Inspectors came and went from a Walmart-certified factory in Guangdong Province in China, approving its production of more than $2 million in specialty items that would land on Walmart’s shelves in time for Christmas.
Trouble Wi
th AuditsFactory monitoring companies have established a booming business in the two decades since Gap, Nike, Walmart and others were tarnished by disclosures that their overseas factories employed underage workers and engaged in other abusive workplace practices. Each year, these monitoring companies assess more than 50,000 factories worldwide that employ millions of workers. Walmart alone commissioned more than 11,500 inspections last year. Spurred by heightened demand for monitoring, the share prices of three of the biggest publicly traded monitoring companies, SGS, Intertek and Bureau Veritas, have all increased about 50 percent from two years ago.
The inspections carry enormous weight with factory owners, who stand to win or lose millions of dollars in orders depending on their ratings. With stakes so high, factory managers have been known to try to trick or cheat the auditors. Bribery offers are not unheard-of. Often notified beforehand about an inspector’s visit, factory managers will unlock fire exit doors, unblock cluttered stairwells or tell underage child laborers not to show up at work that week.
Unauthorized subcontracting, or farming work out, to an unapproved factory (as was the case for the Quaker Pet Group order in China), is “very, very common,” according to Gary Peck, founder and managing director of the S Group, a design and sourcing company based in Portland, Ore.
Though almost all retailers prohibit the practice in their contracts, suppliers still do it to save money, speed production and meet high-volume orders.
And even inspections conducted at authorized factories can be deeply flawed. When NTD Apparel, a contractor for Walmart that is based in Montreal, hired a firm to inspect the Tazreen factory in Bangladesh before 112 workers died in a fire in November, the monitors’ questionnaire asked whether the factory had the proper number of fire extinguishers and smoke detectors on each floor. But it did not call for checking whether the factory had fire escapes or enclosed, fireproof stairways, which safety experts say could have saved lives.
“If it’s a check-the-box inspection, you better have the right boxes to look at,” said Daniel Viederman, chief executive of Verité, a nonprofit monitoring group.
Sajeev Jesudas, president of UL Verification Services, which conducted the Tazreen audit, said inspecting for fire escapes and fireproof stairways was “the responsibility of the local building inspectors.” Bangladesh has been faulted for having far too few officials to inspect factories.
Greg Gardner, the chief executive of Arche Advisors, said Western retailers and brands often seek different levels of audits. Some, like Levi’s and Patagonia, want rigorous — and costly — audits, while others prefer limited, inexpensive audits that will not jeopardize relationships with favored suppliers.
Audits can be very brief. A single inspector might visit a 1,000-employee factory for six to eight hours to review all types of manufacturing issues, like wages, child labor or toxic chemicals. Some auditors receive only five days of training, whereas the federal Occupational Safety and Health Administration requires three years of training and experience assisting inspectors before employees can lead an inspection of a sizable factory in the United States.
In the Rosita case, after the workers went on their rampage, the Western companies that bought the factory’s knitwear grew alarmed. So Rosita’s owner, South Ocean, a conglomerate based in Hong Kong, commissioned a new inspection.
That inspection, conducted by Verité, which is based in Massachusetts, was a scathing broadside. Verité’s monitors found “ongoing physical abuse” and “verbal and psychological harassment,” with managers compelling workers who arrived late to stand for “many hours without rest.”
Verité’s three-day inspection found errors in calculating wages, chemical containers labeled only in English and unreasonably high production quotas for which workers were disciplined or fired for not meeting. The inspectors noted that workers “often face harsh treatment,” including jeering from managers if they requested sick leave or annual leave. The monitors also found that managers had fired employees for missing work because of a death in the family and that security guards had beaten workers involved in union and protest activities.
Mr. Viederman of Verité said the earlier inspection, performed by a major monitoring firm, SGS, demonstrated the shortcomings of checklist audits. The SGS inspection involved a one-day visit, largely seeking yes-no answers, probably for a modest fee.
He noted that SGS had interviewed employees only inside the factory, where workers were often unlikely to speak candidly, and not outside — for instance, at bus stops or at home, where workers might open up.
Charles Kernaghan, executive director of the Institute for Global Labor and Human Rights, was shocked when he read the SGS inspection report for Rosita. “The auditors were saying everything was in perfect order,” he said. “It shows how ineffective these monitoring organizations can be.”
Effie Marinos, sustainability manager at SGS, defended her company’s findings. She said SGS had followed the inspection protocol developed by the Business Social Compliance Initiative, a factory certification group for European businesses.
Ms. Marinos said the protocol for Rosita did not require interviewing workers outside the factory, a practice that she cautioned could undermine a relationship between a Western company and its suppliers.
“You don’t want to start the whole approach with a lack of trust, that they are trying to fool you, that they are behaving unethically,” she said. “It can sour an entire relationship.”
Bypassing Inspection Rules
The Walmart purchase orders read “Ethical Standards Required.”
In mid-2011, the Quaker Pet Group, whose biggest customer was Walmart, began looking for cheaper factories where its trendy dog clothes could be made, according to a former Quaker employee who requested anonymity for fear of reprisal from Quaker. The company has also sold its goods to Petco, PetSmart and smaller retailers.
Quaker settled on a plant called Jiutai Bag and Gift Factory in Dongguan, Guangdong. After visiting the site, Quaker’s president, Neil Werde, sent a note to a Jiutai representative in June 2011. “I was pleased with your factory,” Mr. Werde wrote, according to an e-mail shared by the former employee. “Good luck on the Walmart inspection.”
That inspection did not occur. Quaker officials became concerned that Jiutai would not be able to pass an inspection, the former employee said.
But there was a workaround. While Jiutai would make the garments, Quaker would fill out order forms to say that the items had been made by Ease Clever Plastic Manufactory, then an approved Walmart supplier. Ease Clever is an established manufacturer that ships products to Target and other large companies, according to the global trade database Panjiva. Jiutai, by contrast, had only one recent listing in the database, for a small shipment to Puerto Rico in 2011.
The stickiest issue was how to get the clothing made by Jiutai past Walmart inspectors. An inspection at Ease Clever was scheduled for September 2011, when the Walmart representatives would check that the dog outfits were being manufactured there, the former employee said.
Jiutai simply took the clothes to Ease Clever, according to the former employee. Those moves were outlined in a later e-mail from a Jiutai representative to Mr. Werde.
“The Walmart inspectors showed up and said, ‘Oh, they are being made here.’ It’s not as challenging as you would think,” the
former employee said. “You have your finished-goods area and just show them the cartons being packed out.”
In an e-mail to Mr. Werde, the Jiutai representative, identified as Mr. Hu, detailed how the setup had worked as he pushed Quaker for payment.
In July, Mr. Hu wrote, a company based in Hong Kong called KYCE, apparently acting as a liaison, helped arrange an order for the Christmas dog clothes. “JiuTai only make the clothes,” Mr. Hu wrote.
In September, “we hang the clothes” in display cases and “send to Ease Clever warehouse for Walmart during inspection,” Mr. Hu added, including photographs of the costumes. After the inspection, the clothes went back to Jiutai, and Jiutai, after making final adjustments, packed and delivered the clothes to the shipping terminal, Mr. Hu wrote. Mr. Hu and KYCE representatives did not respond to multiple e-mails seeking comment.
