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MAM Team

Reshoring Success: AirGuide moving manufacturing from Mexico to Clarksdale

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Ted Carter
August 14, 2012 
A Florida company’s decision to relocate part of its manufacturing operation from Mexico to Clarksdale gives Mississippi a win in a national “reshoring” effort by which states hope to persuade U.S. manufacturers to bring some or all of their operations home. 
HVAC equipment manufacturer AirGuide of Hialeah, Fla., is moving its manufacturing operations from Mexico and Texas to Clarksdale, creating 40 full-time jobs for the Delta community.

The project represents a company investment of $720,000, according to the Mississippi Development Authority.

AirGuide, a manufacturer of aluminum grilles, registers and diffusers for the HVAC industry and energy efficient lighting products, is consolidating its Mexico and Houston operations into the Clarksdale facility.

AirGuide said in a press statement that Ron Hudson, Hugh Jack Stubbs, Hartley Kittle and Trisha Webber as well as many other peoples from the Clarksdale-area business community “have been instrumental in AirGuide making the decision to locate in Clarksdale.”

Doug Marty, president of AirGuide, said the company thinks the new location will enable AirGuide Manufacturing and Arcalux “to better serve our customers and further improve our competitiveness manufacturing our HVAC and energy efficient lighting products.”

The Mississippi Development Authority (MDA) provided assistance for improvements to the publicly-owned building AirGuide will occupy, along with support through the Momentum Mississippi Incentives program. Coahoma County is also assisting with this project.

AirGuide manufactures a variety of products, as well as a broad range of custom-designed original equipment manufacturer (OEM) products that can be modified to suit most applications. AirGuide has been in operation for nearly 50 years.
MAM Team

7 Reasons to Expect US Manufacturing Resurgence

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Farok J. Contractor
YaleGlobal, 7 August 2012
NEWARK, NJ: Some 2.8 million American jobs – 70 percent of them in manufacturing – have been lost since 2001 because of the US trade deficit with China, according to a recent Economic Policy Institute study. Indeed, consumers visiting a Wal-Mart or Macy’s are hard pressed to find much made in America. 

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NEWARK, NJ: Some 2.8 million American jobs – 70 percent of them in manufacturing – have been lost since 2001 because of the US trade deficit with China, according to a recent Economic Policy Institute study. Indeed, consumers visiting a Wal-Mart or Macy’s are hard pressed to find much made in America.

It’s true that the share of manufacturing in the US GDP is now only 12 to15 percent, and the country is predominantly a service economy. But the nation is still the world’s biggest manufacturer, with unrivaled productivity in terms of manufacturing value-added per employee or per hour worked (Table 1). American manufacturing wages average $34 an hour, some 21 times the average in China at $1.60 an hour. But each US worker adds $145,000 in value, far more than German, French or Japanese employees, and more than 10 times that of the Chinese worker who contributes $13,700.

The predominant explanation is US manufacturers’ investment in automated equipment. Also, American labor is better trained than the Chinese. Similar productivity rankings can be seen in dollar value-added per hour: The US worker is on top with $73 in value-added per hour worked; the Chinese worker adds only $7.19 of value per hour; Japanese, German and French workers contribute up to $63. China outperforms the US and Europe only in “value added per dollar wages paid” – but only because hourly wages are so low in China.

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Seven factors converging by 2012 suggest that US manufacturing could see a strong resurgence. Jobs once offshored are now returning in industries including automobiles and even unlikely areas like furniture and televisions.

> Wages of the bottom half of American workers have significantly declined in real terms over the past decade, as well as in comparison with other nations, while those of US manufacturing rivals, including China and Japan, have risen.

> American workers are working longer, faster, with greater anxiety,than ever before. Because of greater automation, flexibility, domestic US outsourcing and the fear of being laid-off, surviving US manufacturing workers have seen little or no increases in wages in the past eight years, and their output has increased with productivity in output per employee at an all-time high. Americans put in 1800 hours per year, about the same as Japanese workers (Table 2). Top is South Korea, with its corporate culture that prevents employees going home until the last boss has departed. The French and Germans, by comparison, put in 19 percent less time than Americans.

> The dollar has weakened against several major currencies over the past decade, making imports more expensive and producing in or exporting from the US more competitive, by comparison. The US is not just the world’s biggest importer but also the second largest exporter of merchandise goods (Table 3). In 2001 – the year China joined the World Trade Organization – the renminbi yuan, RMB, was 8.27 per dollar. By 2012 the currency had appreciated by more than 30 percent to 6.3 RMB per dollar. For many Chinese exporters, a breakeven exchange rate, when their exports to the US are no longer competitive, is between 5.5 to 5.8 yuan per dollar. As the RMB continues to appreciate against the dollar, more Chinese firms will abandon exports and focus on their domestic market, growing at 8 percent per annum.

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> China is experiencing significant wage inflation. On the eastern seaboard, where most of China’s manufacturing takes place, several companies have experienced labor shortages and wage bills have increased by 20 percent per year.

> Fuel prices have more than doubled. For products with significant transportation costs, the rise in energy costs can add significantly to the cost of imports. Shipping large appliances is expensive, so Haier, a leading white goods manufacturer based in China, opened a South Carolina plant where components, shipped across the Pacific Ocean, are assembled by American workers.

