The latest survey from the Federal Reserve Bank of Dallas paints a stark picture: Texas manufacturing, a bellwether for the nation’s economy, has hit its lowest ebb since the pandemic's peak in 2020. This is an economic SOS from the second largest manufacturing economy in the country.
The good news? We know exactly why this is happening and what needs to be done.
This downturn in our manufacturing outlook isn’t just a statistic to me; it’s a call to arms. As a Dallas native and entrepreneur who has spent decades in manufacturing and business development, I've seen firsthand how manufacturing creates jobs and anchors communities in prosperity and innovation. I’ve also learned the necessary conditions for manufacturing to take off.
This crucial sector of our economy has taken a hit in the last two years due to policies that have weakened American energy production. Massive increases in the cost of oil directly impact land and sea transportation, so manufactured goods cost more to produce and purchase. Rampant inflation also means that consumers are spending more and getting less. In retail, this manifests as a phenomenon called “shrinkflation”—smaller sizes for retail goods that save manufacturing costs. But manufacturing is a mostly fixed cost—it’s mainly workers who suffer from its decline. And If the trend continues, independently-owned American factories shut down or face mergers and acquisitions by private equity and foreign buyers.
The upshot? Dallas must now reclaim its leadership role by doubling down on manufacturing investment. International turmoil in the Middle East and South Pacific have opened an opportunity to strategically reshore American manufacturing right here in communities across our nation, but especially in Dallas. The cost of paying American workers has been scaring off investors for too long—we must remember that reshoring is a long-term investment that can yield significant returns and create a ripple effect in a local area. If a larger segment of the local workforce is empowered to achieve the American dream and participate in the economy, local investors in every area will reap the economic benefits.
Let’s reimagine industry and community in Dallas, particularly in the southern sector—where people often prefer panhandling because it pays more than any job they’re qualified for. Right now, these communities mostly have openings for work at convenience stores, fast food restaurants, and small-dollar retail. These jobs are transitory, entry-level jobs that don’t pay well. They’re better suited to a high school student in the summers off than an adult trying to provide for a family.
It’s true that areas of the country that have not traditionally been manufacturing zones tend to lack skilled workers who can perform complex manufacturing tasks. This means trade skills education will have to accompany the rise in reshoring. That’s not a bad thing—the average age for a welder is 57, and hundreds of thousands will retire in the next ten years. Without skilled tradesmen to keep the country running, a manufacturing downturn will be joined by dozens of other crises.
Investors have been shy of reawakening America’s manufacturing industry until this point because, to put it bluntly, manufacturing is not sexy or get-rich-quick. “We’ll just source it from China” is a much more common refrain. But investors should not overlook that manufacturing is a very stable investment with strong fundamentals, even as other industries experience massive turbulence. Creating well-paying jobs is also a holistic investment in the community on par with private philanthropy—and a far better use of money than government programs that keep people dependent.
I’ve worked with corporate heads and elected officials to strategize the wholesale growth of Texas’ economy, and it’s striking how optimistic they are about Metroplex’s’ economic leadership. So many business leaders have singled out Dallas Fort Worth as the torchbearer for economic transformation. The North Texas region is a melting pot of entrepreneurial spirit, technological prowess, and an untapped workforce ready to rise to the challenge.
While we can’t change federal energy policy or promise a silver bullet to fix the economy, we should encourage our local elected officials to court businesses who can invest in these communities through manufacturing, and invest in skills training programs that would provide a strong talent pool. If Dallas Fort Worth leads by example the whole country will follow.
We can do more than merely patch the gaps left by manufacturing's policy-driven retreat. We can harness these qualities, turning the economic challenges from the past into a springboard for innovation and growth.
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