Throughout September, according to Walmart purchase orders, Quaker shipped $2.1 million worth of pet outfits from Yantian, China, to various American ports. The purchase orders list Mrs. Claus dresses, Santa suits and reindeer suits — the exact outfits Mr. Hu of Jiutai said he had made at his factory and then photographed. But the purchase orders list Ease Clever as the supplier, not Jiutai.
Contacted by telephone last month about the inspection and shipment, Jay Xie, a sales manager for Ease Clever, said the company had allowed the use of its Walmart certification. “His factory had not yet been audited — he used my factory because it was already audited,” Mr. Xie said of the Jiutai factory manager. Mr. Xie said this had happened only once, as a friendly act to help a fellow manufacturer.
The shipment, though, was late, according to the former employee and Mr. Hu’s e-mail. And soon after Walmart started selling these items, Quaker began receiving complaints, according to the former employee. When Walmart conducted a quality test on the Mrs. Claus dress, it found holes, and the outfit failed the test. Walmart executives then summoned Quaker employees to its sourcing office in Shanghai for an explanation, but Quaker did not disclose the subcontracting to Walmart at that time, the former employee said.
In March 2013, Walmart received a tip, via its global ethics hot line, about the unauthorized subcontracting and looked into it.
Kevin Gardner, a spokesman for the company, confirmed that subcontracting in this case occurred in 2011, and that Walmart officials “met with the supplier after the investigation to go through the findings and reinforce what our expectations are pursuant to subcontracting.”
Even though Walmart was alerted to the case nearly two years after the products were made and only after a hot line tip, the retailer pointed to the episode as an example of how its investigation and compliance system was working, not faltering.
“We investigated. We talked with the supplier. We think this does show the processes were in place,” Mr. Gardner said.
In January of this year, Walmart established a “zero tolerance” policy, saying it would drop suppliers who used subcontractors without the company’s approval. Walmart adopted the policy after garments headed to the company were found in the fire debris at Tazreen, an unauthorized factory.
Quaker and Mr. Werde declined to comment. The pet specialty company remains a Walmart supplier, Mr. Gardner said.
Cat-and-Mouse Games
The question-and-answer sheet that the factory’s managers distributed to all their employees was explicit: if an inspector ever asked, “Are there injury records?” they were to answer, “Have not heard of any work-related injuries.”
And if an inspector asked, “Any corporal punishment in the factory?” the employees were to reply, “No.” If monitors inquired about underage workers at the plant, employees were coached to respond, “Employment for those less than 16 years old is prohibited.”
This sheet, prepared by managers at a Chinese factory and obtained by The Times, had one purpose: to trick inspectors.
Supply chain experts and monitors say that far too often, factory managers play cat-and-mouse games with inspectors because they are desperate to avoid a failing grade and the loss of a lucrative stream of orders.
The experts provided real-life examples. To avoid appearing illegally overcrowded, one factory moved many machines into trucks parked outside during an inspection, a monitor said. Whenever inspectors showed up at certain plants in China, the loudspeakers began playing a certain song to signal that underage workers should run out the back door, according to several monitors. During inspections in India, some factories displayed elaborate charts detailing health and safety procedures that, like stage props, were transferred from one factory to another, another monitor said.
For monitoring companies with major retailing clients, the auditing regimen can be nonstop. The territory itself is daunting — 5,000 factories produce garments in Bangladesh alone. A retailer that uses 1,000 factories worldwide might want to pay no more than $1,000 an inspection — that could mean a one-day, check-the-box audit — instead of $5,000 for thorough, five-day inspections. That would cost $1 million instead of $5 million.
“You have this intense price pressure downward on these inspection firms, turning them into a commodity business,” said Mr. O’Rourke of the University of California, Berkeley.
Auret van Heerden, president and chief executive of the Fair Labor Association, a nonprofit group that Apple uses to monitor its Foxconn factories in China, said many inspectors were too rushed. “Many are doing a factory a day, and many auditors, more than one factory a day,” he said. “They’re on a plane and going to a new city the next day. They don’t have much time to think about it or dwell on it.”
Despite some improvements, many supply chain experts say monitoring has inherent shortcomings. Not long ago, Nike and other sporting goods companies were shaken by revelations that children, ages 5 to 14, toiled up to 11 hours a day making soccer balls for them in Sialkot, Pakistan.
A study found that half of Pakistan’s soccer ball workers were making less than the minimum wage, with many stitching the balls’ panels together at home, making it hard for factory monitors to unearth such violations.
Nike responded by requiring its main contractor there, Silver Star, to consolidate production in one big factory. Knowing how skilled many contractors have become at gaming the monitoring system, Nike took an unusual step and ordered Silver Star to set up a system of elected worker representatives who would be charged with speaking up about safety problems, wage violations or other issues.
“We’ve learned that monitoring alone isn’t enough,” said Greg Rossiter, Nike’s chief spokesman.
Mr. van Heerden said, “You can never visit facilities often enough to make sure they stay compliant — you’ll never have enough inspectors to do that. What really keeps factories compliant is when workers have a voice and they can speak out when something isn’t right.”
Still, after a string of fatal disasters and repeated failures in uncovering serious violations, many experts doubt that even a highly organized and supervised inspection industry can improve factory conditions in country after country. Heather White, a research fellow at Harvard and a longtime factory auditor, said, “It starts as a dream, then it becomes an organization, and it finally ends up as a racket.”
Are Robots Hurting Job Growth?
in Uncategorized/by MAM TeamAs we reported earlier this year, at the vanguard of this new wave of automation is the field of robotics. Everyone has a different idea of what a robot is and what they look like but the broad universal definition is a machine that can perform the job of a human. They can be mobile or stationary, hardware or software, and they are marching out of the realm of science fiction and into the mainstream.
The age of robots has been anticipated since the beginning of the last century. Fritz Lang fantasized about it in his 1927 film “Metropolis.” In the 1940s and 50s, robots were often portrayed as household help.
And by the time “Star Wars” trilogy arrived, robots with their computerized brains and nerve systems had been fully integrated into our imagination. Now they’re finally here, but instead of serving us, we found that they are competing for our jobs. And according to MIT professors, Erik Brynjolfsson and Andrew McAfee, one of the reasons for the jobless recovery.
Andrew McAfee: Our economy is bigger than it was before the start of the Great Recession. Corporate profits are back. Business investment in hardware and software is back higher than it’s ever been. What’s not back is the jobs.
Steve Kroft: And you think technology and increased automation is a factor in that?
Erik Brynjolfsson: Absolutely.
The percentage of Americans with jobs is at a 20-year low. Just a few years ago if you traveled by air you would have interacted with a human ticket agent. Today, those jobs are being replaced by robotic kiosks. Bank tellers have given way to ATMs, sales clerks are surrendering to e-commerce and switchboard operators and secretaries to voice recognition technology.
Erik Brynjolfsson: There are lots of examples of routine, middle-skilled jobs that involve relatively structured tasks and those are the jobs that are being eliminated the fastest. Those kinds of jobs are easier for our friends in the artificial intelligence community to design robots to handle them. They could be software robots, they could be physical robots.
Steve Kroft: What is there out there that people would be surprised to learn about? In the robotics area, let’s say.