> Delivery and Flexibility Pressures. For products requiring flexibility in the face of fickle fashion changes or assembly operations that require components shipped within a few days to accommodate schedules, such pressures have driven component producers to co-locate near US assembly operations.

> Natural disasters and disruptions in recent years have spooked global supply chains: Volcanoes in Iceland, overflowing rivers in Thailand and tsunamis in the Pacific Ocean idled assembly plants in the US and Europe because parts from affected regions could not be shipped. Years of cost savings at Toyota, from sourcing components from faraway locations, were wiped out by a few weeks of losses from assembly operations idled by 2011 floods in Thailand.

Of course, all indicators are not positive. Three factors could inhibit the US resurgence:

> The culture devalues science or engineering education. “Nerds,” “geeks” or “wonks” are at the bottom of the social totem pole compared to sports, film and media celebrities. A culture that emphasizes quick results and instant gratification deters students from tackling math, engineering and other challenging subjects.

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> Too many students pursue a general college degree. According to a survey released by the Manpower Group in May 2012, talent shortages persist in skilled trades, engineers and IT staff, with “nearly half of U.S. employers struggling to fill mission-critical positions.” In OECD countries an average 23 percent of college degrees are in engineering, science or mathematics. But in the US such degrees comprise only 15 percent – and of these, foreign students earn a quarter of the degrees at the undergraduate level and some two-thirds at the doctoral level.

> US companies lack an apprenticeship system. In other OECD nations like Germany, alternative paths in education lead to diplomas or cer
tificates in techn
ical areas, with  employees trained by the company in a particular technology and then retained in well-paying careers. Some US companies are trying this approach, highlighted by G. Bussey in an April Wall Street Journal article. For example, General Electric is sending new employees for crash courses in hands-on manufacturing or sponsoring two-week summer camps at universities on lean manufacturing for high-school students.

But don’t hold your breath. Few American companies are providing apprenticeships and only in selected areas of the country. Unlike Germany, the US is a very mobile society. The average household moves every five years. In an environment where companies can easily sack workers and where workers leave for better opportunities, firms are loath to invest in worker training, only to see skilled workers leave for competing companies. The current economic slowdown, which is reducing such churn in American society and jobs, could lead to a better appreciation for the benefits of apprenticeship programs for both companies and workers.

The time is propitious for a resurgence of manufacturing in the US. Unlike the exuberance of the bubble years, new economic conditions, which may persist for years to come, suggest more sober social attitudes, more career-focused college majors, more buckling down to learn harder subjects, less churn in jobs, and  greater willingness to settle for somewhat lower wages in return for company investment in worker training and greater job security. In short, some aspects of the future may look like the old days when Detroit was king and skilled technical jobs meant reasonably secure careers with a moderate middle-class living standard.
Source: Yale Global Online
Farok J. Contractor is a professor of management and global business with Rutgers Business School.
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The US may be a service economy, but it’s still the world’s largest manufacturer. There are many reasons to remain bullish on US manufacturing and the American worker, suggests Farok Contractor, professor of management and global business at Rutgers Business School. US firms invest in high-tech equipment, and the US worker is tops in adding value per hour on products. Recent economic difficulties also help fuel a manufacturing resurgence: falling wages allow the US to compete with low-cost China; anxious Americans work long hours; high energy prices and an uptick in natural disasters could prompt multinationals to relocate factories closer to the big US market. Contractor also points to factors that could stall the resurgence: US students show little interest in science or engineering. And because American workers enjoy great mobility, US manufacturers hesitate to provide apprenticeships that provide state-of-the-art training. Tough economic conditions could usher in new serious attitudes on career and education choices. 
– YaleGlobal 
by
MAM Team

Manufacturing in America: Start of a  Renaissance?

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Hal Sirkin
08/12/2012 

The U.S. is at the start of a manufacturing renaissance that will generate two to three million jobs and provide $100 billion of added economic growth over this decade. This renaissance is being sparked by a trend that is both remarkable and rational. 
What’s remarkable is that manufacturers are starting to bring back jobs to the U.S. that just a few years ago they exported to China. What’s rational is that they are doing so not out of some dewy-eyed patriotism but because it makes economic sense.

Wages in China are rising so rapidly that the insourcing vs. outsourcing calculus has changed. In 2000, U.S. wages were almost 22 times larger than those in China. By 2015, U.S. wages will be only four times larger. Adjusted for productivity, the differential shrinks even more. In the Yangzi River Delta, the epicenter of China’s skilled manufacturing workforce, the effective wage rate will be about 61 percent of U.S. wages in 2015.

At those levels, it makes sense to return manufacturing of a wide range of goods , with moderate levels of labor content and high logistics costs, to the U.S. For an automotive part, where labor contributes one quarter of total cost, the total cost advantage for China shrivels to less than 10 percent.

Ten percent is a key threshold. When you factor in the risks and realities of doing business in China–weak intellectual property protection and rule of law, long lead times, and lack of proximity to key customers, among others–companies are willing to bring manufacturing back when the cost difference is in the single digits.

Within the next three or four years, that threshold will be crossed for seven key categories of goods: computers and electronics; appliances and electrical equipment; transportation goods; plastics and rubber; machinery; furniture; and fabricated metals. These goods account for about two-thirds of the annual $325 billion in imports from China.

