Made in America

If you missed one of the most important documents on manufacturing to come out of the current government, you’re not alone. On January 16, the Bush administration unveiled its strategy to bolster the United States’ manufacturing sector in an 88-page report titled, “Manufacturing In America.” Unfortunately, the announcement, which was made by Secretary of Commerce Donald L.

Evans, was overshadowed by additional factory job losses, including the announcement that same day of the decision to close an Electrolux AB plant near Grand Rapids, Mich. Most of the plant’s 2,700 jobs will be moved to Mexico.

And therein lies the dilemma of manufacturing in America. Despite huge productivity gains, manufacturers are still finding it cheaper to make goods in other countries—Mexico, Brazil, Poland, India and China are leading contenders.

It’s become fashionable to blame Wal-Mart as the driving power behind manufacturers’ moves to offshore. Once the poster child for “Made in America,” Wal-Mart’s heavy-handed dealing with suppliers has forced manufacturers to make products more and more cheaply, often by moving manufacturing jobs to other countries. Is this a good thing for American consumers or a bad thing for American workers? Presumably, they’re the same people.

So just what is government’s role in manufacturing? To answer that question, let’s take a good look at “Manufacturing in America—A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers.”

The first part of the report provides a detailed picture of manufacturing in America today. Included are labor statistics, productivity trends and compensation costs. There are some factors of note. First, every $1 of final demand spent for a manufactured good generates $0.55 of GDP (gross domestic product) in the manufacturing sector and $0.45 of GDP in non-manufacturing sectors, creating a web of inter-industry dependence.

Second, the decline in U.S. manufacturing’s share of total employment (from 22 percent in 1977 to 11 percent in 2003) can be attributed almost completely to gains in productivity, and is a trend seen in other industrialized countries. And third, a global marketplace means manufacturers are battling it out over supply chain vs. supply chain, and not just company to company.

The next part of the report outlines the challenges faced by American manufacturers. These challenges were identified in a series of twenty Department of Commerce roundtables held during 2003 with representatives of small to large manufacturing companies.

Perhaps the most important part of the report is the recommendations made to Congress, federal agencies, state and local governments and the Department of Commerce based on feedback from the roundtables. Highlights include:

•Make permanent the recent tax cuts and reduce tax complexity

•Lower health care costs through health savings plans and medical liability reform

•Strengthen the U.S. patent system to protect intellectual property

•Eliminate foreign and non-foreign trade barriers

•Create an Assistant Secretary of Commerce for Manufacturing and Services.

As well, the report calls for strengthening skills training programs for displaced workers and creating a President’s Manufacturing Advisory Council, headed by Evans and including manufacturing industry leaders.

What can you do? As a minimum, read the report. It can be downloaded from the Department of Commerce homepage, at www.commerce.gov. See if you agree with the summary of challenges and proposed recommendations. Contact your local, state and government officials to express your opinion. This is a chance for manufacturing professionals to be heard by our nation’s thought leaders and policy makers. Let’s make the most of it.

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