A Plan to Save American Manufacturing

TradeAlert.org ^ | Wednesday, December 31, 2003 | Kevin L. Kearns, Alan Tonelson, and William Hawkins

[Erik Latranyi]

Ford Motor was told that they could build a plant in PRC, and they were ALSO told that PRC would own ALL the technology in that plant at the end of five years.

The technology you are talking about is ordinary factory technology -- nothing endangering national security.

You have to ask yourself why would a company like Ford agree to such an arrangement? Give away a plant after 5 years????

Either Ford is anti-American and wants to prop up the Chinese or there are issues in our country that drives Ford overseas.

[Erik Latranyi]

Russ:

While you make an impassioned plea, I am sorry to inform you that you are completely incorrect.

First, manufacturing goes where it is cost-effective to do so. The costs of manufacturing in the US are prohibitive.

Second, national security may be jeopardized in the short-run, however, we could build manufacturing plants in a few months to churn out what we need for any war effort (in face of a boycott). Do you remember WW2?????

Third, any nation so stupid as to boycott the largest consumer nation deserves the economic depression resulting from their decision.

[Last Dakotan]

Sorry if that fact frightens you and all the other...

No, it doesn't frighten me, it is just the reality of how things will be. I mourn for my country. We used to be a place where great men created things and made companies. I proudly use a great number of products invented elsewhere. That's not the point.

By comparision we will look a lot like Mexico - a country which never developed a manufacturing base. Stratification between the very poor and the very rich, all natural resources shipped off to pay debts, and no new products being created to enrichen people's lives.

[Erik Latranyi]

Ninenot:

I hate to tell you, but workers are replaceable willy-nilly.

I dare you to show me an employee that cannot be replaced with someone else!

I hate to tell you, but in business, labor is just a component like machinery, raw materials, etc.

Labor is transferable quite easily. Our country used to be 99% agrarian. Today, we are 1% agrarian. Sounds like a lot of people changed jobs.

The reality is that there are very few occupations (maybe gov't) where you can have employment for life at the same job.

The economy is too rapidly transforming and the current globalization of manufacturing is only causing this to happen more rapidly.

[Cold Heat]

The manufacturers who cannot compete will not be saved unless subsidized. That ain't gonna happen, so either they change and get productive, or the move and get productive.

Upward wage and cost pressures will continue and continue to drive manufacturing away from this country.

Nothing short of a miracle will stop it.

Nothing.

[Erik Latranyi]

As just one example: Steel production in the US is among the most automated capital-intensive in the world. Not even the Japanese eclipse us there. Yet we will lose our industry despite our superior productivity...and then the steel market prices here will balloon.

This is where you are completely wrong. Steel manufacturing in the US is ancient compared to newer, smaller steel manufacturers overseas.

Why do you think Bush imposed steel tarriffs? The idea was to give the industry some time to upgrade and become competitive.

Why is our steel industry so behind on technology? First, unions demanded worker protections and less automation. Second, owners that held the short-view of competition and the hope of gov't intervention.

I know this industry well. It is not advanced compared to overseas facilities.

[Erik Latranyi]

Which regulations actually do this?

OSHA, EPA, etc (not all regs, but many are nonsense)

It only takes a couple of engineers to design a plant and there is only about one maintenance worker for every 20 - 30 production workers. How does that replace the workforce?

It takes more and better engineers to design the automated equipment. It takes better maintenance workers to maintain the equipment. It takes service jobs to support the engineers and maintenance workers. Do you understand how a cascading economy works?

Frankly, if your job is to pick up a nut and put it onto a bolt, you are a drag on our economy.

Nice sentiment to your fellow Americans.

I think my fellow American can achieve more than putting a nut onto a bolt. I want my fellow American to perform tasks that are not the equivalent of a screw-machine.

[Cold Heat]

Not even the Japanese eclipse us there.

Whoa man! Where you been?

Until 1990, I was in the Steel foundry and machining business. The japs destroyed us by innovations that I cannot even begin to list.

You would think that with the shipping costs from Japan, that we would have had some sort of edge, but no way.

They put the foundry finishing process on ships and finished the product as they transported it. It was amazing what they did!

In order to maintain our manufacturing, we must do likewise. Some have and survived, but those who do not are going.

Innovation has always been the key to survival.

It is possible that we are too stupid to innovate any longer. I sure hope the hell not, but it looks that way.

[Cold Heat]

OOPS, I see it was Paul Ross who made that statement that I replied to. Sorry about that!

