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What Would be The Benefits of the ONSHORE Act of 2023?

Wednesday, July 12th, 2023

The COVID pandemic proved that we cannot rely on imports of products needed to protect the health and welfare of Americans. Offshoring of manufacturing left the U.S. vulnerable to supply chain disruptions. We cannot defend our country if the products needed by the military and defense industry become unavailable because of being sourced offshore, especially in China. It’s time for all Americans to wake up to the dangers of being dependent on other countries for manufacturers goods, especially one that has become a threat to our country.

Strengthening domestic manufacturing capabilities, especially for industries of the future, is critical for economic and national security. We must forge a new path by rebuilding American manufacturing to win the international competition for good jobs, sustained economic growth, and rebuild a strong, secure domestic supply chain if we want to remain a free country.

I am glad to see that Congress is finally paying some attention to this need:  On June 8, 2023, Senator Mark Kelly (D-AZ), Senator JD Vance (R-OH), and Senator Tom Cotton (R-AR) introduced S.1915 – ONSHORE Act of 2023, a bipartisan bill to boost domestic manufacturing and strengthen supply chains that will help bring critical supply chains back to America by assisting communities of all sizes with the site development needed to attract manufacturing facilities. 

The joint press release states: “The U.S. faces a shortage of shovel-ready sites with the necessary infrastructure and workforce for companies to quickly begin construction on new manufacturing facilities. The ONSHORE Act creates a Critical Supply Chain Site Development Grant Program within the Economic Development Administration, which would assist communities, including small towns and tribal communities, with site development to attract manufactures from critical industries to build new facilities in their area.” 

Senator Vance stated, “As our nation takes the necessary steps to reshore critical supply chains and spur innovation, everyone in America should reap the rewards This bill would deploy capital broadly to ensure the foundations of tomorrow’s industry and growth are laid in underdeveloped regions. If enacted, it will deliver good-paying jobs, build vibrant communities, and strengthen supply chains—in Ohio and around the country.” 
 
Senator Kelly stated, “As we work to bring manufacturing supply chains for critical industries from microchips to critical minerals back to America, we have to maximize this opportunity by making sure there are enough sites with the infrastructure and workforce needed for new facilities. For a lot of small towns and tribal communities, the biggest barrier to attracting investment is the cost of getting sites ready for development. We’re working to fix that, which will boost manufacturing and create good-paying jobs in every corner of our states and the country.” 
 
Senator Cotton stated, “We cannot rely on other countries like China for our essential technologies. The technologies of tomorrow should be tested, researched, and made in America. This legislation will help make the necessary investments in our communities to make that possible.”

So far, the OSHORE ACT has received enthusiastic support from the International Economic Development Council (IEDC), the Global Business Alliance, the Greater Phoenix Economic Council, the Arizona Commerce Authority, and JobsOhio..

Nathan Ohle, President & CEO of IEDC said, “The ONSHORE Act will provide communities with essential resources to aid in attracting supply chain manufacturers. Economic developers across the U.S. will welcome this new initiative and IEDC urges the swift passage and implementation of the ONSHORE Act.”

Nancy McLernon, president & CEO of the Global business Alliance, said, “Site readiness is a critical consideration for international companies planning major investments in the United States… and urges all Senators to support this measure and other policies that make it easier to invest in America.”  

Chris Camacho, President & CEO of the Greater Phoenix Economic Council said, “The availability of shovel-ready sites with the necessary infrastructure and skilled workforce is a crucial factor in attracting companies to invest in Greater Phoenix and bolster U.S. supply chains. This program ensures that strategic mega sites and regionally impactful locations are properly prepared for new industrial investment. With enhanced site-readiness, the United States will be better equipped to compete globally, foster the growth of critical industries, and ensure the production of essential products domestically.”

Sandra Watson President & CEO, Arizona Commerce Authority, said, “We applaud Senator Kelly for leading on this important legislation. This ONSHORE Act will significantly strengthen U.S. competitiveness for new manufacturing opportunities, bringing more jobs and investments to Arizona.”

J.P. Nauseef, JobsOhio president and CEO, said, “I applaud the introduction of the ONSHORE Act, which will help Ohio and the rest of the United States more fully capitalize on this generational opportunity by expanding the number of sites that are ready to support major development projects.”

I can see that basic infrastructure, such as road access or water and power utility hookups, is an important factor affecting where a new manufacturing facility is built, but there are so many abandoned manufacturing sites throughout the country that I question the need for the Economic Development Agency’s Critical Supply Chain Site Development Grant Program. There are also large retail stores, such as former K-Mart stores, that could be converted to manufacturing sites by remodeling and changing zoning. The redevelopment of these sites would provide good opportunities to revive the industrial base of states hard hit by offshoring, such as Michigan, Ohio, and North and South Carolina.

In my opinion, there is a greater need for a new type of Small Business Innovation grant program to fund establishing manufacturing plants to manufacture components and systems that are no longer made in the U.S. because of being offshored to China and other Asian countries.  This type of grant would also provide new industrial investment, including in rural and tribal communities, and regions with high unemployment.  These companies would help position the U.S. to compete against adversaries like China, boost domestic manufacturing, and build resilient supply chains. 

