Should California Copy Ohio’s Economic Development Policies?

February 4th, 2014

Ohio’s Governor and economic development agencies may not be visiting California companies to woo them back to Ohio as Texas Governor Rick Perry has been doing, but I would say the answer is “yes” to this question. California would do well to emulate the successful economic development policies of central Ohio surrounding its capital city of Columbus.

Recessions usually didn’t affect this region very much, but the Great Recession was different. In 2009, business leaders formed Columbus 2020 to address the effects of the recession on the 11-county region surrounding the state capital. It is now a private, nonprofit entity incorporated as both a 501(c) (6) and a 501(c) (3) (Columbus 2020 Foundation) and has become a collaboration between business leaders, government, and educational institutions. Its mission is to generate opportunity and build capacity for economic growth throughout Central Ohio.

To achieve this mission, the founders set the following goals to achieve by the year 2020:

  • Add 150,000 net new jobs
  • Increase personal per capita income by 30 percent
  • Add $8 billion of capital investment
  • Be recognized as a national leader in economic development

The plan to achieve these goals is:

  • Retain and expand the companies and industries that call the Columbus Region home today
  • Attract major employers to establish operations in the Columbus Region
  • Create more commercial enterprises by leveraging research assets and entrepreneurs
  • Improve civic infrastructure that enhances the economic development environment

In my interview with Kenny McDonald, CEO of Columbus 2020, he said, “The key factor of our success was starting with the vision of the business leaders that formed Columbus 2020 and having corporate leaders that are willing to engage in the process. You need both vision and engagement. There has been a real partnership between business, government, and educational institutions.”

He added, “We take a holistic view of trade and investment, as many of the companies in the region have a global footprint, and take time to understand what is driving business. The business climate has improved, especially for companies that sell in the U. S., and we’ve noticed that many companies are reshoring back to the US as part of their strategy to regionalize. The U. S. has never been more competitive, and our markets remain attractive, while there remains instability elsewhere in the world. Companies that had a plant in China or India to export to the U. S. are bringing production back to the U. S., to sell to the U. S., while some companies are bringing back work to export to other countries.”

He said, “Honda of America, which has a significant presence in the Columbus Region, recently announced that they were planning to export more to countries outside of the U. S. Honda’s supply chain and other companies that are part of the global automotive supply chain are evidence of the trend to regionalize. It’s been recommended that foreign companies, especially mid-size companies, regionalize by having a plant in the U. S. to reduce risks that disrupt the supply chain.”

The region has a population of only 2 million, but has 15 Fortune 1000 companies, such as Cardinal Health, The Scotts Miracle-Gro Company, Big Lots, L Brands (including Victoria’s Secret and Bath & Body Works, Express, and Nationwide.)

There is a special industrial park, the Personal Care and Beauty Campus, built up near Victoria’s Secret and Bath & Body Works, where all of types of companies in their supply chain are located, representing about 2,000 jobs.

Middle market companies are also an important part of the Columbus Region economy. There are 1,313 businesses that have between $10 million and $1 billion in annual revenue. Even though they represent only 2.3 percent of business establishments in the Region, they employ 15.4 percent of the private sector workforce and have an outsized presence in manufacturing, headquarters and back office functions, and other key industries.

The Columbus Region is home to 63 colleges and university campuses with a total enrollment of nearly 150,000 students and more than 22,000 annual graduates. It is also home to the largest concentration of PhDs in the Midwest, and has more PhDs than the national average. The Ohio State University – the state’s flagship university and one of the country’s leading research institutions – has more than 56,000 students at its main campus in Columbus.

Businesses in the Columbus Region benefit from:

  • No personal property tax
  • No inventory tax
  • No state corporate income tax

Ohio offers the following tax incentives:

  • Job Creation Tax Credit
  • Ohio Enterprise Zone Program
  • Community Reinvestment Areas
  • Research and Development Investment Tax Credit

Ohio also offers several unique loan and grant programs as additional incentives for companies to relocate in the region.

The chart below shows the largest manufacturers in the Columbus region:

COMPANY INDUSTRY EMPLOYEES
Honda of America Mfg. Inc. Automotive 9,433
Whirlpool Corporation Appliances 2,344
TS TECH Co, Ltd. Automotive 2,078
Abbott Nutrition Food & Beverage 2,055
Emerson Electric Co. Utilities 1,720
Worthington Industries Inc. Steel 1,390
Ariel Corporation Energy 1,265
Boehringer Medical 1,250
The Anchor Hocking Co. Glass 1,202
The Scotts Miracle-Gro Co. Lawn Care Products 1,165
Rolls-Royce Energy Systems Machinery 1,146
Commercial Vehicle Group Automotive 1,125
Owens Corning Corporation Automotive 1,011
Lancaster Colony Corporation Food & Beverage 856
Mettler-Toledo International Precision Instruments 800
Jefferson Industries Automotive 750
Cardington Yutaka Technologies, Inc. Automotive 725
Columbus Castings Steel 700

As a result of these policies, Columbus is now ranked as the 8th most affordable location in the U. S. for corporate headquarters. The cost of doing business is half the cost of New York City, Los Angeles, and Silicon Valley. For all of these reasons, Columbus has become the state’s largest and fastest growing city.

Columbus 2020 is well on the way to not only achieving, but exceeding these goals by 2020 as shown below:

JOB CREATION CAPITAL INVESTMENT PERSONAL PER CAPITA INCOME
As of August 2013, more than 53,000 jobs have been created in the Columbus Region since Columbus 2020’s founding in 2010. As of December2013, $3.71 billion of capital investment has been added to the Columbus Region since 2010. As of 2012, personal per capita income in the Columbus Region has increased 10.8 percent since 2010, from $38,547 to $42,728.

California’s Governor Brown and the State legislature should review what the Columbus 2020 organization has accomplished in revitalizing the economy of central Ohio. California’s manufacturers would love to benefit from having no corporate income tax and no inventory tax, as well as having a Job Creation Tax Credit and a Research and Development Investment Tax Credit. 

The new hiring tax credit and partial exemption of certain property from California’s sales and use tax are meager benefits being offered to manufacturers as part of Assembly Bill 93 and Senate Bill 90 that went into effect January 1st. Our California legislature needs to “stop fiddling while Rome is burning,” so that we will be able to stem the tide of companies moving out of California and add more than the pitiful 7,900 manufacturing jobs we have added since 2010 after losing  over 625,000 manufacturing jobs since 2001.

 

 

Posted in Economic Development, Economy, Jobs, Manufacturing, Reshoring | No Comments »

Has NAFTA Benefited Americans?

January 28th, 2014

By this question, I mean the American people, not America, our country, nor American corporations. There can be diplomatic benefits to trade agreements, such as strengthening our relationships with countries that are allies in the world’s political arena. There can be benefits to American-based global corporations to open doors to new markets in specific countries. These are two of the reasons touted by “free trade” proponents as benefits to negotiating trade agreements.

To discern the answer to the title’s question, let us examine whether the North American Free Trade Agreement (NAFTA) has benefited Americans as a whole. 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 this month 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.”

Major corporations such as General Electric, Caterpillar, and Chrysler announced they would add jobs for increased sales to Mexico; instead they eliminated jobs. For example, General Electric testified before Congress saying, “We are looking at another $7.5 billion in potential sales over the next 10 years. These sales could support 10,000 jobs for General Electric and its suppliers. In reality, “General Electric has eliminated 4,936 U.S. jobs since NAFTA due to rising imports from Canada and Mexico or decisions to offshore production to those countries.”

The report also documents the fact that “the small pre-NAFTA U.S. trade surplus with Mexico turned into a massive new trade deficit and the pre-NAFTA U.S. trade deficit with Canada expanded greatly.” According to Census Bureau data, in 1993, the non-inflation adjusted U.S. trade surplus with Mexico was $1.6 billion, and in 2013, the U. S. trade deficit had grown to $50.1 billion. The non-inflation adjust U. S. deficit with Canada grew from $4.4 billion in 1994 to $7.4 billion in 2013. Together the Mexico and Canada inflation-adjusted trade deficits “have morphed into a combined NAFTA trade deficit of $181 billion.”

Most people do not understand how trade deficits hurt them. They do not realize that when our country imports more goods than it exports, we go in debt as a country to pay for these goods. We then have to borrow money or increase taxes to have enough money to run our government. This is why we now have a nearly $17 trillion national debt. As individuals, we would soon go bankrupt if we did not earn enough money to pay our bills and had to keep borrowing money, but the government can just keep printing money. The problem with printing more money is that the value of the dollar keeps going down, so each of us has to work harder to make more money to try to keep our pay equal to what we earned previously.

According to the Coalition for a Prosperous America, trade deficits also diminish the U. S. Gross Domestic Product since GDP equals the sum of Consumption, Investment, Government Procurement, and Net Exports (Exports – Imports). Our trade deficit in 2011 alone shaved an astounding 4% from overall U. S. GDP.

