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Is There Really Free Career Technical Training?

Tuesday, November 19th, 2013

Yes, there is, at least in California. I was recently given a tour of the San Diego Continuing Education headquarters facility by Dean Jane Signaigo-Cox and Vice President Brian Ellison. Continuing Education is the new name for what we used to call Adult Education where you could go back to school to get your high school diploma or take enrichment classes in art, cooking, foreign languages, sewing, etc.

While these types of classes are still being offered to adults over the age of 18, it is now possible to get technical job training and even certification in a variety of careers, such as automotive, computers, electronics, graphics, upholstery, pipe fitting, and welding. Unbelievably, these classes are free in California.

In 2006, then Governor Schwarzenegger identified workforce skills development, referred to as Career Technical Education (CTE), as a state priority. The passage of an education bond provided $500 million for CTE initially, and subsequent budgets have continued to fund the program. The plan was approved by the California State Board of Education on March 12, 2008 and approved by the U.S. Department of Education on July 1. CTE is delivered primarily through K-12 schools, adult-education programs, and community-college programs. CTE programs are closely linked with those of workforce and economic development agencies and industry and rely on the participation of community-based organizations. The programs are as follows:

California K-12/Adult Programs

  • Elementary school awareness and middle school introductory CTE programs.
  • High school CTE, offered through 1,165 high schools in single courses, in course sequences or through over 300 integrated “learning communities.”
  • Career pathways and programs through 74 regional occupational centers and programs.
  • Adult education offered through 361 adult schools and more than 1,000 sites.
  • Apprenticeship offered through more than 200 apprenticeship program and adult schools

The Continuing Education Center I visited is under the jurisdiction of the San Diego Community College District, but all of the California Community Colleges throughout the county and state offer the following programs. 

  • Occupational programs at 109 colleges, leading to certificates, associate degrees, and transfers to four-year universities.
  • Noncredit instruction for short-term CTE programs offered by 58 colleges.
  • More than 160 apprenticeship programs at 39 colleges.
  • Middle College High Schools (13) and Early College High Schools (19).
  • Tech Prep programs delivered through 80 Tech Prep consortia, comprising 109 colleges and their feeder high schools.
  • Contract education provided to organizations for their employees.

San Diego’s Continuing Education program has been making history since 1914, when it started providing job training for returning military veterans from WWI. Year after year, more than 74,000 students are served annually by the seven Continuing Education campuses and many offsite community locations throughout the city of San Diego.In 2013, more than 3,600 students received Certificates of Completion for programs through San Diego Continuing Education (accreditation through the Western Association of Schools and Colleges, the highest level of accreditation a California school or college can receive.)

According to Jane Signaigo-Cox, who oversees many of these career technical programs, “more than 1800 of the certificates awarded were for these Career Technical Education job training programs. Since students spend an average of 65 to 70 percent of course time using hands on tools and technology to learn relevant skills for today’s jobs, they are prepared for an entry level position in their field after completing these courses.”

The Little Hoover commission, a non-partisan legislative agency, named San Diego Continuing Education as a top model program for efficiency and effectiveness in California. The Commission produced an in-depth, well-documented report, “Serving Students, Serving California:  Updating the California Community Colleges to Meet Evolving Demands.” The report was presented to the California governor and legislature and includes several recommendations that suggest how programs could and should function in today’s world.

San Diego’s Continuing Education is the largest adult educational institute of its kind in the nation and has been invited to join 45 academic institutions in the Global Corporate College Network. The Global Corporate College was founded by leaders of entrepreneurial colleges and universities and leverages the best learning industry practices with the resources of accredited academic institutions.  The organization is committed to helping employers realize the full potential of their workforce by providing training opportunities for corporations and organizations throughout the U. S. and Europe and currently services 17 industry sectors. In San Diego, this type contract education is provided through the Employee Training Institute, which offers online training, classroom training, and on-the-job-site training for a fee. Hundreds of customized training options are available to San Diego businesses. Contact the Director of ETI at 619-388-1282 to learn more.

Since I am aware of the shortage of skilled workers in the manufacturing sector, I was particularly interested in the type of career technical training available to address this need. My tour of the Educational Cultural Complex campus included the pipe fitting and welding training department. I was amazed at the number of Miller Electric welding stations they had to teach students in both MIG and TIG welding techniques. They even had one of the newer Lincoln Electric welding simulators that I got to try out at the FABTECH show in Las Vegas in 2012. Because of budget cuts for staff, there is currently only one daytime welding class of about 25 students and one evening class this fall.

After certification, entry-level pipe fitters can earn $17/hour and welders can earn $19/hour, which is a very good entry-level wage in San Diego. Journeymen welders can make double this wage. These are no easy programs:  both require 1,200 hours of training, completed in 48 to 52 weeks. The Continuing Education program provides Career Development Services (CDS) that helps students with resume preparation, interview tips, and specific information about companies that are looking for certain skills.  Regular job fairs are hosted at various campuses. Students also have the opportunity to meet with a career counselor who can help with identifying and setting goals that will keep students on the right track toward employment.

Most of the career technical training requiring specific equipment is only available at the Educational Cultural Complex, but electronic technician training is only provided at the mid-city campus. Training for machinists is only available at the San Diego City College campus as a for-credit college class.

Even after losing more than a half million manufacturing jobs since 2008, “California is by far the number one state for manufacturing jobs, firms and output – accounting for 11.7 percent of the total output, and employing 9 percent of the workforce. CA manufacturing generates $229.9 billion, more than any other state.”

Manufacturing’s tarnished image has caused Gen X and Millennials to not even think of manufacturing as a career. As Sr. Editor, Patricia Panchak of Industry Week, wrote in her November 7th article, “Manufacturer’s Agenda: Toward a New Skilled Workforce Shortage Solution,”, “too many people viewed manufacturing jobs as low-paying, “dumb, dirty, dangerous and disappearing.”

This is certainly not true in San Diego and other parts of California. The majority of manufacturing plants in California are clean and high-tech compared to the heavy industry of the mid-west and so-called “Rust Belt.” Manufacturing jobs provide the opportunity to make higher wages according to many past Industry Week articles that have highlighted“statistics showing that manufacturing jobs on average pay higher salaries than jobs in other sectors.”

If you are in a low-paying or dead-end job, you may want to consider getting the technical training you need to obtain a higher paying job in manufacturing through your local community college or continuing education program.

If you are a company owner or member of the management team of a manufacturing company, you may want to contact your local community college or continuing education center to provide job offers to graduates of their certification programs or get your existing employees trained in new skills.

If you don’t live in California, then try a search using “career technical training” in your state to see what you can find. It may change your life or help you find the skilled workers your company needs.

 

 

 

 

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Posted in Education, Jobs, Manufacturing, Training | 1 Comment »

Second Annual Manufacturing Day Celebrates American Knowhow

Tuesday, September 24th, 2013

The mission of Manufacturing Day 2013 on Friday, October 4th is to highlight the importance of manufacturing to the nation’s economy, address common misperceptions about manufacturing by giving manufacturers an opportunity to open their doors, and show what manufacturing is — and what it isn’t.

Manufacturing Day has become an annual national event after its inaugural year in 2012 that is executed at the local level supporting hundreds of manufacturers across the nation that host students, teachers, parents, job seekers and other local community members at open houses designed to showcase modern manufacturing technology and careers.

In its first year, more than 240 events were held in manufacturing facilities in 37 states and more than 7,000 people participated. This year’s celebration will feature open houses, public tours, career workshops and other activities to increase public awareness of modern manufacturing. Events also will introduce manufacturers to business improvement resources and services delivered through the MEP’s network of hundreds of affiliated centers across the country.

