The scene inside the Home Depot on Weyman Avenue here would give the old-time American craftsman pause.
This isn’t a lament — or not merely a lament — for bygone times. It’s a social and cultural issue, as well as an economic one. The Home Depot approach to craftsmanship — simplify it, dumb it down, hire a contractor — is one signal that mastering tools and working with one’s hands is receding in America as a hobby, as a valued skill, as a cultural influence that shaped thinking and behavior in vast sections of the country.
That should be a matter of concern in a presidential election year. Yet neither Barack Obama nor Mitt Romney promotes himself as tool-savvy presidential timber, in the mold of a Jimmy Carter, a skilled carpenter and cabinet maker.
The Obama administration does worry publicly about manufacturing, a first cousin of craftsmanship. When the Ford Motor Company, for example, recently announced that it was bringing some production home, the White House cheered. “When you see things like Ford moving new production from Mexico to Detroit, instead of the other way around, you know things are changing,” says
Gene B. Sperling, director of the National Economic Council.
Ask the administration or the Republicans or most academics why America needs more manufacturing, and they respond that manufacturing spawns innovation, brings down the trade deficit, strengthens the dollar, generates jobs, arms the military and kindles a recovery from recession. But rarely, if ever, do they publicly take the argument a step further, asserting that a growing manufacturing sector encourages craftsmanship and that craftsmanship is, if not a birthright, then a vital ingredient of the American self-image as a can-do, inventive, we-can-make-anything people.
That self-image is deteriorating. And the symptoms go far beyond Home Depot. They show up in the wistful popularity of books like
“Shop Class as Soulcraft,” by Matthew B. Crawford, in TV cooking classes featuring the craftsmanship of celebrity chefs, and in shows like
“This Old House.”Traditional vocational training in public high schools is gradually declining, stranding thousands of young people who seek training for a craft without going to college. Colleges, for their part, have since 1985 graduated fewer chemical, mechanical, industrial and metallurgical engineers, partly in response to the reduced role of manufacturing, a big employer of them.
The decline started in the 1950s, when manufacturing generated a hefty 28 percent of the national income, or gross domestic product, and employed one-third of the work force. Today, factory output generates just 12 percent of G.D.P. and employs barely 9 percent of the nation’s workers.
Mass layoffs and plant closings have drawn plenty of headlines and public debate over the years, and they still occasionally do. But the damage to skill and craftsmanship — what’s needed to build a complex airliner or a tractor, or for a worker to move up from assembler to machinist to supervisor — went largely unnoticed.
“In an earlier generation, we lost our connection to the land, and now we are losing our connection to the machinery we depend on,” says
Michael Hout, a sociologist at the University of California, Berkeley. “People who work with their hands,” he went on, “are doing things today that we call service jobs, in restaurants and laundries, or in medical technology and the like.”
That’s one explanation for the decline in traditional craftsmanship. Lack of interest is another. The big money is in fields like finance. Starting in the 1980s, skill in finance grew in stature, and, as depicted in the news media and the movies, became a more appealing source of income.
By last year, Wall Street traders, bankers and those who deal in real estate generated 21 percent of the national income, double their share in the 1950s. And Warren E. Buffett, the amiable financier, became a homespun folk hero, without the tools and overalls.
“Young people grow up without developing the skills to fix things around the house,” says Richard T. Curtin, director of the
Thomson Reuters/University of Michigan Surveys of Consumers. “They know about computers, of course, but they don’t know how to build them.”
Manufacturing’s shrinking presence undoubtedly helps explain the decline in craftsmanship, if only because many of the nation’s assembly line workers were skilled in craft work, if not on the job then in their spare time. In a late 1990s study of blue-collar employees at a General Motors plant (now closed) in Linden, N.J.,
the sociologist Ruth Milkman of City University of New York found that many line workers, in their off-hours, did home renovation and other skilled work.
“I have often thought,” Ms. Milkman says, “that these extracurricular jobs were an effort on the part of the workers to regain their dignity after suffering the degradation of repetitive assembly line work in the factory.”
Craft work has higher status in nations like Germany, which invests in apprenticeship programs for high school students. “Corporations in Germany realized that
there wa
s an interest to be served economically and patriotically in building up a skilled labor force at home; we never had that ethos,” says
Richard Sennett, a New York University sociologistwho has written about the connection of craft and culture.
The damage to American craftsmanship seems to parallel the precipitous slide in manufacturing employment. Though the decline started in the 1970s, it became much steeper beginning in 2000. Since then, some 5.3 million jobs, or one-third of the work force in manufacturing, have been lost. A stated goal of the Obama administration is to restore a big chunk of this employment, along with the multitude of skills that many of the jobs required.
And there is an incipient upturn in the monthly employment data, although the president will almost certainly finish his first term with the manufacturing work force well below the 12.6 million it was when his administration began. (It was nearly 11.9 million last month.)
“We sit in rooms with manufacturers who tell us that location decisions to move overseas that were previously automatic are now a close call, and that the right policies can make a difference,” Mr. Sperling says.
THAT is particularly the case if federal, state and local governments intervene with generous subsidies, like those seen in China, Germany, Japan, France, India and other countries eager to sustain manufacturing.
Government subsidies are helping to make manufacturing in America more attractive, but the turnaround may be hard to sustain. And it may be too late. Big multinationals already operate factory networks in Europe and Asia, as well as in the United States. Stepping up exports to those markets from the United States, rather than producing in them, is becoming less of an option — short of an international agreement like the Plaza Accord of 1985, which realigned currencies and gave American manufacturers a temporary boost.
