DETROIT (Reuters) – For nearly six decades Detroit’s story has been one of relentless erosion of its once mighty manufacturing base, but even as the Motor City faces a long bankruptcy a clutch of small producers has moved in to rekindle the “Made in Detroit” brand.
Reposted from Reuters:
Making products ranging from bicycles to luxury watches and “sleeping bag” coats designed for the homeless, these small firms have tapped into a surprising amount of demand for goods made in a city more commonly associated today with failure and decline.
“Our customers come from all walks of life and are looking for a little bit of soul and something that is authentically Detroit,” said Eric Yelsma, founder of Detroit Denim Co., which produces hand-made jeans. “We can’t make them fast enough.”
Unlike deep-pocketed Dan Gilbert, co-founder of online mortgage provider Quicken Loans who has helped spur a downtown boom here by moving in 9,000 employees and spending $1 billion in the process, Detroit’s new entrepreneurs are winging it.
“None of us have ever done this before,” said Zak Pashak, who has invested $2 million in Detroit Bikes, which will start production of its “urban bike” model in August and aims to build 40,000 bicycles a year.
“We just jumped in with both feet,” said Pashak, who started out as a bar owner in his native Calgary and wound up in Detroit, a city he had admired since childhood for its Motown music. “America needs jobs, which is a good reason to start making stuff here again.”
Detroit’s manufacturing startups have yet to have much impact on a city unemployment rate that stood at 11.7 percent in June. As a whole, they have created only a few hundred jobs, just a fraction of the 7,700 manufacturing jobs created in the sector from March 2012 to March 2013 in the Detroit metropolitan area, according government data.
Small as they are, Detroit’s manufacturing startups offer faint signs of economic diversification after decades of reliance on the automakers or grand schemes to revitalize Detroit such as casinos. They are also making relatively expensive niche goods in a city where consumer spending power has been battered for years.
“I think these small firms offer better hope for Detroit than any big answer,” said Margaret Dewar, an urban planning professor at the University of Michigan. “The city has always looked for a big solution to its problems, which hasn’t worked.”
The auto industry built Detroit, drawing hundreds of thousands of jobs here. But as U.S. automakers shifted production elsewhere, the city’s population fell from a peak of 1.8 million in 1950 to around 700,000, and only one large-volume auto plant still makes cars in the city. Detroit has long-term debt of more than $18 billion and on July 18 the state-appointed emergency manager, Kevyn Orr, filed for Chapter 9 bankruptcy protection, the largest ever U.S. municipal bankruptcy.
“LOOKING TO THE FUTURE”
Detroit’s new entrepreneurs have come despite the city’s strained finances, undaunted by the lack of street lights in many neighborhoods and patchy basic services like police and emergency services.
“Most of the people who have set up here are family and friends who have done so regardless of poor services,” said David Egner, executive director of the New Economy Initiative, a $100 million fund to aid entrepreneurs in Detroit.
They are encouraged by Orr’s plans to invest in services and infrastructure as part of the city’s restructuring. “Once services improve, I think we’ll see growth from companies outside that group of family and friends,” Egner said.
The largest of the city’s small newcomers is a watch maker called Shinola, a Depression-era brand name purchased in 2011 when the company set up shop. Dallas-based Bedrock Manufacturing, a venture capital firm backed by Tom Kartsotis, founder of accessory firm Fossil Inc., decided to take advantage of Detroit’s underutilized workforce and resonant Made-in-America mystique.
“When we came here we found a lot of dynamic young people who were not focused on Detroit’s past, but were looking to the future,” said Bedrock CEO Heath Carr. “There is a movement in the United States for Made in America goods, but our question was would they support it with their wallets, because most things made here are more expensive.”
Recent consumer research, including a November 2012 Boston Consulting Group survey, indicates around 80 percent of U.S. respondents are willing to pay a premium for American-made goods.
Bedrock spent an undisclosed sum on equipment and on months of training for workers to assemble Shinola watches in a clean environment not far from downtown Detroit. The parts mostly come from Switzerland or China, but the company has two certified watchmakers on staff who can modify designs.
“It means a lot to me to be able to make these watches here in Detroit,” said Jalil Kizy, a Detroit native and one of Shinola’s two watchmakers. Until Shinola came along, Kizy was like many Michigan natives who have felt they would need to leave the state to find work.
Shinola’s 75-person workforce has the capacity to produce 500,000 watches a year. The first batch of 2,500 watches, priced from $475 to $800 each, sold out in days early this year to buyers across the United States. The company has had teething problems delivering products, Carr said, in part because Shinola underestimated demand.
“It’s a good problem to have,” Carr said. “But we are working to manage customer expectations.”
Shinola also assembles Shinola bikes here, competing with at least two other small-scale bike makers: Detroit Bicycle Company and custom bike builder Slingshot Bikes, which is relocating from Grand Rapids in western Michigan. Pashak’s Detroit Bikes will employ 30 people when production begins in August.
“CRAZY OLD”
The city’s new manufacturers face challenges common to many new businesses: managing consumer expectations while struggling to meet demand, finding qualified workers to ramp up production, or bearing the cost of training new ones.
Eric Yelsma formed Detroit Denim after losing his job selling specialty printing chemicals once oil hit $100 a barrel in 2008. Yelsma wants to expand Detroit Denim’s four-person payroll, but few Americans know how to make jeans anymore.
