U.S. Manufacturing Crisis: White House Talks, but Defense Industry Walks (Overseas)

TradeAlert.org ^ | Wednesday, October 08, 2003 | William R. Hawkins

[Willie Green]

For education and discussion only. Not for commercial use.

In response to the growing political agitation over the “jobless recovery” and the loss of manufacturing jobs under the impact of imports and outsourcing, the Bush Administration has launched a media campaign touting the importance of industry to the economy and the nation´s security.  In his Labor Day address, President George W. Bush said,.  “I understand for a full recovery, to make sure people can find work, that manufacturing must do better.  And we've lost thousands of jobs in manufacturing....some of it because production moved overseas.”

In a recent Washington Times column, Commerce Secretary Don Evans wrote, “manufacturing represents the backbone of our economy and the muscle behind our national security.” A fine and true sentiment, but is the administration doing anything more than trying to soothe public opinion? One example, drawn from the very nexus of manufacturing and national security, clearly indicates that the administration is not interested in reversing America´s industrial decline, but furthering it.  The sector involved is none other than the defense industry itself, where much of the Bush Administration is explicitly encouraging the foreign outsourcing of jobs and production capacity.

The 2004 Defense Authorization bill written by the House Armed Services Committee (HASC) under chairman Duncan Hunter (R-CA) mandated that the Pentagon draw up a list of components and technologies that are critical to the production of U.S.  weapons, and that the industrial capacity to produce such items be located within the United States.  

The Senate version of the bill did not include any of Hunter´s language.  Indeed, it expanded the waiver authority in current “buy America” provisions to allow the easier outsourcing of defense work overseas at the request of Defense Secretary Donald Rumsfeld.  The issue has been stalled in the House-Senate conference.  

Large defense prime contractors such as Boeing, Lockheed Martin and Raytheon—who assemble parts and components produced by smaller firms, oppose the HASC legislation and have been lobbying the White House hard to block it.  These giant defense corporations are succumbing to the same temptations that led firms in the commercial sector to become dependent on fragile “global supply chains” for their operations while sending millions of jobs to foreign lands.

To break the impasse, Rep. Hunter and Deputy Defense Secretary Paul Wolfowitz negotiated a compromise.  According to published reports, Hunter's concessions included dropping the 65 percent U.S.-made content requirement, keeping it at the current 50 percent level [alarmingly, the defense primes claim they cannot build more than half of major weapons systems here anymore].  Hunter also agreed to accept a less rigorous standard for the foreign sourcing of military items, and to drop the requirement that military production be done with U.S.  made machine tools.  He held to the position, however, that the most essential pieces of weapons systems be built in America.  It seemed like a workable solution, hammered out by two men who have made national security issues their lives´ work.

Unfortunately, other senior administration officials, who deal with trade and economic theory, such as the U.S. Trade Representative and the Council of Economic Advisors, are trying to block the compromise.  They oppose any limit on the right of corporations to outsource jobs or move production overseas.  Their “free trade” ideology raises real questions as to whether either trade negotiations or economic calculations in the Bush Administration are really predicated on a desire to gain advantages for the United States, or whether they are simply guided by academic sophistry.

The basic problem with this kind of interagency approach is that the defense industry is not like the commercial sector.  National security cannot be risked by letting such a vital industry be hollowed out the same way so many commercial sectors have been.  It is the government´s duty to set the parameters within which the defense industry will operate.  The defense industry exists only to fulfill public policy: to secure the preeminent position of the United States in world affairs and to secure the homeland, including everything needed to keep Americans safe and prosperous.  Defense managers used to take pride in their contributions to America´s strength.  It is tragic to see a new, more venal corporate culture tarnish this patriotic image.

Advocates of military outsourcing claim they need access to alleged superior European technology and to integrate their commercial and defense operations.  Yet, since the 1991 Gulf War, a wide gap in capabilities has opened between the United States and everyone else.  American forces continue to improve their weapons and doctrines while Europe invests little in new military technology as their defense budgets fall.  Indeed, the European defense industry is in deep trouble and is looking for the American taxpayer for a bail out.  The record of joint European defense projects is often one of delay and disappointment, making for unreliable partnerships.  

And American corporations are not just looking to Europe for integration, but to Asia – and particularly to China, which raises a host of security concerns.  Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

By letting private business desires override considerations of national security and economic revival, the Bush Administration is revealing why it cannot be trusted to back its high-sounding rhetoric about manufacturing and job growth with effective action.  As long as the corporate managers who want to send jobs overseas and buy foreign-made goods have influence in the White House, policy will continue to be made in their special interest, while the needs of domestic American enterprises and their workers will be dismissed.  

William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

[Willie Green]

U.S. Officials Misread Economic Warfare
The Administration's Manufacturing Plan Looks Bogus

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[EagleMamaMT]

Read later.

[oceanview]

good article.

what Bush should learn from the California recall election: an electorate angry about the economy and jobs can hurt you real bad.

[RiflemanSharpe]

what Bush should learn from the California recall election: an electorate angry about the economy and jobs can hurt you real bad.

No lie there, it is getting so that the only idealogy that a large number of people care about is will they be able to keep their jobs.

[RiflemanSharpe]

PING

[Elliott Jackalope]

Jobs = income. Income = food, shelter, medical care, clothing etc. It is rather hard to care about other issues if you don't have income.

