Posts Tagged ‘American manufacturing’

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What do Manufacturers Need to Succeed and Grow?

Tuesday, November 12th, 2024

Now that we have re-elected President Trump for a second term to work on achieving his goal of Making America Great Again, it’s time to focus on how to rebuild America’s manufacturing industry because we can’t be great again without a strong domestic manufacturing industry.

My book, Rebuild Manufacturing – the Key to American Prosperity, provides detailed ways to rebuild American manufacturing based on my over 40 years in the manufacturing industry.  As a start on the path to rebuilding American manufacturing, here are a few suggestions on what manufacturers need to succeed and grow:

 Restoration of Patent Rights

 Manufacturers mainly fall into one of three groups:

 Original Equipment Manufacturers – selling a finished product such as a motor vehicle, ship, airplane, satellite, etc.

Suppliers – manufacturing a component, subsystem, or assembly for a finished product, such as a motor, power supply, semiconductor, etc.

Fabricators – perform a manufacturing process to make a particular part or assembly for a finished product such as an enclosure, bracket, panel, gasket, seal, etc. 

During my career, I have worked for OEMs and suppliers, but currently represent fabricators as a sales rep.  Each of these manufacturers requires a unique selling point (USP) or unique value proposition (UVP) that is part of a company’s marketing strategy to inform customers about how their brand, product, or service is superior to its competitors.

One or more patents are often an important component of the USP/UVP for products, components, and subsystems incorporating new technologies. While fabricators rarely have patents, many have trade secrets covering their manufacturing processes.

 My previous blog articles have shown how patent rights have been eroded by the America Invents Act (AIA) of 2011 and why patent rights must be restored to help technology-based companies have the strong patent protection they need to be successful. The threat of having their patent invalidated by the Patent Review and Trial Board (PTAB) established by the AIA is discouraging inventors from applying for a patent, and they are going to other countries to get their patents.  In addition, the lack of secure patent rights is also hindering the willingness of angel investors to invest in new technologies for startup companies. We must also continue to protect trade secrets because China uses espionage to steal both patented technologies and trade secrets.

 Protection from Unfair Trade Practices

In an increasingly interconnected global economy, American manufacturers face significant challenges, particularly from China’s trade practices. As concerns over unfair trade continue to rise, it’s crucial to understand the implications these practices have on U.S. businesses and the broader economy. Common examples of mercantilist trade practices by China are:  currency manipulation, rampant intellectual property theft, product dumping (selling products at below-market prices), and government subsidies for Chinese companies.  These unfair trade practices have created an uneven playing field. According to the U.S. Trade Representative, these practices have contributed to a substantial trade deficit with China, severely impacting American manufacturing sectors.

 Several industries have borne the brunt of these practices. For instance, the U.S. steel industry has faced aggressive pricing from Chinese manufacturers, which has led to factory closures and job losses across the country. In the textile sector, similar patterns have emerged, where Chinese imports flood the market at prices that domestic producers cannot match, resulting in significant downturns in American jobs.

The U.S. government has implemented various measures to counteract these unfair practices, such as tariffs and trade negotiations to foster fair competition. Addressing unfair trade practices is essential for the survival and growth of American manufacturing. We need fewer imports and more domestic production. Now is the time to take a stand and implement strategies that ensure a fair playing field for American manufacturers. The following strategies should be considered:

  • Establish Tariffs on all Chinese Products – read my previous article on “Why we Need Tariffs on Chinese Products”
  • Strengthening Enforcement of Trade Laws: Increasing the capacity of trade enforcement agencies to investigate and combat unfair practices can deter such actions.
  • Promoting Domestic Production: Incentives for manufacturers to produce locally can help rebuild industries affected by unfair competition.

 Access to Affordable Energy

In the modern manufacturing landscape, access to affordable energy is not just a necessity; it is a fundamental pillar of success. As industries strive to remain competitive in a global market, the cost of energy can significantly impact operational efficiency, profitability, and innovation. Energy costs represent a substantial portion of manufacturing expenses. From powering machinery to heating facilities, energy consumption is intrinsic to production processes. When energy prices rise, manufacturers face difficult choices: pass costs onto consumers, reduce labor, or cut back on investment in technology and innovation. These decisions can hinder growth and competitiveness.

Lower energy costs can lead to reduced overall production expenses, enabling companies to offer more competitive pricing and improve profit margins. For example, industries such as steel and chemicals, which are energy-intensive, benefit tremendously from stable, low-cost energy sources. This advantage can be a deciding factor for companies considering where to locate new facilities or expand existing operations.

Affordable energy is also crucial for fostering innovation. Manufacturers need access to reliable energy sources to invest in new technologies and processes that enhance efficiency and reduce waste. By keeping energy costs low, regions can attract and retain manufacturing businesses, leading to job creation and economic development.

Access to affordable energy is vital for the health and growth of the manufacturing industry. It influences operational efficiency, competitive advantage, innovation, and job creation. Policymakers, industry leaders, and communities must work together to foster an environment where affordable energy is a reality for all manufacturers.

 Reasonable Corporate Tax Rates

Tax policies that govern businesses can significantly influence manufacturers’ operational success and growth potential. Reasonable corporate tax rates are essential not only for maintaining profitability but also for fostering innovation and job creation.  Manufacturers often operate on thin margins, making it crucial to manage costs effectively. Lower tax liabilities provide manufacturers with the capital needed to expand operations, upgrade equipment, and develop new products.

High corporate tax rates can place an additional financial burden on these businesses, reducing their ability to reinvest profits into operations, technology, and workforce development. When manufacturers are forced to allocate a significant portion of their earnings to taxes, they may struggle to remain competitive, especially against international rivals with lower tax obligations. In a global marketplace, manufacturers often compete not only with domestic companies but also with foreign firms that may benefit from more favorable tax regimes.

By implementing reasonable corporate tax rates, governments can level the playing field, allowing American manufacturers to compete effectively against their international counterparts. This is particularly important in industries where price competitiveness is key to success.

Reasonable corporate tax rates can stimulate investment in the manufacturing sector. For example, when businesses have more disposable income, they are more likely to invest in research and development, which is essential for driving innovation and maintaining a competitive edge in the market.

To support the manufacturing sector, policymakers must consider tax reforms that prioritize reasonable corporate tax rates. This can include reducing rates, closing loopholes that disproportionately benefit large corporations, and creating incentives for small and medium-sized manufacturers. A balanced approach to taxation can foster a more equitable environment that encourages growth and investment across the sector.

Reasonable corporate tax rates are crucial for the health and vitality of the manufacturing industry. They enable manufacturers to invest in growth, create jobs, and compete effectively on a global scale. As policymakers consider tax reforms, it is essential to recognize the significant role that reasonable taxation plays in supporting American manufacturers and, by extension, the broader economy. A commitment to fair corporate tax rates will help ensure a robust and thriving manufacturing sector for years to come.

Regulatory Relief in Manufacturing

The burden of overregulation can stifle the potential of manufacturers, hindering productivity and competitiveness. Overregulation refers to the imposition of excessive or unnecessarily complex rules and standards that can burden businesses. For manufacturers, compliance with these regulations often requires significant time, resources, and financial investment. This can divert attention away from core operations, stifling creativity and limiting growth opportunities.

Excessive regulations can make it difficult for U.S. manufacturers to keep pace with competitors who operate in more business-friendly environments. Lowering the regulatory burden can enhance competitiveness, allowing manufacturers to focus on innovation and efficiency.

The costs associated with compliance can be substantial. From hiring specialized staff to implementing new technologies for regulatory adherence, manufacturers often find their budgets stretched thin. This financial strain can lead to higher product prices, which may result in lost sales and reduced market share. A more streamlined regulatory environment can foster a culture of innovation, allowing companies to focus on creating cutting-edge solutions that meet market demands.

While regulations are essential for ensuring safety, environmental protection, and fair labor practices, it is crucial to strike a balance. Policymakers should engage with industry leaders to understand the unique challenges manufacturers face and develop regulations that protect public interests without imposing undue burdens. Streamlining regulatory processes, simplifying compliance requirements, and providing clarity in regulations can significantly benefit manufacturers. A collaborative approach to regulation that prioritizes both public welfare and the needs of manufacturers will pave the way for a robust and resilient manufacturing sector.