As for craftsmanship itself, the issue is how to preserve it as a valued skill in the general population. Ms. Milkman, the sociologist, argues that American craftsmanship isn’t disappearing as quickly as some would argue — that it has instead shifted to immigrants. “Pride in craft, it is alive in the immigrant world,” she says.
Sol Axelrod, 37, the manager of the Home Depot here, fittingly learned to fix his own car as a teenager, even changing the brakes. Now he finds immigrant craftsmen gathered in abundance outside his store in the early morning, waiting for it to open so they can buy supplies for the day’s work as contractors. Skilled day laborers, also mostly immigrants, wait quietly in hopes of being hired by the contractors.
Mr. Axelrod also says the recession and persistently high unemployment have forced many people to try to save money by doing more themselves, and Home Depot in response offers classes in fixing faucets and other simple repairs. The teachers are store employees, many of them older and semiretired from a skilled trade, or laid off.
“Our customers may not be building cabinets or outdoor decks; we try to do that for them,” Mr. Axelrod says, “but some are trying to build up skill so they can do more for themselves in these hard times.”
U.S. Raises Tariffs on Chinese Wind-Turbine Makers
by MAM TeamPublished: July 27, 2012
The finding is the fourth this year in favor of American wind and solar manufacturers and is likely to intensify tension with the Chinese, who have been rapidly expanding manufacturing capacity for alternative energy technologies and flooding global markets with inexpensive products, especially solar panels.
Earlier this year, the Commerce Department ruled that China was dumping solar panels on the American market and imposed duties of 31 percent on most of the imports, which added to earlier duties imposed over what the department said were unfair subsidies for its manufacturers.
On Thursday, a group of about 20 European solar manufacturers announced that they had filed an antidumping case against the Chinese with the European Commission.
The Chinese government has responded to the trade complaints by beginning its own investigation into whether American and Korean manufacturers of polysilicon, the main ingredient in the solar panels, were selling the material below cost. Dumping occurs when a company sells a product in another country at less than fair value.
In the wind tower case, the decision is preliminary, but the Commerce Department will direct customs agents to begin collecting cash deposits equivalent to the tariffs, which are in addition to duties of 13.7 to 26 percent that the department imposed in May for what it said were unfair subsidies of the industry by the Chinese government. The department set the tariffs for the companies that account for the bulk of Chinese exports at 20.85 to 30.93 percent. Any others would be required to pay the highest rate.
“Commerce has taken an important step to address the significant dumping that is taking place,” said Alan H. Price, a lawyer at Wiley Rein, which is representing the American wind manufacturers that brought the complaint. The duties “will help to remedy the material injury already suffered by the U.S. industry and force the Chinese and Vietnamese producers to compete fairly,” he said.
The Chinese embassy in Washington did not respond to an e-mail seeking comment on the decision.
How the tariffs will affect the market is unclear. Like solar, the wind industry has been under pressure to bring down the cost of producing power to better compete with conventional fuels, a task made more difficult by the low price of natural gas and the expiration of an important subsidy at the end of this year. Wind industry executives say that the looming end of the support, a production tax credit, has already led to a decrease in demand for equipment and layoffs.
“On one hand, you say this is good for American manufacturing to have tariffs if they’re truly dumping towers below their cost into the U.S.,” said Michael Garland, chief executive of Pattern Energy, a wind developer. “On the other hand, it’s not going to solve the bigger problem we have, which is a dysfunctional Congress that can’t get anything passed. Because there’s this cliff that everybody’s facing at the end of the year, you’re not going to have any manufacturing in the U.S. anyway.”
The towers, which can cost $600,000 each, often account for 20 percent of the cost of a turbine. So although the tariffs might end up adding only a small percentage to the overall cost of a project, they could cut substantially into profits because that margin is only 7 to 10 percent, Mr. Garland said.
On the solar side, there are also questions about the impact of the duties. The major Chinese solar manufacturers have been able to keep prices low and skirt the tariffs by purchasing cells, the component of the panels to which the tariffs apply, elsewhere.
Imports of Chinese panels and cells decreased in May to $124 million from $226 million the year before, according to the Coalition for American Solar Manufacturing, an industry group that supports the trade cases. But shipments from other countries like Malaysia, Taiwan and the Philippines were up sharply. In the case of Malaysia, shipments were up by 950 percent over the previous May, to $135.5 million, exceeding China, according to the coalition.
Although the overall solar market continues to grow, executives and analysts warned that uncertainty about the outcome of the trade cases, which are only at the preliminary stage, could damp enthusiasm for future projects because costs are unclear.
“I’m paying X rate today. Am I going to have to pay a duty on that six months, a year down the road?” asked John Smirnow, a vice president of the Solar Energy Industries Association, a trade group that is advocating for negotiations between China and the United States to occur simultaneously to the legal cases.
But those who brought the trade cases say it comes down to adhering to the law.
“We have to be doing legal activity when we’re doing business,” said Steve Ostrenga, chief executive officer of Helios Solar Works, a panel manufacturer based in Milwaukee. “It’s not trying to penalize them. It’s just trying to make it right.”
Fighting GMO Labeling in California Is Food Lobby's "Highest Priority"
by MAM TeamPublic Health Lawyer
07/30/2012
In case you had any doubt that California’s Prop 37 — which would require labeling of food containing genetically-modified organisms (GMOs) — is a significant threat to industry, a top food lobby has now made it perfectly clear.
You may not know the Grocery Manufacturer’s Association, but its members represent the nation’s largest food makers — those with the most at stake in the battle over GMO labeling; for example, soft drink and snack giant PepsiCo, cereal makers Kellogg and General Mills, and of course, biotech behemoth Monsanto.
