WASHINGTON — One of the world’s biggest clothing buyers, the United States government spends more than $1.5 billion a year at factories overseas, acquiring everything from the royal blue shirts worn by airport security workers to the olive button-downs required for forest rangers and the camouflage pants sold to troops on military bases.
In Bangladesh, shirts with Marine Corps logos sold in military stores were made at DK Knitwear, where child laborers made up a third of the work force, according to a 2010 audit that led some vendors to cut ties with the plant. Managers punched workers for missed production quotas, and the plant had no functioning alarm system despite previous fires, auditors said. Many of the problems remain, according to another audit this year and recent interviews with workers.
In Chiang Mai, Thailand, employees at the Georgie & Lou factory, which makes clothing sold by the Smithsonian Institution, said they were illegally docked over 5 percent of their roughly $10-per-day wage for any clothing item with a mistake. They also described physical harassment by factory managers and cameras monitoring workers even in bathrooms.
At Zongtex Garment Manufacturing in Phnom Penh, Cambodia, which makes clothes sold by the Army and Air Force, an audit conducted this year found nearly two dozen under-age workers, some as young as 15. Several of them described in interviews with The New York Times how they were instructed to hide from inspectors.
“Sometimes people soil themselves at their sewing machines,” one worker said, because of restrictions on bathroom breaks.
Federal agencies rarely know what factories make their clothes, much less require audits of them, according to interviews with procurement officials and industry experts. The agencies, they added, exert less oversight of foreign suppliers than many retailers do. And there is no law prohibiting the federal government from buying clothes produced overseas under unsafe or abusive conditions.
“It doesn’t exist for the exact same reason that American consumers still buy from sweatshops,” said Daniel Gordon, a former top federal procurement official who now works at George Washington University Law School. “The government cares most about getting the best price.”
Frank Benenati, a spokesman for the Office of Management and Budget, which oversees much of federal procurement policy, said the administration has made progress in improving oversight, including an executive order last year tightening rules against federal suppliers using factories that rely on debt bondage or other forms of forced labor.
“The administration is committed to ensuring that our government is doing business only with contractors who place a premium on integrity and good business ethics,” he said.
Labor and State Department officials have encouraged retailers to participate in strengthening rules on factory conditions in Bangladesh — home to one of the largest and most dangerous garment industries. But defense officials this month helped kill a legislative measure that would have required military stores, which last year made more than $485 million in profit, to comply with such rules because they said the $500,000 annual cost was too expensive.
Federal spending on garments overseas does not reach that of Walmart, the world’s biggest merchandiser, which spends more than $1 billion a year just in Bangladesh, or Zara, the Spanish apparel seller, but it still is in a top tier that includes H & M, the trendy fashion business based in Sweden, Eddie Bauer and Lands’ End, sellers of outerwear and other clothing.
The Obama administration, for example, has favored free-trade agreements to spur development in poor countries by cultivating low-skill, low-overhead jobs like those in the cut-and-sew industry. The removal of trade barriers has also driven prices down by making it easier for retailers to decamp from one country to the next in the hunt for cheap labor. Most economists say that these savings have directly benefited consumers, including institutional buyers like the American government. But free-trade zones often lack effective methods for ensuring compliance with local labor laws, and sometimes accelerate a race to the bottom in terms of wages.
Along a dirt road in Gazipur, about 25 miles north of the Bangladeshi capital, riot police fired tear gas shells, rubber bullets and sound grenades in a fierce clash with garment workers last month, sending scores to the hospital. The protesters demanding better conditions included some from a factory called V & R Fashions. In July, auditors rated that factory as “needs improvement” because workers’ pay was illegally docked for minor infractions and the building was unsafe, illegally constructed and not intended for industrial use.
Unsafe and Repressive
Like dozens of oth
er factor
ies in the area, V & R makes clothes for the American government, which is constantly prowling for the best deals. In interviews, workers at a half-dozen of these suppliers described the effect of such cost pressures.
At Manta Apparels, for example, which makes uniforms for the General Services Administration, employees said beatings are common and fire exits are kept chained except when auditors visit. The local press has described Manta as one of the most repressive factories in the country. A top labor advocate, Aminul Islam, was organizing there in 2010 when he was first arrested by the police and tortured. In April 2012, he was found dead, a hole drilled below his right knee and his ankles crushed.
Several miles from Manta, 40 women from another supplier, Coast to Coast, gathered late one night to avoid being seen publicly talking to a reporter. Dressed in burqas, the women said that prices of the clothing they make for sale on American military bases are now so cheap that managers try to save money by pushing them to speed up production. In the rush, workers routinely burn themselves with irons, they said, often requiring hospitalizations.
Work does not stop, they said, when it rain pours through a six-foot crack in the ceiling of the top floor of the factory — a repurposed apartment building with two extra floors added illegally to increase capacity. Even after the manager swipes their timecards, they say, he orders them to keep sewing.
While giving a tour of the plant, the manager described the building crack as inconsequential and too expensive to repair. He denied the workers’ other allegations. The owner of Manta declined to comment.
Conditions like those are possible partly because American government agencies usually do not know which factories supply their goods or are reluctant to reveal them. Soon after a fire killed at least 112 people at the Tazreen Fashions factory in Bangladesh in November 2012, several members of Congress asked various agencies for factory addresses. Of the seven agencies her office contacted, Representative Carolyn Maloney, Democrat of New York, said only the Department of the Interior turned over its list.
Over the summer, military officials told Representative George Miller, Democrat of California, that order forms for apparel with Marine Corps logos had been discovered in Tazreen’s charred remains but that the corps had ties to no other Bangladeshi factories. Several weeks later, the officials said they were mistaken and had discovered a half-dozen or so other factories producing unauthorized Marine Corps apparel. On Sunday, the owners of Tazreen and 11 employees were charged with culpable homicide.
President Obama has long pushed for more transparency in procurement. As a senator, he sponsored legislation in 2006 creating the website USASpending.gov, which open-government advocates say has made it far easier to track federal contracting. However, procurement experts fault the website for requiring agencies to name their contractors, but not identifying the specific factories doing the work. Some states and cities already require companies to disclose that information before awarding them public contracts, said Bjorn Skorpen Claeson, senior policy analyst at the International Labor Rights Forum.
Federal officials still have to navigate a tangle of rules. Defense officials, for instance, who spend roughly $2 billion annually on military uniforms, are required by a World War II-era rule called the Berry Amendment to have most of them made in the United States. In recent years, Congress has pressured defense officials to cut costs on uniforms. Increasingly, the department has turned to federal prisons, where wages are under $2 per hour. Federal inmates this year stitched more than $100 million worth of military uniforms.
No sooner had the Transportation Security Administration, or T.S.A., signed a $50 million contract in February for new uniforms for its 50,000 airport security agents and other workers, than the agency was attacked from all sides.
Union officials, opposed to outsourcing work overseas, objected because the Mexican plant making the clothing, VF Imagewear Matamoros, was the same one that had treated uniforms with chemicals that caused rashes in hundreds of T.S.A. agents. Congress called an oversight hearing, where some lawmakers questioned why two-thirds of the uniforms would be made in foreign factories, saying the deal was a missed chance to stimulate domestic job growth. Other lawmakers faulted the agency for spending too much money on clothing, especially on the cusp of a federal budget crisis, no matter where the merchandise was made.
“Bottom line,” John W. Halinski, T.S.A. deputy administrator, told Congress, “we go for the lowest-cost uniform, sir.”
The hunt for lower costs and the expansion of free-trade pacts have meant that more of this work is being done abroad, often in poor countries where the Obama administration is trying to spur competition and development.
In Haiti, for instance, trucks loaded with camouflage pants, shirts and jackets, some of them destined for American military bases, idle in front of a factory called BKI.
Next year, BKI managers hope to double the amount of camouflage clothing made for the American government, part of a contract worth more than $30 million between a division of Propper International, a Missouri-based uniform company, and the General Services Administration, which outfits workers for more than a dozen federal agencies.
Three years ago, much of this camouflage clothing was made in Puerto Rico, where workers earned the minimum wage of about $7.25 an hour. By 2011, many of these jobs moved to a factory in the Dominican Republic called Suprema. Wages there were about 80 cents per hour and unpaid overtime was routine, according to workers in recent interviews and a 2010 audit. Since then, most of these jobs have migrated again, this time to BKI in a Haitian free-trade zone called Codevi. Average hourly wages at BKI are about 8 cents less per hour than those at Suprema, according to workers.
Standing near the factory entrance, several BKI workers said they were proud of the clothes they made for the American government. “We push hard because we know they expect better,” said Rodley Charles, 29, a quality inspector at the factory.
But there is basic math: the average pay of 72 cents per hour (which is illegal and below Haiti’s minimum wage) barely covers food and rent, said Mr. Charles, who has since quit, and two other BKI workers.
These wage pressures may soon intensify. Codevi will soon face new competition from another industrial park called Caracol, which is being built partly with money from the United States Agency for International Development as part of reconstruction efforts after the earthquake of 2010.
American officials predict that Caracol will eventually create 60,000 new jobs. Current wages there? About 57 cents per hour, or roughly 15 cents less than typical wages at Codevi.
Big Business
At a military store in Bethesda, Md., Tori Novo smiled as she looked over a pair of $19.99 children’s cargo pants made in Bangladesh that sell for $39 in most department stores. The best part of living on base, said Ms. Novo, a 31-year-old Navy recruiter, was “savings like these.”
Known as exchanges, these big-box stores on military bases around the world offer a guarantee: to beat or match any price from rivals. That promise puts the exchanges in direct competition with the deep discounts offered by stores like Gap and Target. It also adds to already intense pressure to lower costs by using the cheapest factories, industry analysts say.
These stores, run by the Defense Department, do big business, selling more than $1 billion a year in apparel alone. Exempt from the Berry Amendment, the exchanges get more than 90 percent of their clothes from factories outside the United States, according to industry estimates. The profits from these tax-free stores mostly go toward entertainment services like golf courses, gyms and bowling alleys on bases.
Though the Government Accountability Office criticized the exchanges over a decade ago for exerting less oversight than private retailers and for failing to independently monitor their overseas suppliers, little has improved.
The Marine Corps and Navy still do not require audits of these factories. The Air Force and Army exchanges do, but the audits can come from retailers, and defense officials fail to do routine spot checks to confirm their accuracy.
For example, Citadel Apparels, a factory in a seven-story building in Gazipur, has cut, stitched and shipped more than 11 metric tons of cotton boys’ T-shirts and other clothes for sale at exchanges on Army and Air Force bases in recent months. This summer, lawmakers in Congress asked the Defense Department for proof that Citadel was safe. Defense officials produced an audit conducted for Walmart, another client of the factory, showing that it had an “orange” risk ranking in July 2012, the same high level of alarm that Walmart had given the Tazreen factory before the fatal fire there last year.
