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...

The Future of American Manufacturing – Is there Reason for Hope?

By: Michele Nash-Hoff, Can American Manufacturing Be Saved While the state of American manufacturing has been grim for the past decade, the “reshoring” trend and new technologies are making the outlook for the future of American manufacturing look brighter than it now appears. In the past few years, the key factors for returning manufacturing to America have been quality problems, rising labor costs, intellectual property theft, rising shipping costs, long lead times for product delivery from Asia, and the cost of inventory for the larger lots you have to buy from Asia to get the cheaper prices. Now, Harry Moser’s Total Cost of Ownership worksheet calculator is helping companies quantify the hidden costs of doing business offshore enabling more companies to make the decision to reshore manufacturing. According to Harry Moser, founder of the “Reshoring Initiative about 10% of companies nationwide are bringing manufacturing back to America from Asia. It is a pleasure to read frequent stories about even large companies such as Dow Chemicals, Caterpillar, GE, and Ford starting to move some manufacturing back to the U.S. from China. “But rising costs and political pressure aren’t what’s going to rapidly change the equation.” according to Vivek Wadhwa, Vice President of Academics and Innovation at Singularity University. “The disruption will come from a set of technologies that are advancing at exponential rates and converging. These technologies include robotics, artificial intelligence (AI), 3D printing, and nanotechnology. These have been moving slowly so far, but are now beginning to advance exponentially just as computing does.” In the past, large American food product companies like General Mills and Kraft Foods, as well as the automotive industry, have been the biggest user of complex robotic systems. But, today’s robots are smaller and cheaper ─ they are really specialized electromechanical devices run by software and remote control designed to perform specific tasks in the manufacturing of products for a variety of industries. These robots are cost effective for lower production volume than those used in the food and automotive industry enabling more companies to utilize this technology. Artificial Intelligence (AI) is really the software that makes computers, robots, and even unmanned aircraft and space vehicles run in an “intelligent”...

Will Manufacturing Win?

By: Mark Shortt, Design-2-Part Many issues are at stake as the 2012 U.S. Presidential election approaches. Both candidates for President–the incumbent Pres. Barack Obama and the presumptive Republican nominee Mitt Romney–know that a healthy and growing U.S. manufacturing sector is vital to the success of the U.S. economy. But only time will tell whose leadership will better enable American manufacturers to thrive. No matter whom you’re supporting, the election will help set the stage for a good deal of political confrontation and, perhaps, compromise on many important policy issues over the next four years. For manufacturers, the question is not so much “Who will win the election?” as it is “Will manufacturing win?” The answer will depend not just on who’s elected President, but on the composition of the House of Representatives and the Senate. Most important, it will hinge on how well the two houses can work together to craft policies that will support manufacturers by lightening corporate tax burdens (especially for companies that are bringing manufacturing operations back to the U.S.), increasing the available pool of qualified workers, strengthening our nation’s resources for research, development, and innovation, and eliminating unfair international trade practices. But in order for manufacturing to win, both houses of Congress will need to work together more effectively to enact legislation that has been shown to have wide public support. An example is H.R. 639, the Currency Reform for Fair Trade Act, a bipartisan bill that would “crack down on Chinese currency manipulation by giving the United States the power to respond appropriately to unfairly subsidized exports from countries,” such as China, according to a statement released last September by the office of Senator Sherrod Brown (D-OH), who co-authored the Senate version of the bill with Senator Olympia Snowe (R-ME). The bill seeks to “amend title VII of the Tariff Act of 1930 to clarify that countervailing duties may be imposed to address subsidies relating to a fundamentally undervalued currency of any foreign country.” The bad news is that the bill, which has languished in the House since being introduced in February 2011, has only a “2% chance of being enacte,” according to GovTrack.us, an online tool for following legislation...

National Manufacturing Strategy? Stop Talking-Just Do It!

By: Michele Nash-Hoff, Can American Manufacturing Be Saved In the past three years, one business or government leader after another has proposed developing a national manufacturing strategy. For example, the Information Technology& Innovation Foundation (ITIF) released a report, “The Case for a National Manufacturing Strategy,” in April 2011 that builds the intellectual case for why the United States needs a serious national manufacturing strategy. The Alliance for American Manufacturing is a strong proponent of a national manufacturing strategy, and has repeatedly put forward a “Plan to Save Manufacturing,” calling for a national manufacturing strategy to reverse the decline in U.S. manufacturing and the good jobs that come with it. A bill to set up a process to develop a national manufacturing strategy even passed the House of Representatives in 2010 by a vote of 379 to 38, but died in the Senate. Now, a new bill, “The American Manufacturing Competitiveness Act” (HR-5865), co-sponsored by Illinois Reps. Dan Lipinski (D) and Adam Kinzinger (R), passed the House Energy and Commerce Committee on June 20, 2012 and was sent to the House as a whole for consideration. It is great to hear issues concerning U. S. manufacturing being discussed at this level, but it’s time to stop talking about developing a national manufacturing strategy and just do it. There is no assurance that this bill will not suffer the same fate as the similar 2010 bill because just 29% of all House bills reported favorably by committee in 2009–2010 were enacted. Four Democrats and six Republican signed on as co-sponsors of the bill while it was being considered in committee, and four Democrats and two Republicans have signed on as co-sponsors since then for a total of 18 co-sponsors. It will take many more Republican sponsors to ensure that it is brought to a full vote of the House this fall. The bill summary states, “H.R. 5865 would establish the American Manufacturing Competitiveness Board within the Department of Commerce to advise the President on issues affecting manufacturing in the United States. The board would be required to perform a comprehensive analysis of the nation’s manufacturing sector and, using results from the analysis, develop a strategy to...