Priority for receiving such a grant should be given to proposals that would manufacture critical components and systems needed by our military and defense industrial base.  Semiconductors and batteries are not the only critical products that need to be onshored/reshored.  Components such as capacitors, resistors, inductors, transformers, connectors, and flex circuits also need to be returned to being made in the USA.

This kind of investment will better position the U.S. to compete against international competitors like China and the European Union and ensure more critical products are made in America.  

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Posted in Legislation, Made in America, Manufacturing | No Comments »

Economic Indicators Report Reveals a Shrinking Middle Class

Tuesday, May 23rd, 2023

A long-time acquaintance of mine, Charles Shor, contacted me recently to inform me that he had founded a new non-profit organization, Blue Collar Dollar Institute.  Charlie has been a long-time reader of my blog articles, and we share a common concern — the shrinking middle class.  We also shared the same opinion of the main reason for the cause of the shrinking middle class:  the loss of higher-paying manufacturing jobs by American manufacturers outsourcing manufacturing to foreign countries, particularly China. 

We agreed that the problem is, “By offshoring much of our manufacturing base, the United States has developed a dependency on importing consumer goods, amassing debt in the private and public sectors, and relying on critical goods from abroad in times of crisis such as pandemics and wars.”

We both feel that the middle class is in trouble.  “The Blue Collar Dollar Institute aims to understand how the United States’ decision to subsidize foreign manufacturing is decreasing the size of our middle class, increasing the amount of Americans in poverty and catapulting forward the wealth in both the top 5% and foreign competitors.”

The Institute’s Mission Statement is: “The Blue Collar Dollar Institute believes that the United States cannot offer a middle-class lifestyle to a large majority of Americans without possessing a strong and vibrant manufacturing sector.  Our non-partisan mission is to research data, inform the public, and advocate for policy in order to help strengthen US manufacturing and goods-producing sectors. 

Prior to founding Blue Collar Dollar Institute, Charlie’s original foundation, The Charles Shor Foundation, collaborated with  Dr. David Perkis, Purdue Center for Economic Education, Krannert School of Management, to prepare a 200-page Economic Indicators Report.

Charlie encouraged me to contact Dr. Perkis, and we had a long conversation when I connected with him last week.  He explained that the report’s purpose “is to provide a picture of the economic and social wellbeing of the United States in comparison to five other industrialized nations:  China, Japan, Germany, South Korea, and Singapore… Special attention is given to the manufacturing sector due to its perceived ability to offer high paying jobs and to create additional jobs in communities.”

One of the most serious facts the report reveals is: “Since 1945, the percentage of jobs in manufacturing, construction, and mining has dropped from 40% to 14%, eliminating some of the highest paying jobs for high school graduates.”

The result is: “The dreams of Americans obtaining the basics of a middle-class lifestyle, such as owning a home, sending their kids to college, and obtaining affordable housing, have become more and more out of reach for the average household.”  I’ve seen this in my own family as my two adult children have not been able to buy homes in San Diego, CA.

The results of the research revealed that “Although the United States is still the world leader in total output, it has some dubious distinctions in comparison to the other countries of this study.” The other countries are China, France, Germany, Japan, South Korea, and the United Kingdom.  In comparison to these countries, the United States has:

  • The least amount of trade as a share of GDP
  • The largest trade deficits
  • The highest level of adult wealth
  • The most significant wealth inequality
  • The highest level of health care spending (without the best outcomes).
  • The largest level of military spending
  • The lowest GDP share of manufacturing

Needless to say, I only had time to read through the first 40 pages of the lengthy report, so I will only point out some key findings related to manufacturing and trade issues.

As I have written previously in my books and blog articles, the U.S. has trade deficits since 1976, so it was no surprise to me that the report states: “From 1992 – 2019, deficits in manufactured goods have totaled $16.3 trillion (2010 USD), with the bulk of the deficit occurring since 1992 ($15.5 trillion). Since 1992, our largest deficits in manufactured goods have been with China ($4.6 trillion) and Japan ($2.5 trillion).”

Another noteworthy point is “The United States is still the world leader in output as measured by Gross

Domestic Product (Figure 1). In 2019, GDP measured $21.4 trillion USD, compared to $14.4 trillion from its next closest rival, China.”


I’ve long said and wrote that manufacturing jobs are the foundation of the middle class, and if we lose sufficient manufacturing jobs, we will lose the middle class. The loss of middle-class jobs in the U.S. is demonstrated by the fact that “the United States is no longer the leader in average income ($62 thousand USD). That distinction belongs to Singapore ($101 thousand USD).” The result has been “Income inequality in the US has increased significantly over the past 50 years (Figure 10). Income growth for the lowest 60% of income earners fell from the late 1990s through 2015.”

This may be due to the fact that the percentage of jobs in producing goods went down from 39% in 1964 to 15% in 2019, while the percentage of jobs in services increased from 62% in 1964 to 85% in 2019.  The average non-supervisory wage of goods jobs was $944/week I 2019, while the services wage was $699. However, service jobs in retail paid even lower in 2019 —$594/week.