While allowing the factory to stay open, the audit offered an alarming statistical snapshot.
Sixty-five percent: number of workers barefoot, some on the building’s roof. Fifty percent: workers without legally required masks to protect against cotton dust. Sixteen percent: workers missing time-sheets, a common sign of forced overtime. Most serious infractions: cracks in the walls that could compromise the building, and partly blocked exit routes and stairwells.
By January, Citadel’s auditors concluded that most of these dangers had been fixed. However, a half-dozen Citadel workers offered a starkly different picture. Virtually none of the original problems had ever been corrected, they said in interviews last month with The Times.
“We aren’t sewing machines,” one worker said. “Our lives are worth more.”
For now, Bangladesh’s garment sector continues to grow, as do purchases from one of its bulk buyers. In the year since Tazreen burned down, American military stores have shipped even more clothes from Bangladesh.
Ian Urbina reported from Bangladesh and Washington. Research was contributed by Susan Beachy in New York, Poypiti Amatatham in Bangkok, Karla Zabludovsky in Mexico City, Malavika Vyawahare in New Delhi and Meridith Kohut in Ouanaminthe, Haiti.
Made in America Expo
in American Madeamerican made products
For the public attending the Expo, they will be able to go from booth to booth of all American made goods. Consumers want to support American made products because of the benefits to keeping dollars on our own shores and strengthening our production jobs base.
National speakers and well known advocates of The Made in America Movement, including our very own, Ms. Margarita Mendoza, CEO & Founder, will discuss the importance and advantages to buying American made products. If you are in the area, stop and say hi! Enter the raffle for a major American made prize, such as a Ford automobile. Yo, will be given away to attract regional consumers.
Well known Dallas/Fort Worth meteorologist and TV personality Rebecca Miller will serve as the emcee of the Made in America Expo.
Expo Management, Inc.’s mission is to showcase a wide variety of domestic companies that produce American made products in an expansive, equitable expo venue that will attract large numbers of willing consumers.
Become an exhibitor today.
MAM Members, contact your member services rep for your discounted rates. Click here to view a complete prospectus.
See you in Fort Worth!
Fashion & Beauty Editor Tabitha St. Bernard Joins The Made in America Movement Team
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Act Now: Dangerous Fast Track Bill Filed January 9th.
in GovernmentWe asked for legislation to neutralize foreign currency manipulation. They said no.
We asked for comprehensive tax reform to the double taxation of our exports through foreign border adjustable consumption taxes. They said no.
Instead, they file the Fast Track (so-called “Trade Promotion Authority”) bill to these global governance deals like the TransPacific Partnership (TPP) through Congress without any amendment or sufficient debate.
They admit they can’t pass TPP under regular procedural rules because it is so controversial… so they change the rules!
Over 170 members of Congress from both parties, last November, said they opposed Fast Track because it is constitutionally wrong and because it produces bad trade policy.
Tell Congress to oppose Fast Track and support debate under the Regular Order… the ordinary rules of debate and procedures given to every other bill before the House and Senate.
We cannot reform trade policy to grow our economy, create jobs, and protect our constitutional republic unless we stop Fast Track now.
If we get it wrong, the trade deficits will continue eroding the American dream.
We can win this. Tell Congress to oppose Fast Track to keep its power over trade treaties while protecting our sovereignty.
Sincerely,
Michael Stumo, CEO
Coalition for a Prosperous America
Video: What is TPP and Fast Track?
in JobsTell Congress to Stop FAST TRACK on TPP
in JobsHave You Heard of the TPP Yet? An Important Trade Agreement You Need to Know About
in Government, JobsTrade is relevant. The U.S. trade deficit, which has grown from a little more than $70 billion in 1993, the year before NAFTA went into effect, to nearly $540 billion today, costs us jobs. Trade deficits represent lost opportunities. The bigger the trade deficit, the more jobs we could have created in the United States but didn’t. Moreover, trade agreements affect our domestic laws. Once we enter into a trade agreement, it’s not so easy to raise tariffs on trading partners that engage in egregious human rights violations—nor is it easy to exit the agreement once we find out it is bad for our economy and our job creation.
Trade also is interesting. Trade rules affect your rights in the workplace, the safety of the food you eat and how clean your water is. Trade rules can affect whether tuna canneries are allowed to tell you if your tuna is dolphin-safe or whether local grocery stores have to label the hamburger you buy with its country of origin. Trade rules can affect the price of the fancy imported cheese you like or how much North American content must be in an automobile for it to qualify for the tariff benefits of NAFTA. And trade rules also can make it easier for an employer to shut down a factory, call center or legal support office and move it overseas. Trade is anything but boring.
And the debate is certainly not over. The proposed TPP is not yet finished—the rules are still being written. Will those rules largely mimic the rules that have helped kill off nearly 6 million manufacturing jobs in the United States in just over a decade? On the other hand, will the rules help make it easier for our brothers and sisters overseas to organize and act collectively to improve their wages and working conditions? Will the rules require our trading partners to protect endangered species? Or will they make it easier for giant global corporations to attack laws banning toxic chemicals? We don’t know the answer to these questions yet—because the deal isn’t done. But if the loudest voices the administration and Congress hear belong to the global corporations who have benefited from past agreements, I can predict what the answers will be. And they won’t be answers we like. If you have not yet spoken up to tell President Obama that America can’t take another NAFTA, now is the time. The president wants to finish negotiating the agreement by October 2013. Tomorrow may be too late.
Japan's Suntory Gulps Down U.S. Spirits Maker Beam
in ProductsViolence Erupts in Cambodia as Labor Dispute Intensifies
in Economy, GovernmentWorkers at most of Cambodia’s more than 500 garment factories are on strike, demanding an increase in the minimum wage to $160 a month, double the current rate. The government has offered $100 a month.
The local human rights group LICADHO said in a statement that at least four civilians were shot dead and 21 injured in what it described as “the worst state violence against civilians to hitCambodia in 15 years.”The statement said that security forces used live ammunition to shoot directly at civilians.
It was not clear whether those killed were workers or local residents who had joined in the protest.
“They are anarchists, they have destroyed private and state property,” Chuon Narin, the deputy police chief, said by phone. “That is why our forces need to chase them out.”
The protesters were cleared from the street, at least temporarily, by early afternoon.
The violence comes at a time of political stress in the country, with the opposition Cambodia National Rescue Party holding daily protests calling for Prime Minister Hun Sen to step down and call elections.
Although the wage and election issues are not directly linked, the opposition has close ties with the country’s labor movement. Last Sunday, many workers joined a massive political rally organized by the opposition.
The workers represent a potent political force, because the garment industry is Cambodia’s biggest export earner, employing about 500,000 people. In 2012, Cambodia shipped more than $4 billion worth of products to the United States and Europe.
Mak Vin, a 25-year-old worker, said he was among those protesting for more than a week over the wage issue. He said that on Friday morning, as the workers burned car tires and shouted slogans, “hundreds” of armed police arrived and opened fire.
“They fired live bullets directly at us. I am very scared,” Mak Vin said.
There had been an earlier clash overnight, with no known fatalities.
Mak Vin said the workers were protesting only for higher wages, and would return to work once that demand was met. He said most workers were not cowed by the shooting, and would continue their strike.
Violent suppression of social and political protests has not been unusual under Hun Sen’s authoritarian government, but there have been few incidents in recent years where more than one person has been killed.
The authorities also usually shy away from using live ammunition in Phnom Penh, where the population is largely hostile to the government.
But the U.N. special rapporteur on human rights in Cambodia, Surya Subedi, said it was the third time since the disputed elections that authorities have shot into a crowd and caused fatalities. He called for an independent investigation into whether excessive force was used. He also expressed concerned about increasing violence by some demonstrators.
The standoff over wages presents Hun Sen with a dilemma, as increasing violence could drive the workers into a tighter alliance with the opposition, providing a vast pool of people for their increasingly confident street demonstrations. But the government is also close to the factory owners, whose exports fuel the economy and who are generally seen as financial supporters of Hun Sen’s ruling Cambodian People’s Party.
Last week, violence erupts in Cambodia when the Garment Manufacturers Association in called for factory owners to close their plants, ostensibly for fear of damage by protesters. The situation puts pressure both on the striking workers, who are not being paid, and the government, which relies on garment exports to power the economy.
White House To Announce Manufacturing Hubs
in Governmentmade in america
While the President originally touted the initiative in his 2013 State of the Union address last February, Thursday’s event will be the first official launch of the program… White House To Announce Manufacturing Hubs.
Those areas, White House officials say, are among the top 20 places most adversely affected by the recession. Each neighborhood or area in the “Promise Zone” has laid out specific goals and will be held accountable by program administrators and third-party experts to track their results.
In San Antonio, Mayor Julian Castro has been applauded by the White House for his efforts to work with federal programs and investments from local businesses to revitalize neighborhoods. The Eastside area of the city has partnered with St. Philip’s College for job training programs in energy, healthcare, and aerospace/advanced manufacturing jobs, among other initiatives.
“Investing in and rebuilding hard-hit communities are important parts of the President’s plan to restore the basic bargain at the heart of the American story – that every child should have a fair chance at success. And that, no matter who you are or where you’re from, if you’re willing to work hard and play by the rules, you should be able to find a good job, feel secure in your community, and support a family,” a White House official said about tomorrow’s event.
The White House has cited the Youngstown, Ohio area as an example of success as a “manufacturing innovation institute” which has turned around a once-shuttered manufacturing warehouse into a thriving 3-D printing center. In 2012, President Obama announced his plan to invest $1 billion in a network of up to 15 similar cities.
How Will 'Made in America' Fare in 2014?
in American Made, EconomyThat enormous trade deficit with China presents the single biggest impediment to a true manufacturing recovery for the U.S. While the December jobs report showed some promise for manufacturing after nearly a year of weak hiring, January could offer an early clue to what the year ahead will look like. This Friday’s jobs report will tread a fine line: A soft report would suggest that we aren’t yet close to a true economic recovery; another boost, on the other hand, could build the case that manufacturing is gaining some forward momentum.
But even a strong report for manufacturing should be taken with a grain of salt. A hindsight assessment shows that the sector has only recovered a fraction of the jobs it lost during the Great Recession. And looking ahead, the economy hasn’t generated enough steam — nor has Washington generated the right mix of policy — to keep pace with President Obama’s campaign promise to create one million new manufacturing jobs during his second term.
Still, the trade deficit probably won’t make it into the president’s State of the Union speech. It’s a sum that’s easy for policymakers to dismiss as a simple fact of life, one whose impact tends to be indirect. But connect the dots and its effect is clear: As manufacturing shifts from the U.S. to China, that means factories shut down in many American communities. Those laid-off workers, if they were lucky enough to get another job, take significant pay and benefits cuts when they shift to lower-income retail and service employment. That loss of income also means less revenue flowing into the U.S. Treasury, as well as an increased demand for public services, when you factor in those who remain unemployed.