Andrew McAfee: There are heavily automated warehouses where there are either very few or no people around. That absolutely took me by surprise.
It’s on display at this huge distribution center in Devens, Mass., where roughly 100 employees work alongside 69 robots that do all the heavy lifting and navigate a warehouse maze the size of two football fields — moving 10,000 pieces of merchandise a day from storage shelf to shipping point faster and more efficiently than human workers ever could.
Bruce Welty: We think its part of the new American economy.
Bruce Welty is CEO of Quiet Logistics, which fills orders and ships merchandise for retailers in the apparel industry. This entire operation was designed around the small orange robots made by a company outside Boston called Kiva. And can now be found in warehouses all over the country.
Steve Kroft: Now this is the order that she is filling, right, on this screen.
Bruce Welty: Yes, in a typical warehouse, she’d have to walk from location to location with a number of totes. And that’s the innovation here is that the product comes to her.
Steve Kroft: And all of this is preprogrammed? Nobody has to sit there and tell these robots where to go?
Bruce Welty: No, no, it’s all done with algorithms. A lot of mathematics, a lot of science that went into this.
Customer orders are transmitted from a computer to wifi antennas that direct the robots to the merchandise, guiding them across an electronic checkerboard with bar codes embedded in the floor panels. Once the robot arrives at its destination, it picks up an entire shelf of merchandise and delivers it to the packing station. It then speeds off to its next assignment.
Bruce Welty: They know if they need to get from point A to point B and they are not carrying anything , they can go underneath the grid. We call that tunneling. So they are very smart.
Steve Kroft: You’d think they’d run into each other.
Bruce Welty: Yeah, you’d think that but it never happens.
Steve Kroft: If you had to replace the robots with people, how many people would you have to hire?
Bruce Welty: Probably one and a half people for every robot.
Steve Kroft: So it saves you a lot of money?
Bruce Welty: Yes.
And it’s not just going on in warehouses. El Camino Hospital in California’s Silicon Valley has a fleet of robots called tugs that ferry meals to patients, medicines to doctors and nurses, blood samples to the lab and dirty linen to the laundry.
A hospital spokesman told us the tugs are supposed to supplement nurses and hospital staff – not replace them. But he also believes that robots and humans working together is the beginning of a new era.
Robots are now wielding scalpels for surgeons, assisting in the most delicate operations — allowing them to see and snip their way through prostate surgeries with minimal damage. And they have begun filling prescriptions in hospital dispensaries and local pharmacies.
Economic evolution has been going on for centuries and society has always successfully adapted to technological change creating more jobs in the process. But Erik Brynjolfsson and Andrew McAfee of MIT think this time may be different.
Erik Brynjolfsson: Technology is always creating jobs. It’s always destroying jobs. But right now the pace is accelerating. It’s faster we think than ever before in history. So as a consequence, we are not creating jobs at the same pace that we need to.
Andrew McAfee: And we ain’t seen nothing yet.
The changes are coming so quickly it’s been difficult for workers to retrain themselves and for entrepreneurs to figure out where the next opportunities may be. The catalyst is something called computer learning or artificial intelligence — the ability to feed massive amounts of data into supercomputers and program them to teach themselves and improve their performance.
It’s how Apple was able to create Siri the iPhone robot and Google its self-driving car.
Erik Brynjolfsson: We’ve been amazed at how rapidly this has been happening.
[TV clip from “Jeopardy:” This is Jeopardy!]
Erik Brynjolfsson: IBM’s deep QA system that plays “Jeopardy,” we had a contest here that played against our best MIT students, the best Harvard students we could put it up against. And not surpris
ing
ly, Watson won. And it’s being used in real practical applications now on Wall Street and in call centers. Siri — millions of people are using that every day.
Andrew McAfee: The fact that computers can now understand and respond to human speech, the fact that they can actually generate prose of decent quality, they can drive cars, they can win at Jeopardy. We’re seeing technology demonstrate skills that it’s never, ever done before.
And it is putting new categories of jobs in the sites of automation — the 60 percent of the workforce that makes its living gathering and analyzing information. This piece of software called e-discovery is now used by law firms in the discovery portion of legal proceedings, a job that used to require hundreds of people sifting through boxes and boxes of documents.
We now have robots gathering intelligence and fighting wars, and robot computers trading stocks on Wall Street.
It’s all part of a massive high tech industry that’s contributed enormous productivity and wealth to the American economy but surprisingly little in the way of employment.
Andrew McAfee: We absolutely are creating new jobs, new companies, and entirely new industries these days. When Erik and I go out to Silicon Valley and look around, the scale and the pace of creation is astonishing. What these companies are not doing, though, is hiring a ton of people to help them with their work.
Steve Kroft: Because they don’t have them? Because they can’t find them? Because they don’t need them?
Andrew McAfee: Because they can’t find everyone they need, but they don’t need that many people to work in these incredibly large and influential companies. To make that concrete, Apple, Amazon, Facebook and Google are now all public companies. Combined, they have something close to $1 trillion in market capitalization. Together, the four of them employ fewer than 150,000 people, and that’s less than the number of new entrants into the American workforce every month.
And it’s roughly half the number of people that work for General Electric.
Ironically, one of the few bright spots is a modest rise in U.S. manufacturing: an early casualty of automation that is making a comeback because it. This Tesla factory in California turns out battery-powered cars, using state-of-the-art robots that can change tools and perform a multitude of different tasks negating some of the advantages of moving jobs offshore.
Annual investment by U.S. manufacturers in new technology has increased almost 30 percent since the recession ended, and research institutions and robotics companies, funded by venture capital, are constantly searching for innovations like the Roomba vacuum cleaner.
That was the brain child of Rodney Brooks, a pioneer who ran the artificial intelligence lab at MIT, before launching iRobot one of the most successful robotics companies in the U.S. this is his latest progeny, a friendly, affordable chap named Baxter.
Rodney Brooks: It’s meant to be able to go in a factory where they don’t have robots at the moment. And ordinary workers can train it to do simple tasks.
Steve Kroft: Uh-huh. Such as?
Rodney Brooks: Well, a simple one is just– for instance, picking stuff up off a conveyor belt. So it’s going to go down and find the object and grab it and bring it over and put it to another spot.
Baxter costs $22,000, and can be trained to do a new task by a coworker in a matter of minutes. It can also be upgraded like an iPad with new software as new applications are developed.
[Rodney Brooks: And when you’re training it…]
Brooks and investors in his new startup, Rethink Robotics, see a potential market worth tens of billions of dollars, and believe that Baxter can help small U.S. manufacturers level the playing field against low cost foreign competitors.
Rodney Brooks: If you’re using robots to compete with a simple task that a low-paid worker does in a foreign country you can bring it back here and do that task here.
Steve Kroft: Baxter costs 22 grand?
Rodney Brooks: Yep.
Steve Kroft: How long does he last?
Rodney Brooks: It lasts three years.
Steve Kroft: Three years?
Rodney Brooks: So you can think that as 6,500 hours.
Steve Kroft: I think it works out to about $3.40 an hour?
Rodney Brooks: About that yeah.
Steve Kroft: $3.40, that’s probably the wages of the Chinese worker, right?
Rodney Brooks: It’s just about right there now.