Our efforts to keep our earnings of equal value have not succeeded because the report states, “NAFTA has contributed to downward pressure on U.S. wages and growing income inequality.” What this means is that as Americans lost their higher paying manufacturing jobs, they had to compete with the glut of other Americans for the non-offshorable, lower paying, low-skill jobs, in retail, hospitality, and food service. “According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent.” The result is an increasing gap between the rich and the poor and a shrinking middle class.

Manufacturing jobs are the foundation of the middle class; these jobs raised the average daily wage between 1900 and 2000 from $2.50 a day to $96.00 a day. If we lose the majority of our manufacturing industry, we will lose our middle class.

We were supposed to realize the benefits of lower prices as consumers, but in contrast, the report states, “Despite a 188 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal price of food in the United States has jumped 65 percent since the deal went into effect.”

As a result, our “average annual U.S. agricultural trade deficit with Mexico and Canada under NAFTA stands at $800 million, more than twice the pre-NAFTA level.” American ranchers and cattlemen have been hurt by the 130 percent increase of beef imports from Mexico and Canada since NAFTA took effect, “and today U.S. consumption of “NAFTA” beef tops $1.3 billion annually.” U.S. food processors moved to Mexico to take advantage of low wages, resulting in a loss of jobs for Americans at U. S. food processing plants.

The report was a revelation to me about an unintended consequence of NAFTA ? the dramatic increase of illegal immigrants to the U. S. in the past 20 years. According to the report, the increased export of subsidized U. S. corn to Mexico resulted in the destruction of “…the livelihoods of more than one million Mexican campesino farmers and about 1.4 million additional Mexican workers whose livelihoods depended on agriculture.”

The report quotes an exposé, “Trade Secrets,” by John Judis in the April 9, 2008 issue of New Republic, which stated. “Wages dropped so precipitously that today the income of a farm laborer is one-third that of what it was before NAFTA. As jobs disappeared and wages sank, many of these rural Mexicans emigrated, swelling the ranks of the 12 million illegal immigrants living incognito and competing for low-wage jobs in the United States.”

As a result, “The desperate migration of those displaced from Mexico’s rural economy pushed down wages in Mexico’s border maquiladora factory zone and contributed to a doubling of Mexican immigration to the United States following NAFTA’s implementation.”

Prior to NAFTA, jobs at maquiladora factories were responsible for a growing middle class in cities such as Tijuana and Tecate in Baja California, Mexico. The report states that “Real wages in Mexico have fallen significantly below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods as on the day that NAFTA took effect.”

The lower wages at Mexican maquiladoras since NAFTA explains why Mexico is now benefitting from “nearsourcing,” which is returning manufacturing from China where wages have risen 15-20% year over year for the past five years. Taking into consideration the other costs and hidden costs of doing business offshore that comprise a Total Cost of Ownership analysis; Mexico is now more competitive than the coastal areas of China’s manufacturing industry.

Of course, the influx of illegal immigrants from Mexico is another factor in the downward pressure on wages in the United States. Today, only 1.9 million hourly workers make $20 per hour, which is a marker for jobs that provide a middle-class standard of living, down 60% since 1979, according to the Bureau of Labor Statistics.

In conclusion, we can clearly see from the well-documented evidence that NAFTA has not benefited the American people. It may have benefited American corporations that expanded their sales in Mexico or moved manufacturing to Mexico to increase their profits. However, I am sure that none of the American company owners of the more than 60,000 manufacturing firms that have closed since 1994 or the nearly one million American workers who lost their jobs because of NAFTA would say they benefited from this trade agreement.

The last thing we need is another free trade agreement such as the Trans-Pacific Partnership Agreement that has been negotiated behind closed doors by the Obama Administration for the past three years. We can’t afford the loss of more American jobs. What we need are trade policies that will help American manufacturers and address the predatory mercantilist policies of China, Japan, Korea, and other countries with regard to government subsidies, currency manipulation, product dumping, and intellectual property theft. We need to have balanced trade as recommended by the Coalition for a Prosperous America (CPA) in their issue paper, “21st Century Trade Agreement Principles.” As chair of the newly formed California chapter of CPA, I would welcome your support and involvement to rebuild American manufacturing, create more higher-paying manufacturing jobs, and reduce our trade deficit and national debt.

Posted in Economy, Jobs, Manufacturing, Outsourcing, Trade, Trade Policy | 2 Comments »

San Diego Manufacturing Trends

January 15th, 2014

From 2000 to 2011, the U. S. lost 5.8 million manufacturing jobs and 57,000 manufacturing firms closed. U.S. Department of Commerce 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.”

Over the last three years, we have finally seen a growth of about 526,000 manufacturing jobs nationwide for a 4.59% growth rate, but California has lagged behind the nation at only a 0.63% growth rate for 7,900 jobs gained. Mainly due to the effects of sequestration on our military/defense industry, San Diego continued to lose manufacturing jobsin 2013, losing more than 2,000 jobs from February – November.

Offshoring has been major cause of slow economic growth after Great Recession and the high unemployment has exacerbated local, state and federal budget deficits. This has resulted in a weakened middle-class, declining innovation, and lower sales levels in weakened home market.

“Reshoring”/Resurgence of “Made in USA”

A September 2003 report prepared for the U. S. Congress U. S.–China Committee on Economic and Security Review Commission, by Peter Nolan of the University of Cambridge stated, “A ‘‘herd herd ‘mentality to participate in the ‘‘Chinese miracle’’ developed among global giant corporations… Global corporations now view China as central to their long long-term strategy.”

A Stone Associates interview with Technology Forecasters (10/21/03) corroborated the fact that some companies were following this “herd mentality” in migrating to China even when it didn’t make economic sense:  “There is a herd mentality with OEMs in China China—sometimes it makes sense, sometimes it doesn’t—not always rational decision… People tell their bosses what they want to hear hear—(going to China) gives a boost to the stock valuation, but you really have to do the analysis on a case by case basis.”

Now, the offshore supply chain dynamics are changing:

  • Oil prices – tripled in the last 5 years raising shipping costs
  • Labor rates rose about 15-20% year-over-year for last 5 years in China
  • Component/material prices increasing
  • Automation/robotics in U.S. has increased productivity
  • Political instability in China – Labor riots/strikes
  • Risk of disruption from natural disasters
  • U.S. $ declining

Most companies don’t look beyond quoted unit price to make a decision of which vendor to select. They don’t do a Total Cost of Ownership (TCO) analysis, which simply stated, is an estimate of direct and indirect costs. The 13th edition of the APICS (supply chain organization) dictionary says:  “In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream.”

The Reshoring Initiative was founded by Harry Moser, former CEO of GF Agie Charmilles in 2010. The goal is to change the sourcing mindset from “offshored is cheaper” to “local reduces the Total Cost of Ownership” and train OEMs and suppliers on why to source local and how to use TCO Calculator. Free Total Cost of Ownership (TCO) software is provided for OEMs and suppliers/unions.

Sourcing is slowly moving back to the United States. The 2012 MIT Forum for Supply Chain Innovation Reshoring Study revealed:  61% of larger companies surveyed “are considering bringing manufacturing back to the U.S” and 15.3% of U.S. companies stated that they are “definitively” planning to re-shore activities to the U.S. In April 2012 www.mfg.com stated that 40% of contract manufacturers had done reshoring work this year.

Manufacturing Jobs / Year

*Estimated / **Calculated 

The Reshoring Initiative has calculated reshoring’s share of manufacturing job growth since Jan. 2010 is:

Job growth: ?500,000

Reshored jobs: ?80,000

Reshoring % of total: ?15%

Now in 2013, more companies are moving their services and manufacturing operations back to the United States. Nationally, General Electric and Whirlpool have moved some appliance manufacturing back to the U. S. Caterpillar moved operations from China to Mexico and the US. Locally, EcoATM, 451 Degrees, and Solatube have reshored by moving manufacturing back to San Diego County. Some of the parts, assemblies, and products that are not cost effective to come back to the U. S. are going across the border to Baja California, Mexico, and major contract manufacturers in Tijuana, Mexico, such as Sumitronics, are experiencing significant reshoring.

The demand for “Made in USA” goods seems to be increasing and is helping the resurgence of American manufacturing in certain areas, especially true in the apparel industry. Indeed, many consumers like the quality perception boost associated with “Made in USA” labels certifying that these goods were in fact made in America. American made items are also growing in popularity because our production costs are declining while Chinese labor is actually increasing.

Offshore outsourcing will continue indefinitely. The desirable” locations for outsourcing will change over time, and the purely financial benefits of lower cost will erode over time. The challenge is to keep as much as possible within the United States, and if more companies would utilize the TCO estimator worksheet, it would help maintain and return manufacturing to America.

Additive Manufacturing

Additive Manufacturing has been hailed by ‘The Economist’ as the catalyst of ‘the third industrial revolution’ and is projected to have a significant impact on manufacturing in the near future. It has the potential to revolutionize the way we make almost everything. Currently about 28% of the money spent on 3D printing of parts is for final products, but it is predicted to rise to 50% by 2016 and to 80% by 2020.

