There are numerous ideas and recommendations on how we could create jobs but most job creation programs proposed involve either increased government spending or reductions in income or employment taxes at a time of soaring budget deficits and decreased government revenue. Other recommendations would require legislation to change policies on taxation, regulation, or trade that may be difficult to accomplish. The recommendations in this article focus on what could be done the fastest and most economically to create the most jobs while reducing our trade deficit and national debt.
Manufacturing is the foundation of the U. S. economy and the engine of economic growth. It has a higher multiplier effect than service jobs. Each manufacturing job creates an average of three to four other supporting jobs. So, if we focus on creating manufacturing jobs, we would be able to reduce the trade deficit and national debt at the same time.
The combined effects of an increasing trade deficit with China and other countries, as well as American manufacturers choosing to “offshore” manufacturing, has resulted in the loss of 5.7 million manufacturing jobs since the year 2000. If we calculate the multiplier effect, we have actually lost upwards of 17 to 22 million jobs, meaning that we have fewer taxpayers and more consumers of tax revenue in the form of unemployment benefits, food stamps, and Medicaid.
In 2012, the U.S. trade deficit with China reached a new record of
$315 billion. According to a recent
study by the Economic Policy Institute (EPI), the trade deficit with China cost 2.7 million U.S. jobs from 2001-2011. The Department of Commerce estimates that each $1 billion in trade deficit translates to about 13,000 lost jobs, so the $738 billion trade deficit in goods for 2012 cost upwards of 9,599,200 jobs.
What Congress Could DoFirst, Congress should enact legislation that addresses China’s currency manipulation. Most economists believe that China’s currency is undervalued by 30-40% so their products may be cheaper than American products on that basis alone. To address China’s currency manipulation and provide a means for American companies to petition for countervailing duties, the Senate passed S. 1619 in 2011, but GOP leadership prevented the corresponding bill in the House, H. R. 639, from being brought up for a vote, even though it had bi-partisan support with 231 co-sponsors. On March 20, 2013, Sander Levin (D-MI), Tim Murphy (R-PA), Tim Ryan (D-OH), and Mo Brooks (R-AL) introduced the Currency Reform for Fair Trade Act in the House and a corresponding bill will be introduced in the Senate.
Second, Congress should strengthen and tighten procurement regulations to enforce “buying American” for all government agencies and not just the Department of Defense. All federal spending should have “buy America” provisions giving American workers and businesses the first opportunity at procurement contracts. New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction. No federal, state, or local government dollars should be spent buying materials, equipment, supplies, and workers from China.
My other recommendations for creating jobs are based on improving the competitiveness of American companies by improving the business climate of the United States so that there is less incentive for American manufacturing companies to outsource manufacturing offshore or build plants in foreign countries. The following proposed legislation would also prevent corporations from avoiding paying corporate income taxes:
- Reduce corporate taxes to 25 percent
- Make capital gains tax of 15 percent permanent
- Increase and make permanent the R&D tax credit
- Eliminate the estate tax (also called the Death Tax)
- Improve intellectual property rights protection and increase criminal prosecution
- Prevent sale of strategic U.S.-owned companies to foreign-owned companies
- Enact legislation to prevent corporations from avoiding the U.S. income tax by reincorporating in a foreign country
It is also critical that we not approve any new Free Trade Agreements, such as the Trans-Pacific Partnership and Trans-Atlantic Partnership that are currently proposed. The U.S. has a trade deficit with every one of its trading partners from NAFTA forward, so Free Trade Agreements have hurt more than helped the U.S. economy.
What States and Regions Could Do
State and local government can work in partnership with economic development agencies, universities, trade associations, and non-profit organizations to facilitate the growth and success of startup manufacturing companies in a variety of means:
Improve the Business Climate – Each state should take an honest look at the business climate they provide businesses, but especially manufacturers since they provide more jobs than any other economic sector. The goal should be to facilitate the startup and success of manufacturers to create more jobs. I recommend the following actions:
- Reduce corporate and individual taxes to as low a rate as possible
- Increase R&D tax credit generosity and make the R&D tax credit permanent
- Institute an investment tax credit on purchases of new capital equipment and software
- Eliminate burdensome or onerous statutory and environmental regulations
Establish or Support Existing Business Incubation Programs, such as those provided by the members of the National Business Incubation Alliance. Business incubators provide a positive sharing-type environment for creative entrepreneurship, often offering counseling and peer review services, as well as shared office or laboratory facilities, and a generally strong bias toward growth and innovation.
Facilitate Returning Manufacturing to America – The Reshoring Initiative, founded by Harry Moser in 2010, has a mission to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from “offshoring is cheaper” to “local reduces the total cost of ownership.” The top reasons for U. S. to reshore are:
- Brings jobs back to the U.S.