Steve Kroft: So here you could buy one of these robots and it would be like getting a Chinese worker?
Rodney Brooks: In a manner of speaking.
That strategy has already had some success at Adept Technology, the largest manufacturer of industrial robots in the country with a wide and varied product line.
John Dulchinos: So this is our flagship product. This is our Cobra robot. This is the class of robot that was used to automate Philips electric shavers.
The robots at the Dutch company’s factory in the Netherlands proved to be so efficient and economical, that Philips decided to move its main shaver assembly line out of China and back to Holland.
Erik Brynjolfsson: I think that those workers in China, in India, are more in the bullseye of this automation tidal wave that we are talking about than the American workers.
But even if offshore manufacturing returns to the U.S., most of the jobs will go to robots.
Andrew McAfee: When I see what computers and robots can do right now, I project that forward for two, three more generations, I think we’re going to find ourselves in a world where the work as we currently think about it is largely done by machines.
Steve Kroft: And what are the people going to do?
Andrew McAfee: That’s the $64,000 question.
Andrew McAfee: Science fiction is actually my best guide because I think we are in that time frame going to be in a very weird, very different place.
It brings to mind Stanley Kubrick’s “2001: A Space Odyssey,” and the rebellious computer robot “HAL”. Technologically speaking, we are just about there.
[Dave Bowman: Open the pod bay doors, HAL.
HAL: I’m sorry, Dave, this mission is too important for me to allow you to jeopardize it.]
Everyone agrees that it’s impossible now to short circuit technology. It has a life of its own and the world is all in for better or for worse.
[HAL: Stop, Dave.]
We wanted to leave you on this positive note.
Erik Brynjolfsson: One thing that Andy and I agree on is that we’re not super worried about robots becoming self aware, and challenging our authority. That part of science fiction, I think, is not very likely to happen.
Manufacturing in U.S. Expands at a Faster Pace Than Forecast
in Uncategorized/by MAM TeamThe Institute for Supply Management’s index rose to 55.7, the strongest since June 2011, from 55.4 a month earlier, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 54.
The Institute for Supply Management’s index rose to 55.7, the strongest since June 2011, from 55.4 a month earlier, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 54.
American producers are leading a global manufacturing recovery that stretches from China to Europe as their economies improve. Resilient U.S. demand for motor vehicles is prompting companies such as Ford Motor Co. (F) to expand, while further strides in construction are bolstering orders for building materials, appliances and furniture.
“It’s going to be a solid quarter for U.S. manufacturing,” said Brian Jones, a senior economist in New York at Societe Generale, who projected a reading of 55.8. “Businesses are expanding production not only to meet demand but to also build inventories. Manufacturing worldwide is impressing to the high side.”
Another report showed construction spending increased in July to the highest level in four years. Outlays climbed 0.6 percent to a $900.8 billion annual rate, the strongest since June 2009, after little change in June, the Commerce Department said.
Economists’ Estimates
Estimates for the ISM factory index from 85 economists in the Bloomberg survey ranged from 51 to 55.8. Manufacturing accounts for about 12 percent of the economy.
Stocks rose, following the worst month since May 2012 for the Standard & Poor’s 500 Index, as investors weighed the better-than-forecast economic data against possible military action against Syria. The S&P 500 climbed 0.4 percent to 1,639.77 at the close in New York.
Today’s U.S. supply managers’ report follows figures yesterday showing a pickup in other parts of the world. In China, manufacturing strengthened in August, with one gauge posting the biggest jump in three years. Euro-area factory output expanded last month at a faster pace than initially estimated, driven by a resurgence in Italy and Spain as the 17-nation currency bloc’s recovery started to build momentum.
The ISM’s U.S. new orders measure advanced to the highest level since April 2011, while the group’s gauge of export demand rose to a five-month high. The index of orders waiting to be filled also climbed.
Factory Inventories
At the same time, the report showed factory inventories contracted for a second month in August, while customer stockpiles shrank at the fastest pace since November.
“The combination of strong orders growth with weak inventory-building augurs well for future increases in industrial production,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in an e-mail to clients.
Automobile purchases, which are on track for the best year since 2007, are helping power gains in manufacturing.
Dearborn, Michigan-based Ford, the second-largest U.S. automaker, is expanding output of its Fusion sedan, and said its factory in Flat Rock, Michigan, could produce another model as demand grows. The additional shift of 1,400 new workers at the plant will boost Fusion capacity more than 30 percent.
“We expect the sales momentum to stay here in the U.S. and around the world,” Joe Hinrichs, Ford’s president of the Americas, told reporters on Aug. 29.
Housing Market
The recovery in housing also is spurring demand for construction materials and encouraging consumers to remodel and spend on appliances, benefiting home-improvement retailers such as Atlanta-based Home Depot Inc. and Lowe’s Cos. (LOW), based in Mooresville, North Carolina. The companies each reported second-quarter profit that topped analysts’ estimates and raised their annual forecast.
The Commerce Department’s construction report showed private homebuilding outlays increased 0.6 percent in July to the highest level since September 2008. The gain included a 0.8 percent advance in home improvement spending. Non-residential projects also picked up.
Construction helped the economy pick up steam in the second quarter. Gross domestic product increased at a more-than-expected 2.5 percent annualized rate after a 1.1 percent gain in the first three months of the year, the latest Commerce Department figures show.
Age Gap Revealed in Made-in-USA
in News/by MAM TeamReposted from Refinery29:
This could be worrisome for domestically-produced apparel brands that target Millennials and charge more accordingly. Will this generation, accustomed to fast fashion and a global mentality, be willing to spend the extra few bucks for a “Made in the USA” tag? Once again, the unavoidable quality versus quantity debate surfaces — as does another: Are younger Americans simply less inclined to see the link between patronage and patriotism? And does it really matter?
“Older people tend to be more patriotic,” Gallup managing editor Jeffrey Jones told WWD. “Could it be that older Americans have witnessed the erosion of the U.S. manufacturing base and are paying more attention to questions about country of origin? Perhaps.”
On a positive note, while “patriotism” isn’t necessarily everyone’s motivation for buying stateside-manufactured goods, 64% of those interviewed for the April Gallup poll still say they’d be willing to pay more for American items — even those who don’t currently make a special effort to do so. Additionally, when you bring e-commerce into the equation, the numbers are more optimistic: Over 60% in a WWD/American Giant survey say they use the Internet to find and purchase American-made merchandise.
Ultimately, none of these figures definitively mean that young people don’t care about where or how their purchases are made. Locavore and eco-conscious consumption movements — largely youth-fueled — continue to steadily grow. In fact, green fashion now generates over $5 billion in revenue a year — up 1000% from a decade ago. Generational shifts in attitude towards commerce and country are bound to evolve, but it seems whether or not we were born pre or post 1980, we’re mostly on the same page when it comes down to doing the responsible thing. (WWD)
Fast and Flawed Inspections of Factories Abroad
in Manufacturing/by MAM TeamArticle reposted from The New York Times:
But unknown to the inspectors, none of the playful items, including reindeer suits and Mrs. Claus dresses for dogs, that were supplied to Walmart had been manufactured at the factory. Instead, Chinese workers sewed the goods — which had been ordered by the Quaker Pet Group, a company based in New Jersey — at a rogue factory that had not gone through the certification process set by Walmart for labor, worker safety or quality, according to documents and interviews with officials involved.
