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Buying American Spanning Multiple Industries – Homebuilders Getting in On The Act

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MELISSA KANDEL
For Gerald Rowlett, inspiration came from an email – specifically, an email detailing Montana-based builder Anders Lewendal’s project, “The All-American Home,” a house constructed entirely from materials and products made in the U.S.
“I though, oh my goodness, why aren’t we doing this too?” says Rowlett, owner of Westlake Development Group in Happy Valley, Ore. “I contacted my clients asking if they would be interested and they all came back to me and said, ‘This is the right thing to do.’”

But buying American isn’t just about the materials that go into your home. “If you build a house, you create two permanent jobs,” explains Anders Lewendal, owner of Anders Lewendal Construction in Bozeman, Mont. The economist-turned-builder challenges contractors to reallocate 5 percent of their spending to American-made merchandise. With figures corroborated by the Boston Consulting Group, Anders calculated that even this 5 percent modification would add 220,000 construction jobs and send $14 billion into the U.S. economy.

“Buying local has been around for generations,” Lewendal notes. “I’m just quantifying this idea and its economic meaning.”

Following Lewendal’s lead, Rowlett successfully built the first all-American-made home on the West Coast. He has since become an influential player in the “Buy American” initiative, a national effort by homebuilders to change the mindset of their industry as well as customers constructing new homes.

Jake Lewendal, Anders’ son who assisted on the original project, the shift to American-made is also about compassion. “From a buyer’s standpoint, it really does pull on your heartstrings,” he says. “When we first started looking at the working conditions for laborers in developing countries, it was basically all horror stories.”

In fact, Lewendal maintains that the cost saved when purchasing cheaper foreign-made products is often value lost in the end.

“If it’s made in America, it’s usually higher quality because of our regulations, our standards and our laborers, who have better working conditions and are more efficient because of the technology we have here,” he says.

There’s another advantage for energy-conscious homebuyers. “You’re creating a house with the lowest possible carbon footprint,” Rowlett says. “I mapped it out, and it took 274,000 travel miles to build a 97-percent American-made home. If I had gone to my nearest port outside of the country – in China – and took those same trips, it was 1.2 million travel miles.”

Further, Rowlett and the Lewendals confirm that even their 100-percent American-made homes cost only 2 or 3 percent more than normal construction fees. Rowlett asserts that builders can go as high as 97 percent American-made without incurring any additional cost.

So if it’s that simple – and equally priced – then why don’t more U.S. homebuyers embrace the idea?

“There’s an educational part to it,” says Garrison Hullinger of Garrison Hullinger Interior Design. Some of his clients worry that the design will suffer, or that the final product will not look the way they want – Hullinger has to assure them that’s not the case.

If you’re a homeowner looking to purchase American products for remodeling, Hullinger suggests skipping the large depot stores in favor of small businesses, which are more likely to carry the American-made products you seek.

In the end, buying American has ripple effects felt nationwide. “If we’re continuing to source for American materials, those people in the manufacturing plants will not have jobs,” Hullinger explains.

Jake Lewendal agrees. “That’s what the American initiative is really all about,” he says. “We’re creating jobs here in America and helping our neighbors.”

This Chart Will Change How You Think About Manufacturing

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Dylan Matthews 
This chart, contained within slides of a presentation by Robert Z. Lawrence and Lawrence Edwards promoting their new book “Rising Tide: Is Growth in Emerging Economies Good for the United States?,” is quite something.
What this shows is that the decline in manufacturing as a share of overall employment has been ongoing since the 1960s and 1970s, and has not really picked up pace in recent decades.

Consider what this means. If someone had cornered you in 1980 and asked you to predict what the level manufacturing employment would be at in 2009, and you did a straightforward linear projection of the previous two decades, you would have gotten it almost exactly right. You wouldn’t have known about the fall of the Soviet Union or the rise of China or the scale of advances in international communication or automation, but you still would have gotten it almost exactly right.

Their book goes on to show that similar declines have happened, at roughly the same pace, all around the world.
“These data suggest a cause that is common, pervasive and not closely related to the size of the trade balance,” the authors conclude.

Rather, the change is due to rapid productivity growth. That is, automation is reducing the amount of labor required to produce a given amount of goods. That means that prices fall. If people respond those price changes by buying more and more of the underlying good, then sales will increase and employment may not fall. But that’s not happened. Instead, people are saving money on manufactured goods and buying more services, instead. That’s led to the decline in manufacturing jobs.