By working together during and after Manufacturing Day, manufacturers will begin to address the skilled labor shortage they face, connect with future generations, take charge of the public image of manufacturing, draw attention to the many rewarding high-skill jobs available in manufacturing fields, and ensure the ongoing prosperity of the whole industry.

This year’s Manufacturing Day is being co-produced by the Fabricators & Manufacturers Association, International (FMA), the National Association of Manufacturers (NAM), the National Institute of Standards and Technology’s (NIST) Hollings Manufacturing Extension Partnership (MEP), Industrial Strength Marketing which is a leading industrial B2B marketing agency, and the Manufacturing Institute. The national media partner for the event is the Science Channel.

“Manufacturing Day is a great opportunity to shift Americans’ perception that it is not our grandfather’s manufacturing anymore and to showcase the tremendous career opportunities manufacturing has to offer,” said NAM President and CEO Jay Timmons. “This day is an engaging way to attract young people and get them excited about pursuing a career in a technology-driven, innovative environment that will also provide a good-paying job. We encourage all manufacturers and manufacturing associations to get involved and share what we already know—manufacturing makes us strong.”

A long list of trade associations and private companies have joined the effort as sponsors that includes Shell and the Alliance for American Manufacturing at the Gold level, The Association of Manufacturing Excellence, Precision Metalforming Association, SME Education Foundation, Association for Manufacturing Excellence, the Plastics Industry Trade Association, and IHS GlobalSpec at the Silver level, as well as many others at the Bronze level. The long list of endorsers on the website includes my own www.savingusmanufacturing.com organization.

“We’re honored to be a part of Manufacturing Day this year and look forward to helping make it a success,” said Scott Paul, president of AAM. “An innovative and growing manufacturing base is vital to America’s economic and national security, as well as to providing good jobs for future generations.”

“The co-producers could not be more pleased that these organizations and companies, which work on such an integral level with all sectors of the manufacturing industry, are putting their full support behind Manufacturing Day,” said Ed Youdell, president and CEO of the Fabricators & Manufacturers Association. “Their reputation and their reach to professionals in the industry, as well as educators and students, will help generate participation in Manufacturing Day events across the nation.”

The SME Education Foundation sees this is an opportunity for educators and parents to visit local employers with children, particularly those in middle school, to get them excited about the career opportunities available for those who have critically important STEM (science, technology, engineering and mathematics) skills.

“The SME Education Foundation is dedicated to opening multiple pathways for young people to find fulfilling, high paying careers in manufacturing.  Manufacturing Day is an opportunity to highlight manufacturing as vital to our economy and a career path that helps to growing wealth for the individual and for our nation,” said Bart A. Aslin, CEO, SME Education Foundation.  “Positive national media attention can help to dispel misconceptions about industries that provide safe, clean work environments while manufacturing products that improve standards of living in our global economy.”

Supported by this group of co-producers and industry sponsors, Manufacturing Day is designed to amplify the voice of individual manufacturers and coordinate a collective chorus of manufacturers with common concerns and challenges. The rallying point for a growing mass movement, Manufacturing Day empowers manufacturers to come together to address their collective challenges so they can help their communities and future generations thrive.

From now until Manufacturing Day, October 4th, enter the Manufacturing Day Sweepstakes to win a trip for two to a 2014 race of your choice, courtesy of Shell Lubricants. Eligible races include any of the Sprint Cup Series or Nationwide Series races during the 2014 season. The winner will be selected on October 7, 2013 and will be contacted shortly thereafter to claim their prize. Click here to enter today!

According to the 2012 Public Perception of Manufacturing report by the nonprofit Manufacturing Institute, 80 percent of Americans believe manufacturing is important to our economic prosperity, standard of living and national security. Yet, only 30 percent would encourage their children to go into manufacturing as a career. The hope is that by providing media, educators, parents, and kids with an inside look at the high-tech world of manufacturing this percentage will begin to grow.

With the gap growing each year between the skills students learn in school and those they will need on the job, it is increasingly difficult for manufacturers to find and hire qualified employees. By promoting Manufacturing Day, manufacturing associations and other organizations led by NIST MEP centers and the FMA said they want to remove some of the myths surrounding manufacturing. For example, manufacturing is a solid, long-term career choice for qualified candidates—including the young people who will form the workforce of tomorrow.

Here is a summary of a few reasons why we should acknowledge the importance of manufacturing by observing October 4th as Manufacturing Day that are outlined in greater detail in the chapter on “Why we should save American Manufacturing” from my book Can American Manufacturing be Saved? Why we should and how we can:

  • Manufacturing is the foundation of the American economy, and high-paying manufacturing jobs spurred a robust and growing economy and improved our quality of life. Manufacturing jobs were responsible for the lower working class rising into the middle class the last century.
  • Manufacturing is critical to our national defense because American manufacturers supply the military with the essential needed to defend our country. Without a strong manufacturing industry, America could lose future wars.
  • Manufacturing wages and benefits are 25-50 percent higher than non-manufacturing jobs. Only 16 percent of today’s workers earn the $20/hour ? down 60 percent since 1979.
  • United States is the world’s third largest exporter after China & Germany. Manufactured goods make up more than 60percent of U. S. exports, and high-tech products are largest export sector – four times as much as agriculture.
  • Manufacturing supports states’ economies through the taxes they pay. Manufacturing is the largest sector in 10 states, second largest in 9 states, and third largest in 21 states. Losing the critical mass of manufacturing will result in larger state and federal budget deficits. Over 90 percent of all manufacturers are small businesses of less than 100 people.

In my home town of San Diego, Manufacturing Day is being promoted by the California Governor’s Office of Business and Economic Development, the County of San Diego, the City of San Diego, the San Diego Regional Economic Development Corporation, the East County EDC, the San Diego North County EDC, CONNECT, California Manufacturing Technology Consulting (CMTC), the Tijuana EDC, and D&K Engineering. The day starts off with:

8 a.m.  Breakfast and Networking
8:30 – 10 a.m. Program
San Diego City College, Corporate Ed Center
1551 C Street, San Diego, CA 92101

Moderator: Mark Cafferty, President & CEO, San Diego Regional EDC

Panelists joining the conversation are:
Stephan Aarstol, Founder & CEO, Tower Paddle Boards
Alex Kunczynski, President, D&K Engineering

Rick Urban, COO/CFO, Quality Controlled Manufacturing Inc.

Chris Wellons, Vice President of Manufacturing, Taylor Guitars

Unfortunately, this event is already sold out, but you can add your name to the wait list at www.october4mfgday.eventbrite.com.

Tours:  Following this Kick-off breakfast, you are invited to tour various local manufacturers who have agreed to open their doors to the community. Further information and registration to attend the tours can be found at www.MFGDay.com. Click on “Attend an Event” to find a tour near you.

To learn more about Manufacturing Day or to sign up to host or participate in one of the events, log on to www.mfgday. Organizations that wish to become involved as official sponsors of this program may email info@mfgday.com.

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Posted in Economy, Education, Jobs, Manufacturing, National security, Training | No Comments »

Why it is Important to Know Where Products are Manufactured

Tuesday, September 3rd, 2013

At a time when more consumers are paying attention to where products are made and expressing greater interest in buying “Made in USA” products even if they cost more, there are changes proposed that could impact consumers being able to make decisions on the products they buy.

The first reason we need to know where products are manufactured is to have a clear picture of whether the nearly six million manufacturing jobs we have lost since 2000 have been mainly the result of technologic advances and higher productivity in the U. S. or whether outsourcing to foreign countries like China has been the main cause.

