Post by unlawflcombatnt on Jun 5, 2007 13:41:44 GMT -6
Below is an excerpt from an excellent article titled:
IS DEINDUSTRIALIZATION INEVITABLE?
IS DEINDUSTRIALIZATION INEVITABLE?
By Bob Baugh and Joel Yudken
"REBUILDING AMERICA’S INDUSTRIAL BASE IS ESSENTIAL FOR MAINTAINING OUR COUNTRY’S living standards and restoring the American Dream for future generations. Today we must borrow an unsustainable two billion dollars a day to pay for the goods we consume that we do not produce as a nation. Eventually, we must either produce more of what we consume, or be forced to consume less. Our national competitiveness is eroding despite the fact that American manufacturing workers are the most productive in the world. As a high–wage country in a rapidly globalizing world, we must restore our competitiveness by developing a national industrial strategy centered on innovation. Such a strategy requires raising the level of public and private investment, harnessing the distinctive technological and organizational capacities of U.S. manufacturing companies, and developing the skills of American workers.
Manufacturing has been the foundation of the nation’s economic and national security throughout its history. It is a vital engine for economic growth, generating good jobs and guaranteeing a high standard of living for America’s working families. It is a mainstay of state and local economies, providing both jobs and tax revenues for essential public services. Manufacturing jobs create as many as four other jobs in local economies, and the earnings and benefits of those workers exceed those of workers in services and other sectors. In addition, manufacturing is the leading industrial sector in providing health care benefits. The sharp increase in uninsured Americans, five million over the past four years, is directly related to the decline of manufacturing employment. Manufacturing is also the major driver of U.S. productivity growth and technological innovation.
A NATIONAL CRISIS
TODAY, HOWEVER, AMERICAN MANUFACTURING is under siege. Alarms should be going off everywhere but the crisis is deliberately drowned out by an economic orthodoxy that tells us “globalization is inevitable” and “it’s good for consumers.” Free market dogma provides cover for government policies shaped by Wall Street, and multinational corporations that are unraveling America’s working middle class. The fight for manufacturing is a fight for the economic heart and soul of our country. The past five years have been especially brutal, far different from earlier manufacturing downturns. The nature of the decline is structural, widespread, and deep. The 2001 recession was precipitated by a manufacturing depression that continues to this day. Since 1998, over 3.4 million manufacturing jobs have been lost—2.9 million of those since 2001—with over half that total coming from union shops. In addition, since 1999, over 40,000 manufacturing establishments have closed— medium and large plant closures have accounted for 90 percent of the job loss.
The crisis hit everywhere and everyone. State and local tax revenues withered, undermining important public services. On a per capita basis, it has hit minorities, the south, and rural areas the hardest, as textiles, clothing, furniture and more closed or went offshore. Within manufacturing, nearly every subsector has suffered double digit employment declines—48 percent in textiles, nearly 30 percent in computer and electronic parts and primary metals, and 23 percent in machinery.
The crisis has spread throughout the economy to encompass both high–and low–end occupations. In 2003, engineering unemployment hit seven percent, a level that, even in the worst of times in the early 1980s, never rose above three percent. From 2001 to 2004, the Bureau of Labor Statistics estimates there was a loss of 221,000 technical and engineering jobs: computer programmers, electrical and electronic engineers, and so on.
Since January 2001, the U.S. economy lost 725,000 professional, business, and information service jobs, and created only 70,000 jobs in architecture and engineering, many of which are clerical.
Manufacturing is the canary in the coal mine for a “new economy” that has seen outsourcing spread to software, info tech, and financial services. The losses also have spread to the university level where engineering and sciences experienced declining enrollments, as students turned away from degrees for which there was no perceived opportunity. Just as troubling is the precipitous decline in domestic manufacturing investment, which fell nearly 17 percent in real terms from its peak in 1998 and 2004, while investment in manufacturing structures declined 44 percent over the same period. At the same time, many of the same firms are making record offshore investments in R&D, engineering, design, and production jobs.
The investment flows portend future production and exports to the United States. Apologist claims that outsourcing is matched
by insourcing (foreign investment in domestic manufacturing) are meant to mislead. The insourced investments are overwhelmingly a mere change of ownership that does not result in new jobs and production facilities here. Not so in China, where these are startups and expansions. The foreign direct investment (FDI) flow into China reached $62 billion a year in 2004 and continues to soar. Seventy percent of China’s FDI is in manufacturing, with heavy concentration in export-oriented companies and advanced technology sectors. Contracted (future) FDI projections are more than double the actual level today, with U.S.–based firms leading the way. R&D, engineering, design are all part of the manufacturing investments and jobs that the Chinese government is aggressively pursuing.
