'Made in America' More Attractive to Manufacturers

By: Veronique Dupont, Agence France Presse, GMA News Watch out China and Canada, “Made in America” has an attractive ring to it these days. Four years after the height of the financial crisis, marked by a drastic drop in salaries, the United States is again finding favor among manufacturers. Out on the campaign trail ahead of the November 6 elections, President Barack Obama has picked up on the point to convince voters that the US economy is back on track. “After years of undercutting the competition, now it’s getting more expensive to do business in places like China,” he said in May, adding that both wages and shipping costs were up in the single-party state known for attracting foreign firms that often subsequently cut jobs back home. “American workers are getting more and more efficient. Companies located here are becoming more and more competitive. So for a lot of businesses, it’s now starting to make sense to bring jobs back home.” According to a Boston Consulting Group survey and referenced by Obama, 48 percent of executives at companies with $10 billion or more in revenues said they plan to bring back production to the United States from China — or are considering it. Officials at 106 firms from a range of industries responded to the poll, released in April. “Companies are realizing that the economics of manufacturing are swinging in favor of the US, for goods to be sold both at home and to major export markets,” said Harold Sirkin, a BCG senior partner. “This trend is likely to accelerate starting around 2015.” With weeks to go before balloting begins, both the president and his Republican rival Mitt Romney have taken aim at China, with Obama seeking World Trade Organization action against Chinese auto subsidies. Romney has vowed a much tougher line on China if he wins, including declaring that China is manipulating its currency to make its exports artificially cheaper. Obama has renewed his charge that Romney, as a multimillionaire businessman at his private equity firm Bain Capital, was an early pioneer in advising American corporations to outsource blue collar jobs to low wage economies overseas. Politics aside, the tendency to relocate is...

Small and Medium-Sized Manufacturers Project Strong Second Half 2012

By: Prime Advantage Prime Advantage, the leading buying consortium for midsized manufacturers, announced the findings of its tenth semi-annual Group Outlook Survey, revealing financial projections and top concerns of its Member companies for the second half of 2012. The majority of surveyed manufacturers report healthy revenue projections, strong hiring and capital spending plans. However, for a small portion of respondents these plans may see delays due to uncertainty about the results of the federal elections. Study Highlights Forty-eight percent of respondents expect to see their revenues increase from the first half of 2012 Overall increase in customer demand was named the primary reason for the revenue growth in 58 percent of responses The cost pressures from raw materials continue to lessen Midsized manufacturing companies expect to increase new hires at a greater rate in the second half of 2012, as compared to the same period in 2011 Healthcare costs have become the second highest cost pressure concern for manufacturers Strong Second Half Projected for Revenues and Capital Spending Companies are showing more optimism about revenues for the second half of 2012 as compared to several past periods: 48 percent of respondents expect their revenues to increase in the second half of 2012 as compared to 40 percent in 2H 2011, and 36 percent in 2H 2010. An overall increase in customer demand was named the primary reason for the revenue growth in 58% of cases, followed by the introduction of new product lines (32%). Capital spending is also set to increase for one-third of polled companies in the 2H 2012, an upward trend from a year ago, when only one-quarter of respondents budgeted an increase in capital spending. Employment Overall, 90 percent of polled companies plan to keep or increase the number of domestic employees, and 39 percent expect to fill open positions in 2012, which are higher rates when compared to the same period a year ago (35 percent). On average, more medium-sized manufacturing companies expect to hire in the second half of 2012 (39 percent) as compared to the same period in 2011 (36 percent). Cost Pressures: Raw Materials Decline, Healthcare Rises When asked to indicate the top three cost pressures causing...