[Erik Latranyi]

LET US ALL CONSIDER THIS:

(1) We are living in a time where the worldwide demand for goods is increasing.

(2) Manufacturing is locating to those areas where costs are the least (including shipping costs to your market)

(3) As more overseas workers are employed, their demand for goods increases, hence a need for more manufacturing.

(4) As more overseas workers are employed, their wages will increase.


I PREDICT THAT WE ARE ON THE VERGE OF A WORLDWIDE ECONOMIC EXPANSION THAT WILL CHANGE ECONOMICS FOREVER.

As a result, those countries that protect themselves will be left out of the boom.

Those countries that reduce their tax and regulation policies will thrive.

Can anyone argue that the sudden increase in manufacturing in China will not have a profound effect on the gov't??

We will see victory over another communist regine without a shot being fired.

All thanks to Free Trade.

[Erik Latranyi]

Not a problem!

[ninenot]

I am in this industry and understand the cost/benefit studies showing how clearly factory automation is far, far more cost-effective than moving offshore.

If you are in the industry, you then understand that a large number of manufacturers are deferring the investment in automation and simply going for the cheap labor overseas.

BTW, there are no "unskilled jobs" anymore, at least not in a well-run plant.

The canard about 'nuts onto bolts' is just that; more often the assembler has a multitude of tasks which INCLUDE 'nuts/bolts,' and, far more important, include QC exams.

Multi-tasking is the operative these days--but you knew that already, right??

[Dialup Llama]

>The manufacturers who cannot compete will not be saved unless subsidized.

Its not a matter of manufacturers who can't compete. These manufacturers run highly productive plants. Once the process gets tightened down, the CEO justs lifts the plant up and moves it to China in order to get the gov't provided cheap labor ON TOP of the modern manufacturing process.

The next step is for the CEO to demand that all of his suppliers do the same in order to submit a contract to that company.

These CEOs want to earn revenues in the first world and get western legal protections, but the also want one leg in the world of govt mandated slave labor.

We should make it a point to do business only with companies that support the communities from which they earn revenues.

[ninenot]

Who said anything about National Security, Erik?

Why would FOMoCo do that? Simple. Five years of vastly increased profits and concomitant debt reduction. Ford is in trouble financially, and the Chinese have offered them a solution.

Billy Ford's interests lie in maximizing the value of his shares, not in maintaining FoMoCo's employment in America. Henry Ford would kill this poor kid, if he got his hands on him.

[templar]

The fact is that if you have a job that requires no skill, your job will be eliminated through automation or lower-cost overseas labor eventually.

The fact is that high tech and IT jobs are being eliminated to "lower-cost overseas labor eventually.". Skill levels are relative, and there is no job that is so highly skilled that it cannot be competed with by others in countries with substantially lower standards of living than ours. The question is: How do we lower the standard of living in our country (everything from job saftey to building codes and zoning laws) enough to make us again competitive with the third world? Or, perhaps, do we want to?

[ninenot]

Although your earlier posts hinted at it, you've here made it clear that you are another robot/disruptor without foundation in elementary philosophy.

Your office in Beijing is calling.

[Last Dakotan]

You have to ask yourself why would a company like Ford agree to such an arrangement?

No, that was the deal Ford had to accept to gain access to the Chinese market. Its called a trade barrier and counter to agreements the Chinese already made. It is the job of our government to policy such agreements. A job they have proven either unwilling or unable to do.

[ninenot]

Your generalizations demonstrate your spin.

There are only a few steel firms in the USA which have not adequately modernized, and they are the best-known "big" names in the business.

The small mills, all over this country, are doing fine.

What actually happened/will happen with the bankruptcy of Big Steel is that their pension plans will be picked up by the US taxpayer and pensions will be reduced significantly for ex-Steelworkers.

But remember, Erik--those union agreements were agreements on BOTH sides. Big Steel, like Big Auto, gave a lot away; usually because management was just as greedy as the unions.

Or didn't you learn that in automation class??

[blueriver]

If I had looked at Engineering that way before I graduated, I would have changed majors and missed out on the boom.

What is occuring is not a temporary decline in jobs. The jobs still exist, the difference now is that the jobs are in other counties. If you think there will be an upside to this you are dreaming.

[hedgetrimmer]

Its no coincidence that the UNs confrence on wealth redistribution to "least developed nations" including China, happened at Brussels in 2001. That city has a long tradition of anti-freedom and social regimentation.