The long-anticipated bankruptcy filing of Delphi has sparked yet another discussion of the viability of manufacturing as a pillar of the Indiana economy.  Such discussions, unfortunately, have become commonplace in many communities across the state in the last ten years, in the wake of other troubling developments.

Most of us know that the face of manufacturing has changed across the state, but to see the world’s largest auto parts manufacturer – once part of mighty GM itself – succumb to this fate is still shocking.  If the stroke of a bankruptcy judge’s pen can undo the cumulative efforts of several generations of industry and union leaders that have secured a middle class lifestyle for the 35,000 hourly workers nationally who call Delphi home, then no manufacturing job would seem safe.

That’s certainly a valid conclusion to draw from the events of recent weeks.  Yet my spin on the situation is a bit more optimistic.  The Midwest in general, and Indiana in particular, remain world class producers of highly competitive products.  And the fact that the harsh winds of competition have reached the once-insulated walls of some of our oldest, largest manufacturing companies is in a sense tragic, but in another sense, inevitable.

Indeed, the body blow that promises so much pain for Delphi workers and retirees today may end up delivering positive results for the Indiana economy in the long run, for at least two reasons.

First, we have one of the jewels of the corporation, the 5,500 worker Delphi Electronics and Safety facility, within our borders in Kokomo.  Does anyone really think that a company that is required to provide nearly full pay to its furloughed workers, and which has been covering the losses of unprofitable plants with the profits of others, can devote the development resources that are needed to meet the competition?  Whatever emerges from the bankruptcy proceedings, the new Delphi will be better positioned to feed that facility the capital it deserves.

Reorganization at Delphi also presents new opportunities in the vehicle parts landscape that existing or future Indiana companies may take advantage of.  The company’s footprint is much larger in Michigan and Ohio than it is in our state, after all.  Even in the face of sky-high energy prices, the vehicle market remains in reasonably good shape, and the wheels are already turning among Delphi’s competitors in anticipation of whatever chunks of business fall out of its shakeup.

These matters probably seem trifling for those who see Delphi’s demise as the end of the road for domestic manufacturing.  There is a sense in which the doomsayers are correct – the manufacturing world where job security, high pay, and generous benefits are secured through big company-big union negotiations is under serious attack.  All you have to do is look north to Michigan, which has lost jobs nearly every month in the last five years, to confirm that.

But manufacturing is more than that, particularly here in Indiana.  And it’s nowhere close to its death bed.  Measured by output, the Indiana economy is more concentrated in manufacturing today than it was in 1998.  And although down slightly from their peak last fall, manufacturing employment statewide today is up by 2,400 workers from September’s total two years ago.

Make no mistake, the impact of anything close to the worst case scenario for Delphi will have a huge impact on many Indiana communities, particularly if their troubles hasten the building crisis at General Motors.  But the manufacturing game is far from up, especially here in Indiana, and may produce some unexpected benefits for the state as well.