The Hollowing Out of American Manufacturing
Kalamazoo, Michigan Writ Large
I grew up in Kalamazoo, Michigan, two houses down from the Sweitzers. Mr. Sweitzer worked at the local Gibson Guitar factory, and he would arrive home from work each day at around 3:50 p.m., with dinner expected on the table by 4:00 p.m. Near as I could tell, it always was. I was always envious of the extra post-dinner playtime this early eating allowed.
Then one day, the Sweitzers started eating at 5:00 p.m., and I soon learned why: Gibson had left its Kalamazoo birthplace in America’s industrial heartland and moved to Memphis, Tennessee—presumably to avoid union pressures and reduce labor costs. A part of my town went with it.
Now, I’ve learned that Gibson will soon return to an industrial heartland, but this time, it’s in China’s Liaoning Province. Gibson has acquired China’s third-largest piano maker, the state-owned Dongbei Piano Group. Our international lawyers are increasingly seeing U.S. and European companies entering the China market by purchasing existing Chinese factories and operations.
The newly formed entity will be called Baldwin-Dongbei Piano & Musical Instruments Company, leveraging the Baldwin piano brand already owned by Gibson. Gibson also produces around 150,000 guitars a year at a factory in Qingdao and operates a marketing office in Shanghai. Its more affordable Epiphone line is manufactured in southern Guangdong Province.
Gibson’s Global Expansion and the Future of U.S. Manufacturing
There’s little doubt that Gibson’s expansion into China will further reduce its labor costs. And just as certainly, this location will likely not be its final destination.
I wonder what time the Dongbei workers will get home for dinner. And I wonder when Gibson will move that Dongbei facility to Vietnam or Thailand.
