Washington Helped China Snare U.S. Manufacturing Jobs, Study Says

By: Jeffry Bartash, MarketWatch.com The United States lost 3.5 million manufacturing jobs from the end of the 2000 to the end of 2007 and China was almost entirely to blame, a new research paper says. The conclusion is probably not a big surprise, particularly to workers who saw their jobs shipped overseas, but the study offers an interesting twist. Authors Justin Pierce of the Federal Reserve and Peter Schott of Yale School of Management say Washington triggered the jobs exodus by reducing “policy uncertainty.” Read their paper. Policy uncertainty is usually a bad thing – witness recent battles in Washington over the debt ceiling and “fiscal cliff.” Economists and business executives say these fights make it harder to plan and invest and consumer confidence tends to suffer. Yet in the case of China, policy uncertainty protected U.S. manufacturing jobs. The threat that Washington might slap stiff tariffs on goods made in China at any time keep more U.S. manufacturing at home, the authors argue. The constant threat of tariffs – basically a tax on imported goods – largely ended in 2000. The Clinton White House and Republican-led Congress agreed to grant China the permanent right to be treated like other U.S. trading partners such as Europe or Japan. While tariffs can still be applied, the process is more complicated and takes longer to deploy, sometimes involving U.S. or international court hearings. The new level of policy certainty, Pierce and Schott argue, spurred more U.S. manufacturers to shift plants and jobs to China to take advantage of lower labor costs. They no longer had to worry about sudden increases in tariffs when exporting their goods back to America. The loss of U.S. manufacturing jobs accelerated sharply after China’s trading status was upgraded. Manufacturing employment fell to 13.7 million in 2007 from 17.2 million in 2000, according to the U.S. Labor Department. Before 2000, the number of U.S. manufacturing jobs had barely changed in 20 years. The erosion in manufacturing is also a big reason why the U.S. economy failed to add many jobs in the first two years after the 2001 recession. The economy only started to add jobs at a faster clip in 2004...

In the 2012 Campaign, the Factory Floor Becomes a Star

Midwest battleground states make manufacturing a central issue in presidential and Senate races. By: Industry Week More than 975,000 mentions were made in presidential TV advertising about jobs, outsourcing, and trade generally or specifically involving China, as well as Mitt Romney’s involvement with Bain Capital, according to a report released today by Kantar Media’s Campaign Media Analysis Group (CMAG) conducted for the Alliance for American Manufacturing (AAM). The new report analyzed the broadcast TV advertising airtime devoted to the presidential race as well as key Senate races in four industrial states: Indiana, Ohio, Pennsylvania and Wisconsin. The analysis was based on advertising tracked in all 210 U.S. media markets as well as on 11 national broadcast networks and more than 80 national cable networks. “Even in today’s service-and-dotcom economy, one of the most popular images in 2012 political advertising was the American factory,” said Elizabeth Wilner, vice president of Kantar Media’s Campaign Media Analysis Group. “Whether depicted as desolate through chained gates or shot from a brightly lit, busy floor, the factory starred in an air war dominated by debate over the American economy.” According to AAM Executive Director Scott Paul, “Both the Democratic and Republican candidates spent a stunning amount of money on television advertising to convince voters that they could best represent the interests of America’s manufacturers and their workers. Obviously they latched on to the right issues because jobs and outsourcing are absolute, top-of-mind issues. Across the partisan spectrum, these issues move voters.” Wilner’s analysis showed the factory owed its prominence not only to geopolitics but also to “the widespread view among voters of America as a country that makes and builds,” which helped explain why “the factory visual continues to strike a chord.” In the presidential race, Democrats spent $57 million in TV advertising attacking Gov. Romney’s former firm, Bain Capital, for its alleged practices of shipping jobs overseas or eliminating them altogether. The Obama campaign also devoted substantial advertising to the outsourcing angle, including an ad suggesting that, under Romney’s leadership, Bain laid off workers and destroyed livelihoods. While the anti-Bain ads received enormous media attention, more money—$68 million—actually was spent to advertise about trade. The two sides spent...