Manufacturing is not only vital for the U.S. economy but also plays a crucial role in driving innovation, job creation, and economic prosperity. Manufacturing provides millions of Americans with jobs, both directly in manufacturing plants and indirectly through supporting industries such as logistics, finance, and technology. Manufacturing has a vast supply chain that includes raw materials, components, and finished goods, supporting a wide range of businesses and services across the country. The manufacturing sector is a hub of innovation and research and development (R&D), driving technological advancements and creating new products and processes that can benefit various industries.

Manufacturing exports contribute significantly to the U.S. trade balance, helping to generate revenue and create a favorable balance of trade. The manufacturing sector often leads to economic growth by attracting investment, generating tax revenue, and increasing productivity. Most importantly, a robust manufacturing sector is essential for national security, as it ensures domestic production of critical goods and reduces reliance on foreign sources during times of crisis.

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Why We Need Tariffs on Chinese Imports

Tuesday, October 22nd, 2024

On Friday, October 18th, Sean Hannity interviewed Kevin O’Leary, one of the investors on Shark Tank, regarding his opinion of tariffs.  O’Leary has been such a strong proponent of free trade in the past.  In fact, even though I enjoy hearing about new inventions and products presented by the inventors and entrepreneurs on the program, I stopped watching the program because I was disgusted by how often they recommended that the product be manufactured in China. 

Therefore, I was astonished when Mr. O’Leary expressed his support for the tariffs President Trump has proposed, saying that tariffs are a good negotiating tool.  I didn’t have the ability to record his interview on Hannity’s show, so could only take notes. Thus, I can only paraphrase what he said instead of quoting him word for word.  Mr. O’Leary said that right now we don’t have a level playing field for trade with China. so, tariffs would be a way to level the playing field.  He shared that one of the companies in which he had invested went to China to manufacture their product. They spent about $400,000 on tooling, and everything was fine until the product volume got up to about five million. Then, a knock-off of the product made with their tooling appeared on the market under another company’s name and sold for 2/3 of their price. 

He said that nearly every company is wholly or partially owned by the Chinese government and they subsidize some of the costs of these companies to capture foreign markets.  He again said that tariffs would be a good way to fight against China’s unfair trade practices and level the playing field.

It was gratifying to see that someone of his stature in the industry has finally experienced what we in the marketing and sales trenches for American-made products and manufacturing services have been experiencing for over 20 years. I am just surprised that it took so long for him to come to this conclusion.

It only took a couple of years after China was granted Most Favored Nation status in the year 2000 to start seeing an unprecedented pruning of companies in the San Diego region because of the unlevel playing field we experienced in competing against Chinese companies. Buyers that weren’t willing to use vendors in the Midwest or East Coast were willing to go to China on the other side of the world to save money. Sourcing in China became the “in thing” to do.

It became more difficult for the American manufacturers we represented to compete against China, especially for the higher volume work to make plastic injection molded parts or die cast parts for commercial markets.  Our success became more and more limited to Original Equipment manufacturers making products for the military and defense industries that mandated “Buy America” as well as the lower volume work for niche commercial markets.  Sometimes, the quoted Chinese price was equal or a little more than what our American manufacturer had to pay for just the material to make the part. 

I started to keep a record of the companies that moved out of state or had gone out of business starting in January 2001 from my own database of customers and prospective customers. By 2003, I had documented 85 companies that had gone out of business, moved out of California, or sourced their manufacturing out of the country, mostly in China. I contacted the Chambers of Commerce of the other 17 cities in San Diego County and found out that none of them were tracking this data.

However, the loss of companies didn’t make the headlines in San Diego news because they were nearly all smaller companies with fewer than 50 employees.

In the spring of 2003, several legislators with whom I had campaigned for state assembly in the year 2000 asked me to provide them with the list of companies that were moving out of California. I turned the list into a report in an effort to make these legislators and other key policy makers aware of the seriousness of what was happening. I emailed this first report in March 2003 to legislators, local elected officials, industry leaders, and the local news media. The report got attention from a local radio talk show host, Roger Hedgecock, who immediately invited me to be a guest on his show. I prepared two more reports later that year and was invited on his show after each report was released.

I electronically published (e published) two to three reports a year from 2003 – 2010 and became a regular guest on the Roger Hedgecock show and a featured guest on several other regional radio shows. I also started writing opinion blog articles once or twice a month that were published by a local online news line and emailed to my own Constant Contact database.

My list had grown to nearly 200 companies by 2007, and I realized that this phenomenon was not just happening in San Diego or California, but was affecting the manufacturing industry in all of the United States. It became my passion to do what I could to save manufacturing in America because I firmly believe that if we don’t save manufacturing, we will lose our middle class as manufacturing jobs are the foundation of the middle class. That’s when I started to write my book, Can American Manufactur8ing be Saved? Why we should and how we can, which was published in 2009.

In addition to chapters that covered a brief history of manufacturing for 1790 to the present day and the role unions played in shaping American’s industrialization, I covered what was happening to manufacturing, what had been the effects of outsourcing offshore, why we should save American manufacturing, and my opinion of how we could save American manufacturing.

I wrote that I had learned that tariffs on foreign imports was one of the main sources of revenue for the Federal government until the initiation of the income tax in 1913. For more than the first 150 years of its history, the United States was a protectionist country in order to protect and grow its fledgling manufacturing, allowing the United States to become a major industrial power by the early 20th Century. 

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

To accomplish these objectives, the General Agreement on Tariffs and Trade (GATT) was negotiated during the UN Conference on Trade and Employment and signed by 23 countries at Geneva in 1947. GATT became the most effective instrument in the massive expansion of world trade in the second half of the 20th century.

GATT’s most important principle was trade without discrimination, in which member nations opened their markets equally to one another. A major benefit for GATT members was the reduction or elimination of tariffs. Once a country and one of its trading partners agreed to reduce a tariff, that tariff cut was automatically extended to all GATT members. GATT also established uniform customs regulations and sought to eliminate import quotas. By 1995, when the World Trade Organization replaced GATT, 125 nations had signed its agreements, governing 90 percent of world trade.

Our elected officials should have realized that they needed to change the trade policy when we started to lose market share to Japanese products, especially cars and consumer electronic products.

As a result of these free trade policies, the United States developed a trade deficit with the majority of its trading partners starting in 1980. Of course, some deficits were small, but they increased over time until they became enormous like our current deficit with China.

According to USA Facts, “Over 50% of U.S. trade in 2023 involved one of five partners: Mexico, Canada, China, Germany, and Japan.  In 2023, the US imported $1 trillion more in goods than it exported, marking the sixth straight year of a trade deficit in the trillions (adjusting for inflation) …The highest trade deficits were with China ($279 billion), Mexico ($152 billion), and Vietnam ($105 billion).”

The work of The Reshoring Initiative to educate manufacturers on how to use Total Cost of Ownership Analysis to determine the true cost of sourcing offshore vs. domestically has helped a great deal, and by 2023, the U.S. had recouped over a million of the 5.8 million manufacturing jobs that it lost between the year 2000 – 2010. 

In addition, increased interest by consumers in buying “Made in USA” products and more stringent “Buy America” regulations for military and defense procurement has helped save the American manufacturing industry.

It is an acknowledged fact that the tariffs imposed by the Trump Administration on steel and aluminum saved the U.S. steel industry.  Thus, it is now my opinion that if we want to significantly reduce our trade deficit with China, we must impose tariffs on all Chinese products imported into our country.  There is considerable debate about how high these tariffs should be.  I can tell you that for plastic injection molded parts or rubber molded parts, the tariff would need to be 200% to 300% to be competitive on piece pricing with China.  

I realize that this high a percentage of tariffs would never be approved, but the tariff percentage needs to be higher than a token 10% if we really want to achieve the goal of reducing our trade deficit significantly.

We can either continue down the path of increasing trade deficits and increasing national debt by allowing products to be imported by countries practicing predatory trade policies. Or, we can forge a new path by developing and implementing a national strategy that includes tariffs to win the international competition for good jobs, sustained economic growth, and strong domestic supply chains.

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What Can Individuals Do to Rebuild American Manufacturing?

