First 100 Days: Manufacturing a dream and a recovery
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– Scott Paul is executive director of the Alliance for American Manufacturing (AAM), a labor-management partnership of several leading U.S. manufacturers and the United Steelworkers. The views expressed are his own. —
Barack Obama knows the story of American manufacturing firsthand. He cut his political teeth as a community organizer on the South Side of Chicago in the shadow of shuttered steel mills, working to salvage hopes and dreams that had been crushed by the weight of layoffs and economic decline. As President, he can authoritatively recall America’s industrial heritage and decline, but more importantly, Obama can lead the nation to a renaissance in American manufacturing.
Manufacturing has boosted the American economy, jobs, and wages for generations dating back to World War II. Recently, it has fallen on very hard times. Nearly one in four manufacturing jobs has vanished since 2000, and 40,000 factories have closed since 1998. Last year, manufacturing accounted for nearly a third of all lost jobs in the U.S., while factory orders plummeted to record lows.
The health of manufacturing is important even for those who do not hold factory jobs. That is because manufacturing jobs pay better wages than other forms of employment—twenty percent above the U.S. average. Manufacturing jobs also have a stronger multiplier effect—supporting as many as five other jobs—thus contributing disproportionately to the economy. Manufacturers are large local taxpayers, supporting vital public services and schools in communities across the nation. American manufactured products tend to have a much smaller pollution footprint than Chinese products, and we are already deploying new technologies to compete in the clean energy economy of tomorrow. Finally, our national security depends on a strong defense industrial base to supply our troops and protect our interests.
If the creative destruction of capitalism and the arc of history were responsible for American manufacturing’s steep decline, there would be a legitimate debate about whether or not it is worth saving. But public policies have contributed tremendously to the predicament we now face; smarter public policies can get us on the path to recovery.
Wall Street’s woes and the collapse of the housing bubble bear some responsibility for manufacturing’s current condition. Credit markets and consumer demand have dried up, idling factories all over the nation. A substantial, strategic, and sustained economic stimulus package is needed for the overall health of the economy, as well as to boost manufacturing.
The stimulus should focus on investments in infrastructure such as mass transit, a smart energy grid, roads and bridges, which not only provide the greatest return on investment for American taxpayers by generating more jobs and economic growth than any type of tax cut, but will also make us more competitive in the long run. A sizable stimulus that includes a $148 billion annual new infrastructure investment can create up to 2.6 million jobs, including more than 252,000 in manufacturing. But manufacturing job gains are reduced by one-third unless all infrastructure materials are sourced domestically.
Dramatically reducing America’s trade deficit—which stood at a record $700 billion in 2007—will also boost manufacturing. American workers and companies often face global competition subsidized by governments, as well as violations of intellectual property, disregard of reasonable labor laws, and non-enforcement of environmental regulations. Governments such as China’s artificially lower the value of their currencies to gain a trade advantage. Simply enforcing domestic and international trade laws designed to ensure a level playing field, while ending subsidies and currency misalignment will boost our exports, reduce our trade deficit, and create jobs.
If Obama delivers on a manufacturing agenda, every American will benefit. He will also offer a new generation of Americans the same opportunity as their parents and grandparents had: to achieve the American Dream and join the ranks of the middle class.
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The difference today,between now and ww11, is that then the West was technically more advanced than the rest of the World and today the rest of the World can do and make most things so why should anyone buy American goods over another? Unless a new technology is discovered that will give the US a lead then I am afraid over production and fierce competition will mean no one country will be dominant. The last ten years no real wealth was created only money borrowed from the future, which was wasted.
First, you have a typo “..while factory ordered plummeted to record lows.” Sorry, I’m a writer.
Re: manufacturing jobs- there is a devaluation race going on right now between the dollar, Sterling, the Euro, the Yen and the Ruble, among others. These values must all drop vs the Chinese Yuan or there is no hope of jobs coming back within mfg.
Obama’s challenge is to flood the banks and currency BEFORE the dollar crashes from all its other ills. It will do no good to print quarters.
Of course the American workers’ main problem is their 10:1 wage disadvantage vs China and devaluation will address that, with all workers bearing the drop equally.
The labour movement must face the fact that the 10:1 ratio for incomes vs Asia is gone for good, but I don’t know that the movement has the maturity for that.
So perhaps a mass, accelerated devaluation will work. Certainly nothing else will, and it had better work soon…
The Government caused the problems in the first place, I doubt they will do anything other than make the problem worse.
The reemergence of manufacturing in America is a pipe dream at best. As we have seen already what manufacturing is left in America is not what it once was when unions provided good wages and benfits and a worker could expect to retire and live the same. No todays manufacturing jobs come with much less in terms of benefits. In fact even those jobs are leaving. We simply want cheap products and we want a lot of those products. When it comes right down to it we as Americans could care less how its made or who made it. Just as long as I can afford it. This means more jobs going to China and other countries with less of them staying here.
Our government can create jobs for a while but we must realize that those jobs are created with borrowed money.
Yes, someday it will have to be paid back with interests.
Truth be told Americans have already been keeping our standard of living up by borrowing and now we are paying that price. The American auto industry has paid the price because they lacked being able to get concessions from auto workers on benefits, Toyota, Honda and the rest will soon follow as other developing countries get into the car business and even undercut non union auto workers in the US. Let’s face facts, their is always someone somewhere willing to do your job for less.
That is the reality of world economics.
Totally agree with the comment from “Tony.” The stimulus will only be relatively short-term: When the infrastructure is built out, in 5 years, what then? There will still not be sufficient good-paying manufacturing jobs.
