Eroding U.S. Industrial Base Comes With Price

Magic City Morning Star ^ | Feb 8, 2006 | Diane M. Grassi

[hedgetrimmer]

The United States of America has historically enjoyed self-sufficiency in times of both war and peace but in order to better assess its present place in the world as concerns its military and economic strength, it is important to reflect on its foundation. There is daily talk from Wall Street to Capitol Hill with respect to spread sheets and global policy, but it perhaps falls short when it comes down to addressing the average U.S. wage earner, and how both will ultimately affect jobs and the country’s national security and defense. It is important to note, that as our forefathers were fighting for independence from England during the Revolutionary War, seldom do we hear about the underlying and overwhelming task they endured in order to supply an army without an industrial base. In order for success, the Colonies depended upon France and the Netherlands for everything from blankets and clothing to gunpowder, muskets, munitions, and food. Benjamin Franklin bartered a deal with France to ship across the Atlantic Ocean by way of the Netherlands’ St. Eustatius Island, in order for George Washington and his troops to have the means to defend themselves.

In light of the French Revolution at the turn of the 18th century, when the Netherlands were seized by Napoleon and President John Adams came close to war with France, a primary U.S. ally just years earlier, self –sufficiency was the order of the day. In 1791, Alexander Hamilton, the first U.S. Secretary of the Treasury, was asked by President George Washington and the U.S. Congress to officially document U.S. policy on industrial and military self-sufficiency. It read, “Not only have the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national supply. These comprise the means of subsistence, habitation, clothing and defense. The possession of these is necessary to the perfection of the body politic: to the safety as well as to the welfare of the society.”

The Industrial Revolution of the 19th century secured the U.S.policy of self-sufficiency, transforming it into a global power. Due to the strength of its industrialization the U.S. was able to defeat its enemies in World War I. With the advent of the automobile, which Henry Ford learned to mass-produce, weaponry and machinery produced for World War II benefited from the automobile factory. Production of Sherman tanks, Army jeeps, airplanes and PT boats evolved from such civilian U.S. factories. And in the 1950’s the industrial base was modernized for the Korean War effort.

The industrial base and manufacturing for the U.S. military were necessarily intertwined. But following the end of the Cold War there has been a deliberate decomposition of U.S. industry, unprecedented in American history. There are a number of factors which have contributed to U.S. dependence on foreign trade, primarily with India and China, which has not only led to millions of U.S. manufacturing and engineering jobs permanently lost, but paints a grim picture for the long term stability of the U.S. military supply line.

The dependence on foreign oil and the subsequent OPEC oil embargo in the 1970’s, the U.S. policy of deregulation of corporations of the 1980’s, the passage of the North American Free Trade Agreement (NAFTA) in 1994, and the World Trade Organization (WTO) in 2001 allowing China to become a member, collectively accelerated U.S. dependence on cheap labor offshore. Thus, dependency and reliance on suppliers from all over the world for military equipment and machinery components and parts, required for their manufacture, leaves the U.S. vulnerable.

The Defense Department runs a program called the Diminishing Manufacturing Sources and Materials Shortage (DMSMS) at the Tank Automotive and Armaments Command (TACOM). Its purpose is to identify shortages of parts, processes and materials necessary to procure for military buyers. A problem for military acquisitions has been procuring weapon system metal castings as a direct result of plant closings. The majority of castings now come from China and other third-world countries. Along with the foreign dependence on metal castings manufacture its research and development also followed the foundry industry offshore.

DMSMS program managers are aware that there are problems in finding sub-parts and components. Not only have replacement parts started to rapidly diminish, but the chemicals needed in their manufacture have as well. Without specific chemicals certain processes cannot be done. For example, there is only one company left in the U.S. that produces a roller cutter for armored plate or heavy steel which was an indirect consequence of supplying armor kits for U.S. Humvees in the War in Iraq. When the Pentagon learned there was an immediate need at the end of 2004, it called for expediency in their manufacture. Sadly, it took almost a year due to the limited facilities producing such.

Another issue arose when a foreign corporation purchased the only U.S. company which produced a chemical used for a common binder which secures windows and aluminum panels in aircraft. The company eventually folded when it could not meet Occupational Safety and Health Administration (OSHA) and Environmental Protection Agency (EPA) standards. Now the U.S. must depend on the company’s offshore subsidiaries.