The major Additive Manufacturing methods are:

  • Stereo lithography
  • 3D printing
  • Laser sintering
  • high powered laser fuses powered metals into fully dense 3D objects, layer by layer
  • Fused-deposition modeling
  • A plastic or metal wire is unwound from a coil, supplying material to an extrusion nozzle to form success layers

San Diego is blessed with hundreds of design engineering and product development companies, many of which have one or more types of Additive Manufacturing equipment. There is also a service bureau for Additive Manufacturing in Poway, Solid Concepts, which has all of the types of equipment. A few of the engineering design/product development companies with which we are familiar are:

A Squared Technologies

Clarity Design

DD Studio

D&K Engineering

Dynapac Design Group

Expertise Engineering

Fallbrook Engineering

Flex Partners

Leardon Solutions

Koncept Design

Redpoint Engineering

Triaxial Design

In addition, there is the MakerPlace in San Diego, which inventors and entrepreneurs can think of it as their “dream” garage shop for developing and producing their own products. It is a place where they can use a variety of fabrication equipment & tools to work on projects:  Woodworking, metalworking, electronics, embroidery, sewing and specialty tools such as 3D printers, laser cutters and engravers. There are even

“incubator” offices upstairs for businesses to operate out of the same building as the fab shop.

Training to meet Manufacturing Skills Gap

In 2011, the U.S. Bureau of Labor statistics estimated that 2.8 million, nearly a quarter of all U.S. manufacturing workers, were 55 or older. The improvement of the manufacturing industry has been a mixed blessing because as more skilled workers are needed, the supply is limited because baby boomers are retiring or getting close to retirement. “The oldest baby boomers turned 65 on Jan. 1, 2011, and every day thereafter for about the next 19 years, some 10,000 more will reach the traditional retirement age, according to the Pew Research Center.” What makes the situation worse is that there are not enough new ones to replace them because the subsequent generations were smaller and fewer chose manufacturing as a career.

This has resulted in an insufficient number of workers trained for advanced manufacturing jobs. Modern manufacturing is highly technical and requires understanding and proficiency in a wide variety of competencies. In the past 15 years, the manufacturing industry has evolved from needing low-skilled production-type assembly workers to being highly technology-infused. Thus, it is more of a skills gap in the specific skills needed by today’s manufacturers than a shortage of skilled workers.

A key component has been the development of the (National Association of Manufacturers) NAM-Endorsed Manufacturing Skills Certification System—a system of stackable credentials applicable to all sectors in the manufacturing industry. In June 2011, President Obama announced that the Skills Certification System was the national talent solution for closing the skills gap and addressing this key issue for American manufacturers. The Society of Manufacturing Engineers (SME) Education Foundation leads in encouraging youth to get involved in manufacturing technologies through STEM-related activities in the K–12 levels, as well as supporting and advancing the Certification System for manufacturing skills.

San Diego is fortunate to have more opportunities for training in manufacturing skills than many other regions as shown below:

  • San Diego City College – AA degree in Manufacturing Technology, Machining Certificate
  • SDCCD Continuing Education Center – metal fab, welding, plasma cutting
  • Miramar College – biotech/biomedical lab technicians
  • Mira Costa College – Machining Certificate
  • San Pasqual High School – two year machining program
  • Chaparell High School (Charter) – two year machining program
  • Quality Controlled Manufacturing Inc. – machining training and apprenticeship
  • Workshops for Warriors (non-profit) – machining, sheet metal fab, welding, programming

Licensing vs. starting a company

As a member of the steering committee for the San Diego Inventors Forum (SDIF), I have noticed that in the last two years, more inventors are planning to license their technology vs. starting a company (probably about 70%) compared to about 50% previously). However, this trend doesn’t hold true for CONNECT’s Springboard program for entrepreneurs according to Ruprecht von Butlar. In an interview, he said, “The demand for the Springboard program has stayed consistent over the past few years, but the composition has changed ? more technology, biotech/biomedical, and life science. All of the entrepreneurs in their program have either already formed companies or plan to form companies rather than licensing their technology.”

I also interviewed Dr. Rosibel Ochoa, Executive Director of the UCSD Jacobs School of Engineering von Liebig Entrepreneurism Center, and she said they have 30 teams in their program, and all of them plan to start companies rather than licensing their technology.” The Center serves UCSD professors, graduate students, undergraduate students, and alumni. The professors are the only persons more interested in licensing their technology rather than leaving UCSD to be part of a team to start a company.

The difference between the Inventors Forum and the other two programs may be the fact that most of the inventors coming to our meeting in the past two years have been in the “Baby Boom” generation, now between the ages of 48 – 68, and they may realize by now that they don’t have the entrepreneurial skills to found and develop a company. Also, many of them are serial inventors, who enjoy the technical part of inventing a new product, and then want to go on to working on their next invention. Many of the under 40 inventors seem to be more interested in starting a company.

Outlook for 2014

Positives:

–     Reshoring is creating more manufacturing jobs and generating more regional GDP

–     Additive manufacturing is accelerating development of new products

–     Broad access to skills training is available in San Diego

Negatives:

–     Unknown economic impact of Obamacare for manufacturers because of employer mandate

–     Possibility of full sequestration being restored to pay for extending unemployment benefits

If the current military/defense budget remains in effect without the restoration of full sequestration that affected San Diego adversely last year, this year should be better than 2013 for local manufacturers. All of us in San Diego’s manufacturing industry certainly hope so.

Tags: , ,
Posted in Economy, Jobs, Manufacturing, Reshoring, Training | No Comments »

We Must Stop Fast Track Trade Authority from Being Granted!

January 7th, 2014

President Obama had hoped to be able to announce that he had been granted Fast Track Authority before the Asia-Pacific Economic Cooperation (APEC) meeting in Bali, Indonesia on October 8, 2013, but due to budget issues and the government shutdown, the bill wasn’t introduced and approved in the fall. He had also hoped to complete negotiations for the Trans-Pacific Partnership (TPP) Agreement at this meeting, but no agreement was reached by the countries involved. For the last three years, the Obama administration has conducted negotiations behind closed doors through the offices of U.S. Trade Representative Ron Kirk without any involvement with Congress.

Eleven nations have participated in the negotiations: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Japan announced its intention to join the agreement last spring. Because the TPP is intended as a “docking agreement,” other Pacific Rim countries could join over time, and the Philippines, Thailand, Colombia, and others have expressed interest. China could join the TPP at a later date without suffering any disadvantage even though this would negate the original reason for the TPP as a counter to China’s hegemony in the Pacific.

Reliable sources have revealed that a bill to grant the president Fast Track Authority under the Trade Promotion Authority will be introduced on January 8th in the Senate Finance Committee and the House Ways and Means Committee. It appears that there is sufficient support to pass these bills out of the committees for a vote on the floor.

Earlier this year, I published three blog articles on the dangers of the Trans-Pacific Partnership agreement and granting the president Fast Track Authority:  “The Trans-Pacific Partnership Would Destroy our National Sovereignty;” “Why the Trans Pacific Partnership Would Hurt American Manufacturers;” and “The Trans Pacific Partnership Trade Agreement Would Harm our Environment.”

In my first article, I commented on the many articles that Lori Wallach of Public Citizen had written about the Trans-Pacific Partnership:  “Ms. Wallach opines that U.S. multinational corporations have the goal of imposing on more countries a set of extreme foreign investor privileges and rights and their private enforcement through the notorious “investor-state” system. ‘ This system elevates individual corporations and investors to equal standing with each TPP signatory country’s government- and above all of us citizens.’ This would enable ‘foreign investors to skirt domestic courts and laws, and sue governments directly before tribunals of three private sector lawyers operating under World Bank and UN rules to demand taxpayer compensation for any domestic law that investors believe will diminish their ‘expected future profits.’”

With regard to “Buy American” laws in my second article, I wrote, “What this means is that the TPP’s procurement chapter would require that all companies operating in any country signing the agreement be provided access equal to domestic firms to U.S. government procurement contracts over a certain dollar threshold. To meet this requirement, the U.S. would have to agree to waive Buy America procurement policies for all companies operating in TPP countries.”

I also noted that as far back as May 3, 2012, a letter from Rep. Donna Edwards (D-Md.) and 68 other Congressional Reps to President Obama stated in part, “We are concerned about proposals we understand are under consideration in the Trans-Pacific Partnership (TPP) agreement negotiations that could significantly limit Buy American provisions and as a result adversely impact American jobs, workers, and manufacturers…We do not believe this approach is in the best interest of U.S. manufacturers and U.S. workers. Of special concern is the prospect that firms established in TPP countries, such as the many Chinese firms in Vietnam, could obtain waivers from Buy American policies. This could result in larger sums of U.S. tax dollars being invested to strengthen other countries’ manufacturing sectors, rather than our own.”

In a commentary article on October 15, 2013, Lt. Col (Retired) Allen West wrote, “TPP would subject the U.S. to the jurisdiction of foreign tribunals under the authority of the World Bank and United Nations. These unelected, unaccountable panels would constitute a judicial authority higher than the U.S. Supreme Court. They would have the power to overrule federal court rulings and order payment of U.S. tax dollars to enforce the special privileges granted to foreign firms that would be exempt from EPA and other regulations that strangle American firms.”

