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What is the Outlook for American Manufacturing for 2024

Tuesday, January 9th, 2024

The ISM Purchasing Manager’s Index was below 50% for the 14th consecutive month in December.  In particular, new orders and backlogs were contracting in December. A figure below 50% is an indication of a contracting economy.  ISM doesn’t make any predictions in their reports.  What is interesting is that the contraction coincides with the Fed raising interest rates.  When interest rates are high, consumers have less money to buy “wants” vs. necessities, and companies have less money to use for capital improvements.  The initial inflation was caused by shortages from supply chain disruptions and shutdowns during the COVID pandemic, so I don’t understand the theory that raising interest rates would curb inflation.  To me, raising interest rates causes more inflation.

The good news is that several organizations have a more positive outlook for 2024, especially with regard to certain trends.After reviewing several newsletters and articles about the 2024 manufacturing outlook, there is considerable consensus about trends that will continue and grow in the coming year.

Deloitte’s 2024 Manufacturing Industry Outlook states, “In 2023, the US manufacturing industry capitalized on the momentum generated by three significant pieces of legislation that were signed into law in 2021 and 2022—the Infrastructure Investment and Jobs Act (IIJA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Inflation Reduction Act (IRA). Together, these laws prioritize rebuilding infrastructure, advancing clean energy initiatives, and building out the domestic semiconductor industry, while also aiming to foster job growth, workforce development, and equity. By introducing an infusion of funds and tax incentives into US manufacturing across various sectors…the IIJA, CHIPS, and IRA have already spurred record private sector investment in the manufacturing industry.”

AME’s Manufacturing Today magazine features an article titled, 10 Manufacturing Trends for 2024: Shaping the Future of Industry.  These trends include:

Digital Twins – “The adoption of digital twins, virtual replicas of physical manufacturing systems, will skyrocket. These digital simulations enable real-time monitoring and optimization, enhancing efficiency and reducing downtime…facilitate advanced scenario planning and troubleshooting, enabling manufacturers to simulate and predict the impacts of various operational changes and external factors on their systems.”

Reshoring – “With a focus on supply chain resilience, manufacturers are increasingly bringing production back to their home countries. Reshoring efforts aim to reduce dependency on foreign suppliers and mitigate supply chain disruptions.” 

Reskilling Workforce – “Training programs will focus on digital skills, automation, and data analysis. The reskilling initiatives will likely focus on interdisciplinary skills, blending traditional manufacturing knowledge with digital expertise.”

Industrial Automation – “Automation will continue to expand across manufacturing processes, with robots and cobots boosting productivity and accuracy. Advanced automation will not only include robotics but also incorporate AI for more intelligent decision-making processes.

Additive Manufacturing – “3D printing and additive manufacturing will become even more integral to the production process. This technology allows for rapid prototyping, customization, and reduced waste.” 

Industrial Internet of Things (IIoT)  – Increased connectivity through IIoT devices will provide real-time data for better decision-making. This will lead to improved asset management and predictive maintenance. The IIoT will lead to more interconnected and smart supply chains, where data from various stages of manufacturing can be integrated for more cohesive and transparent operations.”

The December 12, 2023 Thomasnet.com Insights newsletter reported that when The Association for Supply Chain Management held their annual conference in September, ASCM members voted on what they believe are the top trends in supply chain for 2024. The top three trends were:

1. Digital Supply Chains – “As antiquated paper processes go the way of the dinosaur, it brings along with it improvements in streamlining, resilience, and agility. Supply chain leaders who leverage digital tools will find themselves better prepared and more able to handle dynamically changing orders.”

2. Supply Chain Investments – “A newcomer to the ASCM list this year — and the fastest climbing — is supply chain investments in both systems and people. This emphasizes just how much corporate leaders now see the value in prioritizing their supply chains and the benefits of adding talent and tech tools to ensure visibility and, ultimately, success.”

3. Relocation – Reshoring continues to hit record levels, and Accenture adds that many companies are turning local for their supply chain needs. Specifically revealing that, by 2026, 85% of companies plan to manufacture and sell their products in the same region. In this way, companies ensure they are addressing the vulnerabilities that arose from their highly globalized supply chains in recent years.”

The December 19, 2023 thomasnet.com Insights newsletter featured an article titled, 2024 Trends: AI, Automotive, Sustainability, and Reshoring, that stated, “2024 is the year that every company will adopt artificial intelligence to further modernize operations. More than 70% of the manufacturing CEOs who have already implemented AI have already seen a significant return on investment in areas such as supply chain management and procurement, according to Xometry’s Q4 CEO Sentiment Survey, which was completed with Forbes and John Zogby Strategies.”

Another one of the trends is “In 2024, we won’t just see companies talk-the-talk on a net-zero emissions future. Instead, we will watch them proactively take steps to limit greenhouse gas emissions across industrial supply chains through investments and decarbonization tracking tools.”

The article states, “Finally, a greener supply chain isn’t the only logistics trend to expect in 2024. With an ongoing emphasis on the importance of domestic manufacturing, U.S. companies will continue to reshore at greater rates this year, creating resiliency to withstand future shocks. In fact, 76% of manufacturing CEOs at the end of 2023 had already reshored — up significantly from earlier in the year. nvestments in reshoring have been accelerated by the “Build America, Buy America” initiative.”

Note that “reshoring” is a trend mentioned by all three organizations.  This is a trend that was increasing every year since 2011, but accelerated as a result of the supply chain disruptions during the COVID pandemic.  According to the Reshoring Initiative 2022 Data Report, “In 2022, 364,000 jobs were reshored (up 53% from 2021), according to the Reshoring Initiative. The reasons for this new growth were threefold:

  • Manufacturers are nervous about relations with China and are bringing production back to the U.S.
  • Biden administration initiatives—the Inflation Reduction Act, the Infrastructure Bill, and the Chips Act—have offered both direction and financial security for companies willing to invest in American manufacturing.
  • Third, tariffs are working. A good example is the Section 232 tariffs for the steel and aluminum industries.

The problem is that at the current rate, it would take 30 years to recoup the +5 million jobs we lost between 2000 and 2010.  If we kept up the pace of 2022, it would still take 15 years. We need to implement some of the policies I have recommended in previous articles to incentivize more reshoring, such as my article, “How Could we Reduce Inflation and Balance Foreign Trade & the Federal Budget?”  Balancing the overvalued dollar would go a long way toward increasing reshoring by making American goods more competitive on the world market. Fixing the U.S. dollar would also expand the manufacturing workforce.  In addition, across the board tariffs on Chinese goods would reduce imports and encourage more people to Buy American, incentivizing manufacturers to reshore to take advantage of increased consumer interest in buying Made in America goods. We must become self-sufficient again in producing manufactured goods if we want to remain a free and independent country.  Our national security is at stake.

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What is the State of the U.S. Economy?

Tuesday, December 12th, 2023

There are many different opinions on the state of the U.S. economy. This is normal when we are entering an election year.  The political party in power wants the economy to appear good or better than the previous administration, and the opposing political party wants it to appear worse than when they were in power.

Let’s examine what are the key economic indicators as well as other data to determine the true state of the U.S. economy.  According to the website, USA Facts, the key economic indicators are:  GDP, inflation, Federal Reserve interest rates, workers’ average hourly wages, unemployment rate, ratio of unemployed people related to job openings, labor force participation rate, trade deficit (imports vs. exports), and Federal debt. USA Facts only reports the figures at the end of the year so the data shown is for 2022 since 2023 hasn’t ended yet.

Gross Domestic Product 1970 – 2023

Labor Force Participation Rate

The rate is calculated as the labor force divided by the total working-age population. The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.

The labor force participation rate was 66.0% in 2008, and gradually dropped down to 63.3% by January 2020.  As a result of the COVID-19 pandemic, it dropped to a low of 61.5% in November 2020 before gradually rising to 62.8% in November 2023.

