Archive for March, 2012

American Manufacturing Has Declined More Than Most Experts Have Thought

Tuesday, March 27th, 2012

A new report released by the Information Technology & Innovation Foundation (ITIF) presents a strong case that manufacturing has declined more during the last decade than it did during the Great Depression of the 1930s.  It’s gratifying to finally see a well-respected non-partisan “think tank” release a report based on empirical data that corroborates what those of working in the manufacturing industry have experienced, about which I have been speaking and writing since 2003.

One of the main points of the report is that during the Great Depression, we lost 30.9% of manufacturing jobs, but in the decade of 2000-2010, we lost 33.1% of manufacturing jobs.  It becomes more serious when you realize that in the Great Depression, manufacturing accounted for 43% of jobs lost and 34% of all jobs at the time, but now manufacturing only represents about 11% of all jobs, but nearly one-third of the job loss.  This percentage loss represents 5.7 million manufacturing jobs. The report states, “On average, 1,276 manufacturing jobs were lost every day for the past 12 years.   A net of 66,486 manufacturing establishments closed, from 404,758 in 2000 down to 338,273 in 2011. In other words, on each day since the year 2000, America had, on average, 17 fewer manufacturing establishments than it had the previous day.”

When you understand the multiplier effect of manufacturing jobs, creating 2-3 supporting jobs, this loss of manufacturing jobs represents 11 to 17 million jobs.  The report states, “In fact, in January 2012 there were more unemployed Americans (12.8 million) than there were Americans who worked in manufacturing (just under 12 million).”  No wonder we have the high local, state, and federal deficits that we are experiencing ? there are fewer taxpayers and more benefit collectors.

The two million manufacturing jobs we lost during the Great Recession was added to the over 3.7 million we had already lost.  After the recession ended, the report states “just 166,000, or 8.2 percent, returned. That leaves 91.8 percent of jobs to be recovered.  At the rate of growth in manufacturing jobs in 2011, it would take until at least 2020 for employment to return to where the economy was in terms of manufacturing jobs at the end of 2007.   In reality…U.S. manufacturing has been in a state of structural decline due to loss of U.S. competitiveness, not temporary decline based on the business cycle.”

It’s obvious that with unemployment at 8.3 percent, “all those jobs have not been recreated in other industries.”  If manufacturing declines further, there are no guarantees that other jobs will appear to replace those lost in manufacturing.  The authors validate what I’ve written in my book and previous articles:  “manufacturing jobs pay more; manufacturing is a source of good jobs for non-college-educated workers; and manufacturing is the key driver of innovation—without manufacturing, non-manufacturing innovation jobs (for example, research and design) will not thrive.”

For years, most economists, experts, and government officials have said that the decline in manufacturing is a natural outcome of our transformation from an industrial society to a post-industrial society. “This decline is often cited by defenders as “normal” and in line with what is happening in other countries. In this “post-industrial” view, advanced nations are transitioning from factories to services; the greater and faster the loss of manufacturing, the more successful nations are in mastering the transition.”

The authors concede that there is “some truth to the post-industrialists’ view.  Advanced economies naturally see manufacturing jobs contribute to a smaller share of total employment, since manufacturing productivity is typically higher than non-manufacturing productivity.  But normally the loss is modest and gradual, in contrast to the United States where in the last decade it was sudden and steep.”  In addition, “advanced nations do lose some lower-value-added, lower-skill, commodity-based manufacturing to lower-wage nations.   But …they also increase their demand for the higher-value-added products that developed nations should naturally produce…the process of global integration does not and should not naturally lead to the deindustrialization of developed economies, but rather to the transformation of their industrial bases toward more complex, higher-value-added production.”

These same experts have denied that manufacturing has been in decline, arguing that manufacturing became incredibly productive just like agriculture did a century earlier so that fewer workers are needed in the industry.  The authors state that “Virtually everyone makes the argument that massive manufacturing job decline is a sign of success: manufacturers are using technology to automate work and to become more efficient…Manufacturing is like agriculture” has been the dominant story.  The United States produces more food than ever, but because farming has become so efficient, it requires a very small share of U.S. workers to grow and harvest the food. So while manufacturing productivity growth may be tough on workers, job loss is seen as a sign of strength, not weakness.”