He added, “We’re also told TPP shows our Asian allies we’re serious about confronting China. But it would actually weaken the U.S. As the Chinese People’s Liberation Army uses every means possible to infiltrate our command and control systems, TPP bans Buy American policies that require crucial equipment for our troops be produced in the U.S. We don’t need TPP to stop China’s military expansion – we need to tell the same crowd pushing TPP to stop transferring their capital and technology to that communist dictatorship.”

In a commentary on the Economy in Crisis website, economist Pat Choate outlined the reasons why we should oppose President Obama being granted Fast Track Authority:

  • Allows the President to select countries with which to enter into trade agreements, set the substance of the talks and then sign those pacts without prior Congressional approval.
  • Allows the President to negotiate and include in these trade agreements not only tariffs and quotas, but also changes in federal, state and local laws on taxes, food and health safety, patents, copyrights, trademarks, immigration, Environment, Labor standards, and Buy America provisions, among many other issues.
  • Creates a Presidential advisory system, comprising 700 industry representatives appointed by the President. These advisors have access to confidential negotiating documents that are kept secret from most members of Congress and the public.
  • Empowers the President to draft the agreements to implement legislation without Congressional input.
  • Requires House and Senate Leaders to introduce the President’s bill on the first legislative day following the President’s submission.
  • Requires that the legislation be discharged from Committee 45 days after submission.
  • Requires a floor vote 15 days after the bill is discharged from Committees.
  • Allows only 20 hours of debate in each House.
  • Prohibits any amendments either in Committee or during the floor debate.
  • Eliminates several floor procedures, including Senate unanimous consent, normal debate and cloture rules, and the ability to amend the legislation.
  • Prevents a Senate filibuster.
  • Requires only a simple majority vote in each House for enactment.

In conclusion Mr. Choate states, “These trade pacts will have the effect of a treaty, though the Constitution requires a two thirds majority vote by the Senate for the United States to enter into a treaty.”

It is precisely this sort of amassing of powers that defines a dictatorship. Our Founding Fathers wisely chose to keep governmental power separated in a system of checks and balances, but by utilizing the Fast Track Authority, our Constitutional system of checks and balances would be destroyed and our national sovereignty would be given to foreign nations and multinational corporations in the name of “free trade.”

A letter addressed to President Obama, signed by 24 Republican Representatives in the House, stated, “Under Fast Track, the executive branch is empowered to sign trade agreements before Congress has an opportunity to vote on them, and then unilaterally write legislation making the pacts’ terms U.S. federal law. Fast Track allows the president to send these executive branch-authored bills directly to the floor for a vote under rules forbidding all floor amendments and limiting debate. And by requiring the House to vote on the bill within a preset period of time, it takes the floor schedule out of the hands of the House majority and gives it to the president.

Given these factors, we do not agree to cede our constitutional authority to the executive through an approval of a request for “Fast Track Trade Promotion Authority.”

The signatories were:  Jones, Bachmann, Joyce, Gohmert, Cook, McKinley, Jimmy Duncan, Stockman, LoBiondo, R. Bishop, C. Collins, C. Smith, Rohrabacher, Bentivolio, Grimm, Mica, Broun, Brooks, D. Young, Jeff Duncan, Gibson, Denham, Hunter and Fitzpatrick.

On the Democrat side of the aisle, Representatives Rosa DeLauro (D-CT) and George Miller (D-CA) took the lead in getting a total of 151 Democrats in the House to oppose the use of “Fast Track” procedures that usurp Congress’s authority over trade matters. Their opposition stands for both the Trans-Pacific Partnership (TPP) agreement and any future trade agreements. The letter in part states, “Congress, not the Executive Branch, must determine when an agreement meets the objectives Congress sets in the exercise of its Article I-8 exclusive constitutional authority to set the terms of trade. For instance, an agreement that does not specifically meet congressional negotiating objectives must not receive preferential consideration in Congress. A new trade agreement negotiation and approval process that restores a robust role for Congress is essential to achieving U.S. trade agreements that can secure prosperity for the greatest number of Americans, while preserving the vital tenets of American democracy in the era of globalization.”

If Fast Track Authority is approved, it would allow President Obama to essentially have dictatorial control over the country in many respects. Fast Track Authority gives the executive branch legislative powers, something expressly forbidden by the Constitution. We must deny the President Fast Track Authority. If this is granted, it will be even more difficult to stop the Trans-Pacific Partnership from being approved.

It would be the final nail in the coffin for U.S. sovereignty. Contact your Congressional representative and urge them to oppose the Fast Track Authority and forward this article to your friends and ask them to do the same!

Tags: , , , ,
Posted in Jobs, Manufacturing, National security, Trade, Trade Policy | No Comments »

Coalition for a Prosperous America’s California Chapter Celebrates the Outlook for the Future

December 17th, 2013

The California Chapter of the Coalition for a Prosperous America (CPA) held their annual dinner in San Diego on January 11th at the Del Mar Hilton to look back on this year’s work and ahead to the coming year, as well as honor those who have helped make that work successful. Nearly 80 attendees joined me in showing our appreciation to Senator Mark Wyland for being the co-host of the well-attended “Manufacturing in the Golden State–Making California Thrive” economic summit last February. Unfortunately, co-host Assemblymember Toni Atkins was unable to be present. Assemblyman Tim Donnelly and County Supervisor Dave Roberts attended along with staff representing Congresswoman Susan Davis, Congressman Darrell Issa, Assemblyman Brian Jones, and Assemblyman Rocky Chavez.

I shared how I became involved with CPA, which is a non-profit, non-partisan membership organization established in 2007 as a coalition of manufacturing, farming, ranching, and labor to fix the U.S. trade deficit and the economy. CPA uniquely joins these distinct groups and focuses on both grass roots and Washington, D. C. lobbying efforts. CPA educates business, organization and political leaders about the economic harm caused by the trade deficit, methods to correct the deficit, and the need to develop and implement a national strategy to produce more in the U.S. so jobs and the taxes they create stay in the U. S.

When I was researching and writing the chapter “What is being done now to save American manufacturing?” for the first edition of my book in 2008, I found many trade and professional organizations that were focused on a particular issue important to their industry or profession, but there didn’t seem to be any collaboration between the organizations to support or oppose issues that affected American manufacturers. The two most powerful organizations, the National Association of Manufacturers and the U. S. Chamber of Congress seemed to be controlled by the large multinational corporations whose position on various issues were at odds with those of smaller American-only manufacturing corporations.

After my book was published in 2009, I met Ian Fletcher, author of Free Trade Doesn’t Work:  What should replace it and why, and he introduced me to CPA when he became their Sr. Economist in early 2011. I realized this was just the kind of organization I had been looking for and started participating in their member-at-large monthly conference calls to share what we were each doing to work on issues adversely affecting American manufacturing.

I volunteered to help CPA put on a Smart Trade Conference on March 28, 2012, and one of the people that attended was Donna Cleary, Field Rep for State Senator Mark Wyland. She asked CPA to facilitate putting on a manufacturing summit in the fall. Because of the national election, we postponed the summit to February 2013, which gave us more time to solicit partners and sponsors. Our partner list became the “who’s who” of organizations in San Diego, and the summit was very successful. In addition to being a bi-partisan event, what made it different was that we broke into small groups after the main presentations and conducted “pair wise” voting on issues to come up with the top two issues: California regulations and the need for a national manufacturing strategy.

We formed a Manufacturing Task Force and produced a report that we disseminated to all of the attendees and subsequently presented to our Congressional delegation. We also presented CPA position papers on the trade deficit, currency manipulation, County of Origin labeling, Border Adjustable Taxes, and “Fast Track” Authority for the proposed Trans-Pacific Partnership Agreement (a trade and global governance agreement being negotiated by the U.S. with eleven Pacific Rim nations).

We sponsored a viewing of the film “Death by China” in September, which clearly shows that we are in a trade war with China that we are losing, and American companies aren’t competing against Chinese companies, but the Chinese government itself.

The next speaker was Mike Dolan, Legislative Representative for the Teamsters, who said, “If CPA didn’t exist, we’d have to invent it.” His basic point was that, based on his long experience working on the Hill and in the field for Fair Trade (fighting expansion of the flawed and failed NAFTA/WTO model), we can win the current battles of the Trans-Pacific Partnership and Fast Track if and only if we build and maintain a strong bipartisan mobilization. He called the TPP “NAFTA on steroids.” He doesn’t see a path to victory next year on sensible trade policy without the Coalition for a Prosperous America and the constituencies it represents — small business, particularly in industries that are sensitive to trade fluctuations, family farmers and ranchers, working families and “trade patriot” activists including the Tea Party cadres.