Ratio of Unemployed People to Job Openings

According to the Bureau of Labor Standards, “The ratio of unemployed people to job openings ranged from 0.8 to 1.0 during 2018 and 2019. Over the past 5 years, the number of unemployed people per job opening reached a high of 4.9 in April 2020, when there were 23.1 million unemployed people and 4.7 million job openings. Since October 2021, the ratio has been 0.5 or 0.6 every month…When ratios equal 1.0, there is approximately 1 unemployed person per job opening. When less than 1.0, the labor market is tight, as job openings outnumber the unemployed. When greater than 1.0, there are more unemployed people than available jobs..”

The unemployment rate of the United States which has been steadily decreasing since the 2008 financial crisis, but spiked to 8.1 percent in 2020 due to the COVID-19 pandemic. The annual unemployment rate of the U.S. since 1990 can be found here.

Federal Fund Interest Rates

The Federal Reserve raised interest rates seven times in 2022 and four times in 2023, increasing the target rate from nearly zero (0.25%) in 2020-2021 to 5.25%-5.50% currently. The Fed is expected to hold rates steady when they meet this month. The Fed rate affects the consumer interest rates for mortgages and installment loans for things like cards, home furnishings, and other consumer goods.  Mortgage rates have risen from 2.75-3.25 in 2021 to 6.0%-7.9% in 2023.  This has stagnated sales for homes and automobiles.

National average wage indexing series, 2001-2022

Year  Annual Wage YearAnnual Wage
2001$32,921.92 2012$44,321.67
2002$33,252.09 2013$44,888.16
2003$34,064.95 2014$46,481.52
2004$35,648.55 2015$48,098.63
2005$36,952.94 2016$48,642.15
2006$38,651.41 2017$50,321.89
2007$40,405.48 2018$52,145.80
2008$41,334.97 2019$54,099.99
2009$40,711.61 2020$55,628.60
2010$41,673.83 2021$60,575.07
2011$42,979.61 2022$63,795.13

Data source:  https://www.ssa.gov/oact/cola/AWI.html

It looks like wages have nearly doubled in 21 years, but the value of the dollar has changed over time. According to the CPI Inflation Calculator, the ”U.S. dollar has lost 42% its value since 2001; $100 in 2001 is equivalent in purchasing power to about $173.73 today…The dollar had an average inflation rate of 2.54% per year between 2001 and today, producing a cumulative price increase of 73.73%.” This we need to deduct 42% from the 2022 wage to compare it to 2001 ($63,795.13 – $27,431.91 = $42,363.23). Thus, the wages only went up by 34% while inflation increased 73.73%. 

U.S. Private Sector Job Quality Index

The November Job Quality Index report by The Coalition for a Prosperous America states, “The Job Quality Index measures job quality for U.S. production and non-supervisory workers by comparing workers’ weekly wages to the mean weekly wage for all non-supervisory workers. Those jobs above the mean are classified as high-quality and those below the mean are low-quality…Over the past three decades, the JQI declined because the U.S. economy created more low-quality jobs than it has high-quality jobs. As shown in Figure 1, the JQI is down 12.8% from 1990 illustrating the disproportionate growth in low-wage, low-hour jobs.”

The last year that the U.S. had a positive trade balance by exporting more than we imported was 1979. The trade deficit grew gradually from 1980 – 1999, but accelerated after China was granted Most Favored Nation status in the year 2000.  In 2022, the trade deficit of $948.1 billion a 3.9% increase from 2021.

For my industry of manufacturing, there are two other measures that can be examined to determine the true state of the economy.  They are:

US ISM Manufacturing PMI

The Institute of Supply Management Purchasing Managers Index “is a diffusion index summarizing economic activity in the manufacturing sector in the US. The index is based on a survey of manufacturing supply executives conducted by ISM. Participants are asked to gauge activity in a number of categories like new orders, inventories, and production and these sub-indices are then combined to create the PMI… A PMI above 50 would designates an overall expansion of the manufacturing economy whereas a PMI below 50 signifies a shrinking of the manufacturing economy.

US ISM Manufacturing PMI was at a level of 46.70 on November 30, 2023, unchanged from 46.70 for October and down from a recent high of 64.70 in March 31, 2021.  The PMI dropped to 49.00 for the November 30. 2022 report, so we have been in a shrinking economy for 13 months.  

U.S. Manufacturing Technology Orders  

According to the November report published by AMT, The Association For Manufacturing Technology, “orders for manufacturing technology…continued to fall relative to 2022. Through October 2023 orders totaled $4.05 billion, 13.5% behind the total for the first 10 months of 2022.  

Conclusion:  Adding to the above data is the fact that vehicle gas prices have escalated since 2020.  According to Finder, “Gas prices in over the last 12 months are well above the national average over the last six years, hitting $4.99 a gallon in the week of June 16, 2022 — a week in which Californians paid a whopping $6.43 per gallon…The national average gas price this week [December 7th] is $3.22, down from $3.27. US gas prices over the last year are among the highest since 2018. California has the highest gas prices in the nation, followed by Hawaii as a close second, and Washington, Nevada, and Oregon making up the top five.  Texas has the lowest gas price ($2.68) in the nation followed closely by Mississippi ($2.72) and Oklahoma ($2.74). 

According to the U.S. Government Accountability Office, “Last year, U.S. consumers saw the largest annual increase in food prices since the 1980s. While food prices generally increased about 2% in prior years, they increased about 11% from 2021 to 2022…Food prices increases also varied by locality. For example, the highest increase between 2021 and 2022 was seen in Detroit Michigan (about 14.5%). The lowest (about 5%) occurred in the Miami-Fort Lauderdale, Florida metro area…Finally, food price increases from 2021 to 2022 varied by food group. For example, prices for grains and bakery products increased by about 13%, while fruits and vegetables increased by about 9%.  Similarly, dairy products increased by about 12%, but meats, poultry and fish increased about 10%.”

I am not an economist qualified to do an educated analysis of all of the above data, but it is obvious to me that the U.S. economy has some serious problems that need to be urgently addressed if we want to avoid a prolonged recession. The question that voters ask themselves in an election year, “Am I better off now than I was under the previous administration.”  The answer to that question will determine the outcome of the next election.     		 

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Are Southern California Trade Shows Recovering from Pandemic Shutdowns?

Tuesday, October 3rd, 2023

There have been four trade shows in Southern California that I have either attended or participated as exhibitor this year. The first show I attended was the five in-one show, MD&M West, WestPack, ATX West, D&M West, and Plastec West held February 7-9, 2023 at the Anaheim Convention Center in Anaheim, CA. 

These shows take up all of the halls in the largest building of the Anaheim Convention Center complex.  Besides the several hundred companies exhibiting in the show, it also offers educational conferences held by the various trade shows concurrently with the show.

There were five free education stages on the show floor that provided in-depth discussions and instructions from industry experts on the latest need-to-know information for their industry. In addition, there were paid conference sessions in meeting rooms on the second floor.  I attended the IME West conference on February 8th and gave a presentation titled, “The Future of Manufacturing.” I discussed how manufacturing revitalization has been hindered by misperceptions, what is happening in our current period of creative disruption, and what vibrant opportunities exist now and in the future.  I also attended all of the other conference sessions held that day, and they were all well attended.   

When I walked the show on the 7th, it seemed to be as well attended as a pre-pandemic show.  The plastic molding company we represent, Hi-Rel Plastics, exhibited in the MD&M show and was happy with the quantity of their show leads, but the quality of the leads wasn’t as good as pre-COVID shows.

The second show was the Del Mar Electronics & Manufacturing Show held April 26th & 27th at the Del Mar Fairgrounds in San Diego County.  My company, ElectroFab Sales, has exhibited in the show since 1997, and this year, we had two exhibit booths featuring the fabrication services of four of the ten companies we represent.  I also gave a presentation on the first morning of the show on “How to Select the Right Processes and Sources for your Products.”

This show has an extensive free conference schedule both days of the show and also features a free reception at the end of the first day of the show which encourages late afternoon attendees to stay for the reception and skip the worst of rush hour traffic to go home. Another added benefit for attendees is free parking for the show.

