Manufacturing: If You Can Make It Here, Don’t Make It Anywhere Else
Image credit: The AutoMotovated Cyclist | Flickr
In a world flooded with cheap imports and overseas production, many people are surprised to hear that some companies still proudly manufacture their products 100% in the United States. One such company is Liberty Tabletop, the only manufacturer of flatware in the United States, located in Sherrill, New York — right in the heart of American manufacturing.
While the “Made in the USA” label was once seen as a nice marketing slogan, today it represents something far more significant. For companies like Liberty Tabletop, manufacturing in America isn’t just about patriotism — it’s a business advantage, a commitment to quality, and a roadmap for a stronger future economy.
As Gen Z steps into the workforce, and as trade schools train the next generation of makers, the conversation around American manufacturing, insourcing, and reshoring has never been more relevant.
Let’s explore why American manufacturing matters more than ever — not just for businesses, but for our economy, environment, workforce, and communities. Read more
As Currency War Erupts, Investors Buy American
The U.S. economy is facing a predicament the Federal Reserve didn’t anticipate — a stronger than expected U.S. dollar. Investors are encouraged to Buy American. Read more
Economic Manufacturing Quantities: The Right Amount and the Right Locations
Does your manufacturing firm have enough facilities creating the optimum number of products in the right locations? Read more
2.7 Million American Jobs Lost to China in 10 Years
There are roughly 5.1 million fewer American manufacturing jobs now than at the start of 2001. And China is to blame for more than one-third of American jobs lost, says a new report. Read more
The Rise of ‘Made by China’ in America
Later this year along the banks of the James River outside Richmond, Virginia, a paper products maker based in northeastern China will begin construction on a new U.S. manufacturing plant. The factory will churn the region’s straw and corn stalks into household products including napkins, tissue and organic fertilizer—all marked “Made in the USA.” Made by China, in America.
With Exports Rising, US Cities Expand Their Global Footprint
Daniel Acker | Bloomberg | Getty Images
Jack Brown Produce workers sort apples on a packing line in Sparta, Mich. The state, a big exporter of agricultural goods, is among U.S. regions raising its export profile.
It’s well-known American jobs have been lost to overseas competition. While work on U.S. manufacturing floors has declined, overseas markets have developed a growing appetite for American-made goods—from chemicals and wood products, to medical devices.
Documentary: Made by China in… America?
Documentary: Made by China in America? directed by Miao Wang about Chinese firms bringing manufacturing to the U.S. It is part of Morgan Spurlock’s “We the Economy” series (www.wetheeconomy.com).
When I was a baby, my mom waited in line at 3am with her ration ticket to pick up the monthly allowance of meat. As fortunate dwellers of China’s capital city, we received a little more than two pounds. In remote provinces, it was half or a quarter of that amount.
Why the US Will Power the World Economy in 2015
Why the US Will Power the World Economy in 2015 – The United States is back, and ready to drive global growth in 2015. [p][/p]
China Trade, Outsourcing, and Jobs
Growing U.S. trade deficit and outsourcing with China cost 3.2 million jobs between 2001 and 2013, with job losses in every state. Read more
Manufacturers in U.S. Still Outpacing Rest of World
Yet strength of ISM index might be overstated, some say
U.S. manufacturers are still expanding at a rapid pace, unlike most foreign rivals.
Manufacturers in the U.S. barely slowed down in November even as major competitors around the world continued to scale back production. Read more
Why ‘Made in the USA’ is hard for Walmart to achieve
An “Assembled in the USA” stamp is seen at the side of a box containing a 32-inch television set in the warehouse of Element Electronics, in Winnsboro, South Carolina. Element’s 315,000-square-foot plant in South Carolina has six assembly lines making 32- and 40-inch TVs that are now available in all of Walmart’s more than 4,000 U.S. Stores. REUTERS/Chris Keane
Walmart has pledged to buy an additional $250 billion in US-made products. But finding quality, low-cost US made goods is proving a challenge. How Walmart is acting as a catalyst for ‘Made in the USA’ manufacturing.
U.S. Businesses Being Destroyed Faster Than Being Created
The American economy is less entrepreneurial now than at any point in the last three decades. That’s the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978.
Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first. Overall, new businesses creation (measured as the share of all businesses less than one year old) declined by about half from 1978 to 2011.
The authors don’t mince words about the stakes here: If the decline persists, “it implies a continuation of slow growth for the indefinite future.” This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery. As Matt O’Brien noted on Wonkblog last week, annual job growth rates have stubbornly refused to budge above 2 percent for the duration of the recovery.The authors of the Brookings study dug beyond the national numbers to look at the change in new firms at the state and metro levels and found that they generally mirrored the national trends.
I mapped the state data below. While all states showed steep drops in new firms, New York stands out for its much smaller decline in the share of new companies than other states — only 18 percent, compared with the 50-state average of 47.2 percent. Illinois, Texas, New Jersey and Missouri round out the top five.
SOURCE: Robert Litan (The Brookings Institution) and Ian Hathaway (Ennsyte Economics). GRAPHIC: The Washington Post. Published May 5, 2014.
At the other end, Alaska had the largest drop in new business, at 61 percent. Hawaii, Vermont, New Mexico and Wyoming rounded out the bottom five. Teasing out the causes of the overall decline or the variation between states is difficult; the authors stressed to me that their data don’t answer the questions of why or how just yet. But they will be looking into that in the months ahead.No immediate pattern emerges from the state-level geography, but one thing is worth nothing. For kicks I tried to correlate the drops in new businesses in each state with the states’ scores on the Tax Foundation’s 2014 State Business Tax Climate Index. There was no significant relationship one way or the other. For example, New York, which showed the lowest decrease in new businesses, actually scored dead last in the Tax Foundation’s ranking. Wyoming had one of the largest declines, even though it ranked first in the Tax Foundation’s report.
At the very least, the Brookings findings strongly suggest that when it comes to luring new businesses to a given state, there are a lot more factors at play than straightforward calculations of corporate tax rates.
U.S. Economy Adds 288,000 Jobs in April; Jobless Rate falls to 6.3%
New government data released Friday morning showed the nation added 288,000 jobs in April, a reassuring sign that the U.S. economy has picked up momentum since stalling out over the winter.