Only when upper middle-class jobs (computer programming, finance, engineering, and so on) have finally gone overseas will the backlash finally appear and push back against the “global economy” which was never in the long-term interests of the American public, just the multinational corporations and their political enablers.
Thats a ridiculus statement, the American economy is technologically superior in far more sectors then many other economies combined.
Other countries may have specific economies of scale that specialize in given products for trade but few countries have such a diverse and structured economy. America has the resources, raw and technological, to compete and lead everywhere.
Obama will make a pretty speech like he always does and nothing will change. How can the high cost of living in the US ever bring back prosperity here compared to the developing countries that can do everything for so much less? Look at grocery prices, why are they still so high when the price of oil has collapsed? Also high local tax burdens, bloated wages for very unproductive work – a lot of paper pushing and no real productivity – and I can’t see how this country will be able to do anything but sink to a lower standard of living – with the yet looming threat of inflation (possibly hyper inflation? – the congressional budget process is a joke now) making even that little cost so much more.
But the new President can be counted on to deliver nice homilies and pretty graveside speeches. I suppose that’s something. It’s called “death with dignity”.
What we should realistically expect is the same process of manufacturing “moving south” the way it did in the 60s and 70s from the northeast to the Sun Belt. Only this time it sets up outside the country all together. Why would the trend of the last twenty years suddenly stop? In a world where access to strong solar exposure is a great boon – the countries of the northern hemisphere are going to have a built in overhead cost just to clean up after their own fuel consumption that those who can go very heavily solar will not have. India, Africa, South American, Southern China and Southeast Asia are all regions of the planet where their manufacturers can bask in the “Golden Glow”. And they are all crawling with cheap labor. You don’t need even a high school diploma to work on an assembly line. In might even get in the way of job satisfaction.
Okay, so get with Congress right away and do away with tax credits for companies who take manufacturing off-shore. Companies, lobbyists and Republicans are going to say it’s a tax increase but this needs to happen, and quickly. Let’s put our money where our interests lie, after all–here in the United States. It would be easy, smart and obvious.
Let’s see if it happens.
We need term limits on Congress.
“Manufacturing” in the USA offers the single biggest opportunity to create wealth by adding true value to goods and services we consume in the US. Manufacturing includes creativity based products such as software and design & development of ideas.
The excessive consumption expenditure that was symptomatic of the business climate since the early 90′s, resulted from progressively increased equity based borrowing, based on overvalued fixed assets such as houses and commercial real estate and cheap money, due to low interest rates.
Industrial production and output worldwide grew at unsustainable rates because the underlying demand for goods and services were falsly accelerated.
In addition to this problem, manufacturing jobs migrated to China from many countries, most notably the USA. These lost jobs were replaced easily under these hugely “growth conditions”, with jobs in the service sectors such as banking, real estate, construction, which were grounded in delivering products into an oversupplied market. The secondary markets that supplied furniture, soft furnishings, fixtures and fittings grew along with the housing boom and manufacturing jobs migrated to China and other low cost producing countries too. Currency manipulation by China enabled false production cost advantages which further accelerated job migration to China.
It is not possible to have a sustained growth in the supply of housing that ranged between 1.7 million and 2 million houses per year in a market that needs an average of 1.1 million new houses per year. The frenzy that drove a substantial proportion of the USA to invest in housing, banking on a sustained increase in equity value, even when they could not afford the housing that they were buying.
Now that the real estate market has collapsed, unemployment is soaring, with little short term prospect of job creation in the short term, people are looking once again at manufacturing to grow the economy. We need to establish new factories here and Government’s role should be to significantly incentivise the establishment to competitive factories that bring jobs Back from China.
As for infrastructral development, we should include in the mix of projects the construction of 200 nuclear power stations and nuclear fuel re-processing plants that will significantly support the migration of the automobile industry to electric vehicles and substantially reduce our dependence on foreign oil. It will also reduce greenhouse gas emissions. Reprocessing of spent nuclear fuel will allow us to fully use the energy potential in the nuclear fuel used and will limit the amount of nuclear waste that must be disposed of.
This is the best scenario possible, since it addresses infrastructure, energy, jobs and manufacturing, using the vast array of high technology industries in the USA.
In addition, the US Government OWES it to the people of the USA to control the way China uses our own currency and a two tier economy to force “cheap” goods into the international markets and the USA to earn them forex. China needs to achieve a better balance between internal consumption and exports to achieve their growth targets.
The effect of the money multiplier from domestic manufacturing employment and output has been largely ignored by government economists with tunnel vision towards some entirely service based economy panacea. It’s nice to see someone still recognizes its importance. I learned about it in Economics 101. Economists advising politicians setting policy seem to either ignore this or have forgotten its power.
Without supporting and further building on our manufacturing base, innovation, living standards and ultimately strength on the global stage will suffer.
Ultimately, if a multinational company wants to sell their products in the US and Canada and enjoy the considerable margins that provides, they need to produce high value added good here. That means employing American workers, paying living wages and generating at least the 5x money multiplier refernced in this article in the North American economy.
There may have been a huge sucking sound on the US economy when oil hit $147 a barrel. That is dwarfed by the sucking sound that has been taking place in the manufacturing sector for decades now.
Stop sticking it to business. Just because something has “Inc” on the end of its name doesn’t mean it’s the Horn of Plenty. They thought so, and their jobs went bye-bye. It’s time to compete, on reality’s terms. I’m hoping we inflate real wages downward so that everybody goes back to work.
