Posted on 10/02/2008 2:02:05 PM PDT by T-Bird45
It is sad what has happened to the United States.
For years, as editor of Manufacturing & Technology News, I have heard dozens of domestic manufacturing company CEOs talk about an impending "collapse" of the U.S. economy. These were the men who were in the unenviable position of having to close their companies or shut down factories and watch as most all of their competitors did the same thing.
These were the men who implemented Six Sigma, lean, ISO 9000, and the Baldrige National Quality and Shingo Prize criteria. They were leaders who agonized over having to move the world's most efficient production capacity from the United States to Mexico and China in order to stay in business, because no matter how good they were, it wasn't good enough to survive. They could compete with other companies, but they could not compete against other COUNTRIES -- countries that cheated in every way imaginable.
These manufacturing company CEOs were men who loved their employees. Who grew up with their employees. Who knew their families. Who knew in their hearts the economic, cultural, moral and physical destruction that was being wrought upon their communities.
U.S. manufacturing company CEOs died many deaths, watching as Wall Street mavericks and their economic ideological apologists in the U.S. federal government, in Congress and their high-paid agents in Washington, D.C., forced hundreds of thousands of dedicated, hard-working Americans into the street, to fend for themselves in a game that was rigged against them.
Has the financial class driven through the heartland of America lately? Have they not taken AMTRAK between New York City and Washington, D.C., passing through the industrial back lots of Baltimore, Wilmington, Philadelphia, Trenton and Newark? Have they not seen an American landscape stretching for thousands of square miles that looks like it has been bombed out?
There are places in America that are "healthy," but these places are even worse: shopping and strip malls located on the edges of America's deteriorating towns and cities, lined with vast parking lots and national chain stores: Applebees, Home Depot, Wal-Mart, Wendy's, Days Inn, Outback Steak House. They are soul-less places -- "Anywhere USA" -- as depressing as the crumbling inner city cores of hundreds of American cities and towns. This is what has become of America. Wall Street had a lot to do with this. As part of the financial bail out bill, they needed to include a provision on teaching ethics and civics.
The heroic men running companies that made durable goods wept on the phone when I called to ask about why they closed their factory after it had been in operation for 80 years or more.
These people were not selling financial paper or making products that were obsolete and no longer in demand, like buggy whips. And yet when I speak with economists about manufacturing, they invariably rationalize the loss of America's wealth-generating sector by claiming the companies that are dying are making "buggy whips." It is wrong and it is infuriating. We're talking about the United States economy, which has just suffered a massive financial heart attack.
I remember writing about the manufacturing job situation in early 2004. It was the 35th consecutive month of manufacturing employment layoffs, with the latest BLS figure coming in at 135,000 production workers being told to go home and not ever come back. This was a crisis. I wondered why in the hell not a single person in the Bush administration and only a handful of people in Congress cared about the collapse of the wealth-generating sector of the American economy. As is happening with the financial sector today, manufacturing five years ago was being disassembled in front of their eyes. There were no bailouts -- manufacturers weren't looking for them -- there weren't even bromides.
I remember thinking as Bush invaded Iraq that it was America's last great hurrah. As America's military hardware was being shipped to the Middle East, America's industrial base was being shipped in the opposite direction to China. The war was happening at the same time that "outsourcing" became a big story in the media. But the business press got bored and started covering the incredible run-up of housing prices. "Whoopee," said all the journalists and economists. "Who needs industry when we've got finance and housing!"
But the manufacturing industry's plight continued. I wanted to rename my publication "One Outrage After Another." I was constantly questioning whether I should continue writing all the stories of companies dying, of industries leaving, of workers being laid off, of trade deficits skyrocketing, of China cheating, of the perverse reaction among Washington elites to rationalize the destruction. I wondered if I was the problem. If being Irish meant fixating on the negative. But I had covered manufacturing through the 1990s, and the story wasn't depressing. I even wrote a book about U.S. companies' adoption of the Toyota Production System and lean manufacturing and the good it was doing. It was not me. It was the story that could not be ignored.
I got to know other people who couldn't sleep at night fretting over what was happening to the United States industrial base. These were patriotic people who started to coalesce around these issues, who were utterly perplexed by the federal government's total unwillingness to act on behalf of American producers and their workers.
The government knew what was going on. But its political appointees made nonsensical ideological arguments concerning "free trade" and "free markets." "We've got a war going on, we can't support U.S. manufacturing" was a refrain I heard over and again by political appointees at the "Commerce" Department and White House.