“The labor pool for this business is pretty much minimal,” he said. “So far, we’ve come up dry.”
A local veterans’ group is considering a plan to fund a six-month training course for three veterans to become “jean smiths” on what Yelsma describes as “crazy old” sewing machines, one more than a century old. Detroit Denim’s jeans sell for $250.
Detroit Denim shares space with the non-profit Empowerment Plan, which makes sleeping bag coats for the homeless. Backed by Quicken Loans’ Gilbert and Spanx founder Sara Blakely, Empowerment Plan makes coats from donated materials – insulation from General Motors and material from workwear brand Carhartt.
Veronika Scott, a 24-year-old graduate of Detroit’s College for Creative Studies who founded Empowerment Plan, said most of the nine formerly homeless women she employs have found places to live since getting a job. Demand for the coats is strong enough that Scott is planning a “buy one, give one” program this fall: for $200, customers will get a coat and have one donated to a homeless person.
Andrew Pierce, U.S. president of marketing consultancy Prophet, said Detroit’s new manufacturers are tapping into Detroit’s reputation much as U.S. automake
r Chry
sler has with its “Imported from Detroit” commercials.
“The Detroit brand is very authentic and a little bit gritty in a good way,” Pierce said. Beyond a growing desire for American-made goods, the attraction of Detroit “is that part of the American dream is all about the rebuild out of a crisis.”
(Reporting By Nick Carey; Editing by David Greising and Claudia Parsons)
Re-Shoring Jobs With The Moto X
in Uncategorized/by MAM TeamRecent news in and around the smartphone space points to an increasingly challenging environment:
After rattling those data points off, one would think the smartphone market is on a downward spiral, yet the latest figures from Strategy Analytics confirm the market continues to grow. In the June quarter, the third party research firm tabulated more than 229.6 million smartphones were shipped, up 10% from the March quarter and 47% compared to the year ago quarter. Looking at data from the GSM Association, there are more than 3.2 billion unique mobile subscribers as of August 2013 and that firm forecasts continued growth to 3.9 billion by 2017.
While there may be slower growth ahead, there is still growth to be had as smartphones continue to take share from basic and feature mobile phones. That shift is best seen in Nokia, which reported a sequential 4% drop in mobile phone shipments in the June quarter. On a year over year basis, the shift is far more evident as Nokia’s mobile phone shipments dropped nearly 27%.
PowerTalk with Motorola Mobility MMI NaN% on the Moto X and bringing jobs back to the U.S. One company that is doubling down on the smartphone opportunity is Motorola Mobility, which is now owned by Google, the company behind the Android mobile operating system. This past week the two companies introduced their first jointly developed smartphone – the Moto X – and I was fortunate enough to speak with Mark Randall, Motorola’s Senior Vice President of Supply Chain and Operation, about the Moto X and what it means for job creation here in the U.S. Mark was formerly of Amazon and as he tells me he helped design the Fort Worth plant where the Moto X will be assembled, back when he worked with Nokia.
During our conversation, Mark talks about the high degree of customization that is possible with the Moto X and while he is tight lipped about what may be next for Motorola Mobility he does point out the size of the Fort Worth, Texas facility. At roughly 500,000 square feet, Motorola and its partner Flextronics International aim to employ 2,200 people when the Moto X ramps to full production. Reading between the lines, it sounds like the Fort Worth facility could be the home for more products and potentially more jobs.
Given the market share gains by Chinese mobile phone and smartphone vendors like Huawei, ZTE and Lenovo, many are concerned about the about the ability to compete with those vendors and be profitable while manufacturing in the U.S. Given the high degree of customization that Motorola Mobility is offering with the Moto X, Mark points out it would have been far more difficult doing this with China based manufacturing partners. He also tells me the closeness of the design team and the manufacturing-assembly team was also crucial and that the labor costs between manufacturing in the U.S. and China were not as far off as many might think.
Moto X will be available in the US, Canada and Latin America starting in late August/early September at AT&T, Sprint Nextel, Verizon Communications, T-Mobile and other carriers as well as at Best Buy stores and Motorola.com.
Given the not only lower than expected job creation numbers reported in the July Employment Report from the Bureau of Labor Statistics but also the low quality nature of the report, the re-shoring of jobs by Motorola is welcome news.
While I am all for re-shoring jobs back to the U.S., as investors we have to wonder how successful the Moto X will be. The smartphone space is crazy competitive, and a single product can carry you only so far. Longtime followers of Motorola remember the RAZR craze, but without a killer follow-up product, Motorola soon began to lose its way. Time will tell how successful the Moto X will be and if there will be follow on products, but given its association with Google, Motorola Mobility now has some deep pockets to fall back on and that means it is far from out of the smartphone race. Those deep pockets are making a good sized bet on the Moto X given the $500 million in marketing and advertising that Google is going to spend on the new smartphone.
Because the Moto X will have a little more than one month of availability at best in the current quarter, that marketing and advertising blitz likely means even greater losses at Motorola for the near term. In the June quarter, Motorola Mobility lost more than $200 million on the operating line on $998 million in revenue. Some quick math shows that an incremental $500 million will sap $1 per share in earnings for Google in the coming quarters, but that’s small potatoes compared with the better than $43 per share that Google is expected to earn this year. If the product receives positive buzz, it will be a positive for Google shares.