Similarly, the bearing industry which produces ball-bearings, roller-bearings and anti-friction bearings is an endangered U.S. industry, key to the production of military gear and plays a part in homeland security. They are components necessary to produce electric motors for conveyor belts such as in factories, steel mills, in airports, in mining, and with the equipment used to manufacture automobiles. And bearings are critical to the mechanical components of major weapons systems. Losing bearings manufacturing to foreign shores directly impacts the capabilities of weapons manufacturing should there be a change in the geopolitical landscape and a cut-off from U.S. suppliers, whether through war, terrorism, or Mother Nature.

With the military build-up of China over the past decade by benefit of applying commercial technologies to military weaponry and its having become the largest offshore manufacturing base for U.S. corporations, the U.S. continues a delicate balancing act with a Communist nation as its biggest trade partner. With a U.S. trade deficit with China reaching over $200 billion in 2005, multi-national corporations, once U.S. companies operating in the U.S., are now just based in the U.S.

And with a demand by China for foreign direct investment as their incentive to buy U.S. products, companies like Boeing are acquiescing by not only building major portions of airplanes in China, but also creating Research and Development opportunities for Chinese engineers, in order to show its commitment. Intel and Microsoft have also followed suit with major investment in directly hiring engineers in China.

Endless conflicts of interest abound when it comes to foreign dependence in order for the U.S. to maintain its infrastructure, electrical grid, military weaponry and supplies, air travel and homeland security, to name a few. When smaller U.S. specialty industries vital to the industrial base become extinct on our shores, they now appear huge in a world where alliances are tenuous at best. A global economy at the expense of U.S. sovereignty, security and standard of living is something that the Colonists would not have stood for. They would have found another way. Maybe America still has time to do the same.

[em2vn]

Cranio-rectal inversion on your part. If we can't make it where does it come from, communist china?

[B4Ranch]

We're being told that 20 men took down the Twin Towers and they only held the skills to fly Cessna 182's. Don't look at Buchanan for the cause of our defenseless economic system. He was not the President when it happened, nor was he the one who authorized that all the steel should be shipped to China.

Buchanan never promoted free trade, GATT, NAFTA, CAFTA, L.O.S.T., open borders or loaning the money for rebuilding the UN Headquarters. Keep looking, might I suggest towards Washington.

If you enjoy reading, try the UN Charter and you'll learn that document is about how to cripple a great nation, the United States.

[Light Speed]

In 1971...or the official date some lag time later.
Anyhoo.....President [brood about Jews and rail at New York]...Nixon,

Decoupled the U.S. Dollar from Gold.
Since that time......Your Dollar has been backed....or floated

On Oil.

Whoever wishes to buy world oil.....must buy it at World Stock exchange in U.S. Dollars.

Why did Saddam go bye bye?
He was selling oil and bypassing the U.S. Dollar.
U.S. Dollars where still in play here.
Just not Fronted.....at a Stock exchange with a transaction record.

Anyhoo.....Hookem horns/holdem hands with the miscreant Saudi's is part of the Hedgemony of keeping the U.S. Dollar active and on top.
One liners of...."We need to keep the $/bbl down in order to sustain market momentum"....is B.S. and *Canned for public consumption.
Oh ya.....show a little empathy for the serf on the land type thing.

The Yom Kippur War by the way....was a yard brawl fought by U.S. vs all the malcontents which caught wind of the Future design [U.S.$/WORLD OIL].
Saudi oil embargo was a part tantraum...and part ruse to save their asses as they could show they were bucking the new play of World dominance.
Russia certainly freaked....but then...this had been building for some time.
as Narcotics and crime is principly hinged/locked onto the U.S. Dollar too.
Whose your Daddy!
Russia knows its weapons are marginal and prone to breakdown.
Muslims cannot think like the Jew who plays chess on Spocks 3D board.
Russia knew they would lose.
Saudi's knew Islam would lose too : )

Saudi's went with the U.S. Dollar imperative and were rewarded handsomely.
Citibank.....and much much more.
Other Sunni Kingdoms learned the play and co opted.
But some brooded in the background.....as they did not have oil.
Egypt broods : )

European Business doubled up on 2 cards....played the U.S. Dollar....and tried to form a Boerse [Exchange] of their own....which has not as yet worked in unseating the U.S. Dollar.
Saddam got the chop for his attempt at Boerse.

