By Rob Lever (AFP) – Jun 16, 2009

DETROIT, Michigan (AFP) — A revived manufacturing sector is critical to leading a recovery of the slumping US economy, underscoring the need for new policies, business leaders told a national economic summit.

The second day Tuesday of the Detroit, Michigan summit seeking an economic strategy offered more comments on the critical importance of the industrial sector in view of the global crisis.

"One of the lessons we have learned from the crisis is that you cannot create create wealth in an economy simply by spinning things around and around," said Jayson Myers, president of the Canadian Manufacturers and Exporters Association.

"You create wealth by building things people want to buy."

Those comments were echoed by others.

"Prosperity comes from building, creating and producing," said Chip McClure, CEO of auto parts maker ArvinMeritor.

"Can we sustain commerce based on financial engineering over real engineering? Simple answer, no way."

McClure said the US needs "a pro-industry climate with policies on trade, taxes, energy, health care, and education that make it competitive for US and foreign manufacturers to build here. An economic downturn is not the time to walk away from 12 million American manufacturing jobs. It?s the time to build."

John Engler, president of National Association of Manufacturers, said the government "needs to consider the long-term impact that increasing costs, adding new regulations, raising taxes and expanding litigation will have on America's future economic competitiveness."

Craig Giffi, vice chairman at the consultancy Deloitte LLC and author of a book on manufacturing, said Americans must begin to realize that manufacturing is not a dirty word.

"Most Americans still cling to a belief that manufacturing is not safe, that pay is not good .... that the jobs are dangerous."

Still he noted that "we are the most productive nation in the world when it comes to manufacturing."

The summit, a three-day gathering aimed at defining a US economic strategy, heard several calls for a formalized US "industrial policy" to help compete with countries, notably in Asia, that offer direct aid to key firms.

But others warned about going too far down a protectionist track, saying this could backfire on the United States.

"Increasing global trade is one of the greatest forces to get us out of this crisis," said Scott Davis, chairman and chief executive of delivery giant UPS.

"It is not uncommon for countries during an economic crisis for countries to turn inward and to put up barriers to protect jobs."

He said a "Buy America" measure in the US stimulus, even though watered down, "sends a horrible signal to the rest of the world and gives a lot of other countries cover for their protectionist practices."

This may hurt the US because "one out of every five manufacturing jobs is linked to the export of goods."

Sandy Baruah, senior fellow at the nonprofit Council on Competitiveness, said shutting out foreigners would be a mistake because it ignores the global supply chain that requires companies to source products around the world.

"There are more Americans employed in America by foreign companies hat Americans who have lost their jobs to outsourcing," he told the forum.

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