- Helps balance U.S., state and local budgets
- Motivates recruits to enter the skilled manufacturing workforce
- Strengthens the defense industrial base
According to Mr. Moser, the Initiative has documented case studies of companies reshoring showing that “about 220 to 250 organizations have brought manufacturing back to the U.S….with the heaviest migration from China. This represents about 50,000 jobs, which is 10% of job growth in manufacturing since January 2010.”
State and/or local government could facilitate “reshoring” for manufa
cturer
s in their region by conducting Reshoring Initiative conferences to teach participants the concept of Total Cost of Ownership, how to use Mr. Moser’s free Total Cost of Ownership Estimator™, and help them connect with local suppliers.
Establish Enterprise Zones and/or Free Trade Zones: Enterprise Zones provide special advantages or benefits to companies in these zones, such as:
- Hiring Credits – Firms can earn state tax credits for each qualified employee hired (California’s is $37,440)
- Up to 100% Net Operating Loss (NOL) carry-forward for up to 15 years under most circumstances.
- Sales tax credits on purchases of up to $20 million per year of qualified machinery and machinery parts;
- Up-front expensing of certain depreciable property
- Apply unused tax credits to future tax years
- Companies can earn preference points on state contracts.
States located on international borders could also establish Foreign Trade Zones (FTZs), which are sites in or near a U.S. Customs port of entry where foreign and domestic goods are considered to be in international trade. Goods can be brought into the zones without formal Customs entry or without incurring Customs duties/excise taxes until they are imported into the U. S. FTZs are intended to promote U.S. participation in trade and commerce by eliminating or reducing the unintended costs associated with U.S. trade laws
What Individuals Could Do
There are many things we could do as individuals to create jobs and reduce our trade deficits and national debt. You may feel that there is nothing you can do as an individual, but it’s not true! American activist and author, Sonia Johnson said, “We must remember that one determined person can make a significant difference, and that a small group of determined people can change the course of history.”
If you are an inventor ready to get a patent or license agreement for your product, select American companies to make parts and assemblies for your product as much as possible. There are some electronic components that are no longer made in the U. S., so it may not be possible to source all of the component parts with American companies. There are many hidden costs to doing business offshore, so in the long run, you may not save as much money as you expect by sourcing your product offshore. The cost savings is not worth the danger of having your Intellectual Property stolen by a foreign company that will use it to make a copycat or counterfeit product sold at a lower price.
If you are an entrepreneur starting a company, find a niche product for which customers will be willing to pay more for a “Made in USA” product. Plan to sell your product on the basis of its “distinct competitive advantage” rather than on the basis of lowest price. Select your suppliers from American companies as this will create jobs for other Americans.
If you are the owner of an existing manufacturing company, then conduct a Total Cost of Ownership analysis for your bill of materials to see if you could “reshore” some or all of the items to be made in the United States. You can use the free TCO worksheet estimator to conduct your analysis available from the Reshoring Initiative at www.reshorenow.org. Also, you could choose to keep R&D in the United States or bring it back to the United States if you have sourced it offshore.
If enough manufacturing is “reshored” from China, we would drastically reduce our over $700 billion trade deficit in goods. We could create as many as three million manufacturing jobs, which would, in turn, create 9 – 12 million total jobs, bringing our unemployment down to 4 percent.
You may not realize it, but you have tremendous power as a consumer. Even large corporations pay attention to trends in consumer buying, and there is beginning to be a trend to buy ‘Made in USA” products. As a result, on January 15, 2013, Walmart and Sam’s Club announced they will buy an additional $50 billion in U.S. products over the next 10 years.
U.S. voters supported Buy America policies by a 12-to-1 margin according to a survey of 1,200 likely general election voters conducted between June 28 and July 2, 2012 by the Mellman Group and North Star Opinion Research. The overwhelming support has grown since prior iterations of the same poll – Buy America received an 11-to-1 margin of support in 2011 and a 5-to-1 margin in 2010. A survey by Perception Services International of 1400 consumers in July 2012, found that 76% were more likely to buy a U.S. product and 57% were less likely to buy a Chinese product.
As a consumer, you should pay attention to the country of origin labels when they shop and buy “Made in USA” products whenever possible. Be willing to step out of your comfort zone and ask the store owner or manager to carry more “Made in USA” products. If you buy products online, there are now a plethora of online sources dedicated to selling only “Made in USA” products. Each time you choose to buy an American-made product, you help save or create an American job.