Crumbling American Dreams
in Uncategorized/by MAM TeamMy hometown — Port Clinton, Ohio, population 6,050 — was in the 1950s a passable embodiment of the American dream, a place that offered decent opportunity for the children of bankers and factory workers alike.
But a half-century later, wealthy kids park BMW convertibles in the Port Clinton High School lot next to decrepit “junkers” in which homeless classmates live. The American dream has morphed into a split-screen American nightmare. And the story of this small town, and the divergent destinies of its children, turns out to be sadly representative of America.
Growing up, almost all my classmates lived with two parents in homes their parents owned and in neighborhoods where everyone knew everyone else’s first name. Some dads worked in the local auto-part factories or gypsum mines, while others, like my dad, were small businessmen. In that era of strong unions and full employment, few families experienced joblessness or serious economic insecurity. Very few P.C.H.S. students came from wealthy backgrounds, and those few made every effort to hide that fact.
Half a century later, my classmates, now mostly retired, have experienced astonishing upward mobility. Nearly three-quarters of them surpassed their parents in education and in that way advanced economically as well. One-third of my classmates came from homes with parents who had not completed high school and, of that group, nearly half went to college.
Low costs at public and private colleges across Ohio were supplemented by locally raised scholarships — from the Rotary Club, the United Automobile Workers, the Junior Women’s Club and the like. Although the only two black students in my class encountered racial prejudice in town and none of their parents had finished grade school, both reached graduate school. Neither for them nor for our white classmates was family background the barrier to upward mobility that it would become in the next century.
J’s rise from a well-knit but modest working-class family to a successful professional career was not atypical, as a recent survey of my classmates revealed. My classmates describe our youth in strikingly similar terms: “We were poor, but we didn’t know it.” In fact, however, in the breadth and depth of the social support we enjoyed, we were rich, but we didn’t know it.
As we graduated, none of us had any inkling that Port Clinton would change anytime soon. While almost half of us headed off to college, those who stayed in town had reason to expect a steady job (if they were male), marriage and a more comfortable life than their parents’.
But just beyond the horizon a national economic, social and cultural whirlwind was gathering force that would radically transform the life chances of the children and grandchildren of the graduates of the P.C.H.S. class of 1959. The change would be jaw dropping and heart wrenching, for Port Clinton turns out to be a poster child for changes that have engulfed America.
The manufacturing foundation of Port Clinton’s modest prosperity in the 1950s and 1960s began to tremble in the 1970s. The big Standard Products factory at the east end of town provided nearly 1,000 steady, good-paying blue-collar jobs in the 1950s, but the payroll was more than halved in the 1970s. After two more decades of layoffs and “give backs,” the plant gates on Maple Street finally closed in 1993, leaving a barbed-wire-encircled ruin now graced with Environmental Protection Agency warnings of toxicity. But that was merely the most visible symbol of the town’s economic implosion.
Manufacturing employment in Ottawa County plummeted from 55 percent of all jobs in 1965 to 25 percent in 1995 and kept falling. By 2012 the average worker in Ottawa County had not had a real raise for four decades and, in fact, is now paid roughly 16 percent less in inflation-adjusted dollars than his or her grandfather in the early 1970s. The local population fell as P.C.H.S. graduates who could escape increasingly did. Most of the downtown shops of my youth stand empty and derelict, driven out of business by gradually shrinking paychecks and the Walmart on the outskirts of town.
Unlike working-class kids in the class of 1959, many of their counterparts in Port Clinton today are, despite toil and talent, locked into troubled, even hopeless lives. R, an 18-year-old white woman, is almost the same age as my grandchildren. Her grandfather could have been one of my classmates. But when I went off to college on a scholarship from a local employer, he skipped college in favor of a well-paid, stable blue-collar job. Then the factories closed, and good, working-class jobs fled. So while my kids, and then my grandchildren, headed off to elite colleges and successful careers, his kids never found steady jobs, were seduced by drugs and crime, and burned through a string of impermanent relationships.
His granddaughter R tells a harrowing tale of loneliness, distrust and isolation. Her parents split up when she was in preschool and her mother left her
alone an
d hungry for days. Her dad hooked up with a woman who hit R, refused to feed her and confined R to her room with baby gates. She says her only friend was a yellow mouse who lived in her apartment. Caught trafficking drugs in high school, R spent several months in a juvenile detention center and failed out of high school, finally eking out a diploma online. Her experiences left her with a deep-seated mistrust of anyone and everyone, embodied by the scars on her arms where a boyfriend injured her in the middle of the night. R wistfully recalls her stillborn baby, born when she was 14. Since breaking up with the baby’s dad, who left her for someone else, and with a second fiancé, who cheated on her after his release from prison, R is currently dating an older man with two infants born to different mothers — and, despite big dreams, she is not sure how much she should hope for.
R’S story is heartbreaking. But the story of Port Clinton over the last half-century — like the history of America over these decades — is not simply about the collapse of the working class but also about the birth of a new upper class. In the last two decades, just as the traditional economy of Port Clinton was collapsing, wealthy professionals from major cities in the Midwest have flocked to Port Clinton, building elaborate mansions in gated communities along Lake Erie and filling lagoons with their yachts. By 2011, the child poverty rate along the shore in upscale Catawba was only 1 percent, a fraction of the 51 percent rate only a few hundred yards inland. As the once thriving middle class disappeared, adjacent real estate listings in the Port Clinton News Herald advertised near-million-dollar mansions and dilapidated double-wides.
