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July Jobs Report: Only 162,000 Jobs Added

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The economy added 162,000 jobs in July, fewer than economists expected, as unemployment fell to 7.4 percent, the Labor Department reported today.

Reposted from ABC News:

Many economists expected the addition of 175,000 to 185,000 jobs in July and the average workweek to remain unchanged at 34.5 hours. The average workweek fell by 0.1 hour in July to 34.4 hours.

The monthly jobs report is closely watched by investors for signs that the Federal Reserve will soon taper its bond-buying efforts that have boosted the economy, perhaps leading to a new downturn. The Fed has indicated that it will pull back those purchases, but hasn’t said exactly when that will begin. Job additions have been moderate this year, but not at the level that will cause the jobless rate to fall substantially.

As interest rates edge up from record lows as the Fed reduces its stimulus, there is concern that bond investors will see more losses and the real estate market may cool.

“The report is disappointing, with weaker job growth in July compared to the first half of 2013,” PNC senior economist Gus Faucher said. “Despite the drop in the unemployment rate, the softer job growth in July, combined with the downward revisions to May and June, makes the Federal Reserve slightly less likely to reduce its purchases of long-term assets when it next meets in mid-September.”

Last month, the Labor Department reported a higher-than-expected addition of 195,000 jobs for June, though part-time work increased over 350,000 from May to June, reflecting weakness in the quality of jobs available. Friday’s report included revisions for previous months, lowering the number of jobs added in May to 176,000 from 195,000, and in June to 188,000 from 195,000.

Stephen Bronars, senior economist with Welch Consulting, said the unemployment rate has fallen, in part, because people are giving up their job searches and leaving the labor force.

The report indicated the labor force participation rate, which measures the percentage of adults who are either employed or jobless but actively looking for work, fell to 63.4 percent in July from 63.5 percent in June.

“Even more troubling is that the participation rate is down 0.3 percent from one year ago,” Bronars said.

Another concern, Bronars said, is that over the past two months, half of the gain in employment has been due to an increase in part-time jobs. In addition, there has been a substantial increase over the past two months in the fraction of full-time workers who are working part-time due to slack work and business conditions, he said.

The employment-population ratio was unchanged at 58.7 percent.

“This leaves us in a bit of a no man’s land, not quite close enough to taper, but a bit close enough to expectations that it looks like we have one more month of speculation about the Fed’s intention,” said Joe “JJ” Kinahan, chief strategist with TD Ameritrade.

The economy has been adding jobs for 34 straight months, since October 2010.

On Thursday, the Labor Department’s jobless claims report indicated the number of Americans applying for unemployment benefits fell 19,000 to 326,000, the fewest since January 2008.

On Wednesday, private payroll provider ADP reported employers added 200,000 jobs in July, the fastest pace since December.

And the Commerce Department’s GDP report showed the U.S. economy grew at an annual rate of 1.7 percent in the second quarter of this year, better than what most economists expected but showing only mild growth. In the first quarter, GDP rose only 1.1 percent.

“These rates of growth are about half of what is needed historically to support job gains of 200,000 per month,” said Robert Murphy, an economics professor at Boston College. “The reason for the higher level of job creation may be that employers postponed hiring early in the recovery until they were sure the expansion was on track. If so, then the recent level of job gains simply reflects postponed hiring that is not sustainable. Alternatively, the estimates of economic growth for this year may be revised upward in coming months as more complete data are compiled, supporting the job growth numbers.”

Carol Hartman from DHR International, an executive search firm, is especially concerned about the long term unemployed who are no longer counted in jobs reports.

“Steady job growth, while not robust, defies the tax increases, regulatory environment and large scale changes to healthcare,” she said. “Whether this anemic ‘recovery’ can pick up steam with more business and consumer costs and the financial distress of local municipalities remains to be seen.”

Written by: SUSANNA KIM (@skimm)
ABC News’ Zunaira Zaki contributed to this report.

SOURCE:  ABC News

Small Manufacturers Bet on Detroit Brand Despite Bankruptcy

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DETROIT (Reuters) – For nearly six decades Detroit’s story has been one of relentless erosion of its once mighty manufacturing base, but even as the Motor City faces a long bankruptcy a clutch of small producers has moved in to rekindle the “Made in Detroit” brand.
Reposted from Reuters:

Making products ranging from bicycles to luxury watches and “sleeping bag” coats designed for the homeless, these small firms have tapped into a surprising amount of demand for goods made in a city more commonly associated today with failure and decline.

“Our customers come from all walks of life and are looking for a little bit of soul and something that is authentically Detroit,” said Eric Yelsma, founder of Detroit Denim Co., which produces hand-made jeans. “We can’t make them fast enough.”

Unlike deep-pocketed Dan Gilbert, co-founder of online mortgage provider Quicken Loans who has helped spur a downtown boom here by moving in 9,000 employees and spending $1 billion in the process, Detroit’s new entrepreneurs are winging it.

“None of us have ever done this before,” said Zak Pashak, who has invested $2 million in Detroit Bikes, which will start production of its “urban bike” model in August and aims to build 40,000 bicycles a year.

