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
Ford Adding 850 New Jobs To Build 2015 F-150
Ford Adding 850 New Jobs To Build 2015 F-150. Ford announced today it will add 850 new jobs in Dearborn to build the all-new 2015 F-150 pickup that is the automaker’s most advanced pickup in 66 years.
The new hires will be sprinkled among the various facilities that make up the Ford Rouge Center in Dearborn. About 500 of the jobs will be at the Dearborn Truck Plant that assembles the pickup with three crews rotating over two shifts each day. Nearly 300 workers are for Dearborn Stamping and more than 50 will work at Dearborn Diversified, which also does stamping.
Total employment at the Rouge complex will be more than 5,500 with the latest hires and almost 5,000 will be hourly workers.
Ford is not taking new applications. The automaker has identified the new hires from its large pile of applications, and some have already begun training. All will be clocking in over the next couple months.
“This is one of the proudest moments I have had in my life,” said Jimmy Settles, head of the Ford department of the UAW, and a third-generation Rouge complex worker.
The $2 billion spent to revitalize the Rouge complex that consists of five plants makes it possible to do things never before done in the auto industry, said Bruce Hettle, vice president of North America manufacturing, at an event this morning announcing the additional employees.
- About 500 of the jobs will be at the Dearborn Truck Plant that assembles the pickup on three shifts. Nearly 300 workers are for Dearborn Stamping and more than 50 will work at Dearborn Diversified which also does stamping.
The Dearborn Truck Plant just finished gutting and rebuilding its body shop to make the 2015 model with an aluminum body instead of the steel bodies used since 1948. Pre-production models are running through the body shop now and are scheduled to run down the full line starting Oct. 20, but that date might be moved up to this week.
The carefully orchestrated launch is on track, said Joe Hinrichs, Ford president of the Americas. Production vehicles will start “in a matter of weeks,” but Hinrichs would not say when Job One will be. Trucks will start arriving in showrooms by the end of the year.
Ford Adding 850 New Jobs To Build 2015 F-150
The plant runs with three crews but more workers are needed because this next-generation pickup has more features and technology. And building a body from aluminum instead of steel requires all new processes — such as adhesives instead of welding — as well as new manufacturing equipment.
Additionally, some of the stamping work has been brought to the complex, work that had been done by suppliers or other Ford facilities, said Bernie Ricke, president of UAW Local 600, who is pleased with the additional jobs.
Ford has pledged to quickly get production up to full speed because of the sheer volume and importance of the truck. Ford sold 763,400 F-Series last year and analyst Adam Jonas of Morgan Stanley estimates Ford’s trucks generate more than 90% of the automaker’s global auto profits.
Ford built up its inventory of outgoing 2014 models to bridge the gap until there are enough 2015 models to satisfy dealers. That will take a while because just as Dearborn Truck hits its production stride, the Kansas City plant in Claycomo, Mo., will go down for six weeks in the first quarter of 2015 to rebuild its body shop to switch to the new truck.
Jonas has written a number of reports expressing concern about the impact of the changeover on Ford’s profitability, but Hinrichs said today the launch is going according to plan, processes are being validated and people are being trained. In the end, Wall Street will be won over by the vehicle itself, he said of the truck that sheds 700 pounds, which will improve its fuel economy.
As part of the national contract negotiated with the UAW in 2011, Ford pledged to create 12,000 hourly jobs in the U.S. by 2015. The automaker has already exceeded that commitment: Last month’s announcement of a second shift of 1,200 workers at the Kansas City plant to make the Transit commercial van brought the total to more than 14,000. More than 3,000 have been added in 2014. Factoring in salaried workers as well, Ford has hired more than 23,000 employees since 2011.
The signs of health are not going unnoticed by the UAW, which has a new contract to negotiate next year.
“It’s always nicer negotiating with a company making lots of money than a company in distress,” Ricke said. Priorities for a new contract in 2015 include economic gains, looking after retirees and continued investment in jobs, he said.
“Ford’s announcement is more positive news for the citizens of Michigan and a further sign of the comeback of Michigan, manufacturing and the auto industry,” said Michigan Gov. Rick Snyder in a release.
Ford will have added almost 5,000 jobs in southeastern Michigan since 2011 including:
■ 850 at Ford Rouge Center including the Dearborn Truck Plant
■ 1,800 at Michigan Assembly Plant
■ 1,700 at Flat Rock Assembly Plant
■ 250 at Rawsonville Plant
■ 240 at Van Dyke Transmission Plant
■ 150 at Livonia Transmission Plant
Jobs are slowly making their way back into the U.S.A. Do you see this happening in your area? Let us know your thoughts in the comments below.
Lincoln Logs to be ‘Made in USA’ Again Creating Jobs in the Process
Lincoln Logs, the popular building toy created nearly a century ago by a son of architect Frank Lloyd Wright, is coming home to the U.S. Read more
Made in America: Why American Giant Didn’t Want to Build Factories in China
American Giant: Made in America.
With the prevalence of outsourcing factory work to Bangladesh and China, fewer retailers can use those three short words on popular clothing.
Is New Balance Making the U.S. Military’s Only Training Shoe?
Training shoes, the last part of U.S. military uniforms that isn’t required to be 100 percent U.S.-made and -sourced, could soon go all-American. How New Balance could be set to profit.
Tesla Finds Home in Nevada
Elon Musk, co-founder and CEO of American electric vehicle manufacturer Tesla Motors.
CARSON CITY, Nev. (AP) — Tesla finds home in Nevada! Gov. Brian Sandoval announced Thursday that Nevada won a high-stakes battle with four other states for Tesla Motors’ coveted battery factory, but the win comes with a hefty price tag — up to $1.3 billion in tax breaks and other incentives over 20 years that state lawmakers still must approve.
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.
To Close the Skills Gap in Manufacturing Careers, Close the Gender Gap
Will the STEM skills gap close if more women join the STEM workforce?
America's STEM Talent Pool Too Shallow to Meet Demand
A new U.S. News annual index, sponsored by Raytheon, measures key indicators of STEM activity in the U.S.
Despite some signs of improvement, student aptitude for and interest in science, technology, engineering and mathematics has been mostly flat for more than a decade, even as the need for STEM skills continues to grow, according to the U.S. News/Raytheon STEM Index.The Index, the first comprehensive index that measures the key factors relating to STEM jobs and education, shows that after a long period of flat to down indicators, there has been some upward movement, particularly in the actual number of STEM degrees granted at the undergraduate and graduate levels. But even with those numbers on the rise, as a proportion of total degrees granted they still hover close to the same levels that existed in 2000, indicating that the education pipeline to fill the current and future jobs that will require STEM skills still isn’t producing enough talent.“Just using the governments data, which is quite a conservative estimate, it’s clear that STEM is an important and growing part of the economy,” says Brian Kelly, editor and chief content officer of U.S. News & World Report. “Beyond that, we know that STEM skills may be required in as many as 50 percent of future jobs.”
The U.S. News/Raytheon STEM Index shows that STEM employment in the United States has gone up by more than 30 percent, from 12.8 million STEM jobs (as defined by the U.S. government) in 2000 to 16.8 million in 2013, and a February report by Burning Glass Technologies indicated the STEM job market is actually far larger than that. Kelly also points out that the analytical reasoning and problem-solving skills associated with science, technology, engineering and mathematics are increasingly important for jobs that aren’t traditionally defined as being in STEM fields.
