Archive for the ‘Manufacturing’ Category

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Who Are My Heroes? Part One

Tuesday, April 21st, 2020

As you might expect my heroes are people who have played a role in trying to alert Americans to the effects to our economy of the decimation of American manufacturing and the dangers of outsourcing manufacturing to China and other countries.  These are real people and none are elected officials.

This month marks the 13th year of my journey to do what I could to save American manufacturing. In May 2007, I e published one of my periodic San Diego County Industry reports that I had been writing since 2003.  I titled it, “Can U.S. Manufacturing be Saved?” My report had grown from four pages to 13 pages, and I realized that what I was documenting about the loss of manufacturers in San Diego and California was going on all over the country.  That’s when I made the decision to start writing my first book, Can American Manufacturing be Saved? Why we should and how we can, published in May 2009.  In the course of researching and writing my first book, my second edition of the same (2012), and my third book, Rebuild Manufacturing – the key to American Prosperity (2017), I have connected with many people who shared my concerns and were early advocates of saving American manufacturing.

My first set of heroes are those who either wrote books, articles, or newsletters that I came across researching my first book. When I was writing my reports, I was blaming the loss of manufacturing in California on the bad business climate, high taxes, and the cheap Chinese wages. These heroes expanded my knowledge greatly by showing that it was our primarily our national trade and tax policies, the trade cheating of China and other Asian countries, and corporate greed that was responsible for losing over five million manufacturing jobs between the year 2000 and 2009.  In alphabetical order, my heroes are:

Michael P. Collins is author of Saving American Manufacturing, Growth Strategies for Small and Midsize Manufacturers, published in 2006 and its companion handbook, The Growth Planning Handbook. Prior to becoming a writer, he was Vice President and General Manager of two divisions of Columbia Machine in Vancouver Washington. He is President of MPC Management, a consulting company that focuses exclusively on the problems and challenges of small and midsize manufacturers (SMMs) of industrial products and services. His book is written from the viewpoint of what manufacturers can do to save themselves and grow their business.  I arranged for him to come to San Diego to give a presentation to the Operations Roundtable of the American Electronic Association in 2011.

Lou Dobbs, is an American television commentator, radio show host, and the anchor of Lou Dobbs Tonight on Fox Business Network, and author of Exporting America, Why Corporate Greed is Shipping American Jobs Overseas, published in 2004 as hard cover and 2006 as a paperback. In his book, he “takes aim at the corporate executives and Washington politicians who profit by exporting U.S. jobs overseas—and shows readers what they can do to save not only their own careers, but the American way of life.

Ralph Gomory, who is well-known for his mathematical research and his technical leadership. For twenty years he was responsible for IBM’s Research Division, and then for 18 years was the President of the Alfred P. Sloan Foundation. He is the co-author with the late William J. Baumol of the book, Global Trade and Conflicting National Interests, published by MIT Press in 2001. After connecting by phone and email for years, it was nice to finally meet him at the Coalition for a Prosperous America trade conference in Washington, D. C. in 2018.

Richard McCormack, journalist and founder/publisher of Manufacturing & Technology News which he found in 1994. McCormack also served as the editor of the 2013 book on revitalizing manufacturing, ReMaking America. I read every issue of MT&N from July 2007 until it stopped publication at the end of 2016. He was also recognized as an American Made Hero by AmericanMadeHeroes.com for his newsletter “coverage of the profound financial and economic ramifications of the shift of industrial capability from the United States to Asian competitors.” He wrote “thousands of articles on outsourcing, industrial and technological competitiveness, government policies, and trends related to management, quality, technology and markets.”Mr. McCormack is currently Press Secretary and Program Manager, Office of Public Affairs, for the Department of Commerce.

Peter Kent Navarro is a Harvard Ph.D. economist and author of several books. I read his book The Coming China Wars, published in 2006, while I was researching my book. At that time, he was a professor of public policy at the University of California, Irvine. He currently serves in the Trump administration as the Assistant to the President, Director of Trade and Manufacturing Policy, and the national Defense Production Act policy coordinator. I first met Mr. Navarro when he was a professor at the University of California, San Diego and running for mayor in 1992. I also had the pleasure of seeing him when I attended the trade conference in 2018. I also read his book, Death by China, which he co-authored with Greg Autry, published in 2012.

Raymond Richman, Howard Richman (son), and Jesse Richman (grandson), authors of Trading Away our Future: How to Fix Our Government-Driven Trade Deficits and faulty Tax System Before It’s Too Late, published by Ideal Taxes Association in 2008. Raymond died in October 2019 at the age of 101. His tribute by Ideal Taxes states, he “authored four books, dozens of journal articles and hundreds of commentaries about economic development, tax policy and trade policy…Beginning with a commentary in the Pittsburgh Tribune-Review on September 14, 2003 (The Great Trade Debate), he became one of the first advocates of a policy of balanced trade, an alternative to the free trade vs. fair trade debate. His essential argument was that trade, free or not, benefits both countries if it is balanced.” I am sorry that I didn’t get to meet him before he died.

Roger Simmermaker, author of How Americans Can Buy American: The Power of Consumer Patriotism, third edition published in 2008. He also writes Buy American Mention of the Week articles for his website and World New Daily. His book provides a guide to assist American’s who wish to purchase products made in America and discusses the importance of “Buying American” for the future economic independence & prosperity of America. He earned special recognition as an American Made Hero. After years of connecting to him by phone and email, it was a pleasure to also meet him at the same trade conference in 2018.

Alan Tonelson, a Research Fellow at the U.S. Business and Industry Council Educational Foundation, and a columnist for the Foundation’s globalization website, Tradealert.org and a Research Associate at the George Washington University Center for International Science and Technology Policy. He is also the author of The Race to the Bottom, published in 2000. “He has written extensively on the trade deficit between the United States and other countries. He has also written on free trade, globalization and industrial decline. He argues that U.S. economic policy should aim for “preeminence” over other countries, just as, he believes, other countries’ economic policies seek their own national interests. He is critical of various forms of “globalism” and internationalism.”

When I was researching my first book, the U.S. Business and Industry Council was the only organization that had a written plan to save American Manufacturing.

I introduced my book as a speaker at the Del Mar Electronics Show in San Diego County, California on May 6, 2009, and had my book on display at my company’s booth at the show. One of the first persons to buy my book was Adrian Pelkus, President of contract manufacturer, A Squared Technologies.  He was also the informal leader of the steering group running the San Diego Inventors Forum.  He invited me to the next SDIF meeting which I attended, and then invited me to join the steering committee, which I did.  After reading my book and endorsing the purpose and ideas I presented in my book, the steering committee changed the focus of SDIF from helping inventors source their products in China to sourcing the manufacture of their products in the U.S.

The SDIF meetings have an informal curriculum of topics to cover in a year, and I have been giving an annual presentation on how to select the right manufacturing processes and vendors to make their products.  It has a pleasure to be able to help so many inventors and entrepreneurs source their products in America.

My connections to theses heroes led me to connections with many other people and organizations who became part of my second set of heroes after my book was published.  I will write about these people in My Heroes Part Two. 

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Posted in Economy, General, Jobs, Made in America, Manufacturing, Trade Policy | No Comments »

Reshoring Critical Pharmaceuticals and Manufactured Goods Would Create Millions of Jobs

Tuesday, March 31st, 2020

It’s a pity that it took the coronavirus pandemic to wake up Americans to the dangers of our dependence on foreign sources for pharmaceuticals and health care products. Perhaps we could have saved lives if our leaders had taken heed to the warning of co-authors Rosemary Gibson and Janardan Prasad Singh in their book China RX, published in 2018. The authors exposed how the pharmaceutical industry has transferred the manufacturing of generic drugs, vital medicines and medical devices to China and other countries, which has resulted in great risk to the health of Americans as well as a substantial risk to our national security.

In their book, they quote Dr. Goodman, dean of the Milken Business School of Public Health at George Washington University, saying, “It is a matter of national security that we have the essential drugs we need…I think it is time for an examination, for some of the most critical drugs, and it’s not just drugs, medical supplies, masks are all made overseas. Do we need to think about having at least some resilient manufacturing capacity built in this country?”

Yes, we do need to return the manufacture of pharmaceuticals and medical devices to benefit the health and safety of all Americans. Additionally, there would be economic benefits. On March 17th, the Coalition for a Prosperous America released a report on the results of the investigation conducted by Steven L. Byers, PhD and Jeff Ferry of their research team into the potential economic benefits of reshoring pharmaceutical production to the U.S.  They “found that an ambitious but realistic reshoring program could create 804,000 US jobs and add $200 billion to annual GDP in the first year.”