We had very good traffic the first day of the show, and more traffic than some previous years on the second day of the show. The second day of the show ends at 3:00 PM so there is less time to collect show leads. We got about 50 leads from our exhibit which was about 30% higher than 2022.  However, there were very few leads from well-established or larger companies.  Most of the leads were entrepreneurs with new products or from small companies designing a new product. 

Show manager, Connor Good, told that the number of booths was up by 25% and attendance was up by 30% over 2022.  He said, “What felt like a long time coming the first year back after the pandemic, attendee numbers were promising. It showed us the industry is ready to get back to business and people are eager to network face to face.”

The third show of the year was the Design-2-Part Show, held September 13th & 14th at the Ontario Convention Center.  This show alternates between held in Long Beach, Pasadena, and Ontario in Southern California. The Design-2-Part shows have been held for 42 years and feature only American manufacturers; no reps or distributors are allowed to exhibit.  An average of 10-11 shows have historically been held around the country each year.

President, Rober Eichner, “We were even able to conduct a show in Texas in 2020 and conducted nine shows around the country in 2021 and 10 shows in 2022.  We have held 11 shows this year and 12 shows are scheduled for 2024.  Show attendance at many of the shows this year approached attendance levels of 2018 and 2019. We purchased the AMCON shows last year, so we plan on holding shows in Denver, CO and Novi, MI in 2024.  We also skipped doing the Santa Clara show last spring, but plan on being back there in 2024.”

This makes these shows the most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services.

I attended the show on Thursday, September 14th to do booth duty for the rubber molding company we have represented for 29 years, Century Rubber Company.  My husband and partner had done booth duty at the show on the 13th.  He said the show was very busy the first day.  The second day is never as busy because it ends at 3:00 PM, but I thought it was busier than the second day of the Long Beach show in October 2022. 

The last show I attended was the Anaheim Electronics & Manufacturing Show held September 27th & 28th at the Anaheim Convention Center in Anaheim, CA.  

This show featured hundreds of companies exhibiting in the following categories:

  • Telecom Manufactures
  • Defense Contractors
  • Plastic and Rubber Molders
  • Medical Device Companies
  • Electronics OEM’s
  • Bio-Pharma Device Manufactures
  • Sports Products Developers
  • Coil Winding
  • Machine Shops
  • Castings
  • Sheet metal fabrication
  • 3D printing…. and More

This show is owned by the same owner as the Del Mar Electronics & Manufacturing Show and allows reps and distributors to exhibit. The same benefits of free parking and a free reception at the end of the first day of the show encourages show attendance.

I attended the show on Thursday, September 28th to walk the show and give a presentation at 1:00 PM on “How to Select the Right Processes and Sources for Your Products”

Assistant Show Manager, Connor Good, told me that the number of booths this year was up 30% from the fall 2022 show, and attendance the first day was 20% higher than the both days last year.  He said, “The show was held in the convention center’s newest hall, the ACC North. We tried to combine the easy going and stress-free environment of the Del Mar show with the professionalism and company dense area of Anaheim. We encouraged business development of all sizes and opportunities through free attendance and parking even if signing up on show day.”

There is one more trade show coming up in Southern California this fall

WESTEC/AeroDef

Tuesday, November 7 through Thursday, November 9

Long Beach Convention Center
300 East Ocean Boulevard
Long Beach, CA 90802

I have been to WESTEC many, many times starting in 1990 when I attended comprehensive technical sessions on manufacturing processes such as investment casting. The amount of time you spend there is well worth the effort. You can literally spend hours and not take in all that there is to offer.

WESTEC has been providing solutions to manufacturing challenges for 58 years. You can see more than 400 exhibitors, face-to-face, at WESTEC — all in one place, over a three-day period. WESTEC gives you face-to-face access to hundreds of experts in critical industries such as aerospace, medical, industrial machinery and consumer goods. You can find new manufacturing technology to make your vision a reality. The variation at WESTEC is vast. Here’s just a small sampling of what you’ll discover at WESTEC:  aerospace manufacturing, castings, forgings, CNC Machining, Waterjet, Advanced Materials, 3D printing, and much more.

WESTEC has manufacturing education sessions that focus on teaching you about new technologies, new processes, and trends that can transform your business. All show floor education is included with the show floor pass. Attendees come from a variety of industries including aerospace, medical, industrial machinery, automotive, and more.

You can sign up to attend at no charge at the official website  www.westeconline.com 

Trade shows are even more important than they once were because most large companies eliminated “vendor days” decades ago where sales reps could schedule appointments with buyers in their purchasing departments.  In addition, many buyers and even engineers are not back to working full-time at their offices and may still be working remotely from home two-three days a week, making it very difficult to connect with them.  Meeting a potential customer at a trade show is the first step in developing a relationship to become a regular vendor for a manufacturer.  Trade shows also provide the opportunity for inventors and entrepreneurs to explore the possible sources for parts, assemblies, and fabrication services for their new products.  Be sure to make it a priority in your schedule to attend a trade show next year.

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Southern California Fall Trade Shows Feature Made in America

Tuesday, August 22nd, 2023

Southern California offers two trade shows this fall for manufacturers to locate processes and sources to make their products.

The first show is the Design-2-Part Show, which is the region’s largest design and contract manufacturing trade show.  It features only American manufacturers; no reps or distributors are allowed to exhibit.  This makes it the most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services. Over 300 service categories will be represented at this show.  From design and prototypes to production, finishing, and assemblies — you will find the answers you need at this show at the Ontario Convention Center in Ontario, CA. 

I will be at this show on Thursday, September 14th doing booth duty for the rubber molder we represent, Century Rubber Company. 

When:         September 13th & 14th, 2023

Hours:         Wednesday 9:30 am – 3:00 pm

Thursday 9:30 am – 3:00 pm

Where:        Ontario Convention Center

Ontario, CA

Cost:  Free Admission

Register here

The second show is the Anaheim Electronics & Manufacturing show to be held September 27th & 28th at the Anaheim Convention Center in Anaheim, CA.  

This show will feature hundreds of companies exhibiting including reps and distributors.

  • Telecom Manufactures
  • Defense Contractors
  • Plastic and Rubber Molders
  • Medical Device Companies
  • Electronics OEM’s
  • Bio-Pharma Device Manufactures
  • Sports Products Developers
  • Coil Winding
  • Machine Shops
  • Castings
  • Sheet metal fabrication
  • 3D printing…. and More

I will be attending the show on Thursday, September 28th to walk the show and give a presentation at 1:00 PM on “How to Select the Right Processes and Sources for Your Products”

Pre-register here and a Free parking voucher will be sent to you prior to the show.

Join our reception. September. 27th, 5-7 pm for munchies , drinks, and more! Converse and commingle whether you are an Exhibitor or Attendee stop in, enjoy. 

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Solutions to Address Outsourcing by Multinationals & Rebuild American Manufacturing

Tuesday, May 9th, 2023

Michael Collins wrote, “Hope is not a plan” in his book Dismantling the American Dream, How Multinational Corporations Undermine American Prosperity. In other words, we cannot hope to rebuild American manufacturing without doing things differently than we’ve done in the past 30 years.  The industrial policies we have been following resulted in the decimation of the U.S. manufacturing base with the loss of over 70,000 manufacturing companies and 5.8 million manufacturing jobs.

Michael proposes a number of solutions in his book, some of which are the same or similar to solutions I proposed in my book, Rebuild Manufacturing – the key to American Prosperity. First, we both agree that we need a new industrial policy and plan.  The free trade policy we’ve followed since WWII has only benefited multinational corporations at the cost of millions of manufacturing jobs and an escalating trade deficit. Every President in the past 30 years had the goal of doubling exports and creating more manufacturing jobs, but the trade and industrial policies they promoted did just the opposite. President Biden’s Build Back Better Plan has the goal of creating five million jobs, but without measurable objectives and a plan to achieve those objectives, Michael feels “nothing will change.”  

