The New American Divide: American way of life is fading…

The ideal of an ‘American way of life’ is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what’s cleaving America, and why.
By CHARLES MURRAYAmerica is coming apart. For most of our nation’s history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway. “The more opulent citizens take great care not to stand aloof from the people,” wrote Alexis de Tocqueville, the great chronicler of American democracy, in the 1830s. “On the contrary, they constantly keep on easy terms with the lower classes: They listen to them, they speak to them every day.”Americans love to see themselves this way. But there’s a problem: It’s not true anymore, and it has been progressively less true since the 1960s.
People are starting to notice the great divide. The tea party sees the aloofness in a political elite that thinks it knows best and orders the rest of America to fall in line. The Occupy movement sees it in an economic elite that lives in mansions and flies on private jets. Each is right about an aspect of the problem, but that problem is more pervasive than either political or economic inequality. What we now face is a problem of cultural inequality.When Americans used to brag about “the American way of life”—a phrase still in common use in 1960—they were talking about a civic culture that swept an extremely large proportion of Americans of all classes into its embrace. It was a culture encompassing shared experiences of daily life and shared assumptions about central American values involving marriage, honesty, hard work and religiosity.Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America’s core cultural institutions.To illustrate just how wide the gap has grown between the new upper class and the new lower class, let me start with the broader upper-middle and working classes from which they are drawn, using two fictional neighborhoods that I hereby label Belmont (after an archetypal upper-middle-class suburb near Boston) and Fishtown (after a neighborhood in Philadelphia that has been home to the white working class since the Revolution).

To be assigned to Belmont, the people in the statistical nationwide databases on which I am drawing must have at least a bachelor’s degree and work as a manager, physician, attorney, engineer, architect, scientist, college professor or content producer in the media. To be assigned to Fishtown, they must have no academic degree higher than a high-school diploma. If they work, it must be in a blue-collar job, a low-skill service job such as cashier, or a low-skill white-collar job such as mail clerk or receptionist.

People who qualify for my Belmont constitute about 20% of the white population of the U.S., ages 30 to 49. People who qualify for my Fishtown constitute about 30% of the white population of the U.S., ages 30 to 49.

I specify white, meaning non-Latino white, as a way of clarifying how broad and deep the cultural divisions in the U.S. have become. Cultural inequality is not grounded in race or ethnicity. I specify ages 30 to 49—what I call prime-age adults—to make it clear that these trends are not explained by changes in the ages of marriage or retirement.

In Belmont and Fishtown, here’s what happened to America’s common culture between 1960 and 2010.

Marriage: In 1960, extremely high proportions of whites in both Belmont and Fishtown were married—94% in Belmont and 84% in Fishtown. In the 1970s, those percentages declined about equally in both places. Then came the great divergence. In Belmont, marriage stabilized during the mid-1980s, standing at 83% in 2010. In Fishtown, however, marriage continued to slide; as of 2010, a minority (just 48%) were married. The gap in marriage between Belmont and Fishtown grew to 35 percentage points, from just 10.

Single parenthood: Another aspect of marriage—the percentage of children born to unmarried women—showed just as great a divergence. Though politicians and media eminences are too frightened to say so, nonmarital births are problematic. On just about any measure of development you can think of, children who are born to unmarried women fare worse than the children of divorce and far worse than children raised in intact families. This unwelcome reality persists even after controlling for the income and education of the parents.

In 1960, just 2% of all white births were nonmarital. When we first started recording the education level of mothers in 1970, 6% of births to white women with no more than a high-school education—women, that is, with a Fishtown education—were out of wedlock. By 2008, 44% were nonmarital. Among the college-educated women of Belmont, less than 6% of all births were out of wedlock as of 2008, up from 1% in 1970.

Industriousness: The norms for work and women were revolutionized after 1960, but the norm for men putatively has remained the same: Healthy men are supposed to work. In practice, though, that norm has eroded everywhere. In Fishtown, the change has been drastic. (To avoid conflating this phenomenon with the latest recession, I use data collected in March 2008 as the end point for the trends.)

The primary indicator of the erosion of industriousness in the working class is the increase of prime-age males with no more than a high school education who say they are not available for work—they are “out of the labor force.” That percentage went from a low of 3% in 1968 to 12% in 2008. Twelve percent may not sound like much until you think about the men we’re talking about: in the prime of their working lives, their 30s and 40s, when, according to hallowed American tradition, every American man is working or looking for work. Almost one out of eight now aren’t. Meanwhile, not much has changed among males with college educations. Only 3% were out of the labor force in 2008.

There’s also been a notable change in the rates of less-than-full-time work. Of the men in Fishtown who had jobs, 10% worked fewer than 40 hours a week in 1960, a figure that grew to 20% by 2008. In Belmont, the number rose from 9% in 1960 to 12% in 2008.
Crime: The surge in crime that began in the mid-1960s and continued through the 1980s left Belmont almost untouched and ravaged Fishtown. From 1960 to 1995, the violent crime rate in Fishtown more than sextupled while remaining nearly flat in Belmont. The reductions in crime since the mid-1990s that have benefited the nation as a whole have been smaller in Fishtown, leaving it today with a violent crime rate that is still 4.7 times the 1960 rate.

Religiosity: Whatever your personal religious views, you need to realize that about half of American philanthropy, volunteering and associational memberships is directly church-related, and that religious Americans also account for much more nonreligious social capital than their secular neighbors. In that context, it is worrisome for the culture that the U.S. as a whole has become markedly more secular since 1960, and especially worrisome that Fish
town has become much more secular than Belmont. It runs against the prevailing narrative of secular elites versus a working class still clinging to religion, but the evidence from the General Social Survey, the most widely used database on American attitudes and values, does not leave much room for argument.

For example, suppose we define “de facto secular” as someone who either professes no religion at all or who attends a worship service no more than once a year. For the early GSS surveys conducted from 1972 to 1976, 29% of Belmont and 38% of Fishtown fell into that category. Over the next three decades, secularization did indeed grow in Belmont, from 29% in the 1970s to 40% in the GSS surveys taken from 2006 to 2010. But it grew even more in Fishtown, from 38% to 59%.

***It can be said without hyperbole that these divergences put Belmont and Fishtown into different cultures. But it’s not just the working class that’s moved; the upper middle class has pulled away in its own fashion, too.

If you were an executive living in Belmont in 1960, income inequality would have separated you from the construction worker in Fishtown, but remarkably little cultural inequality. You lived a more expensive life, but not a much different life. Your kitchen was bigger, but you didn’t use it to prepare yogurt and muesli for breakfast. Your television screen was bigger, but you and the construction worker watched a lot of the same shows (you didn’t have much choice). Your house might have had a den that the construction worker’s lacked, but it had no StairMaster or lap pool, nor any gadget to monitor your percentage of body fat. You both drank Bud, Miller, Schlitz or Pabst, and the phrase “boutique beer” never crossed your lips. You probably both smoked. If you didn’t, you did not glare contemptuously at people who did.

When you went on vacation, you both probably took the family to the seashore or on a fishing trip, and neither involved hotels with five stars. If you had ever vacationed outside the U.S. (and you probably hadn’t), it was a one-time trip to Europe, where you saw eight cities in 14 days—not one of the two or three trips abroad you now take every year for business, conferences or eco-vacations in the cloud forests of Costa Rica.