Their investigation showed that imports of pharmaceuticals had increased “dramatically as US-based drug manufacturers moved manufacturing facilities offshore.” By 2019, “pharmaceuticals ranked third as a US import category [$74 billion], behind automobiles ($180 billion) and crude oil ($132 billion) …”

The report states” Eighty percent of all pharmaceutical imports are accounted for by the top ten countries. Seven of the top ten countries we import from are in Europe…” Ireland is number one followed by Germany, Switzerland, Italy, India, Denmark, Belgium, Canada, United Kingdom, and Japan of the top ten. “China is well behind the leaders, in 17th place, with just $1.6 billion of pharmaceutical imports last year.”

However, “the Census category of pharmaceutical imports does not include the key ingredients that go into pharmaceuticals, known as Active Pharmaceutical Ingredients (API).” In recent testimony to Congress, Rosemary Gibson, author of China RX, stated “that three antibiotics used to treat coronavirus or related infections, azithromycin, ciprofloxacin, and piperacillin/tazobactam, are all dependent on supplies of APIs from China.” Senate Finance Committee chairman Charles Grassley commented, “80 percent of Active Pharmaceutical Ingredients are produced abroad, the majority in China and India.”

Byers and Ferry “used  the REMI Policy Insight Model[1] to estimate the impact on the US economy of restoring our level of pharmaceutical imports to the level of 2010, when we imported $61.6 billion of pharmaceuticals [and] reduced chemical imports by $4.9 billion in [their] simulation, to account for the increased imports of chemical ingredients that go into pharmaceuticals.” They ran the “model over a five-year period, 2020 through 2024.”

While the creation of jobs was the highest the first year at 804,000, the subsequent years created 614,000 in 2021, 548,000 in 2022, 453,000 in 2023, and 371,000 in 2024 for a total of 2,382,000 additional jobs.

Pharmaceutical and medicine manufacturing jobs pay a median income of $74,890, which is “47 percent higher than the median for all private-sector employees.”

The authors comment that “The economic benefits of reshoring US pharmaceutical production are thus substantial. They are also strategic; in that they would reduce US dependence on potentially hostile countries like China. In times of pandemic, there is also a non-zero risk that even friendly nations will prioritize their own citizens over exports. At the very least, the US needs a comprehensive audit of its dependence on individual nations and companies for pharmaceuticals, APIs, and any other key inputs.”

They conclude that “The US has become increasingly dependent on imports of foreign produced pharmaceutical and other health care products as well as the ingredients that go into their production. As a result, the supply chain is highly susceptible to interruption which would put significant pressure on our healthcare system…The benefits of reshoring pharmaceutical and ingredient production are large in terms of national security, patient safety, and economic welfare.”

On Friday, March 27th, the Trump Administration announced it would use the Defense Production Act, to compel General Motors to make more ventilators quicker than the company had planned to produce..

In an article in the Washington Post on March 28th, Joshua Gotbaum wrote: “Under the Defense Production Act, the federal government can, like a traffic cop, direct that inventories be allocated where they are needed most urgently. That’s what FEMA does during floods and hurricanes…The DPA also allows government to move its orders to the front of the line. The Defense Department does this regularly, but the act can be used for more than defense…The government can also use the act to order, and then pay for, expanded production, with new products or new plant capacity. “  

He recommended “The administration needs to act quickly, the DPA using all of its authority to procure not just ventilators but also test kits, masks and other equipment for health-care workers and covid-19 victims.” Mr. Gotbaum speaks from experience as he administered some Defense Production Act authorities as assistant secretary of defense in the 1990s and is currently a guest scholar in the Brookings Institution’s Economic Studies Program.

The benefits of reshoring would be even greater if we returned all critical manufactured goods to the U.S. than just returning pharmaceutical and medical products.  According to recent Reshoring Initiative data, Harry Moser, over 3,000 companies have reshored, creating about 740,000 jobs.  He estimates that if we reduce our trade deficit caused by importing more than we export by 20%, it would create one million jobs. Using the free Total Cost of Ownership Analysis calculator available at www.reshorenow.org would help more companies return manufacturing to America.

We need to ensure that we will have the critical products needed to weather future unforeseen events. In my opinion, the policies to address the Coronavirus crisis should be just the beginning of a concentrated effort to reshore all critical manufactured goods to America. Let’s use all of the potentially available policies:

  • Invoke the Defense Production Act on all critical manufactured goods
  • Impose 25% tariffs on all imported goods from China
  • Incentivize manufacturers to produce products that were offshored to China

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U.S. Private Sector Jobs Have Declined since 1990

Tuesday, December 10th, 2019

On November 14, 2019, Cornel Law School “announced the launch of a new tool for evaluating the U.S. employment situation and predicting related variables: the U.S. Private Sector Job Quality Index (JQI).” The Index described in the White Paper represents 18 months of research by Daniel Alpert, adjunct professor at Cornell Law School and founding managing partner of the investment bank, Westwood Capital, LLC, Jeffrey Ferry, chief economist at the Coalition for a Prosperous America (CPA), Dr, Robert C. Hockett, Professor of Law at Cornell Law School, and Amir Khaleghi, a Research Fellow at the Global Institute for Sustainable Prosperity (GISP) and a PhD student at the University of Missouri–Kansas City.

At the many economic summits I’ve attended over the past 25 years, I’ve heard economists state that the U. S. is creating more low paying jobs than high paying jobs but there hasn’t been any data available to track this trend on a regular basis.  For the first time, the Job Quality Index provides a tool to measure “desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs.”

The authors define job quality as “the weekly dollar-income a job generates for an employee” They explain that “The JQI is an analysis of weekly incomes earned by the holders of each of the private sector P&NS jobs in U.S. It derives its data from the hourly wages paid, and hours worked by, holders of jobs in 180 separate sectors of the American economy.”

Since the end of WWII, the “percentage of private U.S. jobs in the service-providing sectors increased steadily from approximately 55%” to “around 83.5%” at the end of the Great Recession in 2009.  It has remained flat since that point. However, the paper states that “While service-sector growth as a percentage of all jobs has leveled off, job quality continues to worsen.”

The authors commented, “As weekly earnings of services sector jobs have, to an increasing degree, materially lagged those of jobs in the goods- producing sector (Figure 6), an increase of the percentage of service sector jobs would naturally result in an increase in the number of jobs below the mean, as reflected in the JQI.”

In addition, the authors note that the gap between higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs” has widened almost four-fold to $402 in 2018 from $104 in 1990”  

The paper states, “jobs as tracked by the JQI are defined by reference to data on private sector (nongovernmental) employment provided by third party employers—it does not include self-employed workers. In the first iteration of the JQI being presented in this paper, the index covers only production and nonsupervisory (P&NS) positions, which account for approximately 82.3% of the total number of private sector job positions in the country.”

By the end of 2020, a second index (JQL-2) “will run and be maintained side-by-side with the original JQI-1 index. This will track all private sector jobs, with data commencing in 2000.”

Monthly revisions to the JQI-1 will be published “contemporaneously with the monthly release of U.S. employment data by the BLS (generally on the first Friday of each calendar month. In the future, the JQI will be “presented as a three-month rolling average of monthly readings. This is done to address month over month variability which is too volatile to be a reliable directional trend measure.”

The November JQI stated:  “the U.S. Private Sector Job Quality Index (JQI)® has been revised to a level of 80.39, representing a minor decline of 0.04% from its level one month ago and reflecting a somewhat lower proportion of U.S. production and non-supervisory (P&NS) jobs paying less than the mean weekly income of all P&NS jobs, relative to those jobs paying more than such mean. The mean weekly income of all P&NS jobs as of the current reading (reflecting the level as of October 2019) was $794, a change of 0.9% from its level the month prior.”  The chart released is shown below:

The paper is divided into five parts:

Part I — Need for the JQI: The Unmeasured Problem with American Jobs

Part II — Construction of the JQI: Capturing and Tracking the Data (explains the development technical detail, setting forth the assumptions and algorithms inherent in its generation)

Part III — Applying the JQI: Illuminating Areas of Confusion in Economic Transmission (discusses the relationship and potential forecasting usefulness of the index in connection with other economic data)

Part IV — Further Developing the JQI: What the Future Holds for the Index (discusses future maintenance and expansion of the index)

Part V — Conclusion: An Index for our Time

Among other things, Part III discusses “The relevance of the resulting “Phillips Curve,” relating lower unemployment to higher levels of inflation…[which] remains—in various modified forms—part of central bank policy consideration to this day.”