Michael points out that “it will take a reduction in the trade deficit of 20 percent to bring back one million manufacturing jobs.” That means, we would have to reduce our trade deficit by 100% of the 2020 trade deficit total to create five million jobs.  However, the opposite occurred as the trade deficit increased from “$676.7 billion in 2020 to $861.4 billion in 2021… [and] $945.3 billion in 2022” according to the Bureau of Economic Analysis.

Michael notes that “politicians, Democrats or Republicans, don’t seem to be willing to publicly commit to an objective of reducing the trade deficit.” He comments, “This is dangerous territory, and government is the only entity that can do anything about the trade deficit.”

I came to a similar conclusion in the chapter on “Have Free Trade Agreements Benefited American Manufacturing” of my book.  I also recommended that the U.S. do not enter into any new trade agreements, and Michael agrees, writing. “We should oppose any FTA that will cost jobs or increase the trade deficit.”

The question is how do you reduce a trade deficit.?  Since Michael and I are both members of the Coalition for a Prosperous America (CPA), we support addressing currency manipulation and the overvalued dollar as two of the main ways to balance trade.  Michael wrote, “The root cause of the trade deficit is that the United States is not price competitively primarily because the dollar is overvalued by 20 to 30 percent.” However, he wrote, “Most of the large importer corporations and Wall Street do not want the government to enforce the current WTO and IMF laws against currency manipulation or to devalue the dollar because they want to keep foreign import prices low.”

Michael summarizes four methods that can be used to reevaluate the dollar:

  • Impose countervailing duties (CVDs) – tariffs or taxes on imported goods that offset subsidies by trading partners.
  • Tax purchases by using a Market Access Charge (MAC) on all foreign investments in the U.S., including stocks, bonds, real estate, companies, or intellectual property.
  • Implement a withholding tax on the profits and dividends earned by foreign inventors that finance the dollar.
  • Tax sellbacks – impose a 30% tax on the profits of companies that have offshored.

Michael wrote that “A new working paper from the CPA called ‘Imports Growth and Job Creation from a Competitive Dollar’ reveals that if the dollar value could be reduced by 27 percent it would result in export growth five times faster than baseline, while imports would grow more slowly.”

Another CPA proposal that Michael supports is “Make existing China tariffs permanent” and “impose the 4A and 4B tariffs.”   He wrote, “The Trump tariffs with China are working, and in fact, are our only defence against China’s mercantilist cheating.” He recommends that “Congress should limit tariff exclusions for importers, especially those that are not using the imports to manufacture in the United States.”

Michael also recommends creating “a more level playing field with our trade partners” by building reciprocity into our trade agreements.  This would “allow the United States to impose reciprocal duties on all countries who have higher tariffs if they do not lower their tariffs and VATs.”  I wrote in my book, “Over 150 countries in the world have shifted a significant portion of their tax mix to border adjustable consumption taxes —Value Added Taxes (VATs) or goods and services taxes (GSTs)…The rates range from 12% to 24% and average 17% globally.” In 2017, CPA proposed a 12% GST to be applied as a credit to the 15.3% payroll tax. Michael wrote, “We should level the playing field by introducing a program to match the foreign country’s VAT…”

In order to reduce the unfair advantage that multinational corporations have under current U/S. trade policy, Michael supports CPA’s proposal for “Sales Factor Tax Apportionment” that “would tax profits based on where the product is sold and eliminate the ability of multinational companies avoiding taxes by shifting profits offshore.” I had explained that this tax proposal would be “determined solely on the percent of a company’s world-wide sales made to U.S. customers.”

He also recommends the new proposal for a “Global Minimum Corporate Tax of 15 percent”, which “would give government the ability to tax our home company’s overseas profits at 15 percent, and deter them from us9mg tax shelter countries to avoid taxes.”

Michael supports CPA’s proposal for the U. S. to withdraw from the World Trade Organization (WTO) because the requirement of consensus on trade rules and decisions by the 164 member countries have “turned out to be detrimental to the United States,” In addition, he supports “repealing the Permanent Normalized Trade Relations (PNTR) with both Russia and China.”

He writes that these actions are first steps in “decoupling form China” and then lists a dozen different steps to be taken thereafter that CPA recommends as part of the decoupling process.

Michael also briefly mentions the work of Harry Moser, founder of the Reshoring Initiative, to help companies use the Total Cost of Ownership Estimator™ to reshore manufacturing to America.  I have had the pleasure of collaborating with Harry Moser since 2010 as an authorized presenter on how to use TCO to return manufacturing to America and devoted a whole chapter on reshoring in my book. 

The Reshoring Initiative 2022 Data Report  states, “Jobs announced in 2022 were a record-breaking 364,000 – up from 238,000 in 2021. The totalnumber of jobs announced since 2010 is now nearly 1.6million.”  However, Michael notes that “at the current rate of reshoring, it will take over 30 years to reach Biden’s goal of five million jobs.”

Michael’s last chapter makes a brief mention of the need for workforce training and comments that instead of training, “MNCs have used stop gap measures such as outsourcing, automation, buying services from foreign vendors, and poaching trained workers from their suppliers, but these strategies no longer work and the shortage of workers has caught up to American companies.”

I felt that workforce training was so important to rebuilding American manufacturing that I included a chapter on the subject of how to foster and develop the next generation of manufacturing workers in my book. Since my book was published, I have written many articles on this topic.

Most of the above recommendations are focused on government policies, but the likelihood of making such major changes in policies is slim to none at the present time. That is why we need to shift the mindset from a prevailing worldview of ‘inevitable decline’ of American manufacturing to one of ‘vibrant opportunity. We need a new level of thinking and action that scales solutions at hand with unprecedented collaboration and organize our efforts to achieve the following true north goals by 2030:

  •  50,000 world-class domestic manufacturing small – medium– large enterprises (10x increase)
  • Add 5 million middle-income manufacturing jobs (40%)
  • Add $1 trillion to the economy (40% increase)

We need to focus our attention on disruptive and emerging opportunities that create new growth opportunities for companies, people, communities.  We welcome collaboration with Industry Reimagined 2030.

Posted in General, Manufacturing, Trade Policy | No Comments »

How We Can Stop China’s Global Strategy to Cripple America

Tuesday, February 21st, 2023

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Two years ago, Curtis Ellis, one of my heroes died after losing his battle with cancer. Curtis was a prominent trade expert and an astute architect of economic nationalism. In my tribute article to him, I wrote “Curtis was a true patriot and defender of liberty, who believed in all of the greatness of our country and devoted much of his life to putting America first in economic policies to benefit American workers and not just Wall Street.” He believed that we have to fight to save America to create jobs and prosperity by bringing higher paying manufacturing jobs back to America. He was a patriotic crusader against the unfair trade agreements that had caused the loss of millions of manufacturing jobs and our enormous trade deficits year after year.

I knew Curtis had been working on a book before he died, but didn’t know if he had finished it. I was pleased to learn that he had. His longtime partner, Maxine Albert, found a publisher for this timely book – that just launched.  Maxine wrote: “He pushed himself to finish this book because he saw the Chinese Communist’s Party as the most dangerous threat to the nation he loved. Curtis saw something truly sinister in China’s trade abuse as economic warfare.”

It was a great honor to be able to read an advanced copy to write this review of his vitally important book, Pandemonium – China’s global strategy to cripple America, available on amazon and Barnes & Noble. https://amzn.to/3RNWHf1Curtis Ellis  

Curtis Ellis was one of the early policy experts to realize the danger the Chinese Communist Party posed to America.  He understood the world economy and pointed out that “free trade” was a fallacy because of the mercantilist, totalitarian dictatorship in China.  He sounded the alarm on the gathering storm with a chilling account of China’s assault on America in its quest to be the Superpower of the 21st Century.  He foresaw that a crisis with China is inevitable because of their increasing aggression and frightening military buildup that has been funded by America’s manufacturers and consumers. 