The hiring spree surpassed most analysts’ expectations and is the strongest showing in more than two years. Businesses added workers across a broad array of sectors, including business services, retail and construction. The unemployment rate plunged to 6.3 percent — the lowest level since 2008 — though part of that was due to a shrinking labor force.The upbeat report provided a convincing counterpoint to data released earlier this week that revealed economic growth was virtually flat during the first quarter. Many analysts attributed that weak reading to the unusually cold winter and argued that a spring thaw is already underway. The Labor Department also increased its estimates of hiring during the previous two months by 36,000 net jobs.
“It’s just what the doctor ordered in terms of a further piece of confirmation that the winter was abnormal,” said Eric Lascelles, chief economist at RBC Global Asset Management. “We can just expect further economic normalization.”
Wall Street opened higher on the news, but the major U.S. indexes were mixed at mid-day. The blue-chip Dow Jones Industrial Average inched into the red, while the broader Standard & Poor’s 500-stock index was up slightly. The tech-heavy Nasdaq gained 0.2 percent.
The jobs report contained at least one ominous note. The nation’s workforce shrank by more than 800,000 workers in April, sending the labor force participation rate plummeting 0.4 percentage points to 62.8 percent. The Labor Department said most of that decline was due to fewer people joining the workforce.
“People are not giving up in the labor force,” U.S. Labor Secretary Thomas E. Perez said in an interview. “That would be a fundamentally different diagnosis of where we are now.”
The number of re-entrants — people looking for a job after being out of the labor market — plunged by 417,000, the largest drop on record. New entrants declined by 126,000. Many high school and college students typically begin entering the job market in April, but the number of people younger than 25 in the workforce fell by 484,000. The participation rate for teens ages 16 to 19 hit the second-lowest level ever.
“I would actually say that this big drop in the unemployment rate is not consistent with a really robust labor market because that labor force participation rate did not rise, and the employment-to-population ratio is shockingly low,” said Tara Sinclair, an economics professor at George Washington University and economist at Indeed.com, one of the nation’s largest sites for job postings.
Another factor driving the smaller workforce could be the expiration of benefits for the long-term unemployed at the end of last year. To qualify for the payments, workers have to show they are looking for jobs. Without the incentive of unemployment benefits, many of them might have ended their search.
The U.S. Senate voted in April to extend unemployment benefits through May for workers who have been out of a job for six months or longer, but the measure faces a rocky road in the House. On Thursday, Sens. Jack Reed (D-R.I.) and Dean Heller (R-Nev.), the bill’s sponsors, urged the House to move quickly.
“Emergency unemployment insurance is a lifeline for job seekers, and restoring it will strengthen the recovery by bolstering demand at a critical time,” Reed said.
Friday’s data showed the number of long-term unemployed fell slightly to 3.5 million in April, accounting for roughly one-third of America’s jobless. Meanwhile, about 7.5 million people were in part-time jobs for economic reasons. Fed Chair Janet Yellen has cited those dynamics as reasons to keep the central bank’s benchmark short-term interest rate low for years to come.But the sharp drop in unemployment could complicate the Fed’s task. Several top officials, including San Francisco Fed President John Williams and Atlanta Fed President Dennis Lockhart, have said they believe the first rate increase should come when the jobless rate falls to about 6 percent. Both officials had predicted that would not happen until next year, but that goal post is now much closer.
April’s pickup in hiring also helps validate the Federal Reserve’s decision this week to continue scaling back its support for the recovery. The nation’s central bank is reducing its monthly bond purchases by $10 billion to $45 billion — about half the amount it was pumping into the economy every month last year. The Fed has tied its stimulus to the health of the labor market, and Friday’s data clearly show it is improving.
The construction industry provided one of the biggest boosts to job creation last month. The sector added 32,000 jobs, concentrated in heavy and civil engineering and residential building. Over the past year, it has hired 189,000 workers, with the bulk of those gains coming within the last six months.
The main hiring engine was the professional and business services sector, which created 75,000 net jobs. Retailers and bars and restaurants each added more than 30,000 jobs. The health care industry gained 19,000 positions.
SOURCE: Washington Post
China Could Overtake the U.S. as World’s No. 1 Economy This Year
New data from the World Bank suggests China could surpass the U.S. as the world’s biggest economy as early as this year, a day that was always meant to arrive after China began its quest for wealth in the 1980s, but it will just veil the reality of its economic weaknesses
China’s economy is catching up to the U.S.’s much more quickly than anticipated. That’s according to a new report from the International Comparison Program of the World Bank.The study recalibrates GDP statistics based on updated estimates of “purchasing-power parity” — a measure of what money can actually buy in different economies. In the process, the economy of China comes out far larger than we had previously thought. Its GDP surges to $13.5 trillion in 2011 (the latest year available), compared with the $7.3 trillion calculated using exchange rates. That catapults China’s economy much closer to that of the U.S. — at $15.5 trillion. Forecasting ahead, these figures show that China could overtake America as the world’s largest economy as early as this year.
This day, of course, was always going to arrive. The ascent of China to the world’s No. 1 slot has been inevitable ever since the country embarked on its great quest for wealth in the 1980s. With a population heading toward 1.4 billion, the question has been when, not if, China will topple the U.S. from its lofty perch. Still, we can’t ignore the historic significance of that switch. The U.S. has been the globe’s unrivaled economic powerhouse for more than a century. The fact that China will replace the U.S. at the top is yet another signal of how economic and political clout is rapidly shifting to the East from the West.
That quickly gets everyone’s passions boiling over. To many Chinese, becoming No. 1 is vindication for what they feel has been two centuries of humiliation at the hands of an aggressive West and proof that its authoritarian, state-capitalist economic model is superior to the democratic, free-enterprise systems of the U.S. and Europe. In the U.S., losing the top spot is seen as a symbol of America’s decline on the world stage.
Yet we shouldn’t get ourselves too worked up. These new figures don’t mean as much as many people think. Leaving aside the obvious statistical questions the report raises about the value of GDP figures generally, where the U.S. and China rank misses the more important point: bigger isn’t necessarily better.
