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Innovation Is Key to Helping Businesses Make It In America

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Rep. Steny Hoyer
U.S. Representative, Maryland’s 5th congressional district
08/20/2012 
Since our nation’s earliest days, Americans have excelled at envisioning new ideas and transforming them into the products that make the world run. From the Bell telephone, to the Wright brothers’ airplane to the first personal computer, innovation has driven American enterprise from generation to generation, creating jobs in the process. 
Americans overwhelmingly believe if America is to be great in the decades ahead it will be because we continue to make things and sell them here and around the world. Only by tapping into our tradition of innovation can we continue to lead the global economy of the twenty-first century. Investments in innovation will enable us to move our economic recovery forward and lay the groundwork for a new generation of well-paying jobs for the middle class that won’t be shipped overseas. 

Our foreign competitors are investing heavily in research and development and graduating more scientists and engineers. They are working hard to replicate the innovation culture that made us the world’s economic leader. However, I believe — and I know most Americans agree — that we cannot afford to cede that leadership role or allow our innovation edge to erode. 

According to a New York Times feature in January, when the late Steve Jobs was preparing to unveil the original iPhone in 2007, Apple executives determined that finding the 8,700 trained engineers in the United States needed to supervise its 200,000 assembly line workers would take up to nine months. In China, however, it would take only two weeks. Part of the reason is because China and other countries have been investing in science, technology, engineering, and math — or “STEM” — education, skills training, and basic research at unprecedented levels, building a workforce well prepared to compete for these jobs. According to the National Science Board, ten Asian nations have increased their research and development expenditures to equal ours. Furthermore, the number of Chinese graduates earning doctoral degrees in engineering has doubled since 2000 and has now surpassed the number of engineering doctorates earned here. 

Across the world, our competitors are investing in their future. We cannot afford to fall behind. As former President Bill Clinton wrote in his latest book Back to Work, it’s time Americans got into the future business again. Much like the successes of our past, our economic future will be fueled by our limitless energy to innovate. And the best way to tap into that innovation energy is through House Democrats’ Make It In America plan, for which I have been proud to take the lead in Congress. 

Make It In America is the comprehensive jobs plan this country needs, and it aims to restore certainty to American businesses and help them expand so they can create jobs and compete overseas. It combines strategic tax reform that encourages manufacturers to move production back here with investments in education, innovation, and infrastructure. 

A great example of this is the America Invents Act, which Congress passed last year. That legislation will help clear the current patent backlog, speed the processing of new applications, and provide for greater intellectual property protection. When innovation drives an economy, safeguarding intellectual property is vital to making sure those who develop new products can manufacture and sell them profitably.

Other Make It In America proposals to increase innovation await action by Congress. One would establish a National Network for Manufacturing Innovation, which would bring manufacturers, academics, and government leaders together to create an innovation infrastructure that will speed the development of manufacturing technologies. Another calls for a reauthorization of the Elementary and Secondary Education Act that will help close persistent achievement gaps, graduate more students who are college and career-ready, and include robust funding for STEM education programs from an early level. Our plan would also update and modernize the Workforce Investment Act to make job skills training more accessible to those currently out of work. A Make It In America bill I introduced last year would partner manufacturing businesses with local colleges and universities to provide training in essential skills and create a pathway to careers. 

Our plan also encourages businesses to produce more of their goods here in order to take advantage of co-locating design and production, which we believe further feeds innovation as engineers move between the laboratory and the factory floor. These are just some of the ways the Make It In America plan aims to help businesses innovate and find the skilled workers they need for the jobs that investments in innovation will help create. 

When Democrats first introduced Make It In America legislation two years ago, we did so in the hope that Republicans would join with us in a bipartisan effort to put more Americans back to work by investing in business growth. Unfortunately, not only have House Republicans refused to do so but they have yet to propose a comprehensive jobs plan of their own after nearly 20 months in the Majority. A glimmer of hope may be found in the 10 Make It In America bills that were able to draw bipartisan support and be passed into law — a good start but nowhere near what must be done to meet our challenges and move our economic recovery forward. 