For decades, there have been companies referred to as manufacturers that I called “virtual manufacturers.” in my book. These companies have no manufacturing capability in-house. Sometimes they don’t even have the personnel to design the product. The founders of the company may have a concept of the new product they wish to develop and market, but they don’t have the technical expertise to do the design and development themselves. They hire outside consultants to design and develop the product or subcontract the design, development, and prototyping to a company specializing in these services. At the extreme end, they subcontract out everything from start to finish, including engineering design, procurement of parts and materials, assembly, test, inspection, and shipping to the end customer. They may handle marketing and customer service themselves, but sometimes they even subcontract these functions to marketing and customer service firms. There was no real impact on U. S. manufacturing data as long as these U. S. companies outsourced their manufacturing to other domestic manufacturers.

However, in the past 20 years, these virtual manufacturers have increasingly outsourced most or all of their manufacturing offshore. This resulted in U. S. federal agencies involved in economic data labeling them as “factoryless goods producers” and classifying them as “wholesale traders,” if they didn’t do any domestic manufacturing themselves. Apple, Nike, and Cisco are some of the more well known “factoryless goods producers” because of having their manufacturing outsourced offshore.

Now, U.S. federal agencies involved in economic data want to change the way they classify companies that have outsourced their U.S. production to foreign manufacturing companies. They are proposing to reclassify these “wholesale traders” as “domestic manufacturers.” This means that their sales would be counted as U.S. production and their products that are made offshore and imported into the U. S. for sale would no longer be counted as imports.

As reported in the August 20th issue of Manufacturing & Technology News, the purpose of this change is supposedly “to determine how much products are been offshored and to pinpoint the number of American companies that are linked to manufacturing, even though they don’t make the products they design and sell.”

For the past decade, “U.S. statistical agencies found that the North American Industry Classification System (NAICS) did not provide a clear definition of companies that outsourced their production overseas, but that still owned the design and controlled the production and sale of goods from that foreign production.” A Manufacturing Transformation Outsourcing Subcommittee was formed in 2008 by the Economic Classification Policy Committee “to define outsourcing and identify “characteristics of establishments that outsource manufacturing transformation activities.” The committee was made up of representatives from the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Census Bureau and the White House Office of Management and Budget.

“The committee decided that all factoryless goods producers should be classified in manufacturing, the specific industry classification based on the transformation production process used by the contractor”  and recommended that the classification changes be implemented in the 2017 North America Industry Classification System.

There is disagreement on whether this change would be beneficial as it would impact a dozen major government statistical series, such as industrial production, producer price indexes, and industrial productivity.

In my opinion this change would result in data that is misleading and wouldn’t be giving a true picture of American manufacturing. We would not be able to know how much is actually being produced in the United States if we count imports from offshore as if they are domestic production. This change could radically increase U.S. production statistics and reduce our import statistics making our trade balance artificially look better.

A better way to find the answer to this question has been provided by San Diego entrepreneur and businessman, Alan Uke in his book, Buying America Back:  A Real-Deal Blueprint for Restoring American Prosperity. Mr. Uke writes, “Our future as a nation and as individuals is being threatened. Since our spending habits as consumers have contributed to this situation, we can change our spending habits to reverse it… in order for a change to happen, consumers must demand to be more honestly and completely informed about what they are buying and where their money goes. To this end, we are starting a consumer movement to bring this to the attention of Congress…The goal of this movement and of this book are to encourage people to change their buying habits toward purchasing things that help the U. S. economy and job situation.”

He points out that the current information provided on country of origin labels is “misleading, incomplete, inaccessible, or all of these…In order to support our economy and American industries, we must have easily accessible, clearly communicated, and truthful information about a product’s entire origins.”

Mr. Uke recommends that consumers be provided the country of origin information they need at the point of sale whether at a store or online and presents a proposal for the U. S. government to require detailed country-of-origin labels for all manufactured products similar to the nutritional information labels now required on packaged food products. He feels that it is important for consumers to “see the last place where the product was manufactured” and “to discern what portion of its components came from other places” by use of what he calls a “Transparent Label.” It would include the cost by country of origin by both percentage and trade ratio, as well as the location of the company’s headquarters. The percentage is the total cost of the product that is produced or transformed in a particular country. The trade ratio describes the amount of exports vs. imports for a country in relation to the United States. This label would enable consumers to make better decisions when they buy manufactured goods.

The second reason we need to know where products are manufactured is to protect ourselves from unsafe, defective, toxic, and counterfeit products. The U. S. Consumer Protection Safety Commission’s website provides a monthly list of products that have been recalled, and month after month, more than 90% are made in China.

A label similar to Mr. Uke’s recommendation would help companies comply with the new product safety standard (ISO 10377) recently released by the International Standards Organization (ISO):  The “Consumer Product Safety — Guidelines for Suppliers” standard (ISO 10377). The summary written by Dr. Elizabeth Nielsen, Chair of ISO/PC 243, Consumer product safety and a Canadian government Scientist, Regulator and Policy Analyst, states, “Regardless of company structure and organization, ISO 10377 will affect all suppliers irrespective of their role in the supply chain and all types of products whatever the origin.”

“Products should be traceable and carry a unique identifier that is labelled, marked or tagged at the source. This also goes for raw materials, components and subassemblies. Suppliers should insist on properly identified products from vendors and be able to trace products back to their direct source and identify the next direct recipient of the product in the supply chain.”

This standard has a different purpose for labeling than Mr. Uke’s label:  to protect consumers from unsafe, defective, toxic, and counterfeit products. “Products are safer when they carry documentation about the product, its design, its production and its management in the market…Suppliers should be able to recognize a product’s development through its documentation and trace its design, risk assessment, hazard analysis and testing decisions back to its conception.”

ISO 10377 is “aimed at small and medium sized enterprises (SMEs) as well as larger firms and offers risk assessment and management techniques for safer consumer products. This standard will allow retailers and OEMs to trace every part and component of a product through the supply chain to determine exactly where a defect or a counterfeit has occurred.” The standard is divided into four main sections outlining general principles that promote a product safety culture in a company, safety in design, safety in production and safety in the retail marketplace.

Either Mr. Uke’s “Transparent Label” or the label required by ISO 10377 would satisfy both reasons for wanting to know where products are manufactured. This type of label would provide protection for consumers from unsafe, defective, toxic, and counterfeit products and would help us to recognize the main cause of the loss of manufacturing jobs in the United States. We need to face up to the true cause of the loss of manufacturing jobs before we can get any consensus of what to do about it by means of our national policies. We need to oppose reclassifying “wholesale traders” as domestic manufacturers and support “country of origin” labeling by contacting our Congressional representatives.

 

 

 

 

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“Death by China” Film Shows where all the Jobs Have Gone

Tuesday, August 27th, 2013

Are you wondering where all the good jobs have gone? Why do we have less tax revenues creating an out-of-control Federal budget deficit? Why are you working harder for less money than you did in the 1990s?

Death by China, based on the book by Peter Navarro and Greg Autry, shows how the world’s most populous nation and soon-to-be largest economy is rapidly turning into the planet’s most efficient assassin through its shoddy and even poisonous products and environmental pollution. China’s perverse form of capitalism combines illegal mercantilist and protectionist weapons to pick off American industries, job by job. Meanwhile, America’s executives, politicians, and even academia remain silent about the looming threat. To read my full review of the book, click here.

Director Peter Navarro is an internationally acclaimed expert on U.S.-China relations, a regular contributor on CNN, CNBC, MSNBC and the Huffington Post, and a professor of economics at the University of California, Irvine. Greg Autry is an entrepreneur, writer, and educator. He has published extensively on business, economics, trade policy, China and space. Greg serves as Senior Economist for the American Jobs Alliance and economist for the Coalition for a Prosperous America. Both Navarro and Autry have testified to the U.S. Congress on China issues.