It’s true that job loss could be result of increased productivity, but what these experts have ignored is that manufacturing’s share of the Gross Domestic Product (GD) declined from 15% in 2000 to 11.0% in 2009.   While manufacturing has declined as a share of GDP in the United States and some other nations, such as Canada, Italy, Spain, and the United Kingdom,” it is stable or even growing in many others (including Austria, China, Finland, Germany, Japan, Korea, the Netherlands, and Switzerland.)”

The ITIF report dispels the myth that increased productivity is the reason for the job loss with a review of the productivity of various manufacturing industry sectors, showing that in 2010, “13 of the 19 manufacturing sectors (employing 55 percent of manufacturing workers) were producing less than they there were in 2000 in terms of inflation-adjusted output.”

In addition, the authors assert that “the government’s official calculation of manufacturing output growth, and by definition productivity, is significantly overstated.  ” Correcting for biases in the official data, ITIF finds that from 2000 to 2010, U.S. manufacturing labor productivity growth was overstated by a remarkable 122 percent. Moreover, manufacturing output, instead of increasing at the reported 16 percent rate, in fact fell by 11 percent over the period.”  This was during a period when the U. S. GDP increased by 17 percent.

Besides, the report states that “it is not clear how productivity could be the culprit behind the large share of job loss in the 2000s when manufacturing labor productivity (as measured by the official value added data) was not substantially different in the 1990s than it was in the 2000s.  During the 1990s, manufacturing jobs fell by one percent, while labor productivity increased by 53 percent. In the 2000s, manufacturing jobs fell by 33 percent while productivity increased by 66 percent…the 2000s productivity number is actually significantly overstated, even more so than the 1990s figure. Adjusting for bias in the data, the actual productivity growth in the 2000s was just 32 percent.”

The authors provide evidence that “there are serious problems with how the U.S. government measures manufacturing output that cause it to significantly overstate output and, by extension, productivity.   In order to see how productivity and output are overstated, it is necessary to understand both concepts.”

Their explanation is too complicated to consider in this short article, but is well worth reading in the report.  They conclude “that there are substantial upward biases in the U.S. government’s official statistics and that real manufacturing output and productivity growth is significantly overstated. The most serious bias relates to the computers and electronics industry (NAICS 334)—its output is vastly overstated. Correcting for these statistical biases, we see that the base of U.S. manufacturing has eroded faster over the past decade than at any time since WWII, when the United States began compiling the statistics.”

I can substantiate this conclusion from my experience as a manufacturers’ representative for American companies who perform fabrication services, such as plastic and rubber molding, metal stamping and casting, machining, and sheet metal fabrication for other American manufacturers.  While many of the manufacturers in my sales territory of southern California may still be assembling their products in the U. S., many of the components and subassemblies they are using have been produced offshore.  Obviously, it takes fewer American workers to produce the end product because part of the work was actually done by foreign workers.

The problem is that there is no way for the government to track the value of the components and subassemblies that have been produced elsewhere from the value of the product that is sold by the American company. Therefore, the value of the whole product is counted as American productivity without deducting the value of the parts produced outside of the U. S.  You can see how American productivity becomes inflated.

I hope this report will convince the majority of economists, experts, and government officials recognize that manufacturing is truly in serious decline so that they will look at what are the main reasons:  outsourcing manufacturing offshore and the economic warfare being waged by China against the U. S.


“What does the economy have to do with national security?”

Tuesday, March 20th, 2012

Most people in the United States would define national security as military readiness, homeland defense, and generally protecting American interests at home and abroad.  They don’t recognize that the economy has an effect on our national security.  This is the main purpose of the book “Economic Security:  Neglected Dimension of National Security?” edited by Dr. Sheila Ronis for the Center for Strategic Conferencing, Institute for National Strategic Studies and published by the National Defense University Press in the fall of  2011.