[Voltage]

It's good to see that economics works. The government passes laws to discourage business by taxing and regulating them excessively. Business responds by failing or leaving.

I enjoy seeing cause and effect are working. Reality bites!

[RiflemanSharpe]

Last night I was in class, I am taking college classes two nights a week working on my second degree. I got there early and struck up a conversation with three people in class. All three had been touch by lay offs this month, a spouse laid off, watch coworkers laid off Monday, or their company had anounceed lay offs to occure Oct. 15th. The powers that be need to start paying attention to this. The election is coming up.

[harpseal]

Ping on or off let me know.

[LibertyAndJusticeForAll]

(ping!)

“[alarmingly, the defense primes claim they cannot build more than half of major weapons systems here anymore]
…
And American corporations are not just looking to Europe for integration, but to Asia – and particularly to China, which raises a host of security concerns. Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

By letting private business desires override considerations of national security and economic revival, the Bush Administration is revealing why it cannot be trusted to back its high-sounding rhetoric about manufacturing and job growth with effective action. As long as the corporate managers who want to send jobs overseas and buy foreign-made goods have influence in the White House, policy will continue to be made in their special interest, while the needs of domestic American enterprises and their workers will be dismissed.”

William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

[meadsjn]

For want of a nail, the shoe was lost,
For want of the shoe, the horse was lost,
For want of the horse, the rider was lost,
For want of the rider, the battle was lost,
For want of the battle, the kingdom was lost,
And all for the want of a horseshoe nail!

[Boxsford]

My husband was downsized out of his job and we had no income for 14 months. I'm not about to blame Bush at the ballot as Willie Green would like us to. Bush inherited this problem.

[harpseal]

Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

Perhaps the GE executives who negotiated this should be tried for treason and executed to give a lesson to others.

[RiflemanSharpe]

My husband was downsized out of his job and we had no income for 14 months. I'm not about to blame Bush at the ballot as Willie Green would like us to. Bush inherited this problem.

The fact that he did not cause the problem is true. But I do think that he could do more to solve it. And the point I am making is that there are a lot of scared hurting people out there. And these people vote.

[RiflemanSharpe]

What Bush could do is, targeted tax cuts for businesses that start jobs in the US, reduce regulation and useless paper work that strangles new business, and demand that if you want to have free access to US markets the US has free access to yours.

[hedgetrimmer]

Unfortunately, other senior administration officials, who deal with trade and economic theory, such as the U.S. Trade Representative and the Council of Economic Advisors, are trying to block the compromise.

Lets analyse this a bit. The article cites two groups that oppose the logical and pro-American ideal of a prosperous manufacturing base to keep America strong:

1. the Trade representative. The person who is not elected to office and therefore does not directly represent the American people and who is a member of a global socialist body(the WTO). Is it credible that he should oppose a buy American policy.

2. The Council of Economic Advisors. Lets see, isn't it the Soviet Union that ran government by councils? Yes I think that's what the word soviet means, it means council. Do you know who is on the Council of Economic Advisors? Do you have a say in their policies? Can you "unelect" them if their actions are anti-American or unConstitutional? Should they have more weight that the citizens in this issue, since it is a matter of national sovereignty and security?

They oppose any limit on the right of corporations to outsource jobs or move production overseas.

They give the corporations rights that have more weight that the rights of citizens. Citizens through their government charter corporations. Corporations under the protection of the US military and various trade agreements and assurances given to them by our government should be able to harm the American economy and still lay claims to that charter and those protections? Doesn't seem fair, does it.

Their “free trade” ideology raises real questions as to whether either trade negotiations or economic calculations in the Bush Administration are really predicated on a desire to gain advantages for the United States, or whether they are simply guided by academic sophistry.

[alrea]

Oct. 8, 2003--Ceradyne, Inc. (Nasdaq:CRDN - News) has acquired a 115,000 square-foot manufacturing plant on six acres in Leestown Industrial Park in Lexington, Kentucky, to expand production capacity.
The Company intends to equip the new $2.4 million facility with state-of-the-art ceramic processing equipment for the production of its proprietary advanced technical ceramic sintered reaction bonded silicon nitride (SRBSN), which is used to produce cam followers for certain Class 8 large diesel truck engines, other engine parts, and industrial applications.

The Company also said it may use this facility to expand its hot pressing capacity to meet anticipated additional military requirements for its lightweight ceramic armor product line.

Ceradyne Chief Executive Officer Joel Moskowitz stated, "We plan to maintain our large manufacturing base in California, but as we grow, we intend to expand in those geographical areas that offer us, and thus our customers, the most cost-effective, technology-enhanced environment. The state of Kentucky, Fayette County, and the City of Lexington all provided significant assistance to Ceradyne.

"The single most important consideration in our decision to expand operations in Kentucky was the cost of electricity, which will be reduced by approximately 65% compared to the rates we pay in California," Moskowitz added.

[LibertyAndJusticeForAll]

If Clinton was allowing this, that's just what all Republicans would be calling him a traitor.
I remember when trade first began to open to Red China and someone who worked for General Electic said (with eyes glowing), "Imagine, one light bulb for every single person in China, that's a billion dollars".

[oceanview]

Bush is not to blame regarding the cause, but he is in the drivers seat regarding the fixes.