The upcoming insourcing revolution is not just about rising wages in China but also the often-unheralded productivity of the U.S. The U.S. economy is 33 percent more productive than Japan and 25 percent more productive than Germany. This helps explain why Siemens is exporting gas power turbines, made in the U.S., to Saudi Arabia and Toyota has announced it would export cars made in Kentucky and Indiana to South Korea.

Economics is driving insourcing but government policy can facilitate it. Here are seven helpful steps that the U.S. government can take to create good jobs for our children and ensure the long-term success of the economy.

First, adjust tax policy to favor insourcing rather than outsourcing by providing a targeted tax credit for job creation in the U.S. and for the repatriation of funds to the U.S. that foster job creation. U.S. Senator Richard Blumenthal has proposed legislation to create tax credits for re-shoring.

Second, level the playing field by addressing key trade-agreement violations and insisting on stronger IP protection and an end to currency management by the Chinese government.

Third, secure and train critical talent: retain foreign students by issuing six-month green cards in selected disciplines that become permanent upon employment; subsidize job training for new and expanded manufacturing facilities; and create “vocational colleges” that combine liberal arts education with training in such trades as welding, plumbing, electrical, and computer-assisted manufacturing.

Fourth, rethink regulations that impair competitiveness without corresponding benefit.

Fifth, facilitate the creation of industry clusters — such as Silicon Valley or, in an earlier era, Detroit — that bring together competitors, suppliers, schools, and talent to create a winning ecosystem.

Sixth, encourage foreign manufacturers to locate facilities in the U.S., the largest domestic market and one of the lowest-cost in the developed world.

Seventh, change the perception that China is low cost and the U.S. is high cost and uncompetitive. Companies should “do the math” rather than just assume China is cheaper.
More than any major economy, the U.S. responds quickly to threats. We do not curl up in a ball or complain. We adapt and we thrive. We faced down a similar threat from Japan in the 1970s and 1980s, and we are doing it again.
Source: The Huffington Post
Hal Sirkin is Senior partner and managing director, The Boston Consulting Group (Chicago)


by
MAM Team

Manufacturing is Returning to America

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Photo Credit: Daniel Marsula/Post-Gazette

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August 12, 2012 
By Vivek Wadhwa 
A furor broke out after it was reported that the uniforms of U.S. Olympians had been manufactured in China. “They should take all the uniforms, put them in a big pile and burn them,” said an apoplectic Sen. Harry Reid.
The story tapped into the anger — and fear — that Americans feel about the loss of manufacturing to China. Seduced by government subsidies, cheap labor, lax regulations and a rigged currency, U.S. industry has rushed to China in recent decades, with millions of American jobs lost. It is these fears, rather than the Olympic uniforms themselves, that triggered the congressional uproar.

But Ralph Lauren berets aside, the larger trends show that the tide has turned, and it is China’s turn to worry. Many CEOs, including Dow Chemicals’ Andrew Liveris, have declared their intentions to bring manufacturing back to the United States.

What is going to accelerate the trend isn’t, as people believe, the rising cost of Chinese labor or a rising yuan. The real threat to China comes from technology. Technical advances will soon lead to the same hollowing out of China’s manufacturing industry that they have to U.S industry over the past two decades.

Several technologies advancing and converging will cause this.

Robotics
The robots of today aren’t the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such as Willow Garage, iRobot and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever-more sophisticated applications.

The factory assembly that China is currently performing is child’s play compared to the capabilities of the next generation of robots — which will soon become cheaper than human labor. One of China’s largest manufacturers, Taiwan-based Foxconn Technology Group, announced last August that it plans to install one million robots within three years to do the work that its workers in China presently do. It has found even low-cost Chinese labor to be too expensive and demanding.

Artificial intelligence
Artificial intelligence is software that makes computers, if not intelligent in the human sense, at least good enough to fake it. This is the basic technology that IBM’s Deep Blue computer used to beat chess grandmaster Garry Kasparov in 1997 and that enabled IBM’s Watson to beat TV-show Jeopardy champions in 2011. AI is making it possible to develop self-driving cars, voice-recognition systems such as the iPhone’s Siri and Face.com, the face-recognition software Facebook recently acquired.

Neil Jacobstein, who chairs the AI track at the Silicon Valley-based graduate program Singularity University, says that AI technologies will find their way into manufacturing and make it “personal”: We will be able to design our own products at home with the aid of AI design assistants. He predicts a “creator economy” in which mass production is replaced by personalized production, with people customizing designs they download from the Internet or develop themselves.

3D printing
How will we turn these designs into products? By “printing” them at home or at modern-day Kinko’s using shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop featuring manufacturing technologies now on the horizon.

“Additive manufacturing” is making it possible to cost-effectively “print” products. In conventional manufacturing, parts are produced by humans using power-driven machine tools, such as saws, lathes, milling machines and drill presses, to physically remove material until you’re left with the shape desired. This is a cumbersome process that becomes more difficult and time-consuming with increasing complexity. The more complex the product, the more labor is required and the greater the effort.

