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Why U.S. Manufacturing Won't Die
WSJ ^ | July 3, 2003 | CLARE ANSBERRY

Posted on 07/03/2003 9:25:05 PM PDT by edsheppa

Edited on 04/22/2004 11:49:19 PM PDT by Jim Robinson. [history]

What role will U.S. manufacturing play in the national and global economies in the coming years? What jobs will be left for American workers?

It's more than an academic question for many company owners. Stan Donnelly, who owns Donnelly Custom Manufacturing Co. in Minnesota, is studying Mandarin in case he has to move his machines to China. Already, he buys molds from China to make his custom-designed plastic parts. To date, Mr. Donnelly has been able to keep production of those parts in the U.S. But as his customers increasingly demand lower prices, he wonders if he will one day need to move production to Asia as well.


(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy
KEYWORDS: economy; manufacturing
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To: maui_hawaii
Are you sure that "China never sees the profits?"

The PRC serves as the "contractor" for all labor in Red China. GE simply writes one check to the PRC, who then is supposed to pay the workers--but nobody knows with certainty exactly who gets paid what.

It's not like ADP does payrolls there.

Further, it's a matter of record that the PRC Gummint bigwigs are taking graft like nuts from developers who purchase/develop the factory sites. (See the American Spectator series of articles on Clinton's buddies from SE Asia...)
81 posted on 07/04/2003 4:55:59 PM PDT by ninenot (Joe McCarthy was RIGHT, but Drank Too Much)
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To: FLAUSA
Actually, being a "conservative" in no way means that I am anti-union. I AM against featherbedding and 'work rules' that deliberately inflate the amount of people necessary to do a given job...

But if you wait about 2-5 years, you will see massive organizing efforts--and they will be successful--in the service sector.

They will be successful because normal people have a good sense of social justice and are not enchanted by watching their neighbors lose their homes, cars, etc., even with 2 adults working.

By the way, it won't change the pay of CEO's and jocks.
82 posted on 07/04/2003 5:00:37 PM PDT by ninenot (Joe McCarthy was RIGHT, but Drank Too Much)
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To: ChadGore
That's a fairly ignorant statement. Are you 21 yet?
83 posted on 07/04/2003 5:01:31 PM PDT by ninenot (Joe McCarthy was RIGHT, but Drank Too Much)
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To: NMC EXP
It is also rather shocking that the Minnesota molder let that mold design get to China. In about 2 years or less, he will find "his" product being sold here for 25 cents on the dollar.

Most American mfgrs who have set up shop in China have discovered that the Chinese are ready, willing, and able to steal their product and fabricate/sell it on their own.
84 posted on 07/04/2003 5:03:51 PM PDT by ninenot (Joe McCarthy was RIGHT, but Drank Too Much)
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To: ninenot
Good point.

I'll bet they made one mold for him and one for themsevles and have already submitted sample parts and a bid to the American's customer.

Regards

J.R.
85 posted on 07/04/2003 5:09:35 PM PDT by NMC EXP (Choose one: [a] party [b] principle.)
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To: ninenot
Of course they turn and make a profit relative to what they are doing. Otherwise they wouldn't do it. SE Asia has done well doing that, and now China is taking it away from them.

The point I was making is that China is doing the back office type of things. They are not out front doing things, which is where the real money is.

The PRC serves as the "contractor" for all labor in Red China. GE simply writes one check to the PRC, who then is supposed to pay the workers--but nobody knows with certainty exactly who gets paid what.

Things aren't nearly as simple as you say. Really it doesn't work like that...with one check being written to some party hack...

86 posted on 07/04/2003 5:29:36 PM PDT by maui_hawaii
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To: ninenot
I will give you this though... there are always exceptions.

The truth of the statement(s) differ widely depending on who we are talking about, and what they are doing.