Tuesday, September 24th, 2024

You may feel that there is not much you can do as an individual to rebuild American manufacturing to create jobs and protect our national security.  This isn’t true?  Remember that our country was founded by a small group of people that did indeed change the world by forming the United States of America. American activist and author, Sonia Johnson said, “We must remember that one determined person can make a significant difference, and that a small group of determined people can change the course of history.” Eleanor Roosevelt echoed this sentiment saying, “Never doubt that a small group of thoughtful, committed citizens can change world; indeed, it’s the only thing that ever has.”

Here are suggestions of what each one of us can do:

As a Consumer:  It matters if we buy American-made products.  Our addiction to imports has played a major role in creating our high trade deficit, especially with China, where most of the consumer goods we import are manufactured.

We lost 5.8 million manufacturing jobs from 2000 – 2010 because of importing so many goods from China and other Asian countries.  In contrast, American-made products create American jobs, reduce our trade deficit, and reduce our budget deficit from increased tax revenue. Each time you choose to buy an American-made product, you help save or create an American job.

When you shop in person, look for the country-of-origin labels of goods. Most imported goods are required to have these labels.  Don’t throw things into your shopping cart without checking labels. The most important step is to make a commitment to buy American made products. Commit to make a fair effort to find made in the USA products. Make a promise to yourself to buy the “Made in USA” product even if it costs more than the imported product. It is a small sacrifice to ensure the well-being of your fellow Americans. The price difference you pay for “Made in USA” products keeps other Americans working.

If the product you are looking for is no longer made in America, then buy the product from another country besides China, which has nuclear warheads aimed at American cities. By buying Chinese imports, American consumers have provided the funds for the bulk of China’s military buildup. American service men and women could one day face weapons mostly paid for by American consumers. Instead, you could patronize impoverished countries such as Bangladesh or Nicaragua, which have no military ambitions against the United States.

In addition, by buying a product “Made in USA, you would reduce the “carbon footprint” caused by shipping the product thousands of miles by container ship, using a greater amount of fossil fuel than shipping within the United States.

If you are willing to step out of your comfort zone, you could ask to speak to the department or store manager of your favorite store and tell them that they need to start carrying more “Made in USA” products if they want to keep you as a customer. If you buy products on line or from catalogs, you could contact these companies via email with a similar message. Your communicating with a company does have an effect because the rule of thumb in sales and marketing is that one reported customer complaint equals 100 unreported complaints.

If you think that Americans no longer care about where goods are made or have concerns about the safety of foreign products, you may be surprised to learn that poll after poll shows that the majority of Americans prefer to buy American.

A survey of 1,000 U.S. adults by Morning Consul  in  May 2023 with regard to their views of  products made by American companies vs. Chinese companies revealed the following:

  • 65% of U.S. adult consumers claimed to sometimes or always buy “Made in America” products intentionally
  • 43% prioritize purchasing American-made products rather than prioritizing other options like quality, sustainability, or affordability
  • 48% are willing to pay higher amounts for U.S.-based products. 39% responded they would pay between 6%-10% more for said products

If you are having trouble finding “Made in USA” products, you can search “buy American” on the internet.  A few of the sites you will find are:

www.madeinusa.com

www.ionlybuyamerican.com
https://www.themadeinamericamovement.com/made-in-usa-companies/
https://www.madeinamerica.co/pages/thelist
https://madeinamericastore.com/home/

www.buyamericanmart.com

www.americansworking.com

www.shopunionmade.org

www.MadeInUSAForever.com

www.stillmadeinUSA.com

There are also brick and mortar stores springing up around the country that are either stocking only “made in America” products, such as the Buy American Store  and the Urban Outfitters stores. Even stores like Wal-Mart and Target are carrying more “Made in USA brands due to customer demand.

As American consumers, you have many choices to live safely and enjoy more peace of mind with American products. It’s high time to stop sending our American dollars to China while they send us all of their tainted, hazardous, and disposable products. If 200 million Americans refuse to buy just $20 each of Chinese goods, that’s a four-billion-dollar trade imbalance resolved in our favor – fast!

As a Voter:  Voter apathy is partially responsible for the state of our affairs as a country. Too many people have decided that there is nothing they can do on an individual basis and have stopped voting.

Americans have been “sold down the river” by politicians on both sides of the aisle – Democrats and Republicans. Democrats profess to support “blue collar workers” and unions, yet NAFTA and the WTO treaties were approved and went into effect under the presidency of Democrat Bill Clinton. Republicans have professed to support business, yet they have voted to approve harmful trade agreements like NAFTA and have primarily supported policies that benefit large, multinational corporations rather than the small businesses that are the engine of economic growth in the U.S. and the foundation of the middle class.

Remember that the U.S. President isn’t a king or dictator; there are only a limited number of actions a president can do by Executive Order.  It’s the job of the President’s administration to set policies, but Congress turns the policies into laws. This makes it just as important to choose to vote for the right person for your Congressional Representative and Senator as it to vote for the President because very few of the policies proposed by the President will be turned into law if Congress is controlled by the opposition party.

In order to help manufacturers succeed and grow to rebuild our domestic manufacturing industry, manufacturers need affordable corporate tax and interest rates because manufacturing is a capital-intensive industry. They need affordable and reliable energy sources because it takes energy to manufacture every product.  They need protection from the unfair trade practices of China, such as:

  • Currency Manipulation – undervaluing the yuan against the U.S. dollar to capture market share with lower prices
  • Product Dumping – selling at or below cost to destroy their American competitors. 
  • Trans-shipping – shipping to an intermediary country before shipping to the U.S. from that country in order to hide that the product was made in China.

When you choose who to vote for President or Congress, examine both their campaign promises and their track record. It’s important to support candidates that would support and protect American manufacturers.  Here are a few questions you can ask:

  • Do they support more harmful trade agreements?
  • Will they increase enforcement of current Agreements to reduce trade cheating?
  • Will they enforce penalties on trans-shipping of steel and aluminum?
  • Will they continue the tariffs on Chinese steel, aluminum, solar panels and add tariffs on other goods imported from China?
  • Will they support “Buy America” for all government agencies and not just the military?
  • Will they keep tax rates at an affordable level?
  • Will they institute policies to provide affordable and reliable energy produced in the U.S.?

We cannot afford to export our wealth and be able to remain a first-world country. We cannot lose our manufacturing base and be able to remain a “superpower.” In fact, we may not be able to maintain our freedom as a country because it takes considerable wealth to protect our freedom.

You can play a role as an individual in saving our country ? the company you save or the job you save by your actions may be your own in the future. It’s time to shed apathy, become involved, and vote for the candidate that will best protect American manufacturers and help rebuild American manufacturing.

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Excitement Builds as Manufacturers Prepare to Open Doors to the Public

Tuesday, September 3rd, 2024

This year Manufacturing Day will be Friday, October 4th, 2024. This is the day when manufacturers nationwide open their doors to the public for plant tours or participate in manufacturing expos to display their innovations.

It’s interesting to look at how this special day started.  The National Institute of Standards and Technology (NIST) blog describes how it happened.  In 2011, Dileep Thatte of NIST Manufacturing Extension Partnership (MEP) met with Ed Youdell, the new President & CEO of the Fabricators and Manufacturers’ Association at their office in Rockford, Illinois “to share how NIST MEP is focused on helping U.S. manufacturers incorporate innovation, new technologies, productivity and quality improvement techniques and develop their workforce.” 

In the course of the meeting, they developed the idea of having a special day to have FMA members get involved with NIST MEP. Then, they decided it should have a broader scale and created Manufacturing Day. They decided to conduct a pilot event in the Midwest and planned the first Manufacturing Day for the first Friday of October 2012 to allow enough time for outreach and planning.  The first year featured about 240 events and generated a great deal of enthusiasm among the people who participated. 

“The idea was to allow the manufacturers to open their doors in any way they see fit to invite the community, their schools, their educators, the legislators, and others, so that they see what is modern manufacturing and the value of manufacturing for the community.”

The goal was to dispel the myth that manufacturing is “dumb, dangerous, and dirty” so parents, educators, and students “could see that modern manufacturing is different than the traditional image of manufacturing.”  Modern manufacturing is “high tech,” involving computers, Computer Numerical Controlled (CNC) machines, robotics, automation, 3D printing, and other “cool” tools. “It’s about creativity, innovation, teamwork and technical skills.”