A worker walks past a steel factory in Beijing on April 1, 2013
Even if China does become No. 1, that would just be a mask covering up the reality of the economy’s weaknesses. Some of the factors that have been driving GDP upward are also signs of China’s deteriorating economic health — investment in excess capacity, the construction of wasteful real estate projects and the buildup of crazy levels of debt. China is losing its cost competitiveness but still lags badly in the managerial expertise, technology and financial professionalism necessary to develop a truly advanced economy.Beijing’s leadership is embarking on an ambitious program of reform to make the state-led economy more market-oriented and give private business greater sway. But the challenges of implementing these reforms are huge and could cause a dramatic economic slowdown, or even worse. Many economists and analysts (myself included) have openly wondered if China is heading toward a full-blown financial crisis.
On the flip side, if the U.S. slips from its No. 1 position, it doesn’t spell doom. The U.S. still has a substantial lead in innovation, and its dominant position in many industries and sectors is not about to vanish. New York City will remain the world’s premier financial center, and the dollar will reign supreme on the world stage for some time to come. Still, wherever the U.S. ranks, its economy too is badly in need of reform. Better infrastructure, a smarter tax code, an improved education system and more determined efforts to close the income gap would also strengthen the economy’s foundation for growth.
SOURCE: Time
Violence Erupts in Cambodia as Labor Dispute Intensifies
Cambodia garment workers throw stones at riot police during a strike near a factory on the outskirts of Phnom Penh, Cambodia, Jan. 3, 2014 AP/HENG SINITH
PHNOM PENH, Cambodia – At least four people were killed Friday when police outside Cambodia’s capital opened fire to break up a protest by striking garment workers demanding a doubling of the minimum wage, police and human rights workers said.
Chuon Narin, deputy chief of the Phnom Penh Municipal Police, said the four were killed and about 20 others wounded in a southern suburb of the capital after several hundred workers blocking a road began burning tires and throwing objects at police officers. Witnesses said some officers fired AK-47 rifles into the air and that others shot at ground level.
Workers 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.
Belgian photographer John Wink stands to get a close look at the body of a man lying dead on the ground after riot police opened fire on garment workers on strike Jan. 3, 2014 AP/HENG SINITH
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“The use of live ammunition was prolonged and no efforts appear to have been made to prevent death and serious injury,” it said. “Reports suggest that security forces were also injured after being hit with stones.”
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. |
Hun Sen won elections last July that extended his 28-year rule in the poor Southeast Asian nation, but opposition protesters accuse him of rigging the vote. Hun Sen has rejected their demand.
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.
Cambodia garment workers throw stones at riot police during a strike near a factory on the outskirts of Phnom Penh, Cambodia, Jan. 3, 2014 AP/HENG SINITH
The site of Friday’s clash – a street with stores and dwellings – was strewn with debris. Walls bore holes apparently caused by bullets.
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.
Cambodian riot polices walk past an electric wire burned prepare to blockade garment workers on strike near a factory of Canadia Center, Jan. 3, 2014 HENG SINITH, AP
One measure of the seriousness of the situation was an unusual statement issued by the Defense Ministry affirming the military’s loyalty to the government. The statement said the army would take whatever action was necessary to defend the legal government, the king and the constitution.Friday’s confrontation followed a similar one a day earlier at a different location, in which elite troops broke up a demonstration outside a factory, beating demonstrators and arresting 10 people, including Buddhist monks, according to witnesses from human rights groups.
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.
SOURCE: CBS News
How Will 'Made in America' Fare in 2014?
This week, two new data sets will tell us just how well “Made in America” is doing as we begin 2014. Today, the Department of Commerce released international trade data for November. And, on Friday, the Bureau of Labor Statistics will publish the employment situation report for December.
This morning’s trade data has a major bearing on economic growth and our potential for future job creation. Once again, we saw a massive flow of U.S. dollars traveling to Beijing. In fact, the $27 billion trade deficit that America racked up with Beijing in November has put us on pace toward yet another record annual trade gap in 2013, one that will likely eclipse 2012’s whopping $315 billion.
That 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
SOURCE: Huffington Post
Jobless Benefits Bill Stays Alive Amid Talks on Offsets
The fate of Democrats’ effort to revive long-term unemployment benefits that expired Dec. 28 will hinge on meeting Republican demands to cover the bill’s $6.4 billion cost.
A small group of Senate Republicans are seeking a bipartisan compromise to pay for the benefit extension, the opening bid in Democrats’ 2014 election-year agenda focused on helping low-and middle-income Americans.
A 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
SOURCE: Bloomberg News
Companies in U.S. Added 238,000 Jobs in December
A pickup in hiring at factories is helping to support the increase in employment. | Photographer: Justin Ide/Bloomberg
Companies added more workers than projected in December as U.S. employers grew more optimistic about the prospects for demand, a private report based on payrolls showed today. Companies in U.S. Added 238,000 Jobs in December.
The 238,000 increase in employment was the biggest since November 2012 and followed a revised 229,000 gain in November that was stronger than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The December tally exceeded the most optimistic forecast in a Bloomberg survey in which the median projection called for a 200,000 advance.
A pickup in hiring coupled with wage gains are helping to spur faster growth in the consumer purchases that make up almost 70 percent of the economy. A Labor Department report this week may show private payrolls rose by 197,000 last month, according to the Bloomberg survey median.“The job market ended 2013 on a high note,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring.”
Stock-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
SOURCE: Bloomberg News
PR Ploy Or Not, Walmart’s ‘Made In America’ Push Means Something
Last week, Walmart expanded on the $50 billion Buy American pledge it made last January with a full-fledged Made-in-America summit.
This Is The Way Blue-Collar America Ends
Rockwell Automation viewed from the Milwaukee river
Sophie Quinton
Sailors on Lake Michigan know they’re approaching the south side of Milwaukee when they spot the Allen-Bradley Clock Tower. But the building beneath the tower acts as a marker of another sort: the structure originally built to be a manufacturing plant is now filled with white-collar professionals.
As the global headquarters of Rockwell Automation, the Allen-Bradley building provides office space for 3,100 employees who range from product development engineers to sales and marketing teams and corporate executives. They’re in the manufacturing business, but it’s not quite the same business that once made Milwaukee prosperous.
