I’d like to wish everyone in the United States – whether you’re affiliated directly with manufacturing or not – a very happy 1st anniversary.
Well, it’s not exactly a happy one … but it HAS been one year since the President established the White House’s Office of Manufacturing Policy (OMP). This office was established in conjunction with replacing then-outgoing ‘manufacturing czar’ Ron Bloom with two co-chairs of this new office. Not one czar – two. Heading up an Office of Manufacturing Policy. Think on that one for a minute .
And still, we have no meaningful signs of a comprehensive manufacturing policy in this country. Instead, we drift along rivers of uncertainty, speculation, (in)visible hands, and disconnected initiatives.
At this stage, we should all be asking the obvious questions – including the most glaring: How much longer are we gonna have to wait?
Even when the OMP was announced last December, there were some questions raised about its co-chairs and likelihood of success. In ‘Obama Picks Two To Lead Manufacturing Push – But The Right Two?’ Dan Froomkin opines in the Huffington Post from 12/12/11 that both have questionable ‘bona fides’ with regards to their manufacturing experiences & motives. Specifically, Secretary of Commerce John Bryson’s and National Economic Council Director Gene Sperling’s previous roles have been almost exclusively C-suite or government roles. Both are attorneys. Not that there’s anything wrong with that.
So since handing over the reigns of the ‘new’ OMP to both Mr. Bryson & Mr. Sperling, we’ve heard precious little from the office or of anything that can reasonably indicate movement toward a comprehensive US industrial policy.
I read two articles this past week which was the one-year anniversary of the OMP. I’m assuming that the timing of ’em were coincidences, since neither directly reference the OMP – but i think that makes both even more compelling.
In ‘Apple’s Made-In-The-USA Plan Fuels Wishful Thinking,’ Alan Tonelson uses economic data & pragmatism to question Apple’s motives in investing $100-million to repatriate production to the US. But he also takes a look at the overall progress made in reshoring production from China to the US. And the data he presents to support the notion that reshoring isn’t happening at meaningful rates are sobering.
“… if China’s manufacturing clock is rapidly being cleaned by America, why have the Chinese taken the global industrial output lead during the past two years, according to the consulting firm IHS? Why does the manufacturing-dominated U.S. trade deficit with China keep growing robustly despite stagnating overall U.S. economic growth? Why did the U.S. manufacturing trade deficit with China set a new monthly record, as shown in Census Bureau data released yesterday (12/10/11)?”
“Moreover, if American manufacturing is becoming such a world-beater, why do IHS‘ calculations show it losing ground in global output rankings to the crisis-ridden European Union? Why did the overall U.S. manufacturing trade deficit hit its own all-time high in October, according to new U.S. government figures? And why were foreign-based manufacturers last year supplying fully 37.57 percent of U.S. consumption of a broad cross-section of advanced industrial goods, up from 24.49 percent in 1997?”
Simply put, we continue to pile up debt with and lose ground to China, which shows that while the headway we’re making in manufacturing is encouraging it isn’t nearly enough.
In ‘Needed: A US Manufacturing Policy‘ by Clyde Prestowitz, the Apple announcement is also examined. But Clyde takes a different angle by pointing out that a lack of skilled labor presents an obstacle to Apple’s (or anyone’s) intentions to reshore production to the US.
“But in their announcement and subsequent discussions, Apple executives emphasized that in moving production back to the United States they faced the obstacle that American workers with critical skills are in short supply. They attributed this to flaws in the U.S. educational system, saying that American schools no longer teach many of the subjects that Apple workers would need to know.”
Clyde explains that while there’s some truth in this, the larger issue is that we’ve basically killed our schools – that is, the factories and plants and shops that also acted as training facilities to grow manufacturing talent were outsourced, accelerating our loss of intellectual and technical chops.
Further, Clyde addresses the recent purchase of US battery maker A123 Systems by a China’s Wanxiang America. And the events leading up to the purchase are disappointing from the US’ perspective. Clyde writes:
“A second item in the recent press is the news of the buyout of advanced U.S. battery maker A123 Systems by China’s Wanxiang America. This is another example of what happens when we operate with half baked policies. Sad to say I predicted exactly this scenario nearly four years ago. At that time, a meeting was held in Vice President Biden’s office to discuss how to promote development of an advanced battery innovation and production capability in the United States. This was in response to the question posed by President Obama as to why we couldn’t produce advanced batteries in America. Some at the meeting proposed providing various levels of financial grants and tax breaks as a way of stimulating U.S. based R&D and manufacturing. I urged caution, pointing out that other countries like Japan, South Korea, China, and Germany were already spending heavily in the same area. I argued that unless the United States was prepared to match the spending and subsidies of the other countries, any money it spent would go down the rat hole because it wouldn’t be sufficient to allow a U.S.-based company to compete with the big boys from abroad. Unfortunately, it has turned out that I was right. A123 couldn’t compete with the Chinese and others and so now will become Chinese itself. Or maybe I should say Chinese-American. I do hope that Wanxiang will be able to exploit the A123 Systems technology from an American base. But the real lesson here is, again, that a Commerce Department that was on the job would know the global situation and have a comprehensive strategy either for really competing or for not spending money that is sure to be lost.”
Read that again – ‘…a Commerce Department that was on the job would know the global situation and have a comprehensive strategy …”
Both articles spell out the results we can expect from having no policy to support and encourage manufacturing in the US. And both rightly examine the data and unfortunate consequences that show our invisible hand policy is actually perpetuating our manufacturing malaise.
Our growing trade deficit. Neutral production growth. Continually rising imports. Skilled labor shortages. Bungled economic & trad policies. And, of course, tepid manufacturing job growth.
These are symptoms of a nation without a plan, being run by special and myopic interests. And to this point, all we’ve seen are sporadic, disjointed initiatives built for short-term relief but without long-term vision. Or the gumption to see them through. Worse, there’s no overall policy of what we stand for, what matters, and where we’re going.
Both Tonelson and Prestowitz ask in their articles for a comprehensive manufacturing policy to get us back on track. And both represent a continuation of the same good works we’ve seen go unnoticed and ignored over the last year – and longer.
Where should we go for our second anniversary? At this rate, maybe we should just stay in, and order Chinese.