To Navarro and Autry, the success of the film will be measured by the ability of the public to spur politicians to finally recognize that “the best jobs program for America is trade reform with China – not more empty fiscal and monetary stimulus.”

The film review on “rottentomatoes” states, “Death by China pointedly confronts the most urgent problem facing America today – its increasingly destructive economic trade relationship with a rapidly rising China. Since China began flooding U.S. markets with illegally subsidized products in 2001, over 50,000 American factories have disappeared, more than 25 million Americans can’t find a decent job, and America now owes more than 3 trillion dollars to the world’s largest totalitarian nation. Through compelling interviews with voices across the political spectrum, Death by China exposes that the U.S.-China relationship is broken and must be fixed if the world is going to be a place of peace and prosperity.

The New York Times review states, “The film, based on a book by Peter Navarro and Greg Autry and directed by Mr. Navarro, is blunt as can be in working the premise that the admission of China to the World Trade Organization in 2001 has been catastrophic for the American economy. The influx of Chinese goods has left American manufacturers unable to compete, the film says, and Chinese leaders have been brashly ignoring rules about things like currency manipulation to make sure that their country’s products remain artificially cheap.”

In this review article, Daniel M. Slane of the United States-China Economic and Security Review Commission said, “American companies cannot compete because they’re not competing with Chinese companies, they’re competing with the Chinese government.”

The New York Post review states, “Narrated by Martin Sheen, the film looks at what it calls America’s increasingly destructive trade relationship with China — we owe them $3 trillion — which goes back to the Asian nation’s entry into the World Trade Organization in 2001. We hear claims that instead of helping both lands, as President Clinton promised at the time, the deal has resulted in the loss of millions of American jobs and the influx here of shoddy, even deadly Chinese products. Death by China gives that nation a black eye for currency manipulation, intellectual-property theft, political persecution and serious environmental pollution.”

Paste Magazine’s review states, “With his Harvard pedigree and his acclaimed credentials, Navarro is an authority on the subject of the U.S.-China trade relationship. Death by China features him along with several geopolitical experts and activists spelling out exactly how and why this nation’s corporate-political nexus sold out the American worker and consumer to the tune of thousands of factories, millions of jobs and trillions in debt owed to the Chinese.

And who’re the losers in this scenario? Interviews with out-of-work factory workers, college graduates and with both Democratic and Republican legislators paint a picture of widespread blight as unemployment destroys communities and consumers find themselves without any choice but to buy Chinese-made goods.”

Navarro commented: “My goal in creating the film is to draw attention to the urgent need for trade reform with China, and to ensure that it becomes a top priority for legislators. We hope to give the highest possible visibility to an issue that is all too often ignored by politicians, journalists and consumers alike – the incredibly corrosive loss of America’s once formidable manufacturing base to a cheating China. The fact that our government has turned a blind eye to China’s deceitful policies has had an enormously negative impact on the American economy and the standard of living of millions of Americans.”

Francesca McCaffery of Blackbook Magazine said, “A truly life-changing, mouth-dropping documentary film…Peter Navarro’s ‘Death by China’ grabs you by the throat and never lets go…But watch this movie, and you will, in turn, start glowing with a newfound, hit-on-your-head awareness.”

The Hollywood Report review points out that “Narrator Martin Sheen warns upfront that it’s important to “distinguish clearly between the good and hard-working people of China, and their repressive Communist government victimizing American and Chinese citizens alike.”

Death by China made its theatrical debut in Los Angeles and New York in June of 2012 and played theatrically in over 50 cities across the U.S. including key manufacturing cities such as Akron, Chicago, Dayton, Detroit, Cincinnati, Columbus, Detroit, Milwaukee, Pittsburgh, Toledo, Youngstown and many more.

This was opposite of the typical course of documentary films being shown at festivals first and then in theaters. Navarro and Autry wanted to open the film in theaters throughout the swing states during the 2012 presidential election to draw attention to the issue China’s exploitation of our economy.

After the election, Death by China made a series of festival appearances through the end of June 2013. All total, the film was shown at more than 25 festivals – from Beaufort, South Carolina; Macon, Georgia; and New York City to Green Bay, Wisconsin; Sedona, Arizona; and San Luis Obispo, California.

As part of its festival activity, the film garnered three best documentary awards from festivals in Beverly Hills, Durango, and Studio City. “It was a Best Doc nominee at the Cape Fear Independent Film Festival, was first runner up at the Myrtle Beach festival, and received a Golden Ace award from the Las Vegas Film Festival.”

Don’t miss the following opportunity to see this film. If you are not located in the region, please check the Death by China website for other screenings. If you or your organization would like to sponsor a screening, please contact Peter Navarro.  Of course, you can also order the DVD to watch on your own TV.

The Coalition for a Prosperous America presents:  A Screening of Death by China, A Documentary Film by Peter Navarro and Greg Autry

When: Wednesday, September 18th, 2013, Doors open 6:00 PM, event starts at

6:30 PM.

Where: AMN Healthcare, 12400 High Bluff Drive, San Diego, CA 92130 (exit Carmel Valley Road off Int. 5)

Cost: $10.00 (refreshments served)

Agenda

Introduction: Michele Nash-Hoff, Chair, California chapter of the Coalition for a Prosperous America

Film: “Death by China”, directed by Peter Navarro and produced by Greg Autry, CPA Economist

Discussion/Q and A: Greg Autry, Producer, Death by China, Economist, Coalition for a Prosperous America

Following the film there will be a discussion and Q and A to talk about how the Coalition for a Prosperous America is working to build a smart trade policy that will counter China’s, and other nation’s, trade cheating and move manufacturing back to America.

Register today at the CPA site: prosperousamerica.org

For more information, please contact Sara Haimowitz (sara@prosperousamerica.org,)

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Posted in Economy, Jobs, Manufacturing, Outsourcing, Trade Policy | 1 Comment »

Reshoring is Answer to Corporations Cutting U. S. Jobs and Adding Jobs Offshore

Tuesday, August 20th, 2013

As originally reported in a Wall Street Journal article in April 2011, U. S. Department of Commerce data shows that major U. S. corporations cut their work forces in the U. S. by 2.9 million jobs during the 2000s while increasing their employment overseas by 2.4 million.

This trend continues according to data revealed by Trade Assistance Adjustment (TAA) filings made to the U. D. Department of Labor in a recent article in Manufacturing & Technology News. TAA provides benefits and training to workers displaced by trade and sifting manufacturing offshore. The article lists 50 companies that laid off workers in the first three weeks of July, about 80% of which were manufacturing jobs. Other types of jobs displaced were customer service, technical support, information technology, data processing, and even engineering design. TPA assistance is like putting a bandage on after your arm was cut off.

While over 25 companies were shifting manufacturing offshore to China or India, it was surprising to see that Mexico was the next highest location to which manufacturing was being shifted. The reason for this is that new data produced by the Bank of America shows that labor rates in Mexico could be lower than China by as much as 20%, quite a change from 10 years ago when Mexican labor rates were 188 percent higher than China.

Other reasons for this switch to Mexico are lower transportation costs, faster delivery, higher productivity from automation, more reliable quality, and better payment terms than from China. As a resident of the border region of California and Mexico, I have seen this first hand. “Nearsourcing” to Mexico is occurring when reshoring to the U. S. is not economically justifiable at the present time.

Our major regional organization, CONNECT, has a Nearsourcing Initiative focused on matching San Diego companies in need of outsourcing with the region’s local manufacturers. “The program includes workshops that educate the region’s innovation entrepreneurs on the benefits of contracting with local manufacturers, including reduced time to market, increased innovation and reduced risk and costs; and a matchmaking program that helps San Diego innovation companies in need of outsourcing to Innovate Locally, Grow Globally – to connect and contract with qualified San Diego production resources.” Educational workshops and networking meetings have been held over the past two years, and manufacturers are encouraged to seek local vendors or even be matched with regional vendors by using the www.connectory.com database of primary industries, developed by the East County Economic Development Council, and the CONNECT Resource Guide.

