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Obama unveils manufacturing hub on North Carolina trip

U.S. President Barack Obama holds a cabinet meeting at the White House in Washington January 14, 2014. REUTERS/Kevin Lamarque
U.S. President Barack Obama holds a cabinet meeting at the White House in Washington January 14, 2014. REUTERS/Kevin Lamarque

By Mark Felsenthal

RALEIGH, North Carolina (Reuters) - President Barack Obama on Wednesday announced a new public-private manufacturing hub in North Carolina during his visit to the state, seeking to bolster an industry that he considers essential to raising middle class incomes.

The manufacturing hub in Raleigh is a consortium of 18 businesses and six universities that will be led by North Carolina State University and will lead an institute to develop high-power electronic chips. Obama had called for three such hubs in his State of the Union speech a year ago. The other two have yet to be selected.

Backed by $70 million in federal funding, the hub would connect manufacturers with emerging research on energy-efficient chips that would help make electronic devices smaller and faster. Companies involved include ABB, APEI, Avogy, Cree, Delphi, Delta Products, DfR Solutions, Gridbridge, and Hesse Mechantronics, among others.

Eager to press economic themes in an election year after struggling with the rollout of his healthcare plan, Obama has said he would like to create a network of 45 manufacturing hubs around the country, but that would require money from Congress, which has not been as enthusiastic about the idea.

"I don't want the next big job creating discovery, the research and technology, to be in Germany, or China or Japan; I want it to be right here in the United States of America," Obama said on the North Carolina State University campus following a tour of Vacon, which manufactures components used in electronic engines.

"Where I can act on my own I'm going to do so, and today I'm here to act," he said. "Manufacturing is a bright spot in this economy."

While manufacturing accounts for only about 12 percent of the economy, it has been the key driver of recovery from the 2007-09 recession. Its continued show of strength is combining with improving fortunes in other sectors of the economy to set a foundation for sustained strong growth this year.

But problems persist. Intel said a major chip factory it had built in Chandler, Arizona, will not open for the forseeable future. Obama, on the campaign trail in 2012, had held up the facility as an example of U.S. manufacturing potential.

Although manufacturing output has recovered well from the recession, job growth in the sector has not tracked the gains, said Peter Ward, professor of operations management at the Fisher College of Business at Ohio State University.

"The number of jobs in manufacturing don't reflect the bounce back in output," Ward said. "Manufacturers are doing more with less."

Obama's decision to bail out the auto industry was key to helping the manufacturing sector recover, said Mark Zandi, chief economist at Moody's Analytics.

"I think the Obama Administration has been generally manufacturing friendly, certainly in rhetoric but also in substance," Zandi said.

While the president can take some credit for increased demand for goods and services, gains in manufacturing come from management decisions and worker productivity, Ward said.

"I really have a pretty hard time putting a causal link between any president and what happens in the manufacturing economy," he said. "It's much more the management and performance of smart managers and smart workers who are out there doing it."

Obama said he plans to soon unveil two more manufacturing hubs focused on digital manufacturing and lightweight metals manufacturing.

The government will spend a total of $200 million on the three centers, which will be matched by money from private companies, universities, and state governments.

UNEMPLOYMENT INSURANCE

Obama's efforts to spur stronger economic growth have been overshadowed by his inability so far to persuade Congress to approve legislation extending emergency unemployment insurance for people who have been out of work for at least six months.

The president has said the benefits would provide 1.5 million Americans a much-needed cushion and also would boost growth.

Despite pressure from the administration, Democrats and Republicans in the U.S. Senate rejected one another's proposals on Monday. While they vowed to keep working to find middle ground, a compromise appears unlikely before next week's Senate recess. The measure would also have to pass the Republican-led House of Representatives.

Obama's presence in North Carolina comes as the Republican-dominated state government has carried out a conservative agenda, cutting jobless benefits, banning same-sex marriage, and freezing pay for teachers.

In that environment, North Carolina's Democratic Senator Kay Hagen faces a tough reelection battle in November. She was not with Obama during the trip, citing the need to participate in votes in Washington - although Obama thanked her for her hard work during his speech.

Analysts said it would not serve her to be too closely associated with Obama, whose bungled healthcare law roll-out has reduced his popularity ratings in the state.

"Kay Hagen is suddenly reluctant to associate herself with Obama," the Republican National Committee said in a statement.

(Editing by Bernard Orr)

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