I seriously doubt that any measures will ever be able to boost the U.S. to unequaled economic supremacy again. Our decline is the result of transportation technology, trade policies, a global economy and an ever increasing world population. With a current world population of 6.7+ billion that’s destined to grow to 9.5 billion in another 40 years, there will always be hundreds of millions of people who will work for much lower wages than the American middle class and global corporations will seek them out.
I hope we can forestall some of our decline by massive investments in our infrastructure but that will only go so far. Labor wages in a global economy are like water. They will seek a common level and nothing will stop it in the long run.
I knew that we would eventually pay for allowing American companies to send jobs out of country because of lower manufacturing costs. Keep buying those Chinese goods friends; look where it got you. I support the steel industry and the request that the upcoming infrastructure restoration/modernization be done with MADE IN AMERICA steel only. AMERICAN steel mills will have to be constructed and modernized by AMERICANS. AMERICANS will make the steel. AMERICAN truck drivers will deliver the steel. AMERICAN construction workers will install the steel. AMERICAN families will benefit.
I’m all for helping the less fortunate in the world, but let us take care of ourselves FIRST!
I’m sorry, but how are manufacturing jobs going to help me? I have a master’s in computer science and my husband works in health care. When we lose our jobs are we both going to go down to our local factory and apply for assembly line jobs? Rediculous! Increasing manual labor jobs like putting all this money into making more roads and supposedly increasing manufacturing jobs will not help the vast majority of us. Yeah, of course it would if we all had only high school educations, no debts, no mortgage payments, no student loans, etc etc…but of course our economy is not only comprised of so-called “manufacturing” companies. And I agree with one of the other posters…the reason why so many of these jobs have moved overseas is because they can pay the cheap wages and have better technology.
Ann, what makes you think you are the majority of us just because you went to college
I worked in manufacturing and engineering, the SF Bay Area, for nearly two decades, since graduating with my degree in electronics. The struggle that ensued led me to change the very core of my interests and get an MBA. Now, I am working towards a degree in economics.
Nearly all of what the article has to say ring’s true. If it all rang true, I would have little to say except “yeah”. I would like to take exception to just a couple of things.
I find, as I examine the articles and interpretations regarding economics, a couple of glaring misperceptions are apparent. In each instance, the error seem unimportant but, in the aggregate, I suspect it is fundamental in many of the economic problems that we face as policy makers and pundents remain oblivious to the reality of causality and continue to present “red hearings”, distracting many from the foundational issues.
For one, I would like to point to the statement, “Wall Street’s woes and the collapse of the housing bubble bear some responsibility for manufacturing’s current condition.” The connection may be so but the causality is backwards. Rather, it is has been the ever steady decline of manufacturing that has produced the collapse of the housing market, the wall street woes, and the financial crisis as a whole.
With a lack of a manufacturing base, and the material productivity that ensues, the flow of money in the direction opposite goods continued to the pockets of hard working manufacturing personel in China, Hong Kong, and the like. As well, other more unscrupulous hardly working financial managers continued to pull more money out of the US monitary flow and into static accounts in the Camans, Switzerland, Dubai, and where ever they manage to hide money (ask Madoff).
Lacking sufficient funds in the flow in the US and with the value of the dollar held tightly to the global market, consumers in the US have spend the past two decades desperately leveraging with debt in credit cards and ARMs. This desperate attempt to leverage into a standard of living that had become the American Dream of the 1950′s along with the relaxed credit markets and the belief that housing prices would forever climb created artificial demand which fueled the higher prices and more precarious and risky ARMs. But all dept is expected to be paid eventually.
As this debt came due, there remained the original issue that fueled it. There is no cash in the system to flow in the oppostite diretion of the goods. It’s fairly simple. For a man to buy a loaf of bread, he must have a monetary note to hand over. However clever he may be, however hard he may work, unless he has money as a result of that work, he can buy nothing. And without the cash, either in the form of dollar bills or US currency in the accounting system of thousands of computers, no goods will flow.
When the cash exceeded a threshold (and I leave it to some else to ferrite out the details of what that threshold is) the housing market collapsed revealing the underlying credit market failure.
Certainly, many manufacturers managed to remain afloat in the midst of this ever decreasing flow of cash. And they did so just as households did. But also overleveraged with debt as insufficient money was available to account for their expenses, these too have closed up shop as the creditors refuse to provide more funds and recall the existing debt.
But it all began with the loss of the manufacturing base, not the other way around.
One of my favorite military sayings is that we are always prepared to fight the last war. 100 years ago, 95% of all jobs were on the farm, and we were mostly dirt poor. I have a real problem with the term ‘service economy’, because I feel that there are far too many distinctions within this heading. The future lies in areas that are nascent, but not yet developed. Look at the internet economy, and try and fit it into any economic models developed in the 80′s. It wasn’t even remotely on the radar, yet it became the single greatest driver of wealth at the turn of the century. We don’t know for sure what the next big wave will be, but we have some pretty good ideas:
i) green energy (current deployment, as well as new tech) ii) biotechnology (especially stem cell research) and iii) software (still is a massive growth industry, primarily as a service and as an anihilation of the back office).