That’s only the direct effect. The indirect one is less spending in and around those former factory towns — at the hardware store, the flower shop, local restaurants — impacting the bottom lines of other businesses. Manufacturing’s multiplier effect of wealth production can work in a very unfortunate, opposite direction, too.
There’s no serious economist out there who thinks a trade deficit this large is a good thing. So the real issue is what should be done about it. There’s a lot we could do, all well within our rights as a trading partner and without fear of provoking that modern economic unicorn, the mythical “trade war.”
First, we could get our own house in order.
The White House and Congress have focused some attention on manufacturing. The president has an advanced manufacturing initiative in place, albeit with modest funding thanks to a stingy Congress. And a significant number of Senate Democrats have launched a manufacturing initiative, echoing their House colleagues who first proposed a “Made in America” plan in 2010. If either plan became law, it would do a lot to increase employment in the sector. And it would put us on par with just about every other industrialized nation; our government is fairly unique in lacking a national manufacturing strategy.
Then, instead of simply pointing to the growth of U.S. exports, and the purportedly dire need to negotiate more trade agreements, the White House should address the trade deficit directly. That starts with a real focus on the surge of imports that keeps boosting our trade deficit, particularly with China.
The administration could back sensible legislation to deter deficit-inflating currency manipulation, which passed the House in 2010, and the Senate a year later in a different Congress. If brought to the floor in either chamber today, it would pass overwhelmingly and would give America’s manufacturers new tools to help confront the undervalued imports that are effectively stealing U.S. jobs.
The administration could block China’s unfair trade practices through a series of actions, using both international and domestic trade laws. President Obama made a big splash in Ohio during his 2012 re-election campaign by announcing a case against China’s unfair trade practices in the auto parts sector. The follow-through in that case is largely missing, however, and little else has been done since then to restore a level playing field for other American companies facing such skewed competition.
The White House could also set objective criteria for reducing the trade deficit with China. For example: Cut it in half over the next three years, through a combination of more value-added exports and fewer subsidized imports. Unfortunately, without such a clear goal, it’s hard to measure any progress besides the monthly ups and downs of the jobs report.
It’s past time to put displaced American workers back on the job. We have an unemployment rate hovering around 7 percent, and our long-term unemployment rate, combined with the number of jobless who have simply stopped looking, shows that the true rate of joblessness is much higher.
America’s workers deserve a government that will fight for them in the trade arena. And the Obama administration should act boldly, instead of offering more of the same. That won’t happen, though, unless the White House pursues an aggressive trade agenda that places the focus squarely on lowering the trade deficit. Otherwise, we’ll know the administration is more serious about its factory photo ops than actually going to bat for American manufacturing.
Before writing his State of the Union speech, I hope the president absorbs the trade data, and starts to envision what a $315 billion annual goods deficit with China means to his constituents on Main Street USA. He might just change his tune, and begin to chart a better course for Made in America in 2014.
Originally published on the Huffington Post, by
Scott Paul on January 7, 2014.
Follow Scott Paul on Twitter: www.twitter.com/ScottPaulAAM
New Wool Mill Will Be Second Largest in U.S.A.
in American Made, Jobs“There’s a renaissance nationwide of returning to products made in America,” Batchelder said. “There’s a large niche of consumers who are demanding natural fibers and American-made products, not ones made overseas.”
Stordahl agrees: “She’s part of a changing landscape, a movement where some of this (clothing) will be made back here.”
Anderson, 45, who grew up in Fertile, started her Northern Woolen Mills plant two months ago.
With eight employees, the business won’t have a big economic impact on this Polk County town of 1,500. However, it’s enough of a jolt that the city gave the fledgling business three acres of land in its industrial park on its western edge and a low-interest $100,000 loan.
Anderson’s career track, which included management, tourism marketing, and clothing design, took a dramatic turn after her employer had her lobby Bemidji Woolen Mills to resume the manufacturing of wool yarn. The company wasn’t interested, so Anderson filled the niche.
“I saw a need, an opening in the market, and decided to fill it myself,” she said. “Opportunity knocked and I went for it.”
Ironically, her first customer was Bemidji Woolen Mills.
The wool is all USA-grown, including from sheep ranchers in Fosston, Goodridge and McIntosh, and a bison producer in New Rockford, N.D. The equipment also can handle llama and alpaca wool.
When the equipment is all in place within two weeks, Anderson said, Northern Woolen Mills will produce 100 pounds of yarn per day, making it the second-largest processor in the country.
“I used to work in high heels and with (polished) fingernails,” she said. “Now I have grease on my hands and no fingernails. But it’s a lot more fun.”
Making an impact
Stordahl said the endeavor can have an impact on several levels.
“It’s certainly not a new 3M in the neighborhood and, for the average rancher, wool is a minor part of the production,” he said. “But it does fill a niche. And wool has become a high-end fabric. If it’s high-quality wool, it is not scratchy to wear.”
Fosston has become “a hub of unusual agricultural niche products,” Stordahl said, citing the vegetable dehydrating plant in its industrial park as another example.
Chuck Lucken, Fosston’s city administrator, expressed excitement at a new business that didn’t seem likely even a few years ago.
“Any small industry we can get, whether it’s eight jobs or 50 jobs, is a good deal for us,” he said. “Who would have thought wool processing would come back?”
Jobless Benefits Bill Stays Alive Amid Talks on Offsets
in EconomyA three-month extension proposal survived yesterday when, in a surprise 60-37 vote, six Republicans joined with Democrats to provide the 60 votes needed to advance the bill. Several of those Republicans said they may vote against final passage without a way to cover the price tag.
Maine Republican Senator Susan Collins said she told President Barack Obama, when he telephoned to court her vote on Jan. 6, that the “bill would definitely pass if there were a pay-for.”
“We need a concerted effort to find an offset,” Collins said in an interview at the Capitol yesterday.
Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters that if Republicans “come up with something that’s serious, I’ll talk to them.”
The emergency jobless benefits expired for 1.3 million Americans. The push to extend them marks the start of the party’s election-year focus on income inequality, in which Democrats also will push to raise the minimum wage and increase spending on infrastructure projects to create jobs.
‘Way Forward’
Republican House Speaker John Boehner of Ohio hasn’t said his chamber will take up the measure, though he said any extension of the jobless benefits must contain financing. Senate Republican Leader Mitch McConnell told reporters yesterday that if both parties can agree on a way to fund the extension, “there may be a way forward.”
In a sign that House Republican leaders are wary of potential political ramifications, they sent a memo to members yesterday urging them to be careful about how they talk about jobless benefits. “For every American out of work, it’s a personal crisis for them and their family,” read one of the talking points in the memo received from a House leadership aide who requested anonymity.
The expanded program started in 2008 and at one point provided as many as 99 weeks of benefits for the long-term unemployed. At the end of 2013 the maximum was 73 weeks, including 26 weeks of state-funded benefits.
11 Renewals
The emergency benefits have been renewed 11 times since President George W. Bush put them in place in 2008, when the U.S. jobless rate was 5.6 percent. All extended benefits are covered by federal dollars, while initial jobless insurance comes from federal, state and employer funds.
Besides casting the measure as a moral imperative, Democrats are stepping up efforts to demonstrate the economic benefits of restoring the weekly payments. After yesterday’s Senate vote, Obama emphasized that argument in a speech at the White House.
“There’s a whole lot of people who are still struggling,” Obama said. He was joined by a group of 20 people who the administration said were affected by the expiration of the extra benefits. “This is not an abstraction.”
Democrats say extended jobless benefits are an emergency measure that doesn’t need funding. “Congress has done this before, many, many times,” White House spokesman Jay Carney told reporters yesterday.
Six Republicans
In addition to Collins, Senate Republicans who supported advancing the legislation were Dean Heller of Nevada, Dan Coats of Indiana, Kelly Ayotte of New Hampshire, Lisa Murkowski of Alaska and Rob Portman of Ohio.
Collins is the lone Senate Republican seeking re-election this year in a state Obama won in 2012. Coats, Heller and Portman all represent states where the November jobless rate was higher than the nationwide rate of 7 percent.
Coats said his vote on final passage will depend on whether the bill is amended to offset its cost.
“Why end the process before it’s even started?” he told reporters in explaining his vote to advance the measure.
“I would like to see offsets, yes,” Murkowski said, adding that she voted to take up the bill because it’s “an important issue” to Alaska.
Ayotte and Portman are among Republican senators planning to announce today an amendment to pay for the jobless benefits extension by requiring those who seek additional child tax credits to have Social Security numbers. The measure is aimed at stopping undocumented immigrants from collecting the credits.
Finding a way to cover the benefits’ cost may be difficult. In a conference call last week, Representative Steny Hoyer of Maryland said last year’s budget compromise left few options on the table.
‘No Secret’
“There is no secret back-pocket” way to offset the cost of extending benefits, Hoyer said.
Heller said Republicans haven’t determined what they might ask for in exchange for an extension. Options may include restrictions on collecting disability and unemployment benefits at the same time, or reallocating money from funds that federal agencies didn’t spend before the end of the year.
South Dakota Senator John Thune said he would back a payroll tax break for businesses that hire long-term unemployed workers. Thune’s proposal would include low-interest loans to long-term unemployed workers who would have to relocate to take a new job.
None of those proposals have gained much support so far, and neither have ideas from Democrats. New York Senator Charles Schumer, the chamber’s third-ranking Democrat, has floated paying for the benefits by ending a tax break that lets U.S. companies deduct expenses when they move operations overseas. Republicans have opposed that idea.
Subsidy Cuts
Maryland Representative Chris Van Hollen has suggested paying for the plan with cuts to agricultural subsidies.
Many Republicans say the expanded benefit program is a disincentive for those without jobs to gain long-term employment and that it feeds a culture of dependency.
Before the Senate’s procedural vote, McConnell proposed paying for the extended aid by delaying for a year the 2010 health-care law’s requirement that most individuals obtain insurance. Reid told reporters that was “a non-starter.”
McConnell faulted the economy during Obama’s presidency, saying “record numbers” of poor and working-class people “have been having a perfectly terrible time.”
Democrats are seeking to help U.S. workers weather the longest period of high national unemployment since the Great Depression, and if they fail, to put Republicans on defense before the election. Amid talks, Jobless Benefits Bill stays alive.
For every dollar the U.S. government spends on unemployment insurance, $1.55 returns to the gross domestic product, said Reid, citing an analysis by Mark Zandi, chief economist
of Moody’s Analytics.