To receive approval for shipment to Walmart, a Quaker subcontractor just moved the items over to the approved factory, where they were presented to inspectors as though they had been stitched together there and never left the premises.
Soon after the merchandise reached Walmart stores, it began falling apart.
Fifteen hundred miles to the west, the Rosita Knitwear factory in northwestern Bangladesh — which made sweaters for companies across Europe — passed an inspection audit with high grades. A team of four monitors gave the factory hundreds of approving check marks. In all 12 major categories, including working hours, compensation, management practices and health and safety, the factory received the top grade of “good.” “Working Conditions — No complaints from the workers,” the auditors wrote.
In February 2012, 10 months after that inspection, Rosita’s workers rampaged through the factory, vandalizing its machinery and accusing management of reneging on promised raises, bonuses and overtime pay. Some claimed that they had been sexually harassed or beaten by guards. Not a hint of those grievances was reported in the audit.
As Western companies overwhelmingly turn to low-wage countries far away from corporate headquarters to produce cheap apparel, electronics and other goods, factory inspections have become a vital link in the supply chain of overseas production.
An extensive examination by The New York Times reveals how the inspection system intended to protect workers and ensure manufacturing quality is riddled with flaws. The inspections are often so superficial that they omit the most fundamental workplace safeguards like fire escapes. And even when inspectors are tough, factory managers find ways to trick them and hide serious violations, like child labor or locked exit doors. Dangerous conditions cited in the audits frequently take months to correct, often with little enforcement or follow-through to guarantee compliance.
Dara O’Rourke, a global supply chain expert at the University of California, Berkeley, said little had improved in 20 years of factory monitoring, especially with increased use of the cheaper “check the box” inspections at thousands of factories. “The auditors are put under greater pressure on speed, and they’re not able to keep up with what’s really going on in the apparel industry,” he said. “We see factories and brands passing audits but failing the factories’ workers.”
Still, major companies including Walmart, Apple, Gap and Nike turn to monitoring not just to check that production is on time and of adequate quality, but also to project a corporate image that aims to assure consumers that they do not use Dickensian sweatshops. Moreover, Western companies now depend on inspectors to uncover hazardous work conditions, like faulty electrical wiring or blocked stairways, that have exposed some corporations to charges of irresponsibility and exploitation after factory disasters that killed hundreds of workers.
The Rana Plaza factory collapse in Bangladesh, which killed 1,129 workers in April, intensified international scrutiny on factory monitoring, and pressured the world’s biggest retailers to sign on to agreements to tighten inspection standards and upgrade safety measures. While many groups consider the accords a significant advance, some longtime auditors and labor groups voice skepticism that inspection systems alone can ensure a safe workplace. After all, they say, the number of audits at Bangladesh factories has steadily increased as the country has become one of the world’s largest garment exporters, and still 1,800 workers there have died in workplace disasters in the last 10 years.
“We’ve been auditing factories in Bangladesh for 20 years, and I wonder: ‘Why aren’t these things changing? Why aren’t things getting better?’ ” said Rachelle Jackson, the director of sustainability and innovation at Arche Advisors, a monitoring group based in California.
Even with American and European companies appointing executives this summer to put in place a stricter regimen of inspections and safeguards under the new agreements, these efforts are limited to Bangladesh. Other leading garment-producing nations, like China, Honduras, Indonesia, Pakistan and Vietnam, are not getting such stepped-up attention or expanded inspections. Thousands of factories in those countries will no doubt continue to be reviewed through the perfunctory “check the box” audits.
th AuditsFactory monitoring companies have established a booming business in the two decades since Gap, Nike, Walmart and others were tarnished by disclosures that their overseas factories employed underage workers and engaged in other abusive workplace practices. Each year, these monitoring companies assess more than 50,000 factories worldwide that employ millions of workers. Walmart alone commissioned more than 11,500 inspections last year. Spurred by heightened demand for monitoring, the share prices of three of the biggest publicly traded monitoring companies, SGS, Intertek and Bureau Veritas, have all increased about 50 percent from two years ago.
The inspections carry enormous weight with factory owners, who stand to win or lose millions of dollars in orders depending on their ratings. With stakes so high, factory managers have been known to try to trick or cheat the auditors. Bribery offers are not unheard-of. Often notified beforehand about an inspector’s visit, factory managers will unlock fire exit doors, unblock cluttered stairwells or tell underage child laborers not to show up at work that week.
Unauthorized subcontracting, or farming work out, to an unapproved factory (as was the case for the Quaker Pet Group order in China), is “very, very common,” according to Gary Peck, founder and managing director of the S Group, a design and sourcing company based in Portland, Ore.
Though almost all retailers prohibit the practice in their contracts, suppliers still do it to save money, speed production and meet high-volume orders.
And even inspections conducted at authorized factories can be deeply flawed. When NTD Apparel, a contractor for Walmart that is based in Montreal, hired a firm to inspect the Tazreen factory in Bangladesh before 112 workers died in a fire in November, the monitors’ questionnaire asked whether the factory had the proper number of fire extinguishers and smoke detectors on each floor. But it did not call for checking whether the factory had fire escapes or enclosed, fireproof stairways, which safety experts say could have saved lives.
“If it’s a check-the-box inspection, you better have the right boxes to look at,” said Daniel Viederman, chief executive of Verité, a nonprofit monitoring group.
Sajeev Jesudas, president of UL Verification Services, which conducted the Tazreen audit, said inspecting for fire escapes and fireproof stairways was “the responsibility of the local building inspectors.” Bangladesh has been faulted for having far too few officials to inspect factories.
Greg Gardner, the chief executive of Arche Advisors, said Western retailers and brands often seek different levels of audits. Some, like Levi’s and Patagonia, want rigorous — and costly — audits, while others prefer limited, inexpensive audits that will not jeopardize relationships with favored suppliers.
Audits can be very brief. A single inspector might visit a 1,000-employee factory for six to eight hours to review all types of manufacturing issues, like wages, child labor or toxic chemicals. Some auditors receive only five days of training, whereas the federal Occupational Safety and Health Administration requires three years of training and experience assisting inspectors before employees can lead an inspection of a sizable factory in the United States.
In the Rosita case, after the workers went on their rampage, the Western companies that bought the factory’s knitwear grew alarmed. So Rosita’s owner, South Ocean, a conglomerate based in Hong Kong, commissioned a new inspection.
That inspection, conducted by Verité, which is based in Massachusetts, was a scathing broadside. Verité’s monitors found “ongoing physical abuse” and “verbal and psychological harassment,” with managers compelling workers who arrived late to stand for “many hours without rest.”
Verité’s three-day inspection found errors in calculating wages, chemical containers labeled only in English and unreasonably high production quotas for which workers were disciplined or fired for not meeting. The inspectors noted that workers “often face harsh treatment,” including jeering from managers if they requested sick leave or annual leave. The monitors also found that managers had fired employees for missing work because of a death in the family and that security guards had beaten workers involved in union and protest activities.
Mr. Viederman of Verité said the earlier inspection, performed by a major monitoring firm, SGS, demonstrated the shortcomings of checklist audits. The SGS inspection involved a one-day visit, largely seeking yes-no answers, probably for a modest fee.