U.S. Businesses Seek a More Competitive Economy

By: Paul Davidson, USA Today The election is over and the spotlight is on the fiscal cliff. Yet the Washington political drama over year-end tax increases and spending cuts will eventually end, as all do. Some business leaders are already looking past it to a more difficult challenge: the decline of U.S. competitiveness. A recurring theme in the presidential campaign, the USA’s dominant position in the global marketplace has been declining for more than a decade. It underlies the listless recovery, weak job growth and decline of the middle class, economists say. Next week, a coalition of business leaders will press a longer-term to-do list on Washington’s politicians. Its 200 items include cutting corporate taxes, streamlining regulations, upgrading the nation’s crumbling infrastructure and creating a more highly skilled workforce. The nation’s $16 trillion debt itself is a deterrent to U.S. competitiveness because it crimps government investment in education and infrastructure and creates uncertainty among businesses about taxes and interest rates. The Council on Competitiveness, a group of CEOs, university presidents and labor leaders, notes that many of the issues aren’t partisan in nature and should draw support from both parties in a divided Congress. “We need to make the United States a leader in attracting investment, growing jobs and delivering prosperity,” says Deborah Wince-Smith, who heads the competitiveness council. “And we’re falling behind in all those things.” Despite its slippage, the U.S. is still an economic power and the world’s manufacturing leader. And in recent years, falling U.S. factory wages and energy prices have allowed it to narrow its business-cost gap with other countries. Over the long term, however, its status has declined as manufacturers have outsourced millions of jobs to countries that have lower wages, such as China; capitalism has spread to formerly closed economies, and technology has allowed companies to do business almost anywhere. The World Economic Forum recently said the USA’s global ranking among the most competitive economies fell for the fourth year in a row in 2012, from fifth to seventh. It listed government bureaucracy, high taxes and an inadequately educated workforce among the biggest deterrents for doing business here. And in a recent Harvard Business School survey of nearly...

Manufacturers Call for Bold Agenda in November Election

By: National Association of Manufacturers In a newly released video, the National Association of Manufacturers (NAM) is reminding Americans of manufacturing’s legacy in the United States and the need for manufacturers’ voices to be heard on Election Day. The video begins by highlighting the stark reality that the policies coming out of Washington are hurting our nation’s economy but pivots to the potential manufacturers have to enhance our nation’s competitiveness and make us the most dynamic economy in the world. To view the video, please click here. “America’s economy is at stake. America is at stake. The success of the manufacturing economy will determine the quality of life of every American in the future,” said NAM President and CEO Jay Timmons. “Voters understand that manufacturing creates jobs, makes us more globally competitive and grows our economy. This video reminds us of the connection we each share with the 12 million men and women who make things in America, and why we want policies that encourage more manufacturing investment and jobs here in the United States.” “This video has an important and strong message that we hope to deliver on Election Day—we need leaders with a bold agenda,” said Kelly Johnston, vice president of government affairs for Campbell Soup Company and chair of the NAM’s Public Affairs Steering Committee. “It is my hope that this video will inspire manufacturers all across the United States to share this message with employees, colleagues and their family and friends. Manufacturing is critical to our economic future, and we can achieve greatness with the right policies out of Washington.” This is one part of the NAM’s yearlong effort to empower voters during this critical election and provide them with all the tools they need to vote for the candidates who will stand up on behalf of manufacturing here in Washington. The NAM has dedicated unprecedented resources to empower manufacturers, and our efforts will continue through Election Day, Inauguration Day and into the new Congress and administration....

ITIF Report Details 50 Policies to Improve U.S. Manufacturing Competitiveness

By: Michele Nash-Hoff, Can American Manufacturing Be Saved Last week, the Information Technology and Innovation Foundation (ITIF) released a report titled, “Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy,” by Stephen Ezell and Robert Atkinson in which they stated, “A comprehensive strategy aimed at strengthening U.S. establishments competing in global markets is needed for the United States to boost short-term recovery and long-term prosperity…” “The United States is increasingly isolated in its belief that countries don’t compete with one another and that only firms compete” said ITIF Senior Analyst Stephen Ezell, co-author of the report. “Our traded sector establishments are up against competitors that are aided in countless ways by their governments. It’s time to level the playing field.” The report, presents 50 federal-level policy recommendations to help restore U.S. traded sector competitiveness, along with 13 state-level recommendations. The recommendations are organized around federal policies regarding the “4Ts” of technology, tax, trade, and talent, as well as policies to increase access to capital, reform regulations, and better assess U.S. traded sector competitiveness. A nation’s traded sector includes industries such as manufacturing, software, engineering and design services, music, movies, video games, farming, and mining, which compete in international marketplaces and whose output is sold at least in part to nonresidents of the nation. They are the core engine of U.S. economic growth and face unique challenges. Because these industries face competition in the global market that non-traded, local-serving industries (retail trade or personal services) do not, their success is riskier. “The health of U.S. traded sector enterprises in industries such as semiconductors, software, machine tools, or automobiles-all far more exposed to global competition than local-serving firms and industries-cannot be taken for granted.” If a company like Boeing loses market share to Airbus, thousands of domestic jobs at Boeing, its suppliers, and the companies at which their employees spend money will be lost. In contrast, a local grocery store may compete for business with other supermarkets, but it is not threatened by international competition. If Safeway loses market share to Wal-Mart, the jobs remain in the United States. Ezell and Atkinson state, “The fact that the U.S. traded sector has...