To contact the reporters on this story:
Kathleen Hunter in Washington at khunter9@bloomberg.net;
Heidi Przybyla in Washington at hprzybyla@bloomberg.net
To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net
Companies in U.S. Added 238,000 Jobs in December
in Economy, JobsStock-index futures fluctuated after equities rebounded yesterday from a three-day retreat. The contract on the Standard & Poor’s 500 Index expiring in March rose less than 0.1 percent to 1,830.8 at 8:39 a.m. in New York. The yield on the benchmark 10-year note climbed to 2.99 percent from 2.94 percent late yesterday.
Survey Estimates
Estimates in the Bloomberg survey of 36 economists ranged from gains of 170,000 to 225,000 after a previously reported increase of 215,000 in November.
The December gain brought the 2013 average to 179,600 compared with 163,000 per month in the previous year, according to ADP data.
Construction increased headcount by 48,000 in December, the biggest gain since February 2006. Factories added 19,000 jobs. Goods producers in 2013 added 286,000 workers, with almost 75 percent of the gains coming from the construction industry, ADP said.
Employment in trade, transportation and utilities increased 47,000, today’s report showed. Professional and business services employment rose by 53,000 last month, the most since November 2012.
Payrolls at service providers climbed by 170,000 jobs in December.
Company Size
Companies employing 500 or more workers added 71,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 59,000 workers and small companies expanded payrolls by 108,000.
The Labor Department will release its December employment report on Jan. 10. The economy probably added about 195,000 jobs after 203,000 a month earlier, according to the median projection in a Bloomberg survey.
“Consumer spending has accelerated and sentiment has improved, which is likely indicative of better labor market conditions,” Bank of America Corp. economists led by Ethan Harris wrote in a research note last week. “We look for notable gains in manufacturing, retail and construction jobs.”
A pickup at factories is helping to support the expansion, now in its fifth year. Manufacturing grew in December at the second-fastest pace in more than two years, according to the Institute for Supply Management. The purchasing managers group’s factory index eased to 57 from the prior month’s 57.3, which was the highest since April 2011, the Tempe, Arizona-based group said last week.
Factory Orders
Orders reported by purchasing managers were the strongest since April 2010 and an employment gauge reached its highest level since June 2011 in the ISM data.
Among companies pointing to a brighter economic outlook is Dearborn, Michigan-based Ford Motor Co., even as the automaker’s December sales trailed analysts’ estimates.
“We’ve had pretty good growth in manufacturing, ongoing, well sustained,” Ellen Hughes-Cromwick, Ford’s chief economist, said on a Jan. 3 conference call. “Housing sector gains likely to improve again this year. Job and income gains have been relatively stable. Inflation has been well contained and long-term interest rates are likely to be edging up, but remain low by historical standards.”
Housing Market
Sustained momentum in the housing market recovery is supporting payrolls in the construction industry.
Purchases of new homes exceeded projections in November, holding near a five-year high. Sales declined 2.1 percent to a 464,000 annualized pace from a revised 474,000 rate in October that was the strongest since July 2008, according to Dec. 24 figures from the Commerce Department.
“The housing market remains on track for a solid recovery and is likely to continue to improve over an extended period of time,” Stuart Miller, chief executive officer of Miami-based homebuilder Lennar Corp., said on a Dec. 18 earnings call. “The short supply of available homes and pent-up demand, along with a generally improving economy, will continue to drive the housing recovery forward.”
ADP in October 2012 changed the method it uses to calculate its employment figures dating back to 2001. The report is now derived from a larger sample, and is released jointly with Moody’s Analytics.
To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Maker’s Row and Cotton Incorporated Partner to Bring Back "Made in USA"
in American Made, Manufacturing & SourcingMaker’s Row has also launched a page (makersrow.com/cottoninc) which features over twenty domestic cotton mills and suppliers of cotton-based materials that all comply with Cotton Incorporated’s stringent quality and responsibly-produced cotton requirements. The added platform will generate a larger community for businesses to discover and communicate with cotton-based suppliers and manufacturers across the United States.
Maker’s Row
Maker’s Row (makersrow.com) is an online marketplace that connects American manufacturers with product-based businesses. Their mission is to make U.S. manufacturers universally accessible, and the production process simple to understand. Maker’s Row has created a community of makers, entrepreneurs, designers and businesses that are collectively coming together to bring back American manufacturing.
Cotton Incorporated
Cotton Incorporated (cottoninc.com), funded by U.S. growers of upland cotton and importers of cotton and cotton textile products, is the research and marketing company representing upland cotton. The program is designed and operated to improve the demand for and profitability of cotton.
For more information on the Maker’s Row and Cotton Incorporated partnership, or more information on Maker’s Row, please contact Matthew Burnett, CEO, Maker’s Row.
Media Contact: Matthew Burnett, Maker’s Row, 347-860-9333, matthew@makersrow.com
Top US Manufacturers Returning Jobs Back to US from China
in JobsToday “it’s a wash,” Moser told the Tribune-Review. Last year, 30,000 to 50,000 jobs left the United States for China, but 30,000 to 40,000 left China for the United States, according to an analysis of hiring by Apple, Motorola, General Electric, Ford and more than 140 other American-based companies.
A survey by Boston Consulting Group showed this trend is poised to accelerate. More than 50 percent of $1 billion-plus U.S. companies with operations in China are considering bringing all or part of their production to American shores, the consulting group reports.
Twenty-one percent told surveyors that they are doing so or plan to do so within two years. The 2013 figure is double that of 2012, the group noted.
Jerry Jasinowski, former president of the National Association of Manufacturers, cites as reasons: high Chinese energy prices, escalating wages, land prices, lack of protection for intellectual property, and air pollution.
It’s difficult to recruit managers willing to relocate families to Shanghai or another city where pollution levels are considered a serious health threat, he said.
Greg Hall, a senior vice president of Wal-Mart, told Site Selection magazine that the economics of manufacturing are changing rapidly: “In previous decades, investment mainly went to Asia where wages were low. The price of oil was low. … (Today) labor costs in Asia are rising. Oil and transportation costs are high and increasingly uncertain.”
Wal-Mart plans to shift at least $50 billion in manufacturing to the United States.
At the same time, a movement in China is impacting reshoring to America, Jasinowski said. Educated and wealthy Chinese increasingly want to move their families and money elsewhere.
About 30 percent of wealthy Chinese have moved some assets offshore, according to a 2013 survey by Boston-based Bain & Co. Among the high-net-worth Chinese without overseas investment, Bain found that more than half plan such investment. Only one in 10 said they did not plan to migrate assets out of China.
The Huron Report, which has tracked ultra-wealthy Chinese for more than a decade, reports that 16 percent of Chinese millionaires have moved or applied for visas to move out of the country. Forty-four percent are considering doing so.
Moser said he reviewed the Bain report and has told others: “The Chinese are taking their money out. Why should you (American companies) be putting money in?”
The change in job direction is not simple, however. Over the years, China acquired manufacturing from so many firms — and its domestic partners acquired so much foreign technology — that it developed essential supply lines. Just as American auto manufacturers remained competitive in part because domestic supply partners are strong, industries that relocated to China have long Chinese supply chains.
During the past three years, the Trib has chronicled how China leveraged its control over the mining and processing of rare-earth elements to lure manufacturing.
Paul Gillis, a professor at Peking University’s Guanghua School of Management in Beijing, said, “Parts and supplies can be hard to find in the U.S. While China has lost its labor cost advantage, it is a lot harder than some think to just pull up stakes and move the factory to Pittsburgh.”
Don’t expect a publicity campaign by any company planning to pull up Chinese stakes and move to the United States, experts warn.
“Manufacturers don’t like to call it ‘reshoring’ or ‘onshoring,’ ” said Paul Cicio, president of Industrial Energy Consumers of America, a Washington manufacturing lobby. “They’re sensitive. They don’t want to tick the Chinese off” because China represents the largest market in the world.
If Wall Street banks are a barometer for the change in economic outlook, they appear to have made their bets. This year Goldman Sachs finished selling its stock in the Industrial and Commercial Bank of China, the world’s largest bank, ending a relationship begun in 2006.
In September, Bank of America cut ties with China Construction Bank Corp. with a sale of $1.5 billion in stock. It acquired 9.9 percent of the bank in 2005. In December, HSBC dumped its final shares in the Bank of Shanghai.
Although the reasons for the breakups are varied, banking experts say the underlying reason is uncertainty about bad debts owed to banks in China.
Lou Kilzer is a staff writer for Trib Total Media.
Turn America’s Job Prospects Around Through Reshoring
in UncategorizedWhat does a manufacturer do when it’s struggling with excessive costs? One of the most common reactions in recent years has been to pack up and move to another country or continent where it can bring its costs of production down.
And this is just what’s happening to a number of factories, except these are Asian plants moving production to the United States. Turn Americas Job Prospects Around Through Reshoring.
Leading the Pack: Large Manufacturers Build New Facilities
The Wall Street Journal reports that Zhu Shanqing, chairman of Keer Group, is to spend $218 million in South Carolina to build a plant to spin yarn, adding 500 manufacturing jobs to the state’s economy. In another twist, China’s largest air conditioning manufacturer, Gree Electric Appliances, which manufacturers air conditioners sold in the US under a variety of different brands, is planning to build a plant in the US in 2014, although it wouldn’t say exactly where until the deal is sealed. And Hankook Tires, South Korea’s largest tiremaker, is planning to build a factory in Tennessee, to be in production by 2016, which will produce 11 million tires per year for the American market.
In a further strengthening of the trend, Chinese Lenovo Group, the world’s second largest manufacturer of personal computers, is planning to produce its ThinkPad laptop computers in North Carolina. Also, the world’s largest electronics contract manufacturer, Taiwan-based Foxconn Technology Group, which produces well-known brands under contract such as the BlackBerry, iPhone, Kindle and PlayStation, is to invest $30 million in a new robotics plant in Pennsylvania, with the possibility of a second plant in Arizona.
It’s Not Just Public Relations: the Myth of Cheap Asian Labor
Moves to reshore their manufacturing jobs have been driven in part by public pressure, for companies such as Apple, Hewlett-Packard and Walmart. However, the story isn’t only about labor costs. Walmart CEO Bill Simon told a recent manufacturing conference that in addition to rising Asian labor costs, oil and transportation costs are high and becoming increasingly uncertain. While in absolute terms Asian hourly wages are significantly less than the hourly wages of American manufacturing jobs, labor only represents about one tenth of total production costs, on average.
A series of reports from the Boston Consulting Group predicts that the US will reach cost parity with China by 2015 and that by the end of the decade as many as five million manufacturing jobs will be added. Chinese labor rates are rising 20% per year, according to the Manufacturer Alliance for Productivity and Innovation (MAPI), at the same time that the financial crisis has hit US wages.