Manufacturers weren't looking for a hand out or a bailout. They only wanted one thing: for the United States government to put the interests of American producers above the interests of foreign countries, foreign producers, importers and the multinational companies that were taking advantage of mercantilist practices in China. American manufacturers wanted the U.S. government to put the interests of American producers ahead of the law firms representing foreign shipping companies, the lobbyists representing Wall Street and, again, the multinational companies that were swimming in record profits by sending their production offshore; all while the critical manufacturing sector was left for dead. "Good riddance," said the financial elite and its power structure: "those jobs sucked anyway."
Those same free-market, capitalist, anti-government, anti-regulation ideological zealots are now begging -- demanding -- that taxpayers give them a trillion dollars for destroying the American economy.
I never once reported about the dire warnings of an economic meltdown -- about the inevitable financial catastrophe being caused by the asymmetrical global trade imbalances that were mounting by the day. I had my own 401k to worry about along with three older children, and I was not going to be a reporter who stoked the possibility of economic Armageddon.
I guess I was wrong. I guess I should have been reporting on the impending collapse because President George Bush, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke sure haven't had any such reservations about scaring the bejesus out of us.
What strikes me as particularly sad, however, is the clear FACT that in all of the discussion about bailing out the financiers and their agents who killed the American economy, there has not been one mention of the real reason for America's collapse, nor of what is needed to start the long process of restoring the country back to some semblance of economic health.
The housing bubble and sub-prime loans are only part of the problem.
The real culprit is the fact that almost everything Americans buy is made somewhere else. The country continues to ship all of its wealth overseas. Did the economic policy makers not watch the opening ceremony of the Olympic Games in Beijing? Have they not seen the 200-story skyscrapers going up in Dubai?
The core of America's economic problems stem from the trade deficit and the elimination of tens of thousands of factories and millions of jobs that were creating the wealth the country needed to pay for everything. Without that wealth, the financial sector invented playthings and the nation borrowed until it could borrow no more.
Oh, but wait! The answer to the problem is to borrow more to bail out the people who over borrowed. The Paulson proposal, unexpectedly defeated on Monday September 29 in a harrowing live television broadcast, was to allow the U.S. government to pay off bad debts by going deeper into debt. It did not sit well with anybody.
September 29, 2008, will be an important day in the history of the American Republic. It is the day the American era ended. Watching the live pictures on CNBC of the traders in the pits watching the television monitors above their heads as the vote on the House floor was tallied was like watching New Yorkers standing in horror as they watched the burning World Trade Center towers in 2001. The congressional vote count was simulcast with the Dow, and they were crashing in unison. There was shock in the eyes of the traders, and a panic among the CNBC broadcasters, who couldn't believe what they were witnessing. These men and women are consummate professionals and are not prone to panic. But there they were barking out: "What's happening with gold?" "Look at the oil markets!" The market did what the towers did and what our President predicted: it collapsed. For the second time in seven years, the energy was visibly drained out of Lower Manhattan and the country at large, as it realized a scary new era had begun.
Yet, there is still NOT ONE mention from anyone in power -- especially not the two presidential candidates, nor of a single congressional leader -- of what is really needed to bail out the United States.
The only way out of this mess is for the United States do everything it can to make the country what it was until 30 years ago: a nation that valued manufacturing.
The U.S. economy long ago collapsed around domestic manufacturers. Now it's collapsing around the financial wizards who either forget or didn't know that their livelihoods depended on a robust industry and workers making livable wages.
As someone who works in Washington, attends press conferences, government meetings, congressional hearings and who asks questions of the power elite, I can assure you from first-hand experience that the United States government did not do a single thing -- nothing -- to re-set the global ground rules to allow U.S. industry and its millions of workers to be competitive. In fact, all the rules were changed to favor the foreign and financial interests. The country is now paying the real price of saving a few bucks at Wal-Mart.
The United States government and its elected representatives long ago stopped representing the interests of American workers and American producers. If there is any silver lining in the historic House vote on the Bailout Plan on September 29, it is that maybe Congress has woken up to the power of the people. Unfortunately it was the wrong time to wake up. "The people" must now pay the consequences of their elected representative's somnambulance. They must now prepare to confront the "dire" consequences caused by decades of Wall Street's short-term focus on quarterly profits at the exclusion of everything else.
The country has a lot to learn from American manufacturers and their workers, and it will not like what's coming one bit.
Good Post.
Thanks.
Not a single mention of the Big Labor’s hand in any of it. By the looks of this, manufacturing became uncompetitive because of the people that helped them finance their expansion, and NOT because DC liberals and their unions squeezed them out of existence.