He noted that SGS had interviewed employees only inside the factory, where workers were often unlikely to speak candidly, and not outside — for instance, at bus stops or at home, where workers might open up.
Charles Kernaghan, executive director of the Institute for Global Labor and Human Rights, was shocked when he read the SGS inspection report for Rosita. “The auditors were saying everything was in perfect order,” he said. “It shows how ineffective these monitoring organizations can be.”
Effie Marinos, sustainability manager at SGS, defended her company’s findings. She said SGS had followed the inspection protocol developed by the Business Social Compliance Initiative, a factory certification group for European businesses.
Ms. Marinos said the protocol for Rosita did not require interviewing workers outside the factory, a practice that she cautioned could undermine a relationship between a Western company and its suppliers.
“You don’t want to start the whole approach with a lack of trust, that they are trying to fool you, that they are behaving unethically,” she said. “It can sour an entire relationship.”
Bypassing Inspection Rules
The Walmart purchase orders read “Ethical Standards Required.”
In mid-2011, the Quaker Pet Group, whose biggest customer was Walmart, began looking for cheaper factories where its trendy dog clothes could be made, according to a former Quaker employee who requested anonymity for fear of reprisal from Quaker. The company has also sold its goods to Petco, PetSmart and smaller retailers.
Quaker settled on a plant called Jiutai Bag and Gift Factory in Dongguan, Guangdong. After visiting the site, Quaker’s president, Neil Werde, sent a note to a Jiutai representative in June 2011. “I was pleased with your factory,” Mr. Werde wrote, according to an e-mail shared by the former employee. “Good luck on the Walmart inspection.”
That inspection did not occur. Quaker officials became concerned that Jiutai would not be able to pass an inspection, the former employee said.
But there was a workaround. While Jiutai would make the garments, Quaker would fill out order forms to say that the items had been made by Ease Clever Plastic Manufactory, then an approved Walmart supplier. Ease Clever is an established manufacturer that ships products to Target and other large companies, according to the global trade database Panjiva. Jiutai, by contrast, had only one recent listing in the database, for a small shipment to Puerto Rico in 2011.
The stickiest issue was how to get the clothing made by Jiutai past Walmart inspectors. An inspection at Ease Clever was scheduled for September 2011, when the Walmart representatives would check that the dog outfits were being manufactured there, the former employee said.
Jiutai simply took the clothes to Ease Clever, according to the former employee. Those moves were outlined in a later e-mail from a Jiutai representative to Mr. Werde.
“The Walmart inspectors showed up and said, ‘Oh, they are being made here.’ It’s not as challenging as you would think,” the
former employee said. “You have your finished-goods area and just show them the cartons being packed out.”
In an e-mail to Mr. Werde, the Jiutai representative, identified as Mr. Hu, detailed how the setup had worked as he pushed Quaker for payment.
In July, Mr. Hu wrote, a company based in Hong Kong called KYCE, apparently acting as a liaison, helped arrange an order for the Christmas dog clothes. “JiuTai only make the clothes,” Mr. Hu wrote.
In September, “we hang the clothes” in display cases and “send to Ease Clever warehouse for Walmart during inspection,” Mr. Hu added, including photographs of the costumes. After the inspection, the clothes went back to Jiutai, and Jiutai, after making final adjustments, packed and delivered the clothes to the shipping terminal, Mr. Hu wrote. Mr. Hu and KYCE representatives did not respond to multiple e-mails seeking comment.
Throughout September, according to Walmart purchase orders, Quaker shipped $2.1 million worth of pet outfits from Yantian, China, to various American ports. The purchase orders list Mrs. Claus dresses, Santa suits and reindeer suits — the exact outfits Mr. Hu of Jiutai said he had made at his factory and then photographed. But the purchase orders list Ease Clever as the supplier, not Jiutai.
Contacted by telephone last month about the inspection and shipment, Jay Xie, a sales manager for Ease Clever, said the company had allowed the use of its Walmart certification. “His factory had not yet been audited — he used my factory because it was already audited,” Mr. Xie said of the Jiutai factory manager. Mr. Xie said this had happened only once, as a friendly act to help a fellow manufacturer.
The shipment, though, was late, according to the former employee and Mr. Hu’s e-mail. And soon after Walmart started selling these items, Quaker began receiving complaints, according to the former employee. When Walmart conducted a quality test on the Mrs. Claus dress, it found holes, and the outfit failed the test. Walmart executives then summoned Quaker employees to its sourcing office in Shanghai for an explanation, but Quaker did not disclose the subcontracting to Walmart at that time, the former employee said.
In March 2013, Walmart received a tip, via its global ethics hot line, about the unauthorized subcontracting and looked into it.
Kevin Gardner, a spokesman for the company, confirmed that subcontracting in this case occurred in 2011, and that Walmart officials “met with the supplier after the investigation to go through the findings and reinforce what our expectations are pursuant to subcontracting.”
Even though Walmart was alerted to the case nearly two years after the products were made and only after a hot line tip, the retailer pointed to the episode as an example of how its investigation and compliance system was working, not faltering.
“We investigated. We talked with the supplier. We think this does show the processes were in place,” Mr. Gardner said.
In January of this year, Walmart established a “zero tolerance” policy, saying it would drop suppliers who used subcontractors without the company’s approval. Walmart adopted the policy after garments headed to the company were found in the fire debris at Tazreen, an unauthorized factory.
Quaker and Mr. Werde declined to comment. The pet specialty company remains a Walmart supplier, Mr. Gardner said.
Cat-and-Mouse Games
The question-and-answer sheet that the factory’s managers distributed to all their employees was explicit: if an inspector ever asked, “Are there injury records?” they were to answer, “Have not heard of any work-related injuries.”
And if an inspector asked, “Any corporal punishment in the factory?” the employees were to reply, “No.” If monitors inquired about underage workers at the plant, employees were coached to respond, “Employment for those less than 16 years old is prohibited.”
This sheet, prepared by managers at a Chinese factory and obtained by The Times, had one purpose: to trick inspectors.
Supply chain experts and monitors say that far too often, factory managers play cat-and-mouse games with inspectors because they are desperate to avoid a failing grade and the loss of a lucrative stream of orders.
The experts provided real-life examples. To avoid appearing illegally overcrowded, one factory moved many machines into trucks parked outside during an inspection, a monitor said. Whenever inspectors showed up at certain plants in China, the loudspeakers began playing a certain song to signal that underage workers should run out the back door, according to several monitors. During inspections in India, some factories displayed elaborate charts detailing health and safety procedures that, like stage props, were transferred from one factory to another, another monitor said.
For monitoring companies with major retailing clients, the auditing regimen can be nonstop. The territory itself is daunting — 5,000 factories produce garments in Bangladesh alone. A retailer that uses 1,000 factories worldwide might want to pay no more than $1,000 an inspection — that could mean a one-day, check-the-box audit — instead of $5,000 for thorough, five-day inspections. That would cost $1 million instead of $5 million.
“You have this intense price pressure downward on these inspection firms, turning them into a commodity business,” said Mr. O’Rourke of the University of California, Berkeley.