The startling loss of 40,000 manufacturing establishments and over three million experienced workers underscores the damage to our national security. All of these establishments and workers were part a greater industrial base that met both commercial and defense needs. The factory floor serves as a source
of experimentation, innovation, and product development. Many of the engineers, scientists, and skilled workers that work on commercial products one week are the same ones that work on defense applications the next. This vital link between production and innovation, however, is being severed as manufacturers move plants offshore, a move aided and abetted by Pentagon policies to promote globalization of defense products. This trend is evident in a wide range of important industries, from high-tech sectors such as microelectronics, printed circuit boards, and advanced materials; to traditional sectors such as machine tools and ball bearings; to large “systems integrators” such as aerospace and shipbuilding. The loss of skilled production workers,
scientists, engineers, and technical and professional workers across the manufacturing sector means that the next best idea, the next innovation, the next generation of products, and the next investment will be made somewhere else, not in the United States.
FROM INTERNATIONAL COMPETITION TO INTERNATIONALIZATION OF PRODUCTION
THE WORLD HAS CHANGED DRAMATICALLY FOR American manufacturing over the past six decades. Since the end of WWII we have gone from domestic production to international competition to the internationalization of production.
In the 1980s international competition brought a rude awakening for American manufacturing. Henry Ford II’s glib “mini cars, mini profits” dismissal of Toyota came back to haunt Ford and many others firms that initially downplayed the international challenge. In time they learned how to respond to the challenges of innovation, efficiency, and quality. Employers, unions, and workers both struggled and cooperated as they adapted new technology and work organization practices. But this is not the only path corporations took. There was another response, the internationalization of production—a worldwide search for cheap labor and subsidies. One example is Nike Corp., a company that has never manufactured a shoe in the United States. Phil Knight began Nike as a virtual company—modeled after his Stanford master’s thesis—that did design and marketing here while seeking Asian vendors and cheap labor for production.
The same dynamic took hold in major manufacturing industries like auto. While partnerships were being built in domestic plants, the industry began internationalizing their production. They sought cheap nonunion labor by regionalizing production to Mexico. Even before the 1995 North American Free Trade Agreement (NAFTA), the company now known as Delphi had 50,000 employees in Mexico. But, in addition to cheap labor and weak laws, there were other incentives in place for Nike, Delphi, and other firms. The vital link between production and innovation…is being severed as manufacturers move plants offshore …"
(Continued)
IS DEINDUSTRIALIZATION INEVITABLE?
IS DEINDUSTRIALIZATION INEVITABLE?
By Bob Baugh and Joel Yudken
"REBUILDING AMERICA’S INDUSTRIAL BASE IS ESSENTIAL FOR MAINTAINING OUR COUNTRY’S living standards and restoring the American Dream for future generations. Today we must borrow an unsustainable two billion dollars a day to pay for the goods we consume that we do not produce as a nation. Eventually, we must either produce more of what we consume, or be forced to consume less. Our national competitiveness is eroding despite the fact that American manufacturing workers are the most productive in the world. As a high–wage country in a rapidly globalizing world, we must restore our competitiveness by developing a national industrial strategy centered on innovation. Such a strategy requires raising the level of public and private investment, harnessing the distinctive technological and organizational capacities of U.S. manufacturing companies, and developing the skills of American workers.
Manufacturing has been the foundation of the nation’s economic and national security throughout its history. It is a vital engine for economic growth, generating good jobs and guaranteeing a high standard of living for America’s working families. It is a mainstay of state and local economies, providing both jobs and tax revenues for essential public services. Manufacturing jobs create as many as four other jobs in local economies, and the earnings and benefits of those workers exceed those of workers in services and other sectors. In addition, manufacturing is the leading industrial sector in providing health care benefits. The sharp increase in uninsured Americans, five million over the past four years, is directly related to the decline of manufacturing employment. Manufacturing is also the major driver of U.S. productivity growth and technological innovation.
A NATIONAL CRISIS
TODAY, HOWEVER, AMERICAN MANUFACTURING is under siege. Alarms should be going off everywhere but the crisis is deliberately drowned out by an economic orthodoxy that tells us “globalization is inevitable” and “it’s good for consumers.” Free market dogma provides cover for government policies shaped by Wall Street, and multinational corporations that are unraveling America’s working middle class. The fight for manufacturing is a fight for the economic heart and soul of our country. The past five years have been especially brutal, far different from earlier manufacturing downturns. The nature of the decline is structural, widespread, and deep. The 2001 recession was precipitated by a manufacturing depression that continues to this day. Since 1998, over 3.4 million manufacturing jobs have been lost—2.9 million of those since 2001—with over half that total coming from union shops. In addition, since 1999, over 40,000 manufacturing establishments have closed— medium and large plant closures have accounted for 90 percent of the job loss.