Between the tort lobby, excessive regulation, and labor, manufacturing died. This jackweed is blaming Wall Street.
Rosie O’Donnel is going to blame the fact that she’s overweight on Wall Street next week.
There’s nothing of value in this teary elegy.
I’ve been in that business longer than Richard McCormack has been a writer, and it started well before George Bush took office.
Another jerkoff journalist who never walked the walk.
http://www.manufacturingnews.com/about/mccormack.html
“About the Founder and Publisher
Manufacturing & Technology News Editor & Publisher Richard McCormack created the publication in 1994. The paper is read by executives in industry, government and academia on five continents.
McCormack has spent 22 years in Washington, D.C., as a journalist covering science and technology, industry and government.
Prior to creating Manufacturing & Technology News, he was editor of High Performance Computing & Communications Week, a journal he created while at King Publishing Group in Washington, D.C. He covered the creation of the Internet.
He was the founding editor of New Technology Week in 1987.
He was editor of The Energy Daily in the mid 1980s.
McCormack has interviewed such people as Robert Noyce, inventor of the integrated circuit, Seymour Cray, inventor of the supercomputer and Edward Teller, inventor of the thermonuclear bomb.
Mr. McCormack has won numerous journalism awards for investigative, analytical and interpretive reporting. He has appeared on C-Span, CNN and PBS. His work has appeared in hundreds of publications.
McCormack is the 15-time winner of the National Press Club Golf Tournament. He coached the Annandale, Va. High School golf team for nine years.
You can place him on your editorial e-mail list for announcements, news events and story ideas:
editor @manufacturingnews.com. He can be reached by calling 703-750-2664. “
“Ethics, civics,” ?
Interesting read. I disagree with some of it, but agree with more than I thought I would. Thanks.
Loss of manufacturing jobs is world wide.
The US has lost far fewer tahn countries like Brazil and China.
Loss of manufacturing jobs is world wide.
The US has lost far fewer than countries like Brazil and China.
btt
Manufacturers weren't looking for a hand out or a bailout. They only wanted one thing: for the United States government to put the interests of American producers above the interests of foreign countries, foreign producers, importers and the multinational companies that were taking advantage of mercantilist practices in China. American manufacturers wanted the U.S. government to put the interests of American producers ahead of the law firms representing foreign shipping companies, the lobbyists representing Wall Street and, again, the multinational companies that were swimming in record profits by sending their production offshore; all while the critical manufacturing sector was left for dead. "Good riddance," said the financial elite and its power structure: "those jobs sucked anyway."
The United States continues to manufacture more goods than Japan, China and Germany *COMBINED*. It’s a fact.
Just because we don’t make toothpicks, furniture and T-shirts doesn’t mean we don’t make things here. High performance polymers, biotech products (drugs), heavy machinery, high tech (non-commodity) products - all of that is made here. What has happened is that assembly line jobs are being replaced by biotech laboratory jobs that pay 2x. But you have to have a degree to work there.
The difference is though that US has been losing manufacturing jobs for 30 years. China did not manufacture
much 30 years ago and exported nothing then.
Typical socialist idiot blaming everyone and everything except the government. Countries cannot cheat at trade. It’s impossible. China simply didn’t implement the stupid policies that killed our manufacturing sector. And why would they after seeing what happened to us? Everything China is doing now we have done in the past and could do again.
Like I wasn’t already depressed.
Thanks though.
Give us a break. An example is the Corning plant obama is saying closed down and moved to China was CRT tv’s. Quality CRT TV's are a wast because they are done and dead. That is decades OLD technology. It deserves to die. CRT’s produce more harmful rays, use more electricity, and have a worse picture than LCD TV's and monitors.
Plants that close because they are manufacturing dead technology get no sympathy from me and I bet many of the closed plants were doing that.
“But the business press got bored and started covering the incredible run-up of housing prices”
Actually, they were praising “globalism” as a good thing. Liberals loved it because it made them feel like they are citizens “of the world.” Bush cannot do anything because the Chinese fund his tax cuts. Powell, Rice repeat the standard line that we will continue to allow China to cheat on the hopes they will change in the future.
I had a plant manager at GE who would be up against the wall for some reason or another and we would be falling over each other to help.
The man would come into the plant on his time off and bring coffee and pastries for the crew.
He knew how to communicate: "we sink or swim together."
Some managers get it.
Well, some of the manufacturers have themselves to blame. Have any of the US car makers actually put out vehicles, other than pick-ups, that actually competed with Hondas, Toyotas, or Nissans in the past 20 years?