Haitian Sweatshops: Made in the U.S.A.

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Haiti’s northern neighbors have a strong hand in its labor policies. Here, Haiti Prime Minister Jean-Max Bellerive, Canada Foreign Affairs Minister Lawrence Cannon and Secretary of State Hillary Clinton speak at a press conference of the Haiti Ministerial Preparatory Conference in Montreal, January 25, 2010 – (US Mission Canada / Flickr / Creative Commons).

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When the shift changes in the late afternoon, thousands of Haitians stream out from under an arched entrance labeled “Parc Industriel Metropolitain” toward the traffic-choked streets of Port-au-Prince. Among them is David, a thin 32-year-old man in a short-sleeve dress shirt and slacks, who works at one of the many garment assembly factories here, sewing pants for export to the United States. Through a Creole interpreter, David says the way he and his co-workers are treated is pa bon—not right. 
Yet a lot of high-powered people with a stake in Haitian affairs think jobs like David’s represent the answer to Haiti’s problems. The U.S. State Department, the Inter-American Development Bank and the government of Haitian President Michel Martelly recently pulled together more than $300 million in post-earthquake subsidies to create another industrial park just like this one but in northeast Haiti, with Korean textile manufacturer Sae-A as its anchor tenant. Then-Secretary of State Hillary Clinton and former President Bill Clinton both spoke at the park’s opening ceremony, hailing it as the centerpiece of U.S. efforts to help Haiti recover from the devastating 2010 quake. Secretary Clinton echoed President Martelly’s mantra that Haiti “is open for business.”

As the Haitian plant of Sae-A began filling its first order–76,000 T-shirts for Walmart—the politicians smiled in satisfaction. More than a thousand Haitians had been put to work—a significant step for a nation where 80 percent of the ten million citizens lack jobs in the formal sector.  

At least that was the theory behind the enormous amount of effort and money invested in bringing these jobs to Haiti. In 2008, the U.S. Congress passed the Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II), providing customs exemptions that strongly incentivize corporations to import goods to the US. assembled by the Haitian textile and garment industry. This policy received a prominent imprimatur in 2009, when Paul Collier, an Oxford professor of economics and former director of the World Bank’s Development Research Group, prepared a report on Haiti at the request of UN Secretary-General Ban Ki-moon. The key to Haiti’s economic recovery, Collier concluded, is the Haitian garment industry and its potential to create hundreds of thousands of Haitian jobs.

Collier expressed no concerns over the likelihood that those jobs would pay sub-poverty salaries. In fact, Collier and others see the key to Haiti’s future in the large supply of desperate Haitians willing to work for rock-bottom wages. “Due to its poverty and relatively unregulated labour market, Haiti has labour costs that are fully competitive with China, which is the global benchmark,” he wrote in the report.

The U.S. has worked hard to keep them that way. Diplomatic cables obtained by Wikileaks show that the U.S. State Department assisted contractors for Fruit of the Loom, Hanes, and Levi’s in a successful campaign to block a planned minimum wage increase unanimously approved by the Haitian Parliament in 2009. That increase, driven by a series of worker strikes and demonstrations, would have compelled the contractors to pay 62 cents per hour (about $5 per day) to Haitians sewing clothing for sale overseas. But Haitian government leaders caved in to U.S. pressure and dropped the textile industry minimum wage to about $3/day. The U.S. then provided more assistance to Haitian garment companies through duty exemptions in the Haiti Economic Lift Program (HELP) Act in 2010. Though this legislative largest cut overhead for the companies, Haitian workers are still the lowest paid in the hemisphere.

David explains what that pay scale means in real terms. Gesturing in the direction of the workers leaving the industrial park, he says that most of them earn about 200 Haitian gourdes per day. The typical exchange rate is 40 Haitian gourdes for one U.S. dollar, so their salary equals about $5 each day. By the time they pay for transportation to work and a simple meal of plain spaghetti and juice during the workday, they head home with only 40 gourdes, about one U.S. dollar. And they have not yet paid for dinner or housing. Yet unemployment is so pervasive here that the companies count on a reliable supply of Haitians willing to do the work at these sub-poverty wages—just as Paul Collier predicted.

David’s cost of living analysis was backed up by other Haitians I talked with. In 2011, the AFL-CIO-supported Solidarity Center conducted a study estimating the living wage for apparel workers in Port-au-Prince. Factoring in the costs of necessities like food, housing, cooking fuel and child care, the Solidarity Center estimated a living wage for an adult with two dependents to be 1,152 gourdes (about $29) per day.

