Tough love in the auto parts industry.

• Author: Barkey, Patrick M.
• Position: INDIANA INDICATORS

ON THE SAME BLACK Thursday that Borg Warner announced that it would close its Muncie manufacturing facility in 2009, the price of its stock surged by 6 percent. Are the traders on Wall Street heartless, prejudiced against Muncie, or do they simply like bad news?

In truth, none of these answers is probably correct, although we really have no way of knowing. But the divergent reactions of stockholders and workers and their families to the news that nearly a century of Warner Gear history in east-central Indiana will soon be coming to an end reminds us that there are many sides to the larger story of manufacturing's evolution in the industrial Midwest.

When you mention sides in any story about manufacturing, one immediately thinks of management and workers, and in many shops, company and union. If anything is familiar to lifelong residents of the Midwest, it is the ebb and flow of labor and management relations--sometimes harmonious, sometimes acrimonious, and always seemingly adversarial.

That is the side of the story most of us are familiar with. Should the union have negotiated? Was the company telling the truth? These kinds of questions have been asked and answered--often speculatively--since the day factory floors were first organized.

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But there is a completely different story--a much larger story--that has been slowly unfolding about U.S. manufacturing at the same time. Its main actors are more difficult to photograph or interview. But they are extremely powerful, and their influence has greatly affected the course of events.

Let's start with investors and other providers of capital. Every minute the stock market is open, these faceless, nameless individuals and funds collectively vote on the future prospects of the companies that they own, with the stock prices reflecting the result. At the end of the day, money and capital is channeled to successful enterprises and effectively taken away from those that are not.

On Thursday morning, those investors saw a company shedding an under-performing asset, and as a result they voted--with their dollars--to upgrade the future prospects for returns on investment as a result. It is a harsh, cruel, disruptive turn of events for workers and the communities. But in a larger sense, redirecting investment to its most profitable use lies at the heart of what makes the American economy remain competitive.

That story is not new. But the environment in which the story is taking place...