This reason this is important is that there is a significant shortage of skilled workers in the U.S. and the gap is expected to widen even more unless more youth start entering the manufacturing workforce. According to a 2021 study “by Deloitte and The Manufacturing Institute, the manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030.” We must address this workforce gap by changing the perception of manufacturing jobs, and Manufacturing Day is one of the best ways to change this perception.

By 2014, other national organizations such as the Association for Manufacturing Excellence (AME), the Association for Manufacturing Technology (AMT) and SME had jumped on the bandwagon to promote Manufacturing Day.  In San Diego where I lived, the four major chambers, the Greater San Diego Regional Chamber, the East County Chamber, North County Chamber, and South County Chamber, all had events that day ranging from a breakfast with speakers from the manufacturing industry to expos where manufacturers exhibited their products.  Manufacturers all over the county opened their doors to visitors and gave tours. Attended the breakfast put on by the Greater San Diego Regional Chamber and then went on three of the 25 tours scheduled in San Diego County. The producers of Manufacturing Day 2014 bragged that “This year’s Manufacturing Day set another record with almost twice as many events as last year. The final count was over 1,650 events in all 50 U.S. states, three Canadian provinces, and Puerto Rico.”

The NIST blog article, states “In 2016, the National Association of Manufacturers (NAM), an organization with membership in excess of 14,000 manufacturers, began leading the Manufacturing Day initiative. NAM, through their workforce development and education partner, The Manufacturing Institute, has done a magnificent job of supporting this initiative.

We moved to Riverside County in the fall of 2018, and on Manufacturing Day, I began my day by attending the special event in Menifee at Mt. San Jacinto College to introduce their new Makerspace to students.  The auditorium was nearly filled with students form Santa Rosa Academy where a panel of business professionals and professors shared the value of their education to their careers.  The event was sponsored by the City of Menifee, the Menifee Valley Chamber of Commerce, and CMTC. The audience was welcomed by Major Bill Zimmerman and Tony LoPiccolo, Executive Director of the Chamber. Fortunately, I was able to get a private tour of the MakerSpace by Hal Edghill, the MakerSpace specialist, before the students had finished listening to the panelists. I only had time to visit two companies because they were located so far apart and held in the same time period between 10 AM and 2 PM.

In 2019, I attended the first Made in America trade show that was held October 3-6th in Indianapolis, IN. The event began during Manufacturing Week declared by President Trump and the show opened to the public on the national Manufacturing Day. The NIST blog states, “In 2019, more than 325,000 students, teachers, and parents participated in MFG Day which consisted of more than 3,000 events held across all 50 states and Puerto Rico.”

Unfortunately, the COVID Pandemic lockdowns of 2020 curtailed the in-person special events and plant visits, but MFG Day 2020 because a virtual day, celebrated online instead of in person. “Even amid the pandemic, there was a widespread outpouring of support for manufacturing, including from many policymakers.”

The NAM website states, “The White House issued a proclamation on Thursday night designating Oct. 2 as National Manufacturing Day, while at least 28 governors and leading members of Congress marked the occasion by proclamation or on social media.” 

MFG Day 2021 was October 1st, and “manufacturers throughout the nation hosted open houses, factory tours and job fairs—both on site and online—to introduce young people and others to the promise of modern manufacturing. And many companies and leaders took to social media to show their support and love for the industry.

Besides the proclamation of President Biden, at least 15 states issued their own Manufacturing Day proclamations, and more than 40 congressional representatives publicly marked the occasion.

MFG Day 2022 and 2023 resumed having more emphasis on in-person events, plant tours, and expos.  Over 14,000 manufacturers across America now participate in country-wide celebrations

In June 2023, the Manufacturing Institute of NAM hosted a webinar, “Making the Most of Your Event,” featuring “seasoned MFG Day hosts sharing about their own events, best planning tips, lessons learned, ideas for school and community events.  The purpose of the webinar was to “share tips, insights and resources for companies interested in putting on their own MFG Day events.”  The webinar is available to watch here on YouTube for companies and organizations interested in hosting an event or plant tour for 2024.

In the article about the webinar, MI Director of Student Engagement Jen White, said, “Being involved with MFG Day, hosting events, using the branding that’s available on the website, registering your events on MFGday.com and all of our resources and toolkits are 100% free to you,” said White. “You do not have to be an MFG Day sponsor. You do not have to be an NAM member. It is 100% free for you to use. We want as many companies and partners of manufacturers involved in MFG Day as possible.”

I highly encourage you to sign up to be involved in Manufacturing by sponsoring an event, opening up your company for a plant tour, or attending an event or plant tours in your area at this website.  I certainly plan to attend as many plant tours as are logistically possible in my region of Riverside County, California.

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Fall Trade Shows Highlight New Technologies of American Manufacturers

Tuesday, August 20th, 2024

The trade show schedule for Fall 2024 will be very busy around the country.  If you want to keep abreast of new technologies, look for American manufacturers to return manufacturing from offshore, or look for new vendors to make your supply chain more secure, be sure to attend the trade show nearest to you.  The fall starts off with the biggest trade show of them all in Chicago.

September 9-14, 2024 at McCormick Place in Chicago, IL

The International Manufacturing Technology Show (IMTS) is the largest trade show in the Western Hemisphere and draws the innovators, sellers, and drivers of manufacturing technology together to connect, be inspired, and find new solutions.

Location:  McCormick Place, 2301 S Lake Shore Dr, Chicago, IL 60616

Registration:  8:00 AM – 5:00 PM

Show Hours:  9:00 AM – 5:00 PM

Register Now

I’ve been attending this show for over 30 years.  It used to be called the Job Shop Show because it featured companies that performed custom fabrication services such as castings, forgings, extrusions, plastic and rubber molding, metal stamping.  What is unique about this show is that only American companies are allowed to exhibit, The shows in Southern California is where me met many of the companies my manufacturers’ sales agency, ElectroFab Sales, represents.  I will be attending the Long Beach show on September 26th to help out at the booth of the rubber molding company we represent, Century Rubber Company.

Southeast Region

When:September 10 & 11, 2024
Hours:Tuesday 9:30am – 3:00pm Wednesday 9:30am – 3:00pm
Where:Greenville Convention Center
1 Exposition Dr.
Greenville, SC 29607
Cost:Free Admission & Free Parking
  

Southern California

When:September 25 & 26, 2024
Hours:Wednesday 9:30am – 3:00pm Thursday 9:30am – 3:00pm
Where:Long Beach Convention Center
300 E Ocean Blvd.
Long Beach, CA 90802
Cost:Free Admission Register for Free  

New England

When:October 16 & 17, 2024
Hours:Wednesday 9:00am – 4:00pm Thursday 9:00am – 3:30pm
Where:Royal Plaza Trade Center
181 Royal Plaza Dr West
Marlborough, MA 01752
Cost:Free Admission & Free Parking

This show is put on by the Del Mar Trade Shows company that puts on the Del Mar Electronics & Manufacturing show in the spring at which my company has exhibited for 27 years.  As an authorized speaker for the Reshoring Initiative, I will be giving a presentation on “How to Reshore Using Total Cost of Ownership Analysis” on October 2nd at 1:00 PM in Room D.

Free parking! Free Attendance! Free Reception!

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October 7 – 9, 2025

Anaheim, CA

The Manufacturing Technology Series of five regional shows produced by SME & AMT connects decision makers from diverse industries with leading suppliers of advanced manufacturing technology, equipment and tooling. The next Eastec and Southtec shows will be held in the spring of 2025.

Find the Schedule, Floor Plan & Exhibits, Event Information, Your Personalized Planner, Unlock an Exclusive Gift, Connect with People, and More!

Download the SME Events +App now

Meet the Innovators Shaping the Future at The Battery Show 2024!

Over 1,150 exhibitors representing the full advanced battery and EV supply chain.

Register here

This show is the Midwest version of the show that takes place at the Anaheim Convention Center in February at which I have been a panelist or speaker five times.

Register with the special code JOINME24 and grab a free expo pass or receive 15% off all conference passes.