“We just jumped in with both feet,” said Pashak, who started out as a bar owner in his native Calgary and wound up in Detroit, a city he had admired since childhood for its Motown music. “America needs jobs, which is a good reason to start making stuff here again.”

Detroit’s manufacturing startups have yet to have much impact on a city unemployment rate that stood at 11.7 percent in June. As a whole, they have created only a few hundred jobs, just a fraction of the 7,700 manufacturing jobs created in the sector from March 2012 to March 2013 in the Detroit metropolitan area, according government data.

Small as they are, Detroit’s manufacturing startups offer faint signs of economic diversification after decades of reliance on the automakers or grand schemes to revitalize Detroit such as casinos. They are also making relatively expensive niche goods in a city where consumer spending power has been battered for years.

“I think these small firms offer better hope for Detroit than any big answer,” said Margaret Dewar, an urban planning professor at the University of Michigan. “The city has always looked for a big solution to its problems, which hasn’t worked.”

The auto industry built Detroit, drawing hundreds of thousands of jobs here. But as U.S. automakers shifted production elsewhere, the city’s population fell from a peak of 1.8 million in 1950 to around 700,000, and only one large-volume auto plant still makes cars in the city. Detroit has long-term debt of more than $18 billion and on July 18 the state-appointed emergency manager, Kevyn Orr, filed for Chapter 9 bankruptcy protection, the largest ever U.S. municipal bankruptcy.

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“LOOKING TO THE FUTURE”

Detroit’s new entrepreneurs have come despite the city’s strained finances, undaunted by the lack of street lights in many neighborhoods and patchy basic services like police and emergency services.

“Most of the people who have set up here are family and friends who have done so regardless of poor services,” said David Egner, executive director of the New Economy Initiative, a $100 million fund to aid entrepreneurs in Detroit.

They are encouraged by Orr’s plans to invest in services and infrastructure as part of the city’s restructuring. “Once services improve, I think we’ll see growth from companies outside that group of family and friends,” Egner said.

The largest of the city’s small newcomers is a watch maker called Shinola, a Depression-era brand name purchased in 2011 when the company set up shop. Dallas-based Bedrock Manufacturing, a venture capital firm backed by Tom Kartsotis, founder of accessory firm Fossil Inc., decided to take advantage of Detroit’s underutilized workforce and resonant Made-in-America mystique.

“When we came here we found a lot of dynamic young people who were not focused on Detroit’s past, but were looking to the future,” said Bedrock CEO Heath Carr. “There is a movement in the United States for Made in America goods, but our question was would they support it with their wallets, because most things made here are more expensive.”

Recent consumer research, including a November 2012 Boston Consulting Group survey, indicates around 80 percent of U.S. respondents are willing to pay a premium for American-made goods.

Bedrock spent an undisclosed sum on equipment and on months of training for workers to assemble Shinola watches in a clean environment not far from downtown Detroit. The parts mostly come from Switzerland or China, but the company has two certified watchmakers on staff who can modify designs.

“It means a lot to me to be able to make these watches here in Detroit,” said Jalil Kizy, a Detroit native and one of Shinola’s two watchmakers. Until Shinola came along, Kizy was like many Michigan natives who have felt they would need to leave the state to find work. 

Shinola’s 75-person workforce has the capacity to produce 500,000 watches a year. The first batch of 2,500 watches, priced from $475 to $800 each, sold out in days early this year to buyers across the United States. The company has had teething problems delivering products, Carr said, in part because Shinola underestimated demand.

“It’s a good problem to have,” Carr said. “But we are working to manage customer expectations.”

Shinola also assembles Shinola bikes here, competing with at least two other small-scale bike makers: Detroit Bicycle Company and custom bike builder Slingshot Bikes, which is relocating from Grand Rapids in western Michigan. Pashak’s Detroit Bikes will employ 30 people when production begins in August.

“CRAZY OLD”

The city’s new manufacturers face challenges common to many new businesses: managing consumer expectations while struggling to meet demand, finding qualified workers to ramp up production, or bearing the cost of training new ones.

Eric Yelsma formed Detroit Denim after losing his job selling specialty printing chemicals once oil hit $100 a barrel in 2008. Yelsma wants to expand Detroit Denim’s four-person payroll, but few Americans know how to make jeans anymore.

“The labor pool for this business is pretty much minimal,” he said. “So far, we’ve come up dry.”

A local veterans’ group is considering a plan to fund a six-month training course for three veterans to become “jean smiths” on what Yelsma describes as “crazy old” sewing machines, one more than a century old. Detroit Denim’s jeans sell for $250.

Detroit Denim shares space with the non-profit Empowerment Plan, which makes sleeping bag coats for the homeless. Backed by Quicken Loans’ Gilbert and Spanx founder Sara Blakely, Empowerment Plan makes coats from donated materials – insulation from General Motors and material from workwear brand Carhartt.

Veronika Scott, a 24-year-old graduate of Detroit’s College for Creative Studies who founded Empowerment Plan, said most of the nine formerly homeless women she employs have found places to live since getting a job. Demand for the coats is strong enough that Scott is planning a “buy one, give one” program this fall: for $200, customers will get a coat and have one donated to a homeless person.

