savingusmanufacturing.com

Under Secretary of Commerce and U. S. Patent & Trademark Office Director, David J. Kappos, recently visited San Diego to meet with the San Diego Inventors Forum and the San Diego Intellectual Property Law Association as part of his travels around the country to inform people of his mission to improve the U. S. Patent and Trademark Office (USPTO).

Independent inventors (individuals who are not part of corporations) are anxiously watching the outcome of the proposed Patent Reform Act of 2010, Senate Bill, S515, in which the new process would be a “First to File” system in contrast to the current “First to Invent” system.  The concern of independent inventors is that this bill would favor large companies who can afford to file applications for patents before vetting the new technology because it would alter patent law to effectively kill the grace period by conditioning it on early disclosure.  In other words, an inventor would have to publicly disclose the invention in order to trigger a grace period.  (http://www.nsba.biz/content/2927.shtml)

According to Director Kappos, the U. S. is already operating as a “first to file” patent system because in 2007, the total number of interference cases for all applications was seven, and only one interference claim involving a small or medium sized entity was decided based on priority alone – out of 441,637 patent granting decisions.  Interference cases are where two inventors file their patents nearly simultaneously and rely on the first to invent criteria during interference proceedings.

The proposed bill would create a new micro-entity category that would allow fees to be reduced by 75 percent for inventors with five or fewer employees and fewer than five prior patent applications.  The USPTO currently offers a 50 percent discount for small entities (under 500 employees) in virtually every fee category, which is further reduced by another 50 percent for small entities and independent inventors who use the electronic filing system.  The proposed legislation would also strengthen patent rights and lower litigation costs in patent disputes.

Since Mr. Kappos was appointed director last year, the USPTO added a 800 number “hot line” for inventors, and they are close to setting up a tracking “dash board” that will let inventors know when their application will have its first office action.  They changed hiring practices from hiring new college graduates to hiring people who have had some previous experience in industry.  They are hiring 300 more patent examiners this year and plan to hire 1,000 more in the next two years to help reduce the backlog of 750,000 patent applications.  They have also been aggressively providing training to the current 7,000 patent examiners.

An Ombudsman Pilot Program has been set up to assist applicants with issues that arise during the patent application process.  When there is a breakdown in the normal process, the ombudsman can assist in getting the process back on track.  Last fall, the Office instituted a pilot program designed specifically for the independent inventor, “Product Exchange,” which gives the opportunity to select one application of critical importance to an inventor that would receive expedited review of that application in exchange for permission to stop working on another application that is no longer important to the inventor.

One of the few concrete things the Obama administration has done in the last year to benefit the American economy is the appointment of David Kappos by Secretary of Commerce Gates.  Director Kappos is a former engineer and patent attorney who strongly believes that if our country is going to successfully compete in the global economy, it is going to be on the” back of innovation.”   Mr. Kappos said that the USPTO is committed to providing America’s innovators with the tools they need to put their ideas to work, which means providing high quality patents in a timely manner and giving inventions reliable Intellectual Property protection.  His goal is to help inventors bring their goods and services to market, to build economic opportunity, and maintain America’s place as the innovation capital of the world.  I share the same belief that ingenuity and innovation is the key to saving America’s manufacturing industry, and the changes already made and planned in the USPTO will help achieve this goal.

The U. S. Department of Commerce reported that the U. S. trade deficit widened more than expected in February as exports rose to the highest level in 16 months, but this gain was offset by a bigger jump in imports, reflecting increased demand for consumer goods from clothing to televisions.  While exports of manufactured goods increased 1.6 percent, imports increased 3.9 percent.  Manufactured goods comprised 80 percent of U. S. merchandise exports in February; however, manufactured goods also accounted for 75 percent of merchandise imports.   This shows that an increase in consumer spending doesn’t create jobs for Americans because the vast majority of consumer goods are now manufactured in China.

To meet the President’s goal of doubling exports in five years, exports must grow at an annual rate of 15 percent.  How can this be achieved if imports continue to exceed exports?

One way would be to put pressure on China to allow its currency to rise in value against the dollar.  China sets the value of its currency, the yuan, to always equal a set amount of other currencies that includes the dollar.  When the dollar loses value, China buys dollars through U S. Treasury securities so that the yuan’s value is always within a targeted range lower than the dollar to keep Chinese goods cheaper than U. S. goods.

C. Fred Bergsten, head of the Peterson Institute for International Economics recently told the House Ways and Means Committee that the Chinese yuan is undervalued by about 40 percent against the dollar, and Hong Kong, Malaysia, Singapore, and Taiwan are undervaluing their currencies as well to avoid losing sales in markets where they compete against China.  If these currencies were allowed to rise against the dollar to the proper levels, he believes it would trim America’s trade deficit by $100 billion to $150 billion annually and could result in an additional 600,000 to 1.2 million jobs.