With regard to budgets and deficits, “Except for a four-year period at the end of the Clinton administration, the United States has run a national budget deficit every year since 1970…The governments of Japan and the US carry the most debt…Japan has managed to accumulate the largest government debt as a percentage of GDP, totaling 232% (Figure 22). The United States is a distant

second carrying debt just over 100% of GDP…However, total government debt does not tell the whole story as some may be owed to a country’s own citizens while some will be due to foreign entities. For

instance, of Japan’s 232% debt, 208% is owed to domestic entities with a small portion due overseas (Figure 23). Within our comparison group, the United States government maintains the greatest holdings of debt to foreigners (37%).” 

As I have written in previous articles, there is a relationship between budget deficits and trade deficits.  When a country is buying more imports than selling exports, this produces less revenue for the government, so the country goes into debt to pay its expenses.  We lost 5.8 million manufacturing jobs between 2000 and 2010, and have only added back 1.2 million manufacturing jobs from reshoring and Foreign Direct Investment.  If these manufacturing workers had to get service jobs, they would be receiving lower wages and thus paying lower taxes.  In addition, the higher percentage of workers being paid lower wages for a service job results in their paying less taxes, again reducing the government’s revenue.

The report also mentions the benefits of manufacturing for a town, region, state, and the country as a whole.  This is because

1) “Most goods can be traded anywhere in the world, creating more exports and

generating income from overseas, whereas services are typically limited to

local markets.

2) Manufacturing positions create more additional jobs in the local community

than do service oriented positions. This is the multiplier effect of manufacturing.”

The report explains, “Job multipliers indicate how many total jobs will be created within a region due

to a new position in a particular industry.”  The job multiplier effect for manufacturing jobs ranges from 2.2 to 4.0, whereas the multiplier effect for service jobs ranges from 1.3 to 1.9.

The goals of the Blue Collar Dollar Institute to have strong manufacturing, construction, and mining sectors would help middle-class households have a prosperous life in the following ways: 

  • “By creating high-paying jobs for individuals without a college education. 
  • By selling more products overseas than we buy overseas, bringing net funds into the country. 
  • By making our nation less dependent on foreign countries for critical goods in times of crisis such as pandemics and wars, thus reducing risk for the average American.”

I look forward to continuing my discussions with Dr. Perkis to explore ways in which Industry Reimagined 2030 can collaborate to achieve the goals we have in common, such as adding 5 million middle-income manufacturing jobs and $1 trillion to the economy by 2030.

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Posted in Economy, Jobs, Manufacturing | No Comments »

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 Multinational Corporations Undermine American Prosperity

Tuesday, April 18th, 2023

Long-time American manufacturing advocate, Michael Collins, added to his extensive body of work with a 4th book, Dismantling the American Dream: How Multinational Corporations Undermine American Prosperity  Michael had a 35-year career in manufacturing before retiring and uses hhis experience to write a book he describes as “a concise story that tells what America’s multinationals did to the U.S. economy and how they did it.”

Michael told me that one of his purposes in writing the book was to take advantage of a commitment letter signed by 181 CEOs on August 19, 2019 “to lead their companies not just for the benefit of their investors, but for the benefit of all stakeholders: customers, employees, suppliers, communities, and shareholders.” He wanted to “provide the managers of the 181 corporations a good summary of the problems and obstacles they will need to address and overcome if they are going to make good on their commitments.”

In his book, Michael reveals that multinational corporations (MNCs) began to follow Milton Friedman’s doctrine — an entity’s greatest responsibility lies in the satisfaction of the shareholders.” He wrote, “In the 1980s, the Business Roundtable translated this into shareholder value or ‘the point of a business enterprise is to generate economic returns to its owners, period.’” This resulted in “favoring shareholders over all stake holders and short-term profits over society and country.”

His book shows “how the economy has been restructured to fit the needs of the MNCs and their investors, resulting in huge gains in wealth for the few [and] rising inequality while tens of millions of Americans find themselves unable to attain the standard of living of previous generations.”

He writes that outsourcing “began as early as the 1970s, but accelerated in the 1990s after the U.S. negotiated the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA).” He writes, Outsourcing by American corporations has caused permanent damage to American workers, manufactur9ng, supplier companies and the living standards of many families. It may lead to short-term profits for the corporations, but eventually, the corporations will lose the technology and the market to foreign corporations.” He opines that “Over the last 40 years, the MNCs commitment to short-term profits, shareholder value, and outsourcing has resulted in the deindustrialization of America.”

All of this outsourcing caused a surge in inequality, and he quotes the Job Quality Index developed by the Coalition for Prosperous America, which shows that “In 1972, 27 percent of all private industry jobs were low-quality jobs. Today, low-quality jobs are 59 percent of all jobs.”

His brief coverage of “the Myth of Free Trade” corroborates many of the points I have made in blog articles I have written in the past 13 years. I particularly liked his comment, “the winnings of free trade have gone mostly to the investors —the MNCs and their shareholders. Free trade has been very hard on workers, manufacturers, suppliers, and industries…”

In his chapter “Innovation and the Loss of Technology, he lists several key American inventions patented between 1945 – 1982, such as microwave ovens, hard disk drives, laser, MRIs, GPS, mobile phones, personal computers, and comments that “most of the inventions listed above are no longer manufactured in America.” He points out that “China has already swallowed the low-tech products we used to make. What they want now is our advanced technology products and production processes that were developed in the United States. The technologies they are after are all listed in their Made in China 2025 plan.”