CONNECT’s SME (Small-Medium Enterprises) Operations Roundtable group has also taken the lead in educating San Diego’s regional manufacturers on how to use the Total Cost of Ownership EstimatorTM developed by Harry Moser of the Reshoring Initiative, by means of a presentation I gave with a local contract manufacturer in February as an authorized speaker on behalf of the Reshoring Initiative.

It is crucial for American companies that do not have offshore plants to be trained on how to do a true Total Cost of Ownership Analysis using the TCO Estimator as a counter to the continuing trend of offshoring manufacturing jobs by multinational corporations that have facilities all over the world. For multinational corporations, the U. S. market represents a smaller piece of a bigger whole in the global economy. While offshoring may no longer be a relentless search for the lowest wages, many corporations go to Brazil, to China, to India, and other countries because that is where their customers are located.

I believe that training people performing two particular job functions is one of the keys to facilitating more reshoring ? supply chain personnel and Chief Financial Officers (CFOs). I have had the pleasure in the past year of speaking to three regional APICS’ chapters and a four-state regional conference last weekend. APICS is composed of supply chain/logistics people. I learned that in the 13th edition of APICS’ dictionary, the definition of Total Cost of Ownership is:  “In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream.” This is a good definition, not as complete as mine, but good. If supply chain personnel had utilized this definition in the past decade, a great deal of offshoring would never have occurred.

My question to conference attendees was what prevented the utilization of this good definition. One answer was:  We were not allowed to consider anything but the piece price and sometimes transportation costs in making the decision to select domestic vs. offshore vendors. Another answer was:  We were being mandated by upper management to outsource to China to save money. Others thought that their managers were doing what everyone else was doing; i.e., going to China to save money. In other words, they were following the “herd mentality” like buffalo were driven off a cliff by American Indians in our past history.

Another problem mentioned was that in the cost accounting systems used by most corporations,  transportation costs, travel costs to vendors, rework costs of defective parts, cost of inventory, etc. are in separate accounting categories and there wasn’t any software available to do a true Total Cost of Ownership analysis until Harry Moser developed his TCO estimator. This is why I believe that CFOs are critical in turning the tide towards reshoring vs. offshoring.

 

Yes, I believe that as wages continue to rise offshore, especially in China, transportation costs continue to increase, and risk factors such as political instability, intellectual property theft, and counterfeit parts take their toll, more and more companies will see the economic advantage and wisdom of reshoring.

 

However, we can accelerate reshoring if we can expand the reach of our education and training on understanding and using a true Total Cost of Ownership analysis to CFOs and other C level management. Harry Moser and I are no longer the only persons singing the “reshoring” tune. Consultants at the Manufacturing Extension Programs nationwide, such as California Manufacturing Technology Consulting (CMTC) and Manex are being trained in how to use the Reshoring Initiative’s Total Cost of Ownership EstimatorTM. I have even met former “offshoring” consultants who are rebranding themselves to be reshoring consultants. I urge everyone to do what you can to promote reshoring if you want to help create jobs and save American manufacturing.

 

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Posted in Jobs, Manufacturing, Outsourcing, Reshoring | 1 Comment »

What is the Importance of Unmanned Vehicles to our Economy?

Tuesday, July 16th, 2013

We’ve heard a great deal about “drones” or unmanned vehicles over the last decade of the “war on terror” in Iraq and Afghanistan. While these terms are used interchangeably in the news media, the members of the Association for Unmanned Vehicle Systems International (AUVSI) are quick to point out that the term “drone” was originally coined to refer to pilotless aircraft used for “target” practice by the military while an unmanned vehicle includes the technology on the ground, often with a human at the controls.

The mission of AUVSI is to advance the unmanned systems and robotics community internationally through education, advocacy and leadership. AUVSI represents more than 7,000 individual members and more than 600 corporate members from 60+ allied countries involved in the fields of government, industry and academia. AUVSI members work in the defense, civil and commercial markets.

In March 2013, AUVSI released a report, titled “The Economic Impact of Unmanned Aircraft Systems Integration in the United States” to document the economic benefits to the  U.S. once Unmanned Aircraft Systems (UAS) are integrated into in the National Airspace System (NAS) after the federal government tasked the Federal Aviation Ad­ministration (FAA) to determine how to integrate UAS into the NAS in 2012. This report estimates the economic impact of this integration and estimates the jobs and financial opportunity lost to the economy if there is a delay in enacting the regulations needed to do the integration.

The report states that “the main inhibitor of U.S. commer­cial and civil development of the UAS is the lack of a regulatory structure.” Non-defense use of UAS has been ex­tremely limited because of current airspace restrictions.

The combination of greater flexibility, lower capital and lower operating costs could allow unmanned vehicles to transform fields as diverse as urban infrastructure management, farming, and oil and gas exploration to name a few. The use of UAS in the future could be” a more responsible approach to certain airspace operations from an environmental, ecological and human risk perspective.”

Present-day unmanned vehicles have longer operational duration and require less maintenance than earlier models and are more fuel-efficient. These aircraft can be deployed in a number of different terrains and may not require prepared runways.

The Executive Summary states, “While there are multiple uses for UAS in the NAS, this research con­cludes that precision agriculture and public safety are the most prom­ising commercial and civil markets. These two markets are thought to comprise approximately 90% of the known potential markets for UAS.”

UAS are already being used in a variety of applications, and many more areas will benefit by their use, such as:

  • Wildfire mapping
  • Agricultural monitoring
  • Disaster management
  • Thermal infrared power line surveys
  • Law enforcement
  • Telecommunication
  • Weather monitoring
  • Aerial imaging/mapping
  • Television news coverage, sporting events, moviemaking
  • Environmental monitoring
  • Oil and gas exploration
  • Freight transport

While there are a number of different markets in which UAS can be used, the report concentrates on the two markets, commercial and civil, with the largest potential. A third category (Other) summarizes all other markets: Precision agriculture, Public safety, and Other.

“Precision agriculture refers to two seg­ments of the farm market: remote sens­ing and precision application. A vari­ety of remote sensors are being used to scan plants for health problems, record growth rates and hydration, and locate disease outbreaks. Such sensors can be attached to ground vehicles, aerial vehicles and even aerospace satellites. Precision application, a practice especially useful for crop farmers and horticulturists, uti­lizes effective and efficient spray techniques to more selectively cover plants and fields. This allows farmers to provide only the needed pes­ticide or nutrient to each plant, reducing the total amount sprayed, and thus saving money and reducing environmental impacts.”

Public safety officials include police officers and professional firefighters in the U.S., as well as a variety of profes­sional and volunteer emergency medical service providers who protect the public from events that pose significant danger, including natural disasters, man-made disasters and crimes.”

If sensible regulations are put in place, authors Darryl Jenkins and Dr. Bijan Visagh foresee few limitations to rapid growth in these industries because these products use off-the-shelf technology and thus impose few problems to rapidly ramping up pro­duction. The parts comprising these unmanned systems can be purchased from more than 100 different suppliers so prices will be stable and competitive. They can all be purchased within the U.S. or imported from any number of foreign countries without the need of an import license. For this report, they assume necessary airspace integration in 2015, which is on par with current legislation.