Make It In America is about more than just promoting innovation; it is about recapturing the spirit that long made us the world’s innovation leader. If we can do so, there is no limit to what we can achieve and the future we can create. It’s up to Congress to embrace that future and make it possible.

The Red Party Cup: Trudeau USA Introduces the Reusable Red Party Cup

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Just received our samples. Can’t wait to show them off today! | Photo Credit: Margarita Mendoza, Founder, The Made in America Movement

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The Iconic Red Party Cup now becomes a permanent item. 
We received sample press kits of the new reusable Red Party Cup Made in the U.S.A. by Trudeau USA.  We are very excited to use them today.  Perfect timing!  We are having a BBQ and will be showing them off to everyone.  A family member was blown away by the cup.  First thought was “much sturdier for beer pong”!!  Gotta love those 25yr old boys.  Below is the press kit write up which was enclosed with the samples we received.  We cannot wait to let everyone know about the newest Made in USA product.  Thank you, Trudeau USA, for listening to the consumers, and producing not only an amazing product, but manufacturing the product here, in the good ole, United States of America!
Woodridge, Illinois (August 2012) – Trudeau Corporation, a leading global supplier of quality kitchenware and tabletop accessories, announced the launch of its reusable Red Party Cup.  The Red Party Cup transcends the orginal form of a temporary, disposable cold liquid container.  The iconic red cup stands alone as a symbol of American culture.

“We are very enthusiastic and proud to be manufacturing our new reusable Red Party Cup in the U.S.A.  in partnership with American workers in a first-class Midwest factory,” said Marty Armstrong, Executive Vice President of Trudeau USA.  “Americans across the country can continue to celebrate and reuse their personal Red Party Cup over and over again while also saving the environment.”

The Red Party Cup by Trudeau, MADE IN THE U.S.A., is similar in look but not feel to the iconic disposable red cup.  The new 16oz. hot & cold party-approved cup is red on the outside and white on the inside.  It is sturdy, chip-resistant and has a thicker body and smooth, comfortable drinking lip.  The durable, double-walled insulated design keeps drinks cold and offers hand-held comfort with hot beverages.  The reusable cup is eco-friendly, BPA-free, and can be washed on the top rack of the dishwasher.

The Red Party Cup by Trudeau is available as a single cup, a 4-pack, and a 6-pack. The cup will be the first product in a complete Party Collection by Trudeau.  The Trudeau reusable cup will soon also be available in blue, yellow and green and will include an easy peel-off nametag for personalizing.

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Manufacturers: This is Your Day

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Roger Kilmer
August 16, 2012
In the spirit of less talk, more results, Manufacturing Day has been launched and is being championed by dozens of organizations.  It will be celebrated on October 5th with plant tours and open houses at as many manufacturers as possible across the country. 
Why do we need a national day dedicated to manufacturing?  Studies by the nonprofit Manufacturing Institute and others show that almost 80% of Americans believe manufacturing is important to our economic prosperity, standard of living and national security. Yet only 30% would encourage their children to go into manufacturing as a career.  And, according to Ed Youdell, president and CEO of the Fabricators and Manufacturing Association (FMA), “October 5th is dedicated to celebrating the great work and innovation of the 12 million men and women who make the United States the world’s largest manufacturing economy.”

Now is our chance to do something collectively to make a difference for this industry.  High schools, colleges, local chambers of commerce, unions, trade associations, government entities, and manufacturers can work together to propel U.S. manufacturing to the next level.  Through individual open houses and plant tours that will take place in cities and towns across the nation, we can show the public what manufacturing really looks like.   We can do something to teach young people about interesting, challenging, well-paying jobs they could train for in manufacturing.   We can help provide a stream of good, qualified workers our manufacturers so desperately need and help keep more things “Made in America.”  We can do something to rally together in support of what has been, and what can always be, the driver of economic vitality and strength in the U.S.  Be a part of this effort and sign up by Labor Day to host an open house/plant tour for Manufacturing Day and tell your manufacturing contacts about this great opportunity too.