The crumbling of the American dream is a purple problem, obscured by solely red or solely blue lenses. Its economic and cultural roots are entangled, a mixture of government, private sector, community and personal failings. But the deepest root is our radically shriveled sense of “we.” Everyone in my parents’ generation thought of J as one of “our kids,” but surprisingly few adults in Port Clinton today are even aware of R’s existence, and even fewer would likely think of her as “our kid.” Until we treat the millions of R’s across America as our own kids, we will pay a major economic price, and talk of the American dream will increasingly seem cynical historical fiction.
Do you agree with the writer? Can you relate with the story? Please comment below.
A version of this article appeared in print on 08/04/2013, on page SR9 of the National edition with the headline: Crumbling American Dreams.
Admit it. You love cheap clothes. And you don't care about child slave labour
in Uncategorized/by MAM TeamUntil three years ago I did not believe in magic. But that was before I began investigating how western brands perform a conjuring routine that makes the great Indian rope trick pale in comparison. Now I’m beginning to believe someone has cast a spell over the world’s consumers.
This is how it works. Well Known Company makes shiny, pretty things in India or China. The Observer reports that the people making the shiny, pretty things are being paid buttons and, what’s more, have been using children’s nimble little fingers to put them together. There is much outrage, WKC professes its horror that it has been let down by its supply chain and promises to make everything better. And then nothing happens. WKC keeps making shiny, pretty things and people keep buying them. Because they love them. Because they are cheap. And because they have let themselves be bewitched.
Last week I revealed how poverty wages in India’s tea industry fuel a slave trade in teenage girls whose parents cannot afford to keep them. Tea drinkers were naturally upset. So the ethical bodies that certified Assam tea estates paying a basic 12p an hour were wheeled out to give the impression everything would be made right.
For many consumers, that is enough. They want to feel that they are being ethical. But they don’t want to pay more. They are prepared to believe in the brands they love. Companies know this. They know that if they make the right noises about behaving ethically, their customers will turn a blind eye.
So they come down hard on suppliers highlighted by the media. They sign up to the certification schemes – the Ethical Trading Initiative, Fairtrade, the Rainforest Alliance and others. Look, they say, we are good guys now. We audit our factories. We have rules, codes of conduct, mission statements. We are ethical. But they are not. What they have done is purchase an ethical fig leaf.
In the last few years, companies have got smarter. It is rare now to find children in the top level of the supply chain, because the brands know this is PR suicide. But the wages still stink, the hours are still brutal, and the children are still there, stitching away in the backstreets of the slums.
Drive east out of Delhi for an hour or so into the industrial wasteland of Ghaziabad and take a stroll down some of the back lanes. You might want to watch your step, to avoid falling into the stinking open drains. Take a look through some of the doorways. See the children stitching the fine embroidery and beading? Now take a stroll through your favourite mall and have a look at the shelves. Recognise some of that handiwork? You should.
Suppliers now subcontract work out from the main factory, maybe more than once. The work is done out of sight, the pieces sent back to the main factory to be finished and labelled. And when the auditors come round the factory, they can say that there were no children and all was well. Because audits are part of the act. Often it is as simple as two sets of books, one for the brand, one for themselves. The brand’s books say everyone works eight hours a day with a lunch break. The real books show the profits from 16-hour days and no days off all month.
Need fire extinguishers to tick the safety box? Hire them in for the day. The lift is a deathtrap? Stick a sign on it to say it is out of use and the inspector will pass it by. The dark arts thrive in the inspection business. We, the consumers, let them do this because we want the shiny, pretty thing. And we grumble that times are tight, we can’t be expected to pay more and, anyway, those places are very cheap to live in.
This is the other part of the magic trick, the western perception of the supplier countries, born of ignorance and embarrassment. India, more than most, knows how to play on this. Governments and celebrities fall over themselves to laud India for its progress. India is on the up, India is booming, India is very spiritual, India is vibrant. Sure, the workers are poor, but they are probably happy.
No, they are not. India has made the brands look rank amateurs in the field of public relations. Yes, we know it is protectionist, yes, we know working conditions are often diabolical, but we are in thrall to a country that seems impossibly exotic.
Colonial guilt helps. The British in particular feel awkward about India. We stole their country and plundered their riches. We don’t feel able to criticise. But we should. China still gets caught out, but wages have risen and working conditions have improved. India seems content to rely on no one challenging it.
Last week India’s powerful planning commission claimed that poverty was at a record low of 21.9% of the population. It did so on the basis that people could live on 26 rupees (29p) a day in rural areas (33 rupees in urban areas). Many inside India baulk at this. Few outside the country did so.
But times are tough, consumers say. This is the most pernicious of the ideas the brands have encouraged. Here’s some maths from anObserver investigation last year in Bangalore. We can calculate that women on the absolute legal minimum wage, making jeans for a WKC, get 11p per item. Now wave your own wand and grant them the living monthly wage – the £136 the Asia Floor Wage Alliance calculates is needed to support a family in India today (and bear in mind that the women are often the sole earners). It is going to cost a fortune, right? No. It will cost 15p more on the labour cost of each pair of jeans.