“People are measuring the number of Ph. D. engineers and scientists out there, but the mechanics putting the wings on the airplanes need STEM skill sets, too,” he says. “This is not simply an issue about guys with lab coats and pocket protectors. This is way beyond that.”
Launched with support from the Raytheon Company, the new U.S. News/Raytheon STEM Index measures annual changes in key indicators of STEM activity in the United States relative to the year 2000; it is not a comprehensive measure of all STEM economic or STEM education activity in the United States and does not determine whether explicit STEM goals are being met. The Index is made up of 93 sub-indices and thousands of data points divided into eight components: ACT math and science scores, Advance Placement (AP) test scores in STEM subjects, college and graduate degrees granted, U.S. employment in STEM fields, Program for International Student Assessments (PISA) math and science scores, SAT math scores, National Assessment of Educational Progress (NAEP) math scores and interest in STEM at the high school level. It relies on data from the U.S. Bureau of Labor Statistics, the National Center for Education Statistics, the College Board, the National Research Center for Colleges & University Admissions, the ACT and the Organization for Economic Co-operation and Development.
As with other widely followed indices like the S&P 500 or the Consumer Price Index, the weights and components for future U.S News/Raytheon STEM Indices will likely change as more numerous and refined indicators become available. “For instance, we know that the way the federal government classifies STEM jobs undercounts them, possibly by a lot,” Kelly explains.
“Science, technology, engineering and math form the foundation of the global economy,” says Raytheon Chairman William Swanson. “Yet, as the STEM Index suggests, if educational trends continue, fewer qualified candidates will be available to support growth in these areas. It’s critical to our business and the United States’ long term economic outlook that we inspire young people to engage in STEM and dedicate resources to supporting them throughout their academic lives.”
Even with the most weight given to the broadest indicators — STEM employment and STEM degrees granted — the Index shows there has been only modest gains in overall STEM activity since 2000.
“We’ve clearly been in a slump for many years, but we’re seeing glimmers of hope that we’re coming out of that now,” he says, adding that underlying data from the Index show there is much more to the current STEM crisis than meets the eye. “When you take it apart, certain factors are masking the problem.”Bob Morse, the director of research for U.S. News, agrees.“It is important to realize that while the Index and its components can be used to measure trends, they don’t always depict the entire story,” says Morse, who worked closely with U.S. News data analysts Matthew Mason and Sam Flanigan on the Index. In some cases, the raw data may show an increase in STEM related activity in a given area even though the STEM index indicator for that area, once weighted and calculated, shows a decline over time.
The component index for AP tests offers one such example. “In 2000, around 423,000 STEM AP tests were taken,” Morse explains. “In 2013, that number ballooned to 1.2 million. This shows us that despite our graph looking like AP STEM is in a major downslide, in reality there has been real growth in numbers. This is an indication of the rapidly growing popularity of all AP tests in general and that the growth in STEM AP tests is not keeping pace.”
Still, the relatively flat overall Index calls into question the effectiveness of multiple plans to increase STEM awareness and activity in the U.S., including President Barack Obama’s 2009 Educate to Innovate initiative. While the actual number of STEM degrees granted, employment in STEM fields, and the number of STEM-related AP tests have gone up since 2009, other indicators — like SAT and NAEP scores — have stagnated, and other key areas have declined.
“There’s not much evidence so far that government actions have had a significant effect,” Kelly says, stressing that some initiatives, like the Common Core State Standards, which were created in part to address the national STEM education crisis, have not been yet fully implemented.
According to the U.S. News/Raytheon STEM Index, high school student interest in STEM fields reached a low point in 2004, dropping nearly 19 percent from the base-year calculations. Interest levels climbed steadily until 2009, when they began to decline again. In spite of the intense drive to encourage students to study science, interest levels fell between 2009 and 2013 and are now just slightly below where they were in 2000.
The lack of progress among female and minority students is especially troubling in the long term.
“A big part of the problem is the continuing split that puts Asian-Americans and white males on the side of those who are driven to acquire STEM skills, and women, blacks and Latinos on the other side of the dividing line” says Kelly. “T
he labor pool going forward will not be made up mainly of white males and Asian-Americans. The labor pool will be increasingly Latino, and that group is not advancing in STEM fields right now.”
As high school students’ interest in STEM has waned, their scores on international assessments like PISA have dropped, the U.S. News/Raytheon STEM Index shows. According to the latest PISA data, released in December, students in other countries continue to outperform those from the United States in math and science.
“The big picture of U.S. performance on the 2012 PISA is straightforward and stark. It is the picture of educational stagnation,” Secretary of Education Arne Duncan said at the time. “In a knowledge-based, global economy, where education is more important than ever before, both to individual success and collective prosperity, our students are basically losing ground.”
But Kelly cautions that the issue is more complicated than just “us vs. them.” While international assessments like PISA show the U.S. is falling behind, other data used in the U.S. News/Raytheon STEM Index, like NAEP scores, show an improvement over time.
“Even with gains domestically, we can still be losing ground against our international competitors,” Kelly explains.
“There are many very good initiatives and lots of work being done to address the problem,” he continues. “But as the data show, it’s still not enough. There is a mismatch of skills and jobs, of supply and demand, and the challenge is to get them aligned again.”
SOURCE: US News
Surprise! The U.S. is Poised To Be a Rising Star in Manufacturing
After years of hand-wringing about the expense of making things in America, a new report from the Boston Consulting Group says that’s all changing. The shift is due in part to stagnant wages — at least that’s potentially good for something — and to a greater extent, the abundance and declining cost of natural gas.
In fact, there’s a bit of a role reversal underway.Five economies generally regarded as low-cost bases for manufacturing — China, Brazil, Czech Republic, Poland and Russia — are getting relatively more expensive. The reasons: wage increases, slowing productivity growth, currency swings and steep increases in energy costs. The U.S. is getting cheaper, along with Mexico. The reasons: wage stability, increasing productivity, a stable currency and, most dramatically, a sharp decline (50 percent) in the cost of natural gas since 2005, a result of the boom in shale gas. In a press release accompanying the report, BCG’s Michael Zinser said:
While labor and energy costs aren’t the only factors that influence corporate decisions on where to locate manufacturing, these striking changes represent a significant shift in the economics of global manufacturing.
There are few signs that the news has caught up with U.S. companies that continue to shun the U.S. for supposedly cheaper nations. According to a recent report by the Congressional Research Service:
China displaced the United States as the largest manufacturing country in 2010, as the United States’ share of global manufacturing activity declined from 30% in 2002 to 17.4% in 2012.
“Many companies are making manufacturing investment decisions on the basis of a decades-old worldview that is sorely out of date,” wrote Harold L. Sirkin, a BCG senior partner and a coauthor of the analysis. “They still see North America and western Europe as high cost and Latin America, eastern Europe, and most of Asia — especially China — as low cost. In reality, there are now high- and low-cost countries in nearly every region of the world.”
SOURCE: Washington Post
Vietnamese Mobs Set Fire To Foreign Factories In Anti-China Riots
A Vietnamese protester holds a banner in a rally against Beijing’s deployment of an oil rig in the contested waters of the South China Sea, outside the Chinese Embassy on Sunday, May 11, 2014 in Hanoi, Vietnam. The deployment of the rig has a triggered a tense standoff in the ocean and raised fears of confrontation between the neighboring countries. (AP Photo/Chris Brummitt)
HANOI/MANILA, May 14 (Reuters) – Thousands of Vietnamese set fire to foreign factories and rampaged in industrial zones in the south of the country in an angry reaction to Chinese oil drilling in a part of the South China Sea claimed by Vietnam, officials said on Wednesday.
