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

August 20th, 2013

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

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

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

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

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

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

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

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

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

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

 

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

 

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

 

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

What are the Obstacles to More Companies Reshoring?

July 30th, 2013

While there is still a debate about how much reshoring is actually taking place, there is no doubt it is happening, especially in the seven tipping-point industries that the Boston Consulting Group predicted would reshore:  transportation goods, appliances and electrical equipment, furniture, plastic and rubber products, machinery, fabricated metal products, and computers and electronics.

For example, we’ve read about General Electric reshoring appliances such as water heaters, washing machines, and refrigerators to a factory in Kentucky, and Caterpillar is opening a new factory in Texas to make excavators. And, yes, even furniture manufacturing is coming back. At the High Point Furniture Show in April 2012, where the Made in America Pavilion housed 50 U.S. manufacturers, Ashley Furniture announced that it was building a new factory in North Carolina. Lincolnton Furniture also announced they had broken ground on a new furniture factory.

Earlier this year, Apple’s CEO Tim Cook said the company would invest $100 to build a factory in Texas to assemble Macintosh computers, which would include components made in Illinois and Florida, and rely on equipment produced in Kentucky and Michigan.

The results of February 2012 survey from the Boston Consulting Group (BCG),  showed that 37 percent of U.S. manufacturers with sales above $1?billion said they were considering shifting some production from China to the United States, and of the very biggest firms, with sales above $10 billion, 48% were considering reshoring. The factors they pointed to were not only that wages and benefits were rising in China, but the country is also enacting stricter labor laws and experiencing more frequent labor disputes and strikes.

According to BCG, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010. Wages have been predicted to rise by 60% this year alone after additional strikes.

So, we might ask, “Why aren’t more companies reshoring? There are three main reasons:

  1. Most companies don’t conduct a Total Cost of Ownership Analysis when making a decision to outsource manufacturing.
  2. The United States has a high overall cost of manufacturing.
  3. There are still tax incentives to offshore manufacturing.

Total Cost of Ownership Analysis

In spite of the fact that I have spoken to hundreds and hundreds of people about the importance of doing a Total Cost of Ownership Analysis since my book came out in 2009, and Harry Moser, founder of the Reshoring Initiative, has spoken to thousands and thousands of people since releasing his free Total Cost of Ownership Estimator™ in 2010, we have only reached a small portion of the people making the decisions about outsourcing.

Most manufacturing companies that have sourced and are still sourcing parts and products offshore don’t do a Total Cost of Ownership (TCO) analysis. They base their decisions largely on low pieces that are based on cheaper foreign-labor rates and government subsidies by the governments of foreign countries to their manufacturers as part of their country’s predatory mercantilist practices.

If a company chooses not to practice TCO, it will impact their success or failure in the long run. It would be better if more companies would move forward by utilizing the freely available TCO spreadsheets, such as the one developed by Harry Moser that will allow you to quantity even the hidden costs and risk factors of doing business offshore.

After doing a thorough TCO analysis on all of outsourced parts for your products, the next step is to build an integrated team will periodically refine and refresh the analysis. You can even expand the definition of TCO to include the physical length of the entire supply chain and the lead times associated with the entire process.

American manufacturers need to embrace the New Industrial Revolution recently written about in the June 11, 2013 Wall Street Journal by columnist John Koten. He wrote, “Welcome to the New Industrial Revolution – a weave of technologies and ideas that are creating a computer-driven manufacturing environment that bears little resemblance to the gritty and grimy shop floors of the past. The revolution threatens to shatter long-standing business models, upend global trade patterns and revive American industry.”

Koten quotes Michael Idelchik, head of advanced technologies at GE’s global research lab, who said, “The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It’s about small, nimble manufacturing operations using highly sophisticated new tools and new materials.”

High Cost of Manufacturing in America

While the difference in labor rates between the U. S. and Asia is diminishing, the U. S. has the highest corporate tax rates now after Japan reduced their corporate tax rate last year. In addition, the U. S. has high health care costs that are getting worse instead of better under the Affordable Care Act, and the U. S. has the most stringent environment regulations in the world.

In his November 2011 column in Industry Week, Stephen Gold, president and CEO of the Manufacturers Alliance/MAPI, wrote, “While manufacturers face a host of challenges, the data demonstrate that domestically imposed costs ? by commission or omission of government ? further undermine our ability to compete by adding at 20% to the cost of making stuff in the country…The single most significant drag on manufacturing competitiveness is the United States’ high corporate tax rate ?an average federal-state statutory rate of 40% that has not changed in decades.”

According to the second quarter 2013 survey of 317 manufacturers by the National Association of Manufacturers (NAM)/Industry Week, concerns over health care and insurance costs caused by the Affordable Care Act are mounting. Key survey findings include the following:  82.2 percent of manufacturers identified rising health care and insurance costs as their top challenge, an increase from 74.0 percent in the previous survey and 66.9 percent identified the unfavorable business climate due to taxes and regulation as an important challenge.

Other pressures for American manufacturers are revealed by the results of a joint survey conducted by MSC Industrial Supply Company and Industry Week Custom Research, nearly half (49.3%) of the manufacturing executives polled listed “raw material costs as one of the top market pressures, followed by “attracting and retaining talent” at 36.6%, “competition from countries offering lower costs” at 31.5%, and “expansion into new markets” at 31.0%. To help them be as competitive as possible in the global marketplace, 46% have implemented lean practices, and 26.5% have plans underway to implement lean.

Tax Incentives for Offshoring

According to an article in the Houston Chronicle, the U.S. tax code provides the following deductions, offsets, tax credits and incentives to corporations to “offshore” their profits overseas:

Tax Havens ? “The Organization for Economic Cooperation and Development (OECD) defines a tax haven country as one that imposes no or low taxes, does not exchange information about economic activity and lacks economic transparency.” Tax havens are used by a majority of the largest American corporations.