It also discussed the impact of the JQI on household incomes and consumption with regard to the U.S. Balance of Trade in Goods. The authors comment, “…as American consumption has continued to rise, the goods consumed had to be produced by someone—even as U.S. goods production jobs plummeted. As evidenced by the U.S. balance of trade over the past several decades, goods consumed by Americans at the margin came increasingly to be manufactured abroad”

They later comment, “The decline in U.S. job quality over the past three decades is linked substantially to a decline in goods-producing jobs.”

 Some of the findings of the research that were of particular interest to me in Part III were:

  • “The JQI’s definition of high-quality jobs (those above mean weekly earnings) provided an average of 38.26 hours of weekly work at year-end 2018, compared with low quality (those below the mean) which provided 29.98 hours.”
  • The percentage of goods producing jobs as a percentage of total private sector jobs dropped from 25.6% in 1990 (down from a high of 43% in 1960) to 16.4% in 2018.

The researches commented, “Surprisingly, the data as analyzed with the JQI also tend to predict the performances of many other salient metrics of the national economy and—in the end—financial markets too…The JQI can significantly improve decision making of policymakers as well as better-inform participants in the financial markets.”

In their Conclusion, the authors remind us of the fact “that the US manufacturing workforce has declined dramatically in the past three decades.” Between 1970 and 1990, the decline was gradual, going down from “17.8 million manufacturing workers” to “17.7 million.” By the year 2000, “it was down 2.4 percent to 17.3 million manufacturing workers.” In the next decade, “manufacturing employment fell off a cliff. By 2010, manufacturing employment was down a shocking 33.2 percent at 11.5 million. Since 2010, the figure has crept up only somewhat, to reach 12.8 million in May 2019.”

 “Meanwhile, the total US working population has grown dramatically over those years. In 1970, manufacturing workers accounted for 22.6 percent of total US civilian employment. As of May 2019, they accounted for just 8.2 percent of the total.”

They comment, “An important question surrounding the decline of manufacturing is whether those leaving manufacturing are transitioning into better or worse jobs.  After building the new Job Quality Index, “the answer is that lost manufacturing jobs were chiefly replaced by lower-wage/lower hours service jobs.”

The White Paper confirms my research in writing three books and hundreds of articles in the past ten years — losing millions of manufacturing jobs between 2000 – 2010 resulted in a decline in the middle class because manufacturing jobs are the foundation of the middle class. Without a strong middle class, we risk becoming a nation of “haves” and “have nots.” I hope the Job quality Index will wake up more economists, Congressional representatives, and employees of government agencies to the dangers of this trend before it’s too late. 

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Women Lead Made in America

Tuesday, November 12th, 2019

Few people are aware that more than 11.6 million firms are owned by women, employing nearly 9 million people, and generating $1.7 trillion in sales as of 2017.  In fact, women run businesses are helping to lead a resurgence in American manufacturing.

Many women-run businesses participated as exhibitors in the Made in America show, and as I mentioned in my last article, I participated as a panelist for the Women Leading America Made session that featured five women running their own American-made businesses. Moderator Rose Tennent asked each of us to briefly describe our businesses.

Barbara Creighton, CEO of Sarati International, Inc. started her company in 1992 in south Texas to make private label prescription drugs, proprietary drugs, and skin care products. She said, “We develop custom formulations and then private label them. We make products like you would purchase, and we private label them. We are woman owned and woman run.”

Beverlee Dacey, owner of Amodex Products, said that her parents started the company in the early 1970s, and now she runs it.  “We make a soap-based product that is an ink and stain remover liquid solution and do our own manufacturing in Bridgeport, CT. Amodex is the only stain remover recommended by the manufacturer of Sharpie to remove Sharpie ink from anything.”

Connie Sylvester said, “I am an inventor and founder of two companies, Water Rescue Innovations and Mommy-Armor USA.  I founded my first company six years ago in Duluth, MN to make the ARM-LOC water rescue device that slides onto the victim’s forearm and locks into place so that a rescuer can pull the victim to safety.  I sell to a male-dominated industry of first responders, fire-fighters, police, and rescue squads. I’m often the only woman telling men how to rescue people.”

She shared how she started her second company, Mommy Armor USA. On February 14, 2018, after she dropped off her son at school, she got a text message saying there was a school shut down due to a shooter. She was thankful that it wasn’t at her son’s school, but her heart broke for the 17 parents that lost their children at Parkland in Broward County, Florida.  She said, “There was a problem, and I came up with a solution. I had some bullet proof material and suggested to my son that I could make a bullet-proof backpack, but he said they had to leave their backpacks in their lockers. I asked what they got to take to class, and he said they get to take their 3-ring binders. My other son said they get to take their daily planners. So, I got the idea of making a bullet-proof cover for the 3-ring binder and the daily planner.”

She then demonstrated how the bullet proof daily planner could be attached to the 3-ring binder and how it could be used to shield your body like armor. She is just launching the product in time for Christmas.  She has the Mommy Armor fabricated by a company in the hills of the Appalachian Mountains, Capewell Aerial Systems LLC.

Leigh Valentine, founder of Leigh Valentine’s Beauty said that she went through a terrible divorce, lost everything, slept on the floor, and was on welfare for a while. Then, the Lord gave her an incredible idea for a non-surgical face lift product made from plant extracts that dramatically firms skin and takes away wrinkles.  She was on the QVC shopping network for 14 years and sold over 40,000,000 products.  She said many people have told her she could save money by buying from China, but she said, “All of my products are made in America, and I try to buy as much as I can in America.”

I shared that when I started my sales agency 34 years ago, I chose to only represent American manufacturers.  I was a woman in a man’s world because I started out selling castings, forgings, and extrusions. No buyer or engineer I saw had ever been called on by a woman.  I visited all of the companies I represented and learned everything I could about their manufacturing so I would be informed. When I saw what was happening to manufacturing and how it was being decimated, I started writing blog articles and reports and then wrote my book. Can American Manufacturing be Saved” Why we should and how we can that came out in 2009. A second edition came out in 2012, and I have written over 300 articles in the past ten years. We have saved American manufacturing, and now we need to rebuild it. I showed everyone my latest book, Rebuild Manufacturing – the key to American Prosperity.

Rose asked us to what message we would give to a woman who has an idea for a product or who has already started her own business.  Leigh said, “You really have to fight to bring your product to market. I partnered with some people that I wish I never had partnered with.” She would advise women that if they need a partner “be careful to pick a partner that has the same values and vision you do. They will steal from you and lie.” In the end, it cost her $6 million to end the partnership.

Beverlee said, “When you run a company, don’t think you are ever going to reach an equilibrium where you don’t have problems. Every single day there are stress and problems. Then you realize that the problems don’t go away, they just get bigger and worse.  It is normal.  It is part of what you do when you run a company. The other lesson I have learned is don’t grow too fast. There is only so much you can do and only so much you can do well. We are only a five-person company. When we got picked up by Lowes, we made the decision not to go with Home Depot because we wanted to be a good partner to Lowes.”

Barbara said, “Don’t believe all the lies that are being sold to young people. There is no a glass ceiling. Men created the glass ceiling to keep women down. I have never felt held back by a glass ceiling. I was the first women on the west coast to sell chemicals, and the first women in land development. The ceiling is only created by you.”

Connie said, “Don’t set the bar too low and never give up.”  She did high jumping like her brothers and they never lowered the bar for her even though she is only 5 ft. 3 in.  She actually coached track and field for five years.

I said that I would advise a woman to never stop learning. “I recently got my certificate in Lean Six Sigma to be of more service to my customers. Service is all I have to offer — service to the companies I represent and service to my customers.  When I started my company, I chose a motto:  you achieve your goals by serving others.”

Rose commented that there seems to be more comradery at this trade show and asked us to share what we thought about the show.

 Leigh said, “It is such an honor to be here. I am thrilled and honored to be here. This is a movement, and we’ve got to stick together and support each other’s businesses.”

Connie said, “This is like a family. I was actually at another Expo here and saw an announcement on the TV in my hotel about this show, and I knew I had to be here.  When I walked the aisles, I knew I had found my people. Everyone of these people know what it takes to make products in America.  We could have hit the easy button and made things cheaper in other countries, but we chose to make our products in America.”