In his book, Buying America Back: A Real-Deal Blueprint for Restoring American Prosperity, Alan Uke, recommends Country of Origin labeling for all manufactured products that “puts control in the hands of American consumers to make powerful buying choices to boost our economy and create jobs,” as well as reduce our trade deficit. The labels would be similar to the labels on autos, listing the percent of content by country of all of the major components of the product. This Country of Origin labeling would enable American consumers to make the decision to buy products that have most of their content “made in USA.”
If every American would make the decision to buy American products and avoid imports as much as possible, we could make a real difference in our nation’s economy. For example, if 200 million Americans bought $20 worth of American products instead of Chinese, it would reduce our trade imbalance with China by four billion dollars. During the ABC World News series called “Made in America,” Diane Sawyer has repeatedly said, “If every American spent an extra $3.33 on U. S.-made goods, it would create almost 10,000 new jobs in this country.”
In conclusion, if we want to create more jobs, reduce our trade deficit and national debt, we must support our manufacturing industry so that it could once again be the economic engine for economic growth. Following the suggestions in this article could make the “Great American Job Engine” roar once again.
Military Must Purchase Made in America Steel
in Uncategorized/by MAM Team“This is a win for our military and for American companies like ArcelorMittal, Cliffs, and Nucor, that make steel for our military right here in the United States,” Brown said on Tuesday. “We know how to make steel armor plates here in America, and there’s no reason why countries like China and Russia should be making the steel used in our military’s vehicles and equipment.”
Steel armor plates are used for military vehicles, tanks, and equipment. Under regulations, specialty metals procured for defense purposes— including steel armor plate — must be produced in the United States.
Why Americans Love Small Business
in Uncategorized/by MAM TeamSmall business’s favorability is remarkably stable. Gallup Organization polls in both 2010 and 2012 reported 95 percent positive views of small business among Americans.
Why do Americans love small business? Five reasons jump out from all the studies and surveys.
1. Small business owners are the embodiment of the American dream.
Americans like the gumption it takes to invest one’s life savings to follow the dream of starting a company. We are, after all, supposed to be a nation of go-getting, risk takers living in the land of opportunity.
2. Americans love the idea that big companies come from tiny ones.
While studies show that few small businesses actually grow, and only a sliver of entrepreneurs want to do more than start a little company, virtually all big companies started small. As a nation, we love the idea that oak trees come from acorns.
3. Small business is the underdog and Americans root for the underdog.
Small business owners work more hours and make less money than the rest of us, according to the Pew Foundation. They face competition from deep pocketed big companies who — according to the perception of a significant minority of Americans — sometimes use unfair tactics to compete, a Public Affairs Council survey found.
4. Small business owners are seen as honest and ethical.
Only 8 percent of Americans think the CEOs of major corporations are highly ethical, but 52 percent who view small business owners as such, according to the Public Affairs Council survey.
5. Small business is seen as the backbone of a middle class way of life.
When asked who should get credit for supporting the middle class over the last half century, 51 percent of Americans picked small business — more than double the amount that chose labor unions, big companies or the federal government.
Most Americans believe small business owners are America’s job creators. A July 2012, Rasmussen survey found that 57 percent of American voters think small business owners create more jobs and generate more economic growth than either big businesses or the government.
Perhaps small business’s popularity can bridge the political divide that has paralyzed Washington. Unlike capitalism itself, small business is perceived positively by both Democrats and Republicans alike. A 2012 Gallup survey found that while nearly three times as many Democrats as Republicans view the federal government favorably, and nearly twice as many Republicans as Democrats see big business in a positive light, 95 percent of Republicans and 94 percent of Democrats have a positive view of small business.
Note to Washington: Why don’t you focus on policies that help small business generate good will between the parties?
Women Miss Out on Manufacturing Gains
in Uncategorized/by MAM TeamWomen, however, haven’t seen the same gains. Female employment in the manufacturing sector has actually fallen by 13,000 in the past three years. Female durable-goods employment has been mostly flat, up a paltry 4,000 jobs.
The recovery has also been weaker for women outside manufacturing. Women’s employment didn’t hit bottom until September 2010 — six months after men’s employment started rising — and women saw shallower gains once they did start finding jobs.
But that disparity is explained, at least to a significant degree, by the fact that men were hit earlier and harder by the recession, which struck male-dominated professions such as construction and manufacturing with particular force. Despite their weaker gains in the recovery, women are actually closer than men to their pre-recession employment level.
Such a “catch-up” effect doesn’t explain what’s going on in manufacturing, however, as the National Women’s Law Center noted in a report today. Women lost manufacturing jobs faster than men during the recession, and have gained them back more slowly in the recovery.