The data in his chapter “The Slow Erosion of American Manufacturing Industries is mind-blowing and frightening with regard to how many manufacturing sectors have declined, some to the point of no return.  His comment that “all former Presidents since Bill Clinton rely on their economic advisors and abandon manufacturing” rings true.

His analysis of Financialization, “defined as the ‘growing scale and profitability of the finance sector at the expense of the rest of the economy and the shrinking regulation of its rules and returns” provided a new perspective for me.  It was startling to learn that “today finance has 40 percent of the nations’ profits with 5 percent of the jobs.”  He writes that some of ways “Financialization has hurt the American economy” are:

  • Rising inequality
  • Stagnant wages
  • Falling productivity
  • The decline of GDP growth
  • The decline of innovation
  • Decline of capital investment

In the next chapter, he discusses the fact that reducing corporates taxes to keep multinationals producing here in the U.S. hasn’t worked because there are too many loopholes that corporations can use to avoid paying taxes, not to mention reincorporating in tax haven countries or shifting taxes to subsidiaries in lower tax countries.  As a result, reductions in corporate taxes have caused our national debt to escalate because multinational corporations have not paid their fair share of taxes.

The next two chapters focus on how MNCs have developed a more powerful influence on the economy and Congress; first, by buying influence in government with lobbying money, and second by forming monopolies and oligopolies.  His itemization of the lobbying money spent by the top 33 companies in lobbying Congress is staggering.  This explains why trade associations and even manufacturing-related unions like the AFL/CIO Industrial sector have so little influence on legislation.

I was familiar with monopolies, but had to look up information on oligopolies. Essentially, they are industries dominated by a few large companies. Michael writes, “In the last 20 years, oligopolies have been created by mergers and acquisitions (M&A) of MNCs.” He then describes modern day oligopolies:  airlines, banks, hospitals, meat packers, beer, smart phones, pharmaceutical companies, and railroads. He opines, “The agglomeration of market power also leads to political power where the oligopolies and monopolies create and control the rules of the economic game which leads to political inequality.”

In the subsequent chapters, Michael addresses the skilled worker shortages, mainly caused by a lack of workforce training by MNCs, especially apprenticeships, and the lack of high paying manufacturing jobs compared to service jobs as a result of outsourcing manufacturing to other countries. 

His chapter on “The Threat of China” is so thorough that no summary could do justice to his comprehensive coverage of this topic.  He writes, “The COVID-19 pandemic has dramatically exposed the vulnerability of U.S. supply chains.” He advises, “The first step is to recognize China as a competitor not a trading partner and do everything possible to stop this competitor form gain strategic and tactical advantages. He notes, “It is not an exaggeration to say we are in the beginning of a cold war with China and must defend ourselves as we did with the Soviet Union.”

 His next two chapters are devoted to solutions to address the decline in productivity and GDP growth, currency manipulation and the overvalued dollar.

His chapter on “Why we Must Save America’s Manufacturing Sector” echoes most of the points I made in my first book, Can American Manufacturing be Saved?  Why we should and How we Can, published in 2009.  Michael and I are definitely on the same page, and both of us have published hundreds of articles that expressed our opinions on the importance of manufacturing to our national economy. I concur with his statement, “More than any other business sector, the U.S. multinationals were responsible for the erosion of the industrial commons. They outsourced all kinds of technologies and products with reckless abandon and with no regard for the skills and knowledge that would make America competitive in the future.”  I have made the same point many times that Michael expressed when he wrote, “The American MNCs have become ‘stateless’ entities with little or no loyalties to the home country.”

The final chapter provides his recommended solutions for the key problems he has identified, which you need to read for yourself. He makes an appeal to the 181 CEOs to keep their pledge so they can contribute to saving and rebuilding American manufacturing in order to protect our national security that is at risk.

This book is a must-read for everyone who is concerned about the future of the manufacturing industry, especially with regard to our national security.  Every Senator and Congressional Representative needs to read this book.  I suggest you buy one book for yourself and one to give to your Representative.

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

It’s the supply chain … stupid!

Tuesday, April 4th, 2023

Ever since the COVID pandemic started three years ago, we have suffered from disruptions in supply chains for many products used in our daily lives as well as products and components needed for our consumer products, industrial, and defense industries.  Why?  Because we stopped making things in the USA. We outsourced everything from household goods to high tech products, as well as pharmaceuticals and medical devices. First, it was to friendly countries like the Philippines, Puerto Rico, and Taiwan, and then it became predominantly China after they entered the World Trade Organization in 2001.

The shortages of semiconductors, has made news headlines for the past two years. Semiconductors are used in everything from consumer products such as cell phones, computers, and TVs as well autos, trucks, airplanes, boats, ships, drones, and space vehicles.  There is hardly any product that doesn’t have a semiconductor in it these days, even refrigerators and washing machines. Many other electronic and electro-mechanical components are also no longer made in the USA.

Our domestic innovation capacity is contingent on a robust and diversified industrial base. Our loss of manufacturing capabilities has led to a loss in innovation capacity. When manufacturing heads offshore, innovation follows. We currently lack the ecosystem of innovation, skills, and production facilities to have the secure and resilient supply chains required for economic security. As a result, we are no longer self-sufficient in producing the products we depend on for our modern way of life.    