Barbara said, “In this incredibly divisive world, we need to help one another. I am extremely excited about being able to share joy. I just try to lift others up. We are Americans and are proud to be Americans, and we want to have joy in a country that has given us amazing opportunity.”

Beverlee said, “The Made in America movement has been around for awhile now, but what I have enjoyed the most is that for the first time we have a “hubable” wheel where there were a lot of silos. All of us here are together in this.  It’s not a trade show, it’s a forum.”

I said, “This show is a dream come true for me. Most people don’t realize that manufacturing is the foundation of the middle class. We lose manufacturing and we lose the middle class. We’ve had wage stagnation for 20 years, and my children aren’t as well off as I was. We have to get the message across to our children and grandchildren of how important it is to make things in America again. I heard it said that there are only three ways to create tangible wealth: “Grow it, mine it, or make it.” We need to create wealth for our country by making things in America so we can have a safe and free country. After our panel session ended, we said that we would look forward to seeing each other again at the 2020 Made in America Show. We know it will be even bigger and better, so don’t miss it.

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Made in America 2019 Trade Show Sparks New Revolution

Tuesday, October 22nd, 2019

It was a dream come true to see so many innovative companies making products in America when I attended the first Made in America trade show that was held October 3-6th in Indianapolis, IN. The event began during Manufacturing Week declared by President Trump and the show opened to the public on the national Manufacturing Day. Not only was it the largest-ever public showcase of American made products, the focus was different than any other trade show I’ve ever attended. 

My plane from San Diego arrived too late Thursday to attend the gala kickoff party where the band Big & Rich and special guest Ted Nugent entertained the audience. While at the show, John Rich announced his generous donation of over $50,000 to Folds of Honor, a nonprofit organization that provides educational scholarships to families of military servicemen and women who have fallen or been disabled while on active duty in the U.S. Armed Forces.

Fox News sent Fox & Friend’s correspondent, Carley Shimkus, to report live from the show on Friday and Saturday, and she did an update every hour (watch the videos at foxnews.com).

On Friday, opening ceremonies began at 9:00 AM, an hour before the show opened to the public. After prayer was offered, a color guard presented the flag for saluting, and the national anthem was sung anthem, the audience was welcomed by show’s founder and chairman, Don Buckner, and COO, Brad Winnings, and Indianapolis Mayor Joe Hogsett welcomed everyone.

Then, Lloyd Wood, Deputy Asst. Secretary for textiles, Consumer Goods and Materials made brief comments on behalf of the Trump Administration, noting that 500,000 manufacturing jobs have been created since the beginning of 2017, there are 7,000,000 current job openings, and 300 companies of the National Council for American Workers have signed a pledge to expand apprenticeships  He also mentioned that President Trump just signed trade agreement with Japan and is working on trade agreement with United Kingdom.

Economist Stephen Moore, was the featured pre-show speaker. Highlights of his comments were:  average income has increased by about $5,000 per year since 2017, unemployment is down to 3.4%, and Black and Hispanic unemployment is at record low.  Federal tax revenue was higher than any previous year; regulations are down by 34%, yet air quality is better as CO2 emissions have been reduced by 70-80%. Also, for the first time, we are a net exporter of oil and gas.  

Radio talk show host Mike Gallagher, one of the most listened-to radio talk show hosts in America, broadcast his show Friday at the booth of Mike Lindell of My Pillow fame. Mr. Lindell had a booth for his new venture, My Store, which will feature only American-made products for online sales. He was one of the guests on the show along with economist Stephen Moore and Mike Lindell.

After the show opened, there was a simultaneous schedule of speakers from 11:00 AM to 3:00 PM.  Harry Moser, founder and president of the Reshoring Initiative started off the sessions with “What’s Happening with Reshoring.”  By using the TCO Estimator, nearly 3,000 companies have reshored manufacturing to America since 2010 creating nearly 800,000 jobs.  Next, marketing guru, Steve Schwander discussed “How to listen to the customer.”  After lunch, the afternoon sessions were “Protecting your IP from abuse in China” by Amy Wright and “Stay out of trouble when making Made in the USA claims” by Russell Menyhart. Mark Andol, CEO of General Welding & Fabricating, concluded the afternoon session by telling how his Made in America Store has reached big milestones in its mission to save and create American jobs by boosting US manufacturing for nearly a decade. His store in Elma, NY features over 9,000 Made in USA products.

I didn’t spend my time listening to these presentations as I wanted to see the displays by exhibitors.  Outside of the Consumer Electronics Show in Las Vegas, I’ve never been to a show with so much variety of consumer products.  Of course, most of the products exhibited at CES are made offshore, whereas all of these products were made in America.  It was a pleasure to see American made bedding, mattresses, furniture, rugs, draperies, flatware, dinnerware, cook ware, cabinets, and other kitchen goods. These are all industries that some said were lost forever.  There were also bicycles, sports equipment, tools, and toys.  It was especially nice to see Made in America apparel and make up.

While a few of exhibitors probably exhibit at county fairs for their homemade crafts and food stuffs like candy, popcorn, pickles, and sausage, other exhibitors were the more traditional plastic, rubber, and metal fabricators that exhibit at shows like WESTEC, FABTECH, and the regional Design2Part shows. There were also companies that probably don’t exhibit at traditional trade shows, including a company that builds roller coasters.  With about 300 exhibits, it took me both days to completely walk the show as I stopped to talk to so many exhibitors. 

While Friday’s show ended at 5 PM for the public, it was followed by a dinner and speeches for exhibitors, sponsors, and VIP’s.

First, Don Buckner shared his story of how and why he started the Made in American show.

Mr. Buckner said, “I started a company in my garage 20 years ago and recently sold it.  Now I have the resources, capitol, and desire to finally do something.  We decided to make a difference. So, we came up the idea of a trade show in Indianapolis. We rented the Indianapolis convention center for the first week of October to bring 700-800 manufacturers and celebrate U.S. manufacturing in a way that’s never been done before. If you draw a circle around Indianapolis, about a 200-mile radius, probably about half of our manufacturing is in that circle. And the other thing is the heartland of this country truly does believe in buying American-made products being pro union, pro-labor and blue collar.  The name and brand of Made in America has been around for over 100 years. It has value and means quality.  According to Consumer Reports, 80% of Americans still want to buy an American made product, and of those 80%, 60% of those are willing to pay a premium for an American product….” 

Next, Wahl Clipper Corporation, the household name in grooming, presented a $75,000 check to Jeremiah Paul, spokesperson for Wounded Warriors for the Wounded Warrior Project.

Hernan Luis y Prado, founder and CEO, described Workshops for Warriors (WFW), which is a GuideStar platinum-rated nonprofit that provides training for veterans, wounded warriors and transitioning service members to fill America’s void of qualified CNC machining, 3-D printing, welding and advanced manufacturing workers. Since WFW is located in San Diego, I’ve written three articles in the past to support his mission and goals.

Alfredo Ortiz, President and CEO of Job Creators Network, briefly explained that JCN is a nonpartisan organization whose mission is to educate business leaders, entrepreneurs, and employees and provide them “with the tools to become the voice of free enterprise in the media, in Congress, in state capitals, in their communities, and their workplaces—allowing them to hold politicians accountable to job creators and their employees.”

Paul Wellborn, President and CEO of Wellborn Cabinets, accepted the award for American manufacturer of the year on Friday night because he had to leave the show to attend the wedding of his grandson on Saturday. A whole Made in America kitchen was on display at his company’s booth. The award categories highlighted rebuilding America’s manufacturing workforce through reshoring and innovations in manufacturing techniques. The rest of the awards were presented on Saturday night.

My Pillow’s founder and President, Michael J. Lindell, ended the evening with his personal story of going from being a crack addict to becoming a multimillionaire business owner thanks to the intervention of friends and help from God. The evening event lasted until 9:30 PM and ended with a closing prayer.

There is no way to do justice to the show in one article, so my next article will cover day two of the show.

One of the video promos for the trade show said, “There was a time not too long ago when a little elbow grease and a whole lot of pride defined American made.  We were industrialists driven by determination and innovation. We set the bar for quality and ingenuity, generation after generation. Something changed — Technology, foreign influence, loss of respect for the American worker.  It cost us our jobs, factories, communities, our homes. Some called it a natural evolution.  We call is the spark of a new revolution. We are redefining the next chapter in American made history bringing prosperity to the red, white, and blue behind every man and women committed to returning our country back to its glory days of manufacturing.  We invite you to join us in this monumental revolution.  The power of change belongs to us…” 

I believe this trade show did become the spark of a new revolution and I am joining it. I made it my goal ten years ago when I published my first book, Can American Manufacturing be Saved?  Why we should and how we can to do everything I could for the rest of my life to first save and then rebuild American manufacturing to create prosperity. I am glad I am no longer a lone voice in this cause. Please join us.