Rockwell Automation sold over $6 billion worth of industrial control products last year, more than half of those outside the United States and over one-fifth to emerging markets. Some 61 percent of its 22,000 employees are based outside the U.S. While 58 percent of last year’s sales were in manufactured devices, 42 percent were in computer hardware, software and communications components.
Take a close look at Rockwell Automation, and you’ll understand why the modern manufacturing industry manages to be both a tremendous economic driver and a tough business in which to get a job. It’s becoming standard for many manufacturing companies to require employees to have college degrees–and some jobs require a PhD. Factory-floor openings are scarce and often require specific credentials. A company like Rockwell Automation creates wealth and jobs all over the world, which is great for the world–and for shareholders– but not always so great for Milwaukee. The city’s number one economic problem is a lack of middle-income jobs, and no industry has yet emerged to replace the jobs the traditional manufacturing sector used to provide.
Rockwell Automation still has a production facility in the Milwaukee area, at an industrial park in a suburb called Mequon. Here, machines print circuit boards embedded with microprocessors containing software coded by Rockwell developers. The circuit boards are then fitted into variable-speed drives, electric motors built to carry specific loads as efficiently as possible. Workers assembling the drives are as likely to spend their shifts peering at data on a computer screen as they are wielding drills.
While the shop floor employs 350 people, the facility also houses 750 workers whose jobs range from marketing to procurement to engineering. The presence of higher-level expertise makes this facility a hub for service and repair work. “We love it because when we have a problem on the shop floor, I can grab an engineer by the ear,” says Thomas Groose, manufacturing engineering manager. Most of the folks working on the shop floor hail from the suburbs. “We’re not on a bus line here,” Groose notes.
Manufacturing remains an important sector in Milwaukee, employing some 14 percent of the metro area workforce. In Wisconsin, manufacturing accounts for about 18 percent of state GDP and 93 percent of exports, according to the National Association of Manufacturers.
But the city and the state have seen a steep decline in manufacturing jobs over the past half-century, and the kind of jobs that remain require a higher level of expertise. Between 1961 and 2001, the city of Milwaukee lost 69 percent of its manufacturing positions. Some of that work relocated to suburbs like Mequon. But overall, the seven counties in southeastern Wisconsin saw a loss of 83,000 jobs, according to Vanderwalle & Associates, a Wisconsin economic strategy firm.
Many jobs disappeared altogether, as high-tech equipment replaced manual labor. The jobs that remain increasingly require applicants to present a two-year degree or a specific certification. Today, fewer than 40 percent of U.S. manufacturing employees have jobs in actual production, according to the Congressional Research Service. The loss of manufacturing jobs had devastating impact on Milwaukee. Like other post-industrial cities, Milwaukee has suffered decades of economic decline and a spike in inner-city unemployment. Today, the city of Milwaukee has the lowest employment rate for working-age African-American males of any city in the country–worse even than Detroit, according to research from Professor Marc Levine at the University of Wisconsin-Milwaukee. The manufacturing jobs that remain are largely suburban and inaccessible by public transportation, putting them out of reach for the population that needs them the most.
Making factories more productive is Rockwell Automation’s business, and executives there find the media focus on job loss frustrating. “We’d like you to start talking about output, and judge manufacturing based on how much stuff we make, not on how many jobs,” says John Bernaden, director of external communications. He points to figures illustrating a 15 percent productivity increase in American manufacturing since 2009 and 16 percent output growth.
Besides, counting manufacturing jobs is misleading, as growth in the sector creates jobs elsewhere, says Michael Laszkiewicz, vice president and general manager of the power control business at Rockwell Automation. “When we make a decision to build a new plant or establish a new product line, and we add new people in manufacturing, for every ten manufacturing jobs we add five or six jobs in the supply chain supporting manufacturing,” he says, including other transportation and service jobs.
“When I look at our economic challenges and the need to reduce unemployment, I think manufacturing needs to get a priority in terms of regulatory and legislative policy so that it’s encouraged to grow,” Laszkiewicz says.
The problem, from the perspective of the average Milwaukeean, is that when a global business like Rockwell Automation builds a new plant, it could just as easily be in Shanghai or Singapore as in Oconomowoc. The supply chain impact need not accrue only in the United States. More often than not, the spillover benefit is spread all over the world, like the company’s business. And support work in service industries often doesn’t pay workers a family-supporting wage.
Rockwell Automation has achieved great success since taking over the Allen-Bradley Company in 1985, but Rockwell and its peers haven’t brought Milwaukee mass prosperity the way that Allen-Bradley and its peers once did. The fourth industrial revolution may be on the horizon, but right now real wages in the area are flat and unemployment remains high.
Rockwell is still hiring, and it’s still taking on entry-level workers. But the company doesn’t hire just anyone. On the shop floor, the company is seeking high-performing students and workers with technical skills. And for its offices, it needs firmware development engineers. “The bar has been raised,” Laszkiewicz says.
SOURCE: Business Insider
U.S. Isn't Respecting Meat Labeling Rules, Mexico says
Adriana Barrera
MEXICO CITY — The United States is not respecting a World Trade Organization (WTO) ruling on meat labeling, Mexico’s Agriculture Minister Enrique Martinez said on Tuesday, saying it was hurting local industry.
The WTO ruled in late June last year that a U.S. program for labeling imported meat unfairly discriminated against Mexico and Canada, putting pressure on the United States to bring the scheme in line with global country-of-origin meat-labeling rules.
“We can’t understand why once the very WTO issues a ruling, the government of the United States does not respect it,” Martinez said.
“We have talked with beef producers in the United States and Canada, and totally agree this is an arbitrary decision and means discrimination against Mexican beef, which we will never agree with and as a government will defend against.”
Meat exporters in Canada and Mexico say the new rules would cut even deeper into cattle and hog shipments that have already slumped by as much as half in the last four years.
The Canadian government has threatened a possible retaliatory strike against U.S. imports, and is hoping Mexico will join it.
The WTO Appellate Body said last year that U.S. country-of-origin labeling rules, commonly known as COOL, were wrong because they gave less favorable treatment to beef and pork imported from Mexico and Canada than to U.S. meat.
Meat labels became mandatory in March 2009 after years of debate. U.S. consumer and some farm groups supported the requirement, saying consumers should have information to distinguish between U.S. and foreign products.