Offshore Deferral ? U.S. citizens and corporations are supposed  to pay tax on income earned abroad, but  “multinational corporations are allowed to “defer” paying income tax on profits made overseas until — or if ever — those profits are repatriated back to the United States.” U.S. corporations take advantage of this offshore deferral rule by setting up subsidiaries in lower tax countries. Subsidiaries, even when they are wholly owned by a U.S. parent company, are not subject to U.S. taxation. The deferral clause has been in the tax code for more than half a century and has outlasted numerous reform efforts. A USA Today article states that in April 1961, President Kennedy asked Congress to rewrite tax provisions that “consistently favor United States private investment abroad compared with investment in our own economy.”

Profit Shifting ? A U.S. corporation can also avoid paying taxes on its income by shifting its income to its foreign subsidiary in a practice called profit shifting. “Profit shifting involves an accounting practice of transferring assets, such as intellectual property rights and patents, to subsidiaries in tax haven countries. All royalty income earned from these assets is booked by the foreign subsidiary and so is not subject to U.S. taxation.” This practice is particularly prevalent in the pharmaceutical and computer industries; for example, pharmaceutical company Merck made more than $9 billion in profits in 2010 but paid no U.S. taxes.

Earnings Stripping ? Earnings stripping is a practice in which a U.S. parent corporation undergoes a corporate inversion so that its foreign subsidiary in a tax haven country becomes the parent company and the U.S. corporation becomes the subsidiary. This “paper inversion” allows all of the corporation’s global income to be booked by its new foreign parent. In addition, the new foreign parent can “loan” money to its U.S. subsidiary. Because it is a debt of the subsidiary, the money is not taxable. What’s more, the interest on the “loan” that the subsidiary pays to the foreign parent is tax deductible in the United States for the subsidiary.

The same USA Today article states, “Corporate lobbyists say that any move to eliminate deferral would have to be packaged with a significant cut in the 35% corporate tax rate…Otherwise, the largest companies, facing an effective tax increase, would have an incentive to switch their legal residence to another country.” Obviously, no one would want large American corporations to move totally out of the U. S. so the only way to address this problem is to eliminate these tax loopholes while significantly reducing the corporate tax rates. We are long overdue for comprehensive tax reform for both personal and corporate taxes.

At the “Manufacturing in California – Making California Thrive” economic summit that was held on February 14th in San Diego, attendees voted regulatory reform and a national manufacturing strategy as the top two critical issues to be addressed. A national manufacturing strategy would encompass such issues as corporate taxes, intellectual property protection, trade reform, and other factors adding to the high cost of manufacturing in the U. S. If you have a strategy that supports manufacturing, it will alleviate these other issues. A Manufacturing Task Force was formed after the summit, of which I became chair. We have been visiting the elected representatives in our region to provide them with our Task Force report and make them more aware of the needs of American manufacturers. Now our Task Force is evolving into the California chapter of the Coalition for a Prosperous (CPA) which had facilitated the summit. CPA has established state chapters in Ohio, Pennsylvania, and Colorado and is developing chapters in Florida, Michigan, and New York. If you would like to support our work in California, please contact me at michele@savingusmanufacturing.com or contact CPA at sara@prosperousamerica.org for involvement in other states.

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Posted in Manufacturing, Reshoring, Taxes/Regulations, Trade Policy | No Comments »

Made in USA Products Succeed in Home Décor Market

July 23rd, 2013

When ABC began the “Made in America” series on the World News with Diane Sawyer on Monday, February 28, 2011, the ABC team examined three rooms of the home of John and Ana Ursy in Dallas, Texas and removed all foreign-made products. The result was a virtually empty house – no beds, no tables, no chairs, no couches, and no lamps. Only the kitchen sink, a vase, a candle, and some pottery remained.

If the ABC team conducted the same examination today, they might find more Made in USA products. Every season, more and more Made in USA products are available in retail stores, such as Home Depot and Lowes. Consumers are choosing to buy Made in USA products, and retailers are paying attention. Even Walmart, the nation’s largest retailer, announced that it would increase sourcing of American-made products by $50 billion over the next 10 years.

One company was ahead of the trend by providing Made in USA carpet products to the home decor market ? FLOR, owned by $1.1 billion Atlanta-based textile manufacturer, Interface Inc.

In my recent interview with FLOR President Greg Colando, he said, “In 2003, I was requested by Interface founder Ray Anderson to start a company that would use 100% recycled material to make carpet tiles for the consumer market.”

Colando continued, “We started FLOR with three employees in a small office on the west side of Chicago. Our strategy was to grow this brand by word-of-mouth. We sought out design influencers (bloggers, designers, design celebrities) to introduce them to the product, let them fall in love with it, and then spread the word through their own influence.”

We weren’t able to start off with 100% materials in 2003 as they just weren’t available. It was a practice that evolved over many years. First, we committed to the idea that carpet could be 100% sustainable. Back 10-15 years ago, it seemed unattainable to be able to make carpet using recycled materials as you drove through neighborhoods and saw rolled up carpeting at the end of driveways headed for landfills.

We began the process of working with our vendors and demanding they supply us with the materials we were seeking. And here we are, about to celebrate our 10-year anniversary, and our entire line consists of 100% recycled nylon face fibers as it is now possible to get 100% recycled nylon yarn from suppliers. We have some unique texture products, like Fedora (a best seller) where each square you purchase removes five plastic water bottles from a landfill and diverts it into our carpet.”

Today, FLOR is headquartered in Chicago, IL, but their carpet tiles are finished in their manufacturing plant in La Grange, GA. The company has grown from the original three founding employees to more than 100. From their distribution center near Atlanta, their employees are bringing a smarter solution for floor covering to the market place to every store in all the major markets in the United States.