You both lived in neighborhoods where the majority of people had only high-school diplomas—and that might well have included you. The people around you who did have college degrees had almost invariably gotten them at state universities or small religious colleges mostly peopled by students who were the first generation of their families to attend college. Except in academia, investment banking, a few foundations, the CIA and the State Department, you were unlikely to run into a graduate of Harvard, Princeton or Yale.

Even the income inequality that separated you from the construction worker was likely to be new to your adulthood. The odds are good that your parents had been in the working class or middle class, that their income had not been much different from the construction worker’s, that they had lived in communities much like his, and that the texture of the construction worker’s life was recognizable to you from your own childhood.

Taken separately, the differences in lifestyle that now separate Belmont from Fishtown are not sinister, but those quirks of the upper-middle class that I mentioned—the yogurt and muesli and the rest—are part of a mosaic of distinctive practices that have developed in Belmont. These have to do with the food Belmonters eat, their drinking habits, the ages at which they marry and have children, the books they read (and their number), the television shows and movies they watch (and the hours spent on them), the humor they enjoy, the way they take care of their bodies, the way they decorate their homes, their leisure activities, their work environments and their child-raising practices. Together, they have engendered cultural separation.

It gets worse. A subset of Belmont consists of those who have risen to the top of American society. They run the country, meaning that they are responsible for the films and television shows you watch, the news you see and read, the fortunes of the nation’s corporations and financial institutions, and the jurisprudence, legislation and regulations produced by government. They are the new upper class, even more detached from the lives of the great majority of Americans than the people of Belmont—not just socially but spatially as well. The members of this elite have increasingly sorted themselves into hyper-wealthy and hyper-elite ZIP Codes that I call the SuperZIPs.

In 1960, America already had the equivalent of SuperZIPs in the form of famously elite neighborhoods—places like the Upper East Side of New York, Philadelphia’s Main Line, the North Shore of Chicago and Beverly Hills. But despite their prestige, the people in them weren’t uniformly wealthy or even affluent. Across 14 of the most elite places to live in 1960, the median family income wasn’t close to affluence. It was just $84,000 (in today’s purchasing power). Only one in four adults in those elite communities had a college degree.

By 2000, that diversity had dwindled. Median family income had doubled, to $163,000 in the same elite ZIP Codes. The percentage of adults with B.A.s rose to 67% from 26%. And it’s not just that elite neighborhoods became more homogeneously affluent and highly educated—they also formed larger and larger clusters.

If you are invited to a dinner party by one of Washington’s power elite, the odds are high that you will be going to a home in Georgetown, the rest of Northwest D.C., Chevy Chase, Bethesda, Potomac or McLean, comprising 13 adjacent ZIP Codes in all. If you rank all the ZIP Codes in the country on an index of education and income and group them by percentiles, you will find that 11 of these 13 D.C.-area ZIP Codes are in the 99th percentile and the other two in the 98th. Ten of them are in the top half of the 99th percentile.

Similarly large clusters of SuperZIPs can be found around New York City, Los Angeles, the San Francisco-San Jose corridor, Boston and a few of the nation’s other largest cities. Because running major institutions in this country usually means living near one of these cities, it works out that the nation’s power elite does in fact live in a world that is far more culturally rarefied and isolated than the world of the power elite in 1960.

And the isolation is only going to get worse. Increasingly, the people who run the country were born into that world. Unlike the typical member of the elite in 1960, they have never known anything but the new upper-class culture. We are now seeing more and more third-generation members of the elite. Not even their grandparents have been able to give them a window into life in the rest of America.

***Why have these new lower and upper classes emerged? For explaining the formation of the new lower class, the easy explanations from the left don’t withstand scrutiny. It’s not that white working class males can no longer make a “family wage” that enables them to marry. The average male employed in a working-class occupation earned as much in 2010 as he did in 1960. It’s not that a bad job market led discouraged men to drop out of the labor force. Labor-force dropout increased just as fast during the boom years of the 1980s, 1990s and 2000s as it did during bad years.

As I’ve argued in much of my previous work, I think that the reforms of the 1960s jump-started the deterioration. Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of.

But, for practical purposes, understanding why the new lower class got started isn’t especially important. Once
the deterioration was under way, a self-reinforcing loop took hold as traditionally powerful social norms broke down. Because the process has become self-reinforcing, repealing the reforms of the 1960s (something that’s not going to happen) would change the trends slowly at best.

Meanwhile, the formation of the new upper class has been driven by forces that are nobody’s fault and resist manipulation. The economic value of brains in the marketplace will continue to increase no matter what, and the most successful of each generation will tend to marry each other no matter what. As a result, the most successful Americans will continue to trend toward consolidation and isolation as a class. Changes in marginal tax rates on the wealthy won’t make a difference. Increasing scholarships for working-class children won’t make a difference.

The only thing that can make a difference is the recognition among Americans of all classes that a problem of cultural inequality exists and that something has to be done about it. That “something” has nothing to do with new government programs or regulations. Public policy has certainly affected the culture, unfortunately, but unintended consequences have been as grimly inevitable for conservative social engineering as for liberal social engineering.

The “something” that I have in mind has to be defined in terms of individual American families acting in their own interests and the interests of their children. Doing that in Fishtown requires support from outside. There remains a core of civic virtue and involvement in working-class America that could make headway against its problems if the people who are trying to do the right things get the reinforcement they need—not in the form of government assistance, but in validation of the values and standards they continue to uphold. The best thing that the new upper class can do to provide that reinforcement is to drop its condescending “nonjudgmentalism.” Married, educated people who work hard and conscientiously raise their kids shouldn’t hesitate to voice their disapproval of those who defy these norms. When it comes to marriage and the work ethic, the new upper class must start preaching what it practices.

Changing life in the SuperZIPs requires that members of the new upper class rethink their priorities. Here are some propositions that might guide them: Life sequestered from anybody not like yourself tends to be self-limiting. Places to live in which the people around you have no problems that need cooperative solutions tend to be sterile. America outside the enclaves of the new upper class is still a wonderful place, filled with smart, interesting, entertaining people. If you’re not part of that America, you’ve stripped yourself of much of what makes being American special.

Such priorities can be expressed in any number of familiar decisions: the neighborhood where you buy your next home, the next school that you choose for your children, what you tell them about the value and virtues of physical labor and military service, whether you become an active member of a religious congregation (and what kind you choose) and whether you become involved in the life of your community at a more meaningful level than charity events.

Everyone in the new upper class has the monetary resources to make a wide variety of decisions that determine whether they engage themselves and their children in the rest of America or whether they isolate themselves from it. The only question is which they prefer to do.

That’s it? But where’s my five-point plan? We’re supposed to trust that large numbers of parents will spontaneously, voluntarily make the right choice for the country by making the right choice for themselves and their children?

Yes, we are, but I don’t think that’s naive. I see too many signs that the trends I’ve described are already worrying a lot of people. If enough Americans look unblinkingly at the nature of the problem, they’ll fix it. One family at a time. For their own sakes. That’s the American way.

———-
—Mr. Murray is the W.H. Brady Scholar at the American Enterprise Institute. 
His new book, “Coming Apart: The State of White America, 1960–2010” (Crown Forum) will be published on Jan. 31.