SOURCE: Reuters
Where China Goes To Buy Made In USA
Kenneth Rapoza
China loves Made in the U.S.A.
China’s Favorite U.S. States in 2012
The No. 2 economy kept its spot as the third largest importer of U.S. goods last year, second only to neighborly Canada and Mexico.“The U.S.-China trade relationship strengthens America’s economy and creates well-paying jobs for many American workers across the country,” said the U.S. China Business Council’s President John Frisbie.
In 2012, China purchased nearly $109 billion worth of U.S. goods, from soybeans to scrap metal, electronic components to heavy machinery. China will undoubtedly play a significant role as importer of Made in USA as locals keep getting richer. Some estimates forecast that China may have nearly 600 million middle class consumers by the end of the decade, as measured by the World Bank’s definition of middle class.
“Our exports to China remain a bright spot for many companies, particularly with European demand weakening,” said Frisbie in a statement last week.
Even though China’s economic growth slowed last year, growth in U.S. exports to China rose 6.5% from 2011, representing an increase of $6.6 billion.
Here’s a look at the top 10 states where Chinese companies go shopping for Made in USA.
SOURCE: Forbes
Bill Would Create Made in California Label
Backers of the legislation to create a “Made in California” label include electric-car maker Tesla Motors Inc., a group of San Francisco Bay Area green-tech firms and small-business advocates. But some business leaders see problems ahead for the concept. (Jane Tyska, Contra Costa Times / April 11, 2013)
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Marc Lifsher
The legislation, for manufactured products, would enhance the state’s reputation for making environmentally safe and energy efficient products, a senator says.
A “Made in USA” label has long been seen as an advantage in marketing a product. Now there are in-state manufacturers that want to see the adoption of an official label that declares Made in California. State Sen. Ellen M. Corbett (D-San Leandro) has introduced legislation to require Go-Biz, the governor’s business development office, to come up with a plan — including the new label — to promote California-manufactured products. The bill, now before the Senate Appropriations Committee, would enhance California’s reputation for making environmentally safe and energy efficient products, Corbett said. Backers of the legislation include high-end electric-car maker Tesla Motors Inc., a group of San Francisco Bay Area green-tech firms and small-business advocates. But some business leaders see problems ahead for the Made in California concept. Deciding whether something is made in California could be tough considering how complex manufacturing can be today, warned Jock O’Connell, a Sacramento-based international trade expert with Beacon Economics. Look, for instance, at international supply chains, especially for high-tech products such as aircraft that use parts made on multiple continents. “I really see a good intention here,” O’Connell said, “but it’s a piece of legislation that in practice is nearly impossible to implement.” Sales-tax sharing California cities increasing are using tax money to woo companies or to keep them, but some lawmakers are urging caution. Amazon got a share of new sales taxes receipts collected by the cities of Patterson and San Bernardino when the giant Internet retailer agreed to put its distribution centers and new jobs there. In addition, the Bay Area city of Martinez agreed to share tax money with an industrial firm that threatened to leave town. Last year, state Sen. Mark DeSaulnier (D-Concord) said he was contacted by the city manager of Martinez, who was concerned about such tax giveaways. The lawmaker recalls the manager pleaded, “We need you to save us from ourselves.” As a result, DeSaulnier — a former city councilman and county supervisor — has a bill requiring local governments to make an independent cost analysis before granting any tax subsidy of more than $1 million to a proposed developer. “In today’s global economy,” he said, “it is imperative that our cities have the best possible data as they negotiate with large corporations.” The bill, SB 673, won approval from the Senate Governance and Finance Committee last month. But it still faces formidable opposition from the League of California Cities, which blasted the bill for having “a clear anti-development bias.”
SOURCE: Los Angeles Times
How American Excess is Destroying Lives Overseas
by: Zainab Akande
Check the tag of the clothes you’re wearing, either now or sometime after you read this article. There is always small printed text that informs the customer where that item of clothing was made. More often than not, the name of some far away country completely unrelated to our daily lives is listed. The one we Americans are probably most familiar with is the one that reads MADE IN CHINA. But we are going to begin with Bangladesh.
Bangladesh is a country located in South Asia, a part of the Bengal region bordering India and Myanmar (Burma). It is one of the most populated and densely populated countries in the world; high rates of poverty are a major problem among other human rights issues.
Just last week, a clothing factory in the country collapsed, with the body count now at over 500. Police have arrested the building’s engineer, who claimed the building was unsafe as-is, but allegedly played a part in adding three more floors to it regardless. The clothing factory itself was a station that produced American goods on the cheap cheap for large business chains such as J.C. Penny, Walmart, and H&M, to name just a few. This recent event has placed a lens of scrutiny under Western retailers for outsourcing cheap labor, but cheap labor overseas has always been an issue. It is American business and consumption that are driving forces behind the dismal conditions of oversea factories. Of course, it’s a reality that most businesses want to keep quiet and it’s something we may have heard in passing but want to ignore—because changing our shopping habits entirely would be a pain.
On the flipside, Bangladesh’s problematic clothing industry makes up for 80% of its exports.
Let’s pause for a moment and talk about China.
Back in February, I wrote a piece on how Chinese New Year celebrations were dampened by the country’s ongoing smog crisis. Since then, smog levels have not gotten any better. They’re hitting nearly decade-level highs in Hong Kong and ruining chances at a healthy upbringing for children growing up in urban cities. Goodness forbid if we were faced with these types of environmental hazards across America — but since it’s China, the average American could probably care less. But why is it that China is so steep in air pollution? Because of all its factories — and what are those factories producing? Cars that Americans drive, clothes that Americans wear, toys that American children play with, computers that Americans type with, the list goes on and on. The kicker is that this production occurs in the same sweatshop, underpaid conditions as Bangladesh, Haiti, the Dominican Republic, and other places.
In light of the Bangladesh factory collapse, Disney is pulling from developing countries all over, but such drastic movement leads to a loss in jobs. What companies can do is flex their financial muscles and influence for an improved quality of work conditions overseas. Then again, that requires time, effort and resources — three elements that American companies probably aren’t aiming for in their desire to get their goods produced quickly, cheaply, and exported for more than a worker’s measly paycheck.