Instead of downsizing during the recession of 2007-2009, Mr. Colando said, “We actually grew our business during the recession. A new idea/product combined with a large home/design market place provided a great deal of room for growth, even as the rest of the world around us seemed to be crumbling. One wonderful asset we had was our ability to trim down spend while increasing efficiency and staying flexible. Now, we are a rapidly growing business, opening 20 of our own stores in the past couple years.”

FLOR’s products are an innovative system of carpet squares that you assemble to create custom area rugs, runners, or wall-to-wall designs of any shape or size. Using FLOR’s patented adhesives, you connect the carpet squares together and not to your floor. In addition to dozens of patterns and colors of carpet tiles that you can design and assemble yourself, FLOR offers 75 pre-designed combinations of rugs ranging from simple two-tile mats, iconic button rugs, to unique shapes such as the Hop-Scotch rug and Faux Hide rug.

Mr. Colando said, “Our Georgia manufacturing plant is not an automated manufacturing plant using robotics. It is a simplistic “pick and pack” product where members of the FLOR team work hard each and every day to put forth the best possible end customer experience. The majority of our orders ship the same day, which shows the efficiency of the operation.”

“Pick and pack” means that an employee selects the carpet design styles and colors to fill a customer’s specific order and packs them in the shipping box. FLOR doesn’t manufacture the actual carpet tiles; they are manufactured in traditional rolls at one of Interface’s domestic plants and shipped to FLOR, where they are cut into carpet squares and stored in the warehouse by color and design.

FLOR’s becoming a success as an environmentally responsible company, making products for the domestic market in the USA was the result of one man’s vision ?Ray Anderson, who founded Interface Inc. in 1973 to produce the first free-lay carpet tiles in America. Interface is now one of the world’s largest producers of modular commercial floor coverings, with sales in 110 countries and manufacturing facilities on four continents. Interface manufactures carpet for the commercial market ? corporate, healthcare, education, retail, hospitality and government. While Interface manufactures carpet in Australia, England, Holland, Shanghai, China, and Thailand for markets in those countries and regions to eliminate shipping products across the ocean, 90% of the carpet for the domestic market is Made in USA.

Anderson first turned his focus toward the environment in 1994 when he read The Ecology of Commerce by Paul Hawken, and also Ishmael by Daniel Quinn, seeking inspiration for a speech to an internal task force on the company’s environmental vision. Hawken argues that the industrial system is destroying the planet and only industry leaders are powerful enough to stop it. Anderson made a decision to transform the company into using recycled materials wherever possible to become a sustainable company.

He made a promise to have the company eliminate any negative impact it may have on the environment by the year 2020 through the redesign of processes and products, the pioneering of new technologies, and efforts to reduce or eliminate waste and harmful emissions while increasing the use of renewable materials and sources of energy. Interface now leads the industry in environmental achievement and the exploration of environmentally efficient products and processes.

In 2009, Anderson said, “Fifteen years later, we’re only halfway there. But we’ve saved over $400 million, which has more than financed everything else that we’ve done — the R&D, the capital expenditures, the process changes, employee training, the whole ball of wax.

Interface’s Mission Zero Progress has been remarkable. The use of recycled and biobased materials has gone up from 1% in 1996 to 49% in 2012. The water use (gallons per square yard) has gone down from 1.9 gallons in 1996 to .4 in 2012. The waste to landfill from Interface’s carpet products has gone down from 12.5 million pounds in 1996 to 2.0 million pounds in 2012. The Greenhouse Gas Emissions (pounds of CO2e per square yard) from Interface’s carpet factories dropped from 2.8 pounds to 1.6 pounds.

In other words, “Between 1996 and 2008, the company cut its net greenhouse gas emissions by 71 percent (in absolute tons), yet sales increased by two-thirds and earnings doubled.”

Anderson chronicled the Mission Zero journey in two books, Mid-Course Correction: Toward a Sustainable Enterprise: The Interface Model (1998) and Confessions of a Radical Industrialist: Profits, People, Purpose: Doing Business by Respecting the Earth (2009). The latter was released in paperback as Business Lessons from a Radical Industrialist in 2011.

As we can see, one man with a vision can have a huge impact. Anderson’s bold vision and ambitious goal has already accomplished things not thought to be possible, but it is a goal that demands constant improvement and attention. The management of Interface and FLOR are committed to continue with the ambitious sustainability goal to achieve a zero environmental footprint by 2020.

Unfortunately, Ray Anderson died on August 8, 2011 after a 20-month battle with cancer. On July 28, 2012, Anderson’s family re-launched the Ray C. Anderson Foundation with a new purpose. The Foundation’s mission is to create a brighter, sustainable world through the funding of innovative projects that promote and advance the concepts of sustainable production and consumption.

Interface and FLOR stand in sharp contrast to many other American companies that have offshored manufacturing to China and other parts of Asia to escape what they perceive as onerous environmental regulations in the U. S., reduce labor costs, and increase profits. If Interface and FLOR can be financially successful American companies in highly competitive markets while exercising environmental responsibility in the conduct of their business and supporting Made in USA products, they should be rewarded by consumers with more business.

 

Posted in Cleantech, Environment, Innovation, Manufacturing | No Comments »

What is the Importance of Unmanned Vehicles to our Economy?

July 16th, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The authors conclude:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The Trans-Pacific Partnership Trade Agreement Would Harm our Environment

July 9th, 2013

Proponents say that the Trans Pacific Partnership (TPP) trade agreement would be a platform for economic integration and government deregulation for nations surrounding the Pacific Rim and facilitate free trade to counter China’s financial influence in Asia and the Pacific. The negotiating parties include Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. Japan also 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 are already expressing interest.

The TPP is poised to become the largest Free Trade Agreement in the world. The ongoing, multi-year negotiations over the TPP are supposed to conclude this year, so the window of opportunity for preventing this free trade agreement is rapidly closing.