The current wave of global support for garment-export-based economic development in Haiti has a precedent, as does the resulting struggle by Haitian workers to make ends meet. Under the dictatorship of Jean-Claude Duvalier in the ’70s, the U.S. Agency for International Development launched a campaign to transform Haiti into the “Taiwan of the Caribbean,” i.e. the supplier of the cheapest export-assembly labor in the Western Hemisphere.

Wages were held down by enormous unemployment and by little prospect of worker activism under a repressive regime. Duvalier, politically and financially indebted to the U.S. and the International Monetary Fund, agreed to a neoliberal economic regimen that eliminated nearly every obstacle to free trade. By 1984, Haiti had become the 9th-largest supplier of goods to the U.S., mostly assembled products such as baseballs, clothing and toys.

The assembly companies and their U.S. consumers benefited from the arrangement. But a host country does not get much value from an industry where raw materials are imported in and the assembled products are shipped out. The coveted “multiplier effect,” produced when goods are produced and purchased locally, is absent from this export-only model. Combined with sub-poverty wages that provided little purchasing power to workers, the result was that all of the bustling export-assembly activity did not move the economic needle for the Haitian people.

Haiti certainly needs economic developm
ent, b
ut there are other models to pursue, including agricultural practices the Haitian people successfully followed for generations. Separate from the often-dysfunctional government, rural Haitians adhered to the lakou system of property management that divided former plantations into small plots and yielded crops that supported the extended families living there. Haiti met its own food needs and exported to other countries.

But heavy-handed U.S. policies destroyed that legacy. Beginning in the 1970s and 1980s, the IMF, with the U.S. as its largest shareholder and dominant voice, forced Haiti to dramatically reduce tariffs on imported staples. The Haitian tariff on rice, for example, was dropped from 50 percent to the current rate of 3 percent, compared to a regional average of 20 percent. Haitian farmers can no longer compete with food imports from the U.S. and other countries, where crops are highly subsidized by their governments. As a result, hundreds of thousands of Haitians have migrated from the countryside to Port-au-Prince, where they compete to provide cheap labor for garment-assembly companies under harsh conditions.

David says his workplace, at a company called Interamerican Woven, is brutally hot—a literal sweatshop—with little ventilation and limited potable water. An October 2012 report, produced by the International Labor Organization as part of the Hope II legislation, confirms that the company and several others failed to meet baseline requirements for workplace conditions, such as high temperatures and clean drinking water. The report includes similar findings for several other garment assembly companies.

Jackson works for one of those companies, Global Manufacturers and Contractors, assembling T-shirts with tags like Hanes and Champion. Jackson and his wife have two young children. To make ends meet, both parents work six days per week in garment factories. Jackson’s wife skips church on Sunday to report to an additional part-time job. Yet they still must borrow from family and friends to pay the rent and keep food on the table.

Like David, Jackson is an active member of a syndicat of workers advocating for better wages and conditions. Company management pushes against the union, they say, harassing its members whenever possible. Recent investigations by the International Labor Organization and Haiti Grassroots Watch confirmed widespread union-busting in the Haitian apparel industry. “The people fired for being part of the union make a list this long, “ Jackson says, holding his hands two feet apart. “They find a different reason to let them go, but they are tagged because they are part of the syndicat.”

The companies could easily pay their employees better, Jackson says. His position is backed up by economic analysis by the World Bank’s International Finance Corporation, which reviewed the competitiveness of the Haitian garment assembly industry in 2011. The report concluded that preferential market access to the U.S. provided by HOPE II and HELP, along with comparatively low sea freight costs, provide a distinct market advantage to these companies. “The argument that factories in Haiti can’t raise wages is bogus, as they have some of the most competitive costs in the world already,” says Jake Johnston, a researcher on Haiti issues for the Center on Economic and Policy Research.

The T-shirts Jackson makes for GMC are shipped to Etazini—the U.S.—so I ask him if he has any message for Americans. He thinks for a moment, then replies in Creole. “Wi. I appeal to their conscience and hope they ask questions about what they are buying. We make T-shirts for cents, they buy them for dollars,” he says. “That is the reason we come together to support each other; to fight for fairness.” 

Name of workers in this piece have been changed to protect them from retaliation.