According to state filing reports, so far GMA has spent $375,000 on its efforts to oppose the labeling measure, with its members adding additional out-of-state lobbying power in the tens of thousands of dollars.
Never mind polling demonstrating that a whopping 90 percent of Californians think they deserve the right to know what they are eating. GMA also won’t bother to mention the more than 40 other nations (including the European Union, Brazil, and China) that already require food makers to disclose GMOs.
Big Food Lobbying to Undermine Health
This is hardly the first time the nation’s most powerful trade association of food manufacturers has marshaled its resources to oppose common sense food and nutrition policy — at both the national and state levels.
As I documented in my book, Appetite for Profit, for years GMA flexed its lobbying muscle in state legislatures all over the country fighting bills that were simply trying to remove junk food and soda from school vending machines.
Big Food lobbyists have also banded together to vociferously fight any attempt to restrict out of control junk food marketing to children on TV and other media.
For example, in 2005, GMA was a founding member of the Alliance for American Advertising, whose stated purpose was to defend the food industry’s alleged First Amendment right to advertise to children and to promote voluntary self-regulation as an alternative to government action.
More recently, the Grocery Manufacturers Association was among leading trade groups and corporations opposing the federal government’s attempt to improve industry’s own voluntary guidelines for food marketing to children. As this Reuters special report from April explains, GMA’s chief lobbyist visited the White House last July along with several top food industry representatives (including from Nestle, Kellogg, and General Mills) to scuttle an effort by four federal agencies that would have protected children from predatory junk food marketing.
But Food Makers Love Labels Don’t They?
It seems rather ironic that the same food makers taking advantage of every inch of food packaging space to convince shoppers to purchase its products would object so strongly to labeling for something they claim is not harmful.
Indeed in recent years, the federal government , in recognizing that food companies’ so-called “front of package” labeling is so out of control that it commissioned not one but two Institute of Medicine reports to make recommendations to fix the problem and un-confuse consumers.
Unwilling to tolerate government intervention designed to help Americans, the Grocery Manufacturers Association has been aggressively promoting its own new nutrition labeling scheme it calls “Facts Up Front.” But as Food Politics author Marion Nestle has explained, this is an obvious end-run around the feds. Here is how the food industry describes its own voluntary program:
– Facts Up Front is a nutrient-based labeling system that summarizes important information from the Nutrition Facts Panel in a simple and easy-to-use format on the front of food and beverage packages.
Translation: We are repeating information already required on the back of the package, now placing it in a format we like better on the front.
See how that works? The food industry is always in charge. That’s why the nation’s largest packaged food lobby and its members are shaking in its boots over 90 percent of Californians wanting to see GMO labeling on food.
And no wonder, because as GMA President Bailey correctly warned her audience: “If California wins, you need to be worried the campaign will come to your state.”
Very worried.
A Mission to Self-Destruct: America's Culture of Imports
by MAM Team07/27/2012
How did we create this culture of imports? After World War II, America was the lone superpower remaining. The Marshall Plan was ushered in to help devastated European countries get back on their feet. It was a rousing success. American products were the best in the world and it was important that other countries had enough money to purchase them in order to keep our industries growing.
Later, America made concerted efforts to continue knocking down trade barriers and to buy foreign goods. It helped other countries greatly, but by the 1990s, it was apparent that the money was not coming back in equal measure, eventually forming large deficits in trade. Japan became an industrial powerhouse after the war — mostly thanks to American efforts to help them rebuild their country. We assisted in the drafting of a constitution that placed a newly developed focus on industry. Soon, Japan became an industrial leader in a number of fields, to the point where six of the top 10 best-selling cars in America today are Japanese. America helped many countries back on their feet, and our consumers delighted in the lower prices their imported goods could offer.
At the same time, other countries made purchasing their own domestically manufactured products a national priority over the following half century. As an example country, South Korea created a national manufacturing policy that today has them at the top of the world in manufacturing and industry. Until recently, it was strictly taboo for South Koreans to be caught handling or buying foreign-made goods. South Korea’s sense of consumer nationalism has survived to this day, long after a time when it was “necessary” for them to uphold it. This kind of “us-first” thinking lifted these countries and their largest corporations to a stature previously unfathomable. It is easy to see why companies like Hyundai have reached international success when you consider that 99% of the cars on the roads of Korea are Korean-made. This is true for Japan and many other countries, too. Their consumers’s domestic buying preferences are a crucial benefit for their private manufacturers. Similar preferences and cultural attitudes have prevailed in Germany, now economically the strongest country in Europe.
In America, younger generations have been brought up in a culture of “free trade,” where the pervasive attitude is that “industry doesn’t matter.” A culture of imports dominates. Manufacturing as a share of total employment has fallen from 30% in 1970 to only 10% in 2011. Other countries have suffered losses in the manufacturing employment sector as well, as a natural response to increased productivity and mechanization. Even with this, the industrial employment of Germany is still 20%, Japan is 17% and France manages to have 13%. Come on, America. Let’s use our combined efforts to at least match the manufacturing employment rate of France. It would bring our unemployment rate of 8% back down to the traditional 5%.
In this new race to the bottom, we are trading satisfying, higher-paying, higher-skilled jobs in manufacturing and industry for low paying, low-impact jobs stacking shelves at endless superstores packed with low-grade imports from other countries. Salaries get depressed, unemployment rises, and people can soon afford only the cheapest, usually imported, goods, accelerating the cycle and digging a deeper hole for all of us. Those cheap imports aren’t so cheap any more. The exchange became: good jobs sent abroad for which we received low-quality items and low paying jobs.