Among other reasons about which I have written previously, opponents of the TPP say it would harm our planet’s environment, subverting climate change measures and regulation of mining, land use, and biotechnology. The Pacific Rim is an area of great significance from an environmental perspective. It includes Australia’s Great Barrier Reef, the world’s largest coral reef system, home to more than 11,000 species. It includes Peru and its Amazon Rainforest—one of the most biologically diverse areas on Earth.

In May 2007, citizen-led advocacy groups including the Sierra Club forged a bipartisan consensus   that set the minimum standards for environment, labor and other provisions to be included in future trade agreements. According to sections of the TPP that have been leaked, it appears that these minimum standards are being ignored.

It is essential that the environment chapter of the TPP build on the environmental protection progress that has been made. “At a minimum, the environment chapter should be binding and subject to the same dispute settlement provisions as commercial chapters; ensure that countries uphold and strengthen their domestic environmental laws and policies and their obligations under agreed multilateral environmental agreements; and include biding provisions to address the core environment and conservation challenges of the Pacific Rim region, such as efforts to combat illegal trade in wood, wood products, and wildlife and to strengthen fisheries management.”

If you “Google” TPP and the environment, you come up with more than 20 pages of articles by one organization after another and one author after another expressing reasons why the TPP would harm the environment. The opposition to the TPP began as early as 2011 when the first drafts were leaked and intensified in 2012. These organizations include the Sierra Club, Public Citizen group (founded by Ralph Nader), the Citizens Trade Campaign, and Economy in Crisis, among many others.  A common thread of the articles is either a subtle or overt accusation that President Obama has “sold out” to Wall Street/big banks and multinational/transnational corporations.

On their website, Union-backed We Party Patriots states, “…the Trans-Pacific Partnership (TPP) is being put together in extreme secrecy. This secrecy comes complete with a total lack of mainstream media coverage despite serious potential long-term effects. Leaked documents show that the TPP will have a chilling effect on the ability of the United States government to take legal action against multi-national corporations for their abuses of environmental, agricultural, and labor laws.”

The Fair World Project’s website states that in late 2012, “a group of labor leaders, trade justice advocates, family farmers, environmentalists, food sovereignty groups and others from the U.S., Canada and Mexico created a ‘North American Unity Statement Opposing NAFTA Expansion through the Trans-Pacific Partnership (TPP),’ with the goal of uniting 1,000 organizations in opposition to the TPP.”

On March 7, 2013, Friends of the Earth announced that it had released a new video, “Peril in the Pacific: Trans Pacific trade agreement threatens people and the planet.” The video illustrates these threats by telling the story of “Chevron v. Ecuador” international investment suit brought under an existing U.S. treaty. The video raises questions like: “Who should pay to clean up what has been called the “Rainforest Chernobyl” in the Ecuadorian Amazon? Why are the people of the rainforest who suffered the most not represented at the international tribunal hearing the case? Is it U.S. policy to favor the financial interests of multi-national corporations over people and the environment in such disputes?”

The video also asks why the negotiating framework for the TPP favors Wall Street and multinational corporations at the expense of current U. S. environmental and climate policy and why does it  allow multinational corporations to challenge laws that protect our air, land and water.

Because the Asia-Pacific region accounts for about one third of all the threatened species in the world, Friends of the Earth is concerned that the TPP trade agreement potentially checkmates many of our country’s past environmental victories and would block new initiatives. The natural environment and rich biodiversity of the Pacific Rim are threatened by illegal and/or unsustainable commercial exploitation of the ocean, natural resources, and forests.

Friends of the Earth recommends that the TPP negotiators must address the following issues to avoid the most serious environmental harms by:

  • Including an environment chapter that would obligate countries to enforce domestic environmental protections and abide by global environmental agreements that are enforceable through international lawsuits.
  • Rejecting the proposed TPP investment chapter that would authorize foreign investors to bypass domestic courts and bring suit before special international tribunals biased in favor of multinationals to seek awards of unlimited monetary damages in compensation for the cost of complying with environmental and other public interest regulations.
  • Rejecting “provisions of the TPP intellectual property chapter that would provide international legal protections for corporate patents on plant and animal life, granting companies ownership and sole access to these building blocks of life.”
  • Rejecting the regulatory coherence chapter that could hamstring environmental regulation and “encourage cost-benefit analysis that exaggerates financial costs and minimizes the intrinsic value of protecting living things, wild places, and the stability of the ecosystem.”

Friends of the Earth urges that the TPP “must serve to strengthen environmental protection and support the biodiversity in the Pacific Rim and not facilitate a race to the bottom in environmental deregulation.”

What surprises me is that all of the above organizations supported President Obama in his bid for re-election last year despite the fact that he had gone back on his pledge “to oppose Bush-style free trade agreements that lead to thousands of lost American jobs”  and his word to ”not support NAFTA-type trade agreements” in his 2008 campaign. Now that he is elected for his second and last term, what incentive does he have to listen to the opinions of these organizations that oppose the Trans-Pacific Partnership agreement? None!

A few conservative news outlets such as WorldNet Daily began to recognize the dangers of the TPP early this year, beginning with the article, “Obama skirting Congress in globalist plan?” in which Jerome Corsi warn that “the administration apparently plans to restrict congressional prerogatives to an up-or-down vote” utilizing the  “fast-track authority,” a provision under the Trade Promotion Authority that requires Congress to review a FTA under limited debate, in an accelerated time frame subject to a yes-or-no vote. Under fast-track authority, there is no provision for Congress to modify the agreement by submitting amendments to ensure foreign partners that the FTA, once signed, will not be changed during the legislative process.

In a more recent article, “Obama’s 2-ocean globalist plan,” Jerome Corsi writes, “Quietly, the Obama administration is systematically putting into place a two-ocean globalist plan that will dwarf all prior trade agreements, including NAFTA, with the goal of establishing the global sovereignty envisioned by New World Order enthusiasts. The two agreements are the Trans-Pacific Partnership, or TPP, and the Transatlantic Trade and Investment Partnership, or TIPP. WND has learned the Obama administration plans to jam the TPP through Congress no later than Dec. 31.”