Candidates Seek to Politicize Issues of China and Manufacturing

By: Jeremy W. Peters, The New York Times United States-China relations continue to surface as an issue on the campaign trail, particularly in battleground states like Ohio where manufacturing is a major force in the local economy. Now both President Obama and Mitt Romney are running television commercials that trade accusations over who is softer on China, and who is more to blame for sending American jobs there. The Romney campaign ad states: “Under Obama we’ve lost over half a million manufacturing jobs, and for the first time China is beating us. Seven times Obama could have stopped China’s cheating. Seven times he refused.” Then it cuts to Mr. Romney, who declares, “It’s time to stand up to the cheaters and make sure we protect jobs for the American people.” The announcer concludes, “Barack Obama: failing to stop cheating, failing American workers.” The Obama campaign ad, released a day after the Romney one first appeared, opens on an incredulous note. “Mitt Romney tough on China?” an announcer asks. “Romney’s companies were called pioneers in shipping U.S. manufacturing jobs overseas. He invested in firms that specialized in relocating jobs to low-wage countries like China. Even today part of Romney’s fortune is invested in China. Romney’s never stood up to China. All he’s done is send them our jobs.” Who is right? Mr. Romney’s first claim — that more than half a million manufacturing jobs have disappeared since Mr. Obama took office — is supported by data from the Bureau of Labor Statistics, which show manufacturing employment at 12.5 million in January 2009 and put it at just under 12 million as of August, a net loss because of job cuts during the recession. However, what the ad does not say is that manufacturers have actually added several hundred thousand jobs since early 2010, a bright spot in an otherwise dull economy. His second claim, regarding the “seven times Obama could have stopped China’s cheating,” refers to the Treasury Department’s repeated decisions — under both the Obama and George W. Bush administrations — to decline to label China a currency manipulator. Mr. Romney has said he would reverse that course, a position that has alarmed some...

Manufacturing Renaissance?

By: Charles Payne, Fox Business Trade data out this week point to the serious problem for manufacturing and the notion there has been a manufacturing renaissance. I realize President Obama said the world is buying American products because they’re the best, but what he didn’t say is that it’s smarter and cheaper to make a lot of things overseas. President Obama also didn’t mention he wants to punish the innovators, makers, and sellers of those great American products by hijacking their profits. Operatives for the administration are sending signals of plans to attack corporate profits generated abroad before they are repatriated to build a so-called infrastructure bank. Read: a pot of money for political donors and unions. The thing is, the dollar would have to crumble a lot more and a lot faster — as it probably eventually will — to make many products shipped from America more competitive in local economies around the world. This means American companies are at a disadvantage. When the global economy slows, Americans continue to buy imports, but our trading partners seem to put buying our stuff on hold. Case in point: in July, we imported a record $37.9 billion worth of stuff from China, establishing a $29.4 billion deficit. Then there’s the European Union, where our deficit exploded to $12.0 billion from $8.4 billion in June. Yes, these folks are broke, and it’s only going to get worse with punishing tax hikes. (Their banks will get healthier, but not their job market — sound familiar?) When I hear politicians talk about companies sending jobs abroad, while at the same time they don’t have the guts to force China to stop manipulating its currency, I want to laugh. But, I have to cry instead because this platform will be used to punish the most successful American companies. For the record, there has always been a global economy. The great news is these days we are positioned to take advantage of this global economy, but mostly by producing products near the customers. I fear a second term for this administration would seek to punish American companies under the guise of the greater good and the notion they didn’t build...

U.S. – China Trade Deficit Cost More than 2.1 Million Manufacturing Jobs

By: Michele Nash-Hoff, Can American Manufacturing Be Saved On August 23rd, the Economic Policy Institute released a briefing paper, “The China Toll ─ Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state, written by Robert Scott. “Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9 percent) were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs lost or displaced between 2001 and 2011.” The growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment. When you take into account the multiplier effect of manufacturing jobs creating 3-4 other jobs, this explains why we have had a virtually jobless recovery since the end of the recession and why the unemployment rate has stayed so high for so long. The growing trade deficit between China and the United States since China entered the World Trade Organization in 2001 has had a disastrous effect on U.S. workers and the domestic economy. It has cost jobs in all 50 states, as well as the District of Columbia and Puerto Rico. “A major cause of the rapidly growing U.S. trade deficit with China is currency manipulation. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar.Instead, China has tightly pegged its currency to the U.S. dollar at a rate that encourages a large bilateral trade surplus with the United States.” China’s currency should have increased in value as its productivity increased, which would have created balanced trade. But, the yuan has remained artificially low as China acquired dollars and other foreign exchange reserves to further depress the value of its own currency. The paper explains “To depress the value of its own currency, a government can sell its own currency and buy government securities such as U.S. Treasury bills, which increases its foreign reserves.” As a result of pressure for action on China’s currency manipulation, the Ryan-Murphy Currency Reform for Fair Trade Act (H.R. 2378) was approved by the House of Representatives on September...