87 posted on 07/04/2003 5:34:12 PM PDT by maui_hawaii
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To: ninenot
I forgot to mention it earlier, but there is another cost that is totally burdensome - which you allude to - countless reams of government laws and regulations. ABSOLUTELY!

you are right on!

ampu

88 posted on 07/04/2003 10:19:22 PM PDT by aMorePerfectUnion
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To: harpseal
"Not as a first step. I honestly think that we should first and foremost eliminate all the subsidies to overseas investment and to the hiring of guest workers in the USA. IMHO that may well be enough to make teh turn arround."

Interesting. You're against subsidies for international investment but you have no problem with subsidizing "enterprise zones". Isn't this a form of picking winners and losers?

"However, I think tarriffs may prove useful for dealing particularly with those nations that engage in unfair trade practices such as the PRC and India with its capital controls."

Of course tarriffs make sense here.

"If, however the USA is still seeing a net outflow of capital then I would agree that a protective tarriff is needed."

Now why did you interject the preservation of capital into this discussion? The question was the use of tarriffs to preserve jobs.
89 posted on 07/05/2003 5:36:16 AM PDT by DugwayDuke
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To: DugwayDuke
Interesting. You're against subsidies for international investment but you have no problem with subsidizing "enterprise zones". Isn't this a form of picking winners and losers?

An enterprose zone as I defined it would not be a subsidy per se. It would be a place open to any American company employing Americans using American materials to produce products for sale in the USA or abroad. While personally I would prefer that we go to a no income tax economy witth only absolutely necessary regulation, I recognize that it will take time to get there from here.

Now how exactly is that in any way picking winners and losers?

90 posted on 07/05/2003 5:47:24 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: DugwayDuke
Now why did you interject the preservation of capital into this discussion? The question was the use of tarriffs to preserve jobs.

It is through capital investment that jobs are created.

91 posted on 07/05/2003 5:48:19 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: maui_hawaii
OK. My report came from the ex-CEO of a large manufacturing concern, ($400MM) part of Halliburton. He could be wrong.

Please advise your experiences.
92 posted on 07/05/2003 7:28:29 AM PDT by ninenot (Joe McCarthy was RIGHT, but Drank Too Much)
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To: harpseal
"Now how exactly is that in any way picking winners and losers?"

Let's see. You want to give tax breaks and reduced regulation to some companies and not to others. Now, why would you do this for any other reason but to "pick winners and losers"?

Now, why would you restict these benefits to companies that "American company employing Americans using American materials"? What if a company could create more jobs if it used non-American materials?

What if the products produced by these "American companies employing Americans using American materials" are still more expensive? Haven't you used one person's tax dollars to subsidize another person? How is this "fair"?
93 posted on 07/05/2003 9:18:24 AM PDT by DugwayDuke
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To: harpseal
"It is through capital investment that jobs are created."

Capital flows to where it can be most efficiently invested. Do you propose restricting investments to meet your prefered policy goals? How does this differ from forcing investors into certain investments for the "greater good"?
94 posted on 07/05/2003 9:22:23 AM PDT by DugwayDuke
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To: harpseal
Thanks. I know the Nutri Grain analogy was a weak one but it was the only example I could cite at that moment. I have always wondered if we, Americans, were being soaked.

There is much talk about cheap products. Personally, I would rather pay a bit more for some things---if they actually worked and had a longer lifespan. I regularly buy things now and think of them as, pretty much, disposable. Irons, vacuums, blowdryers, phones, etc.

95 posted on 07/05/2003 9:38:28 AM PDT by riri
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To: DugwayDuke
Capital flows to where it can be most efficiently invested. Do you propose restricting investments to meet your prefered policy goals? How does this differ from forcing investors into certain investments for the "greater good"?

One of the biggest factors governing investment of capital is the risk of the ivestment. There is a good reason why investors are not rushing to invest in Zimbabwe or the Congo. Specifically it is the political risk of such investment. What I am proposing is getting the US government out of the political risk insurance business. Further, a protective tarriff provides a greater return on investment. Thereby attracting investment capital but not regulating investment capital.

Other means of attracting investment capital include limited government regulations, lower income tax rates, better taccess to markets etc.