Redoubling Efforts to Support American Manufacturing

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I just returned from the White House Business Council American Economic Competitiveness Forum on Manufacturing, where I had an opportunity to hear from a group of American manufacturers—representing businesses of all sizes from across the country—about how the Obama Administration can continue to support them as they build things here and sell them everywhere. As we have seen in recent months, manufacturing is one of the bright spots for our economy. Over the past two and a half years, more than half-a-million manufacturing jobs have been created in the U.S. – the strongest job growth in that sector since the 1990s. In fact, just last month, an additional 25,000 new manufacturing jobs were added.  
In terms of production, manufacturing output is up 20 percent since 2009, and increased again in July. One manufacturing sector that has been consistently strong is the motor vehicles and parts industry, which has added 165,000 jobs since June 2009— a sector that might not even exist in the U.S. today if not for the assistance this Administration gave to the U.S. auto industry in 2009. 

This matters because we know that manufacturing jobs are good jobs that pay more than average and provide greater benefits. They strengthen economic security for middle class families. 

There is a powerful link between America’s ability to make things and America’s ability to innovate, compete, and create good jobs. We have come to realize that you can’t separate innovation and production—they have to sit near each other. Manufacturers perform 70 percent of all private sector R&D, investing in and producing technological advances that accounted for 90 percent of U.S. patents. Economic research indicates that innovation – in new products or new processes – was central to three-quarters of the nation’s economic growth since World War II and it is not an accident that the manufacturing sectors where America is most competitive are all advanced manufacturing, where new technologies, new products or new production processes are central to the success of specific firms. 

And, of course, manufacturing doesn’t just support production jobs; it also supports non-manufacturing jobs up and down the supply chain. 

That is why across the Administration, we are redoubling our efforts to promote a vibrant manufacturing sector. We are acting on the findings of a report that we released entitled, “The Competitiveness and Innovative Capacity of the United States.” It outlined steps needed to support America’s innovators and entrepreneurs. The report outlines a number of investments this country needs to make to remain competitive over the next two decades. 

President Obama has proposed several things that we need to do right now to build on our strength in manufacturing. First, we should stop rewarding companies for outsourcing jobs overseas and start rewarding companies for bringing jobs back through insourcing. Second, we should put construction workers back on the job to repair our crumbling infrastructure. This will help our manufacturers send their products to customers as quickly as possible. We need to extend the middle class tax cuts for the 98 percent of Americans and 97 percent of America’s small businesses making less than $250,000 for another year, as President Obama has proposed. With these cuts, a typical family of four would see taxes rise by $2,200 if we don’t extend this through 2013. 

Finally, the President is calling for a network of institutes focused on manufacturing innovation. At these hubs, we will bring together our top researchers, manufacturers, entrepreneurs, and other partners who can ensure that we continue to out-build and out-compete the rest of the world in the years ahead. Proposals for a pilot institute went out from the Department of Defense earlier this year. And very soon we will be announcing the winner. 

Having an opportunity to discuss these and other important issues with U.S. manufacturers served as an important reminder that our collaboration is absolutely essential to ensuring that Made in America remains a strong slogan well into the future.

Dr. Rebecca Blank is the Acting Secretary of the U.S. Department of Commerce

New Manufacturing Institute in Ohio

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By Susan Crabtree
August 16, 2012
President Obama is using all the White House weapons at his disposal to woo voters in critical swing states in the campaign’s final stretch, announcing a $30 million investment aimed at creating a manufacturing hub in Ohio to help boost technology and create jobs in a three-state region.
Recent polls show the president holding a slim edge over Republican rival Mitt Romney in Ohio, and Mr. Obama and Mr. Romney have crisscrossed the state pitching their competing economic plans.

The new initiative, which White House officials announced Wednesday, creates partnerships among manufacturing firms, universities, community colleges and nonprofit organizations in Ohio, Pennsylvania and West Virginia and will be based in Youngstown, Ohio, an area hard hit by manufacturing-job losses even before the economic recession.

“I’m pleased that we are taking steps to strengthen American manufacturing by launching a new manufacturing institute in Ohio,” Mr. Obama said. “This institute will help make sure that the manufacturing jobs of tomorrow take root not in places like China or India, but right here in the United States of America. That’s how we’ll put more people back to work and build an economy that lasts.”