In additive manufacturing, parts are produced by melting successive layers of materials based on three-dimensional models — adding materials rather than subtracting them. The “3D printers” that produce these parts use powdered metal, droplets of plastic and other materials — much like the toner cartridges that go into laser printers. This allows the creation of objects without tools or fixtures. The process doesn’t produce waste material and there is no additional cost for complexity. Just as, thanks to laser printers, a page filled with graphics doesn’t cost much more than one with text (other than the cost of toner), with 3D printers we can print a sophisticated 3D structure for what it would cost to print something simple.

Three-D printers can already create mechanical devices, medical implants, jewelry and even clothing. The cheapest ones, which print rudimentary objects, currently sell for between $500 and $1,000. Soon, we will have printers for this price that can print toys and household goods. By the end of this decade, we will see 3D printers doing the small-scale production of previously labor-intensive crafts and goods.

It is entirely conceivable that, in the next decade, manufacturing will again become a local industry and it will be possible to 3D print electronics and use giant 3D-printing scaffolds to print entire buildings. Why would we ship raw materials all the way to China and then ship completed products back to the United States when they can be manufactured more cheaply locally, on demand?

• • •

Other advances in the next decade will likely affect manufacturing, particularly advances in nanotechnology that change the equation further. Engineers and scientists are today developing new types of materials, such as carbon nanotubes, ceramic-matrix nanocomposites and new carbon fibers. These materials make it possible to create products that are stronger, lighter, more energy-efficient and more durable than existing manufactured goods.

A new field — “molecular manufacturing” — will take this one step further and make it possible to program molecules inexpensively, with atomic precision. “Over the next two decades,” Mr. Jacobstein says, “molecular manufacturing will do for our relationship with molecules and matter what the computer did for our relationship with bits and information — make the precise control of molecules and matter inexpensive and ubiquitous.”

All of these advances play well into America’s ability to innovate, demolish old industries and continually reinvent itself. The Chinese are still busy copying technologies we built over the past few decades. They haven’t cracked the nut on how to innovate yet.

It’s a near certainty that robotics, AI and 3D-printing technologies will advance rapidly and converge. American companies already find the rising cost of labor, shipping costs and time lags, and intellectual-property protection to be major issues in doing business in China. And the Chinese government has done itself no favor by hoarding key raw materials, such as rare-earth minerals, forcing Western manufacturers to start looking for alternatives.


The mo
st advanced automobile of today — the Tesla Roadster — is already being manufactured in the United States using robotic and AI technologies. Google just announced that it will produce its highly-acclaimed Nexus 7 tablet in the United States. This is just the beginning of the trend.

So, let me predict a future headline: “Protests break out in China over 2020 Summer Olympic uniforms, 3D-printed with U.S.-made technology.”

Vivek Wadhwa is director of research at the Center for Entrepreneurship and Research Commercialization at Duke University and a fellow at the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University. 

MAM Team

For Some U.S. Companies, ‘Reshoring’ Jobs from China Makes 'Cents'

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Dee Depass
August 10, 2012
MINNEAPOLIS – Two years ago, Calibur11 in Duluth, Minn., did what any other cash-strapped manufacturer looking to prune costs would do: Turn to China. 
But the maker of game console cases is happily shifting its manufacturing operations back to the United States, discovering that doing business overseas was more trouble than it was worth. One supplier lost the molds for the company’s decorative shells, while another demanded a bribe. Quality problems abounded.

“We just kind of got kicked right in the teeth dealing with China. It wasn’t any fun by any means. But it helped us learn to bring stuff back to the United States,” said Calibur11 owner Coy Christmas.

The hassle of operating abroad has triggered some companies to move production stateside, a move called “reshoring” by some. Coming home not only bolsters the speed, quality and simplicity of doing business, it’s also more economical than it used to be. Average wages in China have jumped 10 to 25 per cent a year, hitting $4 to $6 an hour in some plants. Add in shipping and high fuel costs, and offshore manufacturing is no longer such a bargain.

The return of offshore production to America has emerged as a surprising silver lining in the U.S. economic recovery. The government doesn’t track corporate reshoring efforts, but experts say they are hearing of more companies bringing work back to the States.

“Lots of very encouraging anecdotes, and obviously the more of that we see, the better off we all are,” said Alan Tonelson, researcher for the U.S. Industry and Business Council.

Since 2002, about 3.5 million manufacturing jobs have been lost nationwide. Returning jobs could create opportunities for thousands of U.S. workers.

Mark Phillips, commissioner of the Minnesota Department of Employment and Economic Development, said companies that have moved jobs back to the U.S., such as Calibur11 and 3M Co., have different reasons for the change. But all have discovered that operating in China, Mexico, Poland and other countries is not always rosy.

“When you are dealing across the ocean, there are logistical issues and language issues,” Phillips said. “It’s not perfect.”

Christmas called Calibur11’s experience in China a nightmare, with one vendor losing $700,000 in tooling equipment and another demanding a $150,000 “fee” to release his product.

“And then we found out our product was being sold on the black market. It’s been a horror story,” Christmas said. The company, which makes cases for popular consoles such as the Xbox 360, will now add a few employees in Duluth and many more in Chicago, where it plans to hire contractors to handle molding, assembling and packaging.