Ditto...
it started well before George Bush took office
Agreed...
Another jerkoff journalist who never walked the walk
An amazing leap of illogic, IMO -- the primary point of the article is that manufacturing has suffered economic collapse at the same hands (Congress, et.al) as those who crafted the circumstances that led to financial meltdown yet no special effort to "bailout" or "rescue" a basic building block of the economy.
Good job.
Prolly not going to happen. Finance, Education, Tax Policy, Environmental policy, Labor Policy — all of it is geared away from manufacturing & toward a service economy. Maybe if we had a 10-15 year recession/depression the next generation might straighten things out. But it will be a bumpy road getting there.
I have one word... union.
LLS
I agree with everything in this article. The exportation of our jobs is the core cause of Americas current problems. I cannot fathom any red blooded american believing otherwise. Ross Perot was right.
Certainly a glaring oversight to have left that out...
Between the tort lobby, excessive regulation, and labor, manufacturing died
More glaring oversights...
This jackweed is blaming Wall Street
I think he is really trying to point out the glaring differences between how Congress (the root of both problems, IMO) reacted to the financial meltdown and the loss of manufacturing.
“CRT’s....and have a worse picture than LCD TV’s and monitors”
Tell that to my Sony KD-34XBR960!
http://reviews.cnet.com/direct-view-tvs-crt/sony-kd-34xbr960/4505-6481_7-30787600.html
:)
If you don’t compete you lose.
Yankeeland chose not to compete and is dying or already dead.
Meanwhile, East Tennessee is booming
Perhaps. But one company that I sold for was having certain model machine tools built in mainland China. This was like 10-12 years ago, so off-shoring to China was still novel & risky. Turns out that the Chinese supplier was getting the foundary & machining work done in a Gulag. Dozens of machines were impounded by the US Dept. of Commerce. Bottom Line: The chinese were defrauding their customer with phoney bills of lading & invoices just the same as they recently defrauded the Olympics with phoney birth certificates.
No, the article is an illogical diatribe that does not examine the confluence of factors that drove much production overseas (unions, regulations, lawsuits, etc.) and devolves into the usual Bush / Iraq / claptrap.
His focus is entirely in that NE corrider of blindness, witness the cities he lists (did he write that riding Amtrak from NY to DC?) Out here in flyover we lost mills and manufacturing, and didn’t bitch and cry about it but got up, dusted ourselves off and went about innovating new technologies. The Chinese (and the Taiwanese, and Koreans, and Germans and so on) make some good stuff, and lots of it goes into bigger things we make. And we turn a profit. And it doesn’t have a damn thing to do with George W. Bush.
There is manufacturing out here, and it is smarter than ever. Lots of older manufacturing plants and techniques went to lower skilled (and lower wage) places because technology compensated for training. We neither need nor want $50/hr union labor watching a machine do its thing. Waste of money. If that union worker wants to train to program the machine, then hell yes we’ll use him. But the world is too competitive to permit nostalgia jobs. They are gone with the wind.
I lay our decline to the environmental anarchists and excessive government regulation. I am afraid that our grandchildren will curse our names and spit on our graves.
The America that I knew is passing (has passed?) away. At one time Pennsylvania made more steel that any country in the world. The dollar was an iron man eagerly sought all over the world. And so on.
Many Pennsylvania/NY/NJ companies moved down to the Carolinas in the 80's-90's. Many of those companies have already moved-on to Mexico or Asia when their tax-break deals expired. These are light-to-medium manufacturing companies to which I refer. Electronics & Appliances, mostly.
BTW we have used prison labor before as well. It's not economical. Not if you need production and quality.
The yankees have always believed that they are America.
All I know as a consumer just about everything I buy comes from China.... my damn toothbrush in made in China... oh yeh..just bought a Bissel Vacuum cleaner. it was made in Korea. There’s lots of blame to go around...Government, Corporations, Unions. etc....Eliminate capital gains tax and reduce Corporate taxes and manufacturing will return again.
Not one job has ever been "exported". That's just liberal newspeak. Workers here failed to compete with workers somewhere else and lost their jobs as a result. There is nothing wrong with that. If you do not compete you deserve to lose. Why should everyone else have to work to support you?
We also need real tort reform. No class actions, loser pays, and no caps.
A company cheated with official sanctions.
When you say countries can't "cheat", have you considered things like manipulation of currency? Lack of Child Labor laws or basic Environmental regulations? Companies go where the best deal is since they can't control the playing field.