The consortium will focus its efforts on developing additive manufacturing, known as 3-D printing, a new way of making products and components from a digital model. A range of industries, including defense, aerospace, automotive and metals manufacturing plan to use the new technology, and the Department of Energy estimates that the additive process would be able to save more than 50 percent in energy use compared with current manufacturing processes.

In addition to the $30 million government investment, the partnering entities will provide another $40 million to the pilot program. The Obama administration is touting the initiative as part of a plan announced in early March to invest $1 billion on a national network of up to 15 manufacturing hubs created to try to boost the manufacturing sector and encourage investment in the United States.

U.S. Mill Re-Opens To Meet China's Rising Demand For Diapers

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By CAMERON MCWHIRTERAugust 13, 2012 
FRANKLIN, Va.—Three years ago, International Paper Co. IP 0.00% closed an enormous mill here that for generations had churned out white office paper, putting 1,100 people out of work and dealing a major blow to this tidewater city of 8,500. 

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Now, the world’s largest producer of paper products is reopening part of the mill with an eye toward an expanding market in Asia for personal-care products. With about a fifth of its old workforce, IP’s Franklin mill is gearing up to begin producing fluff pulp—the soft, white absorbent used in diapers, tampons, and some medical bandages.

“There is a huge, huge opportunity” as families in the burgeoning middle classes of China, India and other Asian countries are seeking more personal hygiene and baby care products, said Rildo Martini, IP’s vice president and general manager for pulp.
The mill’s transition to making fluff for diapers and other products points to how the U.S. paper industry is diversifying to counteract sinking North American demand for traditional white paper—the stuff of copy machines and printers—in the Internet age. Industry capacity for copy paper has fallen for the past five years in North America. The global manufacturing capacity for fluff pulp totals 6.4 million tons, up from 4.5 million in 2007, according to Rod Fisher, a Norwalk, Conn., consultant who tracks global pulp output. Fluff pulp represents a small portion of an overall pulp and paper market of about 450 million tons annually, he says. In 2011, fluff accounted for only 2% of IP’s global sales. 

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World-wide demand for the substance has been rising about 4% a year and is expected to keep growing for years to come. Meantime, North American demand for copy paper has fallen sharply.

Copy paper demand in Asia has increased, but North American mills can’t compete with Asian mills in that market, because the paper can be produced more cheaply there.

But the mill on the inky Blackwater River is able to take advantage of Asia’s growing desire for fluff because it can be made only from the long, coarse fibers of loblolly pine, a fast-growing tree that thrives in the U.S. South. Its fibers are ground, boiled, bleached and pressed into puffy white material that can absorb what a baby can excrete.

IP, with headquarters in Memphis, also makes fluff at part of its mills in Pensacola, Fla., Riegelwood, N.C., and Georgetown, S.C.

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Other paper makers have expanded their fluff production in recent years. Atlanta-based Georgia-Pacific LLC, the world’s largest producer of fluff, is converting part of an Alabama mill to produce more. Montreal-based Domtar Corp. UFS -1.10% converted a portion of its Plymouth, N.C., mill in 2010.
  
During the recession, copy paper demand in North America “stopped overnight” and IP had to shutter the Franklin mill, said John Faraci, IP’s chief executive. “We had no choice,” he said. “We didn’t have any orders.”

The Franklin mill’s large operations, southern location, and proximity to a major port made it a logical candidate to restart for fluff pulp production. “We’re willing to create jobs where there is demand,” Mr. Faraci said.
IP spent $90 million revamping the mill, and is using about one-third of the 3,500-acre site; shutting it down would have cost about $80 million. Another portion of the mill is being leased to a tissue manufacturer that plans to hire 85 workers. IP also is in talks with other companies, including a renewable-energy joint venture, to use the site.

The revival came none too soon for the city, whose economy had been dominated by the mill since the 1880s. Today “closed” signs in storefront windows are common. The city has had to freeze hiring and dip into reserves due to an about $1 million loss this year in tax revenue from the mill. The percentage of City of Franklin residents living below the poverty line was 22% from 2006 to 2010, more than double the state rate. Unemployment sits at 10%. When IP sought to hire 220 workers, 3,000 people applied.