Bill Bullard, CEO of R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) was the next speaker. He said they joined the Coalition because their industry was being unfavorably impacted by current U. S. trade policies and unfair trade practices by our trading partners. He said, “The number of privately owned cattle and sheep ranches has been going down dramatically since 1994 when NAFTA went into effect and accelerated after China became part of the World Trade Organization (WTO) in 2000. The size of the beef and sheep herd has been decreasing every year, while imports of beef, lamb, and mutton have been increasing.” Shockingly, he revealed that fast food restaurants are not required to disclose the origins of their beef and even when restaurants say the beef is “U.S. Inspected,” it is as likely as not to be imported. Their industry especially needs the government to provide consumer package labeling to show where meat and livestock was born, raised and slaughtered and to reverse the current policy of lowering U.S. health and safety standards just to facilitate more imported meat.

CPA President Michael Stumo presentation was “A Prosperity Strategy for America,” in which he stated:  “We are convincing Congress that we need “net exports,” not merely more exports, to be a successful trading and producing nation. In 2011, our trade deficit shaved an astounding 4% from overall U. S. GDP. We should have a national goal to grow manufacturing back up to 20% of GDP rather than 11%.

Supply chains are the lifeblood of our economy, and all tiers of suppliers to the OEMs are important. They produce the jobs, the job multipliers, the wealth, the innovation, and the intellectual property of a successful developed economy. Those in Washington who are pushing “global supply chains” are really pushing offshoring of our supply chain. We need a strategy of acquiring, keeping, and growing “domestic supply chains” for a strong America.

We need to stop offshoring our manufacturing jobs and the taxes they create to safeguard our economic strength, our democracy and our constitutional republic. The globalization agreements like the Trans-Pacific Partnership are only 15% about tariffs and quotas and 85% about non-trade topics. These other topics include financial regulation, taxes, food and product safety, product labeling, government procurement of domestic supplies, and other matters. These globalization deals transfer the authority of Congress and states over these domestic policy issues to unelected international tribunals of foreign trade lawyers.

The old way of manufacturing and labor working separately for their interests no longer works. These issues are a macro problem for our country and affect all Americans. That’s why manufacturers, farmers, ranchers and workers must work together.

It is working. A large part of Congress signed a letter opposing Fast Track trade authority because of sovereignty and economic issues. Leadership on important committees is talking about net exports rather gross exports. A majority of the House and Senate signed a letter calling for effective protections against foreign currency manipulation in future international agreements. We need to win. Vince Lombardi said ‘winning isn’t everything… it’s the only thing.’ We can win these issues by expanding our membership of individuals, companies, and organizations and expanding from eight state chapters to at least 25 chapters.”

In the wrap-up presentation, Dave Frengel, Director of Government Relations, Penn United Technologies, a precision tool making company, said, “We have 600 employees today, but if our government had been standing up for us against China’s unfair trade practices, we would have 1200 employees, most in family-sustaining jobs with good benefits. Unfair trade affects the entire U.S. supply-chain, not just our company. Our government has been turning its back on production of food and manufactured goods. Our precision tooling and manufacturing industry, which is critical to America’s industrial economy, is a third of what it was before this era of bad U.S. trade policy began. The resulting loss of jobs is huge.”

He continued, “When I was asked by my boss to “fix trade” 11 years ago, we tried working within the National Association of Manufacturers, but our voice and that of other American-only manufactures was ignored. We realized that we needed to join not only with manufacturers and concerned citizens, but with farmers, ranchers and workers to win. We realized that the mission would not be accomplished through existing organizations – we needed a new organization to get the job done. That is why we were a founding member of CPA.

For nearly seven years now, CPA has been holding events all over the nation to raise awareness and mobilize local leaders around trade reform issues. CPA members and staff made over 200 legislative visits this past year. The credibility and influence of CPA is growing and our trade reform message is becoming more convincing as we continue to have crucial conversations with a growing circle of trade policy leaders in Washington, D. C.

We are opening new doors with trade negotiators inside the Obama Administration, the House Ways and Means Committee, and the Senate Finance Committee. Our efforts helped gain massive Congressional opposition to Fast Track trade authority and in support of our constitution. Our efforts helped gain a majority of Senate and House support for effective currency manipulation provisions in all future trade deals.

The Chinese will negotiate forever without changing their predatory trade strategies. We need protection from those who cheat us, which requires strong enforcement of international trade rules by our government. We can compete against foreign companies, but not against foreign governments that rig markets to cheat us out of our share of markets. The Coalition for a Prosperous America works for trade reform that delivers prosperity and security to America, its citizens, factories, farms, and working people. The solutions that CPA focuses on will benefit those who make and grow things here.”

In conclusion, he stated, “We are gaining more GOP support, more Democrat support, more Tea Party support, more citizen support, and more producer support. This year, we’re starting to win – because of the growth in size and influence of the Coalition for a Prosperous America. We need to get stronger. We need you to consider joining CPA as an individual or a company member or to make a tax deductible donation to the CPA Education Fund.”

Bad U. S. trade policy is a major cause of California’s economic crisis. Offshoring has cost California hundreds of thousands of its manufacturing jobs. Family members lost good jobs; communities declined; property values plummeted. We Californians know that we need a smarter U.S. trade strategy.

As a fledgling chapter, we are already influencing the trade policy positions of San Diego’s Congressional delegation, but need to grow to influence the other 48 Representatives and our two Senators to support better trade deals that will grow our economy. This is not a Republican issue nor a Democratic issue, but an American issue, and they must vote right to properly represent California. We need to get stronger and grow to accomplish our goals. We need your involvement and financial support to make a difference. Please contact me at michele@savingusmanufacturing.com to participate in the California Chapter.

Tags: , , , , , ,
Posted in General, Manufacturing, Outsourcing, Trade Policy | No Comments »

Innovation Thrives in San Diego

December 10th, 2013

At a time when some pundits are saying that innovation is lagging in the United States, the annual CONNECT Most Innovative Product Awards luncheon on Friday, December 6th demonstrated that innovation is thriving in San Diego, California. More than 700 attended the awards ceremony to recognize cutting-edge local innovations.

This “red carpet” event is CONNECT’s largest and most prestigious event, attracting more than 700 of the region’s top business leaders, researchers and capital providers. CONNECT honors   San Diego’s world-renowned celebrities of innovation along with the groundbreaking new products launched in the last year. The MIP Awards is to San Diego’s technology industry what the Academy Awards™ is to the movie industry. More than 100 San Diego based companies competed in the rigorous judging process representing a broad range of companies across nine categories.

“The success of the MIP Awards continues to be driven by the impressive and growing number of innovative technology and life sciences companies based here in San Diego County,” said Tyler Orion, interim president, CONNECT. “In the 26 years CONNECT has been spearheading the MIP Awards, we’ve never seen such a well-qualified group of nominees – it’s always a difficult decision to select the most innovative products of the year, and we congratulate all of the winners on their noteworthy achievements.”

CONNECT was founded in 1985 as a regional program of the University of California, San Diego (UCSD) to catalyze the creation of innovative technology and life sciences products in San Diego County by linking inventors and entrepreneurs with the resources they need for success. In 1986 UCSD Diego hired Bill Otterson, Chairman of Lexocorp, to head CONNECT. Over the following 13 years, Otterson and Mary Walshok, Associate Vice Chancellor of Extended Studies and Public Programs at UCSD built CONNECT into an internationally renowned program.

To better serve the entire research community, CONNECT spun-out of UCSD in 2005 and formed the CONNECT Association, a 501c6 trade organization, and CONNECT Foundation, a 501c3 charitable foundation. As a result of spinning-out from UCSD, CONNECT has been able to broaden its mandate to include public advocacy work on behalf of its members through the trade organization.

Since 1985, CONNECT has assisted in the formation and development of more than 3,000 companies that have attracted more than $2 billion in investment capital through its “flagship” Springboard program. Springboard is a free program that is open for enrollment to innovation companies in the Southern California region. Springboard assists companies in proving their business model and developing a compelling commercialization strategy.

Companies accepted into the program are assigned expert business advisors who coach the company throughout the process which includes feedback from financial, marketing, legal and commercialization experts, as well advice from industry executives and the opportunity to dry run presentations and pitches.

After completing Springboard, companies that are considered suitable and ready for investment by angels, venture capital and/or corporate investors, move on to participate in the Springboard Capital Competition.

The winners of the 2013 MIP Award contest are:

Aerospace and Security Technologies

Cubic Defense Applications for One Shot

One Shot is a breakthrough in long-range targeting accuracy that automatically measures and corrects for all aiming errors including-for the first time ever-downrange crosswind speed and direction. It gives our warfighters a decisive battlefield advantage. Cubic is the world’s leading provider of realistic air and ground combat training systems for national military and security forces. Infantry troops, aircrews, and security forces all draw upon the realism gained from using our training systems to help them effectively perform their mission.

Communications and IT

iboss Network Security for iboss Cloud Web Security with Device Management

iboss Cloud Web Security with Device Management provides SaaS mobile device web security and management enabling organizations to safely integrate mobile technology. Utilizing the cloud, MobileEther secures company data, protects against web threats and ensures industry compliance seamlessly within minutes.