He had the talent to be able to transform a complicated economic topic into an easily understandable and compelling narrative that would motivate people to act, and he does that by giving us a detailed, comprehensive and winning plan to declare our independence from China.

In the introduction, Curtis reminded us “Americans lived in a global economy when we wrote the first Declaration of Independence. At that time, the ‘global economy’ was known as the British Empire“ He wrote, “Americans were compelled to send their fiber, timber, and ore on ships across the ocean to ‘the workshop of the world,’ where they were fashioned into finished goods, then sent back and sold to Americans at prices set by others…Today the ‘workshop of the world’ is not Britain, but China.”  

In his first chapter, “How America Became an Invalid,” he outlines how our present position “didn’t just happen. It was not inevitable. It was the result of specific decisions made by specific people in specific places and specific positions of power.”

From my own research for my own books, I was aware of some of these key decisions that led to the decimation of American manufacturing, but I didn’t realize that the ideology of “globalism” started so long ago.  Curtis wrote about a hearing held by the Joint Economic Committee of the U.S. Congress on “the future of manufacturing” that occurred in Washington, D. C. in June 1967.  He wrote, “At the hearing, George Ball, a Wall Street grandee who served in the State Department under presidents Kennedy and Johnson, laid out the ideology of globalism” in which “earth straddling corporations should replace the ‘crazy quilt” of independent nations as the organizing principle of society.” Ball recommended that “Washington should work for “a considerable erosion of the rigid concepts of national sovereignty…the ‘common philosophy’ and ‘common goal’ should be economic efficiency and corporate profits…”

The adoption of this globalist ideology by government and industry certainly explains what has happened in the past 55 years— tax policies that favor multinational global corporations and American corporations moving manufacturing to other countries to maximize profits, first to El Salvador, Puerto Rico, the Philippines, Mexico, and finally China.

In chapter II, “A Dysfunctional Relationship,” Curtis gives a detailed description of how the U.S. relationship with China has become dysfunctional over the past five decades since President Nixon opened our doors to China. 

In chapter III, “Meet the New Boss:  The Global Elite,” he describes how “What’s good for America” became replaced by “What’s Good for the Global Economy” to the detriment of patriotic American businessmen and women. 

Chapter IV, “How China Buys Influence” outlines China’s strategy “to shape American public opinion and influence our economic and government policies to benefit the Beijing regime.”

Chapter V covers a subject near and dear to my heart, “The American System —The Origin of America’s Prosperity” that I wrote about in the first chapter of my book, Can American Manufacturing be Saved? Why we should and how we can. He uses many of the same quotes of the founders of our country that I used, such as “A free people…should promote such manufactories as tend to render then independent from others for essential, particularly military supplies,” from George Washington’s first address to Congress. 

Curtis wrote that the American System was conceived by Treasury Secretary, Alexander Hamilton, by imposing tariffs on imported goods to “raise revenue and protect American industries from predatory competition…. The American System…guided U.S national economic development from the earliest days of the republic, through the Civil War, and into the better part of the twentieth century.” 

In chapter VI, “Setting the Record Straight on Adam Smith,” Curtis clarifies the “foundational economic treatise on the principles of the free market system” proposed by Adam Smith in his book, The Wealth of Nations, published in 1776.

Chapter VII, “Tearing Down ‘The House of World Order” describes how “the international rules-based order,” which is a “euphemism for globalism” that is the basis for the World Trade Organization.  Curtis wrote ”The pandemic showed that the true cost of the China price is very high indeed.   It showed how an economy reliant on global supply chains and just-in-time inventory management is fragile.”

In Chapter VIII, Curtis outlines how to hold China accountable, and Chapter IX describes how to defund China.  In chapter X, Curtis provides common sense on Communist China, and Chapter XI outlines a plan to restore our economic independence.  Chapter XII concludes with a new declaration of independence. 

I don’t want to spoil any of these well thought out prescriptions by providing any quotes from these chapters.  It’s critical that you read these chapters yourself and make your own decision on how you can play a part in saving our country.  I conclude my review with what Maxine wrote as her concluding words in the Foreword: “As I wrote these words, I can hear Curtis saying something he often told me. ‘Each of us has a part to play to stand up for American. You can change the world, one person at a time.’”

I have endeavored to change the world as one person by writing three books and hundreds of blog articles and will continue to do so until the day I die or can’t write or speak any longer. I’m enjoying the greater role I now have the opportunity to play as part of Industry Reimagined 2030 to revitalize American manufacturing to achieve the goals of our vision.  I urge you to take these words of Curtis to heart and do what you can do so our country can become independent from China.

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Action on China or Yet Another Charade by Congress?

Tuesday, January 17th, 2023

On January 10, 2023, the House voted to pass a resolution “to create a select committee focused on U.S. competition with China, fulfilling a campaign promise Republicans made in the lead-up to the 2022 midterm elections.”

An article in The Hill, stated: “The select committee, chaired by Rep. Mike Gallagher (R-Wis.), will zero in on the Chinese Communist Party’s economic, technological and security progress and the strategic competition between Beijing and Washington. The resolution tasks the panel with investigating and submitting policy recommendations on those matters.” The Committee will be “made up of seven Republicans and five Democrats” and “has the authority to hold public hearings.”

The question that should be on everyone’s mind is — Will this Committee have any real impact when Congress has not taken any action on recommendations provided by the annual report they have received from the U.S.-China Economic and Security Review Commission for 20 years?.  Will this Committee just be another “dog and pony” show to demonstrate that Congress is taking the threat China poses to the U.S. more seriously?

For those of you who have never heard of such a Commission, it “was created on October 30, 2000 by the Floyd D. Spence National Defense Authorization Act of 2001, Pub. L. No. 106–398 (codified at 22 U.S.C. §7002) …” This was after China was granted “Most Favored Nation” status, now known as Permanent Normal Trade Relations (PNTR) and allowed to become a member of the World Trade Organization by President Clinton.

The stated “purpose of the Commission is to monitor, investigate, and report to Congress on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China. “

The main duty of the Commission is to provide an annual report to Congress — “Not later than December 1 each year (beginning in 2002), the Commission shall submit to Congress a report, in both unclassified and classified form, regarding the national security implications and impact of the bilateral trade and economic relationship between the United States and the People’s Republic of China. The report shall include a full analysis, along with conclusions and recommendations for legislative and administrative actions, if any, of the national security implications for the United States of the trade and current balances with the People’s Republic of China in goods and services, financial transactions, and technology transfers…”

Each report was required to include full discussion of key factors of the U.S.-China relationship that are very comprehensive.  The following briefly summarizes the key factors:

(A) “The role of the People’s Republic of China in the proliferation of weapons of mass destruction and other weapon systems…”

(B) “The qualitative and quantitative nature of the transfer of United States production activities to the People’s Republic of China, including the relocation of manufacturing, advanced technology and intellectual property, and research and development facilities…”

(C) “The effects of the need for energy and natural resources in the People’s Republic of China on the foreign and military policies of the People’s Republic of China, the impact of the large and growing economy of the People’s Republic of China on world energy and natural resource supplies, prices, and the environment…”

(D) “Foreign investment by the United States in the People’s Republic of China and by the People’s Republic of China in the United States…”

(E) “The military plans, strategy and doctrine of the People’s Republic of China…and the implications of such objectives and trends for the national security of the United States.”

(F) “The strategic economic and security implications of the cyber capabilities and operations of the People’s Republic of China. “

(G) “The national budget, fiscal policy, monetary policy, capital controls, and currency management practices of the People’s Republic of China, their impact on internal stability in the People’s Republic of China, and their implications for the United States.”

(H) “The drivers, nature, and implications of the growing economic, technological, political, cultural, people-to-people, and security relations of the People’s Republic of China’s with other countries, regions, and international and regional entities…”

(I) “The compliance of the People’s Republic of China with its commitments to the World Trade Organization, other multilateral commitments, bilateral agreements signed with the United States, commitments made to bilateral science and technology programs, and any other commitments and agreements strategic to the United States (including agreements on intellectual property rights and prison labor imports), and United States enforcement policies with respect to such agreements.”