Darnell Lee, 52 years old, was one of the lucky ones. He and his wife were laid off from the mill in 2009. His wife is unemployed but at least now they have one salary, he said.

“That was the best phone call I could have ever got,” said Mr. Lee, who works in the mill’s shipping department.

The mill’s 15-story power-system tower—by far the tallest building for miles—is again illuminated at night. Trucks bearing 22-ton bundles of loblolly logs rumble through the city. Giant machines are whirring and grinding as preliminary operations have begun.And that peculiar mill smell, which one resident described as “like rotten eggs times three,” wafts through area streets. Some hate it, but many residents don’t mind.

Beulah Thorpe, 69, who lives right next to the mill, said she hushes people who complain about the plant’s odor. “That is money you smell,” she said. “It is a blessing to see people working there again.”

Source: The Wall Street JournalWrite to Cameron McWhirter at cameron.mcwhirter@wsj.com 

A Banner Year For The U.S. Wind Industry

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These infographics detail key findings from the 2011 Wind Market Report.  |  Infographic by Sarah Gerrity.

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David Danielson
Assistant Secretary for Energy Efficiency and Renewable Energy
Yesterday, the Energy Department and Lawrence Berkeley National Laboratory released a new report highlighting strong growth in America’s wind energy market in 2011 and underscoring the importance of continued policy support and clean energy tax credits to ensure that the U.S. remains a leading producer and manufacturer in this booming global industry. 
As President Obama has made clear, we need an all-of-the-above approach to American energy and the U.S. wind industry is a critical part of this strategy. In fact, wind energy contributed 32 percent of all new U.S. electric capacity additions last year, representing $14 billion in new investment.

In the United States, domestic clean energy production and manufacturing competitiveness work hand-in-hand. The report finds total U.S. wind power capacity grew to 47,000 megawatts by the end of 2011 and has since grown to 50,000 megawatts, enough to power 12 million homes annually — as many homes as in the entire state of California. And as wind energy capacity has grown, more and more wind turbines and components like towers, blades, gears, and generators are “Made in America.” Nearly 70 percent of all of the equipment installed at U.S. wind farmslast year came from domestic manufacturers, doubling from 35 percent in 2005.

This summer, Energy Department leaders have traveled across the country and seen first hand how American workers and businesses are helping maintain U.S. leadership in the growing wind energy industry. In Iowa, Keystone Electrical Manufacturing Company has seen orders from the wind industry grow from almost nothing a decade ago to nearly 22 percent of gross sales, while, at ACCIONA Windpower’s West Branch assembly plant more than 100 workers are making wind turbines to sell here in the U.S. and around the world. Near Minneapolis, the International Brotherhood of Electrical Workers Local 343 Union facility features a 60-foot turbine tower to help train union members for new construction, installation, and maintenance jobs.

In addition to strong gains in domestic wind manufacturing and capacity, the report finds that as wind technology improves, costs are coming down. Technological innovations are helping make longer and lighter wind turbine blades, while improving turbine performance and increasing the efficiency of power generation. At the same time, wind project capital and maintenance costs have continued to decline.

Smart investments are paying dividends across the U.S. wind industry. From Des Moines to Amarillo to Denver, the American clean energy economy is hard at work – creating jobs right now and ensuring our global competitiveness in the clean energy technologies of the future. We can’t afford to break this momentum.

This is why the Obama Administration is calling for the extension of the production tax credit (PTC). Our continued support of clean energy policies like the PTC are mission critical for America’s thriving, competitive wind industry — and shows, more than ever, the promise to create the high-paying American jobs and nationwide economic growth our country needs.
Source: Energy.gov

Reshoring Success: AirGuide moving manufacturing from Mexico to Clarksdale

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Ted Carter
August 14, 2012 
A Florida company’s decision to relocate part of its manufacturing operation from Mexico to Clarksdale gives Mississippi a win in a national “reshoring” effort by which states hope to persuade U.S. manufacturers to bring some or all of their operations home. 
HVAC equipment manufacturer AirGuide of Hialeah, Fla., is moving its manufacturing operations from Mexico and Texas to Clarksdale, creating 40 full-time jobs for the Delta community.