Andrew Pierce, U.S. president of marketing consultancy Prophet, said Detroit’s new manufacturers are tapping into Detroit’s reputation much as U.S. automake
r Chry
sler has with its “Imported from Detroit” commercials.

“The Detroit brand is very authentic and a little bit gritty in a good way,” Pierce said. Beyond a growing desire for American-made goods, the attraction of Detroit “is that part of the American dream is all about the rebuild out of a crisis.”

(Reporting By Nick Carey; Editing by David Greising and Claudia Parsons)

SOURCE:  Reuters

iPhone 6 Could Be First ‘Made In USA’ iPhone

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Foxconn are considering a move to the USA. As you know the iPhone 5 is made at Foxconn in China right now and it has been causing quite a few problems for both the manufacturer and Apple.
Foxconn are now looking into cities in the US, which include Los Angeles and Detroit to determine which may be the ideal place to set up a factory reports CNET. This could mean that in the future, we could see something like the iPhone 6 being made in the USA instead of just being “Designed In California”.

iPhone 6 may be produced in the USA if Foxconn makes reported move

Foxconn have been able to establish themselves as one of the leading producers of goods through making the most of being able to pay out cheap wages to those working in China. If they were to come to the USA then changes would have to be made to their business model.

They have come under the eye for their labour practices in the past. The Fair Labour Association audit revealed that they had excessive overtime and unfair wages. Of course Foxconn said that they would address these issues and apparently they have done just that as they are addressing these concerns.

On a side note, the latest supply checks show that Apple is finally getting closer to keeping up with demand for the iPhone 5.
SOURCE:  SIDHTECH

iPhone 6 Release Date Could Happen On Labor Day 2013

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Rumour has it that we could see Apple iPhone 6 before the end of August or by early September at the latest. Everyone is waiting to hear that the iPhone 6 is in production, it would have to be sometime soon if it is to come out with iOS 7.
We have seen many concepts and some of these show that the iPhone 6 could be thin, it may have a display of full HD and this would be 1080p and there has been a rumour that Apple will be launching a phablet this year.

The life cycle of Apple could be late summer or very early fall. The invitations from Apple generally go out the week before the event, and this is usually on a Tuesday or Wednesday. IOS 7 could be revealed at the same time and pre-orders for the device could start on the Friday. ISO 7 could be then available for download on the same day.

It has been said that the Apple iPhone 6 may have the quad core processor and this would be faster than the processor of the iPhone 5. If so it would work great with iOS 7 as iOS 7 comes with many new features.

It’s also been said that the iPhone 6 may be coming choices of 16 GB, 32 GB, 64 GB and 128 GB.
SOURCE:  SIDHTECH

Playing ‘The Game’ Of U.S. Clothing Manufacturing

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The Game, a Phenix City, Ala.-based manufacturer of sporting apparel for nearly a thousand collegiate baseball teams, recently announced a new line of American-made products — American Threads — to be manufactured in North Carolina. The company, founded in 1986 by Neil Stillwell, owns manufacturing operations in Mexico, Honduras and El Salvador, and sourced a great deal of product from China and Vietnam. Amid a noticeable demand for a home-grown product, they decided to reconsider the cost picture of producing goods locally.
Their reasons for spending so much time using outsourced manufacturing assets, according to Jeff Stillwell, the company’s current president, was the “usual suspects.” As many American companies found, there was an attractive combination of labor costs, skilled labor, raw material availability and transportation costs when sourcing material from low-labor-cost countries like China or other southeast Asian countries. It’s a familiar story, particularly in the clothing industry. And it’s one that’s on many minds as of late, in particular due to the notorious disasters that have befallen dangerous manufacturing operations in Bangladesh.

When it came to first looking into the business case of manufacturing in the U.S., Stillwell says, “Given what our country has been through over the past few years, we sensed a groundswell of demand for ‘made in the USA’ product.” Given that his company is producing apparel for what is generally considered an “American” sport — baseball — the demand for locally-produced apparel is understandable. Patriotism aside, athletes expect high quality from their clothing, and American-made is often most closely associated with some of the highest quality in the world.

Stillwell says that based on the current situation between American manufacturing and that in Asia, “We may be a bit ahead of the curve in the move back to the U.S. Though the cost gap is shrinking, it’s not ‘closed,’ but our sense of patriotism won out in the end. We’re glad to offer a made in the USA product line and we believe the cost sacrifice will not harm the business.” Still, he believes that gap is bound to close in the coming months, given the rising labor rates in Asia, increased competition cost and continued legislative posturing over unfair currency manipulation.

Textile manufacturing in the U.S. isn’t easy, and clothing is another story altogether. Many have said that the industry was dead — forever — and would continue to bounce between the next low-cost economy rather than ever return to the U.S. Stillwell says, “I think the general challenge with apparel manufacturing in the U.S. is that there is simply a price point where people walk away. An item manufactured in China may cost a consumer $18.99 — but if made in America, may cost $29.99. That’s often too large a price gap for consumers to bear.”

At The Game, Stillwell is actually finding a number of benefits due to manufacturing in the U.S. Yes, prices are higher, and those will be reflected in the retail price of these new products. But the company is manufacturing the line in non-union shops in North Carolina — very close to the company’s headquarters in South Carolina.