What we can do as consumers in order to shop more ethically is to research and spread the word. It’s our duty as consumers of these products to speak loud for the voices that suffer to provide for us.
SOURCE: PolicyMic.com
About the writer:
Zainab is an undergraduate student born and raised in New York City, studying mass communications and journalism at the University of Delaware graduating in May 2013. Her interests include politics, fashion, writing, the media arts, travel, unhealthy doses of pop culture, intersectionality, and cultural criticism. She has written for university’s school newspaper, The Review, in addition for the Intellectualyst, a progressive online newspaper. Currently, she is a writing intern at PolicyMic. In 2011, Zainab assisted in research with University of Delaware’s Dr. Danilo Yanich which has since then been studied by the Federal Communications Commission and discussed in the New York Times. She is a member of three national leadership and honor societies. Currently her passions lie in the BBC rendition of Sherlock, philosophy, blogging, and books. Blog: In Medias Res
The Walt Disney Company pulls out of Bangladesh: Will that make workers safer?
By Peter Grier
Staff writer
Staff writer
The Walt Disney Company pulls out of five developing countries – including Bangladesh, site of a devastating building collapse of a garment factory – telling licensees of Disney-brand items of its decision to phase out production there. Critics say pulling out is not the best response.
The Walt Disney Co. is pulling out of Bangladesh and several other developing countries, in part because of fatal accidents in factories that produced branded merchandise for Western firms. Announcement of the move follows last week’s collapse of a Bangladesh garment factory building, a tragedy that may be the worst such accident in world history. The official death toll is now more that 500 and keeps climbing as rescue workers continue the slow process of working through building rubble.
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A Bangladeshi woman looks at a wall filled with portraits of missing persons near the site of a garment factory that collapsed last week in Savar near Dhaka, Bangladesh, Friday. Disney pulls out of Bangladesh and several other developing countries, in part because of fatal accidents in factories that produced branded merchandise for Western firms. | Ashraful Alam Tito/AP
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Disney officials said their pull-out decision was actually made in March, after a fire in a Bangladesh factory last November that killed more than 100. The company has told licensees that it wants to phase out production of Disney-brand items made in Bangladesh, Pakistan, Belarus, Ecuador, and Venezuela.Disney said it relied on World Bank Governing Indicators, which measure rule of law, corruption, and other national characteristics, to help make its decision.
“After much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain,” said Bob Chapek, president of Disney Consumer Products, according to a CNN report.
Are Western firms such as Disney, the Gap, and Benetton in part responsible for the conditions that lead to these tragedies in low-wage nations? Disney’s move shows that some feel their reputations are at risk, at the least, if they are tied too closely to foreign workplace tragedies.
Customers may avoid brands they suspect of abetting worker abuse. And a number of international nongovernment organizations today stand ready to publicize poor conditions found in factories linked to major nation retail brands.
But these NGOs don’t necessarily want their pressure to result in pull-outs. They want corporations to use their economic muscle to improve conditions.
The Washington-based Workers Rights Consortium, for instance, says it works with big companies and their foreign licenses to try to remedy problems before issuing public reports.
“The WRC views ‘cutting and running’ from a factory as a serious abrogation of a licensee’s responsibilities,” says the group in a statement.
Worker groups often want foreign firms to stay to preserve jobs and economic development. Some experts say the blame for tragedies such as the Bangladesh building collapse should be directed at local and national authorities who have the responsibility to protect their workers.
“By misassigning the responsibility for the recent tragedies to global retailers, western media and consumer movements allow the real culprits to get away scott-free and further diminish the likelihood of governance reform in poor countries,” wrote Jagdish Bhagwati, senior fellow for international economics at the Council on Foreign Relations, and Amrita Narlikar, director of the Centre for Rising Powers at the University of Cambridge, last month in the British magazine Prospect.
Other experts put the problem in a larger political frame. The real problem in Bangladesh has been the complex trade apparatus erected by the US, which consumes most of the cheap clothing produced in developing nations, wrote Mallika Shakya, an assistant professor of sociology at South Asian University in Delhi, in the Indian newspaper The Hindu.
Between 1974 and 2004, the US Multi-Fiber Arrangement virtually dictated, item by item, the amount of clothing that third-world countries could export to the US, according to Ms. Shakya. Potential rivals to America such as China got small quotas, while Bangladesh and other unprepared nations got large ones.
The result was that Bangladeshi authorities could not keep up with the explosive growth of their country’s garment industry.
“That is a reason why most factory buildings are found to be built haphazardly, without acquiring the necessary clearance from state agencies,” wrote Shakya.
SOURCE: The Christian Science Monitor
A Return to Made in America: Why Manufacturing is Making a Comeback
By Brad Plumer
It’s hardly news when a U.S. firm moves its manufacturing operations abroad to China. But what about when a Chinese company sets up a factory in the United States?
That happened in January, when Lenovo, a Beijing-based computer maker, opened a new manufacturing line in Whitsett, N.C., to handle assembly of PCs, tablets, workstations and servers.The rationale? The company is expanding into the U.S. market and needs the flexibility to assemble units for speedy delivery across the country, says Jay Parker, Lenovo’s president for North America.But also — and this was crucial — the math added up. While it’s still cheaper to build things in China, those famously low Chinese wages have risen in recent years. “We reached the point where we could offset a portion of those labor costs by saving on logistics,” Parker says.
U.S. firms that have long operated abroad are making similar moves: Caterpillar, GE and Ford are among those that have announced that they’re shifting some manufacturing operations back to the United States. And economists are debating whether these stories are a blip — or whether they signal the beginning of a major renaissances for American manufacturing.
It’s easy to be skeptical. So far, the effect on jobs has been modest. Since January 2010, the United States has added 520,000 manufacturing jobs — and of those, 50,000 have come from overseas firms moving here, according to the Reshoring Initiative, an industry-led group. (That includes 115 in the new Lenovo plant.) That’s a decent number, but it pales beside the 6 million factory jobs that the Bureau of Labor Statistics says vanished between 2000 and 2009.
Yet the optimists counter that the logic of a coming renaissance is impeccable. Besides the shrinking wage gap between China and the United States, the productivity of the American worker keeps rising. And the surge in shale gas drilling gives the United States a wealth of cheap domestic energy to bolster industries such as petrochemicals.