The very fact that wages are so low makes the cost of fixing the problem low, too. Someone has to absorb the hit, be it the brand, supplier, middleman, retailer or consumer. But why make this a bad thing? Why be scared of it?
Here is the shopper, agonising over ethical or cheap. What if they can do both? What if they can pluck two pairs of jeans off the rail and hold them up. One costs £20. One costs £20.15. It has a big label on it, which says “I’m proud to pay 15p more for these jeans. I believe everyone has the right to a decent standard of living. My jeans were made by a happy worker who was paid the fair rate for the job.”
Go further. Stitch it on to the jeans themselves. I want those jeans. I want to know I’m not wearing something stitched by kids kept locked in backstreet godowns, never seeing the light of day, never getting a penny. I want to feel clean. And I want the big brands and the supermarkets to help me feel clean.
I want people to say to them: “You deceived us. You told us you were ethical. We want you to change. We want you to police your supply chain as if you care. Name your suppliers. Open them to independent inspection. We want to trust you again, we really do, because we love your products. Know what? We don’t mind paying a few pennies more if you promise to chip in too.”
And here’s the best part: I think they would sell more. I think consumers would be happier and workers would be happier. And if I can spend less time trawling through fetid backstreets look
ing
for the truth, I’ll be happier.
August 2010
We revealed how factories supplying some of the biggest names on the British high street were making workers put in up to 16-hour days. Marks & Spencer, Gap and Next all launched inquiries and pledged to end excessive overtime.
November 2010
We revealed how Monsoon, the fashion chain that pioneered ethical shopping, used suppliers in India who employed child labour and paid workers below the minimum wage. Its global ethical trading manager urged the Indian government to tackle the issue. The company insisted it had a “long-lasting and passionate commitment to ethical trade”.
April 2011
We revealed how workers in China making iPhones and iPads for Apple suffered from illegal working hours and were made to write confession letters for minor misdemeanours. Foxconn, the Apple supplier, said it was trying to improve working conditions.
March 2012
Working with War on Want, we revealed how Bangladeshi workers producing sportswear for Olympic sponsors Adidas, Nike and Puma werebeaten, verbally abused, underpaid and overworked. The companies promised action
August 2012
The Observer, working with Indian anti-trafficking group Bachpan Bachao Andolan, revealed how boys as young as seven were sold to slave traders for work in the sweatshops of Delhi. Soon after the investigation, India’s government introduced new laws against child labour.
November 2012
We revealed claims that women in India who failed to hit impossible targets while making clothes for British high street names were berated, called “dogs and donkeys”, and told to “go and die”.
Daytona State offers manufacturing training
in Uncategorized/by MAM TeamDaytona Beach News-Journal – DAYTONA BEACH — The purpose of the course, according to a flier from the college, is to help students “develop technical skills that can lead to certifications, internships and job interviews” at area manufacturers who have agreed to be partners in the program.
Jayne Fifer, CEO of the VMA, the Ormond Beach-based trade alliance that represents manufacturers throughout the Volusia-Flagler area and surrounding counties, has said in recent interviews that several of her members have been unable to fill available jobs because of a lack of skilled workers.
The classes will be held at Daytona State’s Advanced Technical College at 1770 Technology Blvd. in Daytona Beach.
For more information, call 386-506-3317.
July Jobs Report: Only 162,000 Jobs Added
in Uncategorized/by MAM TeamMany economists expected the addition of 175,000 to 185,000 jobs in July and the average workweek to remain unchanged at 34.5 hours. The average workweek fell by 0.1 hour in July to 34.4 hours.
The monthly jobs report is closely watched by investors for signs that the Federal Reserve will soon taper its bond-buying efforts that have boosted the economy, perhaps leading to a new downturn. The Fed has indicated that it will pull back those purchases, but hasn’t said exactly when that will begin. Job additions have been moderate this year, but not at the level that will cause the jobless rate to fall substantially.
As interest rates edge up from record lows as the Fed reduces its stimulus, there is concern that bond investors will see more losses and the real estate market may cool.
“The report is disappointing, with weaker job growth in July compared to the first half of 2013,” PNC senior economist Gus Faucher said. “Despite the drop in the unemployment rate, the softer job growth in July, combined with the downward revisions to May and June, makes the Federal Reserve slightly less likely to reduce its purchases of long-term assets when it next meets in mid-September.”
Last month, the Labor Department reported a higher-than-expected addition of 195,000 jobs for June, though part-time work increased over 350,000 from May to June, reflecting weakness in the quality of jobs available. Friday’s report included revisions for previous months, lowering the number of jobs added in May to 176,000 from 195,000, and in June to 188,000 from 195,000.
Stephen Bronars, senior economist with Welch Consulting, said the unemployment rate has fallen, in part, because people are giving up their job searches and leaving the labor force.
The report indicated the labor force participation rate, which measures the percentage of adults who are either employed or jobless but actively looking for work, fell to 63.4 percent in July from 63.5 percent in June.
“Even more troubling is that the participation rate is down 0.3 percent from one year ago,” Bronars said.
Another concern, Bronars said, is that over the past two months, half of the gain in employment has been due to an increase in part-time jobs. In addition, there has been a substantial increase over the past two months in the fraction of full-time workers who are working part-time due to slack work and business conditions, he said.