The author of the article is correct; we need a ‘renaissance’ in this country. As many of the responses state, however, it is unlikely to be in manufacturing. We can and will continue to compete in high tech, health care, and in services; the world’s best higher education infrastructure for instance. No where else in the world do foreigners flock to attend college; they are wonderful places where students not only learn but also enjoy their early adulthood and explore ideas. Our country is our renaissance. It is vast and beautiful. For the most part it is safe and clean. It has may other virtues and advantages. However, we have to change. We have to take better care of ourselves and our environment. We have to welcome immigrants and yet maintain a balance of immigration and stop the devastating effects of uncontrolled illegal immigration. We have to better educate our children and demand civic responsibility. We can and must do better. No where else in the world can one travel from Boston to Maine unimpeded by military police, thugs, or other impediments and enjoy nature and go fishing in wonderfully clean ponds and rivers that are beginning to come back from centuries of pollution. Try doing that in China! I don’t think so. Our renaissance is staring us right in the face and we have to recognize it.
Since when is $20 per hour on an assembly line the American dream? Or shoveling asphalt until you are 65? To the American manufacturing public – You live a nation that empowers you to do better for yourself through education and hard work, of which you will do anyway. Manufacturing does not help American progress; instead it holds us back through extortion by unions and a lack of self-enrichment.
Stop pretending it is 1929; intelligence is the future not labor.
Manufacturing is absolutely required if we import. Simply, in the balance, we must maintain a net zero balance of imports and exports or money simply flows out of the country. Service jobs do not provide a product that can be exported. As long as we purchase imported manufactured products, we have to export manufactured products. There is simply no way around it.
You can see by the response this struck accord,we have been building up china and other countries with grants for higher tech machinary to produce textiles to steel only for their cheap labor or they will not be worth it for multinational companies.If we put that investment into our own manufacturing base we would not have the trouble that has been created by outsourcing,A strong america is a stronger and safer world and you can see that with americas decline that the world has prosperd by without us strong and earning strong they will not be able to servive as is being proven now. .The rules made by the wto are not what our forefathers would have agreed to.To help other nations we need not lose our wealth in the process.If you want to help a homeless man you do not put yourself in the street and he in your home.If the leaders of the United States does not put the American people first,the ones they are sworn to protect,then they should be held for treason and put in jail for a min time of 20 years.That would stop the outsourcing for good.
What makes this author think that Barack Obama knows the story of American manufacturing firsthand? Further, why does a majority of the media think that Obama knows the answer to our country’s problems? He is only a smooth talking politician with no real work experience. There is a real danger in handing over the keys to this man and his planned big governent programs. Are we all brainwashed by the idiot TV shows we watch and the empty news programs? The Federal Government is suffocating this country and it is only going to get worse under Obama. I know what is best for me and my family, not Obama and the Federal government.
It’s too late to salvage American manufacturing. It’s gone, or, as the Anti-spam security word suggests, TOAST. Or, at least, manufacturing of consumer goods is gone. There’s no way American labor will accept the Chinese wages, so the goods are not competitive. The only way to make them competitive is to slap tariffs on the Asian imports. Can anyone spell “WTO”?
You might ask how European and Japanese manufacturers survive? The answer is that they moved upmarket. European clothes and shoes and cars, Japanese electronics and, again, cars are luxury imports, they’ve become status symbols. Can you name one surviving American luxury brand? Cadillac? Struggling to stay in business, and positioning itself as poor man’s BMW doesn’t help either – luxury buyers buy on prestige first, and price distant second. Europeans that could not make it up the food chain are struggling just as badly as American manufacturers.
The only American manufacturing that not just survived, but is alive and well and has real chances to make it into the future is in the areas where quality and tradition still counts, and American makers are known for that. Weapons, Boeing civilian aircrafts, Caterpillar heavy machinery, some UT and GE businesses – that’s where American manufacturing has positions worth defending, and most of these are not in consumer goods business. These businesses are really worth of gov’t support. But these businesses alone can’t create nearly enough jobs to make a noticeable difference.
Autos are one big question mark depending, firstly, on UAW lowering their compensation demand to that of foreign makers, and secondly, on the companies coming up with cars that the buying public would actually prefer to similarly priced Japanese models. For that, American auto makers must offer models head and shoulders above in quality and features for less – sorry folks, reputation, just as credit, is easy to squander and hard to build. Too bad Detroit credit with the customers is far from that of Toyota and Honda – not even speaking about the German makers.
The jobs that still can and need to be protected are way up the food chain from manufacturing. It’s IT, biotech, pharma, health care – in other words jobs requiring higher education. These are the jobs currently being exported overseas, or being outsourced within our borders to cheap foreign workers. Don’t believe the execs demanding more H1B visas because they can’t fill positions. There’s no lack of qualified computer programmers, there’s lack of programmers willing to work for $20/hr without benefits. How to do it, and not violate WTO or some bilateral agreements? That’s THE TASK for Obama and his team.
Here I must make a disclaimer: I voted for McCain. I didn’t believe in Obama as the shepherd of our economy. I still don’t. But, despite that, I hope.
What I wish to Obama on the eve of his inauguration? To give me, and all other voters, a reason to vote for him in 2012. And that reason would not be rousing speeches or even foreign policy triumphs. Not even the end of Iraq war or a victory in Afghanistan. “It’s the economy, stupid!”
I agree we need to get back to making products and we can compete if given a chance. I would rather pay a little more for a product–I look at the tag to find out where any product I buy is made and I do all possible to buy USA made products. I will go to all lenghts not to buy China made products.
I have looked at several stores to find a pair of jeans or a shirt made in the USA. I do it all the time and will do it until the day I die.
I have made my living here and will support all the others who make their living here.
I have made in America products on my computer and still check out the product before I buy.
You can call the town, city or county where they say it is made–call the chamber of commerce or the city clerk or whoever and find out if the plant is still in operation there–many times they will say it is, but has closed.