Those Olympic uniforms are a symbol of our current, culturally caused unemployment problem. We felt comfortable outsourcing the production of everything we used to make, from American flags to the trinkets at the Smithsonian gift shop. As we did with pollution, smoking, and car safety, we need to wake up, recognize we have an import addiction problem, and start making the individual and governmental changes to pull ourselves out of this mess.
About Alan Uke:
Alan Uke is a San Diego entrepreneur, community leader, and founder of Underwater Kinetics, which he started 41 years ago as a sophomore at the University of California San Diego. He holds more than 50 patents, and the majority of his SCUBA diving and his industrial lighting products are exported to more than 60 countries. He has won the Entrepreneur of the Year Award for Consumer Products from the Entrepreneur of the Year Institute, is a member of the World Presidents Organization, and conceived of and founded the San Diego Aircraft Carrier Museum. He is the author of Buying America Back: A Real-Deal Blueprint for Restoring American Prosperity.
Why We Can't End Poverty In America: It's The Ignorance
by MAM Team7/29/2012
That isn’t what people mean by poverty in such advanced nations though. The idea is much closer to Adam Smith’s point about a linen shirt. Such may not be a necessity: but if you live in a society where not being able to afford one means you are regarded as poor then not being able to afford one makes you poor in that society.
So the US, or UK, Swedish, South Korean or Japanese definitions of poverty are not to do with being able to eat: they’re to do with what each society thinks you need to have in order not to be poor.
Which brings us to how the US measures that: through the poverty level. This is, roughly speaking, three times the household budget of the early 1960s for a cheap yet nutritious diet for that household. Upgraded for inflation since then. Maybe that’s a good measure and maybe it isn’t (just about everywhere else uses a percentage of median income but so what? That’s more a measure of inequality than poverty) but that is what it is.
At which point we should get very alarmed by the opening of Edelman’s Op/Ed:
“RONALD REAGAN famously said, “We fought a war on poverty and poverty won.” With 46 million Americans — 15 percent of the population — now counted as poor, it’s tempting to think he may have been right.
Look a little deeper and the temptation grows. The lowest percentage in poverty since we started counting was 11.1 percent in 1973. The rate climbed as high as 15.2 percent in 1983. In 2000, after a spurt of prosperity, it went back down to 11.3 percent, and yet 15 million more people are poor today.”
This just isn’t the way is is supposed to work. It’s a basic observation that wages tend to rise faster than inflation: no, not every year, but over time, the decades, we most certainly expect to see this happening. Further, we can see that the US government has been spending ever more on poverty alleviation of these decades. Yet poverty is rising, not falling. This must be a catastrophe which cries out for concerted attention, no?
Well, no actually, it isn’t. For Professor Edelman then goes on to show that he hasn’t got a clue what he’s talking about in the very next paragraph.
“At the same time, we have done a lot that works. From Social Security to food stamps to the earned-income tax credit and on and on, we have enacted programs that now keep 40 million people out of poverty.”
No, no and thrice no. I’m sorry but this is the sort of mistake that disqualifies one from commenting upon poverty in America. For it is absolutely true that food stamps and the EITC alleviate poverty: of course they do, giving poor people money and food alleviates poverty, how could it not? But it does not reduce poverty by a fraction of a percentage point: it doesn’t reduce poverty by one single person.
Which is where we have to get grubby in the detail of how the US counts the incomes that mount up to that poverty level, that three times the 1960s food budget. Included in the incomes used to calculate who is poor and who is not are cash incomes into the household. So, anything earned by going to work, any money from investments (yes, I know, silly, for poor don’t have investments. But if you don’t do this then you’re counting a retired billionaire living off his dividends as poor. Hello George Soros!) and any money that the government just gives you, like say traditional welfare. Social security gets included here.
What is not included is anything that the government gives you either through the tax system or in kind. So that knocks out the EITC: we know this alleviates poverty but it does not reduce the number in poverty. The same with SNAP or food stamps: these are in kind. So maybe you’re getting $5,000 a year (a little over $400 a month is entirely possible based upon family size) in free food through the program. But this is not counted as your income, does not take you above the poverty line because it is not counted as your income. Which is how we can continually expand the EITC and SNAP (and Section 8 housing vouchers, Medicaid and on and on as they are all treated the same way) without ever reducing the number of poor people in America.
And that’s what’s wrong with Peter Edelman’s thesis about poverty in the USA. He doesn’t actually understand how it is measured. And as I never tire of pointing out if you misdiagnose the problem then you will never, unless through pure blind luck, manage to produce a viable solution.
Another way of looking at this is that the New York Times Op/Ed page is where distinguished professors go to flaunt their ignorance. Given that there are many things I’m ignorant of perhaps I should give it a go? Say, a piece insisting that the Laffer Curve shows that all tax cuts all the time increase tax revenues.
Hmm, no, that won’t work, not even the NYT would fall for something that silly. Anyone got the WSJ phone number?
For Olympic Rowers, Uniforms Will Be Made in USA
by MAM TeamBy Bob Fernandez
Inquirer Staff Writer
“We compete because a) we are custom and b) we are fast,” the company’s founder, John Strotbeck, himself a former Olympic rower, said in an interview. “You should never turn your back on your core.”
He was talking about Boathouse’s rowing niche, but he also could have been talking about Philadelphia, having spurned offers in the late 1990s to relocate to cheaper-labor Southern states.
Bitten with the rowing bug at Marietta College in Ohio, Strotbeck “sweep rowed” in a double (a two-person boat) at the 1984 Olympics in Los Angeles, then sculled in a quad (a four-man boat) at the ’88 games in Seoul, South Korea.