Other questions she considered are:  “But how does the United States remain strong? What does that mean in a world of globalization? How do we even define what national security is in such a complex and interdependent world?  Can we survive, let alone remain a superpower, if we no longer control any means of production?  If we remain a major debtor nation?  If we continue our dependence on unstable countries for our energy supplies?  If we invest insufficient amounts of our resources in research and development, science and technology?  Or if we perceive the training and education of people as a cost as opposed to an investment?”

This report was the result of a conference held on August 24–25, 2010, by the National Defense University.  The conference explored the economic element of national power.  Over two days, several keynote speakers and participants in six panel discussions explored the complexity of this subject and examined the major elements that define the economic component of national security.

The panels and keynote presentations looked at the economic element of national power from different system views, including the role of debt, the government, industrial capability, energy, science, technology, and human capital—create a systemic view of what could be done to improve an understanding of the economic element of national power. Selected papers from the conference that represent these views comprise this volume, edited by Dr. Sheila Ronis, Director of the Master of Business Administration/Master of Management Programs at Walsh College and President of The University Group, Inc., a management consulting firm and think tank specializing in strategic management, visioning, national security, and public policy.  Dr. Ronis has chaired the Vision Working Group of the Project on National Security Reform (PNSR) in Washington, DC, which has been tasked by Congress to rewrite the National Security Act of 1947. As a Distinguished Fellow at PNSR, Dr. Ronis is responsible for the plan and processes to develop the Center for Strategic Analysis and Assessment, to provide the mechanism to conduct foresight studies and the development of the grand strategies that would follow—the kind of studies that would look at an entire system, such as the economy and its relationship to national security.

Dr. Ronis begins with a definition of national security that “can include anything that adds to the strength of the Nation,” such as “the strength of our nation’s infrastructure, our strong societal and moral codes, the rule of law, stable government, social, political, and economic institutions, and leadership.”  It also includes “our nation’s schools and educational programs to ensure a knowledgeable citizenry and lifelong learning—a must for a democracy.”  Then, it also “requires investments in science, engineering, research and development, and technological leadership. We cannot be strong without a viable way to power our cities, feed ourselves, and move from one place to another. Most of all, a strong economy is an essential ingredient of a global superpower.”  Without a strong market-based economy we would quickly lose our superpower status.  We need to have a strong base of globally competitive products and services that produce jobs. The “economy must include sound government policies to promote responsible choices and reduce our debt, and grand strategies for energy and environmental sustainability, science and technology leadership (at least in some areas), human capital capabilities, manufacturing, and the industrial base.”   “And…National security goes to the very core of how we define who we are as a people and a free society. It concerns how we view our world responsibilities.”

Dr. Ronis states that there can be no question of the need to include the economic viability of our nation as a major element of national security because “without capital, there is no business; without business, there is no profit; without profit, there are no jobs.  And without jobs, there are no taxes, and there is no military capability.  The viability of a nation’s industrial infrastructure, which provides jobs for its people, creates and distributes wealth, and leverages profits, is essential. Without jobs, the quality of peoples’ lives deteriorates to a point where society itself can disintegrate.”

Chapter one is a transcript of the comments made by opening keynote speaker David Walker, U. S. Comptroller General and head of the Government Accountability Office (GAO) from 1998 to 2008, and  Founder and CEO of the Comeback America Initiative.  When he started at the GAO, it didn’t have “a strategic, integrated, forward-looking, and outcome-based strategic plan.”  They put such a plan in place at GAO during his tenure, and he said, “It is the closest thing that exists to a strategic plan for the Federal Government, but the GAO is in the legislative branch. So we need one for the executive branch. It needs to be led by the OMB (Office of Management and Budget), and hopefully, eventually it will be.”