There is one comment that is very charming and very wrong. We are not in an American renaissance. This may be a country where one isn’t stopped by paramilitary police thugs, but that’s because they are so much more high tech and even elegant now. Take a walk around Times Square and many other streets in major cities and look at the cornices of the buildings and along the rooftops or along the building edges and corners. There are more spy cameras than there used to be pigeons. You only know they are cameras because they don’t move. Many American cities and most of the big box stores even the boutiques are loaded with surveillance cameras. They’re all a gift form our high tech friends. We are a country glutted with spy ware and it isn’t just watching the hard drives of our computers.
WE don’t need such obvious signs of a dominant hand. The eyes are always watching. Mooo, Bahhh, Meow but never ever bark. But I suppose one could call it all “user friendly”? Le charm descrete de bourgeoisie.
We are also a society that could slip into the same condition that so many Latin American countries used to experience. We are a very anonymous society and most bedroom communities are very transient. We could easily pass into a system where people “disappear”. Wasn’t that one of the fifties nightmares? It’s even easier now with our gated communities of barely interacting “neighbors” and certainly easy in a country scared of terrorists around every corner. Isn’t that the point of all those motionless pigeons?
The only reason why things are manufactured abroad is because it’s too darn expensive to make it in the USA, plain and simple. This article is a joke as it implies all problems would go away if we just started up the factories once again and kept the entire supply chain domestic! For those who only buy Made in USA consider yourselves privileged enough to do so but don’t believe for one minute that’s the answer. The funniest statement in the article: “That is because manufacturing jobs pay better wages than other forms of employment — twenty percent above the U.S. average.” Anyone with no education or experience can typically do manufacturing jobs yet they’re paid 20% more than the normal work force. Anything more needs to be said? BTW, look at the auto-industry, another manufacturing industry going to hell.
To alex crudello
The WTO has been led by the US, most of what comes out of that organization has directly been influenced by the Bush administration.
It is very cleat that the situation were living nowadays is the result of our foolish policies. No need to be a rocket scientist to know that public money spent to help companies shipping jobs abroad will lead to unemployment and deficits…
The federal government did put lots of energy signing free trade agreements with countries that used to be called ennemies not long ago, communist China is providing low quality goods in order to have high margins for our corporations at the cost of US manufacturing jobs. Wouldnt it be time to help factories that stay in the US and slap all these delocalizing with heavy taxes ?
Who cares about the WTO ? US made it, US will break it by simply taxing all imports again, especialy with countries not playing by the rules.
A bit lofty I think. Out of all the things you mentioned on Obamas list, leveling the playing field with money adjustments when it comes to foreign currency and ours such as the cute thing we’ve been doing with the Japanese since the end of WW11 is the best idea But, too many fat cats have vested interests in keeping things the way they are and, this will never be done. Sorry but, one school boy is not going to change the way the mafia does it’s business. And, yes, by (mafia) I mean big business, congress and, the senate. No one can ease the the one hands grip around our throat let alone get the other out of our pocket. Nice thought though.
Low wages off shore are only part of the problem, and not the major one either. Asia does not bother with things like EPA, OSHA, over time, trial lawyers, building codes,QC,patent licensing, etc,etc. Negotiations will never change that, because they have no incentive to change. They will promise what ever is asked and then continue business as usual. As long as non-US corporations (ie. multinationals like duPont,GE, GM, HP and all the others) can import at will and avoid US regulation, they will. I would propose a tariff on all goods imported from those countries that do not adhere to regulations comparable to those in the US. I would also propose a countervailing tariff on those countries which run excessively large trade surpluses with the US. Dump the WTO; it has done nothing to benefit the US.
\”American workers and companies often face global competition subsidized by governments, as well as violations of intellectual property, disregard of reasonable labor laws, and non-enforcement of environmental regulations\”
\’disregard of reasonable labor laws\”. This is surely a joke.
I am from India and I can assure you that in my industry(IT) the labour conditions are better than any other country. So i do not get it when the author says \”disregard of reasonable labor laws\”.
Also just because china is a communist does not automatically mean that labour conditions are bad there.
They may not be up to american standatds but compared to developing world standards they are certainly good and improving.
I think the artcile stinks of \”protectionism\”.
It is trying to save the jobs of those who want to be paid 20% more than the average without contributing anything extra
at the cost of those
who are getting 20% less than the fair value and yet are striving to better themselves.
I dont think Mr Scott needs to be the saviour of asian labourers.
here in the Bronx, NY a one bedroom apartment goes for $1000-$1200 per month–the neighborhood is lower middle class with probably %30.00 on welfare—explain to me how you are going to create jobs that bring in $2000.00 or more per month?
Do you include weapons manufacturing in your figures? Doesn’t this bring a lot of money to workers? Or does it?
President elect Obama has no clue about manufacturing.
He lived in Chicago and worked on the south side. If you know anything about the south side of Chicago you would know that the steel mills are in East Chicago and Hammond,
Gary area.
Bright boy don’t believe everything you read.
Our economic situation is not going to greatly improve until we end “Free Trade”, pull out of the WTO (how a communist country could be allowed to join the WTO is beyond all understanding) and restore American manufacturing. Manufacturing is the only REAL creator of wealth.
“Free Trade” is a swindle!
Sounds great!!! But what do “we” the manufacures do now. We cant stay in business if no one is buying.
We can and we should improve and increase our manufacturing base over time. Our manufacturing base is important if we want to make it easier for poor people to become middle class over time and want it to be easier for people who are middle class now to stay middle class. Our manufacturing base is important to our national security, economic growth, and our ability to reduce the national debt over time.