In 1989, he launched Boathouse Sports in a factory in Northern Liberties. Within a few years, Boathouse had expanded into an almost-exclusive outerwear company that sold parkas, award jackets, and warm-ups to athletes for Division I football teams, the National Football League, and other sports.
Times were good in the 1990s. But then Nike and Adidas crashed the party by paying multimillion-dollar sponsorships to outfit Division I teams for the national TV exposure, wiping out part of Boathouse’s business.
Seeking new revenue, Strotbeck recast Boathouse to supply full lines of apparel, uniforms, and accessories for lacrosse, field hockey, rugby, rowing, track and field, volleyball, and other sports that “flew under the radar,” he said. It also supplies nontraditional sports clubs, such as those for ultimate Frisbee, chess, and paintball.
The company processes about 45,000 orders a year and has annual revenues of about $20 million. It pitches its products to coaches and athletic directors with the simple message that Boathouse will manufacture custom uniforms and deliver them within 20 days of an order – a difficult timetable for a Chinese factory.
“We do everything from design, graphics, inventory of raw materials, cutting and sewing, screening and sublimation, to putting it in a box,” Strotbeck said. “We produce, pretty much, 100 percent of what we ship.”
Dressed one day last week in blue jeans and a black short-sleeve shirt, Strotbeck, 55, said that before he moved into his current factory he had been wooed with incentives by three Southern states: Mississippi, North Carolina, and Tennessee.
He had doubts. Auto companies were investing heavily in assembly plants in the South, which Strotbeck thought could put pressure on their labor markets. Instead of relocating, he bought the former GE aerospace factory on the 400 block of East Hunting Park Avenue in 1999. The company’s mostly female workforce is comprised of Asian and Hispanic immigrants.
A member of the Vesper Boat Club in Philadelphia, Strotbeck said rowing is growing as a sport because of Title IX rules that require colleges to invest in women’s sports.
In 2009, Boathouse signed a deal with the United States Rowing Association, based in Princeton, to sponsor the national rowing teams, leading it to supply with gear the 44 U.S. male and female rowers in London. That gear includes unisuit racing uniforms, practice uniforms, basic training gear, cold-weather vests, long-sleeve shirts, and other items.
“Rowing is out of the Ivy League. It is getting to be an everyman’s sport,” said Strotbeck.
“We did it,” he said of the sponsorship, “because we like rowing and we were getting back into the uniform business. . . . It’s important for us to be an Olympic brand.”
When he was an Olympic athlete in 1984, the official clothing sponsor was Levi’s. Four years later, the clothing sponsor was Adidas. With both companies, the garments were sourced overseas, said Strotbeck.
“This is not anything new,” he said of the made-in-China Ralph Lauren clothing for the London Olympics, “but given the changes in the economy, there’s a realization that we can make stuff in the U.S., and should make things in the U.S.”
That, Ralph Lauren now says, is where it will manufacture clothing for the 2014 U.S. Olympic athletes.
As China Costs Rise, Technology Lures U.S. Factories Home
by MAM TeamBy Scott Malone and Ernest Scheyder
Schenectady, NY/NEW YORK
“When we do the numbers we’re actually ahead manufacturing here instead of paying for air freight and dealing with the logistical issues that we’re having in China,” said Raymond Sjolseth, the company’s president and co-founder.
With just $11 million in revenue last year, Seesmart is a tiny company, but it is one of many manufacturers of all sizes – from Master Lock to blue-chips General Electric Co and Caterpillar Inc – that are expanding production in the United States.
After decades roaming the world in search of lower costs, U.S. manufacturers are finding that factories at home can compete with China, India, Mexico and other low-cost countries.
To be sure, labor-intensive industries like clothing and electronics, which are heavily dependent on hand assembly, are seen as unlikely to come back to the United States in a major way. And the trickle of returning jobs is far from a flood.
But higher transportation costs and wage inflation in China could drive more production back to the United States.
Prime candidates for return are bulky, heavy items. GE has shifted production of appliances from Mexico and China to Louisville, Kentucky, partly due to rising shipping costs. The new plant that Caterpillar is building near Athens, Georgia, will employ about 1,400 and make small bulldozers and excavators.
As manufacturers have learned to run factories with fewer workers – whose jobs consist of keeping high-cost, high-speed machines running smoothly, rather than assembling goods by hand – they have found that wages are a less critical issue in choosing a factory site.
Caterpillar, which has announced nine new plants or expansion projects in the past year alone, said it has chosen to grow in the United States both to meet local demand and because it has been able to find a steady supply of workers able to run the advanced equipment that powers its plants.
A survey by the Hackett Group Inc consultancy found that 46 percent of executives at European and North American manufacturing companies said they were considering returning some production to the United States from China, while another 27 percent said they were actively planning for or are in the midst of such a shift.
In the face of continued high unemployment, outsourcing and offshoring have become potent issues with U.S. voters. In the race for the White House, President Barack Obama, a Democrat, has called attention to job cuts made by private equity firm Bain Capital, formerly run by Mitt Romney, the presumed Republican nominee.
Despite the gloom, there has been a slight rise in U.S. factory employment. Some 11.95 million Americans worked in production jobs as of May, up 4 percent from the sector’s recessionary low in January 2010.
Manufacturing gained its reputation as a key to the U.S. middle class, in part thanks to its historically unionized work force. However, companies including Caterpillar and the Detroit automakers have succeeded in winning concessions in labor negotiations that include two-tier wage structures that provide substantially lower wagers for the newest workers.
At Seesmart, shifting production from China to the United States is cutting logistics costs by about 30 percent as it no longer needs to fly merchandise across the Pacific. Products can also be made and shipped to customers more quickly, Sjolseth said.