The decline of women in manufacturing appears to reflect a longer-term trend. Women’s share of factory jobs rose steadily in the 1960s, 1970s and 1980s, peaking at just under a third — 32.2% — in the early 1990s. Since then, their share has dropped just as steadily, falling in 20 of the past 21 years. Women held 27.3% of manufacturing jobs in 2012, the lowest level since 1971.
The decline might come as a surprise given that increasing automation has made much factory work less physically demanding. But automation has also wiped out many of the jobs traditionally held by women — both factory-floor jobs such as quality control and backroom clerical positions. Additionally, many of the fastest-growing manufacturing sectors, such as fabricated metal products and machinery, have a relatively small share of women employees. And as the NWLC report points out, jobs in those sectors have gone disproportionately to men.
Manufacturing gets an outsized amount of attention given its share of the economy — less than 11% of private-sector employment for all workers, and just 6% for women. But manufacturing jobs, especially in the durable goods sector, tend to be fairly well-paying, and remain a rare path to the middle class for workers without a college degree. It’s a path that remains far less common for women than for men.
Legislation To End Tax Breaks for Companies Shipping Jobs Overseas
in Uncategorized/by MAM TeamThe Bring Jobs Home Act introduced by Senator Debbie Stabenow, creates a special 20 percent tax credit for the moving expenses of companies who shift operations back to the U.S. from abroad.
The bill also prevents companies from deducting from their taxes the costs associated with shipping jobs overseas. Under current law, companies can deduct 100 percent of the cost of shipping equipment overseas, terminating leases, and other expenses associated with offshoring a business-meaning that taxpayers are on the hook for millions of dollars annually.
“Right now, some companies are undercutting hardworking Americans by sending valuable jobs out of the country,” McCaskill said. “We shouldn’t be rewarding them for doing it. Instead, let’s use some common sense, and reduce their incentive to outsource by ending tax breaks for companies that send jobs overseas, and rewarding companies that bring jobs back to the United States.”
A similar measure had bipartisan majority support in the Senate last year, but ultimately failed to advance after a Republican filibuster.
Experience, Reliability Give Chinese Long Beach Electric Bus Contract
in Uncategorized/by MAM TeamLBT staff first made the recommendation to go with the BYD bid in February, but the LBT board asked to table the decision for a month to gather more information. After two study sessions, that decision was made at Monday’s meeting on a 5-2 vote, with Lori Ann Farrell and Maricela de Rivera voting no.
BYD has been in business since 1995 and sells batteries, solar panels and electric cars in addition to buses. Company officials said they plan to build a new chassis facility in California sometime next year, although the chassis for the first 10 Long Beach buses will come from China. The batteries are built in a plant in LA.
Proterra was formed in 2004 and has about 160 employees. They have sold 32 of their EcoRide BE35 electric buses and have delivered 14 (compared to 1,000 and 365 for BYD).
Both firms’ coaches carry 35 seated passengers and more than 20 standing. A primary difference is Proterra’s use of lithium-titanate batteries offering a 30-mile range where BTD uses iron-phosphate batteries with a 7.5 year warranty and a range of 118 to 163 miles.
LBT plans to use the buses on the Passport routes downtown, including trips to and from the Queen Mary. The board approved an additional $1.8 million in potential spending if a WAVE (Wireless Advanced Vehicle Electrification) charging system can be developed from current prototypes as a charging station at the Queen Mary stop. The $11.5 million bid includes 10 manual pug-in depot chargers, which take four hours for a full charge.
According to the staff report, the BYD system will cost significantly less than the Proterra system, saving more than $4 million, despite the lower initial cost for Proterra buses. The proven battery system and warranty were other major factors in BYD’s favor.
Money for the purchase came primarily from a Federal Transit Administration grant from the Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) program, some Prop 1B money and a $700,000 grant from the Port of Long Beach’s Greenhouse Gas Emission Reduction Mitigation Grant Program.
Made in USA Label Pays off For Investors
in Uncategorized/by MAM TeamThe part of the world where a company makes most of its money can be the difference between a great investment and an OK one. In the past 12 months, U.S. stocks that generate all sales at home are up an average of 18.6%, vs. a gain of 6.2% for American firms that get more than half of their revenue from abroad, Bespoke Investment Group says.
“A major theme of 2013 has clearly been a preference for U.S.-centric stocks,” says Paul Hickey, Bespoke’s co-founder. Why? “The U.S., relative to the rest of the world, is the strongest economy.”
That trend helped drive the Standard & Poor’s 500 index to an all-time closing high Thursday and a 10% first-quarter gain.
Domestically focused companies are also sporting better earnings growth as well as benefiting from inflows of capital from foreign investors that view the U.S. as a haven, Hickey says.
