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Economy Title: Resuscitating America’s Manufacturing Base: Outsourcing and corporate lobbying efforts at fault Resuscitating America’s Manufacturing Base: Outsourcing and corporate lobbying efforts at fault By Heide B. Malhotra Epoch Times Staff Reviving America’s manufacturing sector, once considered the bread and butter of the United States, is still on the back burner, as large corporations continue to outsource jobs to foreign shores. “When the job market peaked in 2008 on the eve of the financial crisis, the manufacturing sector had already shed 5 million workers since the decade began,” said John Bougearel, a market analyst and trader, in an article on the website, naked capitalism. About one-third of U.S. manufacturing jobs were lost through outsourcing between 2000 and 2008, not including associated jobs. Ripple effects also come into play when the supply chains needed in the production of certain goods are no longer needed. Manufacturing Jobs at a Glance While the manufacturing sector gained 164,000 jobs between November 2010 and April of this year, it remained stagnant in the subsequent months. Although fabricated metal products experienced a job gain, other manufacturing areas, including the wood sector, suffered job losses, offsetting the gains, according to the July 8 Bureau of Labor Statistics (BLS) report. The BLS monthly diffusion index was around 50, below the 52.5 level it held at the beginning of this year, with an index of 50 representing an increase and not decrease in job creation. At the same time, overtime and regular hours worked on manufacturing jobs decreased by a small fraction, that is, less than 1 hour. Some companies are bringing limited production capacity back into the United States. The Boeing Co. announced at the end of 2010 that it would be opening an assembly plant in North Charleston, S.C., promising to add jobs instead of retrenching. “Construction of the factory is nearly complete and the company has hired more than 1,000 new workers. Final assembly of the first airplane is slated to begin in July,” announced Boeing in an April press release. Playing the Outsourcing Game “If Apple moved its assembly line to the United States and created domestic jobs but didn’t raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold,” said Bougearel in his article on the naked capitalism website. Apple Inc. adds $2 billion to the U.S. annual trade deficit by producing the iPhone in Asian countries, with the majority being produced in China and the rest in Taiwan and Singapore. Apple refuses to provide the names of its parts suppliers to the public, according to an Internet search. However, in its Apple Supplier Responsibility 2011 Progress Report, Apple stated that it enrolled 16,000 workers in China in its Supplier Employee Education and Development (SEED) program, which will allow these individuals to work for an associate's degree and move up the ladder. General Motors Corp. (GM), after receiving taxpayer funds to escape bankruptcy, announced in 2009 that it would “shift more production of vehicles bound for the U.S. market to China,” with 2011 the first year when it would bring Chinese made cars to the U.S., according to an article on the Economic Populist website. At the same time, GM announced that it would close three U.S. plants by 2014, starting a domino effect by putting suppliers, dealers, and a slew of other firms out of business, resulting in the loss of thousands of more U.S. jobs. Outsourcing Effects on Economy “Eliminating jobs from a country impacts its economy and the buying power of consumers,” according to an article on the wiseGEEK website. The economic effect of outsourcing manufacturing jobs might not be immediately apparent, but historical evidence indicates that many areas where jobs were outsourced suffered long-term economic deprivation. People could land only lower paying jobs, reducing their buying power. Economists decrying outsourcing point to the auto industry where such practice was instrumental in impoverishing many U.S. localities. Loss in local and federal income taxes helped fuel the U.S. budget deficit as more and more funds had to be allocated for people on the unemployment or welfare lines, instead of to research and other activities that would have helped the United States maintain a competitive edge. “Manufacturing jobs have by far the greatest impact on national economy, in terms of losing skills and the time taken to retrain such a force,” suggested an article on the Directory Journal, a business journal website. The aforementioned was a heavy blow for the U.S. labor force, but outsourcing manufacturing jobs had a far more detrimental long-term effect on U.S. manufacturing infrastructure. “Another thing is the loss of industrial infrastructure with the closing down of U.S. factories and then exporting of capital abroad. This money is then not available for U.S. economic expansion,” reminds the Directory Journal. American corporations, including their stockholders, must scale back their earnings expectations and view outsourcing from its long-term effect on the knowledge base lost. An existing manufacturing base fosters innovation, improvement of existing products, and the development of new products. Experts suggest that with manufacturing moving offshore, the corporation is also outsourcing its ability to improve the products. Instead, one relinquishes the “feedback loop that leads to innovation,” said Robert Burgelman, professor at Stanford University, in a Stanford Graduate School of Business publication. “Abandoning today’s ‘commodity’ manufacturing can lock you out of tomorrow’s emerging industry,” said Andy Grove, former chief executive at Intel Corp., in the Stanford publication. U.S. Political Intervention “President Obama discussed the vital role advanced manufacturing will have in strengthening our economy and creating good, middle-class jobs,” while visiting Carnegie Mellon University in Pittsburgh, Pa., according to a recent White House press release. During his visit, President Barack Obama announced the formation of the Advanced Manufacturing Partnership (AMP), an alliance of federal government, academia, and industry leaders, in the hope that America once again will have a respectable manufacturing base. AMP is the brainchild of the President’s Council of Advisors on Science and Technology (PCAST). The government will allocate over $500 million toward its success, with the U.S. Departments of Commerce, Defense, and Energy spearheading the effort. “The funding level should be initially be [sic] $500 million per year to be allocated across the three agencies as appropriate, rising to $1 billion over four years,” according to a recently released report by PCAST. While Obama is publicizing the administration’s effort to revive America’s manufacturing base in an all- out effort to create jobs for America’s unemployed, members of the U.S. Congress haven’t come to grips with reality, and a majority are still enthusiastic about sending jobs to foreign shores. Democratic leader Nancy Pelosi quoted the president in a 2010 press