Iran is next.......and not really because of nukes,
but because of oil.
Iran intends to broker their oil without U.S. Dollar participation at the front.

Say goodbye to Iran : )

China....well,....any Great Mystery why Spock said...."Only Nixon could go to China"

China was introduced to the New World order : ).....and embraced it.
even though they supported communist North Vietnam.
Russia fell on the floor and rolled in their vomit as Reagan rolled the dollar on them like a lawn aerator until they squealed.

So ya....the contradictions abound folks.
Why does the U.S. participate so much with the malcontent Muslims,Chi Coms,Russian crime lords and other despots?
Because of the U.S. Dollar....and its imperative to be put in play in their realms.

A big brew ha ha could be coming if China and Russia decide to create a currency for some pan Asia attempt to circumvent the U.S. Dollar.

That will lead to a war.

For now.....Europe is content to support the U.S. Dollar.
Germany is setting the tone now ...with its voice supporting U.S. Imperative...which includes Geostrategics.
Deutsche Boerse made a play in 2004 to buy the London Stock Exchange.
Deutsche Boerse shareholders put a stop to that.
Today.....Germany has a centrist/right gov which is compliant to U.S. imperatives.
Something did indeed turn over there : )

Shift;

Part of the reason for Mexico getting to run illegals in is tied to the U.S. Dollar and Mexico's wealth families who are still plugged in to Spain....who comply's with U.S. Imperative concerning the Dollar.
Spain may not be sending troops......but they are buying U.S. Dollars.
All that Historic Gold is U.S. Dollars in action.
Mexico stays under U.S. Imperative and is seperated from the malcontents south of them who bristle at the Dollar reality.
Russia and China now tap into that....nuture that....and plan for a future Trade Federation which could unseat the U.S. Imperative.

So then....U.S. Citizens watch as illegals pour in and bring crime.
Just like Israeli's watch Terror kingdom at the door.
The U.S. can't have its way totally.
Thats why Israel is tormented.....its the Muslim pound of flesh for yeilding to the U.S. imperative.
Mexico needs U.S. Dollars...which includes Narcotics broker.
China and India and other outsourcing realms are simply new Fields for the Dollar.
Too bad for the U.S. worker who has his career tossed.
Life Sucks....then you die.
Your Grave is purchased in U.S. Dollars : )

Still....If you live in North America....you enjoy the top 5% of the Earth class ride.
Its left to North Am individual to ponder if the reality listed above is good.
That view is margined from Christian to agnostic.

"In the year 2525.....if the U.S. Dollar...is still alive" [The song ...amended ]

[TopQuark]

More BS nonsense from the Hysteric Economic Isolationist crowd.

BTTT

[TopQuark]

Hey, if we can get wages down to 2 bucks a day, nothing can stop us.

This is even more BS. You repeat that socialist propaganda and idiocy that the American worker must have the same salary to compete.

The American worker is expensive mostly because (i) (s)he demands unreasonable benefits, (ii) lags increasingly behind in education, and (iii) demands through legislature environment protection, over-regulation of markets, etc., which adds to his/her cost.

Now, what were you saying about wages?

[TopQuark]

I do believe that such tools are necessary for the construction and maintenance of ships, aircraft and armored vehicles.

And who told you that we wouldn't produce them in a heartbeat if we indeed fact isolation?

There are three ways to deal with problems: avoid them, prevent them, and solve them when they arise.

We cannot prevent all other countries from taking adversarial actions. What you and other isolationists suggests is to avoid dependence on others. What you forget is the third method: if dependence indeed becomes problematic, we can solve the problem then. And nobody can respond to changes better than Americans.

You have very little faith in our industry. As a result you advocate making goods more expensive than they need to be.

[B4Ranch]

"Iran is next.......and not really because of nukes,
but because of oil.
Iran intends to broker their oil without U.S. Dollar participation at the front."

Let's pray we do .....

"Say goodbye to Iran : )"

[TopQuark]

there are only three ways that wealth is created, manufacturing, agriculture and mining.

That's an XVIII century definition: it addresses creation of only tangible goods such. Information and individual skills are also wealth, and none of them is created by teh above-listed methods.

[mr_hammer]

Foolish thoughts young man, foolish thoughts.

[mr_hammer]

That's a good start!

