Posted on 09/12/2003 7:38:23 PM PDT by Brian S
Fri September 12, 2003 11:14 AM ET By Karen Pierog and Susan Kelly
CHICAGO (Reuters) - The prospect of a jobless economic recovery has governors in the nation's rust belt increasingly worried that the thousands of manufacturing jobs lost during the recession and the tax revenues they generated are not coming back.
"I'm sending up the alarm," said Michigan Gov. Jennifer Granholm in a recent interview. "We are at code red in terms of loss of manufacturing jobs and the shifting of these businesses offshore."
In Michigan, where manufacturing accounts for one out of every five jobs, more than 170,000 factory jobs have been shed over the last two and a half years, according to Granholm.
The state's unemployment rate hit 7.4 percent in July, the highest among Midwest states, as a tight budget has seen income tax revenues slip due to the climb in joblessness.
Nationally, manufacturing job losses totaled 2.7 million over three years, with another 44,000 disappearing in August -- the 37th straight month of declining U.S. factory employment.
At this rate, "in five and a half years we will have zero manufacturing jobs in America," said Richard Dauch, incoming chairman of the National Association of Manufacturers.
Dauch, chief executive of Detroit-based auto parts maker American Axle & Manufacturing Holdings Inc., said companies are saddled with higher costs for health care, labor, energy, regulations, taxes and litigation, while fierce global competition prevents them from raising prices.
"We have such incredibly high fixed costs that need to be absorbed, and we have dynamics that are driving costs much higher, when we don't have pricing power anymore," he said.
U.S. policymakers must address trade barriers that create huge imbalances with our partners and must provide more investment tax credits for research and development. They also must find ways to streamline regulations and stop excessive lawsuits, and emphasize science and technology in our education system, Dauch added.
Granholm, Michigan's freshman Democratic governor, has taken aim at those problems.
She wants to rally other rust belt governors around a plan to help manufacturers stay and expand in their states by pressuring the federal government for regulatory reforms and a more-level playing field for international trade. She particularly pointed to lopsided trade with China, which has benefited from its currency's non-floating relationship with the U.S. dollar.
But David Littman, chief economist at Comerica Bank in Detroit, said political rhetoric will not change the realities of the rust belt and the willingness of businesses to shut down and move to more accommodating locations.
"The incentives aren't here," he said. "Odds are they are elsewhere, where someone wants what we once had."
MANUFACTURING MATTERS
Other states besides Michigan are climbing aboard the "manufacturing matters" bandwagon. Fearing the loss of good-paying manufacturing jobs threatens the long-term economic stability of Minnesota, Gov. Tim Pawlenty this month announced a series of regional round-tables to bolster that sector.
Wisconsin Gov. Jim Doyle, whose state lost 14,400 manufacturing jobs over the last year, has targeted the manufacturing of high-end products using well-paid, highly skilled workers. Milwaukee-based Harley-Davidson Inc. motorcycles is one example.
"We think that's where our future in manufacturing lies," he told Reuters in an interview.
Companies want states to address environmental protection laws and other regulations that raise the cost of doing business, said Gary Corrigan, spokesman for Toledo, Ohio-based auto parts maker Dana Corp., which has closed more than 30 plants in two years.
Cut taxes.
It's too late to throw up a barrage of tarriffs. We undercut ourselves, and now we are paying for it.
I wish I could find some sort of "postive note" in all this, but everyone I know in manufacturing is either worried sick or looking for another line of work...like Wal-Mart greeter or landscape artist, which is about the only jobs left for blue-collar workers. (Well, there's the trades...they seem to be doing OK for the moment...)
But manufacturing isn't the only area that's shrinking irreversibly, same thing is happening on the tech & service sides now that big corporations have found out that India can do tech stuff as well as Americans, if not better, and it costs a whole lot less.
Yeah, this is one awesome recovery we're having....
I know Wille Green on FR, I think of Wille Green as a friend of mine, I am no Willie Green...except in my dreams. :)
You are highly perceptive. Manufacturing is hurting, and the American standard of living will eventually be fatally wounded as a result. The large corporations are part of the problem because they are leading the charge to outsource overseas for cheap labor. I don't know what the answer is but I do know that I cannot continue to pay all kinds of insurance, environmental fees, benefits, etc. and still compete with government subsidized overseas manufacturing. Many of my customers are able to import a fully assembled product from overseas (and not just from Asia -- we're talking the Czech Republic and other parts of Europe) and have it delivered to their loading dock for less than the parts alone cost me. Technology that American companies spent years developing is copied and stolen and nothing done about it.
I heard from a local manufacturer last week that a Harley sub-assembly was outsourced to China without Harley knowing about it. They could not tell the difference on the final product, but Harley kicked up a fuss when they found out because they sell the concept of "American built" as part of their mystique. Most larger corporations would not quibble.
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It's good to see somebody is doing it. This nation is disintegrating and dissolving. There will be no substantial recovery.
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The Bushs are overseeing the destruction of this nation.
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