Repost from Wall Street Journal on January 22, 2012 

Luzerne County (PA) Manufacturer to Expand, Create 80 New Jobs

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HARRISBURG, Pa., April 12, 2012 /PRNewswire via COMTEX/ 


Governor Tom Corbett announced today that Certech Inc., a manufacturer of ceramic cores, will create 80 new jobs and retain 185 positions through consolidating an out-of-state operation to its Luzerne County facility.”My administration is committed to creating a business climate that encourages companies like Certech to continue growing and creating jobs in Pennsylvania,” Corbett said. “This was a competitive project that could have relocated to another location. Our economic development efforts helped to keep 185 jobs in Luzerne County and create 80 new jobs.”

The company will close an existing out-of-state facility and consolidate its molded ceramic component operations into its 63,000-square-foot facility in Hanover Township. Certech will also purchase new equipment and train its new employees at the facility.Certech Inc. received a $346,000 funding offer from the Department of Community and Economic Development, including $160,000 in job creation tax credits, $36,000 in job training assistance and a $150,000 Pennsylvania First grant.

“The Certech Facility in Wilkes-Barre has one of the most efficient and experienced teams in North America,” said Mike Kuzdzal, vice president and general manager of Certech North America. “As we continue to look for opportunities to improve our customer service levels and offer the best technical and most competitive products to the marketplace, it was a logical decision for us to move work into and create jobs for this site. The Pennsylvania government agencies we worked with to make this happen were extremely helpful and also focused on the growth of this facility.”

The project was coordinated by the Governor’s Action Team, a group of economic development professionals who work directly with businesses that are considering locating or expanding in Pennsylvania. The Governor’s Action Team worked with the Greater Wilkes-Barre Chamber of Business and Industry to assist Certech’s efforts to expand.

“We are thrilled by Certech’s decision to expand its Hanover Industrial Estates manufacturing facility,” said Larry Newman, vice president of the Greater Wilkes-Barre Chamber of Business & Industry. “It is very good news, not just because this project brings so many new quality jobs to the Wilkes-Barre area, but also because of what Certech’s investment says about Pennsylvania’s ongoing competitiveness as a manufacturing location.”

Certech Inc., a wholly owned division of Morgan Technical Ceramics and the Morgan Crucible Company, manufactures a broad line of complex injection-molded ceramic components. The components are used during the investment casting of turbine engine blades and vanes for aircraft and power generation, aircraft hardware, pumps, valves and sporting goods.

For more information on Certech Inc., visit www.mtccertech.com .

For more information on the Governor’s Action Team and other economic development initiatives in Pennsylvania, visit www.newPA.com or call 1-866-466-3972.

Media contacts: Kelli Roberts, Governor’s Office; 717-783-1116Steven Kratz, DCED; 717-783-1132

SOURCE Pennsylvania Office of the Governor

The Return of 'Made in America'

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4/11/2012 | Written By Anthony Mirhaydari, MSN Money


For all our problems, the stage is set for a renaissance of US manufacturing. That’s largely because our dollars are worth less and our pay is shrinking. 

Clearly, something’s still wrong with the economy. By the metrics that matter to most people, the Great Recession has not ended. Employment, retail sales, industrial production, home prices, most of the stock market and real incomes are all below their 2007 peaks. Food stamp usage is at a record high and rising.

But something’s going right, too. And I want to focus on that this week.

American competitiveness is back, albeit largely because of the pain we’ve endured. Our dollars are worth less, and real wages are lower. Corporations are responding, with new factories springing up and manufacturing jobs blooming like flowers welcoming the spring. Overall, the U.S. has added nearly 500,000 manufacturing jobs since the beginning of 2010 — the first period of significant growth since the late 1990s.

Meanwhile, the costs of producing goods overseas, and getting them here, are rising. Workers in places like China are demanding more, and oil prices make shipping costlier.

Experts say these trends are likely to continue.

Bank of America Merrill Lynch researcher John Inch wrote in a recent note to clients that the “U.S. economy is in the early stages of a long-term manufacturing renaissance.” Analysts at the Boston Consulting Group add that rising wages and other forces have steadily eroded China’s “once-overwhelming cost advantage as an export platform for North America.”

Thanks to higher U.S. worker productivity, as well as supply chain, cheap energy (natural gas) and logistical advantages, the BCG team says that by around 2015 “it may start to be more economical to manufacture many good in the U.S.”

In short, we could be on the cusp of revival of “Made in America,” with workers paid good wages for building things again. And for the millions in the army of the unemployed, it can’t come soon enough.

Silver lining to storm clouds?Don’t get me wrong. Our problems still run deep, and I’m not saying happy days are here again; I’m merely pointing out one of the few silver linings to be found.

We’ve long been too reliant on credit to supplement stagnant wages — and that’s left the West with an $8 trillion debt hole, according to Credit Suisse calculations. This fueled two bubbles and a financial crisis, and it resulted in the pitiful “recovery” we’re in now.

And so far, if the economy is reviving, most workers aren’t sharing in it. Real, inflation-adjusted wages have fallen in three of the past four months. This has never happened outside recession before. So it’s very possible we’re following Europe into the depths of a new downturn.

Last September, I argued that “the real recession never ended” and that, in reality, it started a decade or more ago as labor participation peaked in the late 1990s. We’ve been sliding lower ever since, trying to compensate for a lack of high-quality jobs and stagnant pay, with voodoo stimulus efforts out of Washington and an extreme, inflation-igniting easy-money policy from the Federal Reserve.

The core problem has been a hollowing-out of America’s manufacturing base because of increased globalization, the manipulative trade policies of China and others, and rapid technological change.

Washington, of course, hasn’t done anything about trade or jobs (except talk, of course). But the U.S. economy may find a way out of the hole anyway.

The depth of the problemBefore moving on, it’s worth remembering that something similar has happened before.

In many respects, the current situation resembles the Gilded Age of the late 1800s and the Long Depression, a global downturn that lasted from the 1870s through the 1890s. Replace the robber barons with hedge-fund managers and multinational CEOs, and the agitation over the Free Silver Movement with the Tea Party and the debate over the Federal Reserve’s stimulus efforts, and the similarities are striking.

The downturn was preceded by a period of global economic integration as steam power, the telegraph and railroads made the world smaller. Workers lost jobs to technology and foreign competition. The banking system was rocked by the panics of 1873, 1884 and 1893, driven by real-estate bubbles and stock speculation.

Our current role was played by the United Kingdom, an aging sovereign struggling to maintain its role as the world’s superpower. The role of the upstart United States is now played by vigorous up-and-comers like China and India. Check out this excerpt from A.E. Musson’s “The Great Depression in Britain, 1873-1896: A Reappraisal“:

“Britain was losing her technological lead; she was failing to modernize her plant, to develop new processes, or to modify her industrial structure with the same rapidity as Germany and the United States — owing to conservatism, the heavy cost of replacing old plant, and deficiencies in technical education.”

In other words, the British got lazy, making them vulnerable. We have the same problem now, and I outlined in “Are American workers getting lazy?

The other part of today’s problem is that America’s free-trade policies put U.S. workers at a disadvantage, because trade partners aren’t playing fair. Beijing actively manages its currency’s exchange rate — accumulating trillions of dollars in reserves in the process — in an effort to ensure the country’s export-oriented growth isn’t threatened.
In this environment, research by the National Bureau of Economic Research shows that our economy will suffer if we don’t erect defensive trade barriers and tariffs.