One of Wall Street’s biggest winners this year is media subscription service Netflix, which gets less than 3% of its sales outside the U.S., says S&P Dow Jones Indices. Netflix shares are up 104%. In contrast, tech player Qualcomm, which gets nearly 97% of revenue from abroad and recently warned of slowing growth in Asia, is up 8.2%.
Analysts also see positives in the All-American story, as they have been issuing more positive earnings revisions than negative ones in the past four weeks.
The U.S. market, and particularly domestically focused names, have held up better than foreign stock markets recently following the “Cyprus Surprise,” the latest bailout in the eurozone to spook global investors. Also driving the better performance is the spate of better-than-expected economic data this month, which prompted Barclays to up its first-quarter U.S. GDP estimate to 2.6% from 1.6%.
While U.S. shares have performed better than a broad index of foreign stocks for more than two years, the outperformance has been particularly acute since late 2012 when the U.S. averted a fiscal crisis and election-related political gridlock weighed on sentiment.
“Once the ‘fiscal cliff’ negotiations were settled, U.S. stocks rebounded and haven’t looked back,” Hickey says.
Our Manufacturing Troubles are Cultural, not Economic
in Uncategorized/by MAM TeamI’d say yes — albeit somewhat sadly.
There are at least six different reasons that traditional manufacturing is declining. They aren’t the obvious ones you’ve heard so much about — I’m not talking about labor costs, OSHA regulations, or protesters more concerned about pollution and plant life than production. My thoughts are a little more basic. I refer to them as the 6 D’s:
Dirt
We lost the race for raw materials years ago, as China and other more foresighted countries scooped up vast quantities of the minerals, compounds and rare earths essential to the production of virtually everything cellular or digital.
Durability
In a world of instant gratification and rampant disposability — where the packaging we discard costs more than the products we consume — who really cares about making durable goods and long-lasting products? We’re sick of stuff once it’s no longer shiny, and shiny never lasts.
Soon, new 3D printing technologies will encourage the development of even more kinds of disposable products. That’s bad for our production facilities, our population, and our planet.
Demand
Frankly, we’d rather not own anything these days. Between high maintenance costs, the devastating depreciation of everything physical, and rapid obsolescence, there’s really no reason to buy anything for the long run. We’ve become users and renters, not owners. Zipcar provides “cars for people who don’t want one.” That says a lot more about our lives today than merely pointing out our transportation preferences.
Desire
Our desire for certain things morphs over time, and our appetites change as well. And bragging about your property and your possessions just isn’t cool any more. We’re becoming much less materialistic. In the world of “Mad Men,” four things defined a man: his home, his car, his wife, and his shoes. Just think about how little this formulation has to do with the way we see our lives today, and you’ll appreciate the massive changes coming down the pike.
Demographics
I wrote recently that kids don’t care about cars, but things are much worse for manufacturers than that. As soon as kids reach the age where they can make their own durable goods purchases, they realize they don’t have any money. Instead of saving, they spend their time sucking down lattes from Starbucks. For Generation Y, everything is about the experience and the adventure and the trip, and not about things. Things are mainly a downer and a drag.
Digital
Digital is dictating everything. Everyone realizes that good ideas last much longer and are worth a great deal more than anything you can make with your hands. Unlike even the best physical objects, ideas and some digital goods can be easily shared. Once an idea is widely shared, it’s enhanced and expanded in its scope and its power, not diminished or lessened by broad distribution. That’s how we’ll generate growth in future. By manufacturing new ideas — not iPads.
Is the U.S. Manufacturing Renaissance Real?
in Manufacturing/by The Made in America Movement TeamBut at least one economic seer, Goldman Sachs’ chief economist Jan Hatzius, is throwing a bit of cold water on the idea. He recently released a report, which is getting a lot of attention on the web, arguing that the U.S. “manufacturing renaissance” is cyclical, not structural – meaning, the sector is doing as well as would have been predicted under any circumstances at this point in an economic recovery, and that the gains don’t point to a real seismic shift in U.S. manufacturing competitiveness. “Measured productivity growth has been strong,” admits Hatzius in the report, entitled “U.S. Manufacturing Renaissance: Fact or Fiction?” “But U.S. export performance – arguably a more reliable indicator of competitiveness—remains middling at best.”
It’s a very interesting point, and it matters a lot to the broader economy. Nations that do better in manufacturing gain an edge in the global economy: For every $1 of manufacturing output in a community, there’s another $1.48 of wealth created. That’s why economic advisors to the President, like National Economic Council head Gene Sperling, have been pushing pro-manufacturing policies. But the Goldman report would seem to indicate that the strength in U.S. manufacturing output reflects more the relative weakness of Europe (which is mired in a debt crisis) and Japan, rather than a long-term positive shift in the U.S. itself. “Over the next few years, the manufacturing sector should continue to grow a bit faster than the overall economy,” notes the report. “But the main reason is likely to be a broad improvement in aggregate demand rather than a structural U.S. manufacturing renaissance.”
