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WINNER: REVIVING MANUFACTURING

Where Manufacturing Is on the Rebound

By locating in the right spot, Alcoa found a way to expand its aluminum plant, even during the economic crisis.

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Expanding: Alcoa's Davenport Works.(Courtesy of Alcoa)

If the Great Recession was disastrous for many sectors of the American economy, it was widely seen as the death knell for manufacturing. But a cutting-edge aluminum plant in the heartland is evidence that American factories were given their last rites prematurely. Alcoa’s Davenport Works plant in Iowa—which makes high-tech aluminum alloys—has added 600 jobs since the height of the recession and is training 150 new workers to staff a $300 million expansion, which will come on line at the end of the year. The plant now employs more people than it did before the economic crisis.

National Journal is honoring Alcoa’s Davenport plant for demonstrating the mix of ingredients necessary to sustain the nascent revival of U.S. manufacturing. The plant combines a highly skilled workforce, relentless innovation, and proximity to North American markets to ensure competitiveness and further its technological advantage over business rivals. “When you combine all those elements along with our market knowledge, it just gives us a great platform to compete,” said Mark Vrablec, president of Alcoa Global Aerospace, Transportation, and Industrial Rolled Products.

 

On its face, the Davenport plant—a Rust Belt behemoth built a generation ago—seems an unlikely candidate for manufacturing survival, let alone renewal. The 132-acre facility opened on the Mississippi River three years after the German surrender in World War II. But the 65-year-old factory has proven itself more an asset than a liability. “We’re very experienced. We’ve made a lot of investments and developed high-end expertise,” Vrablec said. “We can make sizes and a complexity of products that can’t be produced anywhere else.”

Aluminum sheet that will be used for trucks, trailers, ships, and airplanes—including alloys and wings for Airbus’s A380 and Boeing’s 747-8 and 777—rolls off the lines at the plant. The factory makes about 110 different aluminum alloys to some 8,000 specifications. The alloys produced in Davenport, which Alcoa calls the world’s premier aerospace supply plant, make planes lighter, corrosion-resistant, and more cost-effective to manufacture. “The metal for Air Force One was made at this plant,” said spokesman Kevin Lowery. So were the blast shields on the Humvees the military used in Iraq and Afghanistan. Davenport aluminum sheet is also sent to more than 110 customers worldwide, including an Airbus facility in France and a Brazilian maker of regional jets, Embraer.

The revival of the Davenport plant captures one of the central themes in America’s manufacturing renaissance: a growing awareness of the value of proximity. For many manufacturers that rely on innovation to compete globally, distance can impede communication, which can thwart the flow of ideas from the customer to engineers to the manufacturing floor and back. “It’s really about customer intimacy: Anticipate their needs and provide innovative solutions,” Vrablec said. “That requires a really close customer connection and working together with all levels of the organization.”

 

For Alcoa, the most important customer connection is with the reviving automotive industry, which itself added 34,100 jobs between April 2012 and 2013. Demand from the North American automotive industry drove the $300 million investment to expand the plant. Lightweight aluminum has become more attractive to auto manufacturers as both consumer demand and government policy have pressured them to improve fuel economy. “When there’s $4-a-gallon gas, people want fuel-efficient cars,” Lowery said. “So you have that demand going on from a consumer standpoint. Strict new fuel-efficiency standards reinforced that demand, and Alcoa saw an opportunity.”

Manufacturing in the U.S. also allows the company to benefit from another driver of innovation: its factory workers. The U.S. and Western Europe boast the most-educated workers on the manufacturing floor, and that can offset the benefit of lower wages in developing countries, especially for more sophisticated manufacturing processes, said Thomas Mayor, senior adviser with Booz & Company, who specializes in manufacturing strategy. Rising wages in some developing markets have further tipped the scales. “We have a very skilled workforce here in the U.S., and very engaged,” Vrablec said. “You’ve got to get the ideas and involvement of the people in the facilities ... to get the innovation that we need to always improve.”

All the clouds haven’t lifted for American manufacturing, which still has regained only about one-tenth of the jobs lost from 2000 to 2010. Many low-skilled manufacturing jobs are clearly gone forever. But the comparative advantages Alcoa Davenport is finding in both proximity to the domestic market and a highly trained workforce show a path toward further recovery. “It’s really focusing on the things that matter: close customer relationships, providing solutions that provide innovations for growth, and an involved workforce,” Vrablec said. Like other U.S. manufacturers reviving and expanding their domestic operations after a dizzying decade of decline, Alcoa is learning that sometimes there really is no place like home.

 

 

See the finalists in each categoryDigital Innovation | Expanding Exports | Workforce Training | Health Care | Financing Infrastructure | Disrupting Government | Regional Economic Strategies | Education | Energy

 

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