{"id":1196,"date":"2023-05-09T19:50:04","date_gmt":"2023-05-10T02:50:04","guid":{"rendered":"https:\/\/savingusmanufacturing.com\/blog\/?p=1196"},"modified":"2023-05-09T19:50:04","modified_gmt":"2023-05-10T02:50:04","slug":"solutions-to-address-outsourcing-by-multinationals-rebuild-american-manufacturing","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/general\/solutions-to-address-outsourcing-by-multinationals-rebuild-american-manufacturing\/","title":{"rendered":"Solutions to Address Outsourcing by Multinationals &amp; Rebuild American Manufacturing"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Michael Collins wrote, \u201cHope is not a plan\u201d in his book <em>Dismantling the American Dream, How Multinational Corporations Undermine American Prosperity<\/em>. In other words, we cannot hope to rebuild American manufacturing without doing things differently than we\u2019ve done in the past 30 years. &nbsp;The industrial policies we have been following resulted in the decimation of the U.S. manufacturing base with the loss of over 70,000 manufacturing companies and 5.8 million manufacturing jobs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael proposes a number of solutions in his book, some of which are the same or similar to solutions I proposed in my book, <em>Rebuild Manufacturing \u2013 the key to American Prosperity<\/em>. First, we both agree that we need a new industrial policy and plan.&nbsp; The free trade policy we\u2019ve followed since WWII has only benefited multinational corporations at the cost of millions of manufacturing jobs and an escalating trade deficit. Every President in the past 30 years had the goal of doubling exports and creating more manufacturing jobs, but the trade and industrial policies they promoted did just the opposite. President Biden\u2019s Build Back Better Plan has the goal of creating five million jobs, but without measurable objectives and a plan to achieve those objectives, Michael feels \u201cnothing will change.\u201d &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael points out that \u201cit will take a reduction in the trade deficit of 20 percent to bring back one million manufacturing jobs.\u201d That means, we would have to reduce our trade deficit by 100% of the 2020 trade deficit total to create five million jobs. &nbsp;However, the opposite occurred as the trade deficit increased from \u201c$676.7 billion in 2020 to $861.4 billion in 2021\u2026 [and] $945.3 billion in 2022\u201d according to the <a href=\"https:\/\/www.bea.gov\/news\/blog\/2023-03-08\/2022-trade-gap-9453-billion\">Bureau of Economic Analysis<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael notes that \u201cpoliticians, Democrats or Republicans, don\u2019t seem to be willing to publicly commit to an objective of reducing the trade deficit.\u201d He comments, \u201cThis is dangerous territory, and government is the only entity that can do anything about the trade deficit.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I came to a similar conclusion in the chapter on \u201cHave Free Trade Agreements Benefited American Manufacturing\u201d of my book. \u00a0I also recommended that the U.S. do not enter into any new trade agreements, and Michael agrees, writing. \u201cWe should oppose any FTA that will cost jobs or increase the trade deficit.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The question is how do you reduce a trade deficit.?&nbsp; Since Michael and I are both members of the Coalition for a Prosperous America (CPA), we support addressing currency manipulation and the overvalued dollar as two of the main ways to balance trade.&nbsp; Michael wrote, \u201cThe root cause of the trade deficit is that the United States is not price competitively primarily because the dollar is overvalued by 20 to 30 percent.\u201d However, he wrote, \u201cMost of the large importer corporations and Wall Street do not want the government to enforce the current WTO and IMF laws against currency manipulation or to devalue the dollar because they want to keep foreign import prices low.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael summarizes four methods that can be used to reevaluate the dollar:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Impose countervailing duties (CVDs) \u2013 tariffs or taxes on imported goods that offset subsidies by trading partners.<\/li>\n\n\n\n<li>Tax purchases by using a Market Access Charge (MAC) on all foreign investments in the U.S., including stocks, bonds, real estate, companies, or intellectual property.<\/li>\n\n\n\n<li>Implement a withholding tax on the profits and dividends earned by foreign inventors that finance the dollar.<\/li>\n\n\n\n<li>Tax sellbacks \u2013 impose a 30% tax on the profits of companies that have offshored.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Michael wrote that \u201cA new working paper from the CPA called \u2018Imports Growth and Job Creation from a Competitive Dollar\u2019 reveals that if the dollar value could be reduced by 27 percent it would result in export growth five times faster than baseline, while imports would grow more slowly.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another CPA proposal that Michael supports is \u201cMake existing China tariffs permanent\u201d and \u201cimpose the 4A and 4B tariffs.\u201d&nbsp;&nbsp; He wrote, \u201cThe Trump tariffs with China are working, and in fact, are our only defence against China\u2019s mercantilist cheating.\u201d He recommends that \u201cCongress should limit tariff exclusions for importers, especially those that are not using the imports to manufacture in the United States.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael also recommends creating \u201ca more level playing field with our trade partners\u201d by building reciprocity into our trade agreements.&nbsp; This would \u201callow the United States to impose reciprocal duties on all countries who have higher tariffs if they do not lower their tariffs and VATs.