(J) “The implications of restrictions on speech and access to information in the People’s Republic of China for its relations with the United States in economic and security policy, as well as any potential impact of media control by the People’s Republic of China on United States economic interests.”

(K) “The safety of food, drug, and other products imported from China…”

The report was also required to “include recommendations for action by Congress or the President, or both, including specific recommendations for the United States to invoke Article XXI (relating to security exceptions) of the General Agreement on Tariffs and Trade 1994 with respect to the People’s Republic of China, as a result of any adverse impact on the national security interests of the United States. “

The 2022 Annual Report to Congress was submitted on November 15, 2022 to Patrick Leahy
President Pro Tempore of the U.S. Senate and Nancy Pelosi, Speaker of the U.S. House of Representatives. “The Commission conducted seven public hearings, taking testimony from 74 expert witnesses from government, the private sector, academia, think tanks, research institutions, and other
backgrounds.”

This report contained the following chapters:

Chapter 1 – CCP Decision-Making and Xi Jinping’s Centralization of Authority

Chapter 2 – U.S.-China Economic and Trade Relations

  • Section 1 – U.S.-China Economic and Trade Relations
  • Section 2 – Challenging China’s Trade Practices
  • Section 3 – China’s Energy Plans and Practices
  • Section 4 – U.S. Supply Chain Vulnerabilities and Resilience

Chapter 3 – U.S.-China Security and Foreign Affairs

  • Section 1 – Year in Review: Security and Foreign Affairs
  • Section 2 – China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States
  • Section 3 – China’s Activities and Influence in South and Central Asia

Chapter 4 – Taiwan

Chapter 5 – Hong Kong

The report made 39 very specific recommendations for Congressional consideration to address the key factors covered in the above chapters of the report. The Executive Summary states: “The Commissioners agreed that ten of these recommendations, which appear on page 10, are the most important for congressional action.” However, the concluding comment of the Executive Summary states: “There remains a gap between America’s growing recognition of the challenges China presents and our responses to date in dealing with them. The purpose of this report is to assess recent developments and to recommend a set of actions that Congress can consider to help meet the challenges, and seize the opportunities they present.”

Space doesn’t permit considering the ten most important recommendations, but I will at quote the shortest recommendation as an example:

#7. “. Congress create an authority under which the president can require specific U.S. entities or U.S. entities operating in specific sectors to divest in a timely manner from their operations, assets, and investments in China, to be invoked in any instance where China uses or threatens imminent military force against the United States or one of its allies and partners.”

I’ve wondered for years if any Congressional Representative actually read the annual report because I never saw any actions taken by Congress with regard to the recommendations I read in the reports of 2008, 2011 and 2016 when I was writing my three books. It seems to me that the new select Committee on China should review the Commission’s 2022 report and propose legislation to act on the recommendations of the report instead of starting all over with holding hearings.

Our national security is at stake, and we don’t have time to “start from scratch” with a new committee conducting hearings to replicate the work that has already been done by the U.S.-China Economic and Security Review Commission. It would be a far better service to our country to have Congress actually take action to pass legislation recommended by the Commission to protect our country from the plans of China to destroy our country economically and militarily to become the “super power” of the 21st Century.

Posted in General, Legislation, National security | No Comments »

2023 Offers Vibrant Opportunities for American Manufacturing

Tuesday, January 3rd, 2023

While some industry leaders are predicting continued supply chain disruptions and even an economic recession, I believe that American manufacturers are poised to enjoy vibrant opportunities in 2023 after nearly three years of economic turmoil and supply chain disruptions.

Americans had a wakeup call during the COVID-19 pandemic when we realized that we had become vulnerable because of our dependency on suppliers from other countries, particularly China.  Our national security and the health of Americans became at risk because of the supply chain disruptions of the goods we needed.

The Industry Week article, titled “Why the US Needs Manufacturing to Succeed”, on Dec. 16, 2022, stated, “With newly focused attention on supply-chain availability and resilience, U.S. manufacturing is at an inflection point. The recently passed infrastructure and CHIPS acts enable direct investment of billions of dollars into the manufacturing sector responsible for critical components, again to improve capacity and supply certainty.”

Manufacturing matters because the high-wage jobs it provides are the foundation of the middle class.  Besides these high-wage jobs, the Brookings Institution says it provides “commercial innovation (the nation’s largest source), a key to trade-deficit reduction and a disproportionately large contribution to environmental sustainability.” In fact, U.S Census data shows that manufacturing still ranks fourth out of the top five employment sectors in the country.

In their annual report dated April 26, 2022, the Reshoring Initiative reported that manufacturing added 1.3 million jobs to the economy between 2010 and 2019, after losing 5.8 million jobs over the previous 10 years. “For the second year in a row, reshoring exceeded FDI by 100%, continuing a recent trend not seen since 2013. Additionally, the number of companies reporting new reshoring and FDI set a new record of over 1,800 companies.” 

I predict that the reshoring data for 2022 will show a continued trend because with today’s heightened need for national security, sustainability and self-reliance, reshoring of U.S. manufacturing, has become, a matter of survival.

 I am not alone in predicting “vibrant opportunities” for 2023.  The Manufacturing.net blog of December 14, 2022, “Predictions for Manufacturing in 2023 – Part I,” provided thoughts on trends from several executives.

A few key thoughts on trends for the upcoming year shared by James DeMuth, CEO of Seurat Technologies, were:

  • “Localization of manufacturing near to customers will reduce economic and environmental costs. Currently, the cost to ship a 40’ container from Asia to the U.S. West Coast is 5X more than pre-pandemic levels.
  • Unpredictable policymaking and inflationary pressures will have less impact on companies that strategically place manufacturing of key components within the U.S. and near to assembly plants.
  • Domestic manufacturing will be emphasized as a matter of national security.”

A few of the key thoughts shared by Molex, a leading provider of electronic components and connectivity solutions, were:

  • Major investments in battery management, zonal architectures and EV charging stations will dominate.
  • Emerging demand for Infrastructure advancements is expected to escalate, which will place greater emphasis on the need for intelligent sensors and high-speed connectors.
  • Investments in Industrial IoT will grow. Robotics and AI will see a surge in usage, as businesses roll out investments made over the last few years.
  • The migration towards Extended Reality (XR) will move data processing to the Edge, allowing inferencing to happen more frequently in real time to match performance expectations. 

Another manufacturing.net blog article, “Key Trends to Remember for 2023,” dated December 29, 2022, predicts:

Continuing Supply Chain Disruption  – “The need to be flexible, and efficiently manage multiple sources of supply while managing overall profitability means sharing information not just within the organization but upstream, driving increased collaboration with suppliers.”

Smart Factories – smart factories encompass two domains:

  • “Improving the capture of data and the operational context to surface the information needed to inform better decisions.
  • Providing the insights and information to more stakeholders, in a more consumable manner, specifically, active rather than passive presentation of impactful data at, or even before, the time of need.”

Continued skills shortages – “Modular robotics in both the physical world and the data environment (through robotic process automation) are reaching levels of maturity that make them more accessible from the perspectives of both cost and complexity.”

Notice that investing and adopting new technologies such as IIOT, Robotics, AI, Industry 4.0 are incorporated into these predictions.  These are examples of “vibrant opportunities” that are happening now, but are not being widely scaled. 

Deloitte’s 2023 manufacturing industry outlook “explores five manufacturing industry trends that can help organizations turn risks into advantages and capture growth.”

      Technology – Investing in advanced technologies to help mitigate risk

“Manufacturers have increased their digital investment over the past few years and accelerated the adoption of emerging technologies. Companies with higher digital maturity have shown greater resilience, as did those that accelerated digitalization during the pandemic. Continued investments in advanced manufacturing technologies can help develop the required agility.”