SOURCE:  In These Times

The New Global Demand for Made in USA

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Francisco J. Sanchez
There’s no doubt about it: Doing business in America is changing. And businesses with even the most loyal customers are finding that their customers are changing, too. In an increasingly global marketplace, business owners across the United States are realizing that their next major customer may no longer come from across town, but beyond our borders.
While news of American exports may not capture the headlines as government shutdowns and political impasses do, the proof is in the thousands of regional businesses that are witnessing its value firsthand.

Not only did U.S. exports outpace the growth of imports in 2012 for the first time since 2007, exports have helped support creation of more than 6 million private sector jobs during the past 35 months. So how does this relate to the business climate here in Salt Lake City? Simple: Our nation’s success with exports has in part been driven by business owners in the Beehive State.

Take, for example, Albion Minerals of Clearfield. One year ago, the company participated in a trade mission to Vietnam that was organized by a collaboration of public and private sector groups, including the state government, the U.S. Commercial Service of Utah, and our strategic partner Zions Bank. The company has since opened a distribution center in Vietnam in a $100,000 deal and expects to see profits grow.

As we mark the third anniversary of the National Export Initiative, a program launched by President Obama to expand exports and support an increase of 2 million jobs here at home,­ we do have something to celebrate. U.S. exports grew by almost $100 billion from 2011 to 2012, reaching a record $2.2 trillion. And exports supported 1.3 million more jobs between 2009 and 2012,­ more than 60 percent toward our goal.

We’re also seeing progress as we mark the first anniversary this month of the United States-Korea Trade Agreement, which opened market access for U.S. businesses to a rapidly growing Asian economy.

In the president’s recent State of the Union speech, he announced his intent to launch talks with the European Union to forge a transatlantic trade and investment partnership, an agreement that can impact almost half of the world¹s economic activity. (The U.S. and the E.U. represent the largest economic relationship in the world. Our joint gross domestic product accounts for 45 percent of global GDP and includes more than 800 million consumers.)

A comprehensive trade agreement with our transatlantic partners,­ along with those with whom we are negotiating in the Asia-Pacific region and an international services trade agreement will be good for American businesses and workers. Communities around Clearfield and across the country can trust that smart, responsible, job-focused trade agreements support good-paying jobs for workers here in Utah. I look forward to working with my colleagues throughout the Obama administration to continue to pursue trade policies that help American companies compete.

SOURCE:  Salt Lake Tribune

Francisco J. Sánchez is the under secretary of commerce for international trade. He leads the International Trade Administration, a federal agency with that promotes U.S. businesses and global competitiveness.

How 108 Year Old J.W. Hulme Is Reinvesting In America’s Manufacturing Roots

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Like so many small business owners, 2008 was the hardest year of Jen Guarino’s life. After moving to Minnesota from San Francisco and orchestrating the miraculous turnaround of a 100-year-old legacy handbag brand, the  51-year-old CEO of J.W. Hulme found herself in a near-empty factory and in debt up to her eyeballs.
“Some people would tell you we were weeks away from the bank taking our keys, others would tell you it was days,” she told me on a recent visit to FORBES, recalling the months after banks pulled the line of credit, leaving the company in tatters.  “We were dying on the vine. I took out another mortgage on my house, I maxed out all my credit cards. I had to let go all but four employees and production came to a standstill. I was literally answering phones and mopping floors.”

Times were tough for Guarino and Hulme, a company that in five years she’d  grown from losses on revenues of $450,000 to a profitable $1.4 million. And while she couldn’t have imagined during those dark days that a Wall Street Journal write up of her flailing company would have been the beacon that attracted the investor who saved J.W. Hulme, she absolutely wouldn’t have dreamt of the challenge that she faces today.

The company, it should be known, is doing incredibly well these days—luxury luggage and handbags are sold through catalogues, showrooms and high-end retailers like Barneys to the tune of $5 million projected revenues this year. What’s the problem then? Despite the success and ever-growing clamor for her company’s products, Guarino is plagued by an aging workforce and serious dearth of trained artisans and sewers to replace them. She’s got a great product that’s selling like hot-cakes, but when it comes to finding employees to manufacture it in her St. Paul factory, she’s coming up short.

The manufacturing floor of J.W. Hulme, where artisans manufacture more than 250 leather and canvas products from small leather goods to luxury luggage, has been dominated by baby boomers and their parents for the past decade. “We have a good chunk of sewers that are 55 plus,” she says. “But what seems to have happened is that a whole generation has been skipped in the workforce. When manufacturing started going to China, America stopped investing in training in trades, and we’re seeing the repercussions of that in U.S. factories who are trying to stay alive.”