[conservative physics]

many of the things I am advocating are already in the process of being changed, and when that transformation is complete the manufacturing sector will come roaring back and America will be a strong as ever.

disband the unions - union membership is WAY down and is going to go to near zero in the future as people figure out that voting for a union is the same as voting to be unemployed.

repeal overreaching and burdensome environmental laws - Republicans have been and will continue to reign in out of control environmental laws which stifle business growth, I expect this trend to continue.


scrap mandatory workers compensation requirements - this admittedly may not happen, but it should and at least the issue is bring brought up in states like California, talking about an issue is the first step to doing something about it. Burdening employers with this kind of unfunded mandate is bad for business. Eventually some states will figure this out and act accordingly... once that happens and jobs and businesses start flowing to those states from others... the rest will feel compelled to act in self interest.


eliminate the minimum wage - this will probably never happen unfortunately... the best we can hope for is capping it where it currently is, which will only happens if we continue to elect real conservatives to congress.


reduce corporate taxation - Bush has already done this and hopefully will continue to do so.


and pass tort reform - Bush has already started to address this issue and I hope he will continue to limit the prevalence of frivolous lawsuits which make doing business in America to risky for many.


Union workers pay will be cut by 100% when the businesses they run into the ground close their doors.

[hedgetrimmer]

What you and other isolationists suggests is to avoid dependence on others

Obviously you've never heard of the Declaration of INDPENDENCE.

in·de·pen·dence freedom from control or influence of another or others

[chimera]

What you forget is the third method: if dependence indeed becomes problematic, we can solve the problem then.

There is a danger to this "what me worry" approach. Sweeping it under the rug and hoping that you never have to deal with it or, if you do, you can deal with it "later", overlooks crucial aspects of building and maintaining infrastructure.

First, it takes time. You don't build basic industries and capabilities overnight. What we are selling out today for a quick buck in the international marketplace has taken the sweat and labor of generations to build. Assuming that our future opponents will sit back and allow us time to recover what we sell out today for thirty pieces of silver is taking a big risk, as well as engaging in the mother of all f-ups, assumption.

The second point is that we're not only selling out our existing capabilities, we're selling out the future as well. Because as well as building things, it takes knowledge of how to build those things, and how they work and how they should be maintained and improved over time. I seriously doubt that a nation of lawyers, insurance salesmen, and burger flippers is going to retain the knowledge base of what it takes to build electrical distribution systems, power generation, chemical industries, high-tech metals processing, machine tools, robotics, etc. Know-how is a fleeting thing. It can vanish relatively quickly, in as few as a couple of generations, if a nation is willing to sell it out. You literally end up eating your own seed corn.

Just like with government welfare payments to people, dependency breeds dependency. If we depend on outsiders today for our automobiles, our steel, our clothing, our gyrostabilizers, then it isn't too far a stretch to envision having to import the knowledge and know-how to re-build what we've sold out. Maybe someone will sell it to you, maybe not. But in any case, you're in a less secure position than you were when you could rely on yourself to do those things.

[Alamo-Girl]

Thanks for the ping!

[wildcatf4f3]

They sent all the tooling for making pneunatic equipment to China. There isn't a bridgeport press still in the inventories of US companies stateside. One doesn't start a manufacturing line up from scratch in less that months to years. I am not an isolationist, but I do recognize that our largest corporations have made profitable descisions with no concern for the security of this country. I don't think we are going to have the time or secure space to do as we did during WWII. We will have one years worth of strategic oil reserve to win. Thats all.

[wildcatf4f3]

Are you going to drop the workers rent/mortgage by 50% also. Hard to be a dependable worker when you are living in a shelter with no car or facilities for washing etc...

[A. Pole]

Are you going to drop the workers rent/mortgage by 50% also. Hard to be a dependable worker when you are living in a shelter with no car or facilities for washing etc...

Well, they should emulate undocumented immigrants who share apartments.

[A. Pole]

Know-how is a fleeting thing. It can vanish relatively quickly, in as few as a couple of generations, if a nation is willing to sell it out.

One generation is enough - the symptom is when the employers look for already skilled workers and do not want to create entry level positions or train new workers.

Also, because other countries do not stand in place two decades are sufficient to stay behind for good.

[1rudeboy]

Do you mean that Ronald Reagan was wrong when he forced foreign manufacturers to move production into US?

Forced, huh? So now it's forced? LOL