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Supply Chain News: US Must Revive Manufacturing Might, New York Times Op-Ed Says


National Security, the Economy and Good Jobs are at Stake

Jan. 5, 2020
SCDigest Editorial Staff

The virus pandemic and issues with personal protection equipment unveiled a troubling reality: "The United States can no longer produce what it needs in a time of crisis, even if those things were invented here."

So say Dan Breznitz of the University of Toronto and business writer David Adler, in a recent guest column in the New York Times.

Supply Chain Digest Says...

Unfortunately, US history, such as the lack of success for Walmart's several "Made in USA" campaigns, may not bode well for a "Made in USA" sentiment.

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The US has let its manufacturing might dwindle, the authors say, in the quest for short term profits available from shifting production to China and other low cost countries

"The country, once a manufacturing powerhouse, is populated by corporations that have moved manufacturing overseas and lost their ability to produce domestically, leaving little behind except shell companies that employ relatively few people," Breznitz and Adler write.

The US now produces very little of a number very essential products, from medicines to computers and smart phones, they note.

The lower prices for imported goods certainly were attractive to US consumers, in part why there was not more pushback against these corporate sourcing strategies.

"But the country lost sight of the critical requirements of a vibrant economy - which is good jobs," Breznitz and Adler say.

The pandemic has exposed just how far down this path the country has gone, the authors say, and opened a chance to fix before the next crisis hits.

Breznitz and Adler say the US should set an aggressive goal of gaining back a quarter of overall production away from Asia and the greater China region.

"That could not only affect preparedness for a subsequent crisis but also restore America's position as a global manufacturer and a bastion of good jobs," the pair add.

Critically, the US is even falling behind in key new technology products, where it has always dominated, such as 5G and the most cutting-edge computer chips.

And as this trend continues on, the US is increasingly creating not well-paid manufacturing jobs but lower-paid services jobs instead.

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It can be done, Breznitz and Adler write, noting "America is still the world's second-largest manufacturer, and has retained pockets of the needed skills, from the shop floor to management of production."

But to make any of this happen, there of course has to be strong demand for US-made products. One way to address that is to mandate federal, state and local governments buy US made goods.

The authors also recommend that companies that are receive federal aid for crises should be required to move a significant percentage of their sourcing and production back to the United States. Government should also move to stop predatory pricing by foreign manufacturers to help generate stable dmoestic demand.

Breznitz and Adler also have hopes that consumers will be willing to pay for US-made goods.

For example, they argue that "once consumers learn that not all generic drugs are alike, with pronounced differences in quality and safety, depending on the country of manufacture, many will gladly add a few cents for drugs using American-made active ingredients, perhaps with packages stating that their products are free from foreign-made active ingredients and were manufactured by fairly treated workers.

Unfortunately, US history, such as the lack of success for Walmart's several "Made in USA" campaigns, may not bode well for a "Made in USA" sentiment.

In fact, Breznitz and Adler lobby for a heavy government hand in pushing US-made goods.

"Federal law should require all manufacturing industries to disclose how much of their sourcing and critical production takes place in the United States," they argue, adding that "It should be illegal for companies to use terms such as "an American tradition" on the packages of goods that were completely produced in China."

It's going to be quite an effort, the authors acknowledge.

"The task is difficult and will take years to bear fruit," they conclude, but add that "there is also the chance to secure prosperity for future generations."

SCDigest's Take: This is the latest in what has been a growing number commentary along similar lines. Perhaps the national security risks from losing manufacturing in the US may serve a real catalyst for governments, businesses and consumers.

What are your thoughts on the need to return manufacturing to the US? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback

Tom Miralia

President and CEO, Distribution Technology
Posted on: Jan, 13 2021
 Flat world, huh?  I agree with SCDigest's take above.

So a nerve was struck in 2016 with respect to the huge shift in manufacturing away from the US, beyond very advanced manufacturing, and now in 2021 the NYT decides to weigh in?  Plus the huge advantages that were 'given away' with respect to intellectual property and tech.  It took a pandemic.  Ok.

In any case, it seems to me what is being related by the Canada based researcher and a comrade with the NYT is the need for a thorough, well-thought out, cohesive Industrial Policy to be develeped, reviewed, and implimented. 

To my observation, the U.S. has yet to have an formal national industrial policy, at least during the industrial era and beyond?  Perhaps there were 'cultural forces' in place that somewhat guided behaviors?   I think those include a bent toward free markets and competition, with people naturally desiring 'cheap stuff'.  Sure.  Today's even more fractured value systems call for an advancment of leadership in this area?  Also, a very likely reason for the lack of an government driven, defined, Industrial Policy has got to do with the incredible difficulties involved in crafting and 'selling' one!  Right?  Even a 'flawless' plan and execution would still impact certain interests who will work toward its undoing?

The authors of course allude to this in the last paragraph.

Nevertheless, if the face of current realities now witnessed, I concur that action is justified.  How to better promote the value of domestically produced goods, when identical lower cost imported goods are available?  How to develope a plan and model, and then educate business leaders and consumers in how thinking in the longer term promotes long-term sustainability and vital national/societal goals?   Especially in the face of competing in short term, on an unlevel playing field.  Good luck with that in a system that lives for the next quarter- at least in publically held firms?

One thought involves 'lower cost' imported goods my not actually be 'lower cost' in terms of impact to us, and also the health and safety of those producing the goods?  That cost could be modeled perhaps along with the prospect of global political pressure that is developing for the US from regimes with a culture to successfully apply an Industrial Policy and who have enough citizens benefitting from that system to hold power over others trapped in rather meagre standards of living- at least by American standards.

Perhaps Government spending and fiscal policy can be crafted with a balanced and phased-in Scorecard of sorts that rewards long-term thinking and decisions and penalizes other.  I'd promote the 'rewarding' side of the scorecard vs. penalties. 

So I encourage research and analysis to be conducted and significantly sponsored by government, I suppose.  If we can paint a valid picture for examination, that's a starting point for development of a path forward from todays' problematic circumstances and where things have come to stand.

Best regards,  Tom M



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