When she looked to her right and her left at chamber of commerce and trade organization meetings in the upper Midwest, Guarino quickly found that she wasn’t alone. The complaint in the Minnesota manufacturing community—once a hotbed of outerwear and shoe manufacturing — was unanimous: not only were business owners unable to find enough skilled workers to meet demand, they were missing out on contracts because of it. “We’re turning down work,” they told her.  “We get called all the time to bring production back to the states and we can’t take it.”

Their workforces were simply maxed out. “None of it was about money or equipment,” Guarino says. In every conversation, the pain point was about finding skilled labor.

But rather than resign themselves to defeat, Guarino, an executive with a fine-art background who has come to consider herself a “guardian of trade” and a band of 20 local business owners in the cut-and-sew industry, have banded together to form The Maker’s Coalition. Guarino describes it as a hands-on movement to revitalize the industrial sewing heritage of the Midwest, but stresses that it’s a model that could easily be brought to other nascent manufacturing hubs around the country. “We’re working together to find, train and employ a workforce for today,” she says, “And for future generations.”

Guarino, the former brand manager for The Sak, moved to Minnesota in 2000 for love and had long dreamt of building her own company from the ground up. “That [relationship]ended, but I stayed,” she says, and she was working as a consultant in St. Paul when her future business partner, Bidwell, came to her with a unique opportunity. “He handed me this one inch by one inch classified he’d found in the paper that read ‘Bag company approaching 100 years old needs capital partner.’” A bag company? In St. Paul? Guarino says she felt her future become clear.

The pricetag for the struggling J.W. Hulme? A reported $600,000 for the company that was losing $150,000 a year on about $450,000 in revenue, mostly manufacturing private label goods for big-shot hunting and fishing brands. The company’s biggest contract—producing canvas luggage and hunting gear for Orvis, which Guarino says accounted for something like 80% of revenues—had just been lost to China. J.W. Hulme needed a new strategy—and fast.

Guarino set the company on an upstream path with just two years to go before Hulme’s 100th anniversary. She was impressed, more than anything else, by the skill-level of the artisans and sewers in the factory, and decided to cut private label manufacturing from the company’s books. “Rather than continuing to compete with Orvis, we started working with leathers, picking better materials, we expanded and upgraded in every way possible.” By 2006 the company had turned a profit on revenues of $1.4 million—up 89% in the three years under Guarino’s leadership.
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Guarino’s efforts brought the average age of artisans down–and revenues up.

 
The triumphant high was, of course, followed by those darkest of days, but Guarino likes to think of the recession years—and the months that followed the company’s 2009 hail mary pass from private equity firm Olympus Partners– as a lesson in the importance of her number one priority: her human capital. “I cried on the day when I had to let them all go,” she says, “And I cried on the day when we managed to hire all but two of them back.”

Getting those employees back on the floor in the fall of 2009 after Olympus revived J.W. Hulme with a $550,000 investment (Guarino and Bidwell retain a 35% stake) was of the utmost importance. Olympus expected a profitable Holiday season, and were particularly optimistic about the company’s positioning as a home-grown brand. “I’m always interested in companies that actually make things in the U.S,” said Olympus CEO Dean Vanech at the time. “And the Americana theme is really strong right now in retail, so I think this is a good time for Hulme.”

But the increased focus on made in America goods was more than just a retail trend—and Guarino credits the movement across industries with the energy and excitement behind her initiative to retrain Americans in traditional craftsmanship. Along with the Maker’s Coalition (and with funding from The United Way) she has led the charge in cre
ating cur
riculum at local community colleges that she believes will be the answer to her own business needs as well as the industry’s. “And that’s not even going into how many kids are graduating from college with no job prospects and mountains of debts,” she says as an aside. The low-cost 22-week program established in St. Paul costs students just $3,800. The first class will graduate this May.

“Look, what this is really about is being able to say yes when someone calls us wanting to bring their manufacturing business back to the U.S.,” Guarino says. “I’m not a purist. I’m not saying that everything in our homes should be made in the U.S.A and I’m not saying we could produce every shirt in WalMart. I know we can’t! But if we can train workers well enough to be able to bring even 10% of the manufacturing industry back to the country, the economic impact would be undeniable.”