The project represents a company investment of $720,000, according to the Mississippi Development Authority.

AirGuide, a manufacturer of aluminum grilles, registers and diffusers for the HVAC industry and energy efficient lighting products, is consolidating its Mexico and Houston operations into the Clarksdale facility.

AirGuide said in a press statement that Ron Hudson, Hugh Jack Stubbs, Hartley Kittle and Trisha Webber as well as many other peoples from the Clarksdale-area business community “have been instrumental in AirGuide making the decision to locate in Clarksdale.”

Doug Marty, president of AirGuide, said the company thinks the new location will enable AirGuide Manufacturing and Arcalux “to better serve our customers and further improve our competitiveness manufacturing our HVAC and energy efficient lighting products.”

The Mississippi Development Authority (MDA) provided assistance for improvements to the publicly-owned building AirGuide will occupy, along with support through the Momentum Mississippi Incentives program. Coahoma County is also assisting with this project.

AirGuide manufactures a variety of products, as well as a broad range of custom-designed original equipment manufacturer (OEM) products that can be modified to suit most applications. AirGuide has been in operation for nearly 50 years.

7 Reasons to Expect US Manufacturing Resurgence

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Farok J. Contractor
YaleGlobal, 7 August 2012
NEWARK, NJ: Some 2.8 million American jobs – 70 percent of them in manufacturing – have been lost since 2001 because of the US trade deficit with China, according to a recent Economic Policy Institute study. Indeed, consumers visiting a Wal-Mart or Macy’s are hard pressed to find much made in America. 

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NEWARK, NJ: Some 2.8 million American jobs – 70 percent of them in manufacturing – have been lost since 2001 because of the US trade deficit with China, according to a recent Economic Policy Institute study. Indeed, consumers visiting a Wal-Mart or Macy’s are hard pressed to find much made in America.

It’s true that the share of manufacturing in the US GDP is now only 12 to15 percent, and the country is predominantly a service economy. But the nation is still the world’s biggest manufacturer, with unrivaled productivity in terms of manufacturing value-added per employee or per hour worked (Table 1). American manufacturing wages average $34 an hour, some 21 times the average in China at $1.60 an hour. But each US worker adds $145,000 in value, far more than German, French or Japanese employees, and more than 10 times that of the Chinese worker who contributes $13,700.

The predominant explanation is US manufacturers’ investment in automated equipment. Also, American labor is better trained than the Chinese. Similar productivity rankings can be seen in dollar value-added per hour: The US worker is on top with $73 in value-added per hour worked; the Chinese worker adds only $7.19 of value per hour; Japanese, German and French workers contribute up to $63. China outperforms the US and Europe only in “value added per dollar wages paid” – but only because hourly wages are so low in China.

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Seven factors converging by 2012 suggest that US manufacturing could see a strong resurgence. Jobs once offshored are now returning in industries including automobiles and even unlikely areas like furniture and televisions.

> Wages of the bottom half of American workers have significantly declined in real terms over the past decade, as well as in comparison with other nations, while those of US manufacturing rivals, including China and Japan, have risen.

> American workers are working longer, faster, with greater anxiety,than ever before. Because of greater automation, flexibility, domestic US outsourcing and the fear of being laid-off, surviving US manufacturing workers have seen little or no increases in wages in the past eight years, and their output has increased with productivity in output per employee at an all-time high. Americans put in 1800 hours per year, about the same as Japanese workers (Table 2). Top is South Korea, with its corporate culture that prevents employees going home until the last boss has departed. The French and Germans, by comparison, put in 19 percent less time than Americans.