Musson wrote that there was little doubt that a stagnation of British exports was “one of the most critical aspects” of the downturn and that aggression by trade partners was a primary cause. It’s the same for the United States today.

He writes: “Foreign trusts also adopted a vigorous policy of ‘pushing’ their goods abroad . . . while foreign industry and trade were greatly assisted by protective tariffs, export bounties, ‘drawbacks,’ and special low rates of rail transport. British business, on the other hand, had no such fiscal protection and assistance in this Free Trade era.”The result was a rise in calls for reciprocity and “fair trade.” It was argued that for Britain, as for the United States now, it would be ruinous to remain an open market when competitors were strongly protectionist. The result was a swing toward protectionism. Nothing much has been done on this front yet, but both presumptive GOP presidential candidate Mitt Romney and President Barack Obama have criticized China’s trade policies.

The tide is turningUnless the people rise up and demand change, I don’t believe the White House and Congress will do anything about our trade policies. Free trade and labor arbitrage have been very good for big business, pushing corporate profits
to record highs while average Americans struggle to fill their cars with gasoline.

Well-paid lobbyists will ensure that any anti-trade, anti-China legislation is dead on arrival to Congress. (Romney has promised to label China a currency manipulator, setting the stage for countervailing duties on Chinese goods. But legislation to do the same thing, which passed the Democratic-controlled Senate, has stalled in the Republican-controlled House.)

Fortunately, years of pain for American workers are bringing about a respite despite Washington’s recalcitrance.

The wage differentialConsider this: Back in 2000, in the twilight of the tech boom, factory wages in China averaged just 52 cents an hour — a mere 3% of what the average U.S. factory worker earned. In the years since, Chinese wages and benefits have jumped by double digits annually, with an average increase of 19% from 2005 to 2010.

With China’s workforce now peaking and labor shortages already developing in some of the coastal provinces, labor disputes and strikes — like the kind seen recently at factories supplying products as varied as flat-panel displays, auto parts and women’s lingerie — will surely become more common.

Beijing, mindful of the need to reorient China’s economy toward domestic consumption in the interests of sustainable growth, is becoming increasingly supportive of worker rights. Witness the recent regulatory spat over working conditions at Foxconn, the main supplier for Apple. Because of this, BCG anticipates further wage increases of 18% per year through 2015. By then, average pay in the Yangtze River Delta, the beating heart of China’s high-tech export machine, is expected to reach $6.31 per hour.

Here at home, fully loaded costs of U.S. production rose by less than 4% annually from 2005 to 2010 as labor unions became more flexible. Factoring in higher U.S. labor productivity, those Yangtze River Delta wages are likely to exceed 60% of U.S. manufacturing labor costs. After also factoring in favorable tax treatments for new factories, especially in Southern, nonunion U.S. states, the gap will be even smaller.

Plus, one must consider shipping expense, added wait times, and the plethora of hidden risks and costs of operating an extended global supply gain. China’s cost advantage won’t add up anymore.

Nor are other low-cost places like Vietnam and Indonesia suitable replacements, since they lack the infrastructure, talent, supply networks and productivity that have made China so attractive. For many, returning to the land of Stars and Stripes will be the best choice.

The impact on the economy will be “significant,” according to the BCG team. It identified seven industry groups — responsible for $200 billion in imports from China annually — for which rising costs in China will likely prompt the return of “Made in USA.” Examples include furniture, appliances, fabricated metals, machinery, transportation equipment, and plastics and rubber goods. Production of other items, such as apparel, textiles, footwear and computers, is expected to remain offshore.

What will this mean? Take a look at the chart below, showing an uptick in manufacturing jobs after a long decline.

Overall, relocation of manufacturing from China, combined with increased export competitiveness out of the United States to Europe and other developed markets, could create up to 3 million new jobs, cut the unemployment rate by 2% and lower the non-oil trade deficit by up to 35% over the next three years. Any reduction in the trade deficit is a direct addition to growth of gross domestic product.

Examples abound, though many of the companies are relatively small.

ET Water Systems, which had made irrigation controls in Dalian, China since 2002, has moved production and assembly to San Jose, Calif. High-end cookware maker All-Clad Metalcrafters is bringing lid production back to the U.S. from China. AmFor Electronics now enjoys lower delivery times and ease of design change after relocating wire-harness production from China and Mexico to Portland, Ore.

While we have a long road to travel to get back to where we were, at least we’re moving in the right direction. Things could be accelerated by focusing on America’s dilapidated infrastructure, encouraging domestic investment in new productive capital with permanent tax credits, reforming health care and education to increase productivity and lower benefit costs, and fingering China for what it is: a blatant mercantilist.

At the time of publication, Anthony Mirhaydari did not own or control shares of any company mentioned in this column in his personal portfolio.

Which Logo Would You Choose for The Made in America Movement?

Last week we asked if there was anyone interested in donating their time and/or skills to The Made in America Movement.Santi Acosta from SantiDesign came forward and donated his time.  He offered to help us come up with a LOGO for our Facebook page as well as our website.Below are the samples he came up with!
We loved all the sample designs, but could not decide on one.
So we are asking you, our loyal followers!We have created two (2) polls so that you may choose your favorite!
We have our favorites!!!  Let’s hear what yours are!

Thank you for all your help, our loyal constituency!!!

Thank you, SantiDesign, for coming to our rescue!  
Check out their work. They are amazing at their craft.

Polls close Friday, April 13th at midnight.  (Yes, folks, Friday the 13th.)
Poll results will be announced Saturday, April 14th in the afternoon.

Please Help The Made in America Movement choose a logo!

Gestamp Making $100 Million Investment in South Charleston Stamping Plant

PictureGestamp Making $100 Million Investment in South Charleston Stamping Plant 

South Charleston Mayor Frank Mullens, left, introduces Gov. Earl Ray Tomblin in front of the former Charleston Stamping & Manufacturing plant where the Governor announced that automotive part manufacturer Gestamp will invest a minimum of $100 million and create 400 to 700 jobs. Also on hand were all three Kanawha County commissioners.

by George Hohmann
Daily Mail Business EditorCHARLESTON, W.Va. — Gov. Earl Ray Tomblin announced that Gestamp, a Spanish automotive company, will re-open the South Charleston stamping plant, investing a minimum of $100 million and eventually creating an estimated 700 jobs.

Tomblin’s announcement provoked a standing ovation from the approximately 75 state, county and local leaders gathered Tuesday afternoon in the stamping plant’s parking lot.

Tomblin said Gestamp’s decision to locate in South Charleston “demonstrates what a willingness to work together” can accomplish. He said building owner Ray Park, the state, county and local leaders and his economic development team “have taken what was once a prospect and made it a reality.”

State Secretary of Commerce Keith Burdette said Park built a long-term relationship with Gestamp Chief Executive Officer Jeff Wilson and one day they were talking about some of the equipment in the plant.Burdette said Gestamp’s site selection consultant had already been talking to others about the company’s need for a plant. “We were the last guys at the dance,” he said.

South Charleston Mayor Frank Mullens said it is his understanding that Gestamp was originally looking at sites in five states. “Then it was West Virginia, Kentucky and Ohio,” he said. “And then it was Ohio and West Virginia.”

Burdette said the deal discussions developed over 30 days and quickly came together in about 10 days.