SOURCE:  Forbes

Consumers May Be Fooled By Deceptive Labels

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Consumer Reports
When was the last time you bought something and it wasn’t what you thought it was going to be?
Judging from all the complaints Consumer Reports receives, it probably wasn’t that long ago.

Subway has long promoted its footlong sandwiches. So when customers caught the company serving shorter sandwiches, they took their complaints to Facebook, garnering media attention.

The Colbert Report’s Stephen Colbert was among those who spoke out.

“We have been five-dollar footwronged!” Colbert had said at the time.

Subway has since issued the following statement:

“We have redoubled our efforts to ensure consistency and correct length in every sandwich we serve.”

Consumer Reports found other products that disappointed customers, too.

The Allergy Luxe Premium Bed Bug Mattress Protector boasts that it provides “luxurious fabric protection against bed bugs, dust mites & allergens.”

Consumer Reports learned this was not the case.

“If you turn the package over and read the fine print at the bottom, it says ‘the manufacturer makes no claim that this product will prevent or inhibit human exposure to insects, allergens, mold or other microbial matter,'” said Tod Marks, Consumer Reports.

The packaging for the Cuddly Sherpa Throw shows cute lambs. But upon closer examination, the label says it is made from “100% polyester.”

Looking for products that are made in America can be confusing as well.

“Just because you see a symbol like an American flag doesn’t mean it was American-made at all,” said Marks. The American Glove Company says “We Glove The USA.” But the label says otherwise; it’s made in Vietnam.

One would assume the dish towels made by American Mills were also manufactured in the U.S. They’re actually made in China.

Unfortunately, confusing words and images aren’t necessarily forbidden by the Federal Trade Commission, which is responsible for monitoring deceptive product claims.

“What would a reasonable consumer think, they ask. And even there it’s not clear cut,” said Marks.

Reading labels closely is a good habit to get into. Consumer Reports says if you believe you’ve been mislead about a product, complain to the manufacturer directly. You can also file a complaint with the Federal Trade Commission at www.consumer.ftc.gov.
SOURCE:  ABC News

Morning News Beat Walmart Watch

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• Business Insider reports that Citi analyst Deborah Weinswig is saying that Walmart management seems to be focused on its Made in the USA initiative, and that this effort could lead to improved profitability.

An excerpt: “While global sourcing remains a significant source of EDLC opportunity, we believe that the $50B commitment to increase domestic sourcing over the next decade should benefit topline and profitability at WMT U.S.

“Domestic sourcing will help the company avoid wage inflation overseas and shipping costs, while increasing flexibility through shorter lead times and generating positive reputational buzz. WMT U.S. kicked off the initiative this week with Georgia state sourced towels, priced at $8.97 for bath size. They are offered in 600 stores and will be in an additional 600 stores by Sept., supported by local marketing.”

KC’s View: I do have a bit of a dog in this hunt, since one of MNB’s longtime sponsors offers certification of Made in the USA products. But I was a big proponent of such programs long before this company began sponsoring MNB, so I don’t feel like I have any apologies to make.

I think you are going to see a lot more of these programs, because Made in the USA increasingly will be seen as an advantage for marketers. You have to do it right, you have to be credible, and you can’t take shortcuts. But it makes a lot of sense … and I don’t think it is hard to imagine Amazon having a Made in the USA section, for example … which may be enough for Walmart to do it.

So, it is good to see Walmart executives taking this seriously.  Just as Kevin says – “You have to do it RIGHT, you have to do it CREDIBLE and you can’t take shortcuts..”  But, we want to know, would you feel better about your Made in USA purchases at Walmart or Amazon or any other major retailer if they were- Made in USA Certified?  

U.S. Sen. Tom Harkin Stumps for Bill Requiring National Manufacturing Strategy

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George C. Ford
Following a tour of a Cedar Rapids manufacturer on Friday, U.S. Sen. Tom Harkin, D-IA, unveiled a bill that would require the president to establish a national manufacturing strategy every two years and submit it to Congress.
Harkin, in comments at American Profol, 4333 C St. SW, said his Rebuild American Manufacturing Act is aimed at spurring job growth, making American manufacturing more competitive and rebuilding the nation’s manufacturing sector.

“In the 1970s, when I was just a young congressman, almost 20 million Americans were employed directly in manufacturing and represented over 20 percent of our non-farm work force in America,” Harkin said. “Today, that number has fallen to about 12 million and only 9 percent of all non-farm workers in America.