How the American Trade Deficit Works in its Favor
The trade deficit that the United States has with China is having an unexpected result when it comes to exporting goods from the US to China. With transportation being one of the biggest expenses in overseas shipment, containers and cargo ships which leave for China empty after having arrived filled with Chinese-made goods allow American exporters to move their products to the Chinese market at a fraction of the cost of goods coming inbound. MAPI points out that American manufacturers actually have an advantage when it comes to shipping costs.
Transportation and Energy: a Key Reality
Shipping from China can be a major cost and headache which is set aside when manufacturing in America. Eliminating this factor from the supply chain can save both time and money. In a recent cost teardown, market researcher IHS found that Google is paying somewhat less overall to produce the Moto X smartphone in Texas, creating 2000 manufacturing jobs, than Samsung is paying to make its popular Galaxy S4 smartphone in Korea. Although the wages of manufacturing jobs are higher in Texas, they amount to only 5% of the total cost of the Moto X. With as little as four days lead time to deliver orders, Google is able to provide customized products to its customers while customers of its overseas competitors are waiting weeks for delivery.
Energy costs are falling rapidly in the US as shale gas is exploited, making the US a net exporter of energy, and oil finds are reducing or eliminating the need to import oil from shaky overseas suppliers. This translates into lower costs for electricity and transportation for American manufacturers, adding to the incentive to add manufacturing jobs here.
It’s Not Only About Costs: Quality, Proximity, Simplicity
China has long been seen as the place to manufacture to obtain a competitive advantage in terms of price. But as the price advantage is being eroded, manufacturers are becoming less tolerant of other problems that come with importing from the other side of the globe.
Quality has always been a problem. Rigid controls and inspections need to be conducted from a distance to ensure that products are produced with appropriate quality. A number of other problems have cropped up, such as worker exploitation, with quality of the production facility and methods coming into the public limelight.
Manufacturers are increasingly looking to eliminate these problems, with less of a cost incentive to work around them. When the manufacturing jobs are close at hand maintaining control over quality is relatively simple, in comparison to overseas production. Having production closer to the customers also has a significant effect in improved customer service. These factors can help boost sales, ultimately helping the bottom line.
These are a number of great reasons for bringing manufacturing jobs home.
Do you have more stories of reshoring manufacturing jobs?
Join the conversation and add your comments below.
US-Made Moto X’s Cost Comparable to Asian-Assembled Smartphones
in ProductsAt this cost level, the Moto X comes roughly in the middle of the combined BOM and manufacturing costs of the leading smartphone models, Apple Inc.’s iPhone 5 and Samsung’s Galaxy S4. The U.S. version of the Galaxy S4 with 16 gigabytes (GByte) of NAND flash memory carries a total BOM and manufacturing cost of $237. Meanwhile, the 16Gbyte iPhone 5 costs $207.
While the manufacturing expense of the Moto X is $3.50 to $4.00 more than these phones, the total cost to make Motorola’s smartphone is only 9 percent more than the iPhone 5—and about 5 percent less than the Galaxy S4.
“With the Moto X, Motorola is reaping the public-relations and customization upsides of producing a smartphone in the United States, while maintaining competitive hardware costs,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS. “The Moto X’s electronic components are comparable to other cutting-edge smartphones on the market today. However, the product doesn’t break much new ground in terms of its hardware. Furthermore, in spite of its ‘Made in the USA’ label, overall costs are still competitive with similar smartphones. Our initial estimate suggests the additional costs of onshoring the Moto X are relatively low.”
Made in the USA—and priced to sell
“Motorola has been generating a great deal of publicity regarding the Moto X’s production in Texas,” said Wayne Lam, senior analyst for wireless communications at IHS. “However, beyond the public relations boon, the domestic manufacturing allows Motorola to rapidly assemble custom versions of the phone for customers in the United States. Motorola can deliver a customized Moto X to AT&T wireless subscribers in just four days.”
The 16Gbyte Moto X has a full retail price of $540 or $580 when customized with Motorola’s Moto Maker purchase and design service. With a two-year service contract from AT&T, consumers can obtain a Moto X for $199.
“An examination of the retail and contract pricing indicates that Motorola receives carrier subsidies of slightly more than $300 per handset when purchased on contract, whereas Apple’s iPhone and the Samsung Galaxy S4 command larger subsidies of more than $400 per contract,” Lam noted. “Therefore, Motorola is definitely vying to become the lower-cost alternative to Apple and Samsung for the wireless carrier partners.”
On the beaten path
“One of the most remarkable things about the electronic design of the U.S.-made Moto X is how unremarkable it is compared to Asian-assembled smartphones,” Rassweiler said. “IHS Teardown has already seen almost all of the components in Moto X in other products. With its use of a Qualcomm-based design, the Moto X could easily be mistaken for a smartphone made by HTC or Samsung, if it weren’t for the Motorola logo. The use of components that are already shipping in high volume allows Motorola to keep costs down.”
Qualcomm in quantity
The Moto X is based on a Qualcomm turnkey design and makes maximum use of the supplier’s semiconductors. Qualcomm-made chips in the Moto X include the MSM8960 apps/baseband processor; the WTR1605L radio frequency (RF) transceiver; the WCD9310 audio codec; the PM8921 power management integrated circuit (IC); and the WCN3680 Bluetooth, frequency modulation and wireless local area network companion IC.
While most of the design was familiar, this was the first time that the WCN3680 was seen in a product torn down by IHS. This device supports the 802.11ac WLAN standard, which is in the initial acceptance stage, but soon will become the standard in smartphones.
Figure 8
The MSM8960 Snapdragon S4 Pro Apps Processor appears to be a variant of the same part that has appeared in other devices, including the HTC One X, the Blackberry Z10 and the North American version of the Galaxy S III.
At the same time, Motorola is promoting its X8 Mobile Computing System.
Company marketing materials strongly suggest, based upon a visual examination of a Motorola-labeled integrated circuit and other observations, that its X8 Mobile Computing System is a system-on-chip (SoC) solution from Motorola featuring eight cores.
Upon further inspection, the X8 is not an SoC, and is not a Motorola chip. Rather, the X8 Mobile Computing System is a design architecture that spreads the eight cores across at least two integrated circuits—including the Qualcomm MSM8960 and a Texas Instruments digital signal processor/microcontroller.
The Moto X also uses microelectromechanical systems (MEMS) microphones from Wolfson Microphones, marking the first time that IHS has seen these parts from this supplier in any product. Wolfson’s forte in the past was audio codec chips.
Battery life
The Moto X makes very efficient use of its battery by managing the power consumption of its apps processor and display.
Instead of taxing the apps processor for simple tasks like displaying notifications, the Moto X employs a secondary low-power contextual core to run the display when the phone is powered off. The Moto X’s active-matrix organic light-emitting diode (AMOLED) display only lights up small portions of the 4.7-inch screen to display time and notifications like email, text and missed calls, extending the battery life to a 24-hour usable experience.
As with all AMOLED displays, each pixel illuminates and thus is inherently more energy efficient than LCDs, where the entire panel is illuminated.
User Friendliness
The Moto X includes several features designed to enhance ergonomics and the user experience.
On the ergonomics front, the smartphone employs a 4.7-inch display with minimum bevels and a rounded/curved backside with an indented index finger rest. While not the largest display available on a smartphone, it makes the Moto X easier to hold and use.
In terms of user experience, the Moto X is the first smartphone to include an “always-on/listening” or “open-mic” front end. The always-on/listening system is trained to listen for magic commands from the owner’s voice to activate Google Now interactions.
The system also supports ge
sture-based interactions using the gyroscope. For example, a double-twist gesture will launch the Moto X’s camera application.
The Street Aesthetic of New York City
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Backing Out Of China To Reshore
in UncategorizedMore companies from Europe and the United States that used to outsource production to China are returning home as price gaps narrow.
Philips found the robots to be more productive than workers in Guangdong in southern China, where it, like many other foreign multinationals, had to contend with rising labor and raw material costs and occasional staff shortages.
General Electric Co took arguably a bigger gamble by opting to reshore some production from China to its Appliance Park in Louisville, Kentucky, in 2012.
There, GE was able to redesign one of its water heaters and slash the time it takes to get them to warehouses. Efficiency rose and material costs fell by more than 20 percent, enabling it to lower the US retail price of its GeoSpring heater from $1,599 to $1,299. GE also returned production of some washing machines and refrigerators to the US.
Similar cases have been popping up over the past five years as more European and US companies find it makes more sense to return jobs and production home, a strategy known as reshoring.
These moves mostly involve companies that sell mainly to their domestic markets. And they indicate that China.s competitiveness as a global low-cost production base is waning.
“A number of German companies operating in China have told me that it makes less and less sense for them to manufacture their products here and export them to Europe,” says Stefan Gessner, general manager of Linder + Wiemann GmbH, a German company that sources equipment for stamping tools in China.
“This is mostly because labor costs are rising while subsidies and other forms of support from the Chinese government are shrinking,” he says. “For those that decide to remain or expand here, it seems to be more a case of go local to stay local.”
Labor costs have shot up by as much as 500 percent in China since the turn of the century. In line with the changing expectations of Chinese factory workers, the average annual urban income jumped to 41,799 yuan ($6,850) in 2011, up from 24,721 yuan in 2007, according to the National Bureau of Statistics.
Boston Consulting Group, which has published a series of papers on reshoring, predicts that ongoing trends could “virtually close the price gap” for most products sold in the US in a couple of years. A similar argument can be made for Europe.
“Within five years, the total cost of production for many products will be only about 10 to 15 percent less in Chinese coastal cities than in some parts of the US where factories are likely to be built,” BCG wrote in 2011.
“Factor in shipping, inventory costs and other considerations, and — for many goods destined for the North American market — the cost gap between sourcing in China and manufacturing in the US will be minimal.”
Small in scale
The number of reported cases of companies that have returned their manufacturing operations back home is limited. There are around 100 in the US, even fewer in Europe.
In July, the Financial Times described the trend among United Kingdom companies as “modest”. Meanwhile, French Industry Minister Arnaud Montebourg said recently that “only a few” French companies have decided to go down this road, or given it serious thought.
Ioana Kraft, general manager of the Shanghai office of the European Chamber of Commerce in China, says,”I have not heard of any major reshoring moves recently (among our members). I recall one or two companies having done so in 2012, but nothing in 2013.”
Yet even such fledgling moves hint at the changing dynamics of the global playing field. The US, for example, now has highly competitive energy prices and its workers are among the most highly skilled and efficient in the world.
According to Harry C. Moser, founder and president of the US-based Reshoring Initiative, a nonprofit organization, Europe is starting to follow in the footsteps of the trailblazing Americans. In this context, the trail being blazed can seem more like a retreat to safer shores.
“Europe is behind the US, but it.s starting to push hard,” says Moser. “It is spreading in the Netherlands and France and there is interest in the UK, Switzerland, Italy and Belgium.”