Stillwell says, “My favorite business benefit of the move was demonstrated just this past week. I left my office in Alabama mid-morning and was inspecting product in North Carolina by mid-afternoon. That is a far cry from a trip to Shanghai.”

The price gap is changing, too, and despite his company’s own experiment, Stillwell does believe that certain textile and apparel products will see an American-made resurgence. He says that U.S. labor costs are still quite high, particularly in comparison to those in Asia, but that for simple goods, like towels, labor costs are a small portion of the overall cost. Today, those labor-free products can often be automated with new equipment, mitigating most of the labor costs. In many situations, that makes American manufacturing a cost-friendly option, even, and that landscape may change for more complex textile-based products in the near future.

Finding exactly the right way to sell American-made goods is still a bit of a mystery as well. It’s one thing to slap a “Made in America” label on the packaging and hope consumers will respond, but The Game is trying out some different, more unique approaches in order to emphasize how the current line depends entirely upon a U.S.-based supply chain. Stillwell says his favorite slogans, which the company is testing out as it announces the product line, borrow from the “farm-to-fork” movement in the food processing world. “Cotton field to game field,” or, “from farmer to fan,” are among his favorites.

The American Threads collection will be available starting in the fall of 2013, which means the current initiative is still an experiment to The Game, and hasn’t yet been fully proven, despite that up-front demand for American-made goods. Stillwell isn’t quite ready to commit to manufacturing more of his company’s products in America, but he hopes it becomes a reality. Like any good businessman, he’s waiting to see where the dollars lay. He says, “Ideas are always great in theory, but until you see them successful in the cold, hard ‘real world’ there’s always a bit of anxiety.”

Detroit: Gold mine for China

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Workers prepare engine cylinder liners for packaging at the US distribution arm of ZYNP China Manufacturing, in Romulus, Michigan, near Detroit. Michael Barris / China Daily

Despite the Motor City’s bankruptcy filing last week, its abundant engineering talent and car history lure Chinese automobile companies seeking global expansion, as Michael Barris reports from Detroit.
Reposted from China Daily:

Detroit is still Motor City – at least to Chinese automotive companies doing business here.

In the past decade, dozens of them have been drawn to the area, not just because of its existing infrastructure, supply network, abundance of skilled workers or tax benefits, but because of Detroit’s pivotal role in automobile history.

“It is the center of modern vehicle technology,” proclaims John Yang, chief metallurgist with ZYNP International, the US distribution arm of engine cylinder-maker ZYNP China Manufacturing. The facility is located in Romulus, Michigan, about 25 miles southwest of Detroit. “This area still has its strength in technology and talent,” Yang said in an interview.

Overwhelmed by a debt of at least $18 billion, Detroit filed for Chapter 9 bankruptcy protection last week, the largest such filing in US history. A legal muddle created by a county judge’s ruling that the filing was unconstitutional was lifted on Wednesday when a federal bankruptcy judge cleared the way for the case to go forward without legal challenges.

As China’s leadership boosts research and development for auto parts, mandated by the latest five-year plan (2011-15), Chinese automotive companies have stepped up their activity around Detroit, doing everything from R&D on behalf of parent companies back home to making parts exclusively for US auto makers.

Their arrival is welcomed by the state government, led by Republican Governor Rick Snyder, former chairman of California computer-maker Gateway Inc, and ex-chairman and CEO of Michigan venture-capital firm Ardesta LLC. The first-term Snyder administration sees China’s interest in learning more about automobile production as a chance to create jobs for a hard-hit region.

Michigan was in the grip of a deep, decade-long recession through 2010. The state, whose economy is disproportionately affected by the automotive industry, lost nearly 218,000 manufacturing jobs from 2000 to 2005. It suffered further near the end of the decade when auto sales at General Motors, Ford and Chrysler plunged because the Detroit Three couldn’t compete against fuel-efficient Japanese cars at a time of high gas prices. The US industry’s woes were symbolized by the Chapter 11 bankruptcy filings of GM and Chrysler in 2009, moves now seen as necessary steps in the auto industry’s recent resurgence.

More and better jobs
Last year, the Great Lakes State, struggling to recover from the economic slump, exported $3.2 billion of goods and services to China, a 25 percent jump from 2011 and lagging behind only Canada and Mexico. Michigan received more than $917 million in capital from China in 2012 to become one of its top 10 direct-investment states.

“More and better jobs are created both by promoting Michigan exports to China and by attracting Chinese companies to locate operations in Michigan,” said Michael Finney, president and CEO of the Michigan Economic Development Corp, a public-private partnership that provides grants, loans and other economic assistance to businesses that make investments or create jobs in the state.

Finney calls China’s economic growth “an opportunity” for Michigan. Chinese officials feel the same way. During a recent visit to the Detroit Chinese Business Association in Troy, about 40 kilometers north of the city, Zhao Weiping, China’s Chicago-based consul general to the Midwest, called Michigan “an important business partner of China”.

The Chinese auto industry’s increasing presence in the Detroit suburbs continues a pattern of auto-production decentralization that started in the 1920s and shifted into high gear in the 1940s and 1950s, when GM, Ford and Chrysler expanded into new facilities around Detroit. That move helped push auto production into a truly national industry, responsible, at the city’s height at mid-century, for one in every six US jobs.