The employment-population ratio was unchanged at 58.7 percent.
“This leaves us in a bit of a no man’s land, not quite close enough to taper, but a bit close enough to expectations that it looks like we have one more month of speculation about the Fed’s intention,” said Joe “JJ” Kinahan, chief strategist with TD Ameritrade.
The economy has been adding jobs for 34 straight months, since October 2010.
On Thursday, the Labor Department’s jobless claims report indicated the number of Americans applying for unemployment benefits fell 19,000 to 326,000, the fewest since January 2008.
On Wednesday, private payroll provider ADP reported employers added 200,000 jobs in July, the fastest pace since December.
And the Commerce Department’s GDP report showed the U.S. economy grew at an annual rate of 1.7 percent in the second quarter of this year, better than what most economists expected but showing only mild growth. In the first quarter, GDP rose only 1.1 percent.
“These rates of growth are about half of what is needed historically to support job gains of 200,000 per month,” said Robert Murphy, an economics professor at Boston College. “The reason for the higher level of job creation may be that employers postponed hiring early in the recovery until they were sure the expansion was on track. If so, then the recent level of job gains simply reflects postponed hiring that is not sustainable. Alternatively, the estimates of economic growth for this year may be revised upward in coming months as more complete data are compiled, supporting the job growth numbers.”
Carol Hartman from DHR International, an executive search firm, is especially concerned about the long term unemployed who are no longer counted in jobs reports.
“Steady job growth, while not robust, defies the tax increases, regulatory environment and large scale changes to healthcare,” she said. “Whether this anemic ‘recovery’ can pick up steam with more business and consumer costs and the financial distress of local municipalities remains to be seen.”
Written by: SUSANNA KIM (@skimm)
ABC News’ Zunaira Zaki contributed to this report.
The Price of ‘Made in China’
in Made in USA/by MAM TeamReposted from The New York Times:
How did this happen? The Metropolitan Transportation Authority says a Chinese fabricator was picked because the two American companies approached for the project lacked the manufacturing space, special equipment and financial capacity to do the job. But the United Steelworkers claims it quickly found two other American bridge fabricators, within 100 miles of New York City, that could do the job.
The real problem with this deal is that it doesn’t take into account all of the additional costs that buying “Made in China” brings to the American table. In fact, this failure to consider all costs is the same problem we as consumers face every time we choose a Chinese-made product on price alone — a price that is invariably cheaper.
Consider the safety issue: a scary one, indeed, because China has a very well-deserved reputation for producing inferior and often dangerous products. Such products are as diverse as lead-filled toys, sulfurous drywall, pet food spiked with melamine and heparin tainted with oversulfated chondroitin sulfate.
In the specific case of bridges, six have collapsed across China since July 2011. The official Xinhua news agency has acknowledged that shoddy construction and inferior building materials were contributing factors. There is also a cautionary tale much closer to home.
When California bought Chinese steel to renovate and expand the San Francisco-Oakland Bay Bridge, for a project that began in 2002, problems like faulty welds by a Chinese steel fabricator delayed the project for months and led to huge cost overruns. Those delays eroded much of the savings California was banking on when it opted for the “cheap” Chinese steel.
There is a second reason not to buy “Made in China” products: jobs. The abiding fact is that steel production is heavily subsidized by the Chinese government. These subsidies range from the massive benefits of a manipulated and undervalued currency to the underwriting of the costs of energy, land, loans and water.
Because of China’s subsidies — most of which are arguably illegal under international trade agreements — its producers are able to dump steel products into America at or below the actual cost of production. This problem is particularly acute now as China is saddled with massive overcapacity in its steel industry.
Of course, every job China gains by dumping steel into American markets is an American job lost. Each steelworker’s job in America generates additional jobs in the economy, along with increased tax revenues. With over 20 million Americans now unable to find decent work, we could certainly use those jobs as we repair the Verrazano Bridge.
The M.T.A. has ignored not only the social costs but also the broader impact on the environment and human rights. Chinese steel plants emit significantly more pollution and greenhouse gases per ton of steel produced than plants in the United States. This not only contributes to global warming but also has a direct negative impact on American soil, since an increasing amount of China’s pollution is crossing the Pacific Ocean on the jet stream.
Finally, when American companies and government agencies opt for Chinese over American steel, they are tacitly supporting an authoritarian regime that prohibits independent labor unions from organizing — one of many grim ironies in today’s People’s Republic. As a result, American workers are forced to compete against Chinese workers who regularly work 12-hour days, six or seven days a week, without adequate safety gear. Both Chinese and American steelworkers wind up as victims.
The bottom line here is this: Buying “Made in China” — whether steel for our bridges or dolls for our children — entails large costs that most consumers and, sadly, even our leaders don’t consider when making purchases. This is hurting our country — and killing our economy.
Peter Navarro, a professor of economics and public policy in the University of California, Irvine business school, directed the documentary film “Death by China.”
Small Manufacturers Bet on Detroit Brand Despite Bankruptcy
in Uncategorized/by MAM TeamMaking products ranging from bicycles to luxury watches and “sleeping bag” coats designed for the homeless, these small firms have tapped into a surprising amount of demand for goods made in a city more commonly associated today with failure and decline.