Ryan Kanne, director of the U.S. Commercial Service Office in Minneapolis, said the obstacles overseas are rising and many companies are bringing manufacturing back because of quality concerns. While it is sometimes cheaper to do business abroad, companies can keep a tighter rein on how products are made if manufacturing is done in the U.S.

“Some were subsidiaries (overseas) while others were contract manufacturing, but (companies) are bringing it back to the U.S. for quality control,” Kanne said.

Darlene Miller, owner of Permac Industries, a high-precision machine shop based in Burnsville, Minn., said her company always had quality issues in China. In 2006, she hired a Chinese contractor to make machine blades with exacting specs. But each shipment turned up flawed, with some blades not uniform, made of the wrong material, or falsely labelled “certified.” What complicated matters is that she had to buy a year’s worth of blades at a time.

Miller spent thousands on an outside testing lab, but was at her wit’s end after three years.

“We found a Wisconsin company to make the blades. And without the shipping, testing and reject costs, they actually beat the price in China,” she said.

For Dan Shimek, owner of the Outdoor GreatRoom Co. in Eagan, Minn., it became too inefficient to lean on offshoring. Shimek used to buy all his wooden pergolas from China, and fibreglass fire pits and pergolas from India. But minor problems on hardware orders created major issues, because reshipping took six weeks. And sometimes reorders on a hot product arrived too late, causing him to miss an entire season’s worth of sales.

“The impact, for sure, is tens of thousands of dollars. And the impact to cash flow for a small business can be even more dramatic than that,” Shimek said.

Today, his company makes most of its firepit and grill tables in Eagan, or orders from Minnesota firms. The change, carried out in the past two years, helped Shimek become more nimble and has added about a dozen jobs to Minnesota’s economy, either at his site or at contractors.

Some economists say reshoring will continue to add U.S. jobs, but others, including Tonelson, worry that the reshoring trend could remain largely anecdotal. “I think the offshoring craze is still going on,” he said.

Certainly conglomerates like 3M Co. continue to operate globally. But even it has brought divisions home, when it has made sense. The Maplewood, Minn.-based company said it consolidated production of its Littmann stethoscope from 14 domestic and foreign contractors to just one 3M factory in Columbia, Mo., a move that will improve efficiency for its operations.

“What we are doing is trying to shorten the supply chain,” said 3M spokeswoman Jackie Berry. “We were making pieces around the world and then consolidated, so our supply cycle fell to 50 days from 165 days.”

Calibur11’s Christmas is expecting to increase its business. The company made and sold $4.5 million worth of gaming cases last year, and this year it will make $5 million to $8 million “and we will do it right here in the United States,” Christmas said.

“I’m pumped up,” he said. “I’m looking forward to bringing us back to the United States.”

Source: TheSpec.Com
by
MAM Team

We Don't Cotton to Tax Cuts for the Rich

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BY ERIC HENRY 
AUG 09, 2012 
If anyone tells you that ending the Bush tax cuts for the richest 2 percent would hurt job creation, tell them to talk with me. We founded our business, TS Designs, in 1977 as a small manual screen-printing company and grew to land contracts with some of clothing’s biggest brands. In the mid 1990s, we lost much of our business as a result of the supposedly job-creating NAFTA trade agreement as large brands sought out the cheapest labor costs they could in Mexico.
We decided to stick it out and keep good jobs in North Carolina. We invested in new technologies that reduced our energy and waste costs. We found new markets for our T-shirts. And we looked at our location as a virtue, not a problem. We decided to manufacture T-shirts from cotton grown, ginned, spun, knit, finished, cut, sewn, printed and dyed all within our state’s borders; or as we like to say, from dirt to shirt in North Carolina.

North Carolina is the nation’s third-largest producer of cotton. We formed Cotton of the Carolinas with other manufacturers and farmers to promote the use of locally grown cotton in a supply chain that keeps jobs, investment and tax dollars right here in our own communities.

Our supply chain is completely transparent, from Ronnie Burleson’s farm in Richfield to his nephew’s cotton gin down the street in New London. From Hill Spinning in Thomasville to Mortex Apparel in Middlesex and back west to Statesville to MoCaro Dyeing and Finishing then back to Mortex before ending up at our company to be printed and dyed.

Years ago, I studied to be an economist at UNC-Chapel Hill, the nation’s first public university. Our public schools, colleges and universities are among the important places we can see our tax dollars at work.

When the first Bush tax cuts passed in 2001, our nation had a budget surplus and we were told the tax cuts would pay for themselves by boosting economic growth and job creation. Many people like myself thought that was bunk. You’d think the economic meltdown and large budget deficit would have shown that giving tax breaks for the best-off Americans makes them richer – it doesn’t pay for itself, it doesn’t trickle down and it doesn’t create jobs, at least not in America.

I know first-hand that investment is the key to keeping my business healthy. I know that the taxes I pay allow the government to reinvest in teachers, roads, clean water and other infrastructure and services that my business depends on to succeed.

North Carolina benefits significantly from government investment. For every tax dollar we send to Washington, we get $1.08 back in everything from supports for our cotton farmers, jobs at our military bases, investments in our national parks that bring tourists to our state, and research and education investments that support the Research Triangle.