Detroit’s connection with a golden age of American automobile manufacturing fascinates Chinese automotive executives.

“Here in Detroit, we have a tradition,” said Jerry Xu, president of the Detroit Chinese Business Association, a nonprofit business network that fosters bilateral business relationships between US and Chinese companies. “We have a lot of history and experience that no other place can have. That is why Detroit is always respected by the Chinese as the place for the automotive industry.”

The business association estimates that about 100 Chinese firms, mostly in the auto industry, are active in the region. Those who come here typically aim to make a name for themselves in the global marketplace via Detroit, which has retained its legacy as a model for American innovation, notwithstanding its long decline and financial problems, Xu said.

Understanding that the path to success is through the Motor City, “they have to find a way to push through and come to the US, to the Michigan area, to realize that aspiration,” Xu said.

Sometimes, he said, large companies come with abundant talent and experience in doing business in the US. But “there are a lot of Chinese medium and small businesses that need help when they come”, Xu said.

The area’s abundant engineering talent is a magnet for Chinese auto-related companies looking to increase their knowledge of automobile production.

Hong Su, vice-president in charge of research at the United States R&D center for Chinese automaker Changan, in Plymouth, Michigan, about 40 km west of Detroit, said he has hired about 20 engineers with US auto industry experience in the last few years because of their expertise in developing vehicles.

Chassis class
“In China, at original equipment manufacturers, the senior people – even managers and directors in engineering – have fewer than 10 years, 15 years of experience,” Su said. “And most of that experience is in reverse-engineering, or copying. They don’t have vehicle-development experience.” Su chuckled as he said the youngest engineer at the US R&D center, which focuses on chassis design, has 19 years of Detroit industry experience, which is more than some senior managers in China. By contrast, his most senior employee, retired, had 35 years of experience.

China has reverse-engineered many cars, but even creating a copy requires vehicle-development know-how, Su said. “Vehicles have copyright issues; sometimes you are forced to modify. If you don’t know the principles of how to modify, you can’t do it.”

Most important, you need vehicle-development expertise to make automobiles to the performance and quality specifications demanded by today’s buyers, he said.
“You can never copy the technical know-how,” he said, as he showed a prototype of a large sedan that Changan, traditionally a maker of smaller cars, plans to build and sell in China. When
finis
hed, the car will target prosperous buyers with families who also crave a big, luxurious vehicle.

Frank Yang, managing director at ZYNP International in Romulus, said the combination of the Detroit area’s existing transportation and manufacturing infrastructure, talent pool and cost-efficiency, along with government tax breaks, allow that US unit to pursue its plan to be a one-stop, full-service company in the engine cylinder industry. ZYNP International’s ability to offer customers R&D, engineering, supply chain management, manufacturing and financing under one roof “differentiates us from competitors, either locally or internationally”, Yang said.

A wide range
“All this is hard to find in other areas of the country,” he said. “Detroit is the hub.”

Showing that being Chinese doesn’t guarantee a job here, ZYND’s Romulus-based engineering staff hail from a range of countries, including China, the US, Brazil, Mexico and Canada. The company employs 50 to 80 people, including seasonal workers. Most are Americans or US residents. The staff include one or two Chinese nationals and very few Chinese Americans because the company emphasizes US industry experience.

“We only have visitors from our China operation to do troubleshooting, to undertake training, to give training, and to receive whatever knowledge they can take from the US,” Yang explained.

He said the company used its flexible pay system and entrepreneurship programs to lure valuable laid-off engineers “to grow together with us”.

At ZYNP, workers repackage engine cylinder liners in returnable containers, or “dunnage”, made in China for direct shipment to customers that include GM, Ford, Chrysler, Volvo, Nemak and Cummins.

ZYNP’s history dates back more than 50 years in Mengzhou, China, where it has its manufacturing operations. The company, which employs 3,500 people in China and North America, started ZYNP North America in two Romulus locations in 2005.

Program development manager Leslie Santos said Detroit’s bankruptcy “does not impact ZYNP’s business or plans. Although ZYNP is in the metropolitan Detroit area, that does not mean we are located in the city. We are not connected to Detroit as far as our administration or anything like that. We just say we’re in Detroit because Detroit is so well known as the automotive capital of the world,” she said.

Despite Motown’s well-publicized woes, the Chinese automotive companies’ arrival has triggered an influx of companies from other fields. The new arrivals are “looking for clean technologies, environmental and water solutions” as directed by China’s latest Five-Year Plan, according to Milan Stevanovich, business community development officer with the Detroit Chinese Business Association.

“We’ve had such an overabundance of automotive engineers here over the last five years. A lot of these engineers here are now either working with angel capitalists or are just starting new startups in all these new emerging sectors,” Stevanovich said. “It’s quite an exciting time to be here in Michigan.”

Some observers see China eventually joining Japan, Germany, South Korea and other foreign countries in making and selling vehicles in the US. A March report by the US Congressional Research Service said the Chinese government ultimately is “seeking to develop vehicles that will be built in China and exported more widely to other markets, as the Japanese and Koreans did earlier”.