Even worse, we are no longer self-sufficient in producing the goods and systems needed to defend our country.  Our national security and freedom as an independent country is at risk. This fact was confirmed in the article “From rockets to shells, Pentagon struggles to feed war machine,” from the March 25th issue of the New York Times which stated, “The United States lacks the capacity to produce the arms that the nation and its allies need at a time of heightened superpower tensions…Industry consolidation, depleted manufacturing lines and supply chain issues have combined to constrain the production of basic ammunition like artillery shells while also prompting concern about building adequate reserves of more sophisticated weapons including missiles, air defense systems and counter-artillery radar…illustrated by the shortage of solid rocket motors needed to power a broad range of precision missile systems, such as the ship-launched SM-6 missiles made by Raytheon…Other shortages slowing production include simple items such as ball bearings, a key component of certain missile guidance systems, and steel castings, used in making engines.”

There are two main ways that government can help rebuild the domestic manufacturing base:  penalize offshoring to other countries and incentivize American manufacturers to make is here or reshore their manufacturing to the USA.  The Biden Administration and Congress have reacted to this supply chain crisis within the last year by passing the following legislation:

CHIPS and Science Act of 2022 to “boost American semiconductor research, development, and production, ensuring U.S. leadership in the technology that forms the foundation of everything from automobiles to household appliances to defense systems.”

Amendment to The Federal Acquisition Regulation (FAR) Buy American Act – “This rule increases the domestic content threshold initially from 55 percent to 60 percent, then to 65 percent in calendar year 2024 and to 75 percent in calendar year 2029.”

Uyghur Forced Labor Prevention Act – This Act changes U.S. policy to establish “a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China.” Previous law required companies to take reasonable care to avoid products produced with forced labor. This Act requires companies to prove that products from Xinjiang province were not produced with forced labor.

While these new laws and amendments to previous laws will help ease future supply chain disruptions, the real solution to the supply chain crisis is to change the financial calculations to enable making as much as possible in the United States. The Reshoring Initiative has been working towards this goal since its founding in 2010 by promoting the use of the Total Cost of Ownership Estimator® developed by Harry Moser

According to the Reshoring Initiative 2022 Data Report, “Reshoring plus FDI have followed a strong upward trend for 13 years. The underlying trend is driven by the recognition that, in many cases, the total cost of offshoring exceeds that of sourcing domestically. There have been peaks and valleys in the trend. 2017 was driven by the 2017 tax and regulatory cuts. 2018 and 2019 declined due to the trade war. The trend resurged from 2020 to 2022 driven by companies recognizing their vulnerability to supply chain disruptions and, most recently, to geopolitical events.”

The report states, “Jobs announced in 2022 were a record breaking 364 ,000 up from 238 ,000 in 2021. The total number of jobs announced since 2010 is now nearly 1.6 million…we expect 2023 and 2024 to remain strong, continuing at approximately 350,000 job announcements per year. If the current trajectory continues, the U.S. will reduce the trade deficit, add jobs, and become safer, more self-reliant and resilient.”

We need continue to rebuild our domestic manufacturing industrial base if we are going to achieve the goals of Industry Reimagined 2030 to have 50,000 more world-class domestic American manufacturers and a $1 trillion GDP by 2030

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How to Buy More Made in USA Products

Tuesday, March 21st, 2023

More than 70% (72%) of American consumers prefer American-made products and nearly half (48%) say they’d be willing to pay around 10–20% more. An exclusive poll about buy-American shopping preferences from Retail Brew and The Harris Poll was conducted among a nationally representative sample of 1,986 US adults from July 22–24, 2022.

Overwhelmingly, Americans want to know where their products are made, and they can do so at retail stores by looking for a “Made in USA” label when they shop in person.  However, when they shop online, there is no country of original information provided in the description of a product by the top online e-commerce companies, Amazon, eBay, and Etsy.

In 2020, The COOL Online Act  (S. 3707) was introduced by Senator Tammy Baldwin to require a prominent country-of-origin description for all products sold online as well as clear disclosure of the country in which the seller of the product is located. However, big retailers including Amazon want to hide where their products are coming from and lobbied to prevent this bill from being voted on by the Senate.  The text of this bill was added as an amendment to the Endless Frontier Act (S. 1260), which passed the Senate, but was not voted on by the House.  A similar bill is planned to be introduced this year.

In addition, all of the e-commerce companies take advantage of the “De Minimis” rule, created by Congress as  Section 321 to the Tariff Act of 1930. “De Minimis” is Latin for “too trivial or minor to merit consideration.” Its purpose was “to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected.”

A White Paper by the Coalition for a Prosperous America (CPA) states, “The 1938 Congress set low-dollar thresholds for three different importation scenarios, assigning a $5 threshold for bona fide gifts and personal effects travelers brought with them, and a $1 de minimis for  any other situation…Congress raised our de minimis threshold to a whopping $800 in 2015. China’s is 50 yuan, which is less than $8.  Goods eligible for de minimis treatment enter the U.S. free of duties and taxes…Express consignment companies like FedEx and UPS and e-commerce sites like Amazon and eBay are the primary actors lobbying to keep de minimis as a giant open-border backdoor.