All that could combine to make U.S. factories more competitive in the years ahead, not just with Europe and Japan, but with the manufacturing behemoth inChina. This shift likely won’t mean the United States will have 19 million manufacturing workers again, the way it did in the 1980s. For one thing, automation is still a powerful force. And the types of jobs that come back will be different from the ones that vanished. Still, any significant uptick in domestic manufacturing after a decades-long decline could bolster the economy and spur innovation.
“I think it’s fair to say this hasn’t all registered in the data just yet,” says Scott Paul, the president of the Alliance for American Manufacturing. “But we’re starting to lay the groundwork where we’ll start to see a real effect three to 10 years from now.”
Laying the groundwork
So what does that groundwork look like? For many analysts, the narrowing of the wage gap between China and the United States is the most significant factor.China has been getting wealthier, and its factory workers are demanding ever-higher wages. Whereas the gap in labor costs between the two countries was about $17 per hour in 2006, that could shrink to as little as $7 per hour by 2015, says Dan North, an economist with Euler Hermes, a credit insurer that works with manufacturers.
“If you’re a U.S. company and the advantage is only $7 per hour, suddenly it may be worth staying home,” North says. “If I stay here, I have lower inventory costs, lower transportation costs. I’m closer to my market, I can have higher-quality production and I can keep my technology.”
This notion appears to be catching on. In February 2012 survey from the Boston Consulting Group (BCG), 37 percent of U.S. manufacturers with sales above $1 billion said they were considering shifting some production from China to the United States. The factors they pointed to were not only that wages and benefits were rising in China, but the country is also enacting stricter labor laws and experiencing more frequent labor disputes and strikes.
“Companies are realizing it’s not as easy to do things in China as they thought,” says Hal Sirkin, a senior partner at Boston Consulting Group who has been predicting the convergence of labor costs since 2011.
The flip side is that American workers are becoming more attractive — for a mix of reasons. Worker productivity has been rising steadily over the years. Also, BCG says, the decline of U.S. organized labor is luring companies home, particularly to the nonunion South. Unions, for their part, have often responded by allowing wages to fall in order to keep jobs in the United States. Ford started bringing back production from China and Mexico after an agreement with the United Auto Workers let the company hire new “second-tier” workers at lower wages.
As a result, Sirkin’s research at BCG suggests that some industries could slowly migrate back from China. That includes industries such as plastic and rubber, machinery, electrical equipment and computers and electronics.
Nor is it just China. BCG also found that the United States is on pace to have lower manufacturing costs than Europe and Japan by 2015. Already, companies in those regions have been moving production here. Nissan, Honda, and Toyota are ramping up their exports from the United States. In 2008, Ikea opened a new furniture factory in Danville, Va., to cut shipping costs. The European aerospace company Airbus has just broken ground for a new factory in Mobile, Ala.
America’s glut of cheap natural gas from shale fracking is also attracting its subset of industries. Factories being built in Texas and Pennsylvania will convert natural gas into ethylene, a key ingredient in plastics and antifreeze. An Egyptian company, Orascom Construction, is building a $1.4 billion fertilizer plant in Iowa near a natural-gas pipeline.
Most of the evidence that “reshoring” is happening is anecdotal, and there’s a limit to how far it is likely to go. For one thing, North says, the industries most reliant on cheap labor — including textiles and mass-produced clothing — will likely never return to the United States. Moreover, China has built up a formidable manufacturing infrastructure that will keep many companies there, even as labor costs shift.
“Chinese suppliers have now developed dense supplier networks that now have their own capabilities for introducing new products,” says Suzanne Berger, a political science professor at the Massachusetts Institute of Technology who studies manufacturing. “And, of course, China is a market that’s growing extremely rapidly — so many companies will want to stay in close proximity to those customers.”
But the early signs are notable. Sirkin points out that his model of labor costs didn’t predict that companies would start coming back to the United States until 2015: “We’ve already seen more movement than we expected.”
Industry has changed
Policymakers’ efforts to bolster domestic manufacturing, however, will have to take into account how dramatically the industry has changed since the 1980s.
In a recent report, an MIT task force described how the U.S. manufacturing landscape is no longer dominated by large firms such as Dupont, IBM and Kodak that could handle every aspect of production themselves. Instead, the future of manufacturing will consist of smaller firms that may not always have enough money to train workers, commercialize new products and procure financing on their own.
“There are these holes in the ecosystem, and we have to think of another way to provide all these capabilities if we want to see manufacturing revived,” says Berger, a co-author of the report.
Some firms have partnered with local universities or governments to develop these capabilities, she says. In Rochester, N.Y., for instance, the demise of Kodak meant that there was no longer a dominant company paying to train new skilled workers. So smaller firms in the optics industry banded together to plan new community college curricula and fill the gap.
In New York, the state government has tried to support semiconductor manufacturing by bringing together private firms, research labs and degree programs to share common facilities, expensive equipment, training and research.
The Obama administration is spending $1 billion to fund similar hubs around the country. The first is the National Additive Manufacturing Innovative Institute in Youngstown, Ohio, which will focus on the development of 3-D printing and other processes for manufacturing objects from digital models.
According to the MIT report, such partnerships have the potential to be far more effective than the old model of handing out tax breaks for manufacturers. That’s because they don’t leave a state or locality at the mercy of a single firm that could leave at any time.
How many jobs will return?
There’s also the key question of how many jobs are likely to come back. The United States has 11.9 million manufacturing employees, and experts tend to agree we’re unlikely to see a return even to the much-diminished levels of the 1990s, when there were more than 17 million factory positions.
President Obama has set a more modest goal of 1 million new manufacturing jobs by the end of his second term. But Paul of the Alliance for American Manufacturing says the country is behind pace to achieve even that “reasonable goal.”
The new manufacturing jobs, meanwhile, will also be different from the jobs of old. For one, many plants are now setting up in the nonunion South, and organized labor has largely been shut out of the manufacturing renaissance. On balance, all of the job gains since 2009 have been nonunion. And, unlike 30 years ago, manufacturing jobs no longer have higher average annual earnings than the typical private-sector worker.