The brunt of Tuesday’s anti-China violence appears to have been borne by Taiwanese companies in the zones in Binh Duong and Dong Nai provinces, as rioters mistook the firms to be Chinese-owned. There were no reports of casualties and the rioting appeared to have subsided by Wednesday.The row over the South China Sea and anti-China violence in tightly-controlled Vietnam have brought relations between Hanoi and Beijing to one of their lowest points since the Communist neighbors fought a brief border war in 1979.”I fear a dark chapter in Sino-Vietnamese relations is now being written,” said Ian Story, a South China Sea expert at Singapore’s Institute of Southeast Asian Studies.
“And because China wants to keep that oil rig in place into August, these protests could just be the first pages.”
Tran Van Nam, vice chairman of the Binh Duong People’s Committee, said workers initially held peaceful protests on Tuesday. But disorder broke out when the numbers swelled to about 20,000.
Gates were smashed and rioters set 15 factories on fire, he said.
“This caused billions of dong (hundreds of thousands of dollars) in damages and thousands of workers will have lost their jobs,” Nam said by telephone.
“We urge everyone to stay calm, exercise restraint and have faith in the leadership of the Party and State.”
F.Y. Hong, president of Taiwan’s Formosa Industries Corp, one of the companies that was attacked, said about 300 rioters looted televisions, computers and personal belongings of workers.
“Due to the limited number of police, they couldn’t stop the looters. The situation was like in a country where there were no authorities to protect its people,” Hong said.
A police official in Binh Duong province, speaking by telephone, said about 200 people had been arrested.
“We are working on other areas in the province … We haven’t seen any injuries.”
A Singapore foreign ministry spokesman said the premises of a number of foreign companies were broken into and set on fire in two Vietnam-Singapore joint venture industrial parks in Binh Duong. He said the Singapore government had asked Vietnam to restore law and order immediately, but gave no other details.
“Everyone is terrified,” said Serena Liu, chairwoman of the Taiwan Chamber of Commerce in Vietnam. “Some people tried to drive out of Binh Duong, but looters had put up road blocks.”
RISK OF MILITARY CLASH
Story said the Vietnamese government would now be under increasing pressure to respond, which could risk a military clash at sea with China that Vietnam could not win.
Dozens of ships from both countries are around the oil rig, and the two sides have accused each other of intentional collisions, increasing the risk of open confrontation.
In Beijing, Foreign Ministry spokeswoman Hua Chunying told reporters that China was seriously concerned about the violence and had summoned Vietnam’s ambassador to protest.
China has “demanded the Vietnamese side make efforts to adopt effective measures to resolutely support eliminating illegal criminal acts and protect the safety of Chinese citizens and institutions”, Hua told reporters.
Hong Kong-listed sports shoe maker Yue Yuen, which supplies footwear to Adidas, Nike and other international brands, said it had suspended production in Vietnam because of the protests, but there was no damage to its facilities and its workers were safe.
A spokesman for global exporter Li & Fung, which supplies retailers like Kohl’s Corp and Wal-Mart Stores Inc with clothing, toys and other products, said some of its suppliers in Vietnam had halted production on Wednesday as a precautionary measure. He gave no further details.
Anti-China sentiment was also evident in Manila, as the Philippine government accused Beijing of reclaiming land on a reef in disputed islands in another part of sea, apparently to build an airstrip.
“If these reports are true, this would represent a significant step by the Chinese, potentially allowing them to extend their airborne reach,” said Story, the analyst.
The spike in tensions over the oil- and gas-rich South China Sea comes two weeks after U.S. President Barack Obama visited the region and expressed support for long-time allies Japan and the Philippines, both of which are locked in territorial disputes with China. Vietnam is also stepping up ties with the United States.
CLAIMS AND COUNTER-CLAIMS
China claims almost the entire South China Sea, an area rich in energy deposits and an important passageway traversed each year by $5 trillion worth of ship-borne goods.
Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims on the area.
Philippine foreign affairs department spokesman Charles Jose said China had been moving earth and materials to Johnson South Reef, known by the Chinese as Chigua and which the Philippines calls Mabini Reef, in recent weeks.
He said China was reclaiming land in violation of the Declaration on the Conduct of Parties in the South China Sea, an informal code of conduct for the region.
“I think they’re to construct an airstrip there,” Jose said.
However, Richard Bitzinger, a military analyst at the S. Rajaratnam School of International Studies in Singapore, said the airstrip was unlikely to be a strategic game-changer in the South China Sea because of the difficulty in building a workable runway on the atoll.
“It would be a nice tool to have in the box of options to project power, but it is probably going to be far too small to have a huge impact,” Bitzinger said.
“At this point I would be very surprised to see this develop into any airbase of any significant size … China’s holdings in the Spratlys are just too small.
“It is probably as much a political move as anything else, the laying down of one more marker to solidify their position and continue their campaign of creeping assertiveness.” (Additional reporting by Donny Kwok and Greg Torode in Hong Kong, Faith Hung in Taipei, Nguyen Phuong Linh and Rachel Armstrong in Singapore and Megha Rajagopalan and Michael Martina in Beijing; Writing by Raju Gopalakrishnan; Editing by Mike Collett-White)
SOURCE: Reuters
Factory Jobs Flow Back to America: China’s rising costs spark sea change in manufacturing
Lucas Remer helps produce alternators at Generac’s plant in Whitewater, Wis., where 80 factory jobs were created when the company reshored the manufacturing of a component to the U.S.A. from China. The move is part of a growing trend. GARY PORTER | MILWAUKEE JOURNAL SENTINEL PHOTO
Companies looking for return: After years of sending production overseas to China and other low-wage countries — known as offshoring — manufacturing jobs are returning to the United States. Executives are confirming the trend as more are actively reshoring jobs, or are planning to return production in the next few years, according to The Boston Consulting Group.
WHITEWATER, Wis. — In 2001, Generac Power Systems joined the wave of American companies shifting production to China. The move wiped out 400 jobs in southeast Wisconsin, but few could argue with management’s logic: Chinese companies were offering to make a key component for $100 less than the cost of producing it in the U.S.Now, however, Generac has brought manufacturing of that component back to its Whitewater plant — creating about 80 jobs in this town of about 14,500 about 25 miles north of the Illinois state line.
The move is part of a sea change in American manufacturing: After three decades of an exodus of production to China and other low-wage countries, companies have curtailed moves abroad.
Some, like Generac, have begun to return manufacturing to U.S. shores.
Although no one keeps precise statistics, the retreat from offshoring is clear from various sources, including federal data on assistance to workers hurt by overseas moves.
U.S. factory payrolls have grown for four straight years, with gains totaling about 650,000 jobs. That’s a small fraction of the 6 million lost in the previous decade, but it still marks the biggest and longest stretch of manufacturing increases in a quarter of a century.
Harry Moser, an MIT trained engineer who tracks the inflow of jobs, estimates that last year marked the first time since the offshoring trend began that factory jobs returning to the U.S. matched the number lost, about 40,000 each.
“Offshoring and ‘reshoring’ were roughly in balance — I call that victory,” said Moser, who traces his interest in manufacturing to his parents’ work at the long-closed Singer Sewing Machine plant in New Jersey. (He once worked there too.) He now runs the Reshoring Initiative, a Chicago nonprofit that works with companies to bring manufacturing jobs back to the U.S.
Several factors lie behind the change.
Over the past decade, Chinese labor and transportation costs have jumped while U.S. wages have stagnated. Manufacturing also has become more automated, further reducing labor’s weight in the cost equation.