Local academics say they expect it to keep gaining momentum. “This reshoring trend is quite prominent — and it.s going to continue in the near future,” says Xu Bin, a professor of economics and finance at the China Europe International Business School, which has its main campus in Shanghai.
Lower margins
According to a report published by the Reshoring Initiative in July, higher wages have been the main reason for most of the reshoring activities by US companies. By the same token, the European Chamber of Commerce.s Business Confidence Survey 2013 reports that 63 percent of European companies it polled rank this as the most significant challenge they will face in their future business in China.
“Tougher business conditions, both globally and in China, have led to a diminished financial performance for European companies in China in recent years,” the report said. “Profitability is on a clear downward slide and high margins may be increasingly a thing of the past.”
Despite this, 86 percent of respondents said they were considering expanding their operations in China, with 41 percent now considering mergers and acquisitions. Moreover, while some 22 percent of European companies were thinking of moving their current or planned investments in China to a different country in 2012, the number has since fallen to 10 percent.
As the logic of “going local to stay local” increasingly rings true, 75 percent of respondents to the survey said their primary reason for being here was to serve the Chinese market, up from 72 percent in 2012.
Other reasons for leaving cited by US companies were the unfavorable exchange rate, quality issues, freight costs, delivery problems and deadlines not being met, as outlined by the Reshoring Initiative.s report.
Among the examples it gave were Sleek Audio LLC, which took manufacturing jobs back to Florida after losing hundreds of thousands of dollars in scrap — and more in lost sales — because of poor quality control in China. Scovill Fasteners Inc cited rising salaries and the fact that a quarter of its staff failed to return from their annual holidays in explaining its decision to go back to Georgia.
Other drivers compelling companies to jump ship include high oil prices, which make international shipping more costly, and friendlier investment climates in the US and parts of Europe.
“Current research shows many (US) companies can reshore about 25 percent of what they have offshored and improve their profitability,” says Moser.
That equation has since changed dramatically to between 30,000 and 50,000 jobs a year being offshored versus 30,000 a year that are reshoring, he said. If true, this illustrates how the mass exodus out of the West five years ago has been replaced by a growing sense of equilibrium.
“New offshoring is down 70 percent to 80 percent, and new reshoring is up about 1,500 percent,” he says.
However, while high-profile companies such as Caterpillar Inc, Google Inc and Ford Motor Co have followed the reshoring trend, finance professors and business consultancies in Shanghai warn against overplaying the situation.
Buying Overseas Clothing, U.S. Flouts Its Own Advice
in NewsLabor Department officials say that federal agencies have “zero tolerance” for using overseas plants that break local laws, but American government suppliers in countries including Bangladesh, the Dominican Republic, Haiti, Mexico, Pakistan and Vietnam show a pattern of legal violations and harsh working conditions, according to audits and interviews at factories. Among them: padlocked fire exits, buildings at risk of collapse, falsified wage records and repeated hand punctures from sewing needles when workers were pushed to hurry up.
In Chiang Mai, Thailand, employees at the Georgie & Lou factory, which makes clothing sold by the Smithsonian Institution, said they were illegally docked over 5 percent of their roughly $10-per-day wage for any clothing item with a mistake. They also described physical harassment by factory managers and cameras monitoring workers even in bathrooms.
At Zongtex Garment Manufacturing in Phnom Penh, Cambodia, which makes clothes sold by the Army and Air Force, an audit conducted this year found nearly two dozen under-age workers, some as young as 15. Several of them described in interviews with The New York Times how they were instructed to hide from inspectors.
“Sometimes people soil themselves at their sewing machines,” one worker said, because of restrictions on bathroom breaks.
Federal agencies rarely know what factories make their clothes, much less require audits of them, according to interviews with procurement officials and industry experts. The agencies, they added, exert less oversight of foreign suppliers than many retailers do. And there is no law prohibiting the federal government from buying clothes produced overseas under unsafe or abusive conditions.
“It doesn’t exist for the exact same reason that American consumers still buy from sweatshops,” said Daniel Gordon, a former top federal procurement official who now works at George Washington University Law School. “The government cares most about getting the best price.”
Frank Benenati, a spokesman for the Office of Management and Budget, which oversees much of federal procurement policy, said the administration has made progress in improving oversight, including an executive order last year tightening rules against federal suppliers using factories that rely on debt bondage or other forms of forced labor.
“The administration is committed to ensuring that our government is doing business only with contractors who place a premium on integrity and good business ethics,” he said.
Labor and State Department officials have encouraged retailers to participate in strengthening rules on factory conditions in Bangladesh — home to one of the largest and most dangerous garment industries. But defense officials this month helped kill a legislative measure that would have required military stores, which last year made more than $485 million in profit, to comply with such rules because they said the $500,000 annual cost was too expensive.
Federal spending on garments overseas does not reach that of Walmart, the world’s biggest merchandiser, which spends more than $1 billion a year just in Bangladesh, or Zara, the Spanish apparel seller, but it still is in a top tier that includes H & M, the trendy fashion business based in Sweden, Eddie Bauer and Lands’ End, sellers of outerwear and other clothing.
The United States government, though, faces special pressures. Its record on garment contracting demonstrates the tensions between its low-bid procurement practices and high-road policy objectives on labor and human rights issues.
Along a dirt road in Gazipur, about 25 miles north of the Bangladeshi capital, riot police fired tear gas shells, rubber bullets and sound grenades in a fierce clash with garment workers last month, sending scores to the hospital. The protesters demanding better conditions included some from a factory called V & R Fashions. In July, auditors rated that factory as “needs improvement” because workers’ pay was illegally docked for minor infractions and the building was unsafe, illegally constructed and not intended for industrial use.
Unsafe and Repressive
Like dozens of oth
er factor
ies in the area, V & R makes clothes for the American government, which is constantly prowling for the best deals. In interviews, workers at a half-dozen of these suppliers described the effect of such cost pressures.
At Manta Apparels, for example, which makes uniforms for the General Services Administration, employees said beatings are common and fire exits are kept chained except when auditors visit. The local press has described Manta as one of the most repressive factories in the country. A top labor advocate, Aminul Islam, was organizing there in 2010 when he was first arrested by the police and tortured. In April 2012, he was found dead, a hole drilled below his right knee and his ankles crushed.
Several miles from Manta, 40 women from another supplier, Coast to Coast, gathered late one night to avoid being seen publicly talking to a reporter. Dressed in burqas, the women said that prices of the clothing they make for sale on American military bases are now so cheap that managers try to save money by pushing them to speed up production. In the rush, workers routinely burn themselves with irons, they said, often requiring hospitalizations.
Work does not stop, they said, when it rain pours through a six-foot crack in the ceiling of the top floor of the factory — a repurposed apartment building with two extra floors added illegally to increase capacity. Even after the manager swipes their timecards, they say, he orders them to keep sewing.
While giving a tour of the plant, the manager described the building crack as inconsequential and too expensive to repair. He denied the workers’ other allegations. The owner of Manta declined to comment.
Conditions like those are possible partly because American government agencies usually do not know which factories supply their goods or are reluctant to reveal them. Soon after a fire killed at least 112 people at the Tazreen Fashions factory in Bangladesh in November 2012, several members of Congress asked various agencies for factory addresses. Of the seven agencies her office contacted, Representative Carolyn Maloney, Democrat of New York, said only the Department of the Interior turned over its list.
Over the summer, military officials told Representative George Miller, Democrat of California, that order forms for apparel with Marine Corps logos had been discovered in Tazreen’s charred remains but that the corps had ties to no other Bangladeshi factories. Several weeks later, the officials said they were mistaken and had discovered a half-dozen or so other factories producing unauthorized Marine Corps apparel. On Sunday, the owners of Tazreen and 11 employees were charged with culpable homicide.
President Obama has long pushed for more transparency in procurement. As a senator, he sponsored legislation in 2006 creating the website USASpending.gov, which open-government advocates say has made it far easier to track federal contracting. However, procurement experts fault the website for requiring agencies to name their contractors, but not identifying the specific factories doing the work. Some states and cities already require companies to disclose that information before awarding them public contracts, said Bjorn Skorpen Claeson, senior policy analyst at the International Labor Rights Forum.
Federal officials still have to navigate a tangle of rules. Defense officials, for instance, who spend roughly $2 billion annually on military uniforms, are required by a World War II-era rule called the Berry Amendment to have most of them made in the United States. In recent years, Congress has pressured defense officials to cut costs on uniforms. Increasingly, the department has turned to federal prisons, where wages are under $2 per hour. Federal inmates this year stitched more than $100 million worth of military uniforms.
No sooner had the Transportation Security Administration, or T.S.A., signed a $50 million contract in February for new uniforms for its 50,000 airport security agents and other workers, than the agency was attacked from all sides.
Union officials, opposed to outsourcing work overseas, objected because the Mexican plant making the clothing, VF Imagewear Matamoros, was the same one that had treated uniforms with chemicals that caused rashes in hundreds of T.S.A. agents. Congress called an oversight hearing, where some lawmakers questioned why two-thirds of the uniforms would be made in foreign factories, saying the deal was a missed chance to stimulate domestic job growth. Other lawmakers faulted the agency for spending too much money on clothing, especially on the cusp of a federal budget crisis, no matter where the merchandise was made.
“Bottom line,” John W. Halinski, T.S.A. deputy administrator, told Congress, “we go for the lowest-cost uniform, sir.”
The hunt for lower costs and the expansion of free-trade pacts have meant that more of this work is being done abroad, often in poor countries where the Obama administration is trying to spur competition and development.
In Haiti, for instance, trucks loaded with camouflage pants, shirts and jackets, some of them destined for American military bases, idle in front of a factory called BKI.
Next year, BKI managers hope to double the amount of camouflage clothing made for the American government, part of a contract worth more than $30 million between a division of Propper International, a Missouri-based uniform company, and the General Services Administration, which outfits workers for more than a dozen federal agencies.
Three years ago, much of this camouflage clothing was made in Puerto Rico, where workers earned the minimum wage of about $7.25 an hour. By 2011, many of these jobs moved to a factory in the Dominican Republic called Suprema. Wages there were about 80 cents per hour and unpaid overtime was routine, according to workers in recent interviews and a 2010 audit. Since then, most of these jobs have migrated again, this time to BKI in a Haitian free-trade zone called Codevi. Average hourly wages at BKI are about 8 cents less per hour than those at Suprema, according to workers.
Standing near the factory entrance, several BKI workers said they were proud of the clothes they made for the American government. “We push hard because we know they expect better,” said Rodley Charles, 29, a quality inspector at the factory.
But there is basic math: the average pay of 72 cents per hour (which is illegal and below Haiti’s minimum wage) barely covers food and rent, said Mr. Charles, who has since quit, and two other BKI workers.