The Senate recently passed a bill extending the Bush tax cuts on income below the $250,000 level for households. Almost everyone – 98 percent of Americans including small business owners – have income below that. The richest 2 percent would keep their tax cuts on their income below $250,000 but not their extra tax cuts above that level.

On Aug.1, the House passed a bill to extend the Bush tax cuts for 2.7 million high-income earners and pay for these tax breaks by raising taxes on Americans with less income – reducing the child tax credit, college tuition tax credit and earned income tax credit, which help 13 million working families, with 26 million children. North Carolina is home to more than half a million of these working families who would be hurt.

Taking money from the budgets of families struggling to make ends meet and giving it to the most prosperous families won’t help my business or our economy. Instead it will continue us down the path of subsidizing the already well-off instead of making the investments in our economy and our people that truly strengthen our nation and our homegrown jobs.

Source: News Observer
Eric Henry is president of TS Designs of Burlington
by
MAM Team

Manufacturing in U.S. and Nation's Future Depend on Attracting Skilled People into Field

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August 09, 2012
By: By Troy A. Mills
Many in the general population may not realize we are at a critical point in U.S. manufacturing, and no nation has ever thrived without a strong manufacturing base. 
The average age of a toolmaker/machinist in the U.S. is older than 50, and for every four who are leaving (i.e. retiring, changing careers or moving) only one is coming in. It doesn’t take much skill with a calculator to figure out that we are in a dire situation. If we don’t do something right now, American tool manufacturing will not exist in 2027.

While I could go on and on about how we got ourselves in this position, I think that most don’t need, or want, the refresher course. The good news is, that it’s not too late.

It takes about 10 years to develop into a top-level tradesman. This means we have to start now. All American manufacturers need to get involved. We need to develop or continue the development of a skilled trades “campaign.” We have to attract new people in to the industry by showing them how fascinating and exciting it is and also how important they are to the success of our nation. This could be accomplished through radio, television and print advertisements as well as job fairs.

But our job fairs need to be different than the same old folding tables, handouts and sample parts. Some companies have already started kids programs, but I think this can be expanded upon by creating summer programs and mini-programs that teach a different discipline at each session. These programs need to be geared toward our middle and high school age children.

We are only in the early stages of this and could use all the help we can get. In addition to ideas, I am also asking every company discuss this on a regular basis and decide, not if, but how much you are willing to contribute to the survival of American manufacturing.

I cannot express the importance of doing something. All of us have experienced over the past year the difficulty in finding qualified candidates. This will get worse every year, until each of us can no longer staff our companies.

This is about more than just the survival of our industry. It’s about survival of our nation, the one our great grandparents and grandparents worked so hard to build. It’s about the legacy of American manufacturing.

Let’s rebuild American manufacturing. I believe our best is yet to come.

Source: MLive – Michigan News
Troy A. Mills is Vice President of Albion Machine & Tool Co. The family-owned business opened in 1927. 
by
MAM Team

Original Sin: Complying with Country of Origin Laws

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Congress recently introduced the whimsically titled bill, the “Team U.S.A. Made in America Act,” which would require the United States Olympic Committee to ensure that ceremonial uniforms for the Olympic team are assembled in the United States with fabrics manufactured in the United States. Regardless of whether clothing is made in or imported to the United States, current U.S. Federal regulation requires that clothing bear its country of origin designation. Currently, around 98% of all clothing for sale in the U.S. is imported. 
Textiles claiming to be “Made in the U.S.A.” are regulated by the Federal Trade Commission (“FTC”) and the Lanham Act, while imported articles are regulated by the U.S. Customs Service (“Customs”). The country of origin requirements become confusing when a product undergoes many different manufacturing processes in different locations, consists of parts from many different countries, or both. For the manufacture of garments, the material from which the garment is made may be cultivated and harvested in one country, drawn and spun in another, and then woven, dyed or finished in any number of other places. For this reason, retailers should be aware of applicable law before a country of origin claim is affixed to any of its garments.

Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304) requires that products and packaging imported into the United States be marked “legibly, indelibly, and permanently” to indicate to the “ultimate purchaser the English name of [its] country of origin…” When an imported product involves elements or processes from more than one country, the country of origin is the last country in which a “substantial transformation” took place. A “substantial transformation” is defined as any “manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change.” Meeting this test is decided by Customs on a case-by-case basis, and Customs issues letters of guidance to manufacturers on the interpretation and application of the regulations it enforces. The FTC’s jurisdiction over foreign origin claims relating to products and packaging extends beyond that of Customs, even covering marketing materials related to foreign and domestically produced goods. Promotional materials for textile and wool products, such as catalogs and Internet copy, must state whether a product is made domestically, abroad, or both.

For a product to bear a U.S. country of origin label without limitations or qualifications, the product and all of its constituent parts must entirely originate, or substantially originate, in the U.S. Any company claiming that its product originates in the U.S. must be able to provide reasonable and reliable evidence for the claim. In examining a U.S. origin claim, the FTC will look at the percentage of manufacturing costs that are attributable to U.S. materials and processes, and also the extent to which any foreign countries played a role in the product’s manufacture. Additionally, the Textile Fiber Products Identification Act and Wool Products Labeling Act require that a textile include a “Made in the U.S.A.” label if the final product is “manufactured in the U.S. of fabric that is manufactured in the U.S.” By contrast, a textile or wool product partially manufactured in the U.S. and partially manufactured in another country must be labeled to identify foreign and domestic countries of origin.