“The LED business involves a very compulsive buy, and the client can’t tolerate long lead times,” he said. “So if you’re not delivering in four to six weeks, it’s not going to happen. You’re going to lose the deal and they’re going somewhere else.”
Higher wages have not been a roadblock for the company because its automated factories mean that labor costs represent less than 2 percent of the cost to manufacture lighting.
“Are our labor costs higher in the U.S. versus China? Yes, but in our case the total cost to produce our U.S. units is lower when all factors are calculated,” said Sjolseth. The company today makes 20 percent of its products in the United States, a number it aims to push to 75 percent by the end of next year.
NARROWING COST GAP
The falling share of wages in total costs also played a role in a new battery plant opened by General Electric in Schenectady, New York, this month.
“With all the manufacturing technology we have, labor is a relatively small component” of costs, said GE’s chief executive, Jeff Immelt. “That’s different today than it was 10 years ago.”
The new plant will employ 450 people, a slice of the 14,500 positions the largest U.S. conglomerate has added since 2009. It employs 301,000 people worldwide and 131,000 in the United States.
The plant is highly automated, with high-tech machines processing the ceramic forms that surround the batteries. Some processes are still done by hand; during a recent tour of the site, workers were applying a layer of carbon paint to the cells with paint brushes.
The hand-painting is a technique that GE researchers used in developing the batteries, and it remains a more reliable approach than applying the carbon by machine, said Prescott Logan, general manager of GE’s newly formed energy storage technologies unit. But GE is working on a way to reliably automate the process.
“There are a lot of parts of that factory that will look very different five years from now,” Logan said.
Rising wages in emerging markets and higher shipping costs are also closing the cost gap between developing markets and the United States.
In 2005 it cost 45 percent less to make electric motors for automobile windshield wipers in China and ship them to the United States, rather than make them domestically, according to an analysis by AlixPartners.
Today, the Chinese motor costs only 18 percent less than a U.S.-made model. The consultancy forecasts that by 2015 the Chinese motor will cost just 9 percent less, due to rising wages and shipping costs and an appreciation in the Chinese yuan versus the U.S. dollar.
The study also looked at costs for motors made in India and Mexico and found they had risen, though not as dramatically as in China.
“If you go back to the heyday of outsourc
ing to
China, at that time with the exchange rates and the ocean freight it was pretty hard to go wrong from a cost standpoint,” said Steve Maurer, a managing director at AlixPartners who specializes in manufacturing efficiency.
“Now that costs in China are increasing … people are stepping back and saying, ‘We need to reevaluate this.'”
(Editing by Patricia Kranz and Leslie Adler)
Steel for America’s Military Will Once Again be ‘Made in USA’
by MAM Team“ArcelorMittal is pleased with the Department of Defense’s decision to reinstate the longstanding requirement that steel armor plate procured for defense purposes be melted domestically. We are grateful for the support of leaders like Senator Brown who have fought tirelessly for this policy to be reinstated. This is an important decision for our hardworking employees in Ohio and nationwide. ArcelorMittal is proud to support the defense efforts of the United States through our production of steel armor plate, and we commend the Department of Defense for its decision to help ensure a vibrant industrial base in the years to come,” said John Mengel, Chief Operating Officer, ArcelorMittal USA Plate.
“As a major supplier of raw materials to the domestic steel industry, Cliffs is encouraged by the Department of Defense’s proposal to again require that all stages of steel armor plate manufacturing occur domestically. This proposed rule reflects the importance of producing strategically significant steel products in the United States from a domestic supply chain,” said Kelly Tompkins, Executive Vice President – Legal, Government Affairs and Sustainability and Chief Legal Officer at Cliffs Natural Resources Inc.
Steel armor plate is used for military vehicles, tanks, and equipment. Under DoD regulations, specialty metals procured for defense purposes—including steel armor plate—must be produced in the United States. Despite more than 35 years of legal interpretation and administrative practice requiring that specialty metals be melted in the United States, DoD in 2009—in the midst of the wars in Iraq and Afghanistan and during a time when the demand for steel was high—published a final rule defining the word “produced,” as it applies to armor plate under the Special Metals Amendment, to include simple finishing processes. This means that armor plate melted in foreign countries, including Russia and China, could be imported and subjected to simple finishing processes in the United States and then deemed to have been “produced” domestically.
After numerous Congressional inquiries and report language questioning DoD’s interpretation of “produced,” the FY11 National Defense Authorization Act included a provision requiring a review and, if necessary, revision of the existing regulation to ensure the definition is consistent with Congressional intent (the review was required to be completed within 270 of enactment of the law, i.e., early October 2011). On July 25, 2011, DoD published its request for comment, and the deadline for public comment was September 8, 2011. Earlier this year, Brown introduced the United States Steel and Security Act, which would have required steel armor plate to be both melted and finished in the United States, not only protecting American steel jobs, but our country’s national security. Cleveland’s ArcelorMittal manufactures steel armor plate, as does Nucor.
In September 2011, Brown—along with Sens. Richard Burr (R-NC), Robert P. Casey, Jr. (D-PA), Kay Hagan (D-NC), Daniel Coats (R-IN), Jay Rockefeller (D-WV), Al Franken (D-MN), and Amy Klobuchar (D-MN)—sent a letter to Defense Undersecretary Ashton Carter urging him to revise the Department’s requirements on steel plate. A copy of that letter can be seen here. During consideration of the National Defense Authorization Act in December 2011, Brown and Senate Armed Services Committee Chairman Carl Levin (D-MI) called for the DOD to expedite its review of this issue.