Hardware and General Technology

Nextivity, Inc. for Cel-Fi RS2

Cel-Fi is a smart signal booster that maximizes a user’s indoor wireless experience by eliminating in-building dead zones. Cel-Fi increases wireless data speeds and eliminates dropped calls for wireless subscribers by boosting signal strength from one bar to five bars.

“We are incredibly proud that Cel-Fi has received San Diego’s most prestigious honor for innovation,” says Werner Sievers, CEO of Nextivity. “The award is testament to the exceptional design and world-class engineering that goes in to developing the world’s only all-digital, one hundred percent wireless smart signal booster. Our team continues to push the boundaries in design excellence, ensuring Cel-Fi meets the stringent testing criteria laid out by carriers worldwide to solve indoor coverage issues for wireless subscribers.”

Life Sciences-Diagnostics and Research Tools

Life Technologies for Ion AmpliSeq Exome

Ion AmpliSeq Exome Kit isolates key regions of the genome with unparalleled ease and speed, leveraging PCR, a routine lab technique. Taking six hours instead of several days, this provides the simplest, fastest exome sequencing solution for researchers studying disease.

Life Sciences-Medical Products

Isis Pharmaceuticals, Inc. for KYNAMRO

KYNAMRO is the first FDA-approved, systemically delivered, antisense drug and a product of Isis’ drug discovery technology platform. KYNAMRO is designed to inhibit LDL-cholesterol formation and is marketed to treat patients with HoFH, a genetic disease characterized by severely high LDL-cholesterol.

Mobile Apps

OneHealth Solutions, Inc. for OneHealth

OneHealth is the leading HIPAA-compliant mobile application combining social technology, game mechanics and clinical principles to support chronic condition and behavioral health patients. Through real-time peer support, OneHealth Experts and evidence-based clinical resources, patients actively manage their conditions anytime, anywhere.

“OneHealth is a pioneer in delivering an integrated web and mobile-based health service that provides users with the tools and real-time support they need to better manage their health goals and lead healthier lives,” said Bruce Springer, CEO of OneHealth. “Our mobile app includes best-practices from nearly five years of implementing our web-based platform, bringing a “healthy support in your pocket” approach to encourage healthy living, drive patient compliance and reduce risk to ensure better health outcomes. This award is an honored recognition of our goal to make healthier living more accessible for everyone when they need it most.”

Software

Emotient for FACET

Emotient is the leading authority in facial expression recognition. Emotient’s flagship product is FACET, a software development kit for automatic emotion detection. Emotient’s technology translates facial expressions into actionable information, enabling companies to develop emotion-aware technologies and create new levels of customer engagement.

“We are honored that FACET received such prestigious recognition from CONNECT,” said Ken Denman, CEO, Emotient. “Emotient’s scientific co-founders are widely regarded as pioneers in applying machine learning, computer vision and cognitive science to facial expression analysis. We look forward to seeing our FACET emotion recognition technology deployed for broad consumer, marketing, healthcare and business use.”

Sport & Active Lifestyle Technologies

Hookit for Hookit Athlete Index

Marketers invest $12B in athlete endorsements every year to capture a piece of $1T plus they impact in consumer spending. Hookit has created the first ever tool to track and monetize athletes’ real-time influence in today’s complex world of digital media.

Sustainability

Achates Power, Inc. for Achates Power Opposed-Piston, Two-Stroke Engine

Achates Power has developed radically improved internal combustion engines that increase fuel efficiency, reduce greenhouse gas emissions and are lower cost. These engines meet the U.S. military’s stringent requirements for power density, fuel efficiency, heat rejection and multi-fuel capabilities.

In my interview, David Johnson, President and CEO, stated, “We were thrilled to win the CONNECT MIP award. Since our 2004 founding, we have worked hard to perfect the opposed-piston engine architecture and our technology is extremely well suited to the needs of the military—providing superior fuel efficiency, high power density and low heat rejection. This is what sets us apart from the competition including, in this case, the incumbent technology.”

Distinguished Contribution Award

In addition to the nine companies honored for their outstanding new products, the Distinguished Contribution Award for Life Sciences and Technology Innovation was awarded posthumously to former Chief Executive Officer, Duane Roth, who passed away in August. Duane’s brother Ted accepted the award, followed by an inspiring tribute video honoring all that Duane did for the San Diego region. The Distinguished Contribution Award for Life Sciences and Technology Innovation is bestowed annually to honor individuals in San Diego who, through business activities and community involvement, have encouraged innovation, diversity of thought and the advancement of local entrepreneurs. A lover of innovation and technology and a true community cultivator, Roth was beloved in the community for serving as an inspiration, a leader, a mentor, a role model, an advocate and friend. Roth’s many contributions to local entrepreneurs and the San Diego innovation economy coupled with his infectious spirit will live on as the award will be renamed in his honor as the Duane Roth Distinguished Contribution Award for Life Sciences and Technology Innovation.

California has a bad rap for an unfavorable business climate with regard to taxes and regulations, but entrepreneurs are still choosing California as the location for starting and growing their technology based companies. San Diego has a great deal to offer these companies to help them succeed and grow starting with the San Diego Inventors Forum (about which I have written previously), CONNECT’s various programs, the CommNexus EvoNexus incubator, and the large pool of angel investors that comprise the TechCoast Angels. San Diego continues to grow more companies than it loses to other states. However, when a company grows to the point that it is acquired by an out-of-state public company, it is often moved to another state by the new parent company. Governor Brown and our state legislators could remedy this situation by improving California’s overall business climate.

Posted in Innovation, Manufacturing | No Comments »

Country of Origin Labeling is Critical to Buying American and Must be Improved

December 3rd, 2013

On January 15, 2013, Walmart and Sam’s Club announced that they will buy an additional $50 billion in U.S. products over the next 10 years. “…by increasing what it already buys here – in categories like sporting goods, apparel basics, storage products, games, and paper products, and by helping to onshore U.S. production in high potential areas like textiles, furniture and higher-end appliances.”

The news release stated, “A popular misconception about Walmart is where the majority of the products on its shelves are sourced. According to data from its suppliers, items that are made here, sourced here, or grown here account for about two-thirds of what the company spends to buy products at Walmart U.S.”

Since 11 months has passed since Walmart’s announcement, I wanted to see if the company was living up the claims of their press release. So I visited two Walmart stores in San Diego to see if I could find products with “Made in USA” labels. I spent a couple of hours going through various departments. In the clothing departments for men, women, boys, girls, and babies, I only found one “Made in USA” label on a team logo shirt made by Intex in the sports team department. The majority of clothing in all departments had “Made in China” labels, but there were also labels for clothing made in Bangladesh, Cambodia, El Salvador, Honduras, Jordan, Nicaragua, Pakistan, and Vietnam.

When I browsed the small appliance and furniture departments, I found only “Made in China” products. I was especially disturbed to see only “Made in China” labels for everything in the baby department: car seats, cribs, infant seats, playpens, strollers, swings, etc.

Since Walmart pledged to buy more “Made in USA” textiles, I made a point to check the labels of all the products in the Bedding department. I found sheets made in China, India, and Pakistan, but all of the comforters, blankets, bedding sets, pillows, towels, bath rugs, and throw pillows were made in China. It was interesting to find two brands of foam mattress pads (Intex and Mainstay) made in America that were cheaper than the brands made in China.

I browsed the sporting goods department carefully and was pleased to find Exxel sleeping bags made in America. I wrote about this company in the second edition of my book as an example of a company that “reshored” manufacturing; that is, returned manufacturing to America from offshore. “In 2007, 60 percent of Exxel’s sleeping bags were made in Shanghai, while Haleyville [Alabama] produced the rest. By 2009, only a third came from China, and by 2010, Haleyville accounted for 90 percent. ‘Labor is China’s advantage and our weakest link,’ Kazazian said. ‘But they can’t compete with me on my just-in-time production cycle.’”

I did find one model of Coleman coolers (a blow-molded plastic model) “Made in USA,” but all other models were made in China. All of the weights, exercise balls, golf clubs, tents, air mattresses, and sports balls were made in China.

Regarding paper goods, you can find “Made in USA” cards in the gift card section, but they are outnumbered by a 3:1 ratio by “Made in China” cards.

I didn’t have time to check labels in the grocery department, but am sure that I would have found the same labeling information I am accustomed to seeing as I noticed that they carry the same brands that I regularly buy at my local grocery store.

The problem with food labeling is that Country of Origin (COOL) Labeling rules defined by the U. S. Department of Agriculture (USDA) leave some loopholes that mean consumers are not getting all the information they need to make informed buying decisions.

For example, seafood has been covered since 2005, and raw seafood requires a label, but if it is cooked or smoked, no label is required. Since 2009, beef, poultry, lamb, goat, some nuts (peanuts, pecans and macadamias), fresh and some frozen fruits and vegetables, and ginseng have to be labeled with their country of origin. However, this requirement applies to retailers (grocery stores), but is not required at restaurants or specialty markets (like fish markets, butcher shops or roadside stands).