They may make better widgets, but chances are pretty good they may be out of business before the market discovers they make better widgets. This is where NATIONAL INTEREST comes in. Most Favored Nation trading status should never have been a carrot to tempt China to do a few cosmetic reforms. It should have been a reward to those countries which actually earned it by playing by the same rules we expect for ourselves and our real allies.
Tort reform is a huge need.
You would not believe some of the hoops you have to jump through in certain industries. And that is the realm of the John Edwards of the world, not the George Bushes.
But all of this started way, way before Iraq, and that’s one of the things that ticked me off about the article. The author is making a connection that simply is not there.
I don't know where "out here" is for you but I am in OK and agree with your view on the unions' role in some of this and how labor that knows how to program is more valuable than the nostalgia jobs you cite. Manufacturers have absolutely gotten smarter but there has also been some short-sighted choices made when off-shoring. I will grant you that some of those choices were driven by factors cited by other posters, such as liability laws, but other matters like exchange rates and transportation costs are now looming large.
Thanks for your reply and I agree with everything you say, but my post had different context. The poster I was replying to said US is losing less jobs than China in manufacturing.
He did not specify time span for comparison.
My point is that if you add up all the jobs lost in US since 1970’s, it will be huge. China did not manufacture and export much 10 years ago.
Much better to overhaul the insane legal system, break the unions Thatcher style, and cut corporate and capital gains taxes.
-ccm
The playing field certainly is, and has been uneven. Things like keiretsu in Japan would be considered anti-competitive in the US. And intellectual property goes out the window in some countries (it’s an odd feeling seeing your own work copied by someone else) but we adjust and find other areas of opportunity. The mfg. bosses the author speaks of are often 2nd or 3rd generation family scions with no knowledge of hunger or adaptation. Or worse they are MBA’s with finance and no practical knowledge. Either way they wind up wrecking perfectly good companies. And they would have done so with or without China even existing.
As for child labor: what do you think kids in the third world who don't work in factories do? Before you judge make sure you are using a realistic perspective.
Environmental regulations are only necessary because of government ownership of environmental resources. It's their environment and they will have as much or as little mess as they want. How does any of that equate to cheating?
Do you have any idea what percentage of manufacturing in the U.S. in union?
Regulations are what's killing manufacturing.
As America's military hardware was being shipped to the Middle East, America's industrial base was being shipped in the opposite direction to China.
Is there any denying this?
Manufacturing has become a pariah in the eyes of the litterati and elites of the U.S. They see those of us who've worked in factories as nothing more than their gardener or janitor.
There are quite a few supercapitalists here on FR that sneer at us for working in a factory. It's all about making a buck. If there ever was any patriotism about giving a fellow American a job it has been washed out by the moneychangers and harlots of finance.
I thinks that's the author's point.
Agreed that transportation cost will make offshore less attractive (but will push more to Mexico - and I have ZERO use for that country). I’m in the heart of the rust belt, and while it is sad to see towns drying up you can breathe the air again, so it’s not all bad. Many moons ago I was in one of the Unions, and across the river from the plant where I worked there was no foliage. Zero. The plant is still there (one of a few remaining) but now the hills are green again. China on the other hand is a hellhole. Eventually it will all level out as cheap places to run to are used up (Africa will be the last, and not sure they can get much quasi-technical production there)
The big thing is the idea of raising all the countries up, rather than siphoning off our funds (lowering us) to underpriviliged countries in a wrongheaded attempt to equalize.
Interesting times (the old Chinese curse)
East Tennessee is booming? I was under the impression that the place was hollowing out. From what I have heard from people still living there is that things aren’t as good as they used to be. I lived in Knoxville for over 12 years.
I am generally a "free-trader" but my business is involved in servicing manufacturing companies. My head & my heart are often in conflict when it comes to discussions like these.
There are amazing technologies out there that are going to continue to drive manufacturing jobs to the margins worldwide. It would be interesting to see what the world will look like in 100 years.
I didn't get any sense the author wanted to go down that path -- I am in agreement with you S-H tariffs would just exacerbate the situation.
Well, considering I was once in a union, then worked up through union and non-union shops, yeah I do know a little about working in a factory. Still have my metatarsal boots as a memento from the coke works. And I saw first hand what unions do to a company. And I’ve also seen bad, bad management. But it was long before Hussein even invaded Kuwait, let alone us going into Iraq. I have nothing but respect for anyone that does an honest day’s work, with work being the operative word.
I didn’t cry when the mills went away, just finished my degree and moved on. Been ‘downsized’ too. Went out and started my own deal. Controlling one’s own destiny can be a good thing.
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