China already is a major importer of US auto parts. Last year it imported about $1.6 billion parts, according to United States International Trade Commission statistics. The Congressional Research Service report says recent acquisitions of US parts companies will help Chinese parts makers “target technology and product innovations to enhance their operations” back home while “also permitting a shift from supplying low-margin parts to more profitable activities, such as integrating parts into component systems”.

Joint venture
China’s recent acquisitions include Chinese auto-parts conglomerate Wanxiang Group’s $250 million acquisition early this year of US battery maker A123 Systems Inc; the purchase by Pacific Century Motors, a joint venture between the Beijing municipal government and another Chinese partner, of Nexteer Automotive from GM in 2010 for $450 million, the largest Chinese acquisition of a US auto parts company; and the purchase by Beijing West Industries, a joint venture of two Chinese State-owned enterprises, of the suspension and brake units of Delphi Corp in 2009 for $100 million.

Making and selling vehicles in the US would cap off the Chinese auto industry’s 30-year effort to develop globally, which reached a milestone in 2009 when it overtook the US to become the world’s largest producer of and market for motor vehicles.

Jerry Xu says the days of China making and selling cars in the US could happen.

“China is not the first group to come here to do business,” Xu said. “There’s Korean, Japanese, there’s German.

“As long as you have good quality and service, the American market is open for you.”

But the Chinese firms “have to better themselves. They have to make sure they provide value to get business market share here,” he said. “They have to continue to prove themselves, make sure they have a long-term plan to grow here. To be successful, they have to make themselves a citizen of their community.”

Changan’s Su says the US may have to wait five to 10 years to see the first Chinese car sold here, given the engineering techniques typically demanded by developed nations, including pollution-control and safety features. He cites the slow rise of Japan’s Toyota Motor Corp as an example of how emerging nations can eventually break through in the fiercely competitive global market.

“Twenty-five years ago, the Japanese came here and tried to study the US market,” Su said. Now Toyota can match strides with GM and Ford in the world market. But even Toyota is a relative newcomer to the US marketplace compared with one particular Detroit icon that still continues to have its world headquarters in the Motor City.

“General Motors,” he said, “is more than 100 years old.”

SOURCE:  China Daily
Contact the writer at michaelbarris@chinadailyusa.com

"Made in America": The Competitiveness Imperative

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Politicians love promoting “made in America” during an election season but tend to forget about it once the dust settles. And so, for all the praise of American manufacturing in the last campaign — by Democrats and Republicans alike — very little has actually been done. So what happened to a real competitiveness-and-jobs agenda?
By any measure, the Obama administration is falling behind on its manufacturing promises, and getting no help from Congress. The president’s campaign-trail goals of a rebalanced economy and 1 million new manufacturing jobs seem more aspirational than achievable at our current pace. And as those aspirations have stalled, the administration has shifted its economic focus from what Americans want — employment — to complex matters that will only compound our problems, such as the proposed Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership trade deals.

Don’t get me wrong, it’s worth negotiating trade agreements that will open markets abroad and provide effective enforcement for rules-based trade, if they guarantee a level playing field for American workers, farmers, ranchers, and businesses. But the administration and perhaps Congress apparently haven’t learned from the mistakes of the past: Before we negotiate, we must get our own house in order, and we must seek far tougher trade terms. We have leverage, after all, as we remain the gold-standard consumer market in the world.

Our goal should be to cut the U.S. goods trade deficit in half by 2017. This can be accomplished by tackling Japanese and Chinese currency manipulation and by ensuring our workers and businesses aren’t forced to compete with state-supported industries abroad.

But even the best trade policy can’t hide the fact that our manufacturing sector receives little, if any, domestic policy support from Washington. First, look at the tax code: Our exports are taxed overseas through value-added taxes in over 150 countries, leaving us at a competitive disadvantage that trade agreements cannot erase. Those nations’ imports to the U.S. are effectively subsidized through VAT rebates while the meager tax support that manufacturing receives in the U.S. is under attack by Wall Street and importers.

American manufacturers are forced to work around a substandard infrastructure desperately in need of repair, yet public construction expenses as a percentage of GDP are dropping like a rock. Our chief competitors, meanwhile, have modern ports, passenger rail, and transportation hubs. And despite the president’s assurances that these jobs can’t be outsourced, major projects like New York City’s Verrazano-Narrows Bridge rehabilitation and the new San Francisco-Oakland Bay Bridge include massive amounts of Chinese steel — work that could have gone to U.S. factories.

We’re also under-investing in human capital. To be sure, community colleges are slowly scraping the rust off of the manufacturing talent pipeline, and some communities are putting vocational educational opportunities back into place for high school students. But the response so far from D.C. has been completely inadequate to meet the needs of the manufacturing sector, particularly if re-shoring becomes more of a trend and as retirements from an aging workforce begin to pile up. Our high-road competitors abroad possess mature, seamless programs to train young people, provide them with apprenticeships, and place them in high-wage jobs in modern factories.

Finally, public investment in innovation is strong in the United States, but it focuses entirely too much on ideas that end up in products made overseas. Taxpayer-financed research made MP3 player technology possible, but none of those devices are currently made in America. Investing in manufacturing innovation and engineering is essential, so that the production of the next idea — the one that hasn’t even been imagined yet — is done here. Otherwise, America will be known as the 21stcentury high-unemployment incubator of fascinating ideas.