  • Talent – Implementing a broad range of talent management strategies to reduce voluntary exits

“Addressing the tight labor market and workforce churn amid shifting talent models is expected to remain a top priority for most manufacturers in 2023. Despite a record level of new hires, job openings in the industry are still hovering near all-time highs…”

  • Supply chain – Relying on time-tested mitigation strategies with enhanced tactics to achieve supply assurance

“Of surveyed executives, 72% believe the persistent shortage of critical materials and the ongoing supply chain disruptions present the biggest uncertainty for the industry… Manufacturers are mitigating these risks not only with increased utilization of digital technology…building local capacity and moving from just-in-time sourcing to create redundancy in the supply chain.”

  • Smart factory – Taking a holistic approach to smart factory initiatives to unlock new horizons

“Many manufacturers are making investments in laying the technology foundation for their smart factories. One in five manufacturers is already experimenting with underlying solutions or actively developing a metaverse platform for their products and services.”

  • Sustainability  – Focusing on corporate social responsibility

“The fast-evolving environmental, social, and governance (ESG) landscape may require close monitoring in 2023 for manufacturers…regulators globally are also moving toward requiring more disclosures for nonfinancial metrics. Manufacturers are progressing toward their ESG commitments by making operational changes across their value chains.”

Deloitte’s recommendations are important for American manufacturers to adopt and implement into their company’s strategic action plans in order to take advantage of the “vibrant opportunities” of the future.  They illustrate that achieving the vision of Industry Reimagined 2030 will require a sea-change in the national narrative of the U.S. manufacturing industry to transform from a prevailing worldview of ‘inevitable decline’ to one of ‘vibrant opportunity.’ The vision of Industry Reimagined 2030 is for U. S. manufacturing to be revitalized, globally competitive and advancing societal interests by 2030.  The following goals will demonstrate achieving this vision through unprecedented collaboration and scaling:

  • 50,000 world-class domestic manufacturers (10x increase)
  • Additional 2+ million to the manufacturing-related, middle-income workforce (30%)
  • Reduce the environmental footprint to supply U.S. goods by 30%
  • Consumer purchases of US made goods increased by $500 million

To explore how your company needs to adapt to the disruptive trends that are taking shape, you may wish to participate in our Reimagine Dialogues. They are structured conversations to consider what the world will be like in 2030 and beyond. The purpose is to stimulate business owners and executives to reimagine their business and its environment in 2030. Why? Looking back on the past 10 years, there have been significant changes and disruptions which impacted business. Many companies were caught off guard and unprepared. Going forward, there will be further disruptions for businesses. Vibrant opportunities await those companies acting with foresight and preparedness. Distress awaits those companies caught reacting. There is no charge for participation and this it is not a free preview of another executive roundtable.  Here is the link for further information and to register. https://www.industryreimagined2030.org/

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Inventors’ Rights under Threat Again

Monday, December 12th, 2022

Inventor Rights are being threatened by the Pride in Patent Ownership Act, S.2774, sponsored by Sen. Leahy, Patrick J. (D-VT).  Sen. Leahy was the co-sponsor of the America Invents Act of 2011 that adversely changed the patent system from the best in the world to one that has eroded inventors’ rights.

The bill is looking good for either being passed by the Senate separately before Congress recesses for the holidays or passed by being attached to the National Defense Authorization Act (NDAA). The NDAA is “must pass” legislation funding the military at a time when there are credible threats of wars around the world. Attaching the Pride in Patent Ownership Act to the NDAA means it would certainly become law.

“This bill requires disclosure of certain patent-related information, including information about ownership and funding. Under the bill, if a foreign or domestic governmental entity provides funding for fees related to a patent application or for paying an attorney (or patent agent) to prosecute the patent application, the application must disclose the amount and source of such funding.

Similarly, if any governmental entity provides funding for paying a patent’s maintenance fees or for paying an attorney (or patent agent) to submit such maintenance fees, the patent owner must submit a statement disclosing the amount and source of such funding.

The bill also requires patent owners to record information about the ownership of a patent with the U.S. Patent and Trademark Office (USPTO). Patent owners must also update this information when certain rights or interests in the patent have been conveyed to another individual or entity. A patent owner may not receive increased monetary damages for infringement of that patent that occurred while the owner was out of compliance with this ownership information recording requirement.”

This bill doesn’t sound as harmful at first glance, but a closer examination shows just how harmful it is.  As a board member for the San Diego Inventors Forum, I am the liaison between our group and the national organization US Inventor, Inc., an inventor organization in Washington D.C. that advocates strong patent protection for inventors and startups.

Last week’s newsletter stated: “This bill would make gargantuan penalties for not registering a change in patent ownership in a timely enough manner. The patent owner would lose the ability to collect increased damages for willful infringement. Increased damages are about all that remain to discourage the theft of patented technologies.

The bill would also let the infringer off if the mistake in registering is considered to have been done with the intent to deceive, which every opposing attorney will argue and make you spend more time and money that you don’t have. There are other angles on this bill, like giving Big Tech an early heads up on what patents to attack using the PTAB.”

Paul Morinville, former president and founder of US Inventor wrote an article published on October 12, 2022 by IP Watchdog , titled, “The Pride in Patent Ownership Act is Big Tech Boondoggling”

“The Pride in Patent Ownership Act requires those who acquire patents to publicly register their ownership assignments with the U.S. Patent and Trademark Office (USPTO) within 120 days. Thus, it serves to identify potential patent infringement plaintiffs.

If the patent holder misses the 120-day deadline, this bill would make gargantuan penalties for not registering a change in patent ownership in a timely enough manner. The patent owner would lose the ability to collect increased damages for willful infringement. Increased damages are about all that remain to discourage the theft of patented technologies.

The bill would also let the infringer off if the mistake in registering is considered to have been done with the intent to deceive, which every opposing attorney will argue and make you spend more time and money that you don’t have. There are other angles on this bill, like giving Big Tech an early heads up on what patents to attack using the PTAB.”

He explains, “Patent infringement is about stealing technology protected by a patent – it is not about who owns the patent. Because patent applications are made public by the USPTO, fair notice is given to would-be-thieves that an invention is protected by a patent.

The patent holder is irrelevant to an infringer’s decision to steal an invention, so identifying the owner can only lead to gamesmanship, especially if the patent holder is too small to defend themselves”

He asks, “Why is Congress pushing the Pride in Patent Ownership Act through by attaching it to the NDAA? His answer: “Identifying future plaintiffs and gaming the system so Big Tech can steal patented inventions unfettered is the real reason behind the Pride in Patent Ownership Act.”

He adds, “What really matters to Big Tech incumbents is that a well-placed invention can disrupt their multibillion dollar markets and that disruption is a threat to their relevance in that market. A little guy with a big idea can truly threaten the very existence of their monopolies. Think back to Google and how their patented search algorithm sent the search icons of the day, Yahoo and Alta Vista, into the dustbin of history.”

He explained that the Supreme Court decision on” eBay v. MercExchange opened the floodgates to willful infringement by effectively eliminating injunctive relief – the ability to take the invention away from an infringer. In eBay’s public interest test, a patent holder must prove that they have a product on the market and the ability to distribute the product at the level of the infringer.

But if Big Tech steals the invention and, by leveraging their huge customer base, existing infrastructure, and endlessly deep pockets, massively commercializes the invention, no small entity will be able to pass the eBay test.

Treble damages stand as the only remaining deterrent to willful infringement. But the Pride in Patent Ownership Act will eliminate treble damages if you make an administrative error.”

Remember that besides changing our patent system from a “first to invent” to a “first to file,” the America Invents Act also created the Patent Trial and Review Board (PTAB) that has nearly destroyed inventors’ rights.  According to the U S Inventors end of the year report, “The Patent Trial and Appeal Board (PTAB) has cancelled claims in 84% of the 2,500+ patents reviewed since 2011 and most inventors do not have a half a million dollars necessary to fund a legal defense.”

We don’t need another bill taking away the last right that inventors have to protect their patents.

I urge you to take the time to call the Washington office of your Senators and tell them that the Pride in Patent Ownership Act is bad for American innovation, startups, and inventors.