The boom in natural gas production in the U.S. has led to a 25 percent decrease in gas prices in the U.S., contrasted with a 138 percent increase in China, according to The Boston Consulting Group.
Many U.S. manufacturers also report growing problems with quality control of goods made in China. “We got to the point where everything we were bringing in had to be inspected,” said Lonnie Kane, president of apparel-maker Karen Kane, noting that his company used to check just 10 percent of goods from China.
“Now prices are escalating, quality is dropping and deliveries are being delayed,” he says. In the past three years, Kane has shifted 80 percent of his production from China back home.
Expansion in the domestic apparel industry remains unusual because the labor-intensive work can be done in many low-wage countries.
But in other industries, a growing number of domestic and foreign companies — including General Electric, Caterpillar, Toyota and Siemens — are opting to build or expand their facilities in the U.S., particularly in the Southeast, where labor costs are low.
For the first time, some small contract manufacturers in the U.S. are beating bigger rivals in Asia, the center of global industrial production.
At Zentech Manufacturing in Baltimore, the company’s president, Matt Turpin, recalls his skepticism when salesmen told him two years ago about their efforts to land a contract making 5,000 to 10,000 wireless printers. He was sure an overseas competitor would get the work.
“I don’t know why you’re wasting your time chasing that business,” he says he told the sales force.
Zentech ultimately won the contract, and Turpin says the company added at least five full-time employees to his shop, where the front office window is draped with a large American flag.
William Davidson, a test technician at Zentech, now earns $17.50 an hour working on those printers and other company products. Before getting hired at Zen-tech three years ago, Davidson, 62, had been unemployed for 18 months. His previous employer, a Delaware repairer of cable boxes, had moved its operations to Mexico.
“The worst part of it was we had to help them pack things up for the move,” he says.
Here in Wisconsin, a similar story has played out with Generac.Aaron Jagdfeld, the company’s chief executive, was the comptroller at the time of the offshoring. Jagdfeld, now 42, had grown up in the region and graduated from the University of Wisconsin at Whitewater with an accounting degree.
The offshoring “didn’t feel right” because of the families affected by layoffs, he said, but the company needed to make the move to remain competitive.
Generac grew rapidly over most of the rest of the decade. Its sales rose to $1.5 billion last year, and it now has about 3,300 workers, including 720 in Whitewater, its largest plant. But the past decade also saw costs surge in China while they rose little in the U.S.
What began as a $100 gap in the cost of producing an alternator narrowed as the Chinese yuan jumped in value and Chinese wages and other costs soared.
The tipping point came when Generac had enough sales to justify investing millions of dollars in new equipment for the Whitewater plant. The company can now produce an alternator with one worker in the time it took four workers in China.
SOURCE: DON LEE TRIBUNE WASHINGTON BUREAU
U.S. Manufacturing Becoming Low Cost
Picture Eugene Hoshiko, File/Associated Press
U.S. manufacturing becoming low cost over the past decade compared with factories in China, Brazil and most of the world’s other major economies.
So says a new private study, which found that rising wages and higher energy costs have diminished China’s long-standing edge over the United States. So has a boom in U.S. shale gas production. It’s reduced U.S. natural gas prices and slowed the cost of electricity.
The Boston Consulting Group is issuing a report on its study of manufacturing costs in the 25 biggest exporting countries. Only seven of those countries had lower manufacturing costs than the United States did this year. And since 2004, U.S. manufacturers have improved their competitiveness compared with every major exporter except India, Mexico and the Netherlands.In 2004, for example, manufacturing in China cost 14 percent less than manufacturing in the United States. By this year, the China advantage had narrowed to 5 percent. If the trends continue, Boston Consulting found, U.S. manufacturing will be less expensive than China’s by 2018.
Over the past decade, labor costs, adjusted to reflect productivity gains, shot up 187 percent at factories in China, compared with 27 percent in the United States. The value of China’s currency has risen more than 30 percent against the U.S. dollar over the past decade.
The higher Chinese currency made goods produced in China and sold abroad comparatively more expensive. And foreign goods became comparatively more affordable in China.
Chinese electricity costs rose 66 percent, more than double the United States’ 30 percent increase. The start of large-scale U.S. shale gas production in 2005 has helped contain electricity bills in the United States and neighboring Canada and Mexico.
China, too, has reserves for shale gas. But it will need years to develop them.
“This is not something you can turn on overnight,” said Justin Rose, a partner at Boston Consulting and co-author of the study.
Brazil has lost even more ground than China. In 2004, manufacturing was 3 percent cheaper in Brazil than in the United States. By 2014, Brazil was 23 percent more expensive. Brazilian factories didn’t improve efficiency enough to offset rising energy and labor costs.
The countries where manufacturing was cheaper than in the United States are Indonesia, India, Mexico, Thailand, China, Taiwan and Russia.
Australia was the most expensive country for manufacturing. Its costs were 30 percent higher than those in the United States.
The survey doesn’t include transportation costs, which vary depending on where goods are shipped. Several countries also face obstacles not captured by Boston Consulting’s manufacturing cost index — from corruption to inefficient government bureaucracies.
SOURCE: Washington Post
The Hidden Weakness in This Month’s Jobs Report
The good news from the April jobs report is that the recovery is the same as it’s always been. The bad news is that, well, the recovery is the same as it’s always been — and some workers are giving up as they realize that.
As you may have noticed, this winter was pretty cold. So cold, in fact, that the economy might have ground to a halt, as shoppers stayed home and home-building stayed weak. The initial estimate of first-quarter GDP growth was a miserable 0.1 percent — and that was after a string of disappointing jobs numbers to start the year. That’s why the April employment report was such a relief: The economy added 288,000 jobs (the most in any single month since January 2012), 36,000 more in revisions, and the unemployment rate fell from 6.7 to 6.3 percent.That sounds like unambiguously good news. But beneath the headlines, the recovery doesn’t look quite so robust. The jobs report is really two different sets of data. There’s the establishment survey, which polls businesses about how many positions they added or lost to come up with the jobs number. And there’s the household survey, which polls households about how many of them have jobs, or are looking for one, to come up with the unemployment rate. In April, the establishment survey showed the economy bouncing back from its winter of discontent. But the household survey showed discontented workers getting discouraged and dropping out of the labor force.
Here’s the bad news: The labor force fell by 806,000 in April, and most of that was because fewer people entered it to begin with. Reentrants — people who have worked before and just started looking again — plummeted by 417,000. That’s the largest monthly drop, in absolute terms, on record going back to 1967.
It’s confounding, because a stronger labor market tends to suck people in, not push them away. Indeed, the labor force had been growing the past six months — up 1.6 million between October and March — before this reversal. The likeliest explanation is that the data got ahead of the trend and that this is just a correction.
Still, there was plenty more to be disappointed about. The average work week was unchanged last month. So were average hourly earnings. Both of those are pretty good predictors of future demand — and future hiring — so there’s not much hint of better times ahead. If anything, the economy looks like it will just keep chugging along at its 2 percent pace. You can see how consistently mediocre the recovery has been in the chart below. Job growth has been the same since 2012.
Let’s be clear: Adding 288,000 jobs is great. It would be even greater if it looked like that growth would continue, but it doesn’t, given the weak internal numbers. It’s likely that we’re now simply getting back to our earlier trend after the polar vortex had temporarily knocked us off.This still isn’t the recovery we’re looking for.
