U.S. Manufacturing, Hire America & Buy American

Want to see some damning statistics? Read this paragraph, taken from The Plight of American Manufacturing.

Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000.  The last time fewer than 12 million people worked in the manufacturing sector was in 1941.  In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.

See what bad trade deals and global labor arbitrage bring us?

For American manufacturers, the bad years didn't begin with the banking crisis of 2008.  Indeed, the U.S. manufacturing sector never emerged from the 2001 recession, which coincided with China's entry into the World Trade Organization.  Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972).  An additional 90,000 manufacturing companies are now at risk of going out of business.

I think the same thing can be said for American Science, Technology, Engineering and Mathematics Professionals. Right about 2000, offshore outsourcing hit hard and heavy and if corporations could not offshore outsource the job, they displaced U.S. workers with foreign guest workers. Literally in executive boardrooms were demands divisions fire and displace as many workers as possible as fast as they could.

There has been much discussion on the ratio of GDP to job creation, the so called economic multipliers. Here's a real one, a job multiplier:

The Milken Institute estimates that every computer-manufacturing job in California creates 15 jobs outside the factory.

There is much more in the above article with some damning statistics on how the real economy, the production economy was and is being thrown under the bus by those in D.C. I found it when reading the new Buy America Works paper, published by the Alliance for American Manufacturing.

The real point of this post is to answer the question, does Buy American criteria in legislation work? This is an important issue right now due to a new jobs (Stimulus) bill being crafted in the Senate. I have called for requiring all Stimulus job hires be Americans (citizens, permanent residents) in additional to requiring American goods and services be utilized.

According to the AAM:

Manufacturing employment gains from infrastructure investment can increase by up to 33 percent when the amount of domestic materials purchased are maximized with the inclusion of strong domestic sourcing provisions.

33%, I am not surprised by this number, but this further validates why it is critical to demand U.S. citizens, green card holders only be hired for jobs created with stimulus and domestic materials are utilized.

The GAO confirmed that Buy American clauses do help the U.S. manufacturing base and the U.S. workforce.

Few are talking about requiring new hires on future Stimulus projects be U.S. citizens and legal permanent residents but it is clear, from the results already projected, this additional requirement would be the best bang for the buck in terms of getting Americans working again.

The rest of the AAM report analyzes a host of trade and WTO rules on these provisions and knocks down any faux pas objections which will surely arise...by those with the interest of grabbing U.S. government money while not paying U.S. workers a dime.

Even weak Buy American clauses are under attack, but one must consider the source. Often it is Canadian think tanks or multinational corporate sponsored think tanks criticizing domestic provision requirements. Of course they will and are trying to fight these requirements because every other nation and corporation on Earth would like to get their hands on some free U.S. taxpayer money to stimulate their own economies.

One criticism cliams no state knows how to procure American materials. A sad state of affairs to be sure, but it's more important for States to figure out how to actually support their legal residents, U.S. domestic materials and products instead of dialing 1-800-Bangalore or 1-866-China-Ship.



Ralph Gomoy piece on HuffPo, another must read

Ralph Gomory has a piece calling for some high level policy changes to put the U.S. national interest as a top economic priority.

The post is

Please link to Gomory piece ...

on HuffPo

Ralph Gomory piece on Huffington Post

I did already but here it is again, Ralph Gomory presents some much needed policy and legislative directives.

We like more detailed stuff, or at least I do, I think Ralph is writing some conclusions that are the least "technical" so people get the message but underneath these policy recommendations is a host of very serious research.

We like Gomory's math head frankly, or at least I do, when he goes down to the nitty gritty.

Minimum Wage in Mexico $1,800 a Year

Ford pays out $10 an hour for wages AND benefits to its workers in Mexico.

Now with Nafta who can compete with that here really?

Buffets Idea Would Work

I found the link to this in the HuffPo piece linked earlier.

It seems very well thought out and squashes the Chinese pegging their currency to ours as a means to always stay cheaper without tariffs (although this is in effect a tariff)


read this Tom

China, the ultimate Protectionist.

We have so much material on this site and I do plan to replace the site search to use a Google advanced search (which is way faster and more specific).

We know.

Since taking office in 2003, Granholm has created 163,300 positions, her office says. She expects that a recent infusion of more than $1 billion from the Obama administration aimed at nurturing car battery and electric-vehicle projects will generate 40,000 more positions by 2020. In the past decade, however, as the auto industry has grown smaller, Michigan has lost 870,000 jobs -- about 632,000 of them during Granholm's tenure. The number is expected to reach 1 million by late next year, the end of her term.  

Link  http://www.washingtonpost.com/wp-dyn/content/article/2009/10/05/AR2009100503870.html


Now most of this I do not believe is completely her fault and I also believe she gets screwed not only by the Federal as well as the corporations...

but what about this question: How many guest workers are displacing techies in Michigan? Are they offshore outsourcing state jobs? Are they enabling offshore outsourcing or body shops to displace workers?

I think that would tell a better picture on Granholm.

Ford in Mexico

Ford makes several models in Mexico and as I wrote earlier the total pay and benefit package there is less than $10 an hour.

Who can compete with that here?

Maybe if the 'company store' stock the shelves of your 'company apartment or home' and the company medical plan had no cash fees etc etc.

The reality is that without tariffs all high paying 'skilled' manufacturing jobs will end up overseas.

There is probably only a single manufacturer in the whole country who is really holding its own and even they are doing 'some' outsourcing - Intel.

Financial, education healthcare along with utility costs are rising at the same pace as actual inflation while the rest here is tied to Mexican and Chinese labor costs to some extent.

This model is unsustainable. Mexicans and Chinese laborors cannot afford to live here and buy Iphones etc.