These wage pressures may soon intensify. Codevi will soon face new competition from another industrial park called Caracol, which is being built partly with money from the United States Agency for International Development as part of reconstruction efforts after the earthquake of 2010.
American officials predict that Caracol will eventually create 60,000 new jobs. Current wages there? About 57 cents per hour, or roughly 15 cents less than typical wages at Codevi.
Big Business
At a military store in Bethesda, Md., Tori Novo smiled as she looked over a pair of $19.99 children’s cargo pants made in Bangladesh that sell for $39 in most department stores. The best part of living on base, said Ms. Novo, a 31-year-old Navy recruiter, was “savings like these.”
Known as exchanges, these big-box stores on military bases around the world offer a guarantee: to beat or match any price from rivals. That promise puts the exchanges in direct competition with the deep discounts offered by stores like Gap and Target. It also adds to already intense pressure to lower costs by using the cheapest factories, industry analysts say.
These stores, run by the Defense Department, do big business, selling more than $1 billion a year in apparel alone. Exempt from the Berry Amendment, the exchanges get more than 90 percent of their clothes from factories outside the United States, according to industry estimates. The profits from these tax-free stores mostly go toward entertainment services like golf courses, gyms and bowling alleys on bases.
Though the Government Accountability Office criticized the exchanges over a decade ago for exerting less oversight than private retailers and for failing to independently monitor their overseas suppliers, little has improved.
The Marine Corps and Navy still do not require audits of these factories. The Air Force and Army exchanges do, but the audits can come from retailers, and defense officials fail to do routine spot checks to confirm their accuracy.
For example, Citadel Apparels, a factory in a seven-story building in Gazipur, has cut, stitched and shipped more than 11 metric tons of cotton boys’ T-shirts and other clothes for sale at exchanges on Army and Air Force bases in recent months. This summer, lawmakers in Congress asked the Defense Department for proof that Citadel was safe. Defense officials produced an audit conducted for Walmart, another client of the factory, showing that it had an “orange” risk ranking in July 2012, the same high level of alarm that Walmart had given the Tazreen factory before the fatal fire there last year.
While allowing the factory to stay open, the audit offered an alarming statistical snapshot.
Sixty-five percent: number of workers barefoot, some on the building’s roof. Fifty percent: workers without legally required masks to protect against cotton dust. Sixteen percent: workers missing time-sheets, a common sign of forced overtime. Most serious infractions: cracks in the walls that could compromise the building, and partly blocked exit routes and stairwells.
By January, Citadel’s auditors concluded that most of these dangers had been fixed. However, a half-dozen Citadel workers offered a starkly different picture. Virtually none of the original problems had ever been corrected, they said in interviews last month with The Times.
“We aren’t sewing machines,” one worker said. “Our lives are worth more.”
For now, Bangladesh’s garment sector continues to grow, as do purchases from one of its bulk buyers. In the year since Tazreen burned down, American military stores have shipped even more clothes from Bangladesh.
Ian Urbina reported from Bangladesh and Washington. Research was contributed by Susan Beachy in New York, Poypiti Amatatham in Bangkok, Karla Zabludovsky in Mexico City, Malavika Vyawahare in New Delhi and Meridith Kohut in Ouanaminthe, Haiti.
Bangladeshi Factory Owners Charged in Fire That Killed 112
in NewsThe fire at the Tazreen Fashions factory on Nov. 24, 2012, was later eclipsed by a building collapse in April that cost the lives of 1,100 workers and brought global attention to the unsafe working conditions and low wages at many garment factories in Bangladesh, the No. 2 exporter of apparel after China. The fire also revealed the poor controls that top retailers had throughout their supply chain, since retailers like Walmart said they were unaware that their apparel was being made in such factories.
Among those charged on Sunday were the factory’s owners, Delowar Hossain and his wife, Mahmuda Akther, as well as M. Mahbubul Morshed, an engineer, and Abdur Razzaq, the factory manager, according to local news reports.
Bangladeshi officials have been under intense domestic and international pressure to file charges against those deemed responsible for last year’s deaths. Fires have been a persistent problem in the country’s garment industry for more than a decade, with hundreds of workers killed over the years.
Bangladesh has more than 4,500 garment factories, which employ over four million workers, many of them young women. The industry is crucial to the national economy as a source of employment and foreign currency. Garments constitute about four-fifths of the country’s manufacturing exports, and the industry is expected to grow rapidly.
On the night of the fire, more than 1,150 people were inside the eight-story building, working overtime shifts to fill orders for various international brands. Fire officials say the blaze broke out in the open-air ground floor, where large mounds of fabric and yarn were illegally stored.
But on some floors, managers ordered the employees to ignore a fire alarm and continue to work. Precious minutes were lost. Then, as smoke and fire spread throughout the building, many workers were trapped, unable to descend the smoke-filled staircases, and they were blocked from escape by iron grilles on many windows. Desperate workers managed to break open some windows and leap to safety on the roof of a building nearby. Others simply jumped from upper floors to the ground.
Polls Find Unpleasant Financial Truths
in UncategorizedUNFAIR FIGHT? Financial services marketers, such as banks promoting credit cards, outspend financial education efforts 25-to-1, according to a recent study by the Consumer Financial Protection Bureau. And that doesn’t even include marketing spending on the two huge areas of investments and insurance.
“When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information,” said bureau Director Richard Cordray, who called the difference in spending “staggering.”
The report found that the financial services industry spends about $17 billion a year marketing financial products and services to consumers, but only $670 million is spent annually to provide financial education to consumers.
Where to go for unbiased financial information to educate yourself? There are many resources, including books and some blogs. A well-regarded general book, for example, is “Personal Finance for Dummies” by Eric Tyson. Always assess who is giving the information and why. The bureau hosts a site at http:consumerfinance.gov/askcfpb, as does the Federal Trade Commission, at http:consumer.ftc.gov.
CREDIT BUREAUS UNEVEN AT CORRECTING ERRORS: The good news is that thousands of consumers with errors on their credit reports are getting relief through the Consumer Financial Protection Bureau. The bad news is, credit reporting agencies vary widely in how they respond to consumer complaints, according to an analysis by U.S. PIRG Education Fund. For example, Equifax responded to more than half of consumers with relief, while Experian helped only 5 percent, with the other major agency, TransUnion, in the middle. The report used data collected by the financial protection bureau’s public Consumer Complaints Database, created to help consumers resolve problems with their credit reports.
Studies have found that millions of Americans have serious errors on their credit reports. That’s potentially a big deal because errors can hurt a consumer’s ability to get an affordable loan, rent an apartment or even land a job. Check your reports for errors once a year from each of the three major credit bureaus at www.annualcreditreport.com.
“MADE IN USA” MYTH? People might assume that products made in America tend to be more costly but are superior in quality. But a recent study, which was more anecdotal than scientific, found no evidence of either. Cheapism.com, which looks for value among lower-priced brands within product categories, sent a researcher into a Walmart, which has been touting its “Made in USA” offerings, to buy and test several items made domestically against imports.
Items included socks, towels, skillets, light bulbs and kitchen mats. The findings? The cost was about the same: U.S.-made items cost a total of $57.50, while imports totaled $55.46. But quality varied, with no clear winner.
“Although we’re happy to get on board the USA-made train, we also pay homage to value pricing and quality performance,” the report said. “We found no clear-cut association among country of origin, price and quality.”
Of course, many people prefer American-made products for philosophical or political reasons more than value reasons.
The Transformation of Manufacturing
in UncategorizedAs the United States emerges from the Great Recession, a broad array of technological and societal trends is shaping the future of manufacturing, which accounts for over 10 percent of all US economic activity.7
The technology trends that present new possibilities and questions for manufacturers include:
Manufacturers are increasingly looking to take advantage of these technology trends to help them navigate the economic and business challenges they face, including increased labor costs in developing countries, a talent gap at home, the intellectual property risks of global operations, and a growing regulatory burden.
Manufacturers are facing new questions
These trends raise many questions for our manufacturing clients:
A new basis of competition
Collectively, these questions reveal that macroeconomic and technological shifts are changing the basis of competition and value creation in manufacturing. Success is no longer guaranteed for the manufacturer with the lowest costs. New materials and new processes give manufacturers across all sectors the opportunity to provide more value to their customers—including improved performance, faster delivery time, customized products, and flexible productive volumes—and capture more profits for themselves. In this dynamic environment, manufacturers cannot afford to stand still. Innovation enabled by new technology is a path to a successful future in manufacturing.
Connected Products Changing Manufacturing Business Model
in UncategorizedHeppelmann’s conclusions are, in part, based on data from a survey of 300 global manufacturing executives commissioned by PTC and performed by Oxford Economics, a global forecasting and quantitative analysis firm. Nearly 70 percent of responding executives said they expect their companies to undergo significant business process transformations over the next three years. The executives hold these expectations because they believe “they’re nearing a point of diminishing returns with their focus on improving manufacturing operations, with more than half saying they believe they’ve already wrung out almost all the potential savings from efficiencies in their production processes,” Heppelmann states in his article.
While this is undoubtedly true for many manufacturers, I have to wonder how true this statement holds for the majority of manufacturers. After all, less than a year ago I attended a presentation by Laurie Harbour, president of Harbour Results, at the Manufacturing in America Symposium. According to her analyses of current manufacturing data, manufacturers as a whole haven’t become more efficient over the past several years. “The extra revenues being brought in now [due to the upturn in U.S. manufacturing] are just hiding the inefficiencies,” she said. The data she produced showed that revenue per full time employee in 2011 was $160,000, but was only $149,000 in 2012. In 2012 revenue increased 16 percent over 2011 but throughput went down 7 percent, she said, which represents about an $11,000 loss per full time employee.
Texas' Surging Manufacturing Sector Gets Boost from Apple
in UncategorizedThe Mac Pro is being assembled at the Flextronics America factory in northwest Austin. The plant employs about 2500 people and jobs at the plant could increase as production of the Mac Pro ramps up.
Apple has been secretive about its plans for USA production, with Flextronics America revealing in October that it was hiring workers to build “the next generation desktop computer.” Apple confirms that all of the parts made in the Mac Pro are also made in the USA, work which had previously been done at Apple’s massive Foxconn factory in China.
Texas economist Ray Perryman says this will be a wonderful opportunity for Texas to tout its manufacturing assets.
“With quality issue and with looking for competitive edges, I think more people will be looking at the United States for manufacturing key components,” Perryman said.
The return of manufacturing has been one of the truly untold stories of the economic recovery. Powered largely by cheap natural gas being recovered from the Eagle Ford shale, manufacturing is returning from offshore locations where it was moved in the seventies and eighties, and much of it is locating in Texas.
Perryman says being known as the place where Apple manufacturers its computers will be just as valuable a promotional tool as San Antonio being known as the place where Toyota manufactures its pickup trucks.