“Our customers come from all walks of life and are looking for a little bit of soul and something that is authentically Detroit,” said Eric Yelsma, founder of Detroit Denim Co., which produces hand-made jeans. “We can’t make them fast enough.”
Unlike deep-pocketed Dan Gilbert, co-founder of online mortgage provider Quicken Loans who has helped spur a downtown boom here by moving in 9,000 employees and spending $1 billion in the process, Detroit’s new entrepreneurs are winging it.
“None of us have ever done this before,” said Zak Pashak, who has invested $2 million in Detroit Bikes, which will start production of its “urban bike” model in August and aims to build 40,000 bicycles a year.
“We just jumped in with both feet,” said Pashak, who started out as a bar owner in his native Calgary and wound up in Detroit, a city he had admired since childhood for its Motown music. “America needs jobs, which is a good reason to start making stuff here again.”
Detroit’s manufacturing startups have yet to have much impact on a city unemployment rate that stood at 11.7 percent in June. As a whole, they have created only a few hundred jobs, just a fraction of the 7,700 manufacturing jobs created in the sector from March 2012 to March 2013 in the Detroit metropolitan area, according government data.
Small as they are, Detroit’s manufacturing startups offer faint signs of economic diversification after decades of reliance on the automakers or grand schemes to revitalize Detroit such as casinos. They are also making relatively expensive niche goods in a city where consumer spending power has been battered for years.
“I think these small firms offer better hope for Detroit than any big answer,” said Margaret Dewar, an urban planning professor at the University of Michigan. “The city has always looked for a big solution to its problems, which hasn’t worked.”
The auto industry built Detroit, drawing hundreds of thousands of jobs here. But as U.S. automakers shifted production elsewhere, the city’s population fell from a peak of 1.8 million in 1950 to around 700,000, and only one large-volume auto plant still makes cars in the city. Detroit has long-term debt of more than $18 billion and on July 18 the state-appointed emergency manager, Kevyn Orr, filed for Chapter 9 bankruptcy protection, the largest ever U.S. municipal bankruptcy.
Detroit’s new entrepreneurs have come despite the city’s strained finances, undaunted by the lack of street lights in many neighborhoods and patchy basic services like police and emergency services.
“Most of the people who have set up here are family and friends who have done so regardless of poor services,” said David Egner, executive director of the New Economy Initiative, a $100 million fund to aid entrepreneurs in Detroit.
They are encouraged by Orr’s plans to invest in services and infrastructure as part of the city’s restructuring. “Once services improve, I think we’ll see growth from companies outside that group of family and friends,” Egner said.
The largest of the city’s small newcomers is a watch maker called Shinola, a Depression-era brand name purchased in 2011 when the company set up shop. Dallas-based Bedrock Manufacturing, a venture capital firm backed by Tom Kartsotis, founder of accessory firm Fossil Inc., decided to take advantage of Detroit’s underutilized workforce and resonant Made-in-America mystique.
“When we came here we found a lot of dynamic young people who were not focused on Detroit’s past, but were looking to the future,” said Bedrock CEO Heath Carr. “There is a movement in the United States for Made in America goods, but our question was would they support it with their wallets, because most things made here are more expensive.”
Recent consumer research, including a November 2012 Boston Consulting Group survey, indicates around 80 percent of U.S. respondents are willing to pay a premium for American-made goods.
Bedrock spent an undisclosed sum on equipment and on months of training for workers to assemble Shinola watches in a clean environment not far from downtown Detroit. The parts mostly come from Switzerland or China, but the company has two certified watchmakers on staff who can modify designs.
“It means a lot to me to be able to make these watches here in Detroit,” said Jalil Kizy, a Detroit native and one of Shinola’s two watchmakers. Until Shinola came along, Kizy was like many Michigan natives who have felt they would need to leave the state to find work.
Shinola’s 75-person workforce has the capacity to produce 500,000 watches a year. The first batch of 2,500 watches, priced from $475 to $800 each, sold out in days early this year to buyers across the United States. The company has had teething problems delivering products, Carr said, in part because Shinola underestimated demand.
“It’s a good problem to have,” Carr said. “But we are working to manage customer expectations.”
Shinola also assembles Shinola bikes here, competing with at least two other small-scale bike makers: Detroit Bicycle Company and custom bike builder Slingshot Bikes, which is relocating from Grand Rapids in western Michigan. Pashak’s Detroit Bikes will employ 30 people when production begins in August.
“CRAZY OLD”
The city’s new manufacturers face challenges common to many new businesses: managing consumer expectations while struggling to meet demand, finding qualified workers to ramp up production, or bearing the cost of training new ones.
Eric Yelsma formed Detroit Denim after losing his job selling specialty printing chemicals once oil hit $100 a barrel in 2008. Yelsma wants to expand Detroit Denim’s four-person payroll, but few Americans know how to make jeans anymore.
“The labor pool for this business is pretty much minimal,” he said. “So far, we’ve come up dry.”
A local veterans’ group is considering a plan to fund a six-month training course for three veterans to become “jean smiths” on what Yelsma describes as “crazy old” sewing machines, one more than a century old. Detroit Denim’s jeans sell for $250.
Detroit Denim shares space with the non-profit Empowerment Plan, which makes sleeping bag coats for the homeless. Backed by Quicken Loans’ Gilbert and Spanx founder Sara Blakely, Empowerment Plan makes coats from donated materials – insulation from General Motors and material from workwear brand Carhartt.