Your FREE expo pass includes access to:

  • 530+ exhibits for the Midwest’s largest collection of end-to-end design and manufacturing suppliers on one show floor, spanning medtech, automation, packaging, plastics, and design
  • Daily keynote presentations including Pat Baird of Philips, Amy Alexander of Mayo Clinic, and Jonathan Arenberg of Northrop Grumman Space
  • Access to hours of free content  at 3 theaters in the expo hall—MedTech Central, Engineering Theater, and Tech Theater
  • Complimentary networking & experiences including a Welcome Reception, Career Connections with professional advancement experts, and booth bar crawls

This list of shows is by no means comprehensive.  There are many more trade shows related to a variety of industries, such as the toy industry, hardware industry, consumer electronics, etc.  Trade shows are still the best way to see products, new technologies, and meet suppliers in person. Many of the trade shows have a concurrent conference or free seminars. 

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What is the Progress on Rebuilding American Manufacturing to Create Prosperity

Tuesday, August 6th, 2024

People have forgotten that there are only three ways to create tangible wealth — mine it, grow it, or make it. Manufacturing is the term now used to describe “making it.” The problem with the current economy of the United States is that we have been outsourcing all three ways to create wealth to other countries for the past 25-30 years, primarily to China after the country was granted Most Favored Nation status in the year 2000.  

As a result, we are now dependent on other countries for the energy, food, and manufactured good we need to sustain the modern way of life, protect the health and welfare of American citizens, and provide the goods needed to protect the national security of our country.

This outsourcing caused a dramatic loss of jobs in the manufacturing industry, namely, 5.8 million high paying jobs from 2000 – 2010.

Let’s consider what progress has been made on a few of the simpler and faster to implement strategies and policies to accelerate the rebuilding process.  In my 2017 book Rebuild American Manufacturing – the key to American Prosperity, I quote recommendations made by the Information Technology& Innovation Foundation (ITIF) and the Coalition for a Prosperous America (CPA) and make many my own recommendations of what needs to be done to rebuild American manufacturing.

Two of the ITIF recommendations were: “Create a network of 25 Engineering and Manufacturing Institutes performing applied R&D across a range of advanced technologies and support the designation of at least 20 U.S. manufacturing universities.”

While the Manufacturing USA Network was formally established in 2014 when “Congress passed the Revitalize American Manufacturing and Innovation Act (RAMI Act) into law, it took three years of planning and competition to form the 16 institutes. Each of these institutes has a unique technological concentration, but is also designed to accelerate U.S. advanced manufacturing as a whole.  The April 2024 edition of Design2Part magazine provides good description of the technological advances facilitated by several of the institutes.

Another ITIF recommendation was:  Lower the effective U. S. corporate tax rate” because at that time, the United States had the highest statutory corporate tax rate at almost 39 percent (when state and federal rates are combined) of any OECD nation.”

The Tax Cuts and Jobs Act (TCJA) of 2017 “reduced the federal top corporate income tax rate from 35 percent to 21 percent, bringing the combined US federal and state rates to about the average for most other Organisation for Economic Co-operation and Development countries, and eliminated the graduated corporate rate schedule (table 1). TCJA also repealed the corporate alternative minimum tax.”  However, the TCJA expires in 2026, so Congress will need to address this issue in 2025.

The ITIF also recommended” “Better promotion of reshoring.”

Thanks to changing economic factors and supply chain disruptions caused by the COVID pandemic, the work of Harry Moser of The Reshoring Initiative to help manufacturing companies do a Total Cost of Ownership Analysis to return manufacturing to America, reshoring has dramatically accelerated in the past three years.  As the chart below shows, we have been able to reshore nearly two million manufacturing jobs (1,898,404) as shown on the chart below:

However, at this rate, it would take another 20 years to recoup the 5.8 million we lost from 2000 – 2010.  To rebuild American manufacturing in a faster way, we must focus on other policies besides reshoring.

The Coalition for a Prosperous America (CPA) released a white paper, titled, “A Competitiveness Strategy for the United States – America at a Crossroads,” in November 2015 that included an even longer list of recommendations.  As a member of CPA since 2011, I quoted all of their recommendations in my 2017 book and have written blog articles in the past several years about many of the specific strategies and policies the report included.

  • Impose offsetting tariffs to neutralize foreign government subsidies to industries and supply chains that compete with ours.
  • Counter foreign government policies that force offshoring by conditioning access to their markets on transfers of technology, research facilities and/or production to their countries, as well as compliance with export performance and domestic content.
  • Develop a national trade strategy and increase funding for U.S. trade policymaking and enforcement agencies. (blog article)
  • Combat foreign currency manipulation through a Market Access Charge (blog article)
  • Congress should strengthen and tighten procurement regulations to enforce “Buy America” for all government agencies, not just the Department of Defense. (blog article)
  • Prevent sale of strategic U.S.-owned companies to foreign-owned companies (blog article)
  • Ensure that domestic manufacturing and agriculture benefit fully from an expanded supply of low-cost US produced energy” (blog article)

President Trump took action on the tariff recommendation in January 2018 by imposing tariffs on solar panels and washing machines of 30 to 50 percent. In March 2018, he imposed tariffs on steel (25%) and aluminum (10%) from most countries. In June 2018, this was extended to the European Union, Canada, and Mexico. However, with the ratification of the United States–Mexico–Canada Agreement (USMCA), the North American trade deal set to replace the North American Free Trade Agreement (NAFTA), the tariffs on Canada and Mexico were rescinded on steel and aluminum.  Since then, Argentina, Australia, Brazil, and South Korea have successfully negotiated a permanent exemption from the steel tariffs. In addition, the Trump Administration Enforced penalties on trans-shipping of steel & aluminum.  Thankfully, the Biden administration has kept these tariffs in effect, essentially saving the U.S. steel and aluminum industries.

The Coalition for a Prosperous America (CPA) asserts that further tariffs are needed to balance trade, and on July 24, 2024, CPA “released a new economic analysis showing that a global 10% tariff on all U.S. imports would generate U.S. economic growth, increase real wages, increase employment, and raise additional revenue to lower taxes for lower- and middle-class Americans. 

Our analysis finds that a 10% tariff would stimulate domestic production and raise economic growth to produce a 5.7% increase in real income for the average American household,” said CPA Chief Economist Jeff Ferry. “Further, the $263 billion raised in tariff revenue could be used to provide tax refunds to all households with income below $1 million a year, creating a progressive tax refund.”

We have a long way to go on implementing some of the other recommended policies to rebuild American manufacturing..  How these issues should be addressed should be one of the main criteria of who to vote for in November, both for President and Congressional candidates.

Since I started writing the first edition of my previous book, Can American Manufacturing be Saved?  Why we should and how we can in 2007, I have made it my mission for the rest of my life to do as much as possible as I can to rebuild American manufacturing to create jobs and prosperity. The future of the American middle class and, more importantly, our national security depends on the choices we make and the actions we take now.

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Access Trax Expands Opportunities for Outdoor Fun for the Disabled

Tuesday, July 23rd, 2024

Many disabled people that have to use walkers or wheelchairs are deprived of experiencing outdoor activities they used to enjoy, such as going to the beach, going fishing at lakes, or other outdoor activities.  A new American-made product produced by Access Trax is restoring their ability to enjoy outdoor activities. Access Trax specializes in outdoor portable pathway solutions for wheelchair and handicap access for sand, gravel, grass, and more. Their premier product is the Trax modular pathway.

I learned about this product when I had lunch recently with a long-time friend, Kathy Roberts.  Access Trax was co-founded by her niece, Kelly Twichel.  Kathy said that Kelly wanted to help disabled people because her mother (Kathy’s sister) had a stroke when Kelly was only 12 and then spent the rest of her life being disabled before she died in 2020. Kathy connected me with Kelly, and I had the pleasure of interviewing her virtually last Friday.

Kelly said “While I was a student at the University of St. Augustine for Health Sciences in San Marcos in 2016, Eric Packard and I were tasked to create an assistive technology device as part of our course work to become occupational therapists. Our inspiration came from a desire to assist local adaptive surfers in crossing the sand to the water’s edge while maintaining dignity and independence.

We tested numerous prototypes in cooperation with the local adaptive surfing community before I graduated with a degree in Occupational Therapy in 2017. After we had achieved a successful design, we launched the company in early 2018. Our mission is for everyone to access the outdoors.”

She said that they got some good news coverage in 2019 and 2020 from local news outlets that helped increase their sales (see featured news coverage here). 