\u201d &nbsp;I wrote in my book, \u201cOver 150 countries in the world have shifted a significant portion of their tax mix to border adjustable consumption taxes \u2014Value Added Taxes (VATs) or goods and services taxes (GSTs)\u2026The rates range from 12% to 24% and average 17% globally.\u201d In 2017, CPA proposed a 12% GST to be applied as a credit to the 15.3% payroll tax. Michael wrote, \u201cWe should level the playing field by introducing a program to match the foreign country\u2019s VAT\u2026\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In order to reduce the unfair advantage that multinational corporations have under current U\/S. trade policy, Michael supports CPA\u2019s proposal for \u201cSales Factor Tax Apportionment\u201d that \u201cwould tax profits based on where the product is sold and eliminate the ability of multinational companies avoiding taxes by shifting profits offshore.\u201d I had explained that this tax proposal would be \u201cdetermined solely on the percent of a company\u2019s world-wide sales made to U.S. customers.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He also recommends the new proposal for a \u201cGlobal Minimum Corporate Tax of 15 percent\u201d, which \u201cwould give government the ability to tax our home company\u2019s overseas profits at 15 percent, and deter them from us9mg tax shelter countries to avoid taxes.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael supports CPA\u2019s proposal for the U. S. to withdraw from the World Trade Organization (WTO) because the requirement of consensus on trade rules and decisions by the 164 member countries have \u201cturned out to be detrimental to the United States,\u201d In addition, he supports \u201crepealing the Permanent Normalized Trade Relations (PNTR) with both Russia and China.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He writes that these actions are first steps in \u201cdecoupling form China\u201d and then lists a dozen different steps to be taken thereafter that CPA recommends as part of the decoupling process.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael also briefly mentions the work of Harry Moser, founder of the Reshoring Initiative, to help companies use the Total Cost of Ownership Estimator\u2122 to reshore manufacturing to America.&nbsp; I have had the pleasure of collaborating with Harry Moser since 2010 as an authorized presenter on how to use TCO to return manufacturing to America and devoted a whole chapter on reshoring in my book.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Reshoring Initiative 2022 Data <a href=\"https:\/\/reshorenow.org\/content\/pdf\/2022_Data_Report.pdf\">Report<\/a> &nbsp;states, \u201cJobs announced in 2022 were a record-breaking <strong>364,000 <\/strong>\u2013 up from 238,000 in 2021. The totalnumber of <strong>jobs announced since 2010 is now nearly 1.6million.\u201d<\/strong> &nbsp;However, Michael notes that \u201cat the current rate of reshoring, it will take over 30 years to reach Biden\u2019s goal of five million jobs.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Michael\u2019s last chapter makes a brief mention of the need for workforce training and comments that instead of training, \u201cMNCs have used stop gap measures such as outsourcing, automation, buying services from foreign vendors, and poaching trained workers from their suppliers, but these strategies no longer work and the shortage of workers has caught up to American companies.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I felt that workforce training was so important to rebuilding American manufacturing that I included a chapter on the subject of how to foster and develop the next generation of manufacturing workers in my book. Since my book was published, I have written many articles on this topic.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Most of the above recommendations are focused on government policies, but the likelihood of making such major changes in policies is slim to none at the present time. That is why we need to shift the mindset from a prevailing worldview of \u2018inevitable decline\u2019 of American manufacturing to one of \u2018vibrant opportunity. We need a new level of thinking and action that scales solutions at hand with unprecedented collaboration and organize our efforts to achieve the following true north goals by 2030:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&nbsp;50,000 world-class domestic manufacturing small \u2013 medium\u2013 large enterprises (10x increase)<\/li>\n\n\n\n<li>Add 5 million middle-income manufacturing jobs (40%)<\/li>\n\n\n\n<li>Add $1 trillion to the economy (40% increase)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">We need to focus our attention on disruptive and emerging opportunities that create new growth opportunities for companies, people, communities.&nbsp; We welcome collaboration with <a href=\"https:\/\/www.industryreimagined2030.org\/\">Industry Reimagined 2030<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Michael Collins wrote, \u201cHope is not a plan\u201d in his book Dismantling the American Dream, How Multinational Corporations Undermine American Prosperity. In other words, we cannot hope to rebuild American manufacturing without doing things differently than we\u2019ve done in the past 30 years. &nbsp;The industrial policies we have been following resulted in the decimation of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,51,4],"tags":[],"class_list":["post-1196","post","type-post","status-publish","format-standard","hentry","category-general","category-manufacturing","category-tradepolicy"],"_links":{"self":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/comments?post=1196"}],"version-history":[{"count":1,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1196\/revisions"}],"predecessor-version":[{"id":1197,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/1196\/revisions\/1197"}],"wp:attachment":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/media?parent=1196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/categories?post=1196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/tags?post=1196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}