“You might say ‘as manufacturing goes, so goes the economy.’ As manufacturing employment has fallen, we’ve seen wages stagnate, our trade deficit increase, unionization rates plummet and less domestic innovation.”

Harkin said that trend also has played out in Iowa with the loss of almost 50,000 manufacturing jobs between 2000 and 2010.

“Many have pointed to factors like technology change and globalization as causes for these trends, but keep in mind that those factors also have been affecting manufacturing in other countries,” Harkin added. “I tend think that the lack of a coherent manufacturing strategy to harness the power of technological changes and respond to globalization has made it harder for American manufacturers to compete.

“The United States is one of the only developed nations without a national manufacturing strategy.”

Harkin’s bill would require the president to identify sectors and emerging technologies in which U.S. manufacturing can grow and be most competitive internationally. It also would require the executive branch to survey the policies in place across the federal government that affect U.S. manufacturing and compare those policies other countries have in place to support their manufacturing sectors.

The president also would recommend to Congress policies and actions to support American manufacturing. Harkin said that might involve changes in regulations, taxation and trade policy.

U.S. Rep. Bruce Braley, D-Iowa, has introduced an identical proposal in the House of Representatives. Harkin believes the bills have a good chance of passing both chambers and moving to President Obama for his signature.
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Mark Thoeny (left) President & CEO at American Profol, Inc. explains the manufacturing process to Sen. Tom Harkin during a tour of the facility. (Jim Slosiarek/The Gazette)
“There’s no real cost to it, or very much anyway,” he said. “It’s really about getting the president and Congress to focus on a manufacturing strategy. What is needed to help existing manufacturers expand and encourage new manufacturing technologies to come online in America?”

Harkin toured American Profol, which employs about 80 to produce polypropylene films used for adhesive-coated tapes, heat-sealed bags, printed banners, DVD case overlays, multi-layer laminates, automotive and construction films and magazine overwraps.

American Profol President Mark Thoeny said a spike in orders prompted the manufacturer to add a sixth production line in 2011 at a cost of $13 million. He said it became clear that customers had ordered too much inventory in anticipation of an economic recovery.
The American subsidiary of Profol Kunststoffe GmbH of Halfing, Germany, was considering adding a seventh production line, but that has been put on hold, according to Thoeny. The project, which was approved for $250,000 in state financial assistance, would have represented a $14 million capital investment to expand the plant and purchase machinery and equipment.
SOURCE:  The Gazette

Maybe Manufacturing Jobs Still Pay More

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Jim Tankersley
All things being equal, you’d still rather be a factory worker in America today than a similarly skilled worker in another industry. That’s the conclusion of Commerce Department economists, who have combed national statistics and say the “wage premium” in manufacturing is alive and well.
A typical U.S. factory worker takes home higher pay and has better benefits than a comparable worker outside of manufacturing, Mark Doms, the department’s undersecretary for economic affairs, said in a recent interview. The findings, he said, rebut a simple comparison of hourly wages across industries that appears to show manufacturing workers slipping behind everyone else in the economy after years of earning more.

“When you’re trying to compare apples to apples,” Doms said, “you do see this manufacturing wage premium [has] been robust over time.”

Manufacturing has been a rare success industry in the recovery from the Great Recession, adding 500,000 jobs since the end of 2009. President Obama often hails it as a vehicle for middle-class prosperity.

From the mid-1970s to the eve of the recession, non-supervisory workers in manufacturing earned more per hour on average than the national average for all industries. During the recession and in the years that followed, however, hourly manufacturing pay fell behind the national average. In January, the average hourly wage for a manufacturing production worker was $19.23, compared with $19.97 for the private sector as a whole.

Commerce economists say the full picture is more complicated — and more favorable to manufacturing. They calculated in a report last year that medical and retirement benefits are 60 percent more lucrative per hour for factory workers than non-factory workers. When they compared workers with similar skills across industries, they found wages and benefits added up to a 17 percent advantage for manufacturing employees, an advantage that has held even as industry employment has shifted away from union jobs to lower-paying nonunion ones.

Doms says there are several explanations for that premium. Factory employees tend to work more hours per week and more weeks per year than other workers, he said, a difference that adds up — just like the compensation premium — to 17 percent.

If you include supervisors, who earn more than non-supervisory workers, factory employees earn more per hour than non-factory ones, he said.

