Tuesday, August 04, 2009

The Time for a National Manufacturing Policy was Yesterday

Employees of the Lordstown General Motors plant in Ohio are banking on the Chevy Cruze to keep them working. We should be cheering them on too. Why? Because Lordstown's story is being told in auto communities across the nation.
"The last eight months have been so chaotic," said Lordstown Mayor Michael Chaffee. "We went from the top of the world in August (2008), to treading water and praying in April."

But the Cruze gives Lordstown residents hope their plant will stay open. GM also hopes the smaller, more fuel-efficient vehicle will carry the smaller, more efficient car company through the next century.

Keeping the plant is one thing, but in an area that American industry has been leaving for 30 years, the loss of jobs from the last major manufacturing employer is huge.

Twenty miles from Lordstown is Youngstown, Ohio, a once-booming manufacturing and industrial community that relied on steel mills to sustain its middle class. When the mills downsized or closed beginning in the late 1970s, residents left to seek work elsewhere, and the standard of living declined for those who remained.

Unlike previous decades, when industry left the area for other parts of the nation, companies are now moving out of the country entirely, permanently erasing thousands of jobs. And it's not just the jobs that are fading, but also health care, pensions and other benefits that built the working middle class.

John Russo, co-director for working class studies at Youngstown State University, has been studying this erosion for years and said he finds the push for cheaper U.S. labor depressing.

"We seem to be willing to create jobs for a working people where the wages and benefits cannot support paying their basic bills," Russo said. "So, it seems to me, Youngstown's story, now Lordstown's story, is a part of America's story as we begin this next century."
President Obama believes “The fight for American manufacturing is the fight for America’s future,” yet he hasn't come up with a formal plan to address the decline. Granted, he has a lot on his plate, but maybe he could find a few minutes to share a beer with Ohio Rep. Sherrod Brown who is proposing a a national manufacturing policy that aligns federal actions with the goal of strengthening our manufacturing sector.

These are the five areas Brown believes our country should focus on (click the link to read the details): Innovation, Supply Chains, Skills, Coordination, and Fair Trade.

Fact: The United States now ranks behind every industrial nation except France in the percentage of overall economic activity devoted to manufacturing. Since 2007, we've lost two million manufacturing jobs and more than five million since 2000, but even in its weakened state, manufacturing is still an essential pillar of our economy.
Manufacturing accounts for $1.6 trillion -- nearly 12 percent -- of the U.S. Gross Domestic Product (GDP). It accounts for nearly three-fourths of the nation’s industrial research and development (R&D) -- with four manufacturing industries alone (computers and electronics, chemicals, aerospace, and autos) accounting for 56 percent of private sector R&D. The industry also accounts for 35 percent of value added in world high technology product production.

Jobs in the manufacturing industry pay 20 percent more on average than service jobs. Each manufacturing job supports 4-5 other jobs throughout the U.S. economy. While employment in manufacturing has steadily declined, one in six private sector jobs is still directly or indirectly tied to manufacturing.
Stabilizing and boosting manufacturing would help our economy, put people back to work, and rebuild the middle class. Obama has been saying all the right things, but he's been sending mixed messages about manufacturing's future.
While Obama felt it necessary to distance himself from the “buy America” provisions put in the stimulus bill, China has no such compunctions. As the Times reports, “when China authorized its first solar power plant this spring, it required that at least 80 percent of the equipment be made in China. When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data.”...

China is intent on dominating the new energy markets of the future. If its past practices are any indication, it will subsidize exports, manipulate its currency, buy China at home, force multinationals to transfer technology and partner with Chinese companies, and engage in industrial piracy to make its way.
And China is not alone: Other countries continue to erect barriers to block American goods and mercantilism and subsidies still reign supreme.

Other countries protect their manufacturing. We shouldn't expect any less from the U.S.

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victor said...
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