She added. “We were on the verge of having to shut our doors in early 2020 and were saved by winning the highly competitive Federal Express Small Business Grant Contest and receiving a grant of $50,000. I was interviewed by Shawn Styles of CBS 8 San Diego News after winning the grant.  This grant helped us to be able to nearly triple our sales in 2021 over 2020. All together, we have won over $100,000 in different grants since 2017, and we have been able to increase our sales every year.”

Kelly explained, “Besides selling our Access Trax mobile panels to individuals and families for personal use, we are also selling them to the National Park Service, City and County Park and Recreation Departments, and the U.S. Department of Veterans Affairs. Our latest customers are movie crews using the panels for outdoor film productions.”

Some of the benefits for these entities are:

  • Stable walkway for ADA compliance
  • Durable and reliable for years
  • Quick and easy set up and maintenance
  • Stake down panels for permanence  
  • Ability to customize the pathway

I asked Kelly if she had any patents, and she replied, “Eric and I were granted a design patent in 2021 and we have three trademarks.  I recently applied for a design trademark on our logo. Our portable wheelchair access mats are durable, lightweight, foldable for use on terrain like sand, gravel, dirt, mulch, grass, and snow.  They work with mobility devices and heavy equipment of up 1,000s of pounds.”

In answer to my question about manufacturing, she said, “No, we buy the raw material from a company in Florida and have a company in San Diego size the panels and add our logo. Then, my employees and I assemble the panels into our standard kits and ship them to customers using Federal Express.”

I asked if Eric is still involved in the day-to-day operations, and she said, “No, he is a silent partner now.”

Kelly said, “We give back to the community in three main ways. First, we sponsor outdoor adaptive sports events so participants can get the access routes they need over sand and grass.  We have been an in-kind sponsor of events for the U.S. Open Adaptive Surfing Championships since 2017.

Second, I travel around the country to speak on subjects such as the value of adaptive sports and recreation, assistive technology, universal design, and how to become a social impact problem-solver. I share information based on my background as an occupational therapist and what I’ve learned with Access Trax.

Third, I joined a small group of San Diego-based nonprofits and businesses focused on empowering people in the community who use wheelchairs for mobility. The group coined their name the “Mobility Community Access Partners” or MCAP for short. Our first goal was to host an event in San Diego to bring people together. In June 2022 we hosted the first ever Adaptive Sports, Recreation and Resource Fair in San Diego. The event included adaptive sports such as wheelchair basketball, adaptive fitness, kayaking, boccia ball, and adaptive over-the-line.”

Kelly added, “Access Trax was a co-host of the June 3rd 2023 event “San Diego Adaptive Sports, Recreation & Resource Fair”. We also co-hosted it again last month on June 29th, 2024 at the same place (recap video).”

I told her that I have being doing what I could to first save and then rebuild American manufacturing since my first book, Can American Manufacturing be Saved? Why we should and how we can” was published in 2009.  I’ve been using my God-given talents to write two more books since then, the latest being Rebuild Manufacturing – the Key to American Prosperity

I told her that besides writing hundreds of blog articles, I have been giving back by helping and mentoring inventors since 2014 as a board member for the San Diego Inventors Forum (SDIF)and was also a mentor for the CONNECT Springboard program for startup companies in San Diego from 2015 – 2018.   

Kelly, said, “I went through CONNECT ALL at the Jacobs Center in 2019, which used to be partly supported by CONNECT. It was a business accelerator that supported local San Diego small businesses with an emphasis on minority and low-to-moderate income founders. When I went through the accelerator, it was a free, six-month program with mentorship, learning modules, and access to a beautiful brand-new coworking space. The program ran from 2019 until 2024 and each cohort was about 4 months long with about 10-15 founders each. Unfortunately, this program recently lost funding and the building was purchased by San Ysidro Healthcare so we lost our co-working space. But I will forever be grateful for that accelerator and the folks who managed it.”

Kelly later emailed me that the former CONNECT ALL is now The Jacobs Center’s Business Accelerator program  The website says it “is the region’s first low to moderate-income and diversity-focused business accelerator program, guiding startups that want to grow rapidly with all the support they need to be successful. A partnership between the City of San Diego, CONNECT w/ San Diego Venture Group, and the Jacobs Center, the Business Accelerator was founded to provide participants with mentors, free co-working space, and guidance on how to scale their businesses.”

I told her that It’s very important to support companies like hers to restore our domestic manufacturing base. SDIF didn’t get to have any in-person meetings for three years because we lost our meeting location at AMN Healthcare’s conference center during the COVID pandemic lock downs, and Zoom meetings didn’t work out.  Finally, we found a new location to resume meeting in person last September, so we just had our 11th meeting on July 11th. I told her that our group supports the national organization, US Inventors, that is working to restore our broken patent system. Our group currently meets the second Thursday of the month at the law offices of Knobbe Martens in the Carmel Valley area of San Diego.  and invited her to our next meeting on August 8th. I thanked her for her time and wished her continued success for her much-needed product for disabled people.

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Why Manufacturing is Important to the U.S. Economy

Tuesday, April 9th, 2024

The recent opinion article by Kenneth A. Reinert titled “Time to end America’s obsession with manufacturing” posted on Microsoft Start presents several reasons why our “obsession with manufacturing is misplaced” in his opinion  This article will focus on why manufacturing is important to the U.S. economy and why we need to be obsessed by manufacturing.

His first reason is that “for the high-income countries of the world, the share of manufacturing as a percent of gross domestic product (GDP) is currently approximately 13 percent. In the U.S., it is approximately 11 percent, very close to the average of high-income countries.” In comparison, Germany’s manufacturing industry was

22.2 %, China was 28.4 %, and Japan was 20.6 % with the world average being 17.5 % in 2021, which was more like the percentage the U.S. previously had prior to so much manufacturing being offshored to Asia.

His second reason is that “in high-income countries, the share of the labor force in manufacturing …the share is approximately 13 percent. In the United States, it is approximately 8 percent. This reflects the increased labor productivity in American manufacturing.”

Even at this low percentage, manufacturing still “drives 20 percent of capital investment, 30 percent of productivity growth, 60 percent of exports, and 70 percent of business R&D.”

Manufacturing employment was relatively constant from 1960 through 1990, but began declining in the late 1990s.  However, manufacturing employment was at an all-time peak of 19.6 million in June 1979, representing 22 percent of the labor force. The biggest drop in employment occurred from 2000 – 2010 after China was granted Most Favored Nation status, and American manufacturers started offshoring manufacturing overseas to China. One-third of U.S. manufacturing workers (5.8 million people) lost their jobs as shown by the chart below:

Thirdly, Reinert says that ”services, or more precisely producer services, are at the heart of the increase in manufacturing productivity. Economists and business analysts have noted the increased “servitization” of manufacturing; it is now very difficult to disentangle manufacturing from producer services given their symbiotic relationship.”  The problem with this reasoning is that the less manufacturing that is done in the U.S., the fewer producer services you have to offer domestically and for export.  Services are even easier to offshore than manufacturing, so it is no surprise that many technical services in IT, customer service and communication have been offshored to India in particular.

His fourth reason is “manufacturing can no longer be envisioned as a single stage. Rather, it is spread out over multiple stages and countries in complicated global value chains (GVCs), held together by, you guessed it, producer services: transport, logistics, information and communication technologies, insurance and many others. Rather than a single stage, manufacturing is now a network.” 

The global value chains are exactly what caused the supply chain disruptions and shortages during the COVID pandemic.  Manufacturers learned that they can’t be dependent on components and parts being shipped from overseas to the U.S. to be assembled into their products. This is one of the main reasons more manufacturers are reshoring manufacturing to the U.S. Moreover, as a country, we can’t be dependent on another country, particularly China, for the components and parts that go into products for our defense and national security industries as well as our pharmaceutical and medical supply industries.

His fifth reason is that “what really matters for economic success is high value added… high value added tends to be found at the beginning and end of GVCs, in research and development, branding, design, distribution, marketing and after-sales services. The actual assembly stage of GVCs is often where the least value added is to be found.” The error of this reasoning is that R & D, distribution, and after-sales services have also been offshored to other countries so that our exports of advanced technology products has also been reduced.  In fact, “the trade deficit in advanced technology products is accelerating, growing from $128 billion in 2019, to $195 billion in 2021, to $244 billion in 2022.”