We certainly cannot expect to influence the President to oppose the TPP near the end of three-years of negotiations that took place under his direction. With the virtual black out  of coverage about the TPP in the mainstream media, the best we can do is make our opinions heard loud and clear to our Senators and Congressional representatives and urge our family, friends, and  members of our personal and business network to do the same. We must urge our elected representatives to vote against granting President Obama “fast track authority” under the Trade Promotion Authority. There is no time to waste. Contact your congressional representative and tell them we cannot afford another damaging “free trade” agreement that would destroy our national sovereignty, hurt American manufacturers, and harm our environment. Tell them to vote “no” to granting the President “fast track authority.”

 

 

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American Manufacturing Competitiveness Act Would Develop National Manufacturing Strategy

June 25th, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Innovative Products Featured at Annual San Diego Inventors Forum Contest

June 19th, 2013

On June 13, 2013, over 100 people gathered at the conference center of AMN Healthcare for the annual inventors contest of the San Diego Inventors Forum demonstrating that innovation is alive and well in the U. S. Ten contestants were selected out of 28 applicants to present their latest inventions for the audience to pick the top three inventions. The products ranged from those that make cooking in the kitchen easy to items to make smart phones more functional and easy-to-use products that provide portable solar power and feed the world. Applicants were limited to those that had attended the Inventors Forum three or more times in the past year and had an invention that was either already patented or was “patent pending” in addition to having a  working model or being ready for sale to the marketplace.
Adrian Pelkus won the first place prize of $1,000 for his patented O2MislyTM CWT, Chronic Wound Treatment System, which uses Vaporous Hyperoxia Therapy, oxygen infused with a vapor to deliver an anti-microbial to the affected area. Diabetic foot ulcers, bedsores, and other wounds that have not healed in as long as several years are being healed in weeks. In clinical trials, nearly every patient showed 50% wound reduction in two weeks. Treatment is now available on a private pay basis in San Diego, but will be expanded nationwide in the future. For further information, email Adrian at apelkus@iyiatechnologies.com.

Phyllis Davis won the second place prize of $500 for the patent pending Portable Farms™ Aquaponics Systems’ Modular Aquaponics Systems. Aquaponics University (AU) was created to teach individuals the skills, procedures and techniques for used for growing chemical-free food and fish in a system with minimal use of power, water and labor. Aquaponics University (AU) offers the Portable Farms™ Aquaponics System Course© that teaches individuals how to grow chemical-free food and fish in a closed-loop system. After completing the course, participants will receive one Portable Farms Kit to be able to build their own Portable Farms™ Aquaponics System that feeds up to eight people forever. For further information, contact Phyllis at pdavis@aquaponicsuniversity.com.

Jon Doogan won the $250 third place prize for the Aculief Wearable Acupressure that was launched at the Natural Products Expo West in March 2013. Aculief is a patented wearable acupressure device for active lifestyles, designed for anyone suffering from tension, health imbalance or discomfort. Aculief applies pressure to the LI4 acupressure point, located between the thumb and forefinger. The LI4 has been used for thousands of years in traditional Chinese medicine to relieve tension and to promote your body’s natural flow of energy. Aculief is currently available through their online store, www.amazon.com, www.Pharmaca.com or in Pharmaca’s 24 retail locations throughout the US.

Other presenters (in no particular order) were:
William Benn for his patented SunLight Harvester ? a mobile, renewable energy solar electric generator and power storage system. It is designed for southwest Sunbelt residents living in the reduced living space of townhomes and condominiums with patios, duplexes, with small backyards, and homes without a south facing roof that want an affordable, clean, and environmentally friendly renewable energy source of electricity. For further information, contact Ben at wmpb72y@gmail.com.

Randall J. Kendis for his patent pending iPhone Hat Cradle ?  a removable cradle to hold an iPhone or other Smartphone on a hat with a brim to provide a platform for hands-free, real-time video transmission and recording without hindering free movement and mobility. The cradle can be quickly switched from one hat to another. For further information, contact Randall at rkendis@gmail.com.

Sia Malek for his patent pending Window Blind Remote Control ? a simple battery-operated device that will turn your current horizontal or vertical window blinds into a remote controlled system. It takes only a couple of minutes to install and can be maintained and relocated easily. For further information, contact Sia at siamalek@hotmail.com.

Judith Balian for her patented system to promote positive thinking. The system acts as a gentle personal trainer to help people become aware of their thoughts and to use the law of attraction to their advantage. While many people know about the power of using affirmations and intentions, few are able to control their wandering minds to harness the greatest potential of this natural law. This system helps users develop the habit of positive thinking to create what they want in live. For further information, contact Judith at jbalian@excoveries.com.

George Octavio Flint for his patent pending Uni-Mattress ? three air mattresses in one ? twin, full, and queen so you can fit the right sized mattress into your available space. For further information, contact George at goflint@gmail.com.

Joshua D. Mackenroth for his Gravity±Seat ? is a revolutionary new bicycle suspension seat post that provides greater control and better handling for a faster, smoother ride.  The radical design is far superior to any of the off-road suspension seat posts in the market today. It is also the first suspension seat post in the world intended for the road bike market as well. Gravity±Seat is true crossover technology that lowers the center of gravity for road bikes and increases the amount of usable suspension travel for off-road bikes. The patented reverse angle design allows the seat to travel downward to lower the center of gravity while the damping shock absorbs sharp impacts. This gives riders the ability to drop down and back toward the rear of the bicycle through rough sections and steep down hills rather than being thrown over the handlebars. The end result is better handling, better traction, faster cornering, and a smoother ride. For further information, contact Joshua at sdlawyerhelp@gmail.com.
Gene McGuinness for his Wave – Fat-Free Cooking aids designed to form and cook taco shells, tortilla chips and bowls without any fat, oil, or grease in your own microwave. For further information, contact Gene at president1956@gmail.com.