The USDA rules for COOL exempt “processed” versions of the foods, and unfortunately, USDA defines the word “processed” in the broadest way they could, so that the maximum amount of food is exempted from labeling. The rules now exempt things that are:

  • cooked, roasted, smoked or cured
  • combined with one other ingredient

This means that all of the frozen meals that you warm up in your microwave have no Country of Origin labels for the ingredients of the meal. The packages just provide “Distributed by” information. The rule that adding one ingredient exempts products from labeling means that lots of frozen vegetables (think peas and carrots) and salad mixes don’t have to be labeled.

Most nuts sold in grocery stores are roasted, so they aren’t labeled. Meat that is cooked, roasted, smoked or cured doesn’t require COOL labeling, so a lot of product in the pork section of the meat case is exempt because it is smoked or cured.

An example of labels that are misleading is the “Product of Canada” labeling on Gorton’s gilled Tilapia packages. Since tilapia is a warm water fish, my husband recently inquired as to where their tilapia is raised. The email reply from Gorton’s Customer Service said:  “All of our tilapia is produced (finished and packaged) in facilities located in either the U.S. or in Canada. All of our coatings, glazes, breading, and flavors are produced in the US and Canada. Our tilapia is aquacultured (farm-raised) fish raised in freshwater ponds and lakes, primarily in China and Indonesia. All of our tilapia is from Best Aquaculture Practices (BAP) or Aquaculture Stewardship Council (ASC) certified facilities. Gorton’s goes beyond FDA standards to ensure that our tilapia is safe and of the highest quality. We work with only a few, carefully selected tilapia growers who share our dedication to producing only high quality, safe products. In addition, we inspect every lot of tilapia in our own raw material inspection and safety testing facility. Regardless of where our seafood is caught and processed, Gorton’s uses strict, rigorous quality control processes to ensure that we provide you with the safest, most wholesome and delicious seafood products on the market.” The good news about Gorton’s fish products is that the labeling on their grilled salmon states “Made with 100% wild-caught salmon.”

Another example of a misleading labeling is the new label on some of the Starkist tuna products as part of their recently launched its “Made in America” campaign to celebrate its 50th anniversary in American Samoa… The new American flagged themed labels are on 12-ounce cans of “chunk light” tuna processed in American Samoa – an American territory, so technically it’s made in America.

 

However, according to a U.S. General Accounting Office report, “…more than three-quarters of cannery employees were foreign workers from neighboring Samoa, an independent country.” The workers are far paid less than the U.S. minimum because Congress passed legislation that delayed for Samoa the minimum wage increases that went into effect for the rest of the country. “The minimum wage in American Samoa’s canning industry is set at $4.76 per hour and will not increase until at least 2015.”

In addition, it’s nearly impossible to verify the issue of where the fish is caught and if the fish were caught by U.S. flagged vessels. An article in Undercurrent News states, “While it may seem important to know whether the majority of the fish is caught — in US waters or outside of them — it is not, as far as the US government is concerned. ‘ As long as a US-flagged vessel catches the fish, the US government considers it to be US fish, ´ said Peter Flournoy, a lawyer for commercial marine harvesters. He added, ‘This includes fish caught outside of US waters.’”

Besides ensuring food safety, one of the goals for knowing the Country of Origin for products is to promote the creation of jobs for Americans. The current loopholes for labeling of products such as Starkist’s chunk light tuna are certainly not contributing to achieving this goal.

I’m sure few Americans know that Starkist is now a U. S. subsidiary of the Korea-based tuna giant Dongwon Industries, which means that when American consumers buy Starkist tuna, they are buying a product of a Korean company selling fish caught in international waters, packaged in American Samoa by foreign workers making less than the minimum wage.

We need to make Country of Origin (COOL) Labeling mandatory for all processed food, including frozen meals, vegetables, as well as canned food such as tuna. We could start by requiring that all ingredients representing 25 percent or more of the product be identified by country of origin on the label, including where fish are being farm raised.

 

Posted in General | 1 Comment »

Is There Really Free Career Technical Training?

November 19th, 2013

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

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

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

California K-12/Adult Programs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

 

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

What is a Secret to the Success of Indiana Manufacturers?

November 5th, 2013

Many companies in Northern Indiana were hit hard by the recession and the dramatic downturn in the auto industry, but some manufacturers were able to weather the storm, recover rapidly, and resume good growth well before the rest of the country. Manufacturing in the U.S. is undergoing a renaissance, and Indiana ranks as the top state where manufacturing contributes the most to the nation’s total economic output. For example, Northeast Indiana’s medical device companies control 34 percent of the worldwide orthopedic market, translating into $12 billion in revenues. They are market share leaders in the $37 billion orthopedic and biologics industry, and combined together, they control 60 percent of the worldwide hip replacement market and 64 percent of the worldwide knee replacement market. Three companies shared their stories with me in recent interviews.

Micropulse Incorporated

I interviewed Brian Emerick, CEO, who founded Micropulse in 1988 and is the sole owner of the company. The company now manufactures from a state-of-the-art 100,000 square foot facility with over 200 employees next to the farmhouse where it was originally started.

Micropulse prototypes and manufactures the most demanding instruments and implants in the medical device industry. They don’t have their own product line and make custom parts for OEMs. They are a contract manufacturer selling to the orthopedic industry. About 50% of their business is spine related, and the rest is a mix of hip, knee, and other joint implants.

Their employees have been trained in “Lean manufacturing” principles and tools using the local Manufacturing Extension Program and courses at the local community colleges. They have several Black Belts now on staff, and they do regular Kaizen events and utilize Six Sigma practices and tools. Their quality system is certified to ISO 13485.

Brian said, “We started being impacted by competition from offshore, especially China about 10 years ago, but business is coming back. Some of our bigger customers like Johnson & Johnson and Zimmer set up plants in China. We do more work with smaller companies that don’t have their own plants in China because the quality requirements for implants are too stringent to use Chinese contract manufacturers.”

They were flat in 2009 during the recession, but the orthopedic industry as a whole was down about 25%. They have great customers and started growing again in 2010. Their growth since has been about 10% per year. They recovered by not buying much and cutting expenses.

They spend about $2 million per year buying new equipment and updating software systems. They are considering adding another 60,000 sq. ft. within the next 18 months.

Brian said, “The secret to our success is the employees that make up our team. We have a solid workforce with very low turnover and have quality customers.”

C&A Tool

Richard Conrow founded C&A Tool in 1969 in a garage in Churubusco, Indiana as a tool and die operation with 10 employees. C&A Tool is a poster child for the manufacturing revival in the U.S. As a privately held company, C&A Tool has continued to add jobs, machinery and square footage each year. Having sustained 44 years of economic ups and downs, the company has grown to employ more than 530 people with 750,000 square feet of manufacturing space.

I interviewed Rob Marr, V. P., who said, “Our services are contract machining and high precision grinding. We don’t have our own products, but do a lot of prototype and development for our customers.” They bought Direct Laser Sintering equipment to be able to do Additive Manufacturing, also known as 3D printing, which utilizes 3D CAD data to produce a part. In the case of C&A Tool, the parts are metal, not plastic, made by Direct Laser Sintering. This technology produces metal prototypes and production parts in a matter of hours.

Their main markets are:  orthopedics for instruments and implants, automotive, electric motors, fuel systems, and aerospace. The company currently has four facilities and has invested in new capabilities, adding new equipment to support jet engine, power generation and industrial markets. This market mix means that they are ISO 9001:2008 certified, as well as TS949, AS 9100, and ISO 13485 certified.

Training the next generation of manufacturers is critical for the future. Rob is passionate about educating the manufacturing workforce, the general public, and his local community that manufacturing is not the dark and dingy days of our forefathers. For the past 36 years, C&A Tool has partnered with the local high schools to offer part time jobs to more than 60 students during the school day that allow them to have on the job training and transition from the classroom to the workplace more seamlessly. In addition to training high school students, the company brings in math teachers to show them the real world of manufacturing.

They have been impacted by competition from offshore, especially China, but have been getting business back for a couple of years. They compete more with Europe than China because of their high precision machining and grinding.

They were impacted by the recession, particularly their automotive business. During part of 2009, their business was down by 40%. New development was down, but they didn’t lay off any one and even bought another facility in 2009. They did not do anything special to recover, just continued their business culture.

They focus on investing heavily in capital equipment and software every year, even during the recession. They buy new equipment as their motto is “to maintain an excess capacity of square footage and equipment, even if it doesn’t have the customer base to support the investment at the moment to be able to take advantage of new opportunities.”

Rob said, “The secret to our success is that our founder laid a foundation for the company with the right people and equipment. We have evolved over the years. It really comes down to the people and allowing them to succeed and learn from their mistakes. We do what’s right by investing in people and equipment so our employees can take pride in their work and we elevate the industry.”

Forest River Inc.

Forest River was founded in 1996 by Peter Liegl. He foresaw an RV company dedicated to helping people experience the joy of the outdoors by building better recreational vehicles. After purchasing certain assets of Cobra Industries, the company started manufacturing pop-up tent campers, travel trailers fifth wheels and park models.