Posted in Economic Development, Made in America, Manufacturing | No Comments »

CPA Report Shows Higher China Tariffs Could Increase U.S. Jobs and GDP

Monday, August 19th, 2019

On July 22, 2019, the Coalition for a Prosperous America released an update to their study on the effects of increasing tariffs on all imported Chinese goods to 25% that had originally released in May. The study was conducted by CPA’s Chief Economist Jeff Ferry and Steven L. Byers, Ph.D. The Coalition for a Prosperous America is a non-profit, non-partisan organization working to eliminate the trade deficit with smart trade and tax policies to create jobs and prosperity.

According to the report, “The tariff revenue totals $547 billion over five years. If those funds are reinjected back into the economy each year, this additional stimulus to growth results in a $167 billion boost to GDP and 1.05 million additional jobs in 2024…The results of the Coalition for a Prosperous America (CPA) model show that tariffs will have a sustained, positive impact on the US economy, including jobs, output, and investment.”

The report states:  “The tariff would stimulate the US economy through two channels: first, the relocation of US-bound production from China to other nations would lead to a reduction in the average cost of imports because many alternative production locations ,such as those in Southeast Asia, today have lower costs of production than China; and secondly, because a portion of the production in China relocated to the US, would directly stimulate the US economy.”

In stark contrast, the opinions of professional economists are reflected in an article titled, “Trade Wars Are Not Good, or Easy to Win” in The Atlantic on August 5, 2019, staff writer Derek Thompson, wrote, ” President Donald Trump has stubbornly insisted on Chinese tariffs over the objections of his economic advisers—not to mention the near-universal outcry of the professional economic community. In a University of Chicago poll of several dozen international economists, zero disagreed with the statement that “the incidence of the latest round of US import tariffs is likely to fall primarily on American households.”

Why do the conclusions of the CPA research directors differ so greatly from the opinions of the economic community? The authors explained, “Our results differ remarkedly from other economic modeling efforts regarding tariffs…The differences result primarily from different assumptions about how businesses and consumers react to tariffs. Other models reflect a pro-free-trade bias and assume that (a) no production returns to the US as a result of tariffs (b )prices of US imports always rise when imports move from China to third countries and (c) US consumers react very negatively to higher prices, leading to educed sales and output in the US economy. A close study of the available empirical evidence shows these assumptions are unwarranted.”

The report states:  “Our model consisted of two parts:  a partial equilibrium model, which looked at how production in China for export to the US responded to the presence of a permanent across-the-board tariff, and a general-equilibrium model, based on the widely-used REMI  economic model to explore the effects of production shifts on the US economy over a five-year forecast period.”

The report takes into consideration China’s retaliation against the tariffs and China’s moving manufacturing to the U.S. or other countries. It shows that the tariffs will encourage production relocation out of Asia and generate significant reshoring of manufacturing to the US by American manufacturers who had established plants in China. This opinion concurs with the data collected by the Reshoring Initiative for several year showing that “the location decision for manufacturers is not just about cost: reliable supply, closeness to customers, political stability, and building customer/consumer brand awareness all matter!”

The original May report went into more detail about the benefit of reshoring, stating, “The US job gains from PATB-25-induced reshoring are disproportionately concentrated in the manufacturing sector, with 192,416 additional manufacturing jobs (27 percent of total jobs created by the tariff). This is because the vast majority of US imports from China are manufactured goods. By 2024, our model forecasts that $69 billion worth of annual production will have migrated from China to the United States. While US production costs in many industries remain higher than in China, that is not the whole story. Locating production in the US offers other advantages, including lower transportation costs, more logistical flexibility, and closer connectedness to consumer markets, distributors, and senior management. Relocating in the US also insulates companies against the uncertainty of potential future trade tensions. Some industries, such as apparel, have already seen reshoring due to these advantages. A permanent tariff would speed up the process.”

In a webinar to CPA members on August 1st, Ferry cited several examples of American companies reshoring production to the US; namely, Caterpillar, Stanley Black and Decker, Hasbro, Whirlpool, Optec, and West Elm.  The website of the Reshoring Initiative lists  nearly 3,000 companies that have reshored, and the list grows by the week.  

In an interview for The Epoch Times,  Ferry said: “As time goes by, people are accepting it because they’re seeing that tariffs are not provoking huge increases or any increases in consumer prices. They’re not disrupting our supply chains”

He also said “the goal of the U.S. government is to fix these problems and to restore prosperity to the United States, and he thinks tariffs have their role to play. If the trade deficit continues, and if we want to see certain manufacturing industries grow in the United States, I think we need to do more, and tariffs on all Chinese imports is a good solution…It’s a delicate and dangerous game [the Chinese regime is] going to have to play to pivot from being an economy that’s completely dependent on exports to being a more balanced economy, and it’s anybody’s guess whether they can pull it off.”

I’m betting that the conclusions reached by CPA would prove true if President Trump did impose 25% tariffs on all imports from China because of the strong evidence of the benefit of reshoring to the US economy.  According to the Reshoring Initiative, data from the manufacturing employment low of January 20190 through 2018, 749,000 jobs have been brought back to the US from offshore. In addition, manufacturing jobs pay higher than service and retail jobs, so tax revenue will increase from more people having higher paying jobs.  Another benefit would be that as we reduce our imports, our trade deficit would go down. However, the best benefit is that as we resume making the products and systems needed to defend our country in the US, we will protect our national security.

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

Brookings Recommends New Focus for SBA’s Small Business Investment Corp Program

Tuesday, July 9th, 2019

can better support America’s advanced industries.

On June 26, 2019, Mark Muro, Senior Fellow, Brookings Institution Metropolitan Policy Program submitted testimony to the U.S. Senate Committee on Small Business & Entrepreneurship regarding the “Reauthorization of SBA’s Small Business Investment Company Program,” and particularly on how the Small Business Investment Company (SBIC) program.

Mr. Muro’s expertise is in America’s advanced industry sector, which are the high-productivity, high-pay innovation industries that anchor American competitiveness and are critical to America’s prosperity.

In his testimony, Mr. Muro wrote that advanced industries are identified using two criteria and must meet both criteria to be considered advanced.:

  • “industry’s R&D spending per worker must fall in the 80th percentile of industries or higher, exceeding $450 per worker
  • The share of workers in an industry whose occupations require a high degree of STEM knowledge must also be above the national average, or 21 percent of all workers”

He explained, “Based on this definition, the U.S. advanced industries sector encompasses 50 diverse industries, including 3 energy, 35 manufacturing, and 12 service industries. These prime industries include manufacturing industries such as automaking, aerospace, pharmaceuticals, and semiconductors; energy industries such as oil and gas extraction and renewables; and critical service activities such as R&D services, software design, and telecommunications.”

He wrote, Advance industries matter because they “are in many respects the nation’s core sources of prosperity and economic preeminence.” Specifically, the advanced industries sector:

  • Encompasses many of the nation’s most crucial industries
  • Represents a key site of innovative activity
  • Trains and employs much of the nation’s STEM workforce

In addition, “its sizable advanced manufacturing sub-sector—delivers critical, specific, under recognized value to the nation and its people and places:”

  • Employment – “In 2018, the 50 advanced industries in the United States employed 14 million U.S. workers, or nearly 10%of total employment. Of that, the 35 advanced manufacturing industries contributed 5.7million jobs and 4% of U.S. employment.”
  • GDP – “U.S. advanced industries generate $3.7 trillion worth of output annually, or 18.5% of U.S. GDP in 2018…advanced manufacturing was a particularly sizable contributor of $1.4trillion worth of U.S. output.”
  • Productivity – “Each worker generated approximately $260,000 worth of output compared with $120,000 for the average worker outside advanced industries.3For the advanced manufacturing sub-sector the figure is $250,000.”
  • Pay – “In 2018, the average advanced industries worker earned $103,000 in total compensation, double the $51,000 earned by the average worker in other sectors. And real absolute earnings in advanced industries grew by 63 percent between 1975 and 2013, compared with just 17 percent for other workers…”
  • Multipliers – “Every new advanced industry job creates 2.2 jobs domestically—0.8 jobs locally and 1.4 jobs outside of the region…On average in other industries, new jobs create only one additional domestic job—0.4 jobs locally and 0.6 jobs outside the region.”
  • Innovation – “Advanced industries perform 90%of all private-sector R&D and develop approximately 82%of all U.S. patents.”

