A Plan to Save American Manufacturing

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

[Willie Green]

The answer is simply a continuing increase in productivity.
Automation is far more reliable, offers higher quality and lower costs than the lowest wage nations overseas.
More automated industries allow employees to seek employment in higher-skilled areas such as engineering, maintenance, etc.

False assumption.
Automation is not a panacea.
The high investment cost of automating domestic manufacturing is undermined by imports in many ways.

• In many instances, lower cost technology implemented offshore can match quality requirements.
• Automated technology can also be used offshore, undercutting the cost of skilled technicians, maintenance and support personnel required to operate it domesticly.
• In both of the above instances, additional investment in support technology necessary for safety and/or environmental compliance is unnecessary.

[EGPWS]

You really don't understand?

Yes I do, however I don't understand your reply. Sorry for being so pragmatic.

[ninenot]

Perhaps you wish to discuss the difference between "socialist utopia" and meaningful regulation of labor standards.

But then, it's much easier to paste labels than actually think about first things, isn't it?

[gooleyman]

While your understanding of tax/reg problems is excellent, please advise which politician will advocate even the SLIGHTEST rollback in EPA, OSHA, or EEO regs/standards.

Thank you for the compliment. They WOULD advocate it if enough people (voters) understood the problem and demanded it. They keep putting the blame on things other than the real problem. People keep hearing the lies and believe them because they've heard them over and over from "reliable" sources such as the DemocRATS, liberal Republicans and the lamestream news media outlets.

-----
Last, even though the numbers are noticeable, tax/reg costs are only about 15% (or less) of sales for most organizations. That's not quite the same as the 70% difference in costs for most comparos of China/USA

That number of 15% is true if you only look at the top tier of manufacturing for a product. That 15% is cascaded throughout the whole process of a product from the harvesting of the raw materials all the way up the stream through processing, shipping, manufacturing, marketing, distributing the finished goods, etc. I submit to you that the net effect would be more than the 70% difference between China and here. Remember that the 15% is added at every level and compounded through the whole process in everything we produce. By the time the consumer picks a product off the shelf, I'll bet the net effect of taxes and regulations is up to well over 90%.

[ninenot]

Automation is a wonderful thing. The PRC knows it, too, Eric!!

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.

Duh.

[Doctor Stochastic]

So when the proposed Five Year Plan fails due to the raised taxes needed to fund it, which Great Leap Forward will let us see the Light At The End Of The Tunnel and allow us to find Prosperity Around The Corner?

The whole article seems to be aimed at a Syndicalist Society type of structure; it's rather reminicent of Robert Reich's version of economics. Perhaps the authors look nostagically back to the Clinton Era Of Prosperity.

[Willie Green]

I see the disgruntled right wing, socialists who want to relive the past are having a pity feast again.

"right wing socialists???

What kind of confused, globo-marxist baloney is that????

But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

~Karl Marx, "On the Question of Free Trade" - January 9, 1848

[EGPWS]

The high investment cost of automating domestic manufacturing is undermined by imports in many ways.

Imports has nothing to do with it Willie! Automating is much more efficient with our computer capabilities we have now and the cost of sick time, vacation time, HR, supervision, safety concerns, hasmat, union dues, SS, health insurance, and Government intervention has led businesses to continue their life long ambition to cut costs.

[WilliamofCarmichael]

there is a continuous feed-back loop between R&D efforts and the factory floor, with the two functions, R&D and production, operating in tandem.

Same is true of software development and R&D.

Now on to what appears to be not so bad news, but..

Franklin J. Vargo Vice President, International Economic Affairs National Association of Manufacturers told the House Committee on International Relations in Hearing On U.S.-China Ties: Reassessing the Economic Relationship, October 21, 2003

"American companies invest in China, as they do in other countries, but the size of the investments are surprisingly small. Ninety percent of U.S. foreign direct investment goes to the high-income countries, predominantly Europe, to enable U.S. producers to be close to the market. The vast majority of the production of U.S. affiliates is sold locally, in the country of production. . .only 10 percent of U.S. offshore manufacturing production is exported back to the United States. The rest is consumed locally or exported to third countries.

"The same is true with U.S. investments in China. First, they are still very small. Less than 5% of U.S. global foreign direct investment in manufacturing is going to China. Commerce Department data show that the bulk of the output of U.S. firms in China is sold in the local Chinese market. Commerce’s data imply that only three percent of U.S. imports from China came from U.S. manufacturing affiliates there. Census Bureau data show that imports into the United States by all multinationals (U.S., European, Japanese, etc.) from their Chinese affiliates account for only 20 percent of total imports from China.