UAS have a durable life span of approximately 11 years and are relatively easy to maintain. The manufacture of these products requires technical skills equivalent to a college degree so there will always be a plentiful market of job applicants willing to enter this market. “The average price of the UAS is a frac­tion of the cost of a manned aircraft, such as a helicopter or crop duster, without any of the safety hazards. For public safety, the price of the product is approximately the price of a police squad car equipped with standard gear. It is also operated at a fraction of the cost of a manned aircraft, such as a helicopter, reducing the strain on agency budgets as well as the risk of bodily harm to the users in many difficult and dangerous situations. Therefore, the cost-benefit ratios of using UAS can be easily understood.”

The authors estimate enormous economic benefits to our country. To calculate the benefits, they forecast the number of sales in the three market categories. Next, they forecast the supplies needed to manufac­ture these products. Then, they forecast the number of direct jobs created using estimated costs for labor. Finally, using these factors, they forecast the tax revenue to the states.

In addition to direct jobs created by the manufacturing process, the authors state that there would be additional economic benefit by the new jobs created and income generated spread to local communities. “As new jobs are created, additional money is spent at the local level, creat­ing additional demand for local services which, in turn, creates even more jobs (i.e., grocery clerks, barbers, school teachers, home build­ers, etc.). These indirect and induced jobs are forecast and included in the total jobs created.”

The economic benefits to individual states will not be evenly dis­tributed. Ten states are predicted to see the most gains in terms of job creation and additional revenue as production of UAS increase, totaling more than $82 billion in economic impact from 2015-2025. In rank order they are:

  • California
  • Washington
  • Texas
  • Florida
  • Arizona
  • Connecticut
  • Kansas
  • Virginia
  • New York
  • Pennsylvania

“The economic projections contained in this report are based on the current airspace activity and infrastructure in a given state. As a result, states with an already thriving aerospace industry are projected to reap the most economic gains. However, a variety of factors—state laws, tax incentives, regulations, the establishment of test sites and the adoption of UAS technology by end users—will ultimately determine where jobs flow.”

The authors conclude:

1. The economic impact of the integration of UAS into the NAS will total more than $13.6 billion in the first three years of in­tegration and will grow sustainably for the foreseeable future, cumu­lating to more than $82.1 billion between 2015 and 2025.

2. Integration into the NAS will create more than 34,000 manufac­turing jobs and more than 70,000 new jobs in the first three years.

3. By 2025, total job creation is estimated at 103,776.

4. The manufacturing jobs created will be high paying ($40,000) and require technical baccalaureate degrees.

5. Tax revenue to the states will total more than $482 million in the first 11 years following integration (2015-2025).

6. Every year that integration is delayed, the United States loses more than $10 billion in potential economic impact. This translates to a loss of $27.6 million per day that UAS are not integrated into the NAS.”

They base the 2025 state economic projections on current aerospace employment in the states and presume that none of the states have enacted restric­tive legislation or regulations that would limit the expansion of the technology. Future state laws and regulations could also cause some states to lose jobs while others stand to gain jobs. States that create favorable regulatory and business environments for the industry and the technology will likely siphon jobs away from states that do not.

In conclusion, the study “demonstrates the significant contribution of UAS development and integration in the nation’s airspace to the economic growth and job creation in the aerospace industry and to the social and economic progress of the citizens in the U.S.

As the top ranked state and home to UAS manufacturers General Atomics and Northrop Grumman, California has active chapters of AUVSI, and the San Diego region chapter is AUVSI San Diego Lindbergh. Since both General Atomics and Northrop UAS plants are located in San Diego’s north county, in 2012, the North San Diego Chamber of Commerce commissioned the National University System Institute for Policy Research to conduct an economic assessment of the industry’s impact on San Diego’s defense economy. The report is titled, “Unmanned Aerial Vehicles:  An Assessment of Their Impact on San Diego’s Defense Economy. The report states, “Unmanned aerial vehicle (UAV) production neared $1.3 billion in San Diego during 2011, according to analysis of federal government Depart of Defense (DoD) contract spending. UAV spending has grown significantly in San Diego over the past five years, nearly doubling since 2008. This growth parallels the increasing role played by UAVs in the U.S. military and the leadership position San Diego companies occupy in the UAV industry.”

While San Diego is still struggling to emerge from the 2008 national economic downturn, “the bright spot in the San Diego economy in recent years has been defense-related spending. Local defense expenditures grew substantially the past decade while military base operations and payrolls expanded. “Many economic observers, including the National University System Institute for Policy Research (NUSIPR), conclude that absent San Diego’s prowess in defense manufacturing and its role in hosting major military facilities, the local unemployment rate would have been significantly higher.”

At the peak of the recession, civilian unemployment in the county climbed to nearly 11 percent, and todaystill hovers around 9 percent. Companies have shed more than 50,000 jobs in the region. Local wages have fallen the past two years, while per capita income remains well below pre-recession peaks.

The important role of UAVs to the San Diego economy is emphasized by the fact that “UAV contracting activities in 2011 supported 7,135 direct and indirect jobs throughout San Diego County,” and “UAVs now comprise the largest segment of San Diego’s defense manufacturing sector. UAV production comprises more than 12 percent of all DoD contracting activities in San Diego County.” While DoD contracting in San Diego started to decrease in the past three years, UAV activity continued to expand.

“Since 2004, San Diego’s aerospace employment, now primarily focused on unmanned aircraft systems, has increased by 1,200 jobs. Just since early 2010, the sector has added 600 jobs. The two major UAV firms locally, Northrop Grumman and General Atomics Aeronautical Systems, each conduct billions of dollars in UAV unclassified contract work in San Diego County. According to Northrop Grumman Vice President Jim Zortman, ‘The center of the unmanned business for aerial vehicles is right here in San Diego.’”

The report states, “Production of UAVs is forecast to double by the end of the decade. Several forecasting firms have predicted the global demand for UAVs will reach $12 billion by 2019, even in the face of significant reductions in U.S. military spending.” There is every reason to believe San Diego is positioned to benefit from this trend given the leadership of Northrop Grumman and General Atomics Aviation in UAV technology.

However, several other states and regions are actively working to attract UAV researchers and manufacturers, and their efforts include the development of specialized educational programs and the preservation of airspace assets. Many states are setting aside dedicated airspace to support the UAV industry. Before the end of this year, the FAA will designate six areas around the country as UAS test sites.

In April of this year, the AUVSI San Diego Lindbergh Chapter joined the San Diego Regional Economic Development Council (EDC), the San Diego Military Advisory Council (SDMAC), the Imperial County EDC, County of Imperial, Holtville Airport, Indian Wells Valley Airport District (IWVAD), and defense contractors including General Atomics, Cubic Corporation, and Epsilon Systems Solutions, Inc. to respond to the Federal Aviation Administration’s (FAA) Screening for Information Request (SIR) and develop an Unmanned Aerial Systems (UAS) Test Range in a partnership with civil and military government agencies, academia, and industry. This coalition has joined an already established entity called the California Unmanned Systems Portal (Cal UAS Portal), which is based in Indian Wells, to create a proposed UAV Test Site that would extend from the NAS China Lake/Edwards Air Force Area, West to the Pacific Ocean, South to the Mexican border, and East to the Arizona border.

If San Diego wants to continue as a leading region for unmanned vehicles, it will be necessary for leaders in the private and public sectors to determine how best to support this industry and influence policymakers to address the high cost of doing business in California that is creating cost pressures on UAS manufacturers’ competitiveness in the worldwide UAS industry. As the report concludes, “Complacency could cause the region [and our country] to lose its leadership position and miss an opportunity to support an industry posed for growth.”