SOURCE: Washington Post
American Company Goes To The Mat For ‘Made In America’
At a time when flag-waving couldn’t be more in fashion, David MacNeil knows a thing or two about standing up for American products. Or at least resting your muddy boots on them. While creating jobs in the process.
TPP: Fast Track to Poverty
That giant sucking sound predicted by Ross Perot commenced 20 years ago last week. It is the North American Free Trade Agreement (NAFTA) vacuuming up U.S. jobs and depositing them in Mexico.
Written by: Leo W. Gerard
Independent presidential candidate Perot was right. NAFTA swept U.S. industry south of the border. It made Wall Street happy. It made multi-national corporations obscenely profitable. But it destroyed the lives of hundreds of thousands of American workers.
NAFTA’s backers promised it would create American jobs, just as promoters of the Korean and Chinese trade arrangements said they would and advocates of the proposed Trans-Pacific Partnership (TPP) deal contend it will. They were — and still are — brutally wrong. NAFTA, the Korean deal and China’s entry into the World Trade Organization killed American jobs. They lowered wages. They diminished what America cherishes: opportunity. They contributed to the very ill that President Obama is crusading against: income inequality. There is no evidence the TPP would be any different. American workers need a new trade philosophy, one that protects them and puts people first, not corporations.
After 20 years, Americans know in their guts the damage NAFTA did to them, the destruction it caused to American manufacturing. There’s also concrete proof. In a study titled “NAFTA at 20,” released this month, Public Citizen’s Global Trade Watch concludes:
“After two decades of NAFTA, the evidence is clear: the vaunted deal failed at its promises of job creation and better living standards while contributing to mass job losses, soaring income inequality, agricultural instability, corporate attacks on domestic health and environmental safeguards, and mass displacement and volatility in Mexico.”
It points out that the NAFTA snake-oil salesmen at the Peterson Institute promised it would create 170,000 jobs a year. A year! Instead, it cost America at least 845,000 jobs. That is the number of manufacturing workers who were able to jump through all of the red-taped hoops necessary to receive Trade Adjustment Assistance (TAA) after corporations moved their jobs across the border. The study’s authors believe hundreds of thousands of additional workers lost their jobs because of NAFTA but did not qualify for the federal TAA aid.
The study also notes that the U.S. Bureau of Labor Statistics determined that two out of every three displaced manufacturing workers who secured new jobs in 2012 did so at slashed wages, the majority at a cut of more than 20 percent.
The result is rising income inequality. It happens like this: workers lose their good-paying factory jobs and take lower-paying positions. This increases competition for low-skill, low-pay jobs that can’t be offshored, such as hamburger flipping and shelf stocking. While a small number of corporate executives and wealthy shareholders profit from moving factories across borders, it forces increasing numbers of workers to vie for minimum-wage jobs. As a result, income inequality now matches the level it was during the robber baron days before the Great Depression.
A study last year by the non-partisan Economic Policy Institute (EPI) supports the Public Citizen findings. EPI determined that trade reduced wages for workers without college educations by 5.5 percent in 2011, costing the average worker $1,800. Meanwhile, trade with developing countries like China increased the wages of the smaller number of college-educated U.S. workers. The upshot is a widening gulf between Americans’ earnings, particularly as more and more Americans can’t afford the costs of higher education.
NAFTA actually encouraged corporations to abandon the United States. The Public Citizen report explains: “NAFTA created new privileges and protections for foreign investors that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries.”
What that means is that U.S. corporations contribute to the trade deficit by manufacturing in Mexico and importing their products into America. Before NAFTA, the United States had a small trade surplus with Mexico. Now it’s a trade deficit. A huge one.
The Korean trade deal, which took effect nearly two years ago, is no better. Like NAFTA, its promoters said it would boost exports and create jobs. In its first year, U.S. exports to Korea fell 8.3 percent. Imports from Korea rose, increasing the trade deficit with Korea by nearly 40 percent. That cost Americans 40,000 jobs.
This is not what Americans want from trade. And yet, the United States is negotiating a NAFTA-style deal called the TPP with 11 Pacific Rim nations, including Brunei, Chile, Malaysia, Peru, Singapore, and Vietnam. The negotiations are occurring in secret. Average citizens have no access to what’s going on. Without significant changes, TPP will just be another American factory shuttering, dream shattering trade deal.
Of course, the corporations that stand to profit and the U.S. Chamber of Commerce support the current TPP scheme, as they did the other job-destroying trade deals. And so do corporate politicians.
Three of them — U.S. Rep. Dave Camp and Senators Orrin Hatch and Max Baucus –introduced legislation last week to speed passage of TPP — put it on the fast track. Under fast track, Congress excuses itself from its Constitutional duty to supervise international trade.
The fast track bill empowers the president to sign a secretly devised trade pact before Congress votes on it. Fast track also limits Congressional debate to 20 hours and forbids amendments.
In addition to the anniversary of NAFTA, last week was the 50th anniversary of Lyndon B. Johnson’s call for a War on Poverty.
In that address to Congress, Johnson also appealed for more balanced trade, for foreign countries granted access to the American market to open their markets to American goods. That’s what Americans want from trade — fairness. They know they can compete when given a level playing field.
Americans want trade deals to ensure equity. They want trade policies that increase American innovation, American manufacturing and American jobs.
They want trade policies that help America win President Obama’s war on income inequality, not schemes that grant special favors to corporations at the expense of people.
Follow Leo W. Gerard on Twitter: www.twitter.com/uswblogger
SOURCE: USW
20 Years Later, NAFTA Still a Massive Fail
NAFTA had little to do with trade and everything to do with corp investment rights.
NAFTA was fundamentally different than past trade agreements in that it was only partially about trade. Indeed, it shattered the boundaries of past U.S. trade pacts, which had focused narrowly on cutting tariffs and easing quotas. In contrast, NAFTA created new privileges and protections for foreign investors that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries.
NAFTA allowed foreign investors to directly challenge before foreign tribunals domestic policies and actions, demanding government compensation for policies that they claimed undermined their expected future profits. NAFTA also contained chapters that required the three countries to limit regulation of services, such as trucking and banking; extend medicine patent monopolies; limit food and product safety standards and border inspection; and waive domestic procurement preferences, such as Buy American.
In 1993, NAFTA was sold to the U.S. public with grand promises. NAFTA would create hundreds of thousands of good jobs here – 170,000 per year according the Peterson Institute for International Economics.1 U.S. farmers would export their way to wealth. NAFTA would bring Mexico to a first-world level of economic prosperity and stability, providing new economic opportunities there that would reduce immigration to the United States. Environmental standards would improve.Rather than creating the promised 170,000 jobs per year, NAFTA has contributed to an enormous new U.S. trade deficit with Mexico and Canada, which had already equated to an estimated net loss of one million U.S. jobs by 2004.
More than 845,000 specific U.S. workers have been certified for Trade Adjustment Assistance (TAA) as having lost their jobs due to imports from Canada and Mexico or the relocation of factories to those countries. The TAA program is quite narrow, only covering a subset of the jobs lost at manufacturing facilities, and is difficult to qualify for. Thus, the NAFTA TAA numbers significantly undercount NAFTA job loss.
NAFTA has contributed to downward pressure on U.S. wages and growing income inequality. According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent. As increasing numbers of workers displaced from manufacturing jobs have joined the glut of workers competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these sectors under NAFTA. The resulting downward pressure on middle-class wages has fueled recent growth in income inequality.The reductions in consumer goods prices that have materialized have not been sufficient to offset the losses to wages under NAFTA. U.S. workers without college degrees (63 percent of the workforce) have likely lost an amount equal to 12.2 percent of their wages under NAFTA-style trade even after accounting for the benefits of cheaper goods. This net loss, calculated by the Center for Economic and Policy Research, means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.