“I can tell you we wouldn’t have been in this game without a facility like this,” Burdette said. The stamping plant has been vacant for several years. Park has used the period to completely refurbish the plant inside and out. “You can eat off the floor,” Burdette said. “The equipment is virtually ‘out of the box.'”

The plant’s superb condition is important because Gestamp wants to begin stamping auto parts in South Charleston by late summer or early fall, Burdette said.

Kanawha Commission President Kent Carper said, “The difference between West Virginia and Ohio was they (Park and the state) invested and the company can start on day one.”

Tomblin said he toured the plant with Park last Thursday. He said Park missed Tuesday’s announcement because he already had planned a vacation.

Burdette said Wilson missed the announcement because he was in either Singapore or Beijing on Gestamp business.

Mayor Mullens said the city business and occupation tax incentive he proposed — and the South Charleston City Council approved on first reading Thursday — “was huge, because municipalities in Ohio don’t have a business and occupation tax.”

The proposed South Charleston tax break would require large manufacturers to pay the city’s business and occupation tax at the regular rate during the first four years they do business in the city. But manufacturers that meet employment and gross sales minimums would have the tax capped at $360,000 a year thereafter.

Mullens said Gestamp “wanted to know how much it would cost them to do business in this city and state vs. how much it would cost them to do business in that city and state.”
Without a cap, the business and occupation tax could fluctuate. South Charleston’s tax rate for manufacturers is 30 cents per $100 in gross sales.

“It’s a big day — an historic day for us,” Mullens said.

Burdette said the state has offered Gestamp incentives that include assistance with training through WorkForce West Virginia and the region’s community and technical colleges.

Also, the state has offered up to two forgivable loans to help the company defray the cost of moving equipment, he said. “They’ll start with a $20 million (production) line and their goal is to have five or six lines installed.

“I think they’ll ramp up employment to 175 to 200 within 12 to 18 months and they’ll have 400 to 500 employees in three to five years,” Burdette said.

The state has offered to screen job applicants through WorkForce West Virginia but details haven’t been worked out yet.

The employee pay scale will be “at market with about a 35 percent benefit,” Burdette said. In other words, if an employee were paid $100,000 a year, he or she would receive that amount plus benefits worth about $35,000.

Burdette said original discussions were that Gestamp would lease the plant for 20 years but he believes the final deal calls for a 12-year lease with an option to renew for 12 additional years.

Several years ago when now-Sen. Joe Manchin was governor, the state loaned $15 million to Park’s company. Park invested that money in the plant along with more than $20 million of his own funds. He added a multi-million-dollar line of robots and had the plant refurbished inside and out.

In a prepared statement, Manchin said, “This was a total partnership between private enterprise, state and local government. As governor at the time, I knew we needed to make the investments in the site that would attract a quality employer like Gestamp to South Charleston, and that is exactly what has happened.

“I thank my dear friend, Ray Park, for his vision and belief in our state and its workforce. Ray came to me as governor with his plan to transform the South Charleston site into a world class, state-of-the-art facility — the perfect marriage of technology and our skilled workforce. I made the decision the state would join in partnership by investing $15 million — which I am happy to say has been paid back with interest — and the result of this investment, Ray’s investment, and his confidence in our state as a premier site that has attracted international investment and will put hundreds of people to work.

“These are the types of investments we must continue to make – and the partnerships we must continue to form – to keep our state and our economy competitive,” Manchin said. “I applaud the efforts of Gov. Earl Ray Tomblin, as well as the wisdom and courage of Mayor Frank Mullins and the South Charleston City Council in making today’s announcement possible.”

Sen. Jay Rockefeller said in a prepared statement, “”Here we are again, seeing more good news for our manufacturing sector in West Virginia.

“I am so excited about this announcement and commend South Charleston Mayor Frank Mullens, South Charleston City Council, and my good friend Ray Park for their hard work aimed at attracting a large manufacturer back to the Kanawha Valley.

“I’ve been involved with this stamping plant since my days as governor and I have stood beside the workers through good and bad times during the Mayflower and Union Stamping days,” Rockefeller said. “I couldn’t be happier that it’s on the way to re-opening and adding hundreds of jobs for the Kanawha Valley.”

U.S. Manufacturing, Household Spending Probably Rose

A pre-production 2013 Dodge Dart inside the manufacturing engineering metrology lab, at the Chrysler assembly plant in Belvidere, Illinois. Photo Credit: Daniel Acker/Bloomberg

 

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By Lorraine Woellert
To contact the reporters on this story: Lorraine Woellert in Washington at [email protected]
To contact the editor responsible for this story: Christopher Wellisz in Washington at [email protected]

Manufacturing probably picked up in the U.S. in March, showing it is weathering a slowdown in global growth, economists said before a report today.The Institute for Supply Management’s factory index climbed to 53 from 52.4 in February, according to a median estimate of 55 economists surveyed by Bloomberg News. Readings greater than 50 signal growth. Construction spending rose in February, other data may show.
“Manufacturers are benefiting from a variety of positive catalysts, including the need to replace a fleet of motor vehicles,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “And we just haven’t got back to the previous peak in inventory that should benefit the sector and the national economy for some time.”Increased auto sales, sustained corporate purchases of equipment and inventory rebuilding are underpinning the industry that led the U.S. out of the recession more than two years ago. At the same time, less demand from overseas customers remains a risk for manufacturers, which account for about 12 percent of the economy.The Tempe, Arizona-based ISM’s manufacturing report is due at 10 a.m. New York time. Estimates ranged from 51.7 to 54.5. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

Also at 10 a.m., the Commerce Department will release data on construction spending. Economists project a 0.7 percent gain after a 0.1 percent January decrease, according to the Bloomberg survey median. Forecasts ranged from a drop of 0.6 percent to an increase of 1.5 percent.

Regional DataRegional reports reinforce the strength of manufacturing. New York-area factories grew in March at the fastest rate since June 2010 and manufacturing in the Philadelphia region expanded the most in almost a year, figures from the Federal Reserve showed.

While companies are investing in new equipment, a stronger labor market is giving households the means to purchase big- ticket items, benefiting companies like motor-home makerWinnebago Industries Inc. (WGO)

“We’re beginning to see positive signs that the economy is improving,” Randy Potts, chief executive officer of the Forest City, Iowa-based company, said on a March 15 conference call. “Consumer confidence has been trending higher and the jobless rate is improving.”

Manufacturing shares have outperformed the market. The Standard & Poor’s Supercomposite Industrial Machinery Index (S15MACH), which includes Caterpillar Inc. and Deere & Co., advanced 16 percent since the end of 2011 through March 30, compared with a 12 percent increase in the broader S&P 500.

Auto SalesLight-vehicle sales in March, set for release tomorrow, may have run at a 14.6 million seasonally adjusted annual rate, the average estimate of analysts surveyed by Bloomberg. It would cap the strongest quarter since the first three months of 2008, according to Ward’s Automotive Group statistics.

A report last week showed orders for non-defense capital goods excluding aircraft — a proxy for business investment in items such as computers, engines and communications gear — increased 1.2 percent in February.

Business spending on equipment and software climbed at a 7.5 percent pace in the final three months of 2011 after a 16.2 percent surge in the prior quarter, according to the latest Commerce Department data on gross domestic product.

The growth helps explain why companies like Deere & Co. (DE) are expanding. The world’s largest maker of agricultural equipment said March 1 that it would invest $70 million to expand tractor production in Waterloo, Iowa.