release, “Funny thing is, when we recently closed one of the most egregious loopholes for companies creating jobs overseas, Republicans in Congress were almost unanimously opposed.” The Pelosi press release presented a long list of grievances against Republicans (starting with the Bush Administration), all of which have affected job creation in the United States. Most of the criticism centered on tax breaks and loopholes for firms that export U.S. jobs, as well objections to an in-depth study on outsourcing of U.S. jobs. Global companies retrenched 1 million Americans, while creating 2.5 million jobs on foreign shores between 1999 and 2007. At the same time, these U.S. multinational firms invested $1 trillion of their earnings in foreign countries by 2008, and no figures are available for subsequent years. Rep. Pelosi suggested that the owners of Koch Industries Inc. are a major force in the outsourcing of U.S. jobs, as well as the major revenue source for the Tea Party movement. On it's website, Koch Industries claims to be one of the largest private companies in the world. Koch operates businesses in numerous industries, including oil and energy, polymers and fibers, industrial chemicals, forest and consumer products, fertilizers, ranching, and commodities and trading services, among others. To stress her contention, Pelosi quoted Charles Lewis, the founder of the Center for Public Integrity, a nonpartisan watchdog group, from an article in the August 2010 New Yorker: “The Kochs are on a whole different level. There’s no one else who has spent this much money [on political contributions]. The sheer dimension of it is what sets them apart. They have a pattern of lawbreaking, political manipulation, and obfuscation. I’ve been in Washington since Watergate, and I’ve never seen anything like it.” n its own defense, Koch has posted on its "KochFacts" home page a slew of the company’s letters aimed at “correcting the record,” defending its businesses, addressing “falsehoods circulating” regarding campaign contributions, challenging news reports, and confronting Reuters and several mainstream media outlets on their journalism, for example, asking one newspaper to “correct it’s non-newsworthy story.” Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Godwinson (#0)
(Edited)
The author of the article is not keeping up with current trends. Small technology companies have been slowly moving manufacturing back to the U.S. for the last 4 or 5 years, because the cost advantage of manufacturing in China for a small to medium company peeked in 2002 / 2003. Even large manufacturers are starting to look at the U.S. again. With the right tax and regulatory policies (which Obama is completely clueless about) this little trickle back could be a flood. 'Made in the U.S.A.' may be staging comeback The "Made in the USA" label may be poised for a comeback, a new study argues. The next few years will bring a wave of reinvestment by U.S. multinational manufacturers in their home base, as rising wages and a strong yuan currency make China a less attractive production center, the paper by the Boston Consulting Group predicts. The study, published on Thursday, says U.S. reinvestment will accelerate as the United States becomes one of the cheapest locations for manufacturing in the developed world. If it came to fruition, such reinvestment could speed up a delicate economic recovery that has yet to gain much traction. There is evidence the trend has already started: Caterpillar Inc. said last year it may produce construction excavators at U.S. facilities that are currently imported. NCR Corp. brought back production of automatic teller machines to Georgia, creating 870 jobs. Toymaker Wham-O moved production of Frisbees and Hula-Hoops from China and Mexico to the United States. More such announcements are likely over the next year or two, BCG says, citing conversations with clients. "If you work the math out using today's numbers. you'd still say it's a good idea to go to China," said Hal Sirkin, a senior BCG partner and lead author of the study. "(But) around 2015, you get to a point of indifference between producing in the U.S. and producing in China." Wages in China are still a fraction of what U.S. workers earn. Direct pay and benefits for production workers in the United States are about $22 per hour, versus only about $2 in China, roughly 9 percent of the U.S. cost. But that difference is expected to narrow, with the Chinese worker earning about 17 percent as much as his or her U.S. counterpart four years from now. Factoring in higher U.S. productivity rates, the weaker U.S. dollar and other factors, such as shipping costs, that difference could narrow further. The study predicts China will remain a major global player — just less of an exporter to the United States. China will still export to Europe, whose workers are less able to move for jobs than U.S. workers are. U.S. wage advantages could eventually reach the point that European automakers will export U.S.-made cars to Europe, the study said. The appeal of a shorter supply chain and fewer headaches from issues like intellectual property will also help encourage jobs and production to come back to the United States, BCG said. Policy could also nudge manufacturers to make the move. High unemployment is driving state incentives to attract factories, while unions are becoming more flexible. Still, the study's thesis is based on assumptions that may not play out. One is that supply and demand of labor in China are increasingly moving out of balance. Another is that demand from a growing Chinese middle class will raise costs, as factories shift to producing for domestic consumption and workers demand more pay to pay for goods that were out of reach before. Also, the yuan's rally could reverse. Since China first loosened restrictions on trading the yuan, its value has steadily strengthened from more than 8 yuan to the U.S. dollar in 2005 to fewer than 6.5 per dollar now. The expected U.S. reinvestment, meanwhile, will affect some industries more than others. Shoes or clothing are work-intensive and do not require highly skilled labor. But higher-value goods made in lower volumes, such as home appliances and construction equipment, are more likely to bear the "Made in the USA" label in coming years — especially if they are large and expensive to ship. General Electric Co's example supports the study's contentions. GE's appliance unit is in the middle of a four-year, $600 million plan to build up its manufacturing presence in Louisville, Kentucky, adding some 830 new jobs. "The default has been to say: 'Let's put the next plant in China,'" Sirkin said. "We're saying: 'Sit back and think through your options.'" BCG is a management consulting firm that advises large manufacturers on issues ranging from strategy to operations.
Small manufacturing won't employ many. It is good to see you putting a good face on a bad situation considering it is your free market/open borders ideology that raped this nation of it's manufacturing base.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
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