When Secretary Geithner was interviewed recently on CNN, he said, “ I think they’ll come to decide it is in their interest . . . I think it is quite likely that they move over time.”   Is he really that naïve?  China allowed the yuan to appreciate by about 20 percent from mid-2005 to mid 2008 but halted the rise after the global economic crisis began to cut deeply into its exports.  If that is the case, why did the U. S. trade deficit continue to grow between 2005 and 2008?  It actually reached a high of $268 billion before it dropped to $226.8 billion in 2009.

Under a 1988 trade law, the Treasury Department must report to Congress every six months on whether any country has been found manipulating its currency to gain trade advantages.  The report was due by April 15^th, but Secretary Geithner requested a three-month extension in early April.

A group of 14 U. S. senators recently unveiled legislation that would provide for penalty tariffs to be imposed on Chinese imports if China does not allow its currency to rise in value.  Democrat Senators Sherrod Brown and Debbie Stabenow and Republican Senators Sam Brownback and Lindsey Graham co-sponsored the bill. In the House, 130 members sent a letter to the President urging a tougher approach on China’s currency manipulation.

A good reason why Obama was elected is that Americans were tired of losing jobs.  It’s high time that actions by the Obama administration match his campaign rhetoric.

According to the Institute for Supply Management March “Report on Business, the PMI was 59.6%, an increase of 3.1% over February’s 56.5%.    Norbert J. ORWE, CPSM, chair of the Manufacturing Business Survey Committee said, “The manufacturing sector of the economy grew for the eighth consecutive month during March.  The rate of growth as indicated by the PMI is the fastest since July 2004 …The Inventories Index provided a surprise as it indicated growth for the first time following 46 months of liquidation – perhaps signaling manufacturers’ willingness to increase inventories based on expected levels of activity.”  This wasn’t just an upturn in a few industries – 17 of the 18 manufacturing industries reported growth in the PMI in March.

The PMI is the Purchasing Management Index, based on data compiled from purchasing and supply executives nationwide.  A PMI reading above 50% indicates that the manufacturing economy is expanding and below 50% indicates that it is declining.  At the very worst of the recession, it was 32.5% in December of 2008.

While it’s good news for our economy that manufacturing has grown for eight months in a row, why has the national unemployment rate held at 9.7% for the third month in a row in March, after peaking at 10.1% in October 2009?

It’s the loss of manufacturing jobs that is keeping unemployment so high.  Too many manufacturers are sourcing all or most of their manufacturing offshore.  An upturn in their business doesn’t mean more manufacturing jobs for Americans if they aren’t producing or buying everything for their products in the United States.  Since 2001, we’ve lost 63% of the U. S. textile industry and 74% of the U. S. printed circuit board industry.  We lost 47% of communication equipment jobs and 43% of motor vehicle and parts industry jobs.

In addition, manufacturers are doing more with less; existing employees are required to work harder and longer because manufacturers aren’t hiring new people until they have more confidence that the upturn in business will continue.  Manufacturers aren’t building up inventory to fill orders – they are ordering materials, components, parts, and assemblies as needed to fill orders they receive from their customers.

The number of manufacturing jobs is a better indicator of what’s really happening in the economy than the stock market.  Many of the companies on the Dow and Standard & Poor index of the stock exchange are no longer American-owned companies.  They are companies that I call multinational globalist companies, which have no loyalty to the United States and don’t care about providing jobs for Americans.  These companies may be doing well based on their worldwide business and could post profits and have their stock prices go up without creating jobs for American workers and benefiting the U. S. economy as a whole.

We need to establish a national manufacturing policy to be able to maintain a strong manufacturing industrial base as the foundation of our economy and create the jobs our country needs.

Milton Ahlerich said, “Frankly we don’t know what we don’t know.”  In the year since I published my book and have been out on the speaking circuit, I confirmed what I believed to be the case — most people don’t realize how important manufacturing is to the economy of the United States and don’t know how to “save American manufacturing.”

I also learned that many of the people who have bought my book belong to the generation that came of age in the era of the U.S. trade deficits that began in 1979 and have become accustomed to “Made in China” consumer products.   They don’t realize that American manufacturers used to produce almost all of our consumer goods prior to 1980.

I intend to write about things that most people don’t know on the subject of manufacturing and it’s importance to America’s economy.  In the age of “information overload” via TV, radio, and the Internet, it’s easy to get overwhelmed and tune out.

We live in a time where most of the news in the mainstream media is shaped and shaded by political views to drive a particular agenda.   Even a lot of Web content is skewed to a political viewpoint.

After doing research for nearly two years while writing my book, I have access to sources of information that most people don’t know about.  Since, I’ve found it impossible to stop doing research on this dear-to-my-heart topic, I want to share information I find with others through this blog

I strived to be non-partisan as I wrote my book and will strive to present the facts and express my opinions in a similar manner in my blog.  It may lean right or left sometimes, depending on the issue and available facts.

Reasonable and intelligent comments are welcome, especially those which point to Web postings, articles, and analyses of the issues.

As we all become more informed, we can play a more active role in “saving American manufacturing.”  It may be one of the best ways we can save our country from oblivion.