At the same time, technological advances will continue to displace factory jobs in the United States and elsewhere. Germany and China — two manufacturing titans — are slowly losing positions because of automation. A report last fall by the McKinsey Global Institute found that the price of robots relative to the cost of human labor has fallen 40 to 50 percent since 1990, and that trend is expected to continue.
Paul, however, points out that Germany has lost jobs at a much slower pace than the United States over the past decade, which suggests that there’s room for improvement. “There’s nothing inevitable about the sort of steep declines we’ve seen here.”
What’s more, experts point out that there are still plenty of other advantages to bringing manufacturing back home. Manufacturing firms tend to spend more on research and development than other businesses, and recent research has focused on the fact that the act of building things can lead to key innovations. Procter & Gamble and Gillette are two companies known for their run-of-the-mill products — diapers and razors — that have turned innovations in the manufacturing process into a key part of their business.
What’s more, the MIT report says, manufacturing can be a potent driver of other service-industry jobs. A small company in Ohio that makes protective sleeves for pipelines, say, will be in a good position to offer technical support for oil platforms and other companies.
“We have the wrong picture if we think on the one hand there’s manufacturing and on the other hand services,” Berger says. “And the idea that we’re going to just go from one to the other is wrong. Almost all valuable things are some bundle of manufactured goods plus services attached.”
SOURCE: Washington Post
Made in the USA: More Shoppers Buying American
Chris Rank | Bloomberg | Getty Images
A curious thing is happening among American shoppers. More people are taking a moment to flip over an item or fish for a label and ask, is it “Made in the USA?” Walmart, the nation’s largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years. General Electric is investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs.
Mom-and-pops are also engineering entire business strategies devoted to locally made goods — everything from toys to housewares. And it’s not simply patriotism and desire for perceived safer products which are altering shopping habits.
The recession, and still flat recovery for many Americans, have created a painful realization. All those cheap goods made in China and elsewhere come at a price — lost U.S. manufacturing jobs. A growing pocket of consumers, in fact, are connecting the economic dots between their shopping carts — brimming with foreign-made stuff — and America’s future.
They’re calculating the trade-offs of paying a little more for locally-made goods.”The Great Recession certainly brought that home, and highlighted the fact that so many jobs have been lost,” said James Cerruti, senior partner for strategy and research at consulting firm Brandlogic. “People have become aware of that.”
‘Made in the USA’ is known for one thing, quality,” said Robert von Goeben, co-founder of California-based Green Toys. All of their products from teething toys to blocks are made domestically and shipped to 75 countries.
“We are reaching a tipping point, where Americans are relearning its competitive advantage,” von Goeben said. “It’s not about the cheapest product, but the best quality product.”
For many consumers, affordability has driven the bulk of purchasing decisions. Businesses in turn have ventured abroad for cheap labor and specific manufacturing skills to keep prices down.
So what’s driving big and small businesses to increase sourcing of U.S. products — beyond the obvious good PR?
In short, a shift in global manufacturing that’s in the early stages. A combination of factors including rising labor costs are eroding China’s cost advantage as an export platform for North America.
Mexico, meanwhile, is rebounding as a manufacturing base, and wages there will be significantly lower than in China, according to a Boston Consulting Group report. By 2015, BCG forecasts that for many goods destined for North American consumers — manufacturing in some parts of the U.S. will be just as economical as manufacturing in China.
For years, the main attraction of China outsourcing has been access to low-cost labor. But pile on related business costs such as transportation of goods, duties and industrial real-estate expenses, and the global manufacturing landscape is no longer China-dependent.
Domestic manufacturing, meanwhile, is on the mend. The pace of growth in the U.S. manufacturing sector picked up to its fastest rate in more than a year and a half in February, as new orders continued to accelerate.
And imported goods — at least in footwear and apparel — are retreating slightly. While more than 97 percent of apparel and 98 percent of shoes sold in the U.S. are made overseas, U.S. imports in those two categories in 2011 declined for the first time ever since such data has been tracked by the American Apparel & Footwear Association.
“The cost competitiveness of U.S. manufacturing is on the rise,” said Cerruti of Brandlogic.
Of course, plenty of goods are still made abroad. And many Americans are broke, jobless or underemployed four years after the 2008 economic crisis. An unemployment measure that factors in those who have quit looking for jobs, as well as those working part-time for economic reasons, is at 14.4 percent. For many, buying “Made in the USA” is a luxury they can’t afford.
Sarah Wagner was inspired by a road trip including tours of US companies to create USA Love List, a website devoted to American-made goods.
USA Love List[p][/p]
Despite many shoppers’ thin wallets, there’s a growing appetite for domestically-made goods.
Blogger Sarah Wagner has turned her passion for “Made in USA” products into a successful website. USA Love List is devoted to sourcing and showcasing where to buy domestically-made items, ranging from lip gloss to pet food. She regularly scans the aisles of big retailers such as Costco and Target for American-made goods.
Site traffic has mushroomed since USA Love List launched in November 2011. “There’s clearly a hunger for this sort of information,” said Wagner, based in Philadelphia. “Companies have no idea how much Americans want to support American companies. They want to get behind their neighbors and communities to make sure those jobs stay there. It’s struck a nerve with a lot of people,” she said.
American-Made Green Products
Among the growing piles of American-made goods, many are green with recycled materials. Turns out it’s easier to manufacture green products domestically because sourcing of recycled materials including recycled plastic is particularly plentiful and transparent in the U.S., said Jenna Sellers Miller, president of Architec Housewares, a 9-employee housewares business, based in Delray Beach, Fl.
Some of Architec’s EcoSmart line of products are sourced domestically. The products are available at Target, Macy’s and Bed Bath & Beyond. “We’re getting appointments with retailers who just want to see our ‘Made in the USA’ products,” Miller said.
Domestically sourced recycled materials and a broader commitment to the environment shape Green Toys business strategy as well. With their factory and warehouse 10 miles apart in northern California, they also cut transportation costs and related emissions.
The 12-employee company also creates a ripple effect of jobs including supporting local drivers, shipping and packaging companies and testing labs. “We could not have started this company anywhere else,” von Goeben said. “This is a uniquely American company.”
Later this year, Green Toys will ship its first batch of toys from northern California to China. Said von Goeben, “It’s the irony of all ironies.”
SOURCE: CNBC