Muro explained that these advanced industries need government financial support because “there is now abundant evidence that the primacy of America’s advanced industries, and especially its advanced manufacturing sector, is being aggressively contested—and eroding.”

The challenge is succeeding because China and other competitor nations “are accelerating their investments in the key inputs to advanced-sector competitiveness—basic and applied research and development (R&D), STEM worker development, regional supply chain deepening—just as the U.S. commitment has weakened.”

He asserted, “As a result, the future competitiveness of the U.S. advanced industries sector has become uncertain because the United States is losing ground on important measures of advanced industry competitiveness.” In fact, “the U.S. has since 2000 run negative trade balances with both China and the world on advanced technology products, with the deficit continuing to grow.”

“On innovation, for example, the U.S. share of global patenting and R&D is falling much faster than its share of global GDP and population. While the U.S. lost 1.6 percentage points in its share of world populationbetween1981and 2016, its shares of global patenting and R&D spending both fell by over 15 percentage points.”

He pointed out that “when the ‘Made in China 2025’ industrial policy implies direct support to thousands of firms through state funding, low-interest loans, tax breaks, and other subsidies to the tune of hundreds of billions of dollars according to third-party estimates, U.S. advanced manufacturing firms—especially smaller ones—struggle to access affordable capital.”  

He added that “while the United States has the most developed venture capital (VC) system in the world, that system remains difficult to access for manufacturing firms…the natural biases of VC and other capital sources skew the existing small-firm finance system far away from capital-intensive manufacturing enterprises and are leaving them to face a debilitating lack of access to critical finance in the United States.”

Because “innovative firms engaged in complex, advanced manufacturing production require greater capital and more time to make a profit than non-production firms…most existing small-firm finance sources (especially venture capital) default to the low-risk, high-reward nature of digital start-ups and stay away from the longer profit horizons of manufacturing.”

He explained that “Tech” companies, after all, can produce fast-turnaround, consumer-facing products with little-to-no physical infrastructure. Advanced manufacturing firms, by contrast, require much more time, risk, and capital to develop products, bring them to market, and achieve scale, ensuring they get fewer VC opportunities.”

He concluded that “acute capital shortfalls are likely hobbling the ability of smaller advanced manufacturing concerns to grow their operations, contribute to local supply-chain deepening, and enhance U.S. competitiveness, community by community.”

Next, his testimony focused on how the SBIC could offer the ideal tool for assisting advanced manufacturing concerns in the coming years.  However, the current SBIC program has “several limitations that prevent it from investing as helpfully in growth as it might.” He stated that “the lack of sectoral specificity in SBIC loan-making means that public funds are not always channeled toward the highest public benefit—most notably that of advanced industries…[and}

its repayment structure, which begins immediately and is comprised of an SBA annual charge plus interest due semiannually, is not conducive to the nature of the longer-term product development timelines that advanced manufacturing firms require. In general, the SBIC’s offerings are not “patient” enough to optimally support advanced manufacturing business models.”

In order for the SBIC to help fill the void and maximize the program’s benefit to U.S. competitiveness through the support of U.S. advanced industries, he recommended that policymakers should:

  • “Explicitly prioritize advanced manufacturing growth in the SBIC’s equity capital toolbox.”
  • “Encourage robust and patient capital in SBIC funding.”

He explained that these actions are needed because “advanced-sector production enterprises are not specifically mentioned in program policies and criteria. They should be, because as of now they are losing out.” And “currently the program favors low-risk, high-reward, relatively short-term enterprises, which discriminates against advanced manufacturing concerns.

Accordingly, the committee should amend the Small Business Act to create within the existing SBIC a program that will offer preferred financing terms to VC firms that invest in advanced manufacturing firms. To determine eligibility for participation in this funding activity. manufacturers’ ‘advanced’ status could be confirmed by their location in designated NAICS codes, employing the same definitional methodology and industry list as employed in this testimony…Funding, therefore, should be growth-oriented, as much as possible—not time-bound. Changes can include tying repayments to a percentage royalty from sales, as well as denoting full repayment as a multiple of the original loan amount, rather using the current fixed payment-plus-interest model.”

In conclusion, he stated, “American’s medium-and long-term competitiveness and economic prosperity will be determined by success in a few select, but significant, industrial sectors: namely, the nation’s advanced manufacturing, energy, and digital industries. Success or failure there, meanwhile, will be determined by our choices, both what we choose to do and choose not to do, in world of state competition for valuable industries. Fortunately, one tool for which we can make good choices is the SBA’s SBIC program. Given its important role in enterprise finance, it is well worth the time and effort to make sure it is optimized to serve as a tool for national competitiveness. If rigorously targeted to investment in America’s advanced manufacturing sector, it will absolutely help us reassert national competitiveness, support vibrant communities, and promote dignified work.”

I’ve worked in the advanced manufacturing sector my whole career and was part of the team of a startup technology-based manufacturing company in the past. I’ve been a volunteer mentor for startup entrepreneurs for the San Diego Inventors Forum for the past ten years and was also a mentor for entrepreneurs in the CONNECT Springboard program simultaneously for three years. I know how hard it is for entrepreneurs to raise seed capital, but the crowd funding programs such as Kickstarter and IndieGoGo are greatly helping.  I’ve seen entrepreneurs raise all the money they needed to get their product into the marketplace, but it’s raising the funds to scale up to full production that is the problem.  Investors are looking for quick profits or the kind of company that will be able to do an IPO rapidly.  I believe that the Brookings recommendations for expanding the scope of the SBA SBIC program will be beneficial in helping to rebuild America’s advanced manufacturing sector.

Posted in Legislation, Manufacturing | No Comments »

Unique Maker Skills Academy launches in California

Tuesday, June 25th, 2019

On June 11th 2019,  I received a press release announcing the launch of the Vocademy Maker Skills Academy (MSA) — a one-of-a-kind, hands-on skills training program. This intensive program covers many of the vocational, career, and soft skills that are no longer taught in our schools. The kinds of skills thousands of employers are seeking. The program is available to anyone over the age of 16, with no prerequisites, transcripts, or GPA requirements.  The first ten-student MSA team starts July 8th, so enrollment is now open.

It is well documented that there is a massive skills gap in traditional and advanced manufacturing in America today. In past articles, I’ve mentioned that an estimated one to two million good-paying manufacturing jobs are going unfilled due to a lack of people with the right skills. There are also thousands of young adult makers looking for effective alternatives to college. The press release states: “An ideal solution has not existed …until today. This truly unique type program addresses the desperate needs of thousands of employers.”

In 2016, I wrote an article about Vocademy when it was essentially a traditional makerspace open to the public and beginning to offer skills training classes to high school students during the day. During that visit, founder and president Gene Sherman told me, “I started Vocademy because I had witnessed the demise of hands-on skills teaching in this country over the past 20 years. Schools have done away with these critical classes that taught practical life skills like woodworking and metal shop. These were the classes where people learned how to use tools and technology and develop the mindsets necessary to create new and amazing things.

When I saw ‘makerspaces’ springing up, I wanted to combine that type space with teaching the kinds of skills that were previously taught in ‘shop’ classes. I wanted to create a place for those who want to use their hands, in addition to their minds ? makers, inventors, and dreamers. I believe that if our country loses its ability to make and build things, we will have lost what made America great.

I wanted to provide access to these tools, but with proper and practical instruction on how to use them correctly and safely. I wanted a place that teaches the most state-of-the-art manufacturing techniques, not just traditional shop skills. I wanted to teach these important skills without the bureaucracy of academia because many more Americans should have the same opportunity to innovate, collaborate, learn, and create their dreams.”