> The dollar has weakened against several major currencies over the past decade, making imports more expensive and producing in or exporting from the US more competitive, by comparison. The US is not just the world’s biggest importer but also the second largest exporter of merchandise goods (Table 3). In 2001 – the year China joined the World Trade Organization – the renminbi yuan, RMB, was 8.27 per dollar. By 2012 the currency had appreciated by more than 30 percent to 6.3 RMB per dollar. For many Chinese exporters, a breakeven exchange rate, when their exports to the US are no longer competitive, is between 5.5 to 5.8 yuan per dollar. As the RMB continues to appreciate against the dollar, more Chinese firms will abandon exports and focus on their domestic market, growing at 8 percent per annum.

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> China is experiencing significant wage inflation. On the eastern seaboard, where most of China’s manufacturing takes place, several companies have experienced labor shortages and wage bills have increased by 20 percent per year.

> Fuel prices have more than doubled. For products with significant transportation costs, the rise in energy costs can add significantly to the cost of imports. Shipping large appliances is expensive, so Haier, a leading white goods manufacturer based in China, opened a South Carolina plant where components, shipped across the Pacific Ocean, are assembled by American workers.

> Delivery and Flexibility Pressures. For products requiring flexibility in the face of fickle fashion changes or assembly operations that require components shipped within a few days to accommodate schedules, such pressures have driven component producers to co-locate near US assembly operations.

> Natural disasters and disruptions in recent years have spooked global supply chains: Volcanoes in Iceland, overflowing rivers in Thailand and tsunamis in the Pacific Ocean idled assembly plants in the US and Europe because parts from affected regions could not be shipped. Years of cost savings at Toyota, from sourcing components from faraway locations, were wiped out by a few weeks of losses from assembly operations idled by 2011 floods in Thailand.

Of course, all indicators are not positive. Three factors could inhibit the US resurgence:

> The culture devalues science or engineering education. “Nerds,” “geeks” or “wonks” are at the bottom of the social totem pole compared to sports, film and media celebrities. A culture that emphasizes quick results and instant gratification deters students from tackling math, engineering and other challenging subjects.

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> Too many students pursue a general college degree. According to a survey released by the Manpower Group in May 2012, talent shortages persist in skilled trades, engineers and IT staff, with “nearly half of U.S. employers struggling to fill mission-critical positions.” In OECD countries an average 23 percent of college degrees are in engineering, science or mathematics. But in the US such degrees comprise only 15 percent – and of these, foreign students earn a quarter of the degrees at the undergraduate level and some two-thirds at the doctoral level.

> US companies lack an apprenticeship system. In other OECD nations like Germany, alternative paths in education lead to diplomas or cer
tificates in techn
ical areas, with  employees trained by the company in a particular technology and then retained in well-paying careers. Some US companies are trying this approach, highlighted by G. Bussey in an April Wall Street Journal article. For example, General Electric is sending new employees for crash courses in hands-on manufacturing or sponsoring two-week summer camps at universities on lean manufacturing for high-school students.

But don’t hold your breath. Few American companies are providing apprenticeships and only in selected areas of the country. Unlike Germany, the US is a very mobile society. The average household moves every five years. In an environment where companies can easily sack workers and where workers leave for better opportunities, firms are loath to invest in worker training, only to see skilled workers leave for competing companies. The current economic slowdown, which is reducing such churn in American society and jobs, could lead to a better appreciation for the benefits of apprenticeship programs for both companies and workers.

The time is propitious for a resurgence of manufacturing in the US. Unlike the exuberance of the bubble years, new economic conditions, which may persist for years to come, suggest more sober social attitudes, more career-focused college majors, more buckling down to learn harder subjects, less churn in jobs, and  greater willingness to settle for somewhat lower wages in return for company investment in worker training and greater job security. In short, some aspects of the future may look like the old days when Detroit was king and skilled technical jobs meant reasonably secure careers with a moderate middle-class living standard.
Source: Yale Global Online
Farok J. Contractor is a professor of management and global business with Rutgers Business School.
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The US may be a service economy, but it’s still the world’s largest manufacturer. There are many reasons to remain bullish on US manufacturing and the American worker, suggests Farok Contractor, professor of management and global business at Rutgers Business School. US firms invest in high-tech equipment, and the US worker is tops in adding value per hour on products. Recent economic difficulties also help fuel a manufacturing resurgence: falling wages allow the US to compete with low-cost China; anxious Americans work long hours; high energy prices and an uptick in natural disasters could prompt multinationals to relocate factories closer to the big US market. Contractor also points to factors that could stall the resurgence: US students show little interest in science or engineering. And because American workers enjoy great mobility, US manufacturers hesitate to provide apprenticeships that provide state-of-the-art training. Tough economic conditions could usher in new serious attitudes on career and education choices. 
– YaleGlobal 

Manufacturing in America: Start of a  Renaissance?

