacturing and into a financial and service economy that will provide growth and new jobs. They think that this is a natural transition just like the transition from an agricultural to a manufacturing economy.
The truth is if manufacturing continues to decline, then America will decline. The assumption that a service economy is adequate is a huge gamble which risks living standards, the economy, and in fact, our position as the No. 1 economy in the world.