Hatzius was on holiday this week and unavailable for comment (we’ll be following up with him next week), but one immediate question is whether exports really do provide a more accurate picture, as the report suggests. It may be that more goods manufactured in the U.S. are staying in the U.S. As we’ve traveled around the country reporting on this topic over the last couple of years, a number of big industrial firms have pointed to growing demand for their products here at home – Caterpillar, which makes an increasing amount of its large earth-moving equipment for domestic mining, agriculture, and energy operations, is a great case in point.
Then there’s the question of how to look at the productivity numbers. While U.S. productivity is up over the last several years relative to, say, China, which has been flat (and also suffers from rising wages), the big question is how much more it can go up. We feel there’s reason to be bullish on the growth potential there, given how materials science and the evolution of the “industrial internet” are fundamentally reshaping manufacturing in the U.S.’s favor. The once separate steps of designing a product, making or buying the parts, and then putting everything together are beginning to blend — a consequence of technologies such as additive manufacturing and 3-D printing. It means that manufacturing wants to be closer to engineering and design — a dynamic that would likely benefit the U.S., which still rules those high-end job categories. Add the ability to include sensors in every part and process, and you’ve got a whole new manufacturing ecosystem that allows companies to accelerate product development cycles and deliver more variety and value more quickly to ever more fickle consumers.
Of course, the jobs that are being created aren’t your father’s (or grandfather’s) factory jobs of knocking in four bolts a minute for eight hours a day. The new economics of Made in the USA are built in large part around acquiring cutting-edge technologies ahead of global competitors and then using those new techniques to produce more efficiently on super-automated factory floors. And while all the technology will translate into higher end jobs, it will also mean — barring dramatic growth — fewer jobs overall, especially in the middle. Positions will either be high end, or lower paid, since workers still have to compete with cheaper overseas labor (even with wage inflation in China, it will be years before the Chinese are on par with U.S. wages). It’s no accident that many of the new manufacturing clusters in the U.S. are in the South, where unions hold less power. “Yes, manufacturing is coming back, but it’s evolving into a very different type of animal than the one most people recognize today,” says James Manyika, says James Manyika, director of McKinsey Global Institute, which recently did an exhaustive study on this shift entitled “Manufacturing the Future.” “We’re going to see new jobs, but no where near the number some people expect, especially in the short term.”
It’s a sentiment that stands in sobering contrast to President Obama’s second term goal of creating a million new manufacturing jobs in four years. Some of the difference may lie in semantics. As Manyika points out, labor statistics underestimate the reality of manufacturing, since they count mainly jobs inside factories. Related positions in, say, Ford’s marketing department, or small businesses doing industrial design or creating new software for big exporters don’t get tallied. Yet these jobs wouldn’t exist but for the big factories. The official 9% of U.S. employment represented by manufacturing belies the importance of the sector to our overall economy. Manufacturing represents a whopping 67% of all private sector R & D spending, as well as 30% of the country’s productivity growth.
In short, manufacturing’s value can be measured in many different ways. “The ability to make things is fundamental to the ability to innovate things over the long term,” says Willy Shih of Harvard Business School and co-author of Producing Prosperity: Why America Needs a Manufacturing Renaissance. “When you give up making products you lose a lot of the added value.” That’s as good a reason as any to care about the future of manufacturing.
U.S. Must Comply with WTO Meat-Labeling Ruling by May
in Uncategorized/by MAM TeamThat decision gave the United States an unspecified amount of time to comply.
The labeling program has led to a sharp reduction in U.S. imports of Canadian pigs and cattle, because it raised costs for U.S. packers by forcing them to segregate those animals from U.S. livestock. Some U.S. groups, however, have said COOL offers consumers valuable information about the origin of their food.
“We expect that the U.S. will bring itself into compliance with its WTO obligations by May 2013 as determined by the arbitrator for the benefit of producers on both sides of the border,” Canadian International Trade Minister Ed Fast and Agriculture Minister Gerry Ritz said in a joint statement.
“We are particularly pleased that the arbitrator determined a reasonable period of time close to that proposed by Canada and Mexico, as opposed to the much longer period suggested by the United States.”
According to the Canadian ministers, the United States asked that it be given until January 23, 2014 to comply. Canada and Mexico asked for compliance by early 2013.
Meat labels became mandatory in March 2009 after years of debate. U.S. consumer and some farm groups supported the requirement, saying consumers should have information to distinguish between U.S. and foreign products.