“I think we are going to see a general trend of more components and more computers being produced in the United States,” Perryman said.
But Perryman says despite the advantages of Texas and USA production, offshore manufacturing is still attractive for companies looking to cut costs.
“They compute so intensely, so there is going to be a lot of pressure on them to remain in lower wage countries,” Perryman said.
The Texas built Mac Pro won’t be cheap. It is priced at Apple stores and other retailers at $2,999.
Apple Kicks Off ‘Made in USA’ Push With Mac Pro
in ManufacturingThe cylindrical machine, which runs on Intel Corp.’s latest Xeon chip, will be available to order today at a starting price of $2,999, Apple said. While companies such as Google Inc. and Lenovo Group Ltd. are doing some final assembly in the U.S. of parts made overseas, Cook said in an interview in October that Apple is manufacturing — not just putting together — the Mac Pro’s metal parts in the U.S.
“The difference with us is that we’re taking a bottoms-up approach,” Cook said at the time. “We don’t want to just assemble the Mac Pro here, we want to make the whole thing here. This is a big deal.” Apple’s partners are using industrial molds and production processes that were developed in the U.S., he said.
High End
The newest version of the Mac Pro, a top-of-the-line computer used by graphic designers and filmmakers who require the fastest performance, is going on sale at the height of the holiday shopping season in customizable configurations starting at $2,999 and $3,999 depending on the chip’s power and amount of memory.
The sleek, rounded black machine, which looks like a space-age trash can or a small jet engine, is 9.9 inches tall and is an eighth the size of the current Mac Pro, the company said. Intel’s Xeon processors will let it handle some calculations at twice the speed of the existing model, Apple has said, and will use 70 percent less power because of its smaller size. The computer comes with 256 gigabytes of flash-based storage, expandable to one terabyte — the equivalent of 1,000 gigabytes.
Twenty States
Apple executive Phil Schiller said in October that more than 2,000 people in 20 states were working on the Mac Pro. The Cupertino, California-based company released a video of the highly automated processes used to build the machine, showing a puck-shaped plug of aluminum being stamped into the shape of the cylindrical shell, and then passed through a series of robots for polishing, anodizing and painting. Other machines insert electronic components onto circuit boards.
The last frames of the video show the words “Designed in Cupertino, Assembled in the USA” being etched on the bottom of the machine by laser. Under U.S. Federal Trade Commission regulations, companies can’t include the term “Assembled in USA” if that process only includes final piecing together of imported parts “in a simple ‘screwdriver’ operation in the U.S.”
So far, the company’s push isn’t poised to have a big impact. Of Apple’s $170.9 billion in annual revenue, more than 70 percent of that comes from the iPhone and iPad tablet, which are built in China. The new Mac Pro will probably contribute less than 1 percent of Apple’s sales in 2014, said Gene Munster, an analyst at Piper Jaffray Cos. He predicts the company will sell 1.1 million Mac Pros in 2014, compared with 300 million iPhones and iPads.
Google, Lenovo
Other large technology companies have also been doing more work in the U.S., yet few have begun manufacturing components in the country. Google, which makes the rival Android mobile operating system and Motorola smartphones, has been assembling its Moto X device at a Flextronics International Ltd. factory near Fort Worth, Texas, hiring more than 2,000 people. In June, Lenovo said it was adding 115 people to work on final assembly of PCs in Whitsett, North Carolina.
“We are designing, engineering and assembling Moto X in the USA,” Gabe Madway, a spokesman for Motorola, said in an e-mail. “Our parts come from all over but are assembled and in some cases made in the U.S.”
While Beijing-based Lenovo, the world’s largest PC maker, isn’t doing fabrication in the U.S., the automation equipment used at its Whitsett plant was made in the country and the company uses packing materials from local vendors, said Milanka Muecke, a spokeswoman.
Labor Conditions
Apple has faced stepped-up scrutiny of its overseas labor in recent years. Allegations of use of underage workers, forced overtime and other infractions have led the company to investigate conditions at China-based manufacturing partners Hon Hai Precision Industry Co. and Pegatron Corp. Apple has joined the Fair Labor Association, and publishes regular results of hundreds of factory audits in a Supplier Responsibility Report.
In December 2012, Cook told Bloomberg Businessweek that the company would spend $100 million to build a new version of one of its Mac models in the U.S. In testimony before the U.S. Senate in May, Cook said the Mac Pro would be assembled in Texas using parts made in Illinois and Florida and equipment made in Kentucky and Michigan. And last month, the company said a new Arizona plant will employ 2,000 people to produce a glass alternative made of synthetic sapphires that are increasingly being used in smartphones to cover camera lenses and home buttons.
Rebuilding Expertise
Cook declined to say how many total jobs Apple might create in the U.S. The biggest challenges have been getting more suppliers to set up shop, and re-establishing production-related expertise that has been disappearing since big technology companies started turning to foreign companies for manufacturing in the 1990s and 2000s, he said.
“We’re responsible for 2,000 jobs so far, and we’ll see how high that goes,” Cook said in the October interview. “The important thing is to re-develop the skills.”
Some of Apple’s suppliers are already taking steps to boost their operations in the U.S. Last month, Hon Hai said it would spend $30 million to build a factory in Harrisburg, Pennsylvania. Hon Hai CEO Terry Gou said the focus at that plant would be on developing automation technologies, not creating job-intensive production lines.
Given the lower labor costs and smooth supply chain Apple has built in Asia, the co
mpany
may never bring high-volume manufacturing of devices such as the iPhone back to the U.S., said Mike Fawkes, who oversaw Hewlett-Packard Co.’s supply-chain operations until 2008. While labor costs in China have been rising in recent years, they are still 60 percent lower than those in the U.S., according to Boston Consulting Group.
“It’s a positive sign to see Hon Hai further establish its U.S. presence,” said Fawkes. “That said, a $30 million factory is a drop in the bucket for manufacturing of any consequence.”
Connecticut First State To Require Labeling of GMO's
in UncategorizedGov. Dannel Malloy held a ceremonial bill signing in Fairfield on Wednesday to commemorate a bill that requires certain foods intended for humans to be clearly marked that it is entirely or partially genetically engineered.
“People need to demand GMO labeling,” Malloy said. “Some companies are doing this and we need to move in that direction.”
“I am proud that leaders from each of the legislative caucuses can come together to make our state the first in the nation to require the labeling of (Genetically Modified Organisms),” Malloy said in a statement. “The end result is a law that shows our commitment to consumers’ right to know while catalyzing other states to take similar action.”
In addition, a combination of northeastern states with a combined population of at least 20 million, including Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, New York, Pennsylvania and New Jersey, must adopt similar laws.
Officials said the bill also includes language that will protect local farmers to ensure regional adoption of the new labeling system before it will require local farms to analyze and label genetically engineered products.
Buying foods that are organic has become popular and in health food stores, it’s not common to find products that are already labeled GMO-free.
Lisa Storch, who owns the Catch A Healthy Habit in Fairfield, said more and more people want to know what’s in the foods they eat.
“It’s little steps at a time,” Storch said. “(We are) trying different avenues as far as healthy eating and what works for you.”
'Made in USA' Now Trendy in China
in UncategorizedIncidentally, the U.S. has been ranked first for brand reputation four years in a row by the Anholt-GfK Roper Nation Brands Index.
China was the third largest importer of U.S. goods last year, purchasing nearly $109 billion worth of everything from electronics to apparel to industrial equipment.
Driving this growth is a booming Chinese middle class (estimated to reach 600 million by the end of this decade) with a hunger for quality, higher priced Western products. A report from the Boston Consulting Group (BCG) found that 61 percent of China’s consumers would pay more for a product made in the U.S.
While a growing Chinese middle class is demanding better products, China is simultaneously losing its footing as a cheap place to manufacture. According to the same BCG report, China’s once-overwhelming low-cost advantage over the U.S. is eroding fast. Within five years, rising Chinese wages, higher U.S. productivity, a weaker dollar, and other factors will virtually close the cost gap between the U.S. and China.
The longstanding yet often turbulent business relationship between the U.S. and China is clearly shifting. China has lost its cost advantage, and American manufacturers can now compete aggressively on quality, service and technology in a way that China cannot. And this is exponentially good for American manufacturers.
It’s estimated that higher U.S. exports, combined with re-shored production from China, could create 2.5 million to 5 million new U.S. jobs in manufacturing and related services by the end of the decade.
If you are interested in finding out more about American-made products, you can check out this list of Made in the USA brand members.
US Fundraising Mittens Made in China
in UncategorizedThe red-white-and-blue mittens it’s selling to raise funds for winter athletes were produced in China.
It says so right on the tag on the inside.
The USOC is charging $14 a pair for the blue hand-warmers that have the word “Go” embroidered in red on the left mitten and “USA” on the right. Also part of that left mitten is the tag, which says the gloves are “100% acrylic,” ”One Size Fits Most” and “Made in China.”
USOC spokesman Patrick Sandusky said the “official” mittens being worn by the athletes at the opening ceremony are made in the USA. They’re also available to the public for $98 a pair on the Ralph Lauren website, which proudly proclaims its products are “Made in America” almost everywhere you look on the page for its official Team USA collection.
But the federation, which receives no government funding and is always trying to find new ways to raise money for its athletes, was going for a lower price point for its fundraiser. With the games more than a month away, it has raised $500,000 from the mitten sales.
“We wanted to create a fundraising opportunity where almost anyone could support Team USA,” Sandusky said.
The foreign-made mittens are available at the USOC’s official online shop of the U.S. Olympic Team.
The mittens are an American spin on an idea that started in Canada at the last Winter Games. The host country produced “Go Canada” mittens that turned out to be the hot item of the Olympics, raising more than $14 million for the Canadian team. Those mittens, which sold for $10 a pair, were made in China, too.
The USOC, meanwhile, has tried to be extra careful about where its goods are manufactured since running into trouble when news broke that its 2012 team uniforms were produced in China.
Congressmen from both parties piled onto the PR gaffe, with Senate Majority Leader Harry Reid, D-Nev., saying, “I think they should take all the uniforms, put them in a big pile and burn them and start all over again.”
Shortly after that, the USOC said all future team uniforms would be made in the United States and, true to its word, the 2014 versions are.
Fans can buy almost all components of the uniforms — among them, pullover sweaters, the same boots the athletes will wear at the opening ceremony and, of course, the $98 “Go for gold TEAM USA” mittens that also say “Go USA.” Some of the proceeds from those sales go to the U.S. team, per terms of licensing agreements with Ralph Lauren.
“We want to provide a variety of things for people to purchase,” Sandusky said. “A good number of those items are made in the USA and some items are made from around the globe, like most sporting goods. But we wanted to make an effort to make sure people have a chance to buy the official team mittens, which are made in the USA.”