Fed’s BernankeFederal Reserve Chairman Ben S. Bernanke said last week that while he was encouraged by the recent decline in the unemployment rate, a further reduction will probably require a quicker expansion of business production and consumer demand, which “can be supported by continued accommodative policies,” he said.

Recent “better news” on the U.S. economy has also included strength in manufacturing, Bernanke said. The improvement could contribute to higher consumer confidence and lead to a self-sustaining recovery, he said. “We haven’t seen that in a persuasive way yet,” Bernanke said in a speech in Arlington, Virginia.

The Great Reversal: Playing the U.S. Manufacturing Boom

Picture Playing the U.S. Manufacturing Boom 

Written by: Jack Hough for The Wall Street Journal
Jack Hough is a columnist at SmartMoney.com
Email: [email protected] 

Investors who have favored emerging markets like China in recent years should pay attention to another growing manufacturing center. It boasts plenty of skilled workers; cheap and abundant energy; stable institutions; and a large middle class that likes to shop.

It is the U.S., where a long industrial decline might be in reverse.


In March, manufacturing expanded for the 32nd straight month, and contributed 37,000 of the 120,000 U.S. jobs added, the government reported. That’s partly because of the ongoing recovery from the Great Recession. But the economy is also changing.

Manufacturing’s share of gross domestic product plunged to 11% in 2009 from 26% in 1947, according to the Commerce Department. In 2010, it rose to 11.7%—the biggest yearly gain in more than 50 years. The 2011 numbers will be released on April 26, and the anecdotal evidence is promising; companies like Caterpillar,CAT -2.17% Ford Motor F -2.00% and NCR say they are moving some operations back to the U.S.

Three trends suggest America’s “manufacturing renaissance” is just getting started, says Neil Dutta, U.S. economist at Bank of America Merrill Lynch. First, the cost advantages of outsourcing factory work are narrowing. Emerging market wages, while still much lower than U.S. wages, are rising, and high oil prices have made shipping more expensive. That is expanding the range of goods U.S. factories can produce at competitive prices (think sophisticated machines, not toys).

Second, a weakening dollar makes U.S. goods more attractive to foreign buyers. The dollar has fallen by nearly one-third over the past decade against a basket of currencies including the euro, British pound and yen.

Third, energy production is booming in the U.S., and domestic natural-gas prices have recently plunged. That gives an edge to U.S. producers of fabricated steel, transportation equipment, machinery and chemicals, which use natural gas extensively, according to a recent report from Citigroup C -2.36% .

Of course, a sudden rise in the dollar or a spike in natural-gas prices or wages could slow U.S. manufacturing gains. But for now, at least, that scenario appears unlikely. Wall Street expects earnings for the S&P 500 industrial sector to rise 13% this year, versus 9% for the broader index.

There are several ways to invest in the U.S. manufacturing resurgence. An index fund that tracks the Standard & Poor’s 500-stock index has a 10.6% weighting for industrials. Investors should try to increase their allocations to about 16%, says Chuck Severson, a portfolio manager at Baird Investment Management.

Mr. Severson prefers U.S. companies that supply manufacturers, because they stand to gain from a broad rise in factory activity. His favorites include Danaher, a conglomerate with an industrial technology division; Roper Industries, whose pumps and valves are used in factories and refineries; and industrial suppliers W.W. Grainer and Fastenal.

BofA’s Mr. Dutta, meanwhile, favors U.S. companies whose goods and services are used to automate and monitor factories. Examples include Rockwell Automation and Emerson Electric.

U.S. Steel and Nucor are the largest U.S. steelmakers, and analysts say both can reduce their domestic production costs by switching from coal to natural gas where possible.

Jerry Swank, founder of Swank Capital, a Dallas investment firm specializing in energy, says U.S. chemical makers such as Dow Chemical and DuPont should profit from turning natural-gas liquids into materials used in fabrics, pipes, food packaging and other items.

Exchange-traded funds also offer easy exposure, notes Jeff Sica, president of Sica Wealth Management in Morristown, N.J. Vanguard Industrials and iShares Dow Jones U.S. Industrial Sector cost $19 and $47 a year per $10,000 invested, respectively, plus trading commissions. Both count General Electric as GE -1.49% their largest holding. The Guggenheim S&P 500 Equal Weight Industrials is more spread out among smaller companies. It costs $50 a year per $10,000 invested, plus trading commissions.

When it comes to U.S. manufacturing, says Kristina Hooper, head of portfolio strategies at Allianz Global Investors, “It’s time to stop looking in the rearview mirror and start looking ahead.”

3 Reasons America Is Having A Major Manufacturing Renaissance

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Written by:  Sam Ro for Business Insider – Money Game
Contact:e-mail:[email protected]
Subscribe to his twitter feed

America is making stuff again.The Wall Street Journal‘s Jack Hough wrote an article about the hot new idea economists are buzzing about: the American manufacturing boom.Hough spoke to Bank of America Merrill Lynch economist Neil Dutta who identified three trends that lay the foundation to a coming American manufacturing renaissance.

First, the cost advantages of outsourcing factory work are narrowing. Emerging market wages, while still much lower than U.S. wages, are rising, and high oil prices have made shipping more expensive. That is expanding the range of goods U.S. factories can produce at competitive prices (think sophisticated machines, not toys).Second, a weakening dollar makes U.S. goods more attractive to foreign buyers. The dollar has fallen by nearly one-third over the past decade against a basket of currencies including the euro, British pound and yen.Third, energy production is booming in the U.S., and domestic natural-gas prices have recently plunged. That gives an edge to U.S. producers of fabricated steel, transportation equipment, machinery and chemicals, which use natural gas extensively, according to a recent report from Citigroup.

Meanwhile, economist Tyler Cowen is out with a similarly-themed essay on America’s great export boom. He also cites three big bullish factors: Domestic energy, huge demand from growing emerging markets, and artificial intelligence that are helping to solve big manufacturing problems.

Bottom line: This is definitely a hot line of thinking across financial and academic circles.

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More Than 1 Million Manufacturing Jobs Could Be Created in USA if Americans Purchased More 'Made in USA' Goods – Economist Says

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By Teresa Dixon Murray, The Plain Dealer  If housing was growing now at the pace it was until 2006, unemployment would likely be 2 percentage points lower and economic growth would be 2 points higher.

And if Americans spent just $100 billion on U.S. goods instead of foreign goods – a gap that has widened the last few years – then that would create more than 1 million jobs in manufacturing in the United States.


Those are two of the sobering statistics cited Wednesday by renowned economist and author Robert Aliber, professor emeritus at the University of Chicago Booth School of Business. Aliber was one of three experts who participated in a 2012 Economic Outlook forum at the City Club in downtown Cleveland.Aliber noted that the annual trade deficit has increased by $300 billion in recent years. Each $1 billion means 12,500 manufacturing jobs. Each $100 billion means $1.25 million jobs.

As far as economic impact, that doesn’t even count what these people would be spending as part of everyday purchases, said Aliber, whose latest book, “Manias, Panics, and Crashes,” was selected as one of the best investment books by the Financial TimesWhile the national election later this year has included debate about all sorts of topics, Aliber said, “the central issue should be thinking about which presidential candidate has a plan to reduce the trade deficit in a realistic and sustainable way.”