Big meat processors opposed the provision, which they said would unnecessarily boost costs and disrupt trade.
The U.S. labeling law requires grocers to put labels on cuts of beef, pork, lamb, chicken and ground meat or post signs that list the origin of the meat.
U.S. officials have said the WTO’s June ruling allowed the United States to continue to require country-of-origin labels, but Washington will have to alter the program to ensure it does not create an impermissible trade barrier.
“The United States remains committed to ensuring that consumers are provided with information about the origin of the beef and pork products they buy at the retail level,” Nkenge Harmon, a spokesperson for U.S. Trade Representative Ron Kirk, said on Tuesday. “We intend to bring the COOL requirements into compliance within the period of time established by the arbitrator, and we will continue to work with USDA, Congress, and interested stakeholders in order to do so.”
How We Could Create Jobs While Reducing The Trade Deficit and National Debt
in Uncategorized/by MAM TeamThe combined effects of an increasing trade deficit with China and other countries, as well as American manufacturers choosing to “offshore” manufacturing, has resulted in the loss of 5.7 million manufacturing jobs since the year 2000. If we calculate the multiplier effect, we have actually lost upwards of 17 to 22 million jobs, meaning that we have fewer taxpayers and more consumers of tax revenue in the form of unemployment benefits, food stamps, and Medicaid.
In 2012, the U.S. trade deficit with China reached a new record of $315 billion. According to a recent study by the Economic Policy Institute (EPI), the trade deficit with China cost 2.7 million U.S. jobs from 2001-2011. The Department of Commerce estimates that each $1 billion in trade deficit translates to about 13,000 lost jobs, so the $738 billion trade deficit in goods for 2012 cost upwards of 9,599,200 jobs.
What Congress Could Do
First, Congress should enact legislation that addresses China’s currency manipulation. Most economists believe that China’s currency is undervalued by 30-40% so their products may be cheaper than American products on that basis alone. To address China’s currency manipulation and provide a means for American companies to petition for countervailing duties, the Senate passed S. 1619 in 2011, but GOP leadership prevented the corresponding bill in the House, H. R. 639, from being brought up for a vote, even though it had bi-partisan support with 231 co-sponsors. On March 20, 2013, Sander Levin (D-MI), Tim Murphy (R-PA), Tim Ryan (D-OH), and Mo Brooks (R-AL) introduced the Currency Reform for Fair Trade Act in the House and a corresponding bill will be introduced in the Senate.
Second, Congress should strengthen and tighten procurement regulations to enforce “buying American” for all government agencies and not just the Department of Defense. All federal spending should have “buy America” provisions giving American workers and businesses the first opportunity at procurement contracts. New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction. No federal, state, or local government dollars should be spent buying materials, equipment, supplies, and workers from China.
My other recommendations for creating jobs are based on improving the competitiveness of American companies by improving the business climate of the United States so that there is less incentive for American manufacturing companies to outsource manufacturing offshore or build plants in foreign countries. The following proposed legislation would also prevent corporations from avoiding paying corporate income taxes:
It is also critical that we not approve any new Free Trade Agreements, such as the Trans-Pacific Partnership and Trans-Atlantic Partnership that are currently proposed. The U.S. has a trade deficit with every one of its trading partners from NAFTA forward, so Free Trade Agreements have hurt more than helped the U.S. economy.
What States and Regions Could Do
State and local government can work in partnership with economic development agencies, universities, trade associations, and non-profit organizations to facilitate the growth and success of startup manufacturing companies in a variety of means:
Improve the Business Climate – Each state should take an honest look at the business climate they provide businesses, but especially manufacturers since they provide more jobs than any other economic sector. The goal should be to facilitate the startup and success of manufacturers to create more jobs. I recommend the following actions:
Establish or Support Existing Business Incubation Programs, such as those provided by the members of the National Business Incubation Alliance. Business incubators provide a positive sharing-type environment for creative entrepreneurship, often offering counseling and peer review services, as well as shared office or laboratory facilities, and a generally strong bias toward growth and innovation.
Facilitate Returning Manufacturing to America – The Reshoring Initiative, founded by Harry Moser in 2010, has a mission to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from “offshoring is cheaper” to “local reduces the total cost of ownership.” The top reasons for U. S. to reshore are:
According to Mr. Moser, the Initiative has documented case studies of companies reshoring showing that “about 220 to 250 organizations have brought manufacturing back to the U.S….with the heaviest migration from China. This represents about 50,000 jobs, which is 10% of job growth in manufacturing since January 2010.”