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American Manufacturing Competitiveness Act Would Develop National Manufacturing Strategy

Tuesday, June 25th, 2013

On June 20, 2013, U.S. Rep. Dan Lipinski (D-IL-) introduced H.R. 2447, “The American Manufacturing Competitiveness Act of 2013,”a bill that would bring together the private and public sectors to develop recommendations to revitalize American manufacturing and create good-paying, middle-class jobs here at home.” U.S. Rep. Adam Kinzinger (IL-16) is the lead Republican cosponsor.

This bill is a pillar of the “Make It in America” jobs plan in the House and would require the National Science and Technology Council’s Committee on Technology to develop a national manufacturing competitiveness strategic plan that would be updated every four years. The goals of the strategic plan would be to promote growth of the manufacturing sector, support the development of a skilled manufacturing workforce, enable innovation and investment in domestic manufacturing, and support national security.

In order to develop a manufacturing strategy, the bill would also require the Committee to conduct an analysis of factors that impact the competitiveness and growth of the United States manufacturing sector, such as “the adequacy of the industrial base for maintaining national security,” “Trade, trade enforcement, and intellectual property policies, and financing, investment, and taxation policies and practices…”

The Secretary of Commerce, or a designee of the Secretary shall serve as the chairperson of the Committee, and the Committee would be required to transmit the strategic plan developed to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Science, Space, and Technology of the House of Representatives not later than one year after the date of enactment of the Act.

I laud Rep. Lipinski for being so persistent in attempting to get a bill passed that would develop a national manufacturing strategy. Last year, he and Rep. Kinzinger introduced “The American Manufacturing Competitiveness Act of 2012” (HR-5865). The bill passed the House on September 12, 2012, by a roll call vote of 339-77. However, the Senate did not act on the bill.

H. R. 5865 was actually a renaming of H.R. 1366, “The National Manufacturing Strategy Act of 2011,” that Rep Lipinski also introduced, which died in the Energy and Commerce Committee. Senators Brown and Kirk had introduced the Senate version of this bill in 2011, but it was never voted on by the Senate. Rep Lipinski had previously introduced H.R. 4692, “The National Manufacturing Strategy Act of 2010,” which passed the House in July 2010 with overwhelming bi-partisan support. Sen. Debbie Stabenow (D-MI) introduced the same bill in the Senate, but it was not voted on by the Senate.

Let us hope this new bill not only passes the House this year, but actually gets voted on and passed by the Senate. This new bill is far superior to last year’s bill in that it would utilize an existing committee rather than set up a new committee with a complex appointment structure for the proposed 15-member committee. It builds on the successful development of the 2012 National Strategic Plan for Advanced Manufacturing and utilizes the expertise and knowledge that was developed in that plan. It would be accomplished with less cost and be consistent with prior Administration work and legal authority. By using the existing committee of the NSTC, the strategy will bring together the many agencies and their expertise that interact with American manufacturing.

“American companies and their workers are operating at a severe disadvantage as they face foreign competitors who benefit from coordinated, strategic government policies that benefit manufacturing,” Rep. Lipinski said. “We need to recognize this reality and bring the public and private sectors together to develop a national manufacturing strategy that specifies recommendations for the optimal tax, trade, research, regulatory, and innovation policies that will enable American manufacturing to thrive. Manufacturing is critical for national security, an essential source of good-paying jobs for the middle class, and drives high-tech innovation.”

“Manufacturing is vital to our economic and national security, and it is critical that we do all we can to promote American competitiveness in the global economy,” Rep. Kinzinger said. “I’m proud to work with Congressman Lipinski to put forward bipartisan legislation that focuses our attention on the challenges facing American manufacturers.”

America has a long and proud manufacturing history. Manufacturing is the foundation of our economy and fostered the development and growth of the middle class in the 19th and 20th centuries. Since the 1970s, however, the number of manufacturing jobs has shrunk, from 20 million in 1979 to fewer than 12 million today. We lost 5.8 million manufacturing jobs just since 2000. The recent recession hit workers in manufacturing especially hard. The hemorrhaging of manufacturing jobs has contributed to the stagnation of middle-class wages – since 2000, the median household income, after it’s been adjusted for inflation, has fallen by $4,787.

In a press release dated June 21st, Scott Paul, President of the Alliance for American Manufacturing, said, “We commend Congressmen Lipinski and Kinzinger for their authorship of the American Manufacturing Competitiveness Act of 2013. Our nation’s manufacturers and their workers stand poised for a manufacturing resurgence, but Washington must do its part by implementing a strategy that actively responds to the challenges of the 21st Century.”

The Alliance for American Manufacturing recommends that “a national manufacturing strategy support private business by focusing government programs on increasing national competitiveness, reducing programmatic inefficiencies and redundancy, and coordinating policies across various agencies and departments.” This type of strategy would require the American government to act smarter in its efforts to promote growth, entrepreneurship, and innovation. AAM recommends that a national manufacturing strategy should:

  • Keep our Trade Laws Strong and Strictly Enforced
  • Combat Currency Manipulation
  • Reduce the Trade Deficit
  • Support Buy America
  • Defend America with American Made Product
  • Prepare for the Next Super Storm
  • Invest in American Infrastructure
  • Create New Ways to Invest in America.
  • Use the Tax Code to Incentivize Domestic Manufacturing
  • Educate Americans for Quality Jobs
  • Invest in Energy Efficiency

The Alliance for American Manufacturing is just one of many organizations that have made recommendations on a national manufacturing strategy. In my book, Can American Manufacturing Be Saved? Why we should and how we can, the chapter on “How Can We Save American Manufacturing?” contains a summary of the recommendations of such organizations as the American Jobs Alliance, Coalition for a Prosperous America, Economy in Crisis, National Association of Manufacturers, Small Business and Entrepreneurship Council, and the U. S. Business and Industry Council, along with my own recommendations.

In April 2011, The Information Technology& Innovation Foundation (ITIF) released a report, “The Case for a National Manufacturing Strategy,” that makes a strong case for such a strategy. Authors Stephen Ezell and Robert Atkinson recognize that “most U.S. manufacturers, small or large, cannot thrive solely on their own; they need to operate in an environment grounded in smart economic and innovation-supporting policies with regard to taxes, talent, trade, technological development, and physical and digital infrastructures.”

Ezell and Atkinson recommend adoption of the following actions as part of the national strategy:

  • Increase public investment in R&D in general and industrially relevant in particular
  • Support public-private partnerships that facilitate the transition of emerging technologies from universities and federal laboratories into commercial products
  • Coordinate state, local, and federal programs in technology-based economic development to maximize their combined impact
  • Provide export assistance to build upon the National Export Initiative, which seeks to double U. S. exports by 2015.
  • Increase export support for U. S. manufacturers through the Export-Import Bank loans

In the past eight years since the National Summit on Competitiveness in 2005, there has been a summit or conference held every year on the topic of revitalizing American manufacturing. A first Conference for the Renaissance of American Manufacturing was held in September 2010, and a second Conference on the Renaissance of American Manufacturing: Jobs and Trade was held on March 27, 2012. This conference focused on solutions to the decline of manufacturing in America and highlighted manufacturing and trade issues.

The President’s Council of Advisors on Science and Technology (PCAST) released a report, “Capturing Domestic Competitive Advantage in Advanced Manufacturing,” in July 2012, prepared by the Advance Manufacturing Partnership Working Group, which makes 16 specific recommendations for policies to enable the United States to resume its leadership in the manufacturing industry and strengthen our position in advanced manufacturing technologies.

We need a committee that will review the many recommendations on a national manufacturing strategy we already have and select the ones that will have the most impact in enabling the United States to have a real renaissance in the manufacturing industry. Since a similar bill has passed the House two out of three times since 2010, it is time for the Senate to pass this legislation and “stop fiddling while Rome burns.” We need real leadership in action, not just words. Contact your Congressional representative to ask them to cosponsor the bill and urge your Senator to bring it to a vote in the Senate after it passes the House.