All this making NAFTA still a major fail.
SOURCE: The Real News
Video: What is TPP and Fast Track?
Here is a short video by Economy in Crisis which explains the global governance agreement known as Trans Pacific Partnership as well as Fast Track trade authority – which transfers Congress’ constitutional power over foreign commerce to President Obama.
So what is TPP and Fast Track?
Tell Congress to Stop FAST TRACK on TPP
The TPP Is Another Job Killing Trade Deal—So Why Are Both Parties Supporting It?
The TPP’s specifics have been hammered out during closed-door conferences held throughout the world over the past five years. The 18th round took place in Malaysia in July. Leaked chapters of the agreement have caused concern among a diverse group of critics including the Sierra Club, Public Citizen, and numerous U.S. labor unions. The agreement will give unprecedented powers to multinational corporations and affect individuals in member countries in ways that are both unexpected and undesirable.Yet surprisingly, the TPP has supporters on both sides of the political aisle.You can help stop this- tell Congress to stop Fast Track on TPP! Let your State Reps know. Click here and let your voice be heard! Tell Congress to stop FAST TRACK
Have You Heard of the TPP Yet? An Important Trade Agreement You Need to Know About
The U.S. government is currently working with 10 other countries to negotiate the biggest trade and investment agreement (also known as a “free trade agreement” or FTA) in history. It is called the TPP, or Trans-Pacific Partnership. Not only will it be bigger than NAFTA (the North American Free Trade Agreement)—it’s actually NAFTA plus eight other countries. Have you heard of the TPP yet?
But the mainstream press doesn’t talk about the TPP much. Have you read about in in your local paper? Heard it mentioned on the evening news or on news talk radio? Perhaps on the Sunday morning talk shows?I have a feeling that most of you are shaking your heads, shrugging your shoulders or making faces—because the answer is most likely “no.” Most people simply have not heard of the TPP, nor do they know that it might be the last trade agreement the United States ever negotiates (unlike past agreements, this one will be open to new countries, whenever they want to join). So it is all the more important to get this one right.Why isn’t the press talking about this trade agreement? It’s certainly not because trade is boring or irrelevant, and it is definitely not because the debate is over.
Trade 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.
SOURCE: AFL CIO Blog
New Wool Mill Will Be Second Largest in U.S.A.
Stephenie Anderson inspects some of the yarn her new processing plant is turning out. | JOHN STENNES Forum News Service
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FOSSTON — Stephenie Anderson’s timing for starting a wool-processing plant in Fosston is spot-on. So says Bill Batchelder, president of Bemidji Woolen Mills, and Jim Stordahl, an extension agent in Polk County.
“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. |
Filling an opening
The plant’s processing starts with raw wool from sheared sheep and bison — mud, snarls, and all — and turns it into fine, woolen yarn that is sold to clothing makers such as Bemidji Woolen Mills. This new wool mill will be the second-largest in U.S.A.
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?”
SOURCE: The Bemidji Pioneer
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
Top US Manufacturers Returning Jobs Back to US from China
American corporations that off-shored manufacturing to China for two decades are bringing jobs home.
A decade ago, jobs were on a nearly one-way street to the People’s Republic. In 2003, when 150,000 manufacturing jobs went to China, 2,000 came this way, says Harry Moser, head of the Reshoring Initiative, a nonprofit group that tracks U.S.-China job flows. Top US Manufacturers Returning Jobs Back to US from China.
Today “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.
SOURCE: Trib Total Media
Parade MagazinePutting America Back to Work: 5 Ways Made in USA Is Staging a Comeback
Good news: Americans are making things again, from cars to watches to socks. What’s behind the manufacturing upswing—and what it means for American labor.
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.
10 States Where Manufacturing Still Matters
Factory manufacturing output increased for the second straight month. Overall industrial production has increased 0.8%. (Photo: Mike De Sisti, AP)
While some experts are predicting a revival, manufacturing has lagged the economy for years. The country has lost nearly 2.5 million manufacturing jobs in the past 10 years.
Last year, the manufacturing sector was responsible for 12% of the nation’s total economic output. In Indiana, the state where manufacturing contributes most, the figure was 28.2%. 24/7 Wall St. reviewed the 10 states where manufacturing represented the largest total share of the state economy.
The states with the biggest manufacturing economies specialize in different industries. In Oregon, nearly $38 billion of the state’s $50 billion manufacturing sector came from computer and electronic product manufacturing. In Louisiana, more than 10% of the state’s entire economic output in 2011 came from the manufacturing of petroleum and coal-based products. Michigan and Indiana both have sizable auto industries, with Michigan’s auto industry accounting for slightly less than a third of all its manufacturing output in 2011.
During the recession, and in many cases before the recession even started, many states’ manufacturing employment faced steep job losses. Between January 2007 and mid-2009, Indiana lost more than 100,000 manufacturing jobs. In Michigan, nearly 125,000 manufacturing jobs were lost between January 2008 and January 2009 alone.
Now, many of these states have seen employment rebound. Michigan had the fastest job growth in the nation from the end of 2009 to the end of 2011. According to Chad Moutray, chief economist at the National Association of Manufacturers, “the auto sector has been one of the driving sectors in the economy, pardon the pun, over the course of the last couple of years.”
In addition to Michigan, many parts of the Midwest benefited as well, he added. In Indiana, employment has risen more than 3.5% a year for each of the past three years, especially impressive in the context of the nation’s slow job growth overall.
While some believe that the benefits of a potential manufacturing renaissance are largely a myth, Moutray told 24/7 Wall St. that investments in the sector have a positive impact on the economy overall. He also noted that the prospect of added jobs may appeal to many Americans because it jobs pay well.
To identify the 10 states where manufacturing matters, 24/7 Wall St. used state gross domestic product (GDP) figures published by the Bureau of Economic Analysis. We determined from these data which states had the largest percentage of output attributable to manufacturing. Data on specific industries within the manufacturing sector from 2011 represent the most recent available figures. Employment figures for each state come from the Bureau of Labor Statistics and are seasonally adjusted.
Seasonally adjusted manufacturing job totals were not available for Alabama and Oklahoma.
These are the 10 states where manufacturing matters.
10. Alabama
- MFG share of output: 16.3%
- MFG output 2012: $30 billion (22nd highest)
- 2012 Unemployment rate: 7.3%
More than 16% of Alabama’s $183 billion worth of total output in 2012 came from manufacturing industries, about $30 billion. Last year, much of this output — $16.6 billion worth — came from the manufacturing of durable goods, which in 2012 accounted for 9.1% of total GDP, the ninth-highest percentage in the country. This includes the manufacturing of wood products, nonmetallic mineral products and so forth. News reports suggest a strong tradition of manufacturing in Alabama. Mobile County, for example, will now be the site of Airbus’s new A320 jetliner final assembly line, which will likely be the company’s first U.S.-based production facility. The project, which is scheduled to begin in 2015, is expected to create thousands of jobs, a welcome prospect in the wake of declining manufacturing industries this past decade.