Yesterday, the DoD published in the Federal Register a proposed amendment to the Defense Federal Acquisition Regulations revising the definition of “produce” as it relates to the Specialty Metals Amendment. The proposed amendment is the result of section 823 of the FY 2011 National Defense Authorization Act, in which Congress directed DoD to review the current the definition of produced to ensure its consistency with congressional intent. There will be a 60-day comment period on the proposed rule.
Cargill Recalls Ground Beef After Link to Salmonella
by MAM TeamPublished: July 23, 2012
Hannaford is offering refunds to customers who have any ground beef in their freezers bought in its stores with its store brand and stamped with sell-by dates ranging from May 29 through June 16. It has posted signs in its meat departments and on its Web site, and sent media advisories locally and nationally.
In a pop-up announcement on its Web site, Cargill Meat Solutions Corporation, which processes and distributes pork, beef and turkey products to retailers and food service outlets, said it was voluntarily recalling the meat, which it described as an 85 percent lean ground beef product.
Hannaford bought the meat in bulk from Cargill and repackaged it under its own name. It will be making refunds on all such ground beef stamped with the specified dates regardless of the fat content, a spokesman said.
Salmonella infections, which tend to be most severe among infants, older adults and the sick, can be life-threatening to those with weak immune systems. Typically, they strike within 72 hours after the consumption of tainted food. The Department of Agriculture recommends cooking meat to an internal temperature of 160 degrees Fahrenheit, as measured by a thermometer, to ensure against salmonella poisoning.
The department’s Food Safety and Inspection Service has been investigating an outbreak of salmonella Enteriditis, one of the most common types of salmonella serotypes, affecting 33 patients in seven states, including those where Hannaford has stores, as well as Rhode Island and Virginia. That continuing inquiry involves the health departments in those states as well as the Centers for Disease Control and Prevention.
Through epidemiology and by tracing purchases, investigators were able to link the illnesses of five people, two of whom had been hospitalized, to meat produced at Cargill Meat Solutions. Not all meat samples led back to a specific point of sale.
A Nation That’s Losing Its Toolbox
by MAM TeamPublished: July 21, 2012NEW ROCHELLE, N.Y.
It’s all very handy stuff, I guess, a convenient way to be a do-it-yourselfer without being all that good with tools. But at a time when the American factory seems to be a shrinking presence, and when good manufacturing jobs have vanished, perhaps never to return, there is something deeply troubling about this dilution of American craftsmanship.
That should be a matter of concern in a presidential election year. Yet neither Barack Obama nor Mitt Romney promotes himself as tool-savvy presidential timber, in the mold of a Jimmy Carter, a skilled carpenter and cabinet maker.
The Obama administration does worry publicly about manufacturing, a first cousin of craftsmanship. When the Ford Motor Company, for example, recently announced that it was bringing some production home, the White House cheered. “When you see things like Ford moving new production from Mexico to Detroit, instead of the other way around, you know things are changing,” says Gene B. Sperling, director of the National Economic Council.
Ask the administration or the Republicans or most academics why America needs more manufacturing, and they respond that manufacturing spawns innovation, brings down the trade deficit, strengthens the dollar, generates jobs, arms the military and kindles a recovery from recession. But rarely, if ever, do they publicly take the argument a step further, asserting that a growing manufacturing sector encourages craftsmanship and that craftsmanship is, if not a birthright, then a vital ingredient of the American self-image as a can-do, inventive, we-can-make-anything people.
That self-image is deteriorating. And the symptoms go far beyond Home Depot. They show up in the wistful popularity of books like “Shop Class as Soulcraft,” by Matthew B. Crawford, in TV cooking classes featuring the craftsmanship of celebrity chefs, and in shows like “This Old House.”
Traditional vocational training in public high schools is gradually declining, stranding thousands of young people who seek training for a craft without going to college. Colleges, for their part, have since 1985 graduated fewer chemical, mechanical, industrial and metallurgical engineers, partly in response to the reduced role of manufacturing, a big employer of them.
The decline started in the 1950s, when manufacturing generated a hefty 28 percent of the national income, or gross domestic product, and employed one-third of the work force. Today, factory output generates just 12 percent of G.D.P. and employs barely 9 percent of the nation’s workers.
Mass layoffs and plant closings have drawn plenty of headlines and public debate over the years, and they still occasionally do. But the damage to skill and craftsmanship — what’s needed to build a complex airliner or a tractor, or for a worker to move up from assembler to machinist to supervisor — went largely unnoticed.
“In an earlier generation, we lost our connection to the land, and now we are losing our connection to the machinery we depend on,” says Michael Hout, a sociologist at the University of California, Berkeley. “People who work with their hands,” he went on, “are doing things today that we call service jobs, in restaurants and laundries, or in medical technology and the like.”
That’s one explanation for the decline in traditional craftsmanship. Lack of interest is another. The big money is in fields like finance. Starting in the 1980s, skill in finance grew in stature, and, as depicted in the news media and the movies, became a more appealing source of income.
By last year, Wall Street traders, bankers and those who deal in real estate generated 21 percent of the national income, double their share in the 1950s. And Warren E. Buffett, the amiable financier, became a homespun folk hero, without the tools and overalls.
“Young people grow up without developing the skills to fix things around the house,” says Richard T. Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers. “They know about computers, of course, but they don’t know how to build them.”
Manufacturing’s shrinking presence undoubtedly helps explain the decline in craftsmanship, if only because many of the nation’s assembly line workers were skilled in craft work, if not on the job then in their spare time. In a late 1990s study of blue-collar employees at a General Motors plant (now closed) in Linden, N.J., the sociologist Ruth Milkman of City University of New York found that many line workers, in their off-hours, did home renovation and other skilled work.