"Thus, the data do not support the view that a huge rush of outsourcing has resulted in our trade imbalance with China. Nevertheless, it is certainly true that more U.S. companies are beginning to talk about the necessity of moving to China to stay globally competitive. A growing erosion of our manufacturing base is a real possibility. The best way to ensure that investment flows follow economic fundamentals while maintaining growing manufacturing production in the United States is to have market-determined currencies and a better investment environment in the United States. We need to avoid artificial factors that distort trade and investment, but we must also take the steps necessary to reduce the cost of production in the United States and to improve the attractiveness of the United States as a place for both U.S. and foreign companies to invest. " [end excerpt]

There are two things here. First, in Europe, "The vast majority of the production of U.S. affiliates is sold locally, in the country of production" and second, "the bulk of the output of U.S. firms in China is sold in the local Chinese market."

The way I read the excerpt the bulk of the imports from China come from chi-com companies.

But! Just in the past few days a newspaper's series was posted describing the experiences of several American companies including Motorola.

Without criticizing the practice the series pointed out that the chi-coms require American companies to bring Chinese "partners" up to speed on technology, management, and production. Motorola once was the biggest cell phone supplier in China but no longer. Chinese companies now have Mototola's cookies and are now the largest suppliers. Don't recall if the series mentioned exports but the chi-coms' campanies could easily overwhelm Motorola there also, I bet.

I suspect the Chinese companies that supply the bulk of our imports obtained their position in the same manner. Demand that American companies transfer their technology as a condition of having access to the billion Chinese "consumers," take the technology and start up chi-com (princeling) companies, take over the market. Repeat.

One more task needs to be added to the President's EMERGENCY MEASURES: assign adult American patriots to supervise our useful idiots.

[ninenot]

I'll grant your 90% estimate (I'd heard numbers like that before...)

So what?

Actually, even if you took out all the REALLY stupid regs and eliminated C-Corp taxation entirely (a VERY good thing to do...) you still have a problem: certain other countries dumping all kinds of crap into rivers, skies, etc., not to mention certain other countries dumping the dead bodies of laborers into the same places.

All that flapjaw from GWB about "establishing Democracy" in such exotic places as Iraq--and he can't "establish reasonable standards" anyplace else?

Well--he can't. We cannot force PRC, Brazil, India, or Malaysia to accept minimum standards of EPA/OSHA/FLSA. But we CAN tell them to drop dead until they do so.

[meadsjn]

The article doesn't suggest eliminating the income tax, which is simply a tariff on American production. The piddly tax breaks at the federal level were immediately offset by increases in income and sales taxes at the state and local levels. The money to run the government should come from tariffs on products produced in foreign countries. Let them pay for the priviledge of access to our consumer markets.

Tons of counter-productive regulations need to go to the trash heap, and the NGOs pushing for them need to be stopped.

We are moving into a crisis era similar to the Great Depression of the 1930s, and more government interference, ala the FDR power grab, will just prolong the agony, just as it did then. Government needs to be trimmed to the bone and refocused on the survival of the United States, or the rising generation of voters will have to demand even more drastic measures to ensure their own survival. About four more years of Boomer control of government and institutions is going to be the end of that generation's control. Their credibility will be completely shot with two younger generations of really angry and desperate voters.

This stock market bump is not sustainable without more wealth being created internally, and is only sucking another round of borrowed US money into the stock market casino. The offshoring of our most advanced technology and manufacturing cannot honestly be compared to the decline of the buggy-whip industry. It is national suicide.

[EGPWS]

Let's look at the Buggy Whip manufacturers who have significantly off-shored their operations in the last 10 years:

Didn't know these manufacturers were focused on "buggy whips" however praise to their CEO's for understanding that "buggy whip" manufacturing is best left to someone else.

[nmh]

"Right wing" meaning - you think you are conservatives. "Socialists" meaning you're really not. You want the government and anyone else available to make sure you can do whatever you want for a living and get overpaid for it.

Genuine conservative people get on with something else for a livelihood. You guys can't seem to do that. Reality isn't you bag. I think you should vote for Dean. He's a whiner too. He hates advancement. In fact, you might now think the world of the unibomber. He hated technology too - whether it be with technology jobs or menial manufacturing type jobs.

By all means, keep belly aching. Stay stuck in time. Imagine reality will change to suit your self serving world view. It's less competition out there for folks.

[gooleyman]

Actually, even if you took out all the REALLY stupid regs and eliminated C-Corp taxation entirely (a VERY good thing to do...) you still have a problem: certain other countries dumping all kinds of crap into rivers, skies, etc., not to mention certain other countries dumping the dead bodies of laborers into the same places.