He stated, “Things like savings, critical infrastructure, investments in basic research, educational outcomes, and healthcare outcomes are key leading indicators, and in all of these areas, we are below average for an industrialized nation.”  He contends that if the economic element of national power is neglected and misunderstood, nothing will be more dangerous to the Nation than the national debt and its unintended consequences for generations to come.  Last year government represented 25 percent of the economy, above the recent average of 21 percent. “But if we do not reform our existing entitlement programs and other aspects of government, it will represent about 40 percent of the economy by 2040, and that does not count state and local governments.”

He stated that the composition of the budget has changed dramatically in the last four decades.  “Forty years ago, it was dominated by defense at 42 percent.  Today, it is dominated by social insurance programs, which grow faster than inflation and grow faster than the economy even when the economy is growing. Forty years ago, when Congress came to town, they got to decide how 62 percent of the budget would be spent, of which today defense is about half of the discretionary budget.  Now they decide how about 38 percent gets spent, and if we continue on our status quo, do nothing, let-it-ride policy, it will go down to 18 percent by 2040.  This obviously is an imprudent and unsustainable course.”  He points out that if you count our unfunded Social Security and Medicare debt, our total debt is $62 trillion, not the $14 trillion we hear about.  He states that if the total debt is taken into consideration, we are worse off than Spain,    and only three years away from becoming like Greece.  His arguments are alarming and are critical for policymakers and every citizen to understand.   In conclusion, he provides a common-sense approach to making the tough choices and changes we need to make before it’s too late to get our financial house in order.

In chapter two, John Morton traces the historical roots of the economy and its role in enabling the superpower status of the Nation.  Mr. Morton is a Distinguished Fellow and the Homeland Security Lead for the Project on National Security Reform. He is also the Strategic Advisor to and a consultant to Gryphon Technologies. He states, “Today, America sustains that position primarily through two elements of its national power: its peerless military and its dollar currency, upon which the international monetary and economic system is largely based. A third element initially enabled that hegemony in the 1940s: the national economy—that is, the Nation’s industrial might. Much of that element is no longer present today.”  He presents a brilliant analysis of how American industry was the foundation of America’s becoming a superpower from the Civil War to the present day and how the alliance of government, science, industry, academe, and the military forged the national security establishment, later called the defense industrial base.  He proposes that the United States needs an economic grand strategy in order to continue America’s role in the world, which is based on its military and economic prowess and capability.

In chapter three, Keith Cooley explains his approach to an energy plan, which includes a grand strategy that, if enacted, will support the Nation’s future.  Mr. Cooley is Chief Executive Officer (CEO) of the advisory firm Principia, LLC.  He previously was President and CEO of NextEnergy, an accelerator for alternative energy businesses and technologies. He paraphrases the International Energy Association definition of energy security as simply “the assurance of the uninterrupted supply of energy at an affordable price, while respecting environmental concerns.” His chapter addresses the notion of energy security as national security from four points of view that are, in his opinion, strategic priorities:

  • Priority 1: creating strong civic, business, and political leadership to quickly implement needed changes that assure energy and national security for this country.
  • Priority 2: developing and sustaining an alternative energy capability
  • Priority 3: migrating to alternative (sometimes called “clean”) energy sources
  • Priority 4: widespread increased dependence on domestic energy efficiency

He states, that “no 21st-century economy can be secured without a steady supply of energy. Without adequate energy to power contemporary civilization, there is no security at all.”  He concludes by urging “action on energy security issues at the highest levels of government, industry, and civic engagement. We have many examples to draw lessons from both here and abroad that can inform our actions. But we must act; we must engage. It is the only path available for our survival.”