 I visited Vocademy, located in Riverside, CA, on June 20th and interviewed Gene to find out more about the transformation from a makerspace to a skills discovery and training center.  Gene said, “Employers today are looking for those with a breadth of hands-on and soft skills. They want generalists and not specialists because the economy and workplace are changing at a rapid pace.  We have created the Maker Skills Academy to meet the needs of a career-centric workforce. Our goals are to teach real world skills, get our students career ready, and show them the amazing opportunities in the world of making. We’re looking forward to changing lives and creating the makers of the future. The program only takes six-months to complete. We do this by including over 90 fundamental classes in real-world subjects,” such as:

  • 3D Printing and Computer Aided Design
  • Laser Cutting and Engraving
  • Sewing and Textiles
  • Plastics, Vacuum forming, and Composites
  • Costume, Prop, 3D Papercraft, and Model Making
  • Fundamental Electronics, Soldering, Raspberry Pi and Arduino.
  • Robotics, Automation, and Hardware Programming.
  • Machine Shop Basics and CNC machining
  • Welding, Fabrication, and assembly
  • Wood Working.
  • Hand Tools, Power Tools, and support equipment 
  • Life and career soft skills for manufacturing, engineering, entrepreneurship and many other jobs

He emphasized that “by including the soft skills classes employers are seeking, the Maker Skills Academy is the perfect way to prepare for jobs in advanced manufacturing and other maker careers.

And unlike any other training programs or schools, MSA students will also have access to using our equipment every single evening to practice their skills, collaborate, create amazing resumes, and build capstone projects.”

.

As Gene led me on a tour of their facility, he explained, “Classes have minimal theory or history and lean heavily toward hands-on, practical skills learning. There are only eight to ten students per MSA team. We have a high instructor-to-student ratio for effective and intimate learning of skills. Our modern facility has over $500,000 of traditional and state-of-the-art manufacturing equipment.

During the tour, I saw that Gene had upgraded the 3D printing lab with all industrial machines rather than the hobby-type machines previously in the lab.  He had also upgraded to industrial sewing machines from the home-type machines he had previously, and there were now two cutting machines in the laser workroom. There were two new park bench projects in the fabrication workroom that the students had built themselves to utilize their metal fab and woodworking skills. He showed me the Little Free Libraries projects that are being placed in front of homes in neighborhoods, which are the capstone projects for the woodworking class.

Gene said that the Maker Skills Academy is perfect for those looking for:

  • a unique alternative to college, with real job and life skills
  • an ideal learning program to explore a multitude of maker skills
  • an effective pre-engineering program before entering university
  • an intensive course in maker skills for entrepreneurs or inventors
  • a set of job skills that will make STEM or maker careers future-proof

The website provides the following description of what is included in the Maker Space Academy program:

  • Six months of subjects and classes designed by industry experts and based on real-world needs of companies.
  • All raw materials, tools, and supplies the student will need for the classes in this program.
  • Six months of maker lab access with use of all equipment the student has been trained to use. 7-days-a-week, 5-10pm.
  • A Vocademy Maker Academy work shirt, basic measuring and hands tool set, a shop apron, and safety glasses.
  • An incredibly creative environment, surrounded by other makers, students, and engineers.
  • An Intellectual Property (IP) free facility. Student developed products or inventions are the property of the student.
  • A unique learning experience for anyone seeking to become more valuable to the world.
  • To develop an amazing set of skills for a career, personal enrichment, or for entering engineering schools.
  • Student graduates will receive Vocademy Certificates of Completion for every subject completed.
  • The opportunity to collaborate and work on your projects or ideas using modern and traditional industrial equipment.
  • To create an incredible resume full of projects, practical skills, and hands-on experience.

I asked what was expected of students, and Gene replied, “There are no mid-terms or finals. Students must commit to classes, self-guided learning, and the creation of projects. They sign a Commitment Pledge to put forth their best effort to ensure a successful learning experience. Students must be willing to continue self-guided depth learning and skills practice during maker lab hours and personal time. And, students are expected to complete a final capstone project for their maker portfolio/resume either solo or as part of a team.”

When I asked what his future goal is, he said, I want the Maker Skills Academy to be the choice of manufacturers for training employees, both existing and those being hired.  I want the MSA to be considered as the “Olympic training center” for manufacturing skills. I envision local manufacturers becoming partners with Vocademy for their employee training.”

I told him that I hope he realizes his goal because programs like his would go a long way in solving the skills gap and attracting the next generation of manufacturing workers.  It is critical that we get back to being a nation of “makers” as manufacturing is the foundation of the middle class, and our middle class has been shrinking for the last 30 years as we moved more and more manufacturing offshore.   

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Posted in Education, Manufacturing, Training, Workforce Development | No Comments »

The High Cost of Trade Deficits

Tuesday, April 9th, 2019 
 
 

Free trade has resulted in enormous trade deficits in goods for the United States for over 40 years. Our last year of a positive trade balance was 1975. At best, free trade has benefited large, multinational global corporations that have manufacturing facilities located in other countries. At its worst, it is the primary source of our trade deficit and loss of good paying manufacturing jobs.

Even with the tremendous resources we have, what was once the world’s largest manufacturer of products has accumulated $14.379 trillion worth of deficits in goods for all countries since 1991.

A fact sheet generated by the Coalition for a Prosperous America for 2018 show ten countries account for 97% of our trade deficit: China, Mexico, Japan, Germany, Ireland, Vietnam, Italy, India, South Korea, and Malaysia. Our trade deficit with China alone was $419 billion, representing 47.9% of our trade deficit.  Since 1991, we have accumulated over $9.144 trillion worth of trade deficits with just the top four countries. If we had fair trade, we would not have these constant trade deficits.  The drastic effect China has had on our trade deficit is demonstrated by the fact that in 2001 when China joined the World Trade Organization, we had a total $412 billion deficit in goods, but in 2018, we had a $879 billion deficit in goods. 

 

For every $1 billion of trade deficits in goods, it’s been estimated that 6,000 – 7,000 jobs are lost, at about $80,000/job. This means that 8 – 10 million more Americans willing to work could have a comfortable middle-class job in America. Instead, we lost 5.8 million manufacturing jobs from the year 2000 to 2010. 

 

In terms of purchasing power, workers’ wages in the U.S. have been stagnant since the 1970s. The significant collapse in the income of average Americans can be attributed to the vast decline of jobs in the U.S. manufacturing sector. This is the reason average U.S. wages have fallen over time, especially since 2001. From 2001 – 2013, the average U.S. wages fell by 3.5%. In contrast, as Chinese workers flocked to cities for manufacturing jobs, wages have grown substantially, averaging an 11 percent increase per year from 2001 to 2015. 

 

According to the Pew Research Center, 61% of American households were part of the middle class in 1971, but by 2015, only 50% of Americans were part of the middle class. “In 2002, China’s middle class was only four percent of its population. A decade later, this number had climbed to 31 percent, constituting over 420 million people. In contrast, in 1999, only 2% of the Chinese population was a part of the middle class, but by 2013, 39% of the Chinese population was in the middle class.

 

Since China joined the World Trade Organization, the bi-partisan, 12 member U. S.-China Economic and Security Review Commission (USCC) has been required to submit annual reports to Congress. These reports document China’s non-compliance with the WTO and the effect it has on the U. S. economy.

For example, the 2007 report included a case study of the local impact of trade with China on North Carolina. The USCC report stated “the accelerating decline in North Carolina’s manufacturing employment is due in large measure to increasing competition from imports mostly from China . . . The combination of China’s 2001 admission to the World Trade Organization (WTO), which gave it quota-free access to U.S. markets for its textile and clothing exports, and the subsequent U.S. grant of Most-Favored (Trading) Nation status that lowered most tariffs on Chinese imports, battered North Carolina’s textile and apparel industries, and they never recovered.”

Because a greater proportion of North Carolina’s workforce had manufacturing jobs than any other state, North Carolina’s workforce was more vulnerable to competition from imports than the workforces of other states. North Carolina’s manufacturing economy was made even more vulnerable by its concentration in the import-sensitive sectors of textiles, apparel, and furniture. North Carolina is one of the southeast states that had a large number of textile companies, and as a result, North Carolina has been the most impacted state in the nation by layoffs due to trade. Between 2004 and 2006, almost 39,000 North Carolina workers were certified by the Trade Adjustment Assistance program as having lost jobs to trade, more than 10 percent of the U.S. total of 387,755. 

According to the Social Science Research Institute (SSRI) of Duke University in North Carolina, there were 2,153 textile and apparel plants in North Carolina employing 233,715 people in 1996. By 2006, the apparel industry had experienced a 70% decline in jobs and 55% loss of plants. The textile industry by comparison had only lost 63% of jobs and 32% of plants from 1996 to 2006. 

The loss of these well-paid manufacturing jobs in North Carolina’s textile industry may have resulted in families losing their homes and/or being forced to relocate to other areas of the country to find jobs. Taking lower paying jobs in their own communities may have resulted in families no longer being in the middle-class income range. And, those who have not been able to find any work or only part-time work may have even dropped down to the poverty level.  It is not just people losing jobs and not being able to find other employment that pays as well as their former jobs, “hundreds of small towns throughout North Carolina impacted by plant closures are dying.”