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Why our Economy Struggles to Create Jobs

Tuesday, May 14th, 2013

There have been many opinions expounded via TV news shows, radio talk shows, newspapers, and magazines over the last four years as to why our economy has struggled to create jobs after the recession of 2007-2009 more than any other recession since WWII.

The economic collapse of the real estate and financial markets in 2008 had more impact on job losses than the recession of 2000-2001 caused by the dot.com bust because jobs related to real estate and construction represented a much higher component of employment than software/dot.com did at the time. During the recession of December 2007-June 2009, construction employment fell from 7,490,000 to 6,008,000, representing a loss of 1.5 million jobs or 19.8 percent of the construction workforce. It has remained less than 6 million as of April 2013 (Source:  Bureau of Labor Statistics).

When consumer demand dropped sharply because of so many people losing their jobs and homes, this eliminated the last thing keeping the domestic market floating on a bubble.

Since then, our economy has limped along at monthly average of a 1.5 to 2 percent growth rate in our Gross Domestic Product (GDP), which is not enough to create the amount of jobs we need. The main reasons why our economy is struggling to create jobs are:

Decline of U. S. Manufacturing

We lost 57,000 manufacturing firms and 5.7 million manufacturing jobs since the year 2000. According to the Bureau of Labor Statistics, we recouped about 500,000 jobs (489,000 or 4 percent) since the low in January 2010.

As I have discussed in both editions of my book and numerous blog articles, this loss of manufacturing firms and jobs was mainly the result of “predatory mercantilism”; i.e., unfair competition/product dumping by China and other Asian nations and the fact that a large number of multinational and American companies outsourced manufacturing offshore and/or set up plants in China and other parts of Asia. These companies literally outsourced American jobs in an attempt to compete with the “China price,” take advantage of less stringent environmental regulations, reduce taxes, and thereby maximize profits.

Transition to Service Economy

In addition to the many reasons previously discussed by myself and others, a key factor was revealed by the in-depth analysis of national and state data presented in the report, “Goods, Services, and the Pace of Economic Recovery” by Martha L. Olney and Aaron Pacitti, Berkeley Economic History Laboratory (BEHL), University of California, Berkeley March 2013.

Their hypothesis was:  Do service-based economies experience slower economic recoveries than goods-based economies? They argue that they do. They conclude that “service-dependent economies experience longer recoveries because they cannot respond to anticipated demand.” Thus, in a service-based economy, the recovery from a recession will take about one year longer than in a goods-based economy.

Why is this? They state, “An economy recovers from a downturn when businesses increase production. Both goods and services can be produced in response to actual demand. But only goods—and not services—can be produced in response to anticipated increases in demand, allowing optimistic forward-looking producers to inventory goods until anticipated buyers appear. Services cannot be inventoried. The more services an economy produces relative to goods, the more production is dependent upon only actual increases in demand, and the slower the recovery.”

Services have to be delivered in real-time by doctors, dentists, lawyers, accountants, web designers, graphic artists, etc. Even in the industrial realm, services such as engineering design, product testing, shipping, and delivery services are performed as needed. These services cannot be produced ahead of the need and “stored.”

The authors argue that there is a connection between the steady rise of services in the U.S. economy over the last half century and the slower pace of recovery from economic downturns. They state, “…as services become a larger share of output in an economy, more production is dependent on just actual and not also anticipated demand, slowing the pace of recovery from an economic downturn.”

The increase in the services share over the past 60 years has been striking. “In 1950, 40 percent of expenditures for U.S. GDP were for services and service-producing jobs were 48 percent of employment. By 2010, services constituted over 65 percent of expenditures for GDP and service-producing jobs were nearly 70 percent of employment.” The rise in services in the U.S. has led to longer recoveries, causing the current recovery to last about one year longer than it would have a half century ago.

End of NASA’s Manned Flight Program

The official retirement of the Space Shuttle program in 2011 resulted in a 19 percent drop in employment from 2007 to 2010 according to the Commerce Department’s Bureau of Industry and Security (BIS) industrial base assessment of the 536 companies in NASA’s manned space flight supply chain. If this steep a drop in employment occurred before the retirement of the Space Shuttle, it will be far worse by the time of the next assessment now that the program has ended.

Of the 536 companies, 50 percent of them are manufacturing companies, of which 21 percent are based in California, and 9 percent based in Florida. The report said that companies that supplied the Space Shuttle and Constellation launch program are facing “large-scale layoffs and facility closures across both industry and government.”

Near the Kennedy Space Center, more than 7,400 people in Brevard County, Florida alone lost their jobs when the shuttle program ended. The mainly contractor positions cut by NASA accounted for just under 5% of the county’s private sectors jobs. Thousands of formerly well-paid engineers and other workers around the country are still struggling to find jobs to replace the careers that flourished during the space shuttle program.

The machinery and tools used to support a manned space program are in danger of being discarded. In a separate assessment of the space flight industry, BIS found that 52 companies that were major suppliers (Tier I) had 48,623 pieces of tools and machinery, 91 percent of which had been paid for by the government. This classifies them as “Government-Furnished Property” so that the General Services Administration can process them by being transferred, sold, scrapped, or donated.

The danger is that the U. S. government may never be able to re-establish a manned space flight program to support ongoing missions to the International Space Station once the supplier base of the manned space flight program has been decimated. At the present, the U. S. has no way of sending astronauts to space in its own vehicles, and NASA is relying on the Soviet-made Soyuz capsules to send U.S. astronauts to space station. Thus, the United States may never again be a leader of space exploration.

Wind Down of War on Terrorism

The end of the Cold war with the Soviet Union resulted in a major downsizing of the military-industrial complex in the early 1990s, causing the recession of 1991-1992 and hundreds of thousands of lost jobs. Likewise, the withdrawal of troops from Iraq and the ramp down of troops in Afghanistan are having a similar effect on the defense/military industry, with a resulting loss of funding for new programs, cutbacks in existing programs, and job loss.

Sequestration

The additional cuts in the Defense Department’s procurement are taking a toll on some critical industries such as ship repair. In February, the Navy canceled all FY 2013 ship repair contracts that had been awarded to San Diego ship repair companies but not yet started. How many companies can survive having all their new contracts canceled?

What can we do?

It is interesting to note that one of the policy recommendations of the authors of the Berkeley report on goods vs. service’ corroborate some that I have presented previously:

“Therefore we believe that industrial policy aimed at restoring the country’s manufacturing sector could be beneficial. For example, tax policy that provides large re-shoring tax credits for goods-producing firms and levies large tax penalties on firms that offshore goods production could increase the share of goods in total output.”

Additional recommendations the authors make are:

  • Targeted investment in public goods and infrastructure would accomplish the same end.
  • Full employment policies and direct job creation programs could be enacted.
  • Targeted and aggressive fiscal spending and an employer of last resort program that guarantees full employment.

The authors conclude, “Longer and slower recoveries place a greater strain on state and federal budgets by decreasing tax revenue and increasing expenditures on automatic stabilizers. States will be forced to cut spending since all states with the exception of Vermont are required by law to run a balanced budget.” We have certainly seen this conclusion take effect as one state after another faces a staggering budget deficit, and our federal deficit has skyrocketed since 2009.

In the past two years, the general public and more economists and policymakers have begun to recognize the importance of U. S. manufacturing. Manufacturing is the foundation of our economy and is crucial to providing the quantity and quality of higher paying jobs we need.

It is high time for Congress and the Obama administration to develop a comprehensive national manufacturing strategy for the United States. Until we make a national manufacturing strategy a top priority, our economy will continue to struggle to create jobs.

 

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