State and/or local government could facilitate “reshoring” for manufa
cturer
s in their region by conducting Reshoring Initiative conferences to teach participants the concept of Total Cost of Ownership, how to use Mr. Moser’s free Total Cost of Ownership Estimator™, and help them connect with local suppliers.
Establish Enterprise Zones and/or Free Trade Zones: Enterprise Zones provide special advantages or benefits to companies in these zones, such as:
States located on international borders could also establish Foreign Trade Zones (FTZs), which are sites in or near a U.S. Customs port of entry where foreign and domestic goods are considered to be in international trade. Goods can be brought into the zones without formal Customs entry or without incurring Customs duties/excise taxes until they are imported into the U. S. FTZs are intended to promote U.S. participation in trade and commerce by eliminating or reducing the unintended costs associated with U.S. trade laws
What Individuals Could Do
There are many things we could do as individuals to create jobs and reduce our trade deficits and national debt. You may feel that there is nothing you can do as an individual, but it’s not true! American activist and author, Sonia Johnson said, “We must remember that one determined person can make a significant difference, and that a small group of determined people can change the course of history.”
If you are an inventor ready to get a patent or license agreement for your product, select American companies to make parts and assemblies for your product as much as possible. There are some electronic components that are no longer made in the U. S., so it may not be possible to source all of the component parts with American companies. There are many hidden costs to doing business offshore, so in the long run, you may not save as much money as you expect by sourcing your product offshore. The cost savings is not worth the danger of having your Intellectual Property stolen by a foreign company that will use it to make a copycat or counterfeit product sold at a lower price.
If you are an entrepreneur starting a company, find a niche product for which customers will be willing to pay more for a “Made in USA” product. Plan to sell your product on the basis of its “distinct competitive advantage” rather than on the basis of lowest price. Select your suppliers from American companies as this will create jobs for other Americans.
If you are the owner of an existing manufacturing company, then conduct a Total Cost of Ownership analysis for your bill of materials to see if you could “reshore” some or all of the items to be made in the United States. You can use the free TCO worksheet estimator to conduct your analysis available from the Reshoring Initiative at www.reshorenow.org. Also, you could choose to keep R&D in the United States or bring it back to the United States if you have sourced it offshore.
If enough manufacturing is “reshored” from China, we would drastically reduce our over $700 billion trade deficit in goods. We could create as many as three million manufacturing jobs, which would, in turn, create 9 – 12 million total jobs, bringing our unemployment down to 4 percent.
You may not realize it, but you have tremendous power as a consumer. Even large corporations pay attention to trends in consumer buying, and there is beginning to be a trend to buy ‘Made in USA” products. As a result, on January 15, 2013, Walmart and Sam’s Club announced they will buy an additional $50 billion in U.S. products over the next 10 years.
U.S. voters supported Buy America policies by a 12-to-1 margin according to a survey of 1,200 likely general election voters conducted between June 28 and July 2, 2012 by the Mellman Group and North Star Opinion Research. The overwhelming support has grown since prior iterations of the same poll – Buy America received an 11-to-1 margin of support in 2011 and a 5-to-1 margin in 2010. A survey by Perception Services International of 1400 consumers in July 2012, found that 76% were more likely to buy a U.S. product and 57% were less likely to buy a Chinese product.
As a consumer, you should pay attention to the country of origin labels when they shop and buy “Made in USA” products whenever possible. Be willing to step out of your comfort zone and ask the store owner or manager to carry more “Made in USA” products. If you buy products online, there are now a plethora of online sources dedicated to selling only “Made in USA” products. Each time you choose to buy an American-made product, you help save or create an American job.
In his book, Buying America Back: A Real-Deal Blueprint for Restoring American Prosperity, Alan Uke, recommends Country of Origin labeling for all manufactured products that “puts control in the hands of American consumers to make powerful buying choices to boost our economy and create jobs,” as well as reduce our trade deficit. The labels would be similar to the labels on autos, listing the percent of content by country of all of the major components of the product. This Country of Origin labeling would enable American consumers to make the decision to buy products that have most of their content “made in USA.”
If every American would make the decision to buy American products and avoid imports as much as possible, we could make a real difference in our nation’s economy. For example, if 200 million Americans bought $20 worth of American products instead of Chinese, it would reduce our trade imbalance with China by four billion dollars. During the ABC World News series called “Made in America,” Diane Sawyer has repeatedly said, “If every American spent an extra $3.33 on U. S.-made goods, it would create almost 10,000 new jobs in this country.”
In conclusion, if we want to create more jobs, reduce our trade deficit and national debt, we must support our manufacturing industry so that it could once again be the economic engine for economic growth. Following the suggestions in this article could make the “Great American Job Engine” roar once again.