9. Michigan
- MFG share of output: 16.5%
- MFG output 2012: $66.2 billion (8th highest)
- 2012 Unemployment rate: 9.1%
Each of the “Big Three” U.S. auto manufacturers — Chrysler, Ford and General Motors — is based in Michigan, and car sales are trending upward. This likely will be critical for the state: motor vehicle manufacturing accounted for nearly 5% of the state’s total GDP in 2011, far more than any other state. Michigan also led the nation with $18.8 billion in motor vehicle manufacturing output in 2011. The resurgence in the auto industry has not only boosted output but also led to job growth. Manufacturing employment in Michigan rose 7.9% between the ends of 2010 and 2011, leading all states, and then by an additional 3.9% between the ends of 2011 and 2012, also among the most in the nation. But this did little to help Detroit avoid a bankruptcy filing since extremely few auto manufacturing jobs exist within the city limits.
8. Iowa
- MFG share of output: 16.7%
- MFG output 2012: $25.4 billion (25th highest)
- 2012 Unemployment rate: 5.2%
Iowa had the 30th largest state economy in the nation last year. However, relative to its GDP, Iowa is still one of the nation’s largest manufacturers. This is especially the case for non-durable goods, which accounted for 8.4% of the state’s total output in 2012, the fifth-highest percentage in the nation. In 2011, when non-durable goods manufacturing accounted for 8.3% of Iowa’s output, nearly half of this contribution came from food, beverage and tobacco manufacturing. At 4% of state GDP, this was more than any other state except North Carolina. Despite low crop yields due to drought, Iowa was the leading producer of both corn and soybeans in 2012, according to the USDA.
7. Ohio
- MFG share of output: 17.1%
- MFG output 2012: $87.2 billion (5th highest)
- 2012 Unemployment rate: 7.2%
Ohio is a major manufacturer of a range of products. In 2011, it was one of the largest manufacturers of both primary and fabricated metals products, which together accounted for about 3% of the state’s output that year. The state was also the nation’s leader in producing plastics and rubber products, which accounted for more than $5.3 billion in output in 2011, or 1.1% of Ohio’s total output. Likely contributing to Ohio’s high output of manufactured rubber products, the state is home to Goodyear Tire & Rubber, a Fortune 500 company. At the end of 2012, Ohio was one of the top states for manufacturing employment, with roughly 658,000 jobs, trailing only far-larger California and Texas.
6. Kentucky
- MFG share of output: 17.1%
- MFG output 2012: $29.75 billion (23rd highest)
- 2012 Unemployment rate: 8.2%
In 2011, Kentucky manufactured nearly $4 billion worth of motor vehicles, bodies, trailers and parts, the fifth-largest output in the nation. As of 2011, this manufacturing industry was worth 2.4% of Kentucky’s GDP, the third-largest percentage in the country. In 2011, electrical equipment, appliance, and component manufacturing had an output of only about $1.3 billion the 15th highest, but this may be expected to improve. Louisville is home to the GE Appliance Park, where the company has recently built two new assembly lines. The assembly lines, which cost more than $100 million, will produce high-efficiency washing machines and will create about 200 jobs, in addition to the thousands of jobs GE has created in the region over the past few years with its opening of several other factories.
5. Wisconsin
- MFG share of output: 19.1%
- MFG output 2012: $49.98 billion (12th highest)
- 2012 Unemployment rate: 6.9%
Wisconsin led the nation in paper manufacturing in 2011, with nearly $4 billion in output, which was 1.5% of the state’s total GDP and the third-greatest portion of total output. In 2012, Wisconsin was a large producer of durable goods, which accounted for 11.3% of its GDP, up from 10.7% the previous year, holding on to its fourth place position. In spite of Wisconsin’s high output in the paper industry, the state’s Chamber of Commerce has expressed concerns regarding the implementation of government regulations that may hurt current and future job prospects. Officials in Wisconsin claim the new Boiler MACT regulations, for example, will have a negative economic impact on pulp and paper industry jobs in the state.
4. North Carolina
- MFG share of output: 19.4%
- MFG output 2012: $88.25 billion (4th highest)
- 2012 Unemployment rate: 9.5%
Last year, North Carolina was the fourth-largest manufacturing economy in the country, losing the third-place position to Illinois. In 2011, of the state’s $84 billion manufacturing output, nearly $24 billion alone came from chemical manufacturing.Roughly 5.5% of the state’s GDP arose from chemical manufacturing alone. Another close to $20 billion came from the food, beverage, and tobacco product industry, more than any state but California. North Carolina’s tobacco economy is one of the second-largest in the country, and R.J. Reynolds, the second-largest tobacco company by sales in the U.S., is based in the state.
3. Louisiana
- MFG share of output: 22.6%
- MFG output 2012: $55.10 billion (11th highest)
- 2012 Unemployment rate: 6.4%
None of the nation’s manufacturing leaders produced less output from durable goods manufacturing than Louisiana, at $7.7 billion. Similarly, in 2011, the state produced just $7.1 billion in manufactured durable goods. Louisiana was among the nation’s largest manufacturers of chemicals, as well as petroleum and coal products, that year, helping the state’s totals. As of 2011, more than 10% of the state’s GDP came from petroleum and coal manufacturing, by far the highest percentage in the nation. The state remains one of the nation’s leading oil refiners. According to the U.S. Energy Information Administration, “the Louisiana Offshore Oil Port (LOOP) is the only port in the U.S. capable of offloading deep draft tankers.”
2. Oregon
- MFG share of output: 27.8%
- MFG output 2012: $55.16 billion (10th highest)
- 2012 Unemployment rate: 8.7%
Oregon manufactured nearly $38 billion worth of computer and electronic products in 2011, up from the year before, and second in the nation. That output is behind California, but its percentage of total GDP was 20%, surpassing by far second place Idaho, where computer and electronic manufacturing accounts for only about 5.8% of total output as of 2011. Recent outside investments in the state reinforce the tech-heavy industries in Oregon. In the first half of this year, for example, AT&T invested nearly $80 million in its Oregon network to improve performance for Oregon residents, according to the Portland Business Journal.
1. Indiana
- MFG share of output: 28.2%
- MFG output 2012: $84.15 billion (6th highest)
- 2012 Unemployment rate: 8.4%
Indiana has added manufacturing jobs at one of the fastest rates in the nation over the past several years, with year-over-year growth in manufacturing at or above 3.7% at the end of each of the past three years. Some of this growth came from companies like Honda expanding their factories and adding thousands of jobs, which made headlines in 2011. Developments like these are critical for the economy of the state, which depends on manufacturing more than anywhere else in the nation. In 2012, Indiana had just the nation’s 16th largest economy, while its output from manufacturing exceeded all but a handful of states. In 2010 and 2011, Indiana was one of the leading states in total output from both motor vehicle-related and chemicals manufacturing. Manufacturing of chemical products accounted for 7% of the state’s GDP in 2011, at least partly due to the presence of pharmaceutical giant Eli Lilly, which has vendors throughout the state.
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Why Tech Manufacturing Jobs Are Coming Back To America
Ted Samson
Companies are moving manufacturing closer to high-tech hubs to better protect intellectual property, serve customers
For the first time in more than a decade, technology manufacturing jobs are on the rise in the United States, according to new research from Jones Lang LaSalle. The jobs aren’t surging back, per se; the research company predicts job growth at a rate of around 0.7 percent through 2018, up from around 1.1 million jobs at the end of 2012. Cities with a large concentration of highly educated tech workers — such as Silicon Valley and Austin, Texas — will see the greatest influx of manufacturing jobs.
JLL cited several reasons that American tech companies see greater value in creating tech jobs in the States, despite the relatively low real estate and labor costs in popular offshore locales.
