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Michael Penner, president and CEO of Richelieu, poses in their Montreal offices, June 13, 2014. (Christinne Muschi For The Globe and Mail)
Michael Penner, president and CEO of Richelieu, poses in their Montreal offices, June 13, 2014. (Christinne Muschi For The Globe and Mail)

An American revival: A Canadian manufacturer’s quest to rebuild itself Add to ...

Michael Penner, chief executive of Montreal-based Richelieu Group, is sitting at a table in the Roosevelt Room at the White House.

He’s a political junkie, so it’s an awesome experience. He can’t help but look around. But this isn’t a stop on a White House tour. This is serious. Mr. Penner is one of about a dozen executives summoned to meet with President Barack Obama, who wants to talk about what it would take to encourage more investment in the United States.

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Someone from Ford Motor Co. is present. There are representatives from Sweden’s Ericsson AB and Deutsche Lufthansa AG of Germany. Sitting next to Mr. Penner is Sanjay Jha, chief executive of Globalfoundries Inc., a chip maker based in Silicon Valley that employs 13,000 people on three continents. These are big dogs. Mr. Penner sells socks and employs about 100 people. He doesn’t normally shrink from the spotlight, but on this day, he’s reciting a quiet prayer that the President of the United States will leave the talking to others.

Please don’t ask me. Please don’t ask me. Please don’t ask me.

“We only have one person left to speak,” Mr. Obama says. “I’d like Michael Penner to talk to you about his story.”

OMG! “Thank you Mr. President.”

What follows is a retelling of Michael Penner’s story, based on several interviews over the weeks that followed Mr. Penner’s audience with the most powerful person in the world.

Mr. Obama’s Commerce Department had its eye on Mr. Penner. His story is one of industrial death and rebirth. Factories that were abandoned when North American production fled to Asia at the start of the millennium now are being refurbished and put back to work. Many said the most manual forms of assembly would never return to rich countries. Richelieu plans to invest $16-million (U.S.) in western North Carolina to begin production of 100-per-cent-Made-in-America socks for Wal-Mart shoppers. “All my future is riding on this,” Mr. Penner says.

Globalization is a funny thing. It’s forever shifting. The cost of labour in China is rising, while salaries in the U.S. have been depressed by the recession. The shale energy boom has significantly lowered the price of powering factories in North America. Business strategy also has changed over the past decade. Managers now want to cut delivery times by locating factories closer to their consumers.

After years of steady decline, the U.S. has added factory jobs every year since 2010. The Labour Department on Thursday estimated that there were 12.1 million Americans employed in manufacturing in June, a 5.6-per-cent increase from the end of 2009. That falls short of a glorious rebirth, but it is growth all the same. Boston Consulting Group in April released a study of the world’s 25 biggest exporters that determined the U.S. and Mexico had closed the gap with China as the most competitive place to make things.

One of the first things Mr. Penner did after securing his beachhead in Burke County, N.C., a few years ago was to erect a Canadian flag. His office is adorned with Canadiana, including a poster depicting all the planes Air Canada has flown over its 78-year history.

But patriotism is no match for economic reality. The manufacturing renaissance that has gripped the imagination of Mr. Obama and other U.S. leaders is barely discussed in Canada. The country’s economy has turned sluggish, in part because relatively high-paying factory work is stagnant. According to Statistics Canada, there were 1,485,976 manufacturing jobs in Canada in 2013, compared with 1,497,657 in 2012 and 1,487,265 in 2009. Boston Consulting’s analysis showed Canada was “losing ground” in global competitiveness because of slightly higher labour costs and, more importantly, weak productivity.

Tough times in textiles

They don’t teach you how to do mass layoffs at law school.

Michael Penner, 45, grew up around the textile business. His father, Harvey, worked for the Simard family of Montreal, which created Richelieu in the 1930s. Harvey Penner purchased the textile business in the 1990s, but Michael didn’t immediately aspire to join the family business. He attended McGill University for his undergrad – playing some football for the Redmen along the way – and then went to Hofstra University in New York to get a law degree. He worked on Wall Street for a while, but realized he’d prefer to be the guy hiring lawyers rather than the guy getting hired. Mr. Penner returned to Canada to join the family business in 2000. He took control of Richelieu in 2006.

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