Aliber was joined by Mark Schweitzer, senior vice president and director of research for the Federal Reserve Bank of Cleveland, and Charles Upton, professor emeritus of economics at Kent State University, who also taught at the University of Chicago and Rutgers University.

Schweitzer said the Federal Reserve is projecting economic growth of nearly 3 percent this year and about 3 percent next, with inflation remaining at low levels.

Upton, however, while he’s seeing some bright signs, said he has many fears about the future.

Near-term, he said, housing remains in disarray. Some estimates show that 29 percent of homeowners owe more than their homes are worth (although Upton said he thinks that’s a little high), and he believes foreclosures will remain a huge problem into next year. Economic recovery will be limited until housing settles down, he said.

Other worries Upton cited: many of those who are unemployed have skill sets that don’t match with demand, and many have skills that are no longer needed at the same levels. In addition, he fears what will happen when Social Security and Medicare run out of money.

Aliber agreed that the skills of the labor force remains a concern, saying there are 3 million to 4 million unemployed people that aren’t matched to demand. They will have to find jobs that pass less or will have to retire early, he said.

Despite all of that apparent gloom, Aliber said that housing is improving, consumer confidence is growing and the monthly jobs reports are consistently positive.

When asked about oil and gas costs, Upton said prices are likely to continue to increase, particularly as demand grows in countries like Brazil, Russia and China.

—–

To reach this Plain Dealer reporter:
[email protected],
On Twitter: @teresamurray
On Facebook: facebook.com/pdmoneymatters

More Than 1 Million Manufacturing Jobs Could Be Created in USA if Americans Purchased More ‘Made in USA’ Goods

Made in USA Making a Comeback – Furniture Company’s Revival Has Global Message

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LINCOLNTON, N.C. (AP) — When Bruce Cochrane’s family furniture company became an empty factory, he wouldn’t drive by the building, even though it was just a short ride from home. There were just too many memories of what was — and what he was sure would never be again.Five generations of Cochranes had been furniture makers, starting with his great-great grandfather, William, who built church pews in the 1850s. By the mid-1990s, though, the long, proud family tradition appeared to be at an end. Like so many other American industries, the furniture trade was moving to China, land of cheap labor.

Cochrane headed there, too, becoming a consultant to furniture makers there, making occasional trips to offer advice. Back in North Carolina, he saw globalization taking its toll. First, fewer and fewer workers in the plants. Then, shuttered factories. But it took a while to grasp the scope of the loss.”I didn’t give that a lot of thought at the time,” Cochrane says. “I was making so much money that I did not really dwell on the implications of what I was doing, of what other people were doing. … Later on, I saw how sad it was to see a $50 billion industry move offshore and all the thousands and thousands of jobs that were lost. And I was part of it.””That,” he says, “probably bothered me more than anything — seeing the jobs go away.”

More than three years after the factory closed its doors, Cochrane reopened them for a new venture, Lincolnton Furniture Co. Earlier this year, a small work force of about 55 — including several who’d toiled for his late father under the same roof — built the company’s first bedroom and dining room pieces, shipping them to stores with a flag-decorated “Made in America” tag.Lincolnton is part of a small but growing trend called “reshoring” — a reverse migration of U.S. manufacturers from the Far East (mostly China) to West. With rising labor and shipping costs in China, companies producing appliances, cookware, audio earphones, water heaters and other goods have decided it makes economic sense to move some (or all) of their operations back to U.S. soil.Cochrane knows he’s doing something risky, that some folks think he’s a bit crazy and believe the furniture business in the U.S. is mostly gone. He’s confident, though, this is a smart move, and not just because it feels good — which, by the way, it does.

“To do something like this HAS to be a business decision,” he says, “but it is emotional and it is sentimental to be able to come back and make something again and to impact people in such a positive way.”

What happens in the cavernous factory on Cochrane Road could bring economic security to workers in a state that, by one estimate, has hemorrhaged tens of thousands of jobs to China in the last decade.

But what happens here could also offer larger lessons about U.S. workers in a global market, the appetite for American-made goods and the future of an industry decimated by foreign competition.

___

Bruce Cochrane was in China, 8,000 miles away, when he first began thinking about reviving the family’s business three years ago.

Over a decade of consulting, he’d witnessed dramatic changes in China’s economy. Manufacturing workers’ wages — 58 cents an hour, on average, in 2001 — were approaching $3. The once abundant labor supply was drying up. Shipping costs were higher because of rising fuel costs. Quality was suffering because of high turnover. It could take three or more months to get a piece of furniture after it was ordered — compared with 30 days or less in the U.S. The clear-cut advantages of manufacturing in China were disappearing.

That same point was made in a 2011 report by The Boston Consulting Group that estimated that “reshoring” by companies could result in 2 to 3 million new jobs. About a quarter would be directly in manufacturing, and the rest would work for suppliers or service industries.

Furniture, the report said, is among the seven areas where this is most likely to occur. The costs of shipping bulky products and the ample supply of wood in the U.S. make it a prime candidate for domestic manufacturing; China has to import wood.

“The pendulum is swinging,” says Hal Sirkin, the report’s lead author. He says wages are rising 15-to-20 percent a year in China and U.S. workers are, on average, more than three times as productive

The report predicts that by 2015, these industries will likely reach a “tipping point” where the cost advantages of China will have shrunk to a point where U.S. companies may see it’s to their benefit to return production or set up a new base here.

“It’s still early,” Sirkin says. “We don’t know all this is going to happen, but companies are starting because the economics are starting to look favorable. I was surprised to see it happening as quickly as it is.”

It is happening at a time when Americans — historically proud of the nation’s manufacturing might — are showing frustration with the migration of those jobs to China and elsewhere. An ABC News/Washington Post poll in February found that nearly 75 percent of those surveyed favor raising taxes on businesses that move manufacturing jobs overseas.

In January, President Barack Obama hosted a White House forum on in-sourcing, featuring small and large companies that have invested in the U.S. And in his State of the Union speech, Obama called for an economy “built on American manufacturing.” He said the resurgence of the U.S. auto industry “should give us confidence.”

A March trade group survey found expansion in 15 of 18 manufacturing industries, including autos, steel and furniture.

The president’s Republican rivals, meanwhile, also have touted the value of manufacturing and talked tough about China. Mitt Romney has vowed to declare China a “currency manipulator” and impose tariff penalties. Rick Santorum, who has emphasized his blue-collar roots, proclaimed he wants to “got to war with China” to create the best business climate for America.

But predictions about a rebirth of manufacturing and muscular rhetoric about resolving trade imbalances are met with understandable skepticism.

Consider the numbers: More than 5.5 million manufacturing jobs were lost from 2000 to 2011, though there has been a modest recovery in recent years, There are economists who say some jobs are gone forever because of productivity and robotic gains. And U.S. multinationals eliminated more than 800,000 jobs in the U.S. while adding 2.9 million overseas from 2000 to 2009, according to federal figures.

The trade deficit with China — $295 billion last year — has cost nearly 2.8 million U.S. jobs from 2001 to 2010 and almost 70 percent have been in manufacturing, according to a 2011 report by the Economic Policy Institute.

The report’s author, Robert Scott, found that about a third of all displaced jobs were in the computer and electronic parts industry; other areas include textiles, apparel and furniture. North Carolina’s loss of nearly 108,000 jobs ranked it among the top 10 hardest-hit states.

