We received a huge amount of Feedback on our piece on Saving Western Manufacturing, Part 2, some of which we print this week. That includes our Feedback of the Week from Brazil’s Otacilio Moreira, who says it isn’t just the US that needs to be worried.
You'll find that and several other good letters below. More next week.
Feedback of the Week – On Saving Western Manufacturing, Part 2:
I should say it’s not only the U.S. that is losing its lead in large-scale, high-tech manufacturing. I see, here in Brazil, the same from big manufacturers to small owned companies (those more affected because they dont have enough resources to expose their products in other markets or trade shows abroad).
It seems the Chinese developed a way of doing business in a more competitive way or using strategies not known by their competitors.
Let me give you an example: A US company operating in Brazil for almost 100 years, has his own factory to build vessels according to ASME standards. They receive a quote to export a vessel to another country and, after sending their price, the bidder returns saying: Your price is double of a Chinese manufacturer. The engineers where curious to learn about the Chinese quote. Let us know about their specs, and from there they learn they were using a different spec. Then they asked the Chinese to quote according to the same spec.
Surprisingly, they reply: Our price will be the same!!!!!!
It’s like a Hitchcock movie: a mystery, and, as long as we don’t find the answer, all manufacturers around the globe are in jeopardy.
OMC Orientação para Melhorias Contínuas.
Qualidade e Liderança em Projetos de Supply Chain.
More on Saving Western Manufacturing, Part 2:
I found this article so on-target that I sent it to the President. It voiced my unvoiced concerns. Not for the manufacturing that is disappearing, but the manufacturing that never had a chance to exist here. I see all this funding for new technologies and they WILL NOT be built here. How is that beneficial to the U.S. economy? And, the Buy American act is not going to help that at all.
The costs of new manufacturing start-ups is very high, but Germany and China build the clean rooms so the jobs will come. This country needs to stop using trigger words like Socialism and start realizing that this is about competing with the rest of the world for our own existence. Do we really want all of our jobs to be retail? Who will be able to afford to buy those products? What is going to happen to our tax base when the poor don't pay taxes and the wealthy have places to hide their money so they don't pay as much taxes? The middle class is the real tax base and business. That's what this country needs to buckle down and cultivate.
Perhaps, a program like the college loan system for new manufacturing startups? Government subsidized low-interest loans and state and local level tax holidays for them?
Something needs to be considered seriously.
Advance Tabco Corp.
Why the decline in US Manufacturing?
Over-regulation from all areas of government - top to bottom including code enforcement for permits.
Lack of interest in manufacturing because people involved have declined to the point of having no clout - it's all about the numbers (votes).
No interest from investors - profits too low in manufacturing for amount of investment required.
Other countries do not have tort law, and do not constantly threaten manufacturers with law suits - if we had liability limits, it might help.
In general there is just too much resistance to making things in the US. We would not have a country torn apart by national health care if we had employers that could furnish insurance to its employees. Small manufacturers are doing well to afford liability insurance & workers comp.
How does the data stack up when comparing:
- # of manufacturing jobs during those periods
- actual GDP for manufacturing in those years
- actual increases in productivity over those periods
Are there any other key data points that support or refute the premise?
At the end of the day, there should be no "real" debate on the importance of manufacturing to the advancement of a nation and that nation's economy. Manufacturing has been/is/will be a critical success factor for all economies (local, state, national, global) that want higher standards of living for their citizens and a high level of international importance as other economies are dependent on their capability.
The economics of manufacturing is about much more than dollars and profit margins we measure/generate today (too often this quarter/this year), but rather about understanding the world of possibilities and how resources can be utilized/leveraged both today and in the future (+100 years). There will always be issues that will require creative solutions and the skills developed from manufacturing have much broader applications than what is "seen" in products produced and sold. The number of examples supporting this reality (from current developments to ancient history) are too numerous to ignore. It is essential that the USA re-discover the power of manufacturing.
Jon Bingol, CFPIM
The conclusion drawn from the data in this article is highly questionable. The article cited the years from 2001 to 2007 as a harbinger of doom since growth exceeded addition of capacity.
The data provided by the Federal Reserve shows that capacity utilization in 2001 had just fallen off a cliff coinciding with the bursting internet bubble. Why would anyone add capacity from 2001 to 2007 when there was plenty of unused capacity available?