“I have often thought,” Ms. Milkman says, “that these extracurricular jobs were an effort on the part of the workers to regain their dignity after suffering the degradation of repetitive assembly line work in the factory.”
Craft work has higher status in nations like Germany, which invests in apprenticeship programs for high school students. “Corporations in Germany realized that
there wa
s an interest to be served economically and patriotically in building up a skilled labor force at home; we never had that ethos,” says Richard Sennett, a New York University sociologistwho has written about the connection of craft and culture.
The damage to American craftsmanship seems to parallel the precipitous slide in manufacturing employment. Though the decline started in the 1970s, it became much steeper beginning in 2000. Since then, some 5.3 million jobs, or one-third of the work force in manufacturing, have been lost. A stated goal of the Obama administration is to restore a big chunk of this employment, along with the multitude of skills that many of the jobs required.
And there is an incipient upturn in the monthly employment data, although the president will almost certainly finish his first term with the manufacturing work force well below the 12.6 million it was when his administration began. (It was nearly 11.9 million last month.)
“We sit in rooms with manufacturers who tell us that location decisions to move overseas that were previously automatic are now a close call, and that the right policies can make a difference,” Mr. Sperling says.
THAT is particularly the case if federal, state and local governments intervene with generous subsidies, like those seen in China, Germany, Japan, France, India and other countries eager to sustain manufacturing.
Government subsidies are helping to make manufacturing in America more attractive, but the turnaround may be hard to sustain. And it may be too late. Big multinationals already operate factory networks in Europe and Asia, as well as in the United States. Stepping up exports to those markets from the United States, rather than producing in them, is becoming less of an option — short of an international agreement like the Plaza Accord of 1985, which realigned currencies and gave American manufacturers a temporary boost.
As for craftsmanship itself, the issue is how to preserve it as a valued skill in the general population. Ms. Milkman, the sociologist, argues that American craftsmanship isn’t disappearing as quickly as some would argue — that it has instead shifted to immigrants. “Pride in craft, it is alive in the immigrant world,” she says.
Sol Axelrod, 37, the manager of the Home Depot here, fittingly learned to fix his own car as a teenager, even changing the brakes. Now he finds immigrant craftsmen gathered in abundance outside his store in the early morning, waiting for it to open so they can buy supplies for the day’s work as contractors. Skilled day laborers, also mostly immigrants, wait quietly in hopes of being hired by the contractors.
Mr. Axelrod also says the recession and persistently high unemployment have forced many people to try to save money by doing more themselves, and Home Depot in response offers classes in fixing faucets and other simple repairs. The teachers are store employees, many of them older and semiretired from a skilled trade, or laid off.
“Our customers may not be building cabinets or outdoor decks; we try to do that for them,” Mr. Axelrod says, “but some are trying to build up skill so they can do more for themselves in these hard times.”
The Factory Factor: Why Outsourcing and 'Made in America' Could Decide this Election
by MAM TeamScott Paul
Executive Director, Alliance for American Manufacturing
Voters of all political stripes are far ahead of the debate inside Washington, D.C. More importantly, perhaps, is that nearly all Americans — not only working-class Ohioans — share this view.
So don’t be surprised if both campaigns escalate the rhetoric and attacks on shipping jobs overseas in the coming weeks, in part to mask their own shortcomings.
That’s because no one is a knight in shining Made in America armor when it comes to this issue. Mitt Romney (rightly) criticizes President Obama for not labeling China as a currency manipulator, but glosses over the fact that Republican leaders in Congress are blocking a bipartisan currency bill that would pass overwhelmingly. Romney has also been on the wrong side of Administration decisions to defend American tire workers against China’s cheating and successfully rescue Chrysler and General Motors.
The GOP hypocritically accuses Obama of sending stimulus dollars overseas, while Republican Senators tried to block Buy America requirements for stimulus spending.
The fact is, accusing your political opponent of shipping jobs overseas is now an established American campaign tradition. What is missing is an honest debate about what could actually be done to promote American manufacturing jobs. Voters are ready for such a dialogue.
Public opinion research conducted for the Alliance for American Manufacturing (AAM) by the bipartisan team of the Mellman Group and North Star Opinion Research concluded that voters overwhelmingly embrace a bold, popular, and effective agenda for growing American manufacturing jobs. Now we just need Washington to listen.
A strikingly large percentage of Americans (56 percent) believe our nation is no longer the world’s strongest economy. Americans believe that we should be number one, and understand that manufacturing is the most important part of our economy. But, less than a quarter of voters believe anyone in Washington is doing a great deal to defend American manufacturing against cheating on trade or to create new manufacturing jobs.
Voters want a national manufacturing strategy and they favor proposals to crack down on China’s cheating, train a skilled workforce, and enforce Buy America policies by a margin of more than 8 to 1 — perhaps even surpassing apple pie.
But what can get done in this time of partisan gridlock? More than you think. Exactly one substantive bill passed the Senate last year over a filibuster attempt led by Mitch McConnell: legislation to penalize China for manipulating its currency, which was supported by most Democrats and one-third of Republicans. That bill would sail through the House this year if Speaker Boehner allowed a vote.
The manufacturing majority is strong and diverse. It has never been effectively harnessed because of often competing agendas between global companies and labor unions; we are the exception to that rule.
Voters will be forced to endure an endless series of 30-second TV ads telling us how bad the other guy is on offshoring. The least they deserve is a good manufacturing policy after the election.
Follow Scott Paul on Twitter: @ScottPaulAAM