Companies that make products in our country may cause less air pollution, water pollution, and land pollution on our planet than companies that make products in China. The greater the distance an item travels from place of production to final destination the more water pollution and other types of pollution that may take place.
Businesses especially small businesses need capital to stay in business. The federal government should stop taxing interest from savings accounts, dividends, capital gains, and estates. Businesses may have an easier time obtaining loans and investments for hiring workers, research and development, and plant and equipment. Individuals and businesses may have more money to spend. Many middle class people, union members, and government employees who have mutual funds may benefit from capital gains and dividends not being taxed.
Congress should eliminate the Federal Reserve or veto many of its decisions. If the United States Senate wants a Federal Reserve decision to be vetoed, it should be vetoed. If the United States House of Representatives wants a Federal Reserve decision to be vetoed, it should be vetoed.
Congress should consider backing our currency with gold, silver, and other commodities.
The federal government, state governments, and businesses should spend more money on buses within cities, buses between cities, passenger rail, and freight rail. If people have an easier time getting to jobs and from jobs via buses, governments may be able to spend less money on food stamps and Medicaid. If fewer families need to have 2nd cars and 3rd cars, they could save money on auto insurance, gas, auto maintenance, and other auto related costs and have more money for other things. If the air is cleaner, fewer children may have asthma attacks and have to go to emergency rooms. Many parents may lose less time from work if they are able to take their children to emergency rooms less often. Our country may use less foreign oil and be able to spend less money on our military.
I have posted comments after several columns on http://www.newgeography.com that you may read by going to http://www.newgeography.com/users/kenstr emsky I discuss manufacturing and other topics on it.
My website is http://www.myspace.com/kennethstremsky
I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.
I ran for United States Senate in 2002.
I have been in and out of “manufacturing” for 40 years and after reading some comments, am amazed. First for the more elitist and for want of a better term “service industry snobs” mfg does NOT mean dirty ole manual jobs. Doubt that goe visit a Boeing or Cat or Deer or auto as you have grouped the low tech-low education jobs with the hi tech higher education jobs. Go visit a real machine shop and talk about set ups, maintenance and cutting metal to 1/1000th or more tolerances. The jobs most envision from their service towers of mindless droid in cubicles that in truth require less skill, eduation and training then real manufacturing, doubt that one, check out exotic metals working, medical insts, and electronics. For those that enjoy slamming unions, go ask about what is required to enter and move up in many mfg area unions from entry to journey or master levels.. might stun you, more so as compared to the requirements for cubicle warriors.
Time we return USA to real MFG, not the image of creatures muscling heavy parts etc. Way back in 80′s saw this mess coming when the spin ministers started the “Dump the dirty jobs offshore (that paid well and crated the middle class) as soon we will all be using computers. The truth was the game was stop updating USA mfg plants,build stater of art offshore, get huge tax breaks and do away with tariffs on INCOMING, while rest of world keep tariffs way up on our exports, or changed them to “fees” not tariffs. To this day Japan “inspects” read takes apart for safety inspections” auto imports. China simply places fees on “Selected models” as such “encourages” they be built inside China, where by law China (“THE Commie government” some mention) must own more then 50% of firm and off course, unlike in USA that means at least 50% of cash generated remains in country. The profits stay there and to this day have yet to find ANY REPORT on dollar drain from USA by foreign firms in USA sending the profit dollars home, anyone solve that one?
But we can compete at world levels, but we must first get a better educated work force to build more complicate products, we must get the trade horror fixed, perhaps as simply as if we just respond in kind to other nations, our trade laws reflect their.. which would cause screams from those so very patriotic firms like WM, Target and most Corp USA.. that will hide behind USA flag as needed, but sell out USA as needed.
We need to cut the silly overhead that all to often burdens USA mfg and by that I mean more emphasis in updated hardware and less on overly manned support and reporting or as often called “Indirect employees”. We must replace this attitude only Neanderthal’s work in MFG and only the best and brightest work outside of MFG. What most simply cannot grasp is mfg was and is the engine that drives real economics, as you cannot simply shuffle or report on or manipulate data, numbers and as we found paper, and grow or even keep even. You cannot assign paper a value as you can a manufactured product, nor do you repair, replace, spare parts, maintain, after market etc service industry paper. We are now paying for that fiasco big time. I suspect if it was really examined that all to many with no degrees or simply English lit, lib arts ro business majors get a bit envious of wages paid in real skilled manufacturing jobs. Most in MFG are much more responsible and disciplined then their service paper peers. When most whine about “USA Made junk as unions did it” never were in a dirty ole mfg plant or they would KNOW that quality si a direct function of top management, NOT the workers and in their greed, all to often top end says :Get it out the door, file to fit and paint to match” and if workers want to keep job, they do as told. The foreign firms, like Toyota, award the workers with quality responsibility and as they grew are a lot less of the old corp where workers could stop the line to fix something as that is not longer a job security item now days.
WHen you slam the mfg world, your ignorance of econ 101 shows, as no economy cannot support itself just assigning value to paper and information is not a product that creat five or six other jobs to sell used info, repair it, after market it, or spare parts and installing them. Clean green hi tech mfg is what USA must go after, and the alternate energy field is wide open, so is things like high speed trains, wind and solar and whatever comes next.