Perhaps the simplest, time-tested explanation for why manufacturing jobs pay a premium is that the industry boasts consistently high productivity. There was new evidence of that in Labor Department statistics released Thursday. They showed manufacturing productivity increased by 2.2 percent last year, compared with 0.7 percent for the private sector as a whole.

Correspondingly, real hourly compensation for factory workers rose 0.2 percent for the year. Across the entire private sector, that compensation fell by 0.6 percent.

Manufacturing Sector Rebounds

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Tricia Rosenberg, an employee of Olsen Uniparts in Eldridge, measures a part from an piece of construction equipment. (John Schultz / Quad-City Times)

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Jennifer DeWitt
Manufacturing, which has long been the backbone of the Quad-City workforce, again is flexing its muscle as area employers expand and rebuild their ranks.
The economic downturn of recent years brought layoffs, reductions in hours and some hiring freezes as manufacturers worked to align output with reduced demand.

“I think companies are still cautious, but they’re starting to get going again,” said Mark Kapfer, Eastern Iowa Community College’s executive director for economic development. “But if you don’t have skills, you better get them.”

Dr. Bruce Storey, Black Hawk College’s director of educational services, agreed.

“While the unemployment rate is getting better, we’ve noticed it’s getting better for the people with degrees. Someone with a high school diploma, a GED or no work experience is having a terrible time. The AA (associate’s degree) is the new high school degree.”

The two educators said the jobs most in demand among Quad-City manufacturers are for CNC (computerized numerical control) operators, engineering technicians, welders, mechanical maintenance and electrical maintenance workers.

“If you want to be in manufacturing, the way I’d go is CNC. That’s the hot job,” Storey said. “Some people are just afraid of the math and the computers.”

Tara Barney, chief executive officer of the Quad-Cities Chamber of Commerce, said the growth in the manufacturing sector comes as companies add jobs at a modest rate.

“But they’re adding high-quality jobs and when they have a client with a specific need,” she said.

Citing data from a Quad-City laborshed study, Barney said manufacturing jobs saw an increase in the laborshed from between 73,000 and 74,000 in 2010 to “85,508 in 2012, precisely.”

The laborshed, which is much larger than the four-county metropolitan statistical area, takes in a 70-mile radius around the Quad-Cities in Iowa and Illinois from which the metro Quad-Cities draws its workforce. Barney said the laborshed also shows average annual manufacturing salaries jumped from $65,000 in 2010 to $80,000 in 2012.

But job-seekers serious about a manufacturing career will need to bring higher skills to the table — be it through associate’s degrees, apprentice programs, certificates or other training.

Tricia Rosenberg of Annawan, Ill., knows that first-hand. After pursing CNC training at Eastern Iowa Community College’s Blong Technology Center, she landed a production job at Uniparts Olsen in Eldridge.

After a couple of years of running a CNC and a lathe, she has been promoted to educational training coordinator.

“I love this. It is so hands-on and different every day,” she said.

Rosenberg, 31, trains her co-workers to read parts blueprints and to do programming, some of the same skills she teaches students at the Blong Center, where she is a part-time adjunct instructor.

“It’s not the old thinking where it used to be a boys club,” she said of the manufacturing sector. Although she followed her father into manufacturing, the industry is opening up to more women and attracting others who had once been scared away because of the thought that it was heavy lifting, she said.

At Uniparts Olsen, she said wages range from $10 to $13 an hour for manufacturing jobs and $11.50 to $14 for CNC jobs. Those with more training and experience often get hired first and earn the higher wages, she said.

Looking ahead, the U.S. Bureau of Labor Statistics indicates employment of manufacturing maintenance and repair workers is expected to grow 11 percent during the 2008-2018 decade.

Data from Eastern Iowa Community College indicates general maintenance and repair workers can expect median hourly wages of $16.21 an hour. Here are some of the other starting hourly wages: mechanical design technology $16.33; electromechanical systems $18.60; renewable energy systems specialist $11.78; industrial engineering technology/CNC machining $13.87; welding $12.73; and logistics/supply chain $12.33.

Additionally, Black Hawk College said these are annual salaries for other related jobs: welders, $35,000-$40,000; CNC, $40,000 and up; and engineering technician, $35,000 to $55,000 depending on the career.

“Fifty years ago, you got out of high school, went to Deere and stayed there for your whole life,” Storey said. “That doesn’t happen anymore.”

SOURCE:  Quad-City Times

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