In chapter four, Louis Infante offers his approach to energy security.  Mr. Infante is the Executive Director, Government and Military, for Ricardo, Inc., an independent automotive engineering consulting company, where he is responsible for strategy development and enactment in the military and government markets.  He advocates a National Energy Security Initiative administered by the Department of Energy (DOE) and joined by every government department with responsibilities that will be affected by energy—in essence, practically all departments.”  He describes a specific model that the U. S. could use to manage the complexities of its entire energy system. “This initiative would include mechanisms to improve the research and development policymaking decisions and strategies to make them real.”  He recommends that “U.S. leadership must overcome barriers to establishment of a national policy on energy that prescribes an endgame and the plan to achieve it.”  He concludes that “the National Energy Security Initiative will provide the coordinating efforts in planning and technology R&D that can assure success in the redevelopment of the U.S. energy system. And it can start within DOD as a first application of success.”

In chapter five, Myra Howze Shiplett, Wendy Russell, Anne M. Khademian, and Lenora Peters Gant address the complex set of issues of whether a nation can be an economic or military superpower without a plan to ensure it has people with the right knowledge and capabilities throughout its society.  They point out, “In 2010, America was “ranked 12th in the number of 24- to 35-year-olds with college degrees . . . among 36 developed nations” compared to “sixth in post-secondary educational attainment in the world among 25- to 60-year-olds.” Also, a major problem is that “Nationwide, only about 70 percent of students earn their high school diplomas” with lower rates for minority students ? “only 57.8 percent of Hispanic, 53.4 percent of African American, and 49.3 percent of American Indian and Alaska Native students.”  They discuss the five steps needed for the “Architecture of the High School Educational Future” and a new kind of graduate education that will produce “practitioners/scholars” with the skill sets needed for public service.  They conclude that “A vibrant, growing economy that provides jobs for America’s citizens is an essential component of our national security. A critical success factor for such an economy is a well-educated workforce, equipped to deal with the complexities of the 21st century…The security of our nation demands this commitment.”

In chapter six, Carmen Medina explores the many issues that surround what it means to have innovation as a major element of a nation’s economy.  Carmen Medina retired from the Central Intelligence Agency (CIA) in February 2010 after over 30 years of service. Her last assignment was as Director of the Center for the Study of Intelligence (CSI), where she developed and managed CIA’s first agency-wide Lessons Learned Program. First, she explores some definitions of innovation: “technology-based that leads to new industries”, as opposed to “social innovation, which refers to changes in the way people behave,” as well as agricultural innovation, “defined as the application of knowledge of all types to achieve desired social and economic outcomes.”  She states that “The capacity for innovation has been the primary catalyst of U.S. economic growth. Indeed, capitalism essentially is built on innovation and the concept of creative destruction. Going forward, innovation will be even more critical to U.S. economic prosperity.”

She identifies a problem, stating “There is, however, no doubt that the U.S. capacity for innovation has declined in relative and absolute terms over the last 20 years or so.  Our standing has consistently declined.”  In addition, “the emergence of the BRIC economies—those of Brazil, Russia, India, and China—will fundamentally alter the world economic map by 2020.”  The conclusion of this chapter is that “It is probably impossible for the United States to have a robust economy and remain a superpower if its companies lose their ability to be innovative.

Very often, important White Papers, reports, and books are ignored by the mass news media, but this is one book that every elected official from the president down to local legislators should read.  The current situation is alarming, and we have a limited amount of time to address these issues if we want to stop our slide into becoming a third-world nation.  Manufacturing, innovation, energy security, and an educated citizenry are necessary to maintain freedom as a democratic republic.   As the report concludes, “To be successful in addressing a complex system, we need to integrate all major elements of national power: diplomatic, informational, military, economic, and so on… The entire world expects the United States to remain a leader. We cannot do this unless we are strong. And we cannot be strong unless we plan for and shape our future as a Nation with a sound economy.”

Will the AME, NAM and NACFAM Alliance Revitalize Manufacturing?

Tuesday, March 6th, 2012

The Association for Manufacturing Excellence (AME) is joining with leading organizations, such as the National Association of Manufacturers (NAM), and the National Council For Advanced Manufacturing (NACFAM) to form an alliance to revitalize manufacturing and grow the economy, while improving the standard of living of all citizens in North America.  These organizations are inviting public and private sectors to come together to build on the NAM study, A Manufacturing Renaissance: Four Goals for Economic Growth.