Regulations similarly focus on the location of manufacture when determining country of origin for labeling purposes. Consider the example of a T-shirt that is made from American-grown cotton, but assembled in the Dominican Republic. Pursuant to Customs Regulation § 10.22, Customs Regulations (19 CFR 10.22), assembled articles are products of the country where the assembly occurs. Therefore the T-shirt’s country of origin is the Dominican Republic, although the company could affix a label to the T-shirt claiming that the T-shirt’s materials originate in the U.S.

The consequence of improperly labeling products is considerable. Failing to label a product correctly is considered fraudulent activity by the FTC. The FTC recommends that consumers contact their respective state’s Attorney General or Better Business Bureau to report mislabeling, and courts have found that state law claims for false labeling are not preempted by Federal law. Additionally, the Lanham Act enables a company’s competitors to assert claims against the company for false designations of a product’s origin.

With this newfound focus on promoting American-made products, it is important to note that the identification of a product’s country of origin to consumers is a well-regulated area. Moreover, there has been a resurgence of public interest in domestic textile manufacturing, as evidenced by the recent crowd funding success of “Flint & Tinder”, a startup retail company that promises consumers a quality American-made line of men’s underwear. The startup aimed to raise $30,000 and has received nearly $300,000 from donors to date. The Team U.S.A. Made in America Act and the crowd funding phenomenon both demonstrate that making apparel in the U.S. resonates with consumers. Studies have repeatedly verified the relationship between consumer perception of product quality and the perceived country of origin, and many consumer activist groups in the U.S. exist specifically to promote the purchase of domestically made products.

Therefore, whether the retailer is a startup funded by online investors or a major apparel brand, the specter of overlapping liability under Federal law and general U.S. consumer perception regarding products’ origination ensures that compliance with Federal regulations concerning the labeling of clothing is a sound investment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. 

Source:  JD Supra
by
MAM Team

How America Can Win an Olympic Gold for Its Economy

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August 10, 2012
By PAUL A. ARGENTI
Professor of corporate communication at the Tuck School of Business at Dartmouth College. 
Over the last few weeks, as the United States competed and mostly won in the international sports arena at the 2012 Olympics in London, the country itself seemed to suffer from a reputational setback in headlines from many prominent media outlets including Time magazine (“The History of the American Dream: Is it Still Real?”) and the Wall Street Journal (“Why Capitalism Has an Image Problem”).
Why is it that while our athletes still seem to be excited about both working hard on representing the United States in the most competitive environment on the planet and embracing America itself as a concept (note the many tears welling up as the flag raises and the national anthem is played), a cloud seems to hang over both our businesses and the people who work in them? And a malaise hovers over the country itself during this long, hot summer as Americans question their country’s supremacy and its place in the world outside of the Olympics.

Earlier this year, I gave a presentation in Singapore on country reputations while on sabbatical there. I was shocked to find that the United States ranks 23rd, or three places behind Singapore, and far behind the number one country in the world in terms of reputation, our neighbor to the north, Canada, according to research from the Reputation Institute. Our educational system is rated slightly better at number 17 in the world. And while our infrastructure was the newest and best when I was growing up in the ’50s and ’60s, a return from Singapore’s Changi airport to the United States through JFK airport in New York quickly reminds us how far our star has fallen. And if you travel anywhere in Europe this summer by rail, you will be appalled that all we have to offer is the Amtrak Acela in the Boston to Washington corridor. As HBO’sNewsroom anchor, Will McAvoy, stated in the fictional show’s pilot:

There is absolutely no evidence to support the statement that we’re the greatest country in the world. We’re seventh in literacy, 27th in math, 22nd in science, 49th in life expectancy, 178th in infant mortality, third in median household income, number four in labor force and number four in exports. We lead the world in only three categories: Number of incarcerated citizens per capita, number of adults who believe angels are real, and defense spending (where we spend more than the next 26 countries combined; 25 of whom are allies)…

How did it come to pass that the greatest capitalist nation on earth seems to have lost its mojo? What role can American business play in breaking us out of our torpor?  And, what can you do to try to inject some positive energy back into the atmosphere when the heat of summer turns into the crisp, promising chill of early autumn in a few weeks? Warren Buffett took a crack at this a few weeks ago in a CNBC interview:

The U.S. economy is doing better than virtually any big economy around the world. This economy has come back a long way, with the exception of housing, from where it was a few years ago. And you can see it in corporate profits.