If you are ready to turn that idea into a product, let us help you get started at the San Diego Inventors Forum. You will get motivated by hearing successful local San Diego inventors speak how they developed their marketable products. You will be able to network with fellow creative people and get guidance and encouragement to take your first or next steps necessary to turn your ideas into a reality. You will have the opportunity to meet “mentor” inventors and professionals in many fields. First-time attendees are invited to introduce themselves and briefly describe their idea/invention. At the end of the meeting, the “who needs who” period  provides the opportunity to express a need for help with such issues business structure, licensing, marketing, funding, legal and engineering questions.

We members of the SDIF steering committee invite all innovators, inventors, engineers, artists and start-up entrepreneurs to attend our monthly meetings, held the second Thursday of the month from 6:30pm to 7pm for networking and 7pm to 8:30pm for the meeting at the conference center of AMN Healthcare in San Diego.

Now that the annual contest is over, the 2013-2014 topics schedule begins again in August. August’s topic will be “Innovation and Entrepreneurship” – harnessing your creative mind, and September will continue with “IP 101” – when, why and how to search for patents, trademarks and copyrights. During the course of the year, topics covered include marketing, licensing, branding, networking, and funding. I will be giving my annual presentation in the fall on “Manufacturing 101” – how to select the right manufacturing processes and sources to make your product. For further information, the San Diego Inventors Forum can be reached at http://www.sdinventors.org or by calling Forum president Adrian Pelkus at 760-591-9608.

 

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Is India a Better Place for Manufacturing than China?

June 4th, 2013

You would think that because India was formerly part of the British Empire and became an independent democracy, there would be less pollution and better working conditions than in China. Well, you would be wrong.

You wouldn’t find it any healthier to live in many of the industrial cities of India than the industrial cities in China. India is developing more slowly, but its growth is already taking a toll on the health of its people. India’s population has more than tripled since independence in 1947, from 350 million people to 1.2 billion, severely straining the country’s environment, infrastructure, and natural resources.

In my last article, I mentioned that four cities in India were listed in the Blacksmith Institute’s “Dirty 30” of the 2007 report, “The World’s Worst Polluted Places.” Consider Vapi, at the southern end of India’s “Golden Corridor,” a 400 km belt of industrial estates in the state of Gujarat. There are more than 50 industrial estates in the region, containing over 1,000 industries and extending over more than 1,000 acres. Many estates are chemical manufacturing centers, producing petrochemicals, pesticides, pharmaceuticals, textiles, dyes, fertilizers, leather products, paint, and chlor-alkali. Waste products discharged from these industries contain heavy metals (copper, chromium, cadmium, zinc, nickel, lead, and iron), cyanides, pesticides, aromatic compounds like PCBs (polychlorinated biphenyls), and other toxins.

The Indian Medical Association reports that most local drinking water is contaminated because of the absence of a proper system for disposing of industrial waste. Industrial waste instead drains directly into the Damaganga and Kolak rivers. Vapi’s groundwater has levels of mercury 96 times higher than World Health Organization standards. Approximately 71,000 people have no choice but to drink contaminated well water, as clean water sources are more than a mile away. The water is so discolored by contaminants it looks like a bottle of orange soda. Local produce contains heavy metals up to 60 times the safe standard. There is a high incidence of respiratory diseases, chemical dermatitis, and skin, lung, and throat cancers. Women in the area report high incidences of spontaneous abortions, abnormal fetuses, and infertility. Children’s ailments include respiratory and skin diseases and retarded growth.

It isn’t any better in Sukinda, in the state of Orissa, where 97 percent of India’s chromite ore deposits are located. Twelve mines operate without any environmental management plans, and more than 30 million tons of waste rock is spread over the surrounding area and the banks of the Brahmani River. The mines discharge untreated water directly into the river. Approximately 70 percent of the surface water, and 60 percent of the drinking water, contains hexavalent chromium at more than double national and international standards. The polluted Brahmani River is the only water source for 2,600,000 people. Health problems include gastrointestinal bleeding, tuberculosis, asthma, infertility, birth defects, and stillbirths.

The Indian economy is growing rapidly, but pollution is quickly spiraling out of control and rivers are dying by the dozens. Fully 80 percent of urban waste, including industrial waste, winds up in the country’s rivers. Much of this comes from untreated sewage. The Ganges River has levels of fecal coliform, a dangerous bacterium that comes from untreated sewage, 3,000 percent higher than what is considered safe for bathing. More than three billion liters of waste are pumped into Delhi’s Yamuna River each day. “The river is dead, it just has not been officially cremated,” said Sunita Narain, director of the New Delhi-based Centre for Science and Environment, one of India’s top environmental watchdog groups, to Spiegel-Online.com in reference to the Yamuna.

Air pollution is also a growing problem. There are four main sources: vehicles, power plants, industry, and refineries. India’s air pollution is exacerbated by its heavy reliance on coal for power generation. Coal supplies more than half the country’s energy needs and nearly three-quarters of its electricity. Reliance on coal has led to a 900 percent increase in carbon emissions over the past 40 years. India’s coal plants are old and not outfitted with modern pollution controls. Also, Indian coal has a high ash content, which creates smog. Vehicle emissions are responsible for 70 percent of the country’s air pollution. Exhaust from vehicles has increased 800 percent, and industrial pollution 400 percent, in the past 20 years.

