Invest and Americans will produce again

President Donald Trump loves a good Sharpie, and now he has all the more reason to love the company that makes them.

The president signed the flurry of executive orders the day he returned to office with a Sharpie.

He’s used them for years since discovering they were more reliable than more expensive pens.

They have another merit, too: They’re almost entirely made in America.

Only the felt tip of a Sharpie comes from abroad — it’s made in Japan, according to The Wall Street Journal’s Natasha Khan, who published an eye-opening article on the penmaker this week.

What makes Newell Brands, the corporation that makes Sharpies, so newsworthy is its success in saving money — and holding down consumer prices — by making the pens in America.

Newell was once as dazzled as other manufacturers by the prospect of making its products more cheaply in Asia.

But in 2018, Newell’s Chris Peterson decided to try making the latest Sharpie, a gel version, at the company’s factory in Maryville, Tenn.

Prompted perhaps by the political environment of the first Trump administration, the company had already been trying to move some manufacturing back to America from China.

The new pen required updating its Tennessee plant’s equipment and training workers to operate and maintain the new machines.

That’s what made the project a triumph — investment in an American factory, and in the Americans working there.

This country can make top-quality consumer goods at affordable prices, but only if companies invest in their equipment and in enhancing their workers’ skills.

Peterson had the company pay to send factory-floor workers to college.

They came back ready to take on more technically demanding tasks, and their wages shot up, on average by 50% over the last five years in the CEO’s estimation.

The mandarins of globalization say higher wages surely have to mean lower profits, and doesn’t better machinery mean fewer workers?

But Newell’s production costs dropped even as employment levels held steady: The company, its plant and its workers improved together.

Not every story in American manufacturing has such a happy outcome, of course — but Newell has proved the process that once led manufacturers and their workers alike to prosper still works in the 21st century.

Ford Motor Company famously discovered it could sell more cars by paying its workers well enough they could afford to buy the automobiles they were making.

Long before globalization and containerized shipping, America’s national economy boomed thanks to a virtuous cycle of rising wages, more technological investment, an increasingly educated workforce and higher consumer spending on products made in America.

Success at home led to success abroad: America was an exporting superpower that “ran persistent trade surpluses” from 1870 to 1970, according to the Federal Reserve Bank of St. Louis.

Trump wants to make American manufacturing great again — but tariffs, which can help, are not enough by themselves.

The Sharpie case shows more domestic investment is critical.

One reason for American manufacturing’s relative decline in recent decades has been the high cost of building new plants or renovating old ones.

Even if it’s profitable to manufacture in America, the upfront expenses are a hurdle, especially when foreign countries, which subsidize their industries in myriad ways, offer quicker returns on investment.

Trump incurred the wrath of free-market purists by getting government more involved in businesses like Intel and US Steel.

Yet industries like chip-making and steel — or for that matter ship-building and aerospace — are sectors with heavy government involvement throughout the world.

The few countries that have significant manufacturing in those fields all use government to sustain their industries.

Many smart free-market economists are dangerously naive about this.

At a recent Dallas-area debate I participated in, National Review economics editor Dominic Pino (who’s since moved to The Washington Post) contrasted “the government-driven protectionist model that we have used for US Steel for decades,” which has “now resulted in the quasi-nationalization of that company,” with “FedEx, which is profitable, employs way more Americans . . . and actually delivers services that Americans use every single day.”

Trouble is, nowhere on earth is steel manufacturing as fully private an enterprise as FedEx is.

The choice Pino was presenting wasn’t between government-backed steel or free-market steel — it was between partly government-backed steel or no domestic steel-making at all.

For most American manufacturers, private investment is enough — though even then, government must consider what unfair practices other countries may adopt to lure investment away from our shores.

There’s also a role for government in ensuring a reasonably level playing field at home, so investment isn’t incentivized out of manufacturing and into other sectors without the heavy upfront costs of plants and machinery.

But the example of Newell Brands shows business leaders themselves, without any government help, can work miracles and defy globalization’s laws of gravity when they put capital behind America’s workers and factories.

Daniel McCarthy is the editor of Modern Age: A Conservative Review and editor-at-large of The American Conservative.