That may very well be true, but I don’t think this kind of rhetoric is going to get you away from staring at your computer to start thinking about what you can do for your country anytime soon. So, here is my version of an Olympic heptathlon guaranteed to bring gold back to America’s reputation:

  1. Stop whining: The New York Times ran an article this week about whiners who were not winners at the Olympics, but I think it’s more prevalent among American businessmen and women who seem to think they are entitled to all kinds of things, from government services without taxes, to happy workers without benefits, to bonuses for mediocre performance. What made America great was that democracy promised and provided the same opportunity for everyone. When we change the rules of the game so that only a handful of people have that opportunity (see the 1 percent), we lose the richness of America.
  2. Be optimistic: When times are tough, leaders need to be the ones who provide energy for everyone else in the room. Too many of today’s leaders are energy takers rather than energy givers. Forget about how great it was “back in the good old days” or how amazing it’s going to be when everything gets sorted out, and get yourself and your people excited about being part of the solution today, rather than part of the problem tomorrow.
  3. Do something for someone else: The new concept of “shared value” is fascinating because it implies that what’s good for others also ends up being best for you. Too many Americans seem to have gotten stuck in their selfish teenage years when it was all about them. Doing what is best for society in general ends up being really good for business, according to great strategy scholars like Harvard’s Michael Porter.
  4. Volunteer your time in your community: In addition to thinking about doing something on a more macro level, do something yourself. My daughters and I served food to community members who were less fortunate through our church for many years when they were younger, and it always made me feel good to both let them see how fortunate they are, at the same time giving their time as well as their talent to people who didn’t have enough to eat.
  5. Vote: About 40 percent of eligible voters did not vote in either 2004 or 2008. You can’t complain about how bad things are for business if you don’t participate in the most obvious way to influence what happens in America. If you feel like this won’t make a difference, see No. 2 above for help.
  6. Say “thank you” more often: My colleague and friend Marshall Goldsmith taught me that while our instinct is often to get angry with those who are trying to give us feedback about how to be a better person (because our egos get in the way), we should instead learn to say “thank you” more to our colleagues, our family, and our friends.
  7. Instill a sense of hope in your children: I was fortunate to be raised in one of the most optimistic periods in American history by what many consider to be America’s greatest generation. My parents, who were only a generation away from the deprivation of the Great Depression, always told me that things would be better for me. One of the things I am trying to do every day is give that same sense of hope to my 19-month-old son. It will not only make your children feel that they can make the world a better place, but it will also make you feel like you are doing something to help that dream become a reality.

I end my class each year with a quote from my anthropology instructor at Columbia University, Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

Do your part to restore the American dream off the field as well as on by being part of that small group.<br
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Source: US News
by
MAM Team

Fake Chinese Parts in US-Made Arms Leave India at Risk

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India will acquire ten C-17 Globemaster-III aircrafts from Boeing for $4.1 billion, which will be delivered in 2013. | Picture courtesy: Boeing

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Aug 11, 2012  
by Uttara Choudhury 
New York: India, a big buyer of American arms, is understandably concerned by a key US senate committee report that finds vast numbers of counterfeit Chinese electronic parts are being used in US military equipment. Where does it leave India if suspect parts have crept into US-built aircrafts and missiles it has bought or put on its shopping list? The failure of a single electronic component could put an Indian airman or soldier at risk. 
Over a 14-month investigation, the Senate committee’s investigative staff amassed a database with 1,800 cases of counterfeiting involving about 1 million parts. It found that 70 percent of the suspect parts were traced to fly-by-night, unscrupulous Chinese companies who supplied electronics and other computer chips to large US defence manufacturers. 

Defence Minister AK Antony told the Rajya Sabha in a written reply on Wednesday that India was verifying if “faulty spare parts made in China” were used in defence equipment being sold by the US to India.

“There have been media reports in this regard, which are being verified,” Antony said this week.

According to Bloomberg, the US Air Force had in January this year suspended a company called Hong Dark Electronic Trade Co., in Shenzhen (in southern China), from supplying parts to US contractors after it supplied about 84,000 fake components to a middleman, who then sold the suspect electronic parts to Boeing, Lockheed Martin, Raytheon, L-3 Communications, among others.

Bloomberg quoted Air Force Deputy General Counsel Steven Shaw’s memo saying; “Many of the 84,000 electronic parts from Hong Dark have been installed on aircraft such the C-17 transport and helicopters such as the AH-64 Apache and CH-46.”

Given Shaw’s memo, India should double-check what it is paying for when it receives new aircraft. The first of the 10 Boeing C-17 Globemaster III aircraft ordered last year will be delivered to the Indian Air Force in June next year. India is forking over $4.1 billion (Rs 22,960 crore) to buy the US Air Force’s workhorse used extensively in Iraq and Afghanistan, making it the largest defence contract to have been signed by the two governments.

Antony listed some of the other US military equipment India had bought in the last five years. Last year, India purchased an amphibious transport vessel, the USS Trenton (re-christened INS Jalashwa), for nearly $50 million with six-UH-3H helicopters to operate alongside, costing another $49 million.

It also bought Harpoon anti-submarine missiles under a package worth $200 million, and long-range acoustic devices, modern hull penetrating periscopes, side scan sonar, C-130J transport aircraft, sensor-fused weapons, P-8I long range maritime reconnaissance aircraft and quick reaction team boats from the US.

One reason India is beefing up its arsenal is China, which has been expanding its military and modernising its equipment at a tear. This has triggered a simultaneous build-up of advanced weaponry in the Asia-Pacific region on a scale and at a speed not seen since the Cold War arms race between America and the Soviet Union.

India has purchased some $12.7 billion in arms, 80 percent of them from Russia, during 2007-2011, according to the Stockholm International Peace Research Institute (SIPRI). India and the US want to eventually move beyond a seller-buyer relationship to substantial co-production and eventually, high-technology joint research and development of weapons.

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