In China for example the "rule of law" is tenuous at best. It tends to be more rule of teh elite and the law is bent to whatever serves their purposes. This should have a very negative impact on teh flow of capital into this economy.

I further note that access to the Chinese market has been an almost holy grail since the days of William McKinley (actually the estimate of lucrative Chinese markets was arround since the days of Thomas Jefferson) yet this has yet to be fully realized. There are very very large number of impovrished in China who will not buy many American manufactured goods with the huge tarriffs the Chinese impose on imports of other than capital goods.

What I propose is letting a free and equitable market decide if necessary. I propose getting the US government out of the subsidy of deveoping economies to the detriment of the US economy. Thus letting a more free market in capital come into being. As to the tarriff structure it like the EPA, OSHA, and the EEOC all have effects on the flow of capital and I am saying that the flow of capital should be used as one of the governments means to determine the harmfulness or benificence of its policies.

96 posted on 07/05/2003 10:27:01 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: DugwayDuke
Let's see. You want to give tax breaks and reduced regulation to some companies and not to others. Now, why would you do this for any other reason but to "pick winners and losers"?

There is no place in this proposal to restrict access to these zones to some companies and not others.

Now, why would you restict these benefits to companies that "American company employing Americans using American materials"? What if a company could create more jobs if it used non-American materials?

The whole purpose is to get the maximum benefit to America as soon as possible I would be more tahn happy to see this implemented accross the whole economy with no such restrictions as it would IMHO have most beneficial effects but demonstration projects are more likely to get through first.

...What if the products produced by these "American companies employing Americans using American materials" are still more expensive? Haven't you used one person's tax dollars to subsidize another person? How is this "fair"?

Since there is no tax subsidy involved merely a tax benefit fiven to anyone who makes the free choice to invest in these zones and follow the initial rules if they can not produce a product economically for a price they can get in the free market I presume they will go out of business. If, however, they are able to compete more effectively then I presume there will be an increased demand to locate in these zones, expand these zones and hopefully expand this economic envirornment throught the nation.

Due to the fact that anyone will be able to locate in these zones there is no subsidy of one to exclude another. In short if I could by my words alone abolish the income tax I would but this is a short term means to that eventual end.

The alternative is some sort of welfare system and transfer payments that will make things far far worse in term of fairness.

97 posted on 07/05/2003 10:40:06 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: riri
Personally, I would rather pay a bit more for some things---if they actually worked and had a longer lifespan. I regularly buy things now and think of them as, pretty much, disposable. Irons, vacuums, blowdryers, phones, etc.

Other than the Zippo lighter finding things that actually work and have a long lifespan is not an easy task. I agree that it is sometimes a better buy to pay a little more for higher quality and maintainability but it does not seem to be supported by the market in many items.

98 posted on 07/05/2003 10:43:42 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: harpseal
It is the mind set. Most Americans would rather buy the $15 and buy a new one every year or two. Which might ok if the $15 iron ever actually worked ok. But some of us would buy the $75.00 iron and be happy doing so if 1. it lasted a while and 2. It actually got hot and worked decently.

As I said I lived in Europe and the midset is very different. They don't even understand why we buy inferior products that barely get the job done.

In Germany,a completely unionized country and labor friendly (to put it mildly), I managed to get an iron that actually got hot ($45USD) a Bosch washer that actually got my clothes clean, front loading ($250) and the most incredible vacuum (Seimens $150 USD) that actually lasted, was metal and could pick up a golf ball from a foot away.

So, if completely unionized to death Germany can bring a German-made product to the table for a reasonable price why can't American corps do the same?

99 posted on 07/05/2003 12:31:02 PM PDT by riri
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To: ninenot
In relation to China I would have been in a position to brief the American bosses on the realties of the work on the ground in China.

I was the assistant to the regional CFO of a company that was actually higher in the Fortune 500 than Halliburton. My responsibility was as an analyst for the PRC.

Of course I did concede that it depends largely on what one is doing in China and who one is dealing with. In some cases the report probably is very right. Its might not always be that way though.

100 posted on 07/05/2003 12:50:06 PM PDT by maui_hawaii
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