The AME white paper “Challenges Facing the Manufacturing Industry…” states “The strategy calls for putting people, schools, businesses and the government to work; producing literate career-ready citizens capable of joining the workforce; and enabling manufacturers to once again lead the designing, building and exporting of quality products and services around the globe.” The top three priorities are:

  • Build a better educated and trained workforce
  • Promote product and process innovation, as well as research and development
  • Improve global competitiveness for companies

AME advocates that each priority “must be considered in developing public policies that support the revitalization of the manufacturing sector, and policy-makers must consider these elements in shaping future public policy and legislation.”   The goal is to help companies and our education systems transform themselves by using more innovative processes to become more competitive to put people back to work in making things in America.

I  strongly agree with AME’s viewpoint that we need to revitalize American manufacturing because “manufacturing is very critical to economic growth, prosperity and a higher standard of living.”  This is because manufacturing jobs have a multiplier effect-? every manufacturing job creates three to four other jobs.  Manufacturing creates more wealth than any other sector in the economy.  “Manufacturing pays higher wages and provides greater benefits, on average, than other industries. It performs almost two-thirds of private sector research and development, creates the highest number of jobs to support the industry while serving the surrounding communities, and contributes to more than 50 percent of the country’s total exports.”

The White Paper notes that we’ve lost nearly six million manufacturing jobs in the United States since January 2000, for an average of about 54,000 per month, according to the Bureau of Labor Statistics.  We also lost 56,190 manufacturing facilities from 2001 to 2010, or about 15 per day.

AME has issued a call for action to policy-makers, industry professionals and academic leaders to play critical roles in revitalizing the economy through the rebirth of manufacturing jobs.  To do this, we need to ensure the supply of educated citizens, necessary physical infrastructure, and a favorable tax and regulatory framework that fosters increased collaboration between public and private sector partners.

AME has been leading the “Revitalization of Manufacturing” initiative, wherein AME and their allied organizations have been reaching out to policy-makers nationwide, and encouraging them to join or develop efforts focusing on local and state job creation.  AME states that “itt is imperative that policy-makers recognize the importance of an industry that has been the backbone of the North American economy.  To date, AME has received more than 400 signatures of support from state and federal policy-makers, industry trade associations and operations executives representing manufacturers across North America.”

AME advocates “a renewed emphasis on making businesses more competitive by developing the educational and training infrastructure to produce qualified individuals to fill these new opportunities.”   To accomplish these initiatives, AME is joining with leading organizations to adopt the three priorities by:

Reforming public education to produce career ready citizens – Parents, teachers and business leaders need to recognize that other nations are both out-educating us and out-competing us.  Some of the ongoing initiatives by manufacturing organizations to help reform public education are:

  • The Manufacturing Institute’s Roadmap to Education Reform for Manufacturing, a comprehensive blueprint for education reform
  • American Productivity and Quality Center’s (APQC) Education North Star program that helps school districts do more with less by transforming education through process and performance management
  • Career Pathways,  a program that encourages students to consider a career in manufacturing and help prepare them by using the Manufacturing Pathway Map

Last fall, I wrote about a number of programs sponsored by other organizations to interest and prepare youth for careers in manufacturing in the article, “How Can we Attract Youth to Manufacturing Careers?

Establishing consortiums of like-minded individuals with the same mission to help sustain and grow businesses through sharing technology and innovative ideas.  AME recommends that businesses “grow a culture that achieves results through engaging their people” to “develop pragmatic, working-level leaders who can pull it all together.”  In addition, businesses “need to foster rapid advancement of technology and innovation by establishing regional consortiums to help bring jobs back home.”

“AME Northern Kentucky/Cincinnati Consortium is the first building block of the AME Consortia network, and the organizations plans to deploy at least 10 more in 2012.  AME also has alliance partners, like the Virginia Business Excellence Consortium.”