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Hal Sirkin
08/12/2012 

The U.S. is at the start of a manufacturing renaissance that will generate two to three million jobs and provide $100 billion of added economic growth over this decade. This renaissance is being sparked by a trend that is both remarkable and rational. 
What’s remarkable is that manufacturers are starting to bring back jobs to the U.S. that just a few years ago they exported to China. What’s rational is that they are doing so not out of some dewy-eyed patriotism but because it makes economic sense.

Wages in China are rising so rapidly that the insourcing vs. outsourcing calculus has changed. In 2000, U.S. wages were almost 22 times larger than those in China. By 2015, U.S. wages will be only four times larger. Adjusted for productivity, the differential shrinks even more. In the Yangzi River Delta, the epicenter of China’s skilled manufacturing workforce, the effective wage rate will be about 61 percent of U.S. wages in 2015.

At those levels, it makes sense to return manufacturing of a wide range of goods , with moderate levels of labor content and high logistics costs, to the U.S. For an automotive part, where labor contributes one quarter of total cost, the total cost advantage for China shrivels to less than 10 percent.

Ten percent is a key threshold. When you factor in the risks and realities of doing business in China–weak intellectual property protection and rule of law, long lead times, and lack of proximity to key customers, among others–companies are willing to bring manufacturing back when the cost difference is in the single digits.

Within the next three or four years, that threshold will be crossed for seven key categories of goods: computers and electronics; appliances and electrical equipment; transportation goods; plastics and rubber; machinery; furniture; and fabricated metals. These goods account for about two-thirds of the annual $325 billion in imports from China.

The upcoming insourcing revolution is not just about rising wages in China but also the often-unheralded productivity of the U.S. The U.S. economy is 33 percent more productive than Japan and 25 percent more productive than Germany. This helps explain why Siemens is exporting gas power turbines, made in the U.S., to Saudi Arabia and Toyota has announced it would export cars made in Kentucky and Indiana to South Korea.

Economics is driving insourcing but government policy can facilitate it. Here are seven helpful steps that the U.S. government can take to create good jobs for our children and ensure the long-term success of the economy.

First, adjust tax policy to favor insourcing rather than outsourcing by providing a targeted tax credit for job creation in the U.S. and for the repatriation of funds to the U.S. that foster job creation. U.S. Senator Richard Blumenthal has proposed legislation to create tax credits for re-shoring.

Second, level the playing field by addressing key trade-agreement violations and insisting on stronger IP protection and an end to currency management by the Chinese government.

Third, secure and train critical talent: retain foreign students by issuing six-month green cards in selected disciplines that become permanent upon employment; subsidize job training for new and expanded manufacturing facilities; and create “vocational colleges” that combine liberal arts education with training in such trades as welding, plumbing, electrical, and computer-assisted manufacturing.

Fourth, rethink regulations that impair competitiveness without corresponding benefit.

Fifth, facilitate the creation of industry clusters — such as Silicon Valley or, in an earlier era, Detroit — that bring together competitors, suppliers, schools, and talent to create a winning ecosystem.

Sixth, encourage foreign manufacturers to locate facilities in the U.S., the largest domestic market and one of the lowest-cost in the developed world.

Seventh, change the perception that China is low cost and the U.S. is high cost and uncompetitive. Companies should “do the math” rather than just assume China is cheaper.
More than any major economy, the U.S. responds quickly to threats. We do not curl up in a ball or complain. We adapt and we thrive. We faced down a similar threat from Japan in the 1970s and 1980s, and we are doing it again.
Source: The Huffington Post
Hal Sirkin is Senior partner and managing director, The Boston Consulting Group (Chicago)


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