Auret van Heerden, president and chief executive of the Fair Labor Association, a nonprofit group that Apple uses to monitor its Foxconn factories in China, said many inspectors were too rushed. “Many are doing a factory a day, and many auditors, more than one factory a day,” he said. “They’re on a plane and going to a new city the next day. They don’t have much time to think about it or dwell on it.”
Despite some improvements, many supply chain experts say monitoring has inherent shortcomings. Not long ago, Nike and other sporting goods companies were shaken by revelations that children, ages 5 to 14, toiled up to 11 hours a day making soccer balls for them in Sialkot, Pakistan.
A study found that half of Pakistan’s soccer ball workers were making less than the minimum wage, with many stitching the balls’ panels together at home, making it hard for factory monitors to unearth such violations.
Nike responded by requiring its main contractor there, Silver Star, to consolidate production in one big factory. Knowing how skilled many contractors have become at gaming the monitoring system, Nike took an unusual step and ordered Silver Star to set up a system of elected worker representatives who would be charged with speaking up about safety problems, wage violations or other issues.
“We’ve learned that monitoring alone isn’t enough,” said Greg Rossiter, Nike’s chief spokesman.
Mr. van Heerden said, “You can never visit facilities often enough to make sure they stay compliant — you’ll never have enough inspectors to do that. What really keeps factories compliant is when workers have a voice and they can speak out when something isn’t right.”
Still, after a string of fatal disasters and repeated failures in uncovering serious violations, many experts doubt that even a highly organized and supervised inspection industry can improve factory conditions in country after country. Heather White, a research fellow at Harvard and a longtime factory auditor, said, “It starts as a dream, then it becomes an organization, and it finally ends up as a racket.”
Made in America not just a slogan anymore
in Uncategorized/by MAM TeamLet us celebrate that this Labor Day 2013 is trending toward its home-grown meaning.
No offense to American union workers, but we don’t exactly have to look for the ladies’ garment workers label to determine whether our clothing is made in the good ol’ U.S. of A.
Labels on garments that are branded by Reebok (Thailand), Old Navy (Indonesia, Cambodia and Madagascar) and Target’s Mossimo (Egypt) remind us why bathing beauties this summer might have preferred and looked so enticing in made-in-America Longitude swimwear.
But there appears to be several reasons why a manufacturing trend is on the horizon — and if a resurgence in U.S.-manufactured goods and exports continues, well, that will bode well for the U.S. economy in general and U.S. jobs in particular.
Here’s some background, courtesy of an dailyfinance.com article posted Friday.
“Just a few years ago, you likely wouldn’t have believed an article touting American manufacturing as a growing force in the global economy — and for good reason. For much of the past 15 years, U.S. exports and our manufacturing sector have been on the decline. But that trend appears not only to be slowing, but reversing. The data is driven by America’s increasing oil production, a commitment from retailers to buy more domestic goods, and other companies bringing their previously offshored manufacturing back home — a trend called ‘reshoring.’ “
And here’s the not-made-in-America skinny: “U.S. manufacturing accounted for 19 percent of global exports in the year 2000. By 2011, that number had shrunk to 11 percent. During that same time, Chinese manufacturing surged from 7 percent to 21 percent of global exports. For the American factory and its workers, not to mention the economy, these were troubling numbers,” as dailyfinance.com reported.
Corporate America, the 1 percenters being ripped to shreds by Big Labor and their bed partners — liberals and progressives — are seemingly flipping the well-scripted criticism of greed.
Analysts say that with manufacturers currently employing 12 million Americans, a U.S. export boom could push down our unemployment rate by 2 to 3 points to 5.4 percent — relief worth praying for.
The dailyfinance.com article said Chinese manufacturing is maturing and explained it this way: “According to the Boston Consulting Group, the U.S. is becoming one of the least expensive places in the developed world for manufacturing. We’ve got cheap domestic sources for energy (thanks to the shale gas production boom), as well as relatively low wages. These cost advantages make U.S. manufacturing more akin to China or India just a couple of years ago. BCG projects that by 2015, U.S. labor will cost between 8 percent and 18 percent less than in the other five major export economies (Germany, Japan, France, Italy, and Great Britain).”
Companies banking on “Made in America” labels include Brooks Brothers, which bought a plant in Haverhill, Mass., a few years ago to make suits here instead of offshore, and Caterpillar opened a $200 million plant in Texas a year ago.
And the No. 1 brand in motorcycling, Harley-Davidson, the 110-year-old stalwart of “Made in America,” is even reworking its management-labor relations by renegotiating with unions and granting workers more flexible job classifications and duties.
“[T]he combination of reshoring and building out new manufacturing facilities in the U.S. could create as many as 5 million new jobs here,” dailyfinance.com said.
So, see. It’s all good.
The dreamers in and around the comprehensive immigration-reform movement are having their say about being “Born in the USA.” Well, corporate America is retrending toward having its say, too.
“Made in America?”
Hard-working Americans should bet on it.
Happy Labor Day.
The Dirty Job America Must Now Embrace — Closing the Skills Gap
in Uncategorized/by MAM TeamRowe traveled the world for the past six years taking on jobs with people that were dangerous or just plain disgusting that Americans do every day to make a living.
Personally learning how to make snakes vomit for science or having an angry African monkey named ‘Patty’ stare you down while creating livable space for her and 24 of her friends were two of my favorites!
SkillsUSA was awesome! Awesome! G-d’s work and I don’t say that lightly. They have over 340,000 youth in our schools learning trades and many are STEM trades such as: Digital Marketing, Robotics, Inventions, Electrical Engineering and also Welding, Motorcycle Repair, Automotive, Criminal Justice and more! There were 10,000 at the conference and some very very proud CTE (Career & Technology Education teachers). They boast 98 percent high school graduation rates from their research. WOW! The national average is just over 70 percent.
Walking around the huge Expo center with Edie Fraser, our dynamic CEO at STEMconnector watching kids compete for their destinies (most competitions were at 8 hours long!) was mesmerizing.
Now I hate to be crude, but at least 8 board member plus 100 more corporate and education leaders asked me if this was my ‘first time,’ at the conference with such zeal it was like the Madonna song — you know which one I’m referring to…
“Whatever Kool-Aid they are manufacturing and mixing, that’s a promising skill into itself,” I mused. How do we bottle more of that to build our workforce?!
Rowe with his signature baseball cap and jeans pointed out that in the ’70s, colleges created a poster campaign that told us to work smarter not harder, and the campaign was spectacularly successful! Rowe also shared his view that this campaign was the worst advice ever given. Why?
Because…
Out went vocational education and skills-based learning for jobs.
In came college, college, college-bound, NCLB, college loans, and over a trillion in debt.
We shifted focus off of skills and trade and the great equalizer of our country became to get kids college bound and degreed.
We became a country where testing scores are currency and not whether a child can show up on time, a positive mental attitude, focused resume and a work ethic to become an expert in a craft or skill.
We forgot how to just make something that America could sell and many ‘dirty jobs’ were viewed as beneath us in our quest to work smart but not necessarily hard.
Mike and others have pointed out time and time again to us that most jobs require a two-year degree (yeah, community colleges!) or less, and technical training and certifications. Also pointed out is that many of these jobs, especially if technology or engineering are involved, can start with salaries in the late 40’s and 50’s. The U.S. Department of Labor shares that only 18 percent of jobs require a 4-year college degree.