To start, offshoring isn’t as cheap as it used to be. For example, wages of around 60 cents an hour during the height of the technological migration to Asia have risen to as high as $6 per hour in China’s eastern manufacturing centers, according to JLL. Increasing oil prices also play a role.
Second, as tech companies see increasing global competition, they need to protect their intellectual capital in new product manufacturing, and keeping production of new products within the United States makes it easier.
Third, keeping operations in close proximity to executives, designers, and engineers helps the product launch teams stay on task and during critical early-stage production.
Fourth, tech companies with U.S. locations are better equipped to quickly address end-user needs.
Finally, companies are more likely to find the workers with the technical skills necessary to operate complex systems in today’s highly automated manufacturing facilities.
“This regionalization of high-tech manufacturing is characterized by the creation of jobs requiring strong technological skills — think engineers on production lines — as opposed to reshoring where similar job functions are imported back to the United States from overseas,” said Greg Matter, vice president at Jones Lang LaSalle. “Having access to this talent is one of the reasons that manufacturing facilities for technology firms are often located in tier-one locations where labor and real estate are generally more expensive.”
Indeed, about 79 percent of moderately high-tech manufacturing jobs and 95 percent of very high-tech manufacturing jobs were located in the 100 largest American metropolitan areas in 2010, according to JLL. More than one-third of the most high-tech positions reside in companies on the West Coast. Lower-level technology jobs, meanwhile, are most concentrated in the southern states.
JLL expects that through 2018, high-tech manufacturing jobs will proliferate further in Silicon Valley. Austin, too, is becoming a magnet for high-tech manufacturing growth. Other cities poised to attract these jobs include Los Angeles; Binghamton, N.Y.; Portland, Ore.; Boulder, Colo.; Phoenix, Az.; Boston; and Boise, Idaho.
SOURCE: InfoWorld
This article, “Why tech manufacturing jobs are coming back to America,” was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest business technology news, follow InfoWorld.com on Twitter.
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
Do Americans Really Care How Their Clothes Are Made?
Clothing with Joe Fresh labels lies in the debris on April 30
By Calum Macleod
DHAKA, Bangladesh — Just two more months, the daughter promised her mother by telephone, then she’d be home for good.
Making shirts in this packed metropolis of 12 million people, Sheuli Akhter, 20, made decent money — about $140 a month — by the impoverished standards of rural Bangladesh. But she missed the family benefiting from the wages of her hard work.
Her mother, Ranjana Akhter, was found sobbing near the rubble of the Rana Plaza factory where her daughter worked, days after the eight-story complex collapsed and killed more than 1,100 workers. Viewing dozens of corpses a day, the 35-year-old woman still hoped her daughter had somehow survived.
The victims retrieved from the debris were crushed and unrecognizable in the South Asian heat.
“I am looking for her body, but they are all decomposed now. It’s getting harder to identify,” said Ranjana Akhter, tears falling from her eyes.
The scale of the mismanagement and breadth of the human tragedies in Bangladesh powerfully illustrated what years of abuse, inhumane conditions and unthinkable danger could not: Garment workers in Third World countries take enormous risks to earn a living in Bangladeshi-owned companies that produce clothing for Western retailers.
At the end of this global production line stand millions of American shoppers whose favorite companies and brands — Benetton, The Children’s Place, Gap, J.C. Penney, Mango, Target and Sears — use Bangladesh as a launching pad for the goods Western consumers crave.
Clothing manufacturers in North America and Europe — operating with scant supervision of their operations — have made Bangladesh the second-largest exporter of clothes in the world. The enormity of this tragedy is already beginning to change the country’s free-for-all business climate.
Many international retailers rushed to embrace a labor-backed factory safety proposal after the April 24 collapse, the world’s deadliest industrial accident since India’s Bhopal chemical plant disaster took 2,260 lives in 1984.
4 million jobs at stake
More than 30 retail chains including H&M, the largest clothing producer in Bangladesh, agreed to sign onto the proposal, which requires public disclosure of factory inspections and company-paid renovations when problems are found.
But talks broke down between the labor coalition IndustriALL and trade groups representing U.S. retailers like Gap over language that might make stores liable for conditions in Bangladeshi factories while requiring union-style management restrictions. The retail groups said they could improve worker safety by conducting more rigorous inspections of their factories.
A major pillar of Bangladesh’s economy, the garment industry employs roughly 4 million people. Only China exports more clothing than Bangladesh, which has 5,000 factories of varying sizes producing for other major chains.
These global brands thrive in a place where the average worker earns the equivalent of 24 cents an hour, according to the Worker Rights Consortium, a worker advocacy group that criticized U.S. retailers for failing to sign onto the proposed changes. The wage for garment workers is much higher — sometimes four times that — which is why so many people are drawn to the industry.
Many of the garment operations have sprung up in the past decade in buildings sometimes refurbished in a hurry to capture customers. Western retailers contract with myriad unconnected workshops to get fabric and buttons and fasteners needed for their products. Though many importers require inspectors to check on working conditions, they do not oversee all aspects of building safety. Those laws are the authority of the government, which works hand-in-hand with the industry.
In fact, a consortium of Bangladesh factory owners is also a lobbying group that consults with the government on working conditions and safety matters. Government oversight is notoriously weak.
Rana Plaza was showing structural cracks before the collapse. They prompted some businesses to move out of the building, but that wasn’t enough for the factory to shut down. The owner was captured trying to flee across the Indian border and is under arrest on charges that he built illegal additional floors on a building not designed for manufacturing.
Since 2005, at least 1,800 garment workers have been killed in factory fires and building collapses in Bangladesh, according to the advocacy group International Labor Rights Forum. That includes the toll from Rana Plaza.
Despite this carnage, the retail industry has found a needy home in Bangladesh, a nation of 140 million mostly Muslim people that’s home to regular political strife and overwhelming poverty. Sixty million Bangladeshis are classified as “very poor,” and per capita income is $1,700 a year.
Its garment firms, which make up 80 percent of total exports, face pressure from foreign buyers to retain the nation’s chief selling point: the cheapest place to make clothes. The disaster highlights the perilous choice for Bangladeshis in the garment sector, 80 percent of them women who work as seamstresses and support entire families.
Some survivors say the jobs are no longer worth it.
“I will never work in a garment factory again, and never again in a multistory building,” said Asma Akhter, 22, who lay trapped in the rubble for three days before rescue.
‘This can’t be justified’
After a factory fire last November killed 117 people who were making T-shirts and jackets, “the government didn’t take any steps to prevent this type of incident. Another disaster like this can still happen,” she said.
“The garment factory owners sell the products abroad at a high price, but we get low wages. This can’t be justified,” said Asma Akhter, who hopes her secondary school education, unusual among her colleagues, will aid her job hunt.
Others see it differently.
Seamstress Asma Akhter, 25, who is no relation to the woman of the same name above, said she would be “helpless” without the garment sector.
“I don’t know what I could do,” she said. “If you want to survive you have to work.”
But nothing says world retailers have to stay in Bangladesh.
International companies must contend with a volatile political environment of frequent street agitation and confrontation. Regular strikes called by opposition parties wielding street power hamper production.
“We must stop the killing,” said Nazmar Akter, president of Sommilito Garments Sramik Federation and general-secretary of the Awaj Foundation of workers’ groups.
“It’s a global business. Everybody has the responsibility,” Akter said. “Workers in Bangladesh are unsafe, hungry, with bad living and working conditions. We are human. We want respect and dignity; that’s our demand.”
SOURCE: The Washington Post