Our education systems in advanced degrees in hi tech are often 70$ foreign students.. as most in USA to lazy or not prepared and not after jobs that end up paying less then some basket weaving 101 major after ten years. Real mfg jobs exist in two area, one is the low tech anyone can do and to call them Mfg jobs is an insult to the real world class industry and world class mfg jobs and industry we have to reinvent. We are a nation where about 1/3 do not finish HS, and most college grads are so poorly educated as to be a joke and most dodge the hi tech more demanding degrees as they simply slid through HS and cannot really take the new world class educations we need.
Obams is right, we need to bring back mfg and make it as respectable to the nation as those cubicle warriors that feel time spent on www at work is productive. Sorry for reality check, but shuffling paper or moving data at some bites per sec is not going to build the USA,. and anyone that ever took real econ knows that DOD dollar spent actually damages, not improves economy.. as once a bullet is fired, a tank built, or such, the dollar used by it does not really recirculate across the economy, So if you want reality check on how to fix USA, do not classify the job, measure how often the end product create other jobs, get resold, repaired, requires other items to work *(like power or gas etc) and what is it’s life cycle, what jobs are created after mfg, what are hte life cycle economic impacts-costs.. as that is the way a nation grows.
Sorry cubbies, but someone has to “Get hands dirty” so to speak or you will be out of your hands clean cubby job. Doubt it, look about at which nations grew nd which ar falling.. starting with your local mirror, smart man running nation now, and it shows… he wants mfg back, those core jobs and their products that so many others live off of…
Lest we forget there is only ONE reason why American manufacturing went to China: COOLIE WAGES! That is the only reason why China was allowed into the WTO – to allow American companies to depress USA wages by shipping manufacturing and every other type of job they can to China so that they can pay Coolie Wages and then sell those products at outrageous prices back home.
Chuck’s post is brilliant and right on the mark.
Well said, Scott.
Quoting economist Martin Wolf (Financial Times, 060109): “The US and a number of chronic deficit countries have, at present, structurally deficient capacity to produce tradeable goods and services”. This has been the case for over twenty years so comparing 2009 US with that of the 1950-1980 period, when it had a strong positive trade balance , a strong dollar and a strong work ethic; is self-delusionary.
As a direct consequence of this inability; the US government and personal debt levels have progressively worsened to the point where the incoming President claims that “the US will have to run trillion dollar deficits for the foreseeable future” and consumers, who previously contributed to over 70% of US GDP, have been essentially bankrupted by unremitting debt accumulation. Thus the US has arrived at a point where the budget crisis can only remedied by a) improving its balance of trade and b) by reducing government expenditure. Both, not one or the other.
Improving the balance of trade via both increasing exports and decreasing imports will be a slow process, if it happens at all. US trade figures (BEA) for the most recent quarter show that the US imported four times more “Industrial supplies and materials” than it exported and seven times more “Consumer goods”. These figures are from November 2008 when the trade deficit fell by $10 billion. Most of this was due to a drop in the oil price and not due to the effects of the progressive devaluation of the USD by the US Treasury in an effort to improve exports. It should be noted that the total exports actually fell in November compared to October. So during a period when the USD was being deliberately devalued and consumers had lowered their expectations; the trade deficit was still $40.4billion or half a trillion annualised. Note also that as the world economy slow, US exports will continue to drop. Competitive currency devaluation has already started so letting the USD slide will backfire badly.
The noises coming out of the US Congress suggest that some form of Smoot-Hawley protectionism is being contemplated. This would be counter-productive as the US would be attacking the very countries that are, so far, providing the trillions of dollars to US so it can try and balance its budget e.g. China, OPEC, EU, Japan. All countries with the largest trade surpluses with the US.
It should be pointed out that a great many US corporations have, since the 1980s, progressively “exported” US jobs to lower per unit labour cost countries in Mexico, Japan, China, etc. It is foolish to blame those lower cost countries for this action. These pressures on labour cost have resulted in a US real wage rate that has virtually stagnated for 20 years. That contributed to US workers (consumers) paying themselves a raise by accumulating ever greater levels of debt. It also reduced the Federal tax receipts. I, therefore, suggest that before blaming foreigners for these problems; consider the actions and motives of these corporations.
Turning to reducing government expenditure in trying to balance the budget, one has to be stuck by the inefficiencies engendered by the persistent interference by sectional interests (lobby groups) in public policy. Given the federalist structure of the US, this has resulted in contradictory and, at times, incoherent inefficient policies. The unremitting bailing-out process, together with progressive devaluation of the USD and ridiculously low returns from investing in US Treasury paper, makes it problematical that unconditional funding of the deficit, by foreigners (who hold 94% of the debt), will continue “..for the foreseeable future”; as it becomes necessary for those same foreigners (esp China) to consider spending their money on rectifying their own problems. Further, it is now necessary for the US to re-consider it massive expenditure on the military, especially funding for its many wars. This is, quintessentially, a non-productive expenditure.
Consequently, the only way forward for the US is for it to accept a period of consolidation and rebuilding. This will involve a reduction in its GDP (living standards) over a period of some years. To rebuild export capacity will take 5 to 10 years – if funding, private and government is available. For the world to be in a position to increase global trade will take the same time – much longer if the US initiates trade wars via protectionism. Hopefully, the periods for all these projects will coincide.
Returning to my statement: “Improving the balance of trade via both increasing exports and decreasing imports will be a slow process, if it happens at all.” If it happens at all depends entirely on the economic discipline shown by the US government (especially the US Congress) and US consumers. This will require a mature reflection on how the US has fallen to it current position, learning from its mistakes and accepting responsibility for those mistakes. To quote a US commodities trader during the carnage last September: “The US just has to learn that the world does not owe it a living”.