Reshoring by making better informed business decisions  to keep and bring jobs back home – the Reshoring Initiative was founded by Harry Moser in 2010.  He is collaborating with AME to promote reshoring as part of the “Revitalization of Manufacturing” initiative.  AME recommends that companies use the Total Cost of Ownership (TCO) analysis tool Mr. Moser developed “to effectively compare total cost of local and offshore sources, enabling them to make informed business decisions. ‘We are committed to changing the sourcing paradigm from ‘off-shored is cheaper’ to ‘local reduces the total cost of ownership,’ said Moser.”

Redeploying Training Within Industry (TWI) programs to train or retrain workers to have the skills to work in advanced manufacturing jobs to revitalize manufacturing and re-energize the economy.  First created during WWII to replace workers who left the factories and went off to war, the TWI programs were revived in 2001 by the Central New York Technology Development Organization, a member of the U.S. Manufacturers Extension Partnership (MEP), after which the TWI Institute was formed to oversee the global deployment of the program.

AME’s White Paper only identifies the TWI programs, but I wrote about training programs sponsored by other organizations, such as the Society of Manufacturing Engineers’ Tooling U and The Fabricators and Manufacturers Association, International in my article, ”What’s Being Done to Address the Lack of Skilled Workers?

In order to be more globally competitive, AME recommends that companies use Lean Certification, an internationally recognized certification process developed by the Society of Manufacturing Engineers (SME), AME, Shingo Prize, and the American Society for Quality (ASQ), which establishes the standard for continuous improvement and Lean practices.

The White Paper states that at its 2012 national board meeting, “AME reaffirmed its commitment to helping small-and medium-sized businesses create more manufacturing jobs, and the organization’s strategic plans address the challenges facing manufacturing by formulating counter-measurements to address them with its public and private alliance partners.”

In conclusion, the White Paper states, …the public and private sectors must come together to build an integrated plan supportive of these initiatives, especially NAM’s Manufacturing Strategy for Jobs and Competitiveness and Roadmap to Education Reform for Manufacturing; the LEARN Act; and the Reshoring Initiative.  These will ultimately revitalize the industry and grow the economy.”

I have repeatedly said in my book and blog articles that it will take the efforts of the public and private sectors, as well as individual Americans, to first save and then revitalize American manufacturing.  I agree that these strategies will be beneficial, but they will not be enough to accomplish this goal.   First of all, I do not agree that the challenges to accomplish this goal are the “four major challenges on which its future depends and has been failing to meet… globalization, the revolution in information technology, the nation’s chronic deficits and its pattern of energy consumption” that are quoted from Thomas L. Friedman and Michael Mandelbaum’s book, That Used to Be Us, How America Fell Behind in the World It Invented and How We Can Come Back.

These are all realities that must be addressed, but they are not the main challenges that face America’s manufacturing industry.  The main challenge can be summed up in one word:  China.  By this I mean China’s predatory mercantilism in the form of currency manipulation, export subsidies, theft of intellectual property, product “dumping,” export restrictions on raw materials, and more recently, technology transfer and rare earth hoarding.

As long as companies that are members of AME, NAM, and NACFAM, such as Westinghouse, General Electric, and Caterpillar, choose to close factories in the United States to offshore manufacturing to China for the illusion of selling to the 1.3 billion Chinese consumers, we will continue to lose manufacturing jobs.

As long as these organizations and their member companies advocate so-called free trade policies and are afraid to stand up to China’s predatory mercantilism and urge our elected officials to demand that China adhere to the terms of its admission into the World Trade Organization, our huge trade deficits will continue to escalate.

These companies must stop being Chinese apologists and appeasers just to add more profit to their bottom line.  They need to realize that complying with China’s demand for technology transfer in order to build or establish a plant in China is destroying the future of their own companies.

Now is the time for action.  The best thing that AME, NAM and NACFAM members could do is to take a pledge to not close any more plants in the U. S. to set up manufacturing in China.  Then, we would really be able to revitalize American Manufacturing.