When you call, you could say, “My name is _____ and I am a concerned constituent. The Pride in Patent Ownership Act is bad for American Innovation. It creates an unthinkably huge penalty for a clerical error in registering patent ownership. It provides the attorneys of huge corporations with more arguments to use against American inventors and startups. It creates another barrier for inventors and startups. It will help Big Tech gain more power and will make it harder to compete with China. 

Senator _____ needs to oppose The Pride in Patent Ownership Act including any effort to amend it into the National Defense Authorization Act. This is important for the future of America. Tell your Senators to oppose this bill.”

If they want to know more, tell them to contact the current president of US Inventor, Randy Landreneau at Randy@USInventor.org.”

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3D Printing Provides Vibrant Opportunities for American Manufacturing

Tuesday, November 15th, 2022

The 3D printing industry has experienced consistent and stable growth over the past decade, disrupting multiple industries. 3D printing and other additive manufacturing processes have made huge advancements in technology over the last several years and are playing a key role in reshoring mass production for companies in the USA. Constant improvements to materials and processes in 3D printing are being developed nearly on a daily basis.

Among the many benefits that 3D printing can offer are:

  • Reduce warehousing/inventory – as many parts as needed can be ordered in a much shorter time frame, saving not only time, but large inventory purchases and overseas shipping costs.
  • Agility – 3D printing allows design iterations and new prototypes to be made in mere hours and this allows companies to respond more quickly to market changes.
  • Eliminate material waste – plastic waste for injection molding can be recycled but not reused during production run.
  • Mitigate mass production risk – eliminates need to purchase large volume of parts to get cheaper price and reduces risk of having parts become obsolete before they are used.
  • Consolidate parts and assemblies into lower part count components

To find out more information about the latest trends I interviewed people at three companies.  The first was Melanie Lang, President of Formalloy, a company I mentored in 2017 when I was a mentor for CONNECT’s Springboard Program.

FormAlloy was founded in 2016 by CEO Melanie and her husband Jeff Riemann (CTO).  Both came out of the Aerospace and Heavy Industries and had proven expertise and leadership in machine design and engineering.

Formalloy manufactures two models of 3D printing of metals: the FormAlloy X & L-Series Directed Energy Deposition (DED) systems, which feature closed-loop control, variable-wavelength lasers. The company also offers the FormAlloy AX – Metal Deposition Head designed for robotic systems, manufacturing production lines and retrofits, the FormAlloy PF and ADF powder feeders for gradient or bi-metallic structures, and the FormAlloy DEDSmart software that enables the user to record all build parameter data that can be utilized post-build to analyze the component and verify the build quality.

Melanie told me that they exhibited at the IMTS show, held September 12-17 in Chicago. Her company was featured in the article “See Digital Manufacturing Data in Real-Time” written by Stephanie Hendrixson, Executive Editor, Additive Manufacturing.  Hendrixson wrote, “Formalloy showcased its DEDSmart capability, which displays and captures build data. Prints can be monitored in real time, and the resulting build data can be exported as a CSV file for analysis or visualized with built-in tools, such as DEDSmart Vizualize…Traceability becomes the utmost priority when dealing with highly regulated industries, and as a digital manufacturing process, additive manufacturing offers a potential opportunity: the ability to record data about each build in real-time, which can be used for quality control, part validation and process improvement

“Having access to the full set of build data, and the ability to control the inputs is really groundbreaking for metal AM, as many companies have closed off the controller and/or data,” says company founder and CEO Melanie Lang. “Our view is that we must have open access to data in order to build trust into the parts and be able to use the data for part certification.”

“Metal 3D printer supplier Formalloy has seen its powder-based directed energy deposition (DED) technology applied to produce parts for aerospace, oil and gas, defense and beyond..

 Next, I interviewed Spencer Loveless of Merit3D. Merit3D is a sister company of Dustless Technologies, located in the rural town of Price, Utah.  Spencer said, “Dustless is a family company. We’ve been around for 40 years, and my dad invented a vacuum for taking ashes out of wood stoves that evolved to a wet/dry vacuum. This evolved into different dust collection attachments for tools. We make attachments for jackhammers, attachments for grinders, and SKIL saws, and reciprocating saws, as well as many other products used by manufacturers. In the past, most of our products were made by injection molding, which has been around for 100 years and is a very tried and proven technology. One of the drawbacks that we saw with injection molding was the lack of agility to go to market very, very quickly.”

He said, “We were making most of our polymer components through injection molding, mostly through suppliers in China and were basically focusing on the design and the final assembly at our facility. Almost every time we started to produce a new product, we saw changes that we could make to improve the product, but it was too expensive to change the tooling.”

He explained, “We decided to look into 3D printing and we spent a lot of time researching 3D printing equipment and testing different materials before we settled on a couple of different systems. We needed a product that had properties and qualities of that of ABS and Nylon injection molded parts. We settled on a few solution from Adaptive3D and Photocentric. Both companies had great solutions for ABS like and rubber like materials. We needed 3D printable materials to simulate molded rubber and molded nylon and settled on using some new technologies and developments.

We spun off Merit3D as a sister company, to make 3D printed parts for our vacuum products and to help other manufacturers ramp up with production 3D printing.  In fact, we have had so much demand for our 3D printing that so far, it’s pretty much been limited to other companies in Utah.  One of our customers is Phone Skope, and we can print thousands of phone cases in a day.

He concluded, “We are very excited to see how manufacturing is changing. No longer are companies required to spend a lot of money up front for expensive tools or molds. New technologies are allowing us to mass produce parts at scale and bring manufacturing back to America. Merit3D is a game changer for small to medium businesses to advance their products very quickly”

Lastly, I interviewed Dan Searle, Sr. Account Executive for Stratasys Direct Manufacturing, currently working out of their facility in Tucson, AZ.  I’ve known Dan since 2012 when he was Business Development Manager for Solid Concepts, which was acquired by Stratasys in 2014. 

Stratasys Direct Manufacturing is the parts provider branch of Stratasys. They produce 3D printed parts for customers in eight different additive technologies including metals as well as three conventional manufacturing technologies. Stratasys Direct has over three decades of experience with 3D printing and has been at the forefront of using 3D printing in production applications in different industries but primarily in Aerospace.  With six manufacturing facilities, a world class quality control system ranging from file interrogation, material verification to quality control inspections and more they manage quality and mitigate risk at every step of the product life cycle. They now have nine locations in the U.S. for direct manufacturing and offer over 90 different materials including engineering grade polymers and metals in additive.

Dan said, “Stratasys Direct pioneered aerospace production in additive manufacturing in 2006 and have worked with companies like Airbus, Bell, Boeing, Boom Aerospace, General Atomics Aeronautical Systems, and Northrop Grumman. We have the largest fleet of industrial 3D printers in north America and unparalleled expertise in additive manufacturing that allows us to harness the power 3D Printing in end use part production. One of the advantages of 3D printing is reducing the number of components in an assembly.  For example, one assembly for the Atlas V rocket was reduced from 140 tradition parts to 16 FDM parts for a costs savings of 57% and 89% reduction in parts. Besides interior and cabin parts, we now make flight worthy parts such as air intake plenums and manifolds.”

Dan concluded, “Stratasys Direct manufacturing has seen AM heavily adopted in the Aerospace industry. It is used for functional prototypes, tooling support and end use flight hardware. For one OEM customer we have printed over 128,400 flight parts over the last 6 years. We are now seeing customers come to us to print flight critical components with AM.”

These companies are excellent examples of the vibrant opportunities now available in American manufacturing.  They show the feasibility of transforming the prevailing worldview of American manufacturing from “inevitable decline” to one of “vibrant opportunity” that is the vision of the non-profit which I co-founded with Doug Berger — Industry Reimagined 2030. Our goal of having an additional 50,000 world class manufacturers by 2030 is achievable with the adoption of 3D/additive manufacturing technologies and Industry 4.0 technologies as well as reshoring of manufacturing from offshore to America. 

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