“U.S. Customs & Border Protection (CBP) itself acknowledges that raising the de minimis threshold

changed the very nature of international trade.” Under the traditional paradigm, businesses would contract foreign manufacturers, entering into supply contracts, importing particular products by the container-load, and then distribute products to domestic retailers. “Large shipments would be consigned to a single purchaser, and typically consist of the same or similar goods. Under the new paradigm, that same shipping container has individual packages destined for hundreds of individual customers who are fulfilling the legal role of “importer…”

“For regular imports, the law requires importers to provide Customs & Border Protection (CBP) an advance manifest of the incoming cargo describing it. But de minimis shipments, including millions of e-commerce packages, typically arrive with no advance information.”

CPA recommends that Congress “fix this by lowering the threshold back to $9 ($5, but adjusted for inflation).”

One company is leading the effort to adopt a private sector solution.  Don Buckner Sr., recently contacted me about the new online marketplace he is developing to provide consumers with easy access to domestic manufactured products. MadeInUSA.com.  Customers will be able to identify and search by three sourcing categories: Made in USA, Made in USA with US & Global Materials, and Assembled in the USA. They may also search by a Business Certification such as Veteran, Women, Minority, GSA Holder, or Small Business. This will increase a company’s visibility, allowing access to opportunities they might not otherwise have.  Vendors must certify that products displayed on the site are produced in compliance with the Federal Trade Commission Made in USA claim. Strict adherence is required for all vendors.  MadeInUSA is now registering vendors and products at https://madeinusa.com/vendor.  The website is scheduled to go live in late 2023.

I asked what will make his website different from other websites offering Made in USA products, and

Don said, “MadeInUSA.com is an Enterprise level eCommerce marketplace specifically designed to highlight and promote vendors to domestically produced products. MadeInUSA.com is built using the latest technology and is the most comprehensive, secure, online resource for consumers and corporate buyers  As the premier and trusted online marketplace for products made in the USA, the site offers a doorway between U.S. manufacturers and the world.”

Customers will be able to identify and search vendors by one of three categories: Made in USA, Made in USA with US & Global Materials, and Assembled in the USA. They may also search for vendors by a Business Certification such as Veteran, Women, Minority, GSA Holder, or Small Business. This will increase a company’s visibility, allowing access to opportunities they might not otherwise have.

Don explained, “The MadeInUSA.com eCommerce platform is based on a drop ship model and will collect and pay all sales tax and shipping costs. All the manufacturers must do is build it and box it”

The website is now open for vendor applications to offer products directly to consumers. Vendors may list products for free but must certify that products displayed on the site are produced in compliance with the FTC Made in USA claim. Strict adherence is required for all vendors. Manufacturers and vendors can register by visiting https://madeinusa.com/vendor to submit an application.   

U.S. consumers prefer to buy domestic products.  Today, it is hard for consumers to do that and easy for imports to by-pass customs duties.  Congress has legislators working to fix labeling and import duties. I applaud the focus of Don Buckner to reconnect U.S. manufacturers to the U.S. consumers and to create American jobs through increased demand for USA branded products. 

Industry Reimagined 2030 is working with national associations and the private sector to increase consumer purchases of U.S. goods. We share the same commitment that buying USA-made products isn’t just patriotic, it’s an investment into our communities, our labor force, and our economy.  We aim to increase U.S. purchases by $500 billion that will result in 2 million jobs by 2030.  

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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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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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California Targets Manufacturing Industry to Reduce Pollution

Tuesday, October 4th, 2022

On September 14, 2022, I had the pleasure of attending the California Metal Coalition quarterly meeting in San Diego held at the offices of C & H Machine in Escondido. The CMC website states: “California is home to 4,000 metalworking facilities, employing over 350,000 Californians with high-paying manufacturing jobs and health benefits.   Jobs provided by our industry are the path to the middle class for many Californians.”

After introductions, Executive Director James Simonelli provided an overview of legislation and rules changes that could adversely affect the metals industry in California. 

First, he discussed AB 423 – San Diego County Air Pollution Control District: members and duties. This bill was sponsored by Assembly Member Todd Gloria (elected as San Diego Mayor in 2020) on May 28, 2019 and was signed by Governor Newsome on Oct 11, 2019

He pointed out that while “existing law provides for the establishment of air pollution control districts and air quality management districts,” San Diego’s air pollution control district was handled by the County Board of Supervisors. AB 423 required the San Diego County Air Pollution Control District to become a separate agency with a specified membership as of March 1, 2021. It required local governments to appoint members to the San Diego County Air Pollution Control District governing board in a specified manner and appoint a specified liaison to consult with the United States Navy, the United States Marine Corps, and the United States Coast Guard. AB 423 greatly expanded the authority of the SDAPCD for permitting, compliance/enforcement, local air monitoring, and new rule making.

Next, Mr. Simonelli reported further developments with regard to AB 617 that was passed and signed by the Governor on July 16, 2017.  “It requires the California Air Resources Board (CARB) and air districts to develop and implement additional emissions reporting, monitoring, reduction plans and measures in an effort to reduce air pollution exposure in disadvantaged communities. It mandates a statewide strategy to reduce emissions, with a review at least once every five years. Through grants to community-based organizations, locals can more easily analyze data and participate in new air pollution reduction programs.”