Reinert opines that “U.S. is currently involved in a bipartisan experiment to throw “an extraordinary amount of subsidies at particular manufacturing sectors, including semiconductors and green energy. Estimates of the total subsidies reach as high as $1 trillion. Manufacturing subsidies area way of being seen to be “doing something” in the economic realm and signal “standing up to China.” 

His conclusion is that “We need to end our obsession with manufacturing and focus on high value added wherever it is found. We also need to limit manufacturing subsides and allow them to be subject to WTO disciplines that the U.S. has developed and utilized intensively. Otherwise, long-run growth and prosperity will be diminished.”

The only correct opinion in his article is that “national security requires producer services along with manufacturing. There is a saying among military analysts that “amateurs talk strategy, but experts talk logistics.” These “logistics” are producer services. In the words of one researcher, these include “the construction, maintenance and operation of military bases; equipment maintenance; food service; transportation; communications and IT support; and supply chain management.” This is exactly why we need to strengthen our domestic manufacturing supply chain of goods and materials needed by our military and our defense industry and not a reason to end our obsession with manufacturing.

Last week, I discussed this article with a friend who is a fellow member of the Coalition for a Prosperous America, Dr. John R. Hansen. He is a retired economist who worked with the World Bank for over 30 years. We agreed with Reinert that using subsidies to drive manufacturing growth with can be expensive and wasteful, but believe he is wrong to dismiss the importance of manufacturing to America and wrong to assume that massive subsidies would be required for a renaissance in American manufacturing. I asked him to email me a few comments on Reinert’s article that I could include in my article.  He wrote:

“The importance of manufacturing for America lies in the following: We need to be able to produce and export internationally tradeable goods to pay for the goods we import. For the past two years, our trade deficit in goods has exceeded 1.0 trillion USD. Yes, we could continue borrowing and printing money to cover our trade deficits, but this is a dead-end strategy. The only sustainable strategy is to develop our ability to produce a surplus of internationally tradeable goods.

Producing more services is not the answer. They tend to be very labor intensive, and we cannot compete against countries like India where well-educated people receive very low wages compared to the average American. Furthermore, most services require physical presence.

The services highlighted by Reinhart suffer the same problems. They are very hard to export, especially if you don’t produce enough tradeable exports like manufactured goods into which the services can be embedded.

Our only real hope of paying for the imports we need is to first increase the production of tradeable manufactured and agricultural goods before we can stimulate the production of services that can be embedded in these goods. Both are highly tradeable, and we have a basic comparative advantage in both. We have abundant agricultural land, much of which is supplied with high technology that helps offset our higher labor costs. We also have one of the most advanced manufacturing sectors in the world.

The main reason we cannot reduce our imports and increase our exports of manufactured goods is that other countries producing such goods have currencies that are seriously undervalued compared to the US dollar. For example, the currencies of  China and Japan, two of our biggest competitors and sources of trade deficits, have currencies that are undervalued by 40% and 60% against the US dollar. This makes the prices of the goods that these countries produce 40-60% lower than if the foreign currencies were valued at exchange rates that would balance trade.”

John and I agree that the only real solution to this problem is the Market Access Charge that John has proposed and I have written about in several previous articles.  The MAC would do this by imposing a small charge that would be collected on all foreign-source money entering America’s financial market (averaging USD 90 trillion every year)  For more details, read my article , “Why a Market Access Charge is Urgently Needed,” from this past January. 

We need to stop the destruction of American industry and innovation, the loss of high-paying manufacturing jobs, and the collapse of communities.  We need to rebuild American manufacturing to create prosperity for our children and grandchildren.  

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Manufacturing USA is Working to Rebuild American Manufacturing

Tuesday, March 5th, 2024

The manufacturing sector has an unrivaled ability to boost the nation’s global economic competitiveness. If the United States wants to remain a world leader and super power, it needs a cutting-edge manufacturing sector that is a step ahead of the competition.  This is why the National Network for Manufacturing Innovation was formally established in 2014, now called Manufacturing USA®.

The website states, “Manufacturing USA® is a national network created to secure U.S. global leadership in advanced manufacturing through large-scale public-private collaboration on technology, supply chain and education and workforce development. The network comprises the U.S. Departments of Commerce, Energy and Defense, their sponsored manufacturing innovation institutes, and six additional federal agency partners, creating a whole-of-government, national effort to drive innovation in manufacturing.”

   The following 17 institutes are now part of the Manufacturing USA network:

“While each institute is established by a sponsoring federal agency and has a unique advanced manufacturing technology focus and identity, they also seek to advance the bigger Manufacturing USA network mission to improve American manufacturing’s global competitiveness….Each institute includes members from industry, academia, and state and federal governments with a shared interest in advancing manufacturing [and]…collectively worked with over 2,500 member organizations to collaborate on more than 670 major technology and workforce applied research and development projects and engaged over 106,000 in advanced manufacturing training. “

The website describes the background of why and how it was formed.  “In June 2011, the President’s Council of Advisors on Science and Technology recommended the formation of the “Advanced Manufacturing Partnership” (AMP) (report). The partnership was led by Dow Chemical Company President, Chairman, and CEO Andrew Liveris, and MIT President Susan Hockfield. The Advanced Manufacturing Partnership was charged with identifying collaborative opportunities between industry, academia and government that would catalyze development and investment in emerging technologies, policies and partnerships with the potential to transform and reinvigorate advanced manufacturing in the United States. In 2012 it issued its first set of recommendations, “Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing.”

After a nationwide outreach and engagement effort, “The National Network for Manufacturing Innovation: A Preliminary Design,” was issued in January 2013.

In September 2013, an AMP 2.0 final report focused on a renewed, cross-sector, national effort to secure U.S. leadership in the emerging technologies that will create high-quality manufacturing jobs and enhance the United States’ global competitiveness. The steering committee, whose members are among the nation’s leaders in industry, academia, and labor, was a working group of the President’s Council of Advisors on Science and Technology.

In December, 2014, Congress passed the Revitalize American Manufacturing and Innovation Act (RAMI Act) into law, which gave Congressional authorization to the Advanced Manufacturing National Program Office and authorized the Department of Commerce to hold “open-topic” competitions for manufacturing innovation institutes where those topics of highest importance to industry could be proposed.”

The key initiatives of Manufacturing USA® are:

Advanced Manufacturing Technology Leadership – The institutes “convene private sector companies, academic institutions, government entities, and other stakeholders to pursue collaborative research and development, test applications, and train workers.”

COVID-19 Manufacturing Recovery – It “helped facilitate the production of Personal Protective Equipment (PPE) and helped empower U.S. manufacturers to reinvent the domestic PPE supply chain.”

Future Manufacturing Supply Chains – “It is engaging in projects that make domestic manufacturing processes more innovative and efficient to strengthen the competitiveness and resilience of U.S.-based manufacturing.”

Manufacturing Workforce Development – It is “helping to define the skills and training needed to satisfy manufacturers’ future requirements…retraining and upskilling the current workforce, and developing STEM talent for the future.”

Clean Energy Manufacturing – “It is fostering the development of energy efficient and clean energy technologies that will lead to major reductions in manufacturing energy costs and increases in innovative new green products in emerging clean-energy industries.”

Manufacturing USA® has developed a national education and workforce development roadmap to revitalize the manufacturing workforce by bringing together the public and private sectors to create opportunities for existing and prospective workers to find their pathways into the advanced manufacturing workforce. The roadmap is bu8ild upon three key priorities:  equip with skills, broaden access, and spark interest.

The February 2024 edition of SME’s Smart Manufacturing magazine featured an article titled “Manufacturing USA, Stronger than Ever” outlining some the of the recent accomplishments of a few of its network institutes.  It also mentioned the Modern Makers campaign that was “launched in 2023 to showcase individuals whose sense of purpose embody the Manufacturing USA mission to secure the future of U.S. manufacturing through innovation, education and collaboration.”

The article reported that “two institutes received significant funding from the Department of Commerce’s Economic Development Agency (EDA) Build Back Better (BBB) initiative, three institutes recently received EDA grants associated with the CHIPS and Science Act, and another institute’s parent organization got a grant from the Department of Defense’s (DoD) funding from the CHIPS and Science Act.”