We can't control those countries, even the nuts who wrote this plan agree to that. We lose even more control when we continue to chase our companies into the arms of these Jezebel countries. If a company has the bulk of his factories in countries you mentioned, he's going to lobby hard for Congress and the President NOT to do anything that jeopardizes his operations and people in those countries. And believe me his money speaks loudly to them. Much louder than we can on this forum.

We must lower the taxes and regulation and our manufacturers will return here, provide the jobs that people argue for, and return us to having more control over these other countries. I think that will go a long way to making them straighten up too.

[Willie Green]

Automating is much more efficient with our computer capabilities we have now and the cost of sick time

I guess you didn't bother to read what I said about automation also being implemented offshore.
Even the most sophisticated automation in the world doesn't operate totally unattended.
But there's no sense trying to explain that to the intentionally ignorant.

[Russ7]

having worked for a very large manufacturer, I have watched with wonder why things have been allowed to deteriorate so badly. I can offer dozens of examples...but just look at one...Can anyone guess who makes all the ceramic packages our microprocessors sit on? Consider that fact that our hi-tech military needs these advanced microprocessors for bunches of our geewiz war things, would it trouble you to know that the USA doesn't any longer have a capability to manufacture the ceramic packages that go along with the microprocessors. Some might think...we can solve that with a handful of PhDs and a few million USDs. Before you think you can do it, talk to the companies that WERE in the biz but were driven out by predatory pricing practices of companies on the other side of the globe. Rest assured the US companies howled loudly but we were suppose to play nicey nice and shut up.

Spin the clock forward 15-20 yrs later. We could be held hostage to the country from which ceramic packages are exported. We'd need their permission to go to war. If the country I'm alluding to was France, Germany or Russia.. we'd have been screwed in our efforts to fight in Iraq.

One by one these precious manufacturing capabilities are being lost to countries who can set up manufacturing plants in the jungles of Southeast Asia. Take a current example...where are most hard drives assembled? What would happen if the people controlling these places decided we weren't going to get anymore hard drives? The people assembling your hard drive are very satisfied with a few bowls of rice and protection from the rebels and wild animals. There are times when I think those people assembling the hard drive may be better off financially than the majority of Americans who have leveraged every single thing they have requiring them to work longer hours at one or more jobs.

[nmh]

Dearest Willie,

"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

~Karl Marx, "On the Question of Free Trade" - January 9, 1848

Have you NO clue on what the context of this is?

Are you able to read and comprehend?

Notice:

It is in this REVOLUTIONARY SENSE ALONE, gentlemen, that I vote in favor of free trade.

He was NOT advocating "free trade". He was advocating revolution AGAINST capitalism.

You are such an idiot! Marx was NEVER a capitalist.

Marx IS what YOU are advocating - SOCIALISM and A PLANNED WORK ECONOMY that is PROTECTED.

You amaze me with your proud stupidity.

It's no wonder that dull bulbs like yourself can't deal with bettering themselves or change since you refuse to use your God given brain.

[meenie]

It seems that if you are going to compete with a nation that has no health care, retirement funds, or enviromental regulations, living in a mud and straw hut with no electricity and carrying water from a common well, you are going to have trouble competing. Over a period of time, we have to make a transition to those conditions or a compensating tariff to enable our own manufacturing base to work making goods for our own people.

So far our political leaders are intent on the straw and mud hut scenario. If they are interested in retaining a nation that can support their obsessive spending habits and life style, things have to change. Driving down the dollar to attempt the change is only going to make the adjustment worse. The realization should be sinking in soon that their government is in danger as well as their position of power.

[Willie Green]

Genuine conservative people get on with something else for a livelihood.

Genuine conservatives are well informed on issues of national policy and are actively engaged in promoting policy changes that benefit America First! in conformance with their conservative principles.

"Move along" is a marxist mantra chanted by proponents of elitist, globo-governance.

[hedgetrimmer]

No one is enslaved to only ONE kind of work

No we are only enslaved to a global socialist institution, the WTO. Newt Gingrich himself said in 1994, that the creation of the WTO was an unprecedendented transfer of sovereign power to a foreign body.

But thats the kind of world you want to live in, one dominated by global socialists who regulate everything America, from our money (world bank), our foreign aid (IMF), our environement (UN, UNEP, ICLEI) and our trade (WTO).

Yep we dumb Americans are living in fantasy world, where some of us still believe in the sovereignty of nations and have the courage to preserve the freedoms our forefathers gave us, not selling out to the global socialists like you have.

Right wing socialists my eye.No such thing.