Our era is defined by a breathtaking “app” economy but a collapsing real-world economy. Two more trade deals as they’re currently constituted won’t change that equation. Making American manufacturers and their workers more competitive, on the other hand, will allow Democrats and Republicans to fulfill their “made in America” promises and boost our economy. 


Scott Paul is president of the Alliance for American Manufacturing.

Moto X: All the Details About Motorola's Made-in-America Smartphone

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Picture

Moto X Colors

Thousands of Android devices have been made by consumer electronics manufacturers. Maybe you know the Samsung Galaxy S4 or a Verizon Droid, but the rest of them can easily blend together.

But, after a year in the works, Motorola is hoping that the Moto X will be the Android phone you know and want. On the back of the colorful phones reads “Designed and Assembled in the USA;” the phone is the first device built from scratch since Google acquired the company and is being built in the U.S. so it can quickly ship to American buyers.

“We started to think about smartphones, and the main thing we realized was they weren’t very smart,” Motorola Senior Vice President of Product Management Rick Osterloh said at the phone’s unveiling. “We see a lack of innovation because we think there is a lack of imagination.”

Motorola has put its imagination into making the Moto X a highly customizable phone with a few unique software tricks.

Colorful and Customizable Hardware 
The 4.7-inch, 1280×720-resolution Moto X is a big-screened smartphone like many other Android phones, but the hardware differences are in the shape of the device and in the colors you can get it in. The phone has a very comfortable curved back with a small dimple in the center of the back to rest your finger in.

But if you order your Moto X through Motorola’s Moto Maker website you can customize the color of the back of the phone, the edges and even the color of the volume and power buttons and the ring around the camera. There 2,000 color combinations to choose from and the company is even working on a back made of wood.

In addition you can engrave a message or name on back of the phone. You can upload your contacts and a photo for the wallpaper before the phone ships out of the Fort Worth facility within four days of placing the order. However, to start, the color-customized versions of the phone will be available only with AT&T service. The other carriers, including Verizon and Sprint, will have black and white versions of the phone in stores and on their websites.

The phone is powered by 2GB of RAM and Motorola’s Moto X Mobile Computing system, which the company says includes a series of chips. (A Snapdragon S4 Pro processor, quad-core Adreno 320 GPU, a contexual computing processor and a natural language processor, if you’re interested in the details.)

Photos of the Moto X and the Factory it Was Made In

Smarter Software
That power is important though for the new Android software tricks. Similar to some of the features available in Motorola’s new Droid phones for Verizon, the Moto X has what the company calls “Touchless Controls” and an “Active Display” features. The touchless control works similarly to Google Glass, without having to touch the phone your phone can listen to you. After training it, you should be able to say “OK Google Now call mom,” without ever tapping or lifting the phone.

The Active Display feature aims to solve checking your lockscreen for the time or new messages. You don’t have to wake the screen, instead, periodically the phone will flash the time and if you have any new messages. Even with those notifications, the company promises up to 24 hours of battery life.

Motorola also doesn’t want you to spend too long trying to get at your camera. The phone has a 10-megapixel camera that you can get to by just shaking the phone, launching the viewfinder in under three seconds. You can take a photo by just tapping on the screen; the phone will auto focus for you. You can customize all the camera settings, however, if you’d prefer to manually turn on the camera and take the photo. The phone will ship with Android 4.2.2 and will be updated to Android 4.3 soon.

Availability and Pricing 
The Moto X will be available at the end of this month or at the beginning of September, through AT&T, T-Mobile Verizon, Sprint, US Cellular and Best Buy. The 16GB model will cost $199 and the 32GB version $249. The company says it might eventually offer a version directly through the Google Play Store.

And don’t worry, if you order one through the Moto Maker in different colors and don’t like it, you can redesign or return it within 14 days of purchase.

SOURCE:  ABC News

Motorola's New Smartphone: Made in the U.S.A., but Not for Much Pay

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Factory workers assembling the Moto X will make as little as $9-an-hour, if the help wanted ads are to be believed.
Reposted from The Atlantic

Today, Google-owned Motorola is officially announcing the new Moto X, an Android-powered device that, as its ads remind us, will be the first smartphone actually manufactured in the United States. Motorola is teaming with Flextronics to assemble the handsets at a former Nokia factory in Fort Worth, Texas, which will eventually employ somewhere around 2,000 workers. 

In other words, we’re all finally about to see what happens when a tech company actually tries to bring production back to the U.S. of A. from low-wage Asia, much as Apple is planning to do with some of its Macs, and how much the resulting new jobs will actually pay. 

In some cases, it appears, the answer is not much. Flextronics seems to have kept mum about wages. But after a little bit of surfing around jobs boards, I was able to find some help wanted ads from a staffing company that don’t leave a whole lot of questions about what factory they were headhunting for. (Here’s a link to the one below.)

So at the lowest wrung, we’re talking Walmart wages. For better-educated technicians and production leads, we’re in a more middle-class pay range. There’s no mention of benefits in the ads, but I’m not going to draw any hard conclusions from that. 