For example, the Advanced Regenerative Manufacturing Institute (ARMI) received a “BBB grant to create a Robotics Manufacturing Hub and support four innovation accelerators in an 11-county region of Pennsylvania.”

The article reported that “America Makes is a partner in the new Sustainable Polymers Tech Hub, which is led by the Greater Akron (Ohio) Chamber of Commerce… the Akron area has the largest concentration of plastics and rubber manufacturing plants, machines and materials in North America and is positioned to establish global leadership in sustainable technology in those areas.”

In addition, CyManII led the Secure Manufacturing in South Texas Strategy Development Consortium of 13 organizations in San Antonio, Texas and “was awarded a Strategy Development Grant to develop a regional coalition and innovation roadmap to mature cybersecurity and secure manufacturing technologies…CyManII’s efforts are in advancing research through development and testing…[the consortium] will develop an innovation roadmap for cybersecurity and secure manufacturing technologies.”

Also, “PowerAmerica’s home institution, North Carolina State University, received a $39.4 million DoD grant to build the Commercial Leap Ahead for WideBandgap Semiconductors (CLAWS) semiconductor research hub, which will create a semiconductor research foundry to advance next generation chips and fabrication technology. CLAWS is one of eight federal research hubs around the U.S. created from the CHIPS and Science Act.”

The Manufacturing USA institutes are creating a better climate for manufacturers to help them adopt the innovative applications of Industry 4.0 technologies that will strengthen and grow their businesses. The economic development activities of the institutes are designed to strengthen the supply chain and improve the competitive position of U.S. manufacturing companies. In turn, this will provide pathways for Americans seeking rewarding, higher-paying jobs and contribute to stronger local, regional and national communities. Be sure to check out which institute is focused on your industry.

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How High Interest Rates Affect the Manufacturing Industry

Tuesday, February 20th, 2024

Rising interest rates have been making frequent headlines since they started rising in 2022 when inflation reached the historic level of 8% for a sustained period of time.  When inflation rates rise substantially, the Federal Reserve raises interest rates as part of their aggressive monetary policy to bring it down.

The effect on manufacturing is serious because manufacturing is an asset-driven industry sector, and assets are expensive. It is necessary for manufacturing companies to finance the cost of new machinery, equipment, vehicles, and infrastructure.  As interest rates rise, the cost of financing grows higher, which means manufacturers end up paying significantly more to expand operations.

This creates a dilemma for manufacturers: They must either spend more to borrow or spend more to maintain assets beyond their original life expectancy. This is an added expense for the industry when they are already facing significant increases in material prices. It also comes at a time when manufacturers are being pressured by the market to implement Industry 4.0 technologies, such as sensors, automation, robotics, new ERP software, and AI, all of which require capital expenditures.

The inflation of the past couple of years was mainly caused by supply chain shortages and disruptions due to the COVID pandemic shutdowns.  Once the supply chain recovered, the supply of goods would have increased, reducing inflation.  Instead, the Fed raised interest rates, causing business contraction and less consumer spending.

I’ve never been able to understand the rationale for raising interest rate to reduce inflation. Raising interest rates only adds to the cost of doing business, reduces capital expenditures and investment by companies, and reduces consumer spending.  Reducing industrial and consumer spending causes businesses to contract, which leads to layoffs. Layoffs cause less consumer spending leading to more business contraction.  It becomes a vicious cycle.

Confirming my opinion about the negative effect of high interest rates, the August 28, 2023 article by Matthew Fox in Business Insider titled “’Interest rates are killing our industry’: Here’s what businesses are saying about the Fed’s impact on the economy” states:

“’High interest rates are affecting industrial production like never before… interest rates have placed an inverted incentive to grow due to a major slowdown in capital equipment expenditures. This is the time to stop raising interest rates,’ one survey respondent in the computer and electronic product manufacturing industry said.”

“For the first time in a long time, we are seeing customers reduce or cancel orders due to softening end-use demand. We expect this trend to continue over the next few months” and “Customer orders came to a sudden halt. The overall volume dropped 51% year-over-year.”

“A respondent from that sector [machinery manufacturing industry] said, “The phone is not ringing. Our sales team is working harder with less results. Projects are being postponed and, perhaps even more telling, payments are increasingly protracted.”

The latest press release from The Association For Manufacturing Technology (AMT) reported:  “Orders in 2023 totaled $4.94 billion, 11.2% behind the $5.56 billion recorded in 2022… Contract machine shops decreased their 2023 orders just over 21% compared to 2022… aerospace sector’s 2023 orders decreased nearly 9% from 2022.”

My sales agency, ElectroFab Sales represents small American manufacturers that perform fabrication services for Original Equipment Manufacturers in a variety of industries in southern California, and I can confirm that business started contracting significantly in the third quarter of last year and hasn’t rebounded so far this year.

We’ve also had significant layoffs in the past two years. The February 12, 2024 article in TechCrunch reports “The final total of layoffs for 2023 ended up being 262,735, according to Layoffs.fyi. Tech layoffs conducted in 2023 were 59% higher than 2022’s total, according to the data in the tracker. And 2024 is off to a rough start despite not reaching the peak of last year’s first quarter cutbacks.:

A review of Historical Data

The following chart shows the relationship between Fed rates and recessions (shaded vertical lines show recessions). 

While some of the recessions started after the Fed started to reduce rates from being high, there may be a lag time in the effect of high interest rates and the start of a recession.  When businesses have contracted significantly, it takes a period of time to turn the economy around towards expansion, depending on how significantly the economy has contracted.  I believe there is evidence to indicate that the longer the duration of high Fed rates, the longer the recession lasts.  The following chart shows the duration of the recessions:

People think that the “Roaring 20s” was a period of prosperity and expansion, but there were actually three recessions in the 1920s prior to the crash of the stock market in 1929, leading to the Great Depression that lasted 43 months, followed by a shorter recession of 13 months prior to the beginning of WW II.

The recession that began in the fall of 2008 was the longest lasting recession since the recession that began in 1981. The cause of the brief, two-month recession of 2020 was the shutdowns of non-essential manufacturing during the beginning of the COVID pandemic.   

Judging by the number of recessions since 1913, I don’t think that the monetary policies of the Fed have been successful in preventing “booms and busts.”  However, it has protected the banking industry from widespread bank failures.

We need to understand that contrary to what many people think, the Federal Reserve is not a government-owned national bank. The Federal Reserve was established by Congress in 1913 with the enactment of the Federal Reserve Act. It was established to be the central bank of the U.S. “Its primary purpose is to enhance the stability of the American banking system. The Federal Reserve System is composed of a central, independent governmental agency, the Board of Governors, in Washington, D.C., and 12 regional Federal Reserve Banks located in major cities throughout the U.S…. The Fed introduced Federal Reserve notes, which became the predominant form of U.S. currency and legal tender.”

According to the website USA Facts, “The Fed is an independent body and is not tied to an administration or partisan agenda. The system has three key entities: The Board of Governors, the Federal Reserve Banks, and the Federal Open Market Committee (FOMC).

The Fed oversees five key functions. These five key functions laid out by the Fed are “…to conduct the nation’s monetary policy, promote the stability of the financial system, promote the soundness of financial institutions, facilitating US dollar transactions, and promoting consumer protection.

The president appoints the Board of Governors, pending Congressional confirmation. The Board of Governors is tasked with supervising the five functions, overseeing 12 Federal Reserve banks, and creating financial regulations.”

What is the Outlook for the Future?

On January 29, 2024, the article “When Will the Fed Start Cutting Interest Rates?” by Preston Caldwell, on MorningStar, states “We expect the Fed to start cutting rates beginning with the March 2024 meeting. The Fed will pivot to monetary easing as inflation falls back to its 2% target and the need to shore up economic growth becomes a top concern…since July 2023, the Federal Reserve has kept the federal-funds rate at a target range of 5.25% to 5.50%, far above typical levels over the past decade. But we expect the Fed will begin cutting rates in March 2024—bringing the federal-funds rate to 3.75%–4.00% by the end of 2024.”

We can only hope that when the Fed does cut rates, it will not lead to a recession of equal time. The sooner that the Fed reduces its fund rates, the better. 

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