20.8.06

CREATIVE DESTRUCTION. Times change, and so does the Allis-Chalmers manufacturing complex in West Allis.

Today, about 5,500 people draw paychecks on the site, but their typical task has morphed from forming metal at a lathe to processing data at a computer. Only about 10% of them still manufacture things - complicated, specialized things, such as the massive industrial kilns produced by a dozen well-paid employees of the A-C Equipment Services Corp.

So it is with Wisconsin as a whole. Pushed by the forces of globalization, the state's economy is evolving at an increasing pace, with service companies becoming more important as less-skilled manufacturing jobs move overseas. But as with all evolution, the best of the future builds on the successes of the past.

Manufacturing, now backed by increasing amounts of technology on the surviving factory floors, still provides the steel of Wisconsin's economic backbone, just as it did a quarter-century ago in the recession-racked year of 1981.


Connect the dots in those paragraphs. "Less-skilled manufacturing jobs move overseas" and "increasing amounts of technology on the surviving factory floors." That's called comparative advantage. But it doesn't come for free. As the article notes, Wisconsin (and the United States) was once a more dependent on agriculture. But the manufacturing that drew workers from the farm fields was the high-technology of its day. The surviving manufacturing jobs make use of the high technology as of today. Tractors? Automobiles? Steel castings? Routine. The premium for math-intensive degrees in the current labor market suggests that the long-standing U.S. comparative advantage, in knowledge-intensive, leading edge products is still there.

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