Remember that it takes taxes paid by three to four working Americans to pay for the unemployment benefits of a non-working American. The cheaper China price of goods that we import instead of producing here in the U. S. results in a cost to society as a whole. We need to ask ourselves:  Is the China price worth the cost to society?  I say a resounding NO! We need to stop shooting ourselves in the feet. We need to stop benefitting the one percent of large multinational corporations to the detriment of the 99% percent of smaller American companies.

China, Germany, Japan, and many other countries have built their currency value around making certain all of their countrymen have a good job, even if that destroys America’s work force. As a result, these countries have maintained constant trade surpluses with the U. S. for many years, which would not have happened if we had fair trade.

 

It is impossible for the U.S.to remain competitive if our currency is not fairly valued. In order to move manufacturing jobs back to the U.S., we need to move our currency value down by at least 27% because the currency of Germany and Japan are undervalued by about that same amount.  China has rigged its currency between 15%-40% below its fair value since joining the WTO, and this gives a subsidy to their imports to the U.S. and imposes a direct cost on U.S. exports to China.

Devaluing our currency would allow many more products that we import from overseas to be made here. Unfair trade practices of currency manipulation, government subsidies, product dumping, and state-owned enterprises have allowed China to buy our raw materials and our low-cost energy to become the largest producer in the world of paper, aluminum, and steel even though labor costs are small compared to the cost of raw materials, energy, and transportation.

We need to focus on eliminating our trade deficits and achieving balanced, reciprocal trade in all future trade agreements. The last thing we need is to increase our trade deficit more than it already is.

 

In addition, we need to continue on the path of returning more manufacturing to America by reforming our tax policies and making regulations less onerous to manufacturers, without compromising our commitment to protect our environment. This is the only way that we will be able to simultaneously reduce our trade deficit and the national debt.

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Tariffs Benefit the American Manufacturing Industry

Wednesday, February 13th, 2019

Most people are unaware that for over 150 years, the American government protected the development and growth of its manufacturing industry with high tariffs, ranging from a low of 5% to as high as 50% in some cases. The first tariffs were imposed by the Tariff Act of 1789, whose purpose was to raise money for the new federal government, slash Revolutionary War debt and protect early-stage American industries from foreign imports.

Prior to achieving its independence, Americans were dependent on goods imported from England, France, and Holland, so it was critical to develop their own manufacturing base to maintain independence as a country in the event of future wars.

These protectionist policies enabled its fledgling manufacturing industries to grow until the United States became the preeminent industrial nation in the 20th century.  American manufacturing dominated the globe for over 70 years.

After World War II, the U.S. switched from protectionism to free trade in order to rebuild the economies of Europe and Japan through the Marshall Plan and bind the economies of the non-Communist world to the United States for geopolitical reasons.

To accomplish these objectives, the General Agreement on Tariffs and Trade (GATT) was negotiated during the UN Conference on Trade and Employment, reflecting the failure of negotiating governments to create a proposed International Trade Organization. Originally signed by 23 countries at Geneva in 1947, GATT became the most effective instrument in the massive expansion of world trade in the second half of the 20th Century.

GATT’s most important principle was trade without discrimination, in which member nations opened their markets equally to one another. Once a country and one of its trading partners agreed to reduce a tariff, that tariff cut was automatically extended to all GATT members. GATT also established uniform customs regulations and sought to eliminate import quotas.

By the 1970s, Japan’s economy was flourishing to the point that Japan became a major exporter to the U. S. for consumer electronic goods such as cameras, stereos, radios, and TVs. During the 1980s, Japan further expanded its U. S. market share with automobiles and machine tools for the manufacturing industry, such as mills, lathes, and turret presses.

Germany focused on high-end products in all of the same markets as the Japanese, so that American products faced stiff competition at the low end and high end.

Manufacturing employment in the U. S. reached a peak of 19.5 million in 1979, and slid down to 17.3 million by 1993 from the effects of job losses from increased imports from Japan, Germany, and other countries because of free trade policies and lower tariffs.

By 1995, when the World Trade Organization replaced GATT, 125 nations had signed its agreements, governing 90 percent of world trade.

Another major blow to the American manufacturing industry took place when the North American Free Trade Agreement (NAFTA) was negotiated under President Bill Clinton and went into effect in January 1994. The agreement was supposed to reduce market barriers to trade between the United States, Canada, and Mexico to reduce the cost of goods, increase our surplus trade balance with Mexico, reduce our trade deficit with Canada, and create 170,000 jobs a year. Twenty years later, the fallacy of these supposed benefits is well documented.

According to the report “NAFTA at 20” released in 2014 by Public Citizen’s Global Trade Watch, “More than 845,000 specific U.S. workers have been certified for Trade Adjustment Assistance (TAA) as having lost their jobs due to imports from Canada and Mexico or the relocation of factories to those countries.”

In 1994, GATT was updated to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO.) The 75 existing GATT members and the European Community became the founding members of the WTO on January 1, 1995. The other 52 GATT members rejoined the WTO in the following two years, the last being Congo in 1997. Since the founding of the WTO, a number of non-GATT members have joined, and there are now 157 members.

The loss of jobs accelerated after President Clinton granted Most Favored Nation status to China in the year 2000, and China was able to join the WTO. As a result, the U. S. lost 5.9 million manufacturing jobs from 2000 to 2010, and manufacturing employment dropped from 17.3 million down to 11.4 million in depth of recession in February 2010. In addition, an estimated 57,000 manufacturing firms closed.

On January 31, 2017, the Economic Policy Institute released a report, “Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs,” written by Robert Scott.

Scott stated, “Due to the trade deficit with China, 3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).”

Why were so many jobs lost? A large percentage of the people who lost jobs were in industries decimated by Chinese product dumping and below market pricing; i.e., textiles, furniture, tires, sporting goods, and garments. In addition, American manufacturers chose to outsource manufacturing offshore as the U.S. Department of Commerce data shows that “U.S. multinational corporations… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”

Thankfully, manufacturing employment increased to 12.8 million by December 2018 as shown by the chart below. This was the result of a very slowly improving economy, reshoring (returning manufacturing to America), and increased Foreign Direct Investment (foreign manufacturers setting up plants in the U.S.) Notice that it took six years to increase by 904,000 under the Obama Administration, and it’s only taken two years to increase by another 441,000 jobs under the Trump Administration. While an increase of 1.4 million jobs is good news, at this rate, it would take about 30 years to recoup the 5.8 million jobs we lost from 2000 to 2010.

 

We need to accelerate the growth of manufacturing jobs, and that is what the tariffs imposed by President Trump are designed to do.  In the only few short months since the tariffs went into effect, I’ve seen the following headlines about job growth in the past week:

“U.S. Steel Corp. Restarts Texas Plant That Closed in 2016,”  IndustryWeek, February 5, 2019

“Tariffs Helping US Manufacturers Add Jobs, Says Group,” IndustryWeek, February 7, 2019

“US Steel Resumes Construction on Idled Facility,” IEN, February 11, 2019

On December 04, 2018, the article “Contrary to popular belief, Trump’s tariffs are working” by Jeff Ferry, Research Director for the Coalition for a Prosperous America (CPA), stated,  “The tariffs have contributed to this growth directly and indirectly. Directly, we’ve catalogued some 11,000 US jobs that are being created by companies in the four tariffed industries, and that’s not including any of the Section 301 industries. Since that 11,000 tally in August, more investments and jobs have been announced, like the massive $1.5 billion steel plant to be built by Steel Dynamics, which will create some 600 new jobs in the southwest. Solar Power World lists a dozen solar companies now investing in US production of solar modules.”

“At CPA, we built an economic model looking at the effects of the tariffs on the US economy from 2018 through 2021. We found that the tariffs boosted US economic growth, adding $9 billion to GDP this year. Further, our growing economy leads to growing US imports each year. In other words, by boosting our own economic growth, we buy more goods from our trading partners, not less.”

If we want to protect our national security and maintain our national leadership in the 21st Century, we cannot continue down the path of increasing trade deficits and increasing national debt by allowing countries with predatory trade policies to destroy the American manufacturing industry.  I support the new path the Trump Administration is forging by developing and implementing a national strategy to win the international competition for good jobs, sustained economic growth, and strong domestic supply chains.

 

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