As a liberal arts grad and part time high school teacher, I would like to respond to Chuck’s post. First of all, I am tired of the foolish warrant that education creates aptitude. You can’t create innovators by building a school and churning them out. Too often, what we do gets in the way of creativity. Conversely, I am 27 years old, and no one told me anything at all about manufacturing while I was in high school. The closest we got to a real shop was a dust collecting CNC machine that that the college educated teachers had no idea what to do with. The trouble, you see, is that in the state I live in, you must have a masters degree in education to be a teacher. How many folks who know what to do with a CNC machine are going to waste their time at a ‘school’ of education that costs 25000 in tuition and another 25000 in living expenses (you can’t work while you student teach). I, like many others, tried to get a useful engineering degree, but I don’t have the aptitude for math, so I had to reluctantly change majors to English, which it turned out I really liked. Then, when I tried to get into education, I found out that I had to add another 50000 or so to my 27000 of undergrad debt. Add to that the insult of finding out that every other liberal arts major who didn’t know what to do with their degree wants to be a teacher too, and now you see why I’m working part time. Despite my inability to excel math that you would never use as an engineer anyway, I have an aptitude for all things mechanical, always have. To think, I could have been making 600000 a year as an electrician now if I had known that was an option, no student loans required.
If the only people allowed in the education system are college educated people who did well in school, then how are kids supposed to find out that college is not profitable and that there are other more lucrative jobs out there. College readiness is a huge deal in high schools, and schools publish and are rated on what percentage of their students go to a four year school, on top of standardized test scores that measure skills which are useless in the shop (literary analysis anyone?).
Here I am, classroom full of students, teaching symbolism and making the kids read novels for some reason, meanwhile my kids aren’t learning a single useful skill. And they know it, and they’ll be just as angry as I was when they find out they were misled by a pack of useless liberal arts majors with pseudo masters degrees. Let’s stop acting like we can educate every social problem away, that mentality is foolishness.
Oops, I put one too many zeros on that electrician’s salary.
Gee wizz…nice – idea but that protectionist wrapper would convolute what is still stable internationally; America dosen’t have that “comparative – advantage” of the 1950′s, and won’t get it back.
If the US wants to give jobs to the people, they must put up import duty of notebooks and LCD TV made in Taiwan. Silly to have the CPU made by Intel but the jobs for laptops are given to Taiwan. Laptop assembly would create thousands of jobs
dhome posted something good here
For this insanity we are living in that is utterly unsustainable a great many solutions need to converge.
Yes we need to manufacture at home. Yes we need to grow food at home. Yes we need to reduce our consumption in a huge way.
We are all going to have to consciously do without a lot of the mass consumption to rebuild the place we would like to have and it is going to have be done on our own backs not on the backs of others. Unfortunately what we are seeing is a quite logical conclusion to capitalism. Which is not to say the abstract or theoretical concept of free market trade is negative it is just the human component in a process that basically says we need to infinitely grow on a finite planet is illogical and irrational and quite frankly just impossible.
And no we can not sorry to say go back to better days. We can however go forward to them. Those better days of the past such as what we call the miracle of the new deal set this collapse into further action in truth. Why do it when others can do it for us you know. Why not rely on the bakers to process and create money out of thin air to fund everything.
Currently the idea that by making more jobs somehow that will create wealth well that is also a non-solution. Creating jobs in this current system will just increase consumption which in turn will allow for manipulation and inflation and since we are on debt money the whole inflation is a necessity just to service the principal.
Again going back to the way it was is an impossibility. We actually have to go forward and take responsibility for the mess we are in. We have to clean house. Get back to some sound and sustainable trade system. We have to begin thinking sustainably with food production and building and community connection. And to be perfectly honest we have to redefine what is work and value because I am sorry there are not enough jobs to service the endless process of debt money or gdp and also have enough resources to even manage the infrastructure.
Of course we can just stay the course and bomb every resource country into the dark ages and keep our greedy ship afloat for a few more years time.
The future is not bright but it can be a place that becomes better and yes it involves some manufacturing at home but it also involves manufacturing less as well.
we shall see…
PC
American manufactured clothing and other goods have always been made better, fit better, last longer, and have been used with pride. I will not buy one more item, that is not manufactured in the United States. I can do with out NOT AMERICAN MADE junk.
Buy American is my new Motto
Too weak.
Tell folks that imports must be reduced.
Tell them how to reduce imports.
The argument for a sound industrial base is right on target. Much of the American manufacturing that went to Mexico is being exported to China. This is insulting because the minimum wage in Mexico was raised to $5.60 per day. Mexico is suffering from a brain-drain as their university educated professional immigrate to America for better wages that’s possible in Mexico. This leaves Mexico of a dumbing down situation as the best and brightest leave with no expectation of returning to their homeland. Surely, some of you may be thinking all Mexicans are wet backs bent on stealing a burger-flipping job from a high-school dropout. But I’d swim the river, too, if I could make eight bucks an hour in a fast food restaurant.
Clearly American has lost its bearings and the road to recovery will surely confirm the goodness of my decision to live in Mexico and earn American wages. In my work, a manufacturing job of sorts, I’ve met other Americans that choose to earn the good money and live the good life abroad in Panama, Costa Rica and other south-of-the-border sanctuaries. OK, I hear a moan about the truly ugly drug war in Mexico, which is being wholly funded by Americans, both on the government side and the drug-cartel side. If the American drug users would put their pot & crack pipes aside, productivity in America would soar and cheap labor would have to step aside.