Veronika Scott, a 24-year-old graduate of Detroit’s College for Creative Studies who founded Empowerment Plan, said most of the nine formerly homeless women she employs have found places to live since getting a job. Demand for the coats is strong enough that Scott is planning a “buy one, give one” program this fall: for $200, customers will get a coat and have one donated to a homeless person.
Andrew Pierce, U.S. president of marketing consultancy Prophet, said Detroit’s new manufacturers are tapping into Detroit’s reputation much as U.S. automake
r Chry
sler has with its “Imported from Detroit” commercials.
“The Detroit brand is very authentic and a little bit gritty in a good way,” Pierce said. Beyond a growing desire for American-made goods, the attraction of Detroit “is that part of the American dream is all about the rebuild out of a crisis.”
(Reporting By Nick Carey; Editing by David Greising and Claudia Parsons)
iPhone 6 Could Be First ‘Made In USA’ iPhone
in Uncategorized/by MAM TeamThey have come under the eye for their labour practices in the past. The Fair Labour Association audit revealed that they had excessive overtime and unfair wages. Of course Foxconn said that they would address these issues and apparently they have done just that as they are addressing these concerns.
On a side note, the latest supply checks show that Apple is finally getting closer to keeping up with demand for the iPhone 5.
iPhone 6 Release Date Could Happen On Labor Day 2013
in Uncategorized/by MAM TeamThe life cycle of Apple could be late summer or very early fall. The invitations from Apple generally go out the week before the event, and this is usually on a Tuesday or Wednesday. IOS 7 could be revealed at the same time and pre-orders for the device could start on the Friday. ISO 7 could be then available for download on the same day.
It has been said that the Apple iPhone 6 may have the quad core processor and this would be faster than the processor of the iPhone 5. If so it would work great with iOS 7 as iOS 7 comes with many new features.
It’s also been said that the iPhone 6 may be coming choices of 16 GB, 32 GB, 64 GB and 128 GB.
Playing ‘The Game’ Of U.S. Clothing Manufacturing
in Uncategorized/by MAM TeamWhen it came to first looking into the business case of manufacturing in the U.S., Stillwell says, “Given what our country has been through over the past few years, we sensed a groundswell of demand for ‘made in the USA’ product.” Given that his company is producing apparel for what is generally considered an “American” sport — baseball — the demand for locally-produced apparel is understandable. Patriotism aside, athletes expect high quality from their clothing, and American-made is often most closely associated with some of the highest quality in the world.
Stillwell says that based on the current situation between American manufacturing and that in Asia, “We may be a bit ahead of the curve in the move back to the U.S. Though the cost gap is shrinking, it’s not ‘closed,’ but our sense of patriotism won out in the end. We’re glad to offer a made in the USA product line and we believe the cost sacrifice will not harm the business.” Still, he believes that gap is bound to close in the coming months, given the rising labor rates in Asia, increased competition cost and continued legislative posturing over unfair currency manipulation.
Textile manufacturing in the U.S. isn’t easy, and clothing is another story altogether. Many have said that the industry was dead — forever — and would continue to bounce between the next low-cost economy rather than ever return to the U.S. Stillwell says, “I think the general challenge with apparel manufacturing in the U.S. is that there is simply a price point where people walk away. An item manufactured in China may cost a consumer $18.99 — but if made in America, may cost $29.99. That’s often too large a price gap for consumers to bear.”
At The Game, Stillwell is actually finding a number of benefits due to manufacturing in the U.S. Yes, prices are higher, and those will be reflected in the retail price of these new products. But the company is manufacturing the line in non-union shops in North Carolina — very close to the company’s headquarters in South Carolina.
Stillwell says, “My favorite business benefit of the move was demonstrated just this past week. I left my office in Alabama mid-morning and was inspecting product in North Carolina by mid-afternoon. That is a far cry from a trip to Shanghai.”
The price gap is changing, too, and despite his company’s own experiment, Stillwell does believe that certain textile and apparel products will see an American-made resurgence. He says that U.S. labor costs are still quite high, particularly in comparison to those in Asia, but that for simple goods, like towels, labor costs are a small portion of the overall cost. Today, those labor-free products can often be automated with new equipment, mitigating most of the labor costs. In many situations, that makes American manufacturing a cost-friendly option, even, and that landscape may change for more complex textile-based products in the near future.
Finding exactly the right way to sell American-made goods is still a bit of a mystery as well. It’s one thing to slap a “Made in America” label on the packaging and hope consumers will respond, but The Game is trying out some different, more unique approaches in order to emphasize how the current line depends entirely upon a U.S.-based supply chain. Stillwell says his favorite slogans, which the company is testing out as it announces the product line, borrow from the “farm-to-fork” movement in the food processing world. “Cotton field to game field,” or, “from farmer to fan,” are among his favorites.
The American Threads collection will be available starting in the fall of 2013, which means the current initiative is still an experiment to The Game, and hasn’t yet been fully proven, despite that up-front demand for American-made goods. Stillwell isn’t quite ready to commit to manufacturing more of his company’s products in America, but he hopes it becomes a reality. Like any good businessman, he’s waiting to see where the dollars lay. He says, “Ideas are always great in theory, but until you see them successful in the cold, hard ‘real world’ there’s always a bit of anxiety.”