The bill is supposed to provide the following benefits to disadvantaged communities:

“Quicker review of pollution control technology – In districts exceeding air pollution limits, the new law supports an expedited process to implement the best available retrofit control technology at industrial sites.

More significant penalties for polluters – Penalties increase five-fold to $5,000 for violating air pollution laws from non-vehicular sources”.

However, Mr. Simonelli said that the task force was set up to find out what concerns disadvantaged communities had with regard to pollution, and the task force is currently looking at facilities where welding of metal is being done as welding operations can create emissions of lead, hexavalent chromium, copper, nickel, and cadmium.

The next item for discussion the agenda went along with California’s recent ban of the sale of new gasoline-powered cars and light trucks by 2035.  They would also like to have Zero-Emission Forklifts.   

Mr. Simonelli said they are targeting internal combustion forklifts, such as propane powered, with a lift capacity of 12000 lbs. or less.  “New equipment cannot be purchased after 2026, and current equipment must be phased out between 2026 – 2038.  The primary option will be electric forklifts.  CMC submitted formal written comments to CARB on August 19 2022.  This measure is scheduled for consideration by the Board in 2023.”

The CRB website states, “Accelerating the transition to zero-emission technologies, where feasible, is an important component of CARB’s strategy to meet the state’s air quality and greenhouse gas reduction goals. As such, CARB staff is currently developing a measure that would drive greater deployment of zero-emission forklifts within fleets throughout the state. This measure, which has been identified in CARB’s Mobile Source Strategy, State Implementation Plan, and Sustainable Freight Action Plan, is one of several near-term actions intended to facilitate further zero-emission equipment penetration in the off-road sector.

CARB staff is currently developing a measure that would drive greater deployment of zero-emission forklifts within fleets throughout the state. This measure, which has been identified in CARB’s Mobile Source Strategy, State Implementation Plan, and Sustainable Freight Action Plan, is one of several near-term actions intended to facilitate further zero-emission equipment penetration in the off-road sector.

Forklifts operate in many different industry sectors but are most prevalent in manufacturing and at freight facilities, such as warehouse, distribution centers, and ports. There are approximately 100,000 forklifts operating in California.”

If you are thinking you are safe because you don’t live in California, think again. In reporting on the ban of gas-powered cars, CNBC reported: “The decision is expected to have sweeping impacts beyond California and will likely pave the way for other states to follow. At least 15 states including New Jersey, New York, and Pennsylvania have adopted California’s vehicle standards on previous clean car rules.”

Mr. Simonelli then discussed two proposed rules by the South Coast Air Quality Management District:

 Proposed Rule 1460 – Control of Particulate Emissions from Metal Recycling and Shredding Operations.  

This rule addresses controlling emissions (fugitive dust) from scrap recycling of which there are about 200 in the district along with several shredding facilities.  It would affect registration, housekeeping, water use, and potential enclosures at these facilities. The first Working Group meeting was held on March 16, 2022, and two additional Working Group meeting were held in May and July.  There was a Public Workshop on September 6, 2022 and a special public hearing on September 21, 2022.  A notice for the final Public Hearing was sent out on October 4th announcing the final Public Hearing to be held November 4, 2022, when the board votes on the proposed rule. 

Proposed Rule 1435 – Control of Toxic Emissions from Metal Heat Treating Processes.

This rule address controlling emissions from heat treating, forging, brazing, plating, anodizing, and other processes in which metal is heated, which may produce hexavalent chromium. The first Working Group meeting was held August 6, 2019, and the University of California Riverside is conducting research on heating metal and creating hexavalent chromium. The SCAQD website states: “Hexavalent chromium is a toxic air contaminant that is a potent carcinogen mainly produced by industrial processes. Long-term inhalation of hexavalent chromium over a lifetime can:

  • Increase the risk of developing lung and nasal
    cancers
  • Cause or worsen certain health conditions such as
    respiratory tract irritation, wheezing, shortness of
    breath etc.

It is important for manufacturers to participate in industry organizations like the California Metals Coalition to be able to keep informed about issues that will affect their industry and have an organization that will lobby for or against issues that will affect their industry. Company owners do not have the time to do research on their own with regard to what their state legislatures and regulating agencies are doing that could adversely affect their company.  I strongly recommend that company owners and executives look into joining the organization that best fits your industry in your state as well as national organizations that keep track of legislation being considered by Congress, such as the Coalition for a Prosperous America, a non-profit, non-partisan organization working to “save American manufacturing, of which I have been a member for 11 years.

It will only be through unprecedented collaboration between organizations such as CMC, CPA, and many others that we will be able to achieve the vision of Industry Reimagined 2030 to transform the narrative of American manufacturing from one of inevitable decline to one of vibrant opportunity that is necessary to revitalize American manufacturing to create more jobs and prosperity for our country. 

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Reinventing Education – Students Learning “how to think – not what to think” for New Collar Workforce

Tuesday, August 16th, 2022

Our non-profit Industry Reimagined 2030 has identified some prevailing misperceptions about manufacturing that must be dispelled if we want to be successful in growing the supply of available recruits for manufacturing jobs.  These are that “manufacturing is in inevitable decline” and “manufacturing jobs are dumb, dirty and not well paying.”