“We must be prepared with the skills for America so America will be prepared,” said the dynamic youth president on the podium at opening night. The event resembled a Junior Olympics or rock concert with “America Needs Me” posters abound.
I spoke to him afterwards and he would like very much to be a STEM teacher in Automotive Technologies for a few years once he finishes his two-year degree and he plans to continue his education from there.
Rowe suggests that the new motto should be to ‘Work Smart and Hard.’ That’s a campaign we can all get behind. Whether you go to a 4-year college, or a 2-year college, or get some vocational training, know what the jobs you want requires education-wise and what jobs pay to help you map out your decisions and training. Now that’s smart!
I hope you will also be touched for the very first time by SkillsUSA and groups like 4H, Girls Scouts, DECA, YearUp, Invent.org, Youthbuild, NFTE and more that teach real deal skills.
And companies… if you haven’t already and your struggling to hire…
Get dirty and get out there meeting your education institutions to make sure you have a pipeline. Make sure your industry standards are being met and begin mentoring kids in schools and after school on these skills. Judge competitions. Build partnerships. Send equipment they can learn on. Build a school to hire internships and apprenticeship program.
When you go out there and meet rock star workers like the ones we met in Kansas City, consider hiring them. Let them know what training they need now to work for you and hopefully reach them before they rack up hundreds of thousands of dollars in debt.
Putting America Back to Work: 5 Ways Made in USA Is Staging a Comeback
in American Made, Consumer Products, Domestic Sourcing, Jobs, Made in USA, Manufacturing/by The Made in America Movement TeamGood news: Americans are making things again, from cars to watches to socks. What’s behind the manufacturing upswing—and what it means for American labor.
More Reform, Fewer Rules Will Help U.S. Manufacturing
in Uncategorized/by MAM TeamDallas Fed President Richard Fisher has long complained that U.S. politicians have undermined the economic recovery, and he reiterated that message in a speech that nonetheless remained hopeful that American manufacturers could yet become the “most efficient operators in the world.”
A policy hawk who has said the central bank will likely trim its bond-buying program next month, Fisher said little about Fed policy on Thursday except that companies in general have benefited from the monetary accommodation.
In a speech where he compared U.S. manufacturing to the race horse Secretariat, Fisher said the sector could be helped by “throwing out old, counterproductive fiscal and regulatory policies” that would allow manufacturers to outpace their global competition.
“American companies … have taken advantage of the cheap and abundant money made available by the Fed’s very accommodative monetary policy to create lean and muscular balance sheets,” he told a manufacturing conference, according to prepared remarks.
“While there are many risks in the policy that the Fed has been pursuing … every manufacturer of goods in America has been given a great gift by your central bank,” Fisher said.
The Fed has kept interest rates near zero since 2008 and more than tripled its balance sheet to some $3.6 trillion in an unprecedented effort to lower borrowing costs and encourage investment, hiring and growth.
But the recovery has been erratic and growth has remained below 2 percent this year thanks in part to tighter fiscal policies.
While U.S. manufacturing production took a beating in the 2007-2009 recession, it has rebounded in recent years and the latest monthly data show factory activity jumped to a two-year high in July.
“The remaining obstacle to being the absolute best economy for manufacturers and other businesses, bar none,” Fisher added, “has been fiscal and regulatory policy that seems incapable of providing job-creating manufacturers and other businesses with tax, spending and regulatory incentives to take advantage of the cheap and abundant fuel the Fed has provided.”
'Made in USA' On The Rise As Manufacturing Costs Drop
in Uncategorized/by MAM TeamAccording to the Boston Consulting Group (BCG), the U.S. is fast becoming one of the lowest-cost countries for manufacturing in the developed world. BCG argues that average manufacturing costs in Germany, Japan, France, Italy, and the U.K. will be 8 to 18 percent higher than in the U.S. by 2015.
The report states that export manufacturing in the U.S. is a unsung hero of the economic recovery, noting: “Despite all the public focus on the U.S. trade deficit, little attention has been paid to the fact that the country’s exports have been growing more than seven times faster than GDP since 2005.”
BCG found that the U.S. is increasingly attractive for businesses due to lower costs of labor, (adjusted for productivity), natural gas, and electricity.
U.S. manufacturing activity hit a five-month high in August as hiring picked up and new orders increased at their fastest pace since January, a Markit report showed last Thursday.
However, BCG’s report argues that we are currently just witnessing the beginning of a major shift in global manufacturing.
“Over the past 40 years,factory jobs of all kinds have migrated from high-cost to low-cost countries,” said Harold L. Sirkin, co-author of the report. “Now, as the economics of global manufacturing changes, the pendulum is finally starting to swing back. In the years ahead, it could be America’s turn to be on the receiving end of production shifts, as more companies use the U.S. as a low-cost export
BCG believes the U.S. will capture between $70 billion and $150 billion in annual exports from other nations by 2020, with two-thirds of these export gains emanating from production shifts to the U.S. from leading European nations and Japan.
Furthermore, by 2020, with more production work shifting back to the U.S. from China, between 2.5 million and 5 million American factory and service jobs could be created. BCG believes that would mean the U.S. unemployment rate could drop by up to three percentage points from its current rate of 7.4.
Chris Williamson, chief economist at Markit, agreed with the BCG’s findings, though questioned the reliability of the time-frame of when America would emerge once more as a cheap,manufacturing powerhouse, and the precise effect it would have on the wider economy.
“It’s difficult to gauge the extent to which the U.S. economy will benefit and over what time scale,”he said, adding, “It is becoming increasingly evident that many companies are shifting production back to the U.S. from low-cost countries, notably China, as the advantages of having a production base in these countries fades or are re-evaluated.”
The BCG’s report references a number of foreign companies, such as Toyota, Airbus, Yamaha, Siemens and Rolls-Royce, who have already started to move more of their production facilities to the U.S.
While BCG cited low labor, natural gas and electricity costs, Williamson emphasized lead-times. “Before, a lengthy, six-month transport time for goods to be shipped from Asia could be tolerated given the cost advantage,” Williamson said. “But,as the cost advantage fades, the trade-off between cost and timeliness works in the latter’s favor. With the increasing use of 3-D printing, this trade-off will of course work even more in favor of localized production.”
Indeed, Mary Anne Greczyn, a spokesman for Airbus, said this was why the aircraft manufacturer was opening a factory in Mobile, Alabama.
“As you would imagine, for an airline such as JetBlue or American Airlines to have to come to Europe every time they get an aircraft delivered can be time- and resource- consuming,” Greczyn said. “When the new facility in Mobile is up and running, they will need only to travel to Alabama for their A320 Family aircraft.”
Greczyn added that Airbus was not moving, shifting or reshoring construction to America, but simply expanding its production facilities.
Williamson broadly agreed with the BCG report, but warned that it would be many years before the “renaissance” of the goods-producing sector in the U.S.
PR Ploy Or Not, Walmart’s ‘Made In America’ Push Means Something
in Economy, Jobs, Made in USA, Manufacturing, Reshoring, Walmart/by MAM TeamLast week, Walmart expanded on the $50 billion Buy American pledge it made last January with a full-fledged Made-in-America summit.
Read more