None of this should be particularly shocking. The generous manufacturing wages of mid-century America are mostly a memory at this point. Even the United Auto Workers have negotiated a two-tiered wage system that start’s new assembly hands at about $14 an hour, half of what their older colleagues make. Meanwhile, we are, in the end, talking about smartphone manufacturing, an industry where the vast majority of the supply chain exists in Asia, right alongside plentiful cheap labor. Chinese wages have been rising fast, but anybody looking to compete while making handsets in the U.S. is still going to need to minimize costs. 

We’re also talking about Fort Worth, where the living wage for a single adult is $9.27, according to MIT’s living wage calculator. I doubt that that’s an accident. It makes sense that Motorola would look for a location where it wouldn’t have to pay its workers highly. 

The new factory won’t just lead to production jobs. Flextronics also appears to be hiring engineers, for instance. But in general, I think this is a reminder that even if the United States really is on the verge of bringing back loads of manufacturing work from overseas, as many believe, we have to temper our expectations for what that will mean. 

UPDATE 6:19 PM: In an email, a Flextronics spokeswoman confirmed that the advertised wages were indeed accurate: “Please be advised that the posted wages you inquired about are reflective of some of the positions Flextronics is hiring for in Fort Worth and are competitive market wages. Please note that Flextronics is also hiring for managerial and other positions and those job postings can be found at flextronics.com.” 

SOURCE:  The Atlantic

Obama's Amazon Economy

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The President of the United States will be speaking about rebuilding America’s middle class from the depths of an Amazon warehouse in Tennessee. His message and the site from which he’ll deliver it are dissonant, given Amazon’s prominence as a massive importer and employer of temporary workers, two truths that make it harder than ever to find a middle class job in this country.
But in many ways, this is an Amazon-driven economy. Want a new TV? Click here and it can arrive at your doorstep in a day. Just charge it to your card. But would you like a good job? Wait in line. Been unemployed for a while? Wait even longer.

Americans have fantastic, otherworldly tech gadgets to play with at home but 70,000 structurally deficient, real-world bridges over which we drive every day. Last year we could tweet news instantly about Hurricane Sandy’s effects on New York City but we could not find any Made-in-America electrical transformers to supply power to those in need. As taxpayers we have financed breathtaking research that has led to extraordinary devices like MP3 players, but good luck finding one that’s made in America today.

While the consumption slice of our economy is doing better, the productive sector is barely treading water. And it should be no surprise; this is exactly the way our economic policy is skewed today.

President Obama said he was going to change all that. But he hasn’t.

In 2009, President Obama said that the world could no longer depend on American consumers as an engine of growth, and that we should bring our economy more into balance — exporting and saving more, while reducing our reliance on borrowing and imports.

During the 2012 election, President Obama pledged to add one million new manufacturing jobs and get tough on China’s trade cheating. So far in his second term, though, we’ve added only 13,000 new factory jobs and our trade deficit with China, $315 billion last year, is breaking records.

What would be helpful is a real-world focus on the economy from Washington. We see lots of finger-pointing, but little action. And Obama’s speeches thus far have reflected that: Lots of promises of action and exhortations that he gets it, but little in the way of policy. But there are steps right now that President Obama could be taking without Congress:

  • He could refocus our trade agenda with a goal of cutting our trade deficit in half by the end of his second term. That means demanding balance from China and Japan in an economy-wide way. Balance should be a pre-condition for any trade or investment deals the Administration is contemplating with these nations.
  • The President should designate China and Japan as currency manipulators. Both of these countries prop up our massive trade deficits with them by significantly undervaluing their currencies to subsidize their goods in the world’s largest free market – America’s – while essentially taxing U.S. goods entering their own.
  • The Administration could go slowly on approving natural gas exports, especially to state-capitalist economies with whom we are competing. How much sense does it make to extract Midwestern natural gas to export to Chinese manufacturers who ship their products, heavily subsidized, back to the Midwest, displacing American jobs?
  • The President could tighten up procurement regulations to ensure that fewer of our procurement dollars are spent overseas. That means more wind turbines manufactured in Iowa, more steel produced in Pennsylvania, and more vehicles made in Ohio.
  • And he could ditch the idea of a strong dollar that has made our exports more expensive overseas. Larry Summers was part of the “strong dollar” posse during the Clinton Administration. I’m not personally thrilled about an Act III for Summers at the Federal Reserve.


There’s a lot that Congress could do… but that’s another blog post.

Perhaps more than anything else, the President could rally Americans behind these ideas. Trade policy needs to be a dinner-table topic in this country, because trade policy puts manufacturing jobs at stake. These jobs are worth fighting for. And it’s time that manufacturing workers felt so valued around the clock, not just at election time.

SOURCE:  Huffington Post

About Scott Paul:
Scott N. Paul is President of the Alliance for American Manufacturing (AAM), a partnership established in 2007 by some of America’s leading manufacturers and the United Steelworkers union. Mr. Paul and AAM have worked to make American manufacturing a top-of-mind issue for voters and our national leaders through effective advocacy, innovative research, and a savvy public relations strategy.

CLICK HERE FOR MR. PAUL’S FULL BIO

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