Although the Constitution of India guarantees free and compulsory education to children between the age of 6 to 14 and prohibits employment of children younger than 14 in any hazardous environment, child labour is rampant. According to an article, “The Hidden Factory: Child Labour in India,” in The South Asian, May 7, 2005, many consumer goods  are “the products of a hidden factory of countless children, many as young as five years old, toiling for tireless hours, under harsh, hazardous, exploitative, often life threatening conditions for extremely low wages.” The article states “India has the largest number of working children in the world.” Credible estimates range from 12 to 15 million child laborers. What is even more horrible is that a large percentage of these children are de facto slaves, bonded to their jobs, with no means of escape or freedom until they can repay their parents’ loans. The major industries using child labor are:

Carpets – An estimated 50,000 to 1,050,000 children, as young as six, are often chained to carpet looms in confined, dimly lit workshops, making the thousands of tiny wool knots that become expensive hand-knotted carpets for export. Recruiters or organized gangs pay landless peasants cash advances to “bond” their children to their jobs. The children suffer from spinal deformities, retarded growth, respiratory illnesses, and poor eyesight.

Brassware – An estimated 40,000 to 45,000 children, as young as six, are involved in brassware production, including jobs like removing molten metal from molds and furnaces, electroplating, polishing, and applying chemicals. If they survive being injured from molten metal and exposure to furnaces operating as high as 2,000 degrees Fahrenheit, they often suffer from tuberculosis and other respiratory diseases due to inhalation of fumes from the furnaces and metal dust.

Leather – As many as 25,000 children, from 10 to 15, are involved in the manufacture of shoes. They suffer from respiratory problems, lung diseases, and skin infections from continuous skin contact with industrial adhesives and breathing the vapors from glues.

Gemstones – Children are commonly engaged as “apprentices” in the gem polishing industry. The learning process takes five to seven years and they work an average of 10 hours a day. Major health issues include tuberculosis and respiratory diseases.

Glass – This industry employs an estimated 8,000 to 50,000 children as young as eight. They work in an inferno due to the intense heat of glass furnaces (1,400-1,600o C) and suffer from skin burns, tuberculosis, respiratory diseases, mental retardation, and genetic cell damage.

Silk – An estimated 5,000 children, mostly girls from five to 16, are employed in silk manufacturing, which includes sericulture, dyeing, and weaving the silk. Chemicals and boiling water in the dyeing process are common health hazards; skin burns from the boiling water and respiratory diseases from the chemicals often result.

Agriculture –Parents pledge children as young as six to landlords as bonded laborers. The number of bonded laborers is not categorized by adults and children, but the total is estimated to range from 2.6 to 15 million. Children are involved in all types of agriculture and are completely controlled by their masters, receiving a bare minimum of food and lodging. More than 90 percent of bonded laborers in India, many of whom became bonded as children, never had the opportunity to go to school.

Mining – A 2006 report, “Our Mining Children,” prepared by a team of non-profit organizations, described the condition of hundreds of thousands of migrant workers in the mining industry.

Karnataka, for example, is a state with vast mineral resources, of which the Bellary district has the most extensive range. Minerals mined include iron ore, manganese, quartz, gold, copper, granite, and decorative stones. India is the fourth-largest iron-ore producer in the world. As a result of new government economic policies, a shift to privatization, an open market economy, and wide-open markets in China, South Korea, and Australia, mining companies have bought up thousands of acres of land in the district since 2000.

All of the mines visited by government teams had child laborers, some as young as five. It is estimated that as many as 200,000, or 50 percent, of the workers are children. The mining economy is only profitable because of large-scale child labor and the flouting of social and environmental laws. The mine owners say they only employ the adults, but as the families live at the mine site, the children join in the work. The parents force their children to work because they say they cannot survive otherwise.

As you can see, India is not any better than China for products to be made ? the pollution is just as bad, working conditions are as bad or worse, and child labor is rampant. Make the better choice ? Made in USA!

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Posted in Manufacturing, Outsourcing | No Comments »

Does it Matter Where Products are Made?

May 28th, 2013

We now live in a globalized economy, and many people say it doesn’t matter where something is made. They say that the industrialization of third world countries is good because it has provided jobs for millions of people and raised their standard of living. American consumers have benefitted from cheaper prices for the products they need and want. However, where products are made should matter to people who are concerned about the environment and the health and well-being of people around the world.

Manufacturing in America developed over a period of more than 200 years. It developed gradually, so there was the opportunity to learn about the hazards of industrialization on a smaller scale than has been possible with the rapid industrialization of developing countries. Pollution caused by specific industries affected small geographic areas, like West Virginia’s coal mining and Pennsylvania’s steel regions.

The Bill of Rights provided freedom of speech, freedom of the press, and the right to assemble, enabling affected communities and workers to address unsafe working conditions and pollution. Residents spoke out against pollution’s health effects in their communities. Workers formed unions to fight for better working conditions and higher wages, especially in hazardous occupations. Newspapers, and later radio and TV, made the public aware of what was happening in factories and mines. After sufficient pressure was put on elected officials at the local, state, and federal levels, laws were passed that improved working conditions, protected worker safety, and reduced pollution.

As a result, great strides on these issues were made in the U.S. in the 20th century. These efforts culminated in the establishment of the Environmental Protection Agency in December 1970, consolidating 15 components from five agencies for the purpose of grouping all environmental regulatory activities in a single agency.

Since then, the U.S. has developed a comprehensive body of law to protect the environment and prevent pollution. The EPA enforces more than 15 statutes or laws, including the Clean Air Act; the Clean Water Act; the Federal Food, Drug, and Cosmetics Act; the Endangered Species Act; the Pollution Prevention Act; and the Insecticide, Fungicide, and Rodenticides Act. In turn, each of the 50 states has its own body of law to comply with federal laws and regulations.

Cleaning up the nation’s air, water, and land hasn’t come cheap. Since passing these laws, the U.S. government has spent trillions of dollars to clean up and prevent pollution. Individuals, small businesses, and corporations paid the taxes that funded these programs. But businesses were hit with a double whammy. They not only had to pay taxes for the government to carry out its end of these programs, they had to pay cleanup costs for their own sites and buy the equipment to prevent future pollution. In addition, they had to hire and train personnel to implement and maintain mandated pollution prevention systems and procedures.