Fortunately, the importance of manufacturing during the pandemic and advanced manufacturing technologies are changing some of the longstanding misperceptions. The Deloitte and The Manufacturing Institute 2022 Manufacturing Perception Study reports “Sixty-four percent of consumers surveyed view manufacturing as innovative, up from 39% of respondents five years ago” and 77% now view manufacturing as more important than they did pre-pandemic.

I recently interviewed Glenn Marshall who is one of our advisors for Industry Reimagined 2030. Glenn Marshall is also serving on the Association for Manufacturing Excellence Management team to help lead a Manufacturing Renaissance. He told me that this “initiative is designed to reduce the critical shortage of skilled workers for advanced technology and manufacturing. He reaches out to business leaders, academia, students, veterans, and policymakers to promote innovative ideas to create ladders of opportunity to make ‘Made in America’ a reality by leading initiatives to design and build things at home, again.”

Prior to retiring, he said that he was the benchmarking/process excellence advocate for Northrop Grumman and Newport News Shipbuilding (NNS). He engaged with all levels of the corporation, supply chain, and the Navy and led the proposal team from NNS to support the Navy’s Task Force Lean initiative. He continues to work with NNS in its outreach to the public schools and colleges Career Pathways program.

He said, “We struggled along with other employers in Virginia and across the nation to find the kind of skilled workers they needed so realized that they had to get involved with the local schools. I met with the superintendent of the Williamsburg James City County (WJCC) School District and arranged to have students tour local manufacturing facilities   part of national Manufacturing Day. These employers showed the students, teachers, and parents the kind of good paying jobs are available and what they could earn doing these jobs which got the students interested. 

Then we worked with the New Horizons Regional Education Center (NHREC) in Virginia and other employers to create an expanded   pubic private partnership to provide career and technical educational options for students within the school districts. NHREC is the largest of nine regional centers in the Commonwealth of Virginia.  NHREC has become a benchmark for community partnerships

The New Horizons Regional Education Center (NHREC) in Virginia has engaged in a public private partnership with Newport News Shipbuilding Apprentice School, employers, public school leaders, legislators and families. They are working to provide career and technical educational options for students within the school districts. NHREC has become a benchmark for community partnerships. Educators and families are discovering that career technical initiatives valued by employers can provide an equitable gateway for each student to learn how to be capable of achieving their career goals and dreams.

Glenn commented, “Upcoming graduates will step into a rapidly changing workforce, with a growing number of “new-collar jobs” requiring specialized, technical skill sets. The future of learning is changing — Beyond creating a world online, advances in artificial intelligence, cognitive technologies, and robotics are upending traditional assumptions about jobs and technology’s role in the workplace. For kids wanting to seize these opportunities, having transferable skills will be more important than a degree. For many, a strong foundation in science, technology, engineering, and math skills will be invaluable. And for some, apprenticeship and certification programs will be essential.”

Glenn also sent me information about Virginia’s lab schools. He said, “These schools are partnerships between public and private universities and colleges, as well as private companies and local K-12 schools. Lab schools that have a specific focus, such as STEM or literacy, or a particular skill or industry, will create learning environments that engage students in hands-on learning.”  My research discovered:  “Legislation approved by the 2010 General Assembly (HB 1389 and SB 736) and the 2012 General Assembly (HB 577) allows any public or private institution of higher education in the commonwealth with an approved teacher-preparation program to establish a college partnership laboratory school…College partnership laboratory schools are public schools established by contract between the governing board of a college partnership laboratory school and the Board of Education.”

I told him that California had passed legislation to re-establish career technical education for grades 7-12 in 2002 (Senate Bill 1934 (McPherson), a companion bill to the earlier Assembly Bill 1412 (Wright), passed in the same year) but it didn’t get fully implemented until 2005. Now, I know of three high schools that teach manufacturing skills such as machining and welding in the San Diego region. The training is a two-year program for juniors and seniors and students receive certifications upon graduation.

Glenn said, “Companies want graduates with an eye for detail, creative critical thinking skills, a collaborative mindset and an ability to deal with ambiguity and complexity. New graduates will need foundational skills in reading, writing math and science, but also know how to think – not just want to think.”

He concluded by saying, “To achieve this goal, educators and business leaders must form public-private partnerships and join with organizations like the Association for Manufacturing Excellence (AME), the Reshoring Initiative and others to engage in reinventing the educational experience. The goal is to graduate all students with the critical thinking skills to adapt to the evolving challenges of new-collar careers and the ever-changing demands for the future of work.

The Association for Manufacturing Excellence will host an international conference in Dallas Texas October 17 – 20, 2022.  Register at  https://www.ame.org/ame-dallas-2022  One of the featured sessions will be an international panel discussing how companies are addressing the need to replenish the talent pipeline with skilled career ready new collar workers: 

In order to achieve the goal of creating five million more manufacturing jobs by 2030, we encourage manufacturers to use the increased public awareness to promote manufacturing’s benefits, opportunities, and technological advances to increase the number of youths interested in manufacturing careers. Manufacturers should emphasize that advanced manufacturing technologies now provide, safe, clean working environments that pay well and offer highly transferable skills that enable career advancement.  As incentives, companies can offer internships, work programs, certification or degree programs, and apprenticeships to increase the talent pool and develop the skilled workforce they need to grow their businesses. 

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