The crisis hit everywhere and everyone. State and local tax revenues withered, undermining important public services. On a per capita basis, it has hit minorities, the south, and rural areas the hardest, as textiles, clothing, furniture and more closed or went offshore. Within manufacturing, nearly every subsector has suffered double digit employment declines—48 percent in textiles, nearly 30 percent in computer and electronic parts and primary metals, and 23 percent in machinery.
The crisis has spread throughout the economy to encompass both high–and low–end occupations. In 2003, engineering unemployment hit seven percent, a level that, even in the worst of times in the early 1980s, never rose above three percent. From 2001 to 2004, the Bureau of Labor Statistics estimates there was a loss of 221,000 technical and engineering jobs: computer programmers, electrical and electronic engineers, and so on.
Since January 2001, the U.S. economy lost 725,000 professional, business, and information service jobs, and created only 70,000 jobs in architecture and engineering, many of which are clerical.
Manufacturing is the canary in the coal mine for a “new economy” that has seen outsourcing spread to software, info tech, and financial services. The losses also have spread to the university level where engineering and sciences experienced declining enrollments, as students turned away from degrees for which there was no perceived opportunity. Just as troubling is the precipitous decline in domestic manufacturing investment, which fell nearly 17 percent in real terms from its peak in 1998 and 2004, while investment in manufacturing structures declined 44 percent over the same period. At the same time, many of the same firms are making record offshore investments in R&D, engineering, design, and production jobs.
The investment flows portend future production and exports to the United States. Apologist claims that outsourcing is matched
by insourcing (foreign investment in domestic manufacturing) are meant to mislead. The insourced investments are overwhelmingly a mere change of ownership that does not result in new jobs and production facilities here. Not so in China, where these are startups and expansions. The foreign direct investment (FDI) flow into China reached $62 billion a year in 2004 and continues to soar. Seventy percent of China’s FDI is in manufacturing, with heavy concentration in export-oriented companies and advanced technology sectors. Contracted (future) FDI projections are more than double the actual level today, with U.S.–based firms leading the way. R&D, engineering, design are all part of the manufacturing investments and jobs that the Chinese government is aggressively pursuing.
The startling loss of 40,000 manufacturing establishments and over three million experienced workers underscores the damage to our national security. All of these establishments and workers were part a greater industrial base that met both commercial and defense needs. The factory floor serves as a source
of experimentation, innovation, and product development. Many of the engineers, scientists, and skilled workers that work on commercial products one week are the same ones that work on defense applications the next. This vital link between production and innovation, however, is being severed as manufacturers move plants offshore, a move aided and abetted by Pentagon policies to promote globalization of defense products. This trend is evident in a wide range of important industries, from high-tech sectors such as microelectronics, printed circuit boards, and advanced materials; to traditional sectors such as machine tools and ball bearings; to large “systems integrators” such as aerospace and shipbuilding. The loss of skilled production workers,
scientists, engineers, and technical and professional workers across the manufacturing sector means that the next best idea, the next innovation, the next generation of products, and the next investment will be made somewhere else, not in the United States.
FROM INTERNATIONAL COMPETITION TO INTERNATIONALIZATION OF PRODUCTION
THE WORLD HAS CHANGED DRAMATICALLY FOR American manufacturing over the past six decades. Since the end of WWII we have gone from domestic production to international competition to the internationalization of production.
In the 1980s international competition brought a rude awakening for American manufacturing. Henry Ford II’s glib “mini cars, mini profits” dismissal of Toyota came back to haunt Ford and many others firms that initially downplayed the international challenge. In time they learned how to respond to the challenges of innovation, efficiency, and quality. Employers, unions, and workers both struggled and cooperated as they adapted new technology and work organization practices. But this is not the only path corporations took. There was another response, the internationalization of production—a worldwide search for cheap labor and subsidies. One example is Nike Corp., a company that has never manufactured a shoe in the United States. Phil Knight began Nike as a virtual company—modeled after his Stanford master’s thesis—that did design and marketing here while seeking Asian vendors and cheap labor for production.
The same dynamic took hold in major manufacturing industries like auto. While partnerships were being built in domestic plants, the industry began internationalizing their production. They sought cheap nonunion labor by regionalizing production to Mexico. Even before the 1995 North American Free Trade Agreement (NAFTA), the company now known as Delphi had 50,000 employees in Mexico. But, in addition to cheap labor and weak laws, there were other incentives in place for Nike, Delphi, and other firms. The vital link between production and innovation…is being severed as manufacturers move plants offshore …"
(Continued)