According to a Census Bureau report “Pollution Abatement Costs and Expenditures,” as a result of a survey of 20,000 plants last conducted in 2005, U.S. manufacturers spent $5.9 billion on pollution equipment, and another $20.7 billion on pollution prevention.

The EPA has achieved some major successes:

  • New cars are 98 percent cleaner than in 1970 in terms of smog-forming pollutants.
  • Dangerous air pollutants that cause smog, acid rain, lead poisoning have been reduced by 60 percent.
  • Levels of lead in children’s blood have declined 75 percent.
  • 60 percent of the nation’s waterways are safe for fishing and swimming.
  • 92 percent of Americans receive water that meets health standards.
  • 67 percent of contaminated Superfund sites nationwide have been cleaned up.

As a result, we now have cleaner air in our cities and cleaner and safer water in our streams, rivers, lakes, bays, and harbors than at any time since the Industrial Revolution began. These vast environmental improvements made in the last 40 years have benefitted every single American.

In contrast, India and China have been getting more polluted in the last 30 years as they have industrialized. Since 2006, Blacksmith Institute’s yearly reports have been instrumental in increasing public understanding of the health impacts posed by toxic pollution, and in some cases, have compelled cleanup work at pollution hotspots. Blacksmith Institute reports have been issued jointly with Green Cross Switzerland since 2007.

Six cities in China and four cities in India were listed in the Blacksmith Institute’s “Dirty 30” of the 2007 report, “The World’s Worst Polluted Places.” This list was based on scoring criteria devised by an international panel including researchers from Johns Hopkins, Harvard, and Mt. Sinai Hospital, along with specialists from Green Cross Switzerland who participated in assessing more than 400 polluted sites.

It’s hard to describe the horrors of pollution in Chinese cities. Imagine living in Xiditou (pronounced shee-dee-tow), about 60 miles east of Beijing, where the Feng Chan River that runs through the town is now black as ink and clotted with debris. The local economy has doubled in just four years, but at a terrible cost. More than 100 factories occupy what were once fields of rice and cotton. These include dozens of local chemical plants, makers of toxins including sulfuric acid, and these factories disgorge wastewater directly into the river. Industrial poisons have leached into groundwater, contaminating drinking supplies. The air has a distinctively sour odor. The rate of cancer is now more than 18 times the national average.

According to the USA Today article, “Pollution Poisons China’s Progress,” of July 4, 2005, “People regard their drinking water as little better than liquid poison, but unable to afford bottled water for all their daily needs, most adults continue to drink it. They buy mineral water only for their children.”

Another horrible location is Tianying, in Anhui province, which is one of the largest lead production centers in China, with an output of half of the country’s total. Low-level technologies, illegal operations, and a lack of air-pollution control measures have caused severe lead poisoning. Lead concentrations in the air and soil are 8.5 to 10 times national standards. Local crops and wheat at farmers’ homes are also contaminated by lead dust, at 24 times the national standard.

The ironic note to these statistics is that China actually has more stringent restrictions on lead than the U.S. The difference is that neither the local nor the national government is enforcing the laws. Residents, particularly children, suffer from lead poisoning, which causes encephalopathy, lower IQs, short attention spans, learning disabilities, hyperactivity, hearing and vision problems, stomachaches, kidney malfunction, anemia, and premature births.

Perhaps you would like to live in Wanshan, China, termed the mercury capital of China because more than 60 percent of the country’s mercury deposits were discovered there. Mercury contamination extends throughout the city’s air, surface water, and soils. Concentrations in the soil range from 24 to 348 mg/kg, 16 to 232 times the national standard. To put this into perspective, the mercury from one fluorescent bulb can pollute 6,000 gallons of water beyond safe levels for drinking, and it only takes one teaspoon of mercury to contaminate a 20-acre lake – forever. Health hazards include kidney and gastrointestinal damage, neurological damage, and birth defects. Chronic exposure is fatal.

China is now the largest source of CO2 and SO2 emissions in the world (SO2 causes acid rain). Japan, South Korea, and the northwest region of the U.S. suffer from acid rain produced by China’s coal-fired power plants and higher CO2.readings from easterly trade winds.

The horrific effects of pollution in China and its staggering cost in human life, are a graphic example of why Chinese companies can outcompete American companies – not only because of their disparity in wages, but also because their government does not enforce the same environmental and social standards. As Americans, who place a high value on human life and protecting our environment, we wouldn’t have it any other way. But American manufacturing industries do pay a penalty competing against China.

During China’s rapid industrialization of the last 30 years, the U.S. has spent billions on technologies and equipment to clean up and prevent pollution. China had a golden opportunity to benefit from all the hard lessons learned by developed countries during their own industrialization. If China had purchased the pollution abatement equipment developed in the U.S., their industrialization would not have caused such horrendous pollution. Millions of lives would have been saved!

In the U.S., our landfills wouldn’t be filling up with discarded products from China that are so cheap that it is easier to throw them away than repair them. Wouldn’t it be worth paying more for “Made in USA” products that are higher quality and last longer?

Thus, if you are concerned about global pollution and want to save lives in both China and the U. S., you should choose to buy “Made in USA” products that have been produced in the most non-polluting manner that is technically feasible at present. My next article will take a look at India’s environment.

 

 

 

 

Posted in Cleantech, Manufacturing, Outsourcing | 1 Comment »

Why our Economy Struggles to Create Jobs

May 14th, 2013

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

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

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

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

Decline of U. S. Manufacturing

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

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

Transition to Service Economy

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

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

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

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

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

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

End of NASA’s Manned Flight Program

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

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

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

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

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

Wind Down of War on Terrorism

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

Sequestration

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

What can we do?

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

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

Additional recommendations the authors make are:

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

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

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

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

 

Posted in Economy, Jobs, Manufacturing | 1 Comment »

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