Minnesota and the shrinking manufacturing base


Manufacturing, it is often said, is the backbone of America’s and Minnesota’s middle class as well as of the economy. That makes trade data for 2009 and the first quarter of this year both promising and worrisome.

On the good news front, the U.S. Commerce Department said trade increased in March – both imports and exports – suggesting that the global recession was weakening. Unfortunately, imports of oil were offsetting most of the gains from U.S. exports.

Mixed news comes from Minnesota trade data released by the Minnesota Department of Employment and Economic Development (DEED). Minnesota manufacturers retained their ranking as 20th state in value of exports in 2009, but that came as exports of these value-added products declined by 15.5 percent last year while they were falling even greater – 18.3 percent – for the entire nation. That’s like declaring victory by not losing too much.

Worrisome news, however, comes from global events that we have little control over from Washington, and no control over from St. Paul. That the financial problems in Greece that could spread to other Southern European countries that share the euro currency. Any weakness in the euro usually strengthens the exchange rate of the U.S. dollar making U.S. exports more costly in trade channels. Some currency market analysts are already stating that the dollar and euro may hit parity before summer ends, which would drag down exports to a large number of regional markets.

What can Minnesota do to help our manufacturers and their exports? Not much. But we have the power to make matters worse. That happens when we cut employment and state programs that help hold up the domestic economy.