It’s Tea Time for Manufacturing
The politics of manufacturing used to be pretty straightforward. The battle lines were clearly drawn — Republicans were on the side of owners and management; the Democrats looked out for labor. Manufacturing baked a steady stream of huge pies, and the two sides squabbled over how to divvy it up. Those simple days are long gone, however. Now the Republicans are for high taxes, while the Democrats urge even higher taxes. Both sides take huge contributions from Wall Street and neither seem concerned with the loss of millions of manufacturing jobs over the last three decades. They have both bought into the notion that globalization — meaning manufacturing wherever it is cheap — and converting the United States into a nation of financial analysts, government employees, lawyers, and hotel and restaurant workers is a good idea. Innovation is in vogue, as is producing “green technology” products, but shaping metal, plastics, and wood into the things Americans buy and use every day has been tossed on the scrap heap of Washingtonpriorities. The budget for the Manufacturing
Extension Partnerships (MEP) — the federal government's number one resource for helping manufacturers compete against low cost competition — gets slightly less funding than the Hagerman Fossil Beds National Monument in Idaho.
Organized labor is only a bit player these days, with relatively few manufacturing employees paying union dues, and it is by no means true that the owners and management of many manufacturing companies share a common political interest. Wall Street has prospered as manufacturing jobs have been lost over the last 30 years. Many operations and supply chain managers as well as manufacturing and industrial engineers have learned the hard way that “maximizing shareholder value” means he or she is out of a job.
One disastrous offshoot of the economic theory of globalization is that no one really looks out for manufacturing any more. When the Obama administration slapped a levy on Chinafor dumping tires, the most vocal opposition came from Cooper Tire. Furniture Brands opposed a similar levy by the Bush administration. These companies lobby for Chinese manufacturing interests over American interests because of the massive investments they have made in China. We are on our own when it comes to influencing Congress. It is up to each of us individually to change the disastrous course of American manufacturing. The old political hack Tip O'Neill correctly said, “All politics is local.” There is no political party or an interest group to which you can send a check and know the interests of manufacturing are being served. They will only be served by local action on the part of each stakeholder. This is a critical election cycle, and we must pin down every candidate for Congress regarding the critical issues. It doesn't matter whether you call yourself Republican or Democrat. What does matter is sending people to Washington who understands the crisis and commit to solutions. The underlying impetus for the Tea Party movement is a “reelect nobody” mentality — a growing mandate to end “business as usual” in Washington. It is high time manufacturing brewed up a little tea of its own.
Fair Trade is Free Trade
Free trade is fine, but we have terribly distorted the idea. We have free trade agreements with Mexicoand Canada— nobody charges the other guy any duties. Our trade with Chinaand India, however, is not remotely “free.” American manufacturers are derisively called “protectionist” when we object; in fact, the governments of those countries are blatantly protectionist. American goods entering Chinaare hit with a 10-15 percent import duty; the duty into Indiait is far higher. We charge only 2-3 percent to import into the United States. If the advocates of free trade are serious, our import duties should be exactly the same as theirs. All American manufacturing wants is a level playing field — not protection, but equivalency.
Chinese currency manipulation has the same effect as an import duty. Throw in the 25 percent or so they are cooking their cash, and Americans operate at a 35 percent+ disadvantage. Local economies across Americapay a stiff price for that, and our children and grandchildren will pay even more. Every candidate for Congress must answer — yes or no — will he or she level the field and give American manufacturing a chance to compete?
Environmental Equivalence
Since the Clean Air Acts were passed there has been only one coke processing plant built in the United States, and virtually all the coke needed by our steel industry comes from China. Pollution controls make competitive U.S.coke processing impossible. Whether you support this or any other environmental legislation, the issue is that unilateral environmental regulation accomplishes little and it drives American manufacturing to ruin. The amount of pollution has not changed as a result of the acts — it has merely moved it from here to China. “Feel good” legislation allows environmentalists to claim they are doing something and levies a huge burden on American manufacturing. Worse, it enables politicians to dupe voters into thinking clean air is free. Cleaner air and water are not free, and the people of the United Statesdeserve to know the cost of environmental regulations.
Environmental improvement requires hard work and strong leadership. Feel good laws that hammer manufacturing but do not really improve the environment must stop, as must misleading people into thinking there is no cost to a cleaner environment. If such regulations add $5 a ton to U.S.coke, then an equivalent environmental equivalence tariff of $5 should be levied on coke from every country without comparable laws.
The Disservice Economy
Over-arching all of this, we must bring an end to the misguided thinking that the United Statescan thrive as a service economy. Our greatness and security were built in our factories, and only continuing to create wealth through the value adding of manufacturing will enable our grandchildren to enjoy prosperity. The economists cite a British economist named David Ricardo and his theories of comparative advantage as the intellectual justification for gutting American manufacturing in favor of China, but what we are doing is not what Ricardo had in mind at all. His theory was all about productivity — not cost; and he assumed full employment. Ricardo was a sober, intelligent man; and no such person believes we can survive as a nation of philosophers and coffee baristas, shipping our wealth to countries where oppressive governments have their people manufacture for us in abysmal conditions making little better than slave wages.
Government must recognize the critical nature of manufacturing. It is not just another place to work. It is the lifeblood of our economy. Absurdly high taxes and lawyers running amok with product liability cases that send health care costs through the roof have to come to an end.
It will take a concerted individual effort on the part of every manufacturing stakeholder to turn the ship around. We have to get every employee involved on a personal basis. Letters, emails, and phone calls to candidates demanding something other than a form letter response, showing up at political events, and demanding yes or no commitments, writing letters to the editors of the local papers — in short, making it your responsibility to pin down every candidate for a public commitment to support manufacturing in very specific ways is the only solution. No more politicians beholden to the investment bankers who are looting American manufacturing or other selfish interests can be sent to Washington. Nothing less than a Congress comprising folks beholden to main street American manufacturing can reverse the catastrophic thinking of the last 30 years.