Continually growing, Forest River now operates multiple manufacturing facilities throughout the Midwest and West coast producing motorized Class A, B and C vehicles, travel trailers, fifth wheels, pop-up tent campers, park model trailers, destination trailers, cargo trailers, commercial vehicles, buses, pontoons, restroom trailers and mobile offices.

They were acquired in 2005 by Berkshire Hathaway, but Mr. Liegl has remained the CEO. Forest River shares 80-81% of the industry with two other companies, leading with a 35% market share.

Doug Baeddert, GM of 14 operating units, said “We don’t sell direct to the public; we sell through dealers focused on their main markets of recreation, commercial businesses for vehicles, pontoons, and mobile offices, and municipalities for buses and restroom trailers.”

Their plants are non-union, and 85% of all production occurs in Indiana. The industry is an assembly-based industry not a vertical industry. They rely on their suppliers and are basically an “assembler” of parts, components, and assemblies that are manufactured by their vendors. For example, many of their wood assemblies are made by small Amish wood shops that are located in Northern Indiana.

They have not been impacted by offshore competition for their products, but over the last 15 years, the imported content of their vehicles has grown. It reached a peak a couple of years ago and is leveling off now.

Doug said, “In 2008-2009, there was a 33-34% reduction of manufacturing of RVs industry-wide. The consolidation of companies has been healthy and good for the financial stability of our industry. There has also been a consolidation of dealers so there are about one-third fewer dealers than prior to the recession.”

During the recession, they didn’t cut any salaried or sales personnel because they weren’t top heavy. They downsized some of the production workforce, but not significantly. They haven’t noticed any effect from sequestration nationwide, and their growth is up 40% this year.

They don’t have a formal budget for investing, but they are continually doing new product design and improving their existing products. Each division is autonomous in product development and is very entrepreneurial, innovative, creative, and visionary in their design work for new products. They can make minor changes from concept to prototype in as little as three days. However, a major technology change, particularly vehicles, can take up to a year.

Doug said, “The secret to our success is the right leadership of our founder, Pete, our people, our products, and our processes. We give enough rope to our people to succeed or fail and have a very low turnover.”

In answer to my question about their secret to success, they all said their core competency as a company is the talent and expertise of their people from management on down the line, not just their equipment or facilities. My own experience in business and as a writer has convinced me that it is the team of people that make up a company that is the key to its success or failure. These stories are examples of achieving the American dream of being a successful entrepreneur.

 

Posted in Economy, Manufacturing, Reshoring, Training | No Comments »

Deadly Food Products Coming to a Store Near You?

October 29th, 2013

For the last several years, there has been one story after another about tainted or even deadly food or ingredients to human and pet food coming from China. The two latest stories were  the jerky treats that caused hundreds of pet deaths and the laundering of honey coming from China by a German importer. However, the majority of Americans are blissfully ignorant of the origin of many of the food products stocked in their neighborhood stores. If they really knew the source of many of the products they buy, they would be horrified. The public outcry would be sufficient to put enough pressure on our elected officials to remedy the situation rapidly.

More than a hundred years ago, there was an exposé of the Chicago meat packing industry in Upton Sinclair’s The Jungle, followed by many other articles in the Progressive Era publications of the day. There was a huge public outcry. As a result, President Theodore Roosevelt sent labor commissioner Charles P. Neill and social worker James Bronson Reynolds to Chicago to make surprise visits to meat packing facilities. Although the meat packers were tipped off in advance about their visits, they saw enough revolting conditions at the meat packing plants to corroborate the claims of the many articles and submitted a report to the president and Congress.

As a result, the Federal Meat Inspection Act of 1906 (FMIA) was passed by Congress and signed by President Theodore Roosevelt to prevent adulterated or misbranded meat and meat products from being sold as food and to ensure that meat and meat products are slaughtered and processed under sanitary conditions. All labels on any type of food had to be accurate (although not all ingredients were provided on the label). Even though all harmful food was banned, there were still few warnings provided on the container. USDA inspection of poultry was added by the Poultry Products Inspection Act of 1957.

Also in 1906, President Theodore Roosevelt signed into law the Pure Food and Drug Act, under which the Food and Drug Administration (FDA or USFDA) was formed as an agency of the United States Department of Health and Human Services. The Federal Food, Drug, and Cosmetic Act (abbreviated as FFDCA, FDCA, or FD&C) was passed by Congress in 1938 to replace the earlier Pure Food and Drug Act of 1906 and gave authority to the USFDA to oversee the safety of food, drugs, and cosmetics. This Act has been expanded to include food coloring, food additives, bottled water, homeopathic products, and foods produced by genetic engineering and natural sources. Genetically modified food is regarded as containing a “food additive” and is subject to pre-market approval by the FDA if the protein added to the food by the genetic engineering process is not “generally recognized as safe.” On May 28, 1976, the FD&C Act was amended to include regulation for medical devices. The amendment required that all medical devices be classified into one of three classes.

The FDA is now responsible for protecting and promoting public health through the regulation and supervision of food safety, tobacco products, dietary supplements, prescription and over-the-counter pharmaceutical drugs (medications), vaccines, cosmetics, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices (ERED), and veterinary products.

Six years ago, there was the biggest pet food recall in history when a Chinese producer contaminated dog and cat food with melamine, a compound used in plastics, causing the deaths of animals across the United States. The public outcry helped lead to the inclusion of animal food in the Food Safety and Modernization Act, a landmark food safety bill passed in 2010 that was the first major overhaul of the Food and Drug Administration’s food safety laws since the 1930s. It gave the USFDA more control over food imports as well as broad new powers to set standards to prevent contamination of produce and processed food.

After the latest scandal regarding jerky treats for pets imported from China, the Food and Drug Administration published a proposed regulation on October 29th that would govern the production of pet food and farm animal feed for the first time. This would help prevent food-borne illness in both animals and people.

The problem with passing more regulations for the USFDA to handle is that it is grossly understaffed and underfunded for its complex and growing regulatory mission. The 2012 budget was only $4.36 billion, and the budget request for 2013 was $4.5 billion. About 45%, or $2 billion of the 2012 budget, is generated by user fees. Pharmaceutical firms pay the majority of these fees, which are used to expedite drug reviews.

The USFDA regulates more than 80% of America’s food supply and $1 trillion worth of consumer goods. Much of the expenditures are for goods imported into the United States. While the USFDA is responsible for monitoring a third of all imports, it only inspects less than 1% of food imports at the ports of entry. Many foreign countries such as China don’t have the same or any standards for source inspections that are required for food manufactured in the United States. They don’t have the same regulations against harmful pesticides and environmental pollution. Thus, importers are bypassing all of these inspections and regulations so can sell their products cheaper. This means that when you eat imported foods, you are playing the Chinese food version of “Russian roulette.”

We need to increase funding for the USFDA, and one simple way would be to require importers to pay a fee for screening of imports  to the USFDA for imports that are under its jurisdiction. This would enable the USFDA to add more staff to expand their inspection of imported goods, especially food imports.

You may be thinking that the U. S. Consumer Protection Agency is recalling food products that are determined by the USFDA to be contaminated or toxic, but you won’t find any food products listed if you go to their site to see the list of the products recalled for the month. This agency recalls manufactured products such as appliances, electrical goods, and toys, etc. The USFDA website lists all of the food, drug, and cosmetic recalls. No country of origin information is listed on the USFDA website. The Consumer Protection agency website has been revamped this year to make it more difficult to find out where a product is manufactured. Previously, you would see the list of products recalled, and the country of manufacture would be listed with the description of the product and why it was recalled. Now, it is a two-step process. On the first page, you see an image of the product and the reason why it was recalled, but no country is listed. You have to select finding products by country of manufacture to get the list for a particular country, such as China. Now, it would be more difficult to come up with how many products are coming from China compared to other countries.

The best solution for this problem would be for Congress to pass a law requiring country-of-origin labels for all human and pet food products similar to the nutritional information labels now required on packaged food products so consumers can see where their food is coming from. San Diego entrepreneur and businessman, Alan Uke has proposed what he calls a “Transparent Label.” in his book, Buying America Back:  A Real-Deal Blueprint for Restoring American Prosperity. He wants such a label for all manufactured products, which would include food for humans and pets. He feels that it is important for consumers to “see the last place where the product was manufactured” and “to discern what portion of its components came from other places.” In the case of food, it should include country-of-origin for all of the major ingredients so that consumers would be able to make decisions on whether or not they want to buy a product based on the origin of the major ingredients.  Mr. Uke also recommends that consumers be provided the country of origin information they need at the point of sale whether at a store or online.

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

Hundreds of American pets have been poisoned and died by tainted food products from China. American children have already been harmed by dangerous levels of lead and cadmium in toys. How many Americans must die from tainted Chinese products before Congress acts?

Posted in Environment, Taxes/Regulations, Trade Policy | 1 Comment »

« Older Entries
Newer Entries »