Reshoring “is not only a drop in the bucket … it’s not making a dent in the growth of the trade deficit,” says Scott. “It’s a classic example of counting trees instead of focusing on the forest. You may see a few trees popping up but the forest is still falling down.”

___

Bruce Cochrane started learning the furniture trade as a teen. He worked with his father, Theo — also known as Sonny — who ran the company with his brother, Jerry

“He always instilled in me that it was OK to take chances,” Cochrane says. “He’d always say, ‘If you aren’t fishing, you aren’t catching anything.'”

Cochrane remembered those words when trying to decide whether to take the plunge. “I actually had a dream of him telling me that and he was in his fishing gear. At that point, I said, ‘Yep, I’m going to do it.'”

That decision came more than a decade after the Cochranes got out of the business. In 1997, the family sold the company to another U.S. manufacturer; the factory remained open and the workers continued to make furniture with the Cochrane name. Over the years, though, more and more work was done in China. The plant finally closed in late 2008, the building was sold and the equipment auctioned off.

Cochrane carefully developed a business plan, and by 2011, he was ready — thanks, in part, to financing from a local bank. The president turned out to be a former company worker.

Last spring, Cochrane — who has two partners — walked into the empty 300,000 square-foot factory.

He soon added family touches, among them an oil painting of his father, hung on the lobby wall. With their silver hair and Clark Kent glasses, father and son share an uncanny resemblance. His eyes mist when he mentions him. “I think about how much he would love this,” he says.

Starting over, Cochrane also looked to the past, recruiting former company workers.

When he phoned the first two — both weren’t working — he heard doubt in their voices.

“Both of them said, ‘I don’t think I can do that anymore,'” he recalls. “They had lost their confidence. It (joblessness) puts people in such despair. They think there’s something wrong with them rather than the circumstances.”

Karen Padgett was one of those first calls. She’d worked her way up from the shipping department to human resources manager, spending 35 years with Cochrane and its successor. When the factory closed, Padgett was adrift.

She was in her 50s, jobs were scarce and a lifetime of working with folks who’d become good friends was suddenly gone.

“It was such a loss,” she says. “If you have a death in the family, you feel like you just can’t pick up and go forward. That’s how I felt. … I knew I needed to work. I knew I was still vital enough to do something, but I didn’t know what I would do.”

Jerry Cochrane had urged her to return to school, so she enrolled in a nearby college to polish her skills.

She was just starting to scope out job prospects when Cochrane called. She knew immediately she wanted the job, but had a moment of hesitation. “Being out of work strips you of your confidence,” she says. “I felt, ‘Oh, gosh can I do this?’ I just needed somebody to reassure me.”

Cochrane described his plans to build American-made furniture. “He said, ‘I really believe it’s coming back and we can make some money doing this and we’ll have a good time, I promise.'”

Padgett is now on the other end of the job search, fielding calls and conducting interviews. She’s received about 1,400 applications for what eventually will be about 130 jobs. (Starting salaries range from $9 to $16 an hour.)

One caller had a particularly poignant story: He said he wanted to work for the company because as a boy, he’d lived down the road from the old Cochrane factory. His single mother had struggled to provide for her six kids, he said, and when times got tough, Sonny Cochrane made sure their utility bills were paid.

The man was eventually hired.

About two-thirds of Lincolnton workers have experience in the furniture industry. North Carolina lost nearly 60 percent of its furniture jobs from 1999 to 2010, as the percentage of imported furniture sold in the U.S. doubled.

It has been a slow-motion economic disaster. Padgett says everyone noticed how one factory, then another closed, and yet “it was like we just woke up and it was swept out from under us. It kind of slapped us in the face when it was all gone.”

It was so traumatic that when Cochrane asked Pat Hendrick to return as purchasing manager, she was thrilled but had one question: “‘Will you be importing anything?’ I didn’t want to be involved with anything like that,” she says, “because that’s how I lost my job.”

To Hendrick, her job offer was an answered prayer. Literally. Every day while she was unemployed, she says, she’d pray she’d find work. One day, she tried something a little different:

“I said, ‘God, I’m tired. You’re going to have to drop a job in my lap that you know I can do and have people there that I can get along with and work with. I’m just leaving it in your hands.'”

Cochrane called at 8:59 a.m. the next day.

Driving back into the parking lot for the first time, Hendrick says she felt as if she’d never left. But two years of unemployment aren’t easily forgotten.

“After losing your job of 32 years,” she says, “you do have reservations. I’m comfortable here, but I don’t think I’ll ever have that same sense of security that I thought I had.”

Dean Hoyle understands uncertainty. After nearly 30 years at the factory, he found himself out of work, too, scraping by doing yard work and mowing lawns.

His situation, he says, was even more agonizing because he was still recovering from the death of his wife from breast cancer, and work, he says, “had been a rock to me.” After 14 months, Hoyle was hired at another furniture company, only to be laid off last year.

Hoyle, who works in the packing department, is struck by how much has changed since he first walked into the factory as a fresh-faced Army veteran. “These places were all up and running when I got out of school,” he says. “Where are all the people going to go now and what are they going to do? Not everybody can be a computer programmer.”

Hoyle’s ruddy, mustachioed face breaks into a wide smile as he recalls going to the bank to deposit his first paycheck from the new job.

“I’m 57 years old and soon to be 58, and I’ve got enough sense to know this area is not full of opportunities for someone like me,” he says. “If I could sum it up in one word, it would be grateful.”

___

In January, Lincolnton’s first piece of furniture — a cherry-wood nightstand — came off the line. All the workers signed it.

That same month, Bruce Cochrane had two dates in Washington, D.C. The first was the White House conference on insourcing, where he met Obama. The other was an invitation to sit in the first lady’s box at the State of the Union speech, where the president spoke of a manufacturing renaissance. (For the record, Cochrane says he’s never voted for a Democratic president.)

Cochrane thinks there’s an appetite for U.S.-produced goods. He attaches a “Made in America” tag to each piece of his company’s furniture, with a message: “We take immeasurable pride in the fact that our furnishings are made of select solid American hardwoods,” he wrote, appending his name.

“I think people realize that made in America means jobs in America,” Cochrane says. “And they have experience with a loved one or a family member or a friend who lost a job so it becomes more and more personal to them.”

Bud Boyles, owner of the Carolina Furniture Mart in Lincolnton (where the nightstand is displayed), senses a similar mood.

“Timing is everything and he’s definitely got the timing right now,” Boyles says. “It might be a hard first year for him but people are saying, ‘We’re going to have to take a look at what we’re doing. We have to go back to our roots and help our neighbors.””

There have been small moments of satisfaction these first months, such as touring the factory with a friend, who said he thought he’d never again smell that earthy scent of fresh-cut wood. “It’s nostalgic,” Cochrane says.

But there have been problems, too. A malfunctioning machine needed fixing and the plant had to be rewired, a costly project. The technology has become so efficient that Cochrane says he’ll need half the workers he first expected — though of course that’s a mixed blessing, given the area’s struggle with unemployment.

Within thre
e years, Cochrane hopes to do $25 million in business a year. For now, he’s determined to prove the naysayers wrong.

“People in this industry still don’t believe this can be done,” he says. “I don’t have any doubt at all.”

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by THE ASSOCIATED PRESS
Sharon Cohen is a national writer for The Associated Press, based in Chicago. She can be reached at [email protected]