Results 1 to 7 of 7

Thread: New Report on US Competitiveness in the World Economy

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default New Report on US Competitiveness in the World Economy

    from


    (snip)150 factory workers in China threatened to jump off the roof of an iPhone factory unless they received a raise. Similar stories are accumulating. Inflation, especially in food and other essentials, has been rampant over the last few years—and to make ends meet, desperate workers sometimes take drastic measures. These anecdotes underscore a major trend in China: skyrocketing cost of labor.

    In the US, it’s the opposite. Since 2000, real wages (adjusted for inflation) have declined. The White House even touts this horrid statistic in its just released paper, Investing in America: Building an Economy That Lasts. Clearly, the paper is not intended for the rank and file. It outlines how current policies are making America competitive with low-wage countries like China. And one of the principal strategies is ... lowering wages:



    The paper also touts the administration’s claim of having created 3.2 million jobs over the last 22 months. But these numbers are based on surveys, formulas, and statistical adjustments. The BLS’s Employment Participation rate, which the paper wisely leaves unmentioned, measures the percentage of people age 16 and older who have jobs. It’s the least corruptible employment number available—and at 58.5%, it's where it was in 1983.



    The long decline from 64.7% (April 2000) parallels another statistic in the paper: from 2001 - 2007, three million manufacturing jobs were lost. Those were the Bush years, obviously. But what happened during the Obama years? Unmemntioned, but just as bad.




    The tiny hook at the bottom is the ballyhooed uptick. But during the next economic downdraft, the line will plunge again. And that slack in employment has contributed to the decline in real wages.

    The problem for a high-wage country in a globalized economy is that jobs will be globalized as well. The decision whether or not to offshore production comes down to calculating the total cost of doing business overseas. This includes worker productivity, transportation, supply chain risks, legal and political risks, currency risks, intellectual property risks, expenses for expats, delays, flexibility, environmental issues, taxes, import duties, etc. Hence, for US manufacturing to be competitive, wages don’t need to match Chinese wages, but they need to be closer. That approach in wages has been happening—at a great expense to US workers. And now there are some results.

    The paper mentions Ford and Caterpillar as examples of large companies that have announced investments in the US to ‘insource’ jobs from overseas. Those announcements, when they do occur, are made with great political fanfare.

    Yet the same companies are still making massive investments in China and other low-wage countries, though no US politician takes credit for that. And there are many others. Merck disclosed from its headquarters in New Jersey that it would build a new facility in Beijing, part of its $1.5 billion investment in China. Nissan, which has large plants in the US, just announced that it would build a plant in Mexico. And government-subsidized solar panel makers, well, for how they just started a trade war, read... The Trade Debacle with China.

    So the net of outsourcing and insourcing among large companies still favors outsourcing. But under certain circumstances and on a small scale, companies might try to insource. And that is a step in the right direction.

    Smaller companies face different dynamics. It has always been expensive, difficult, and risky for them to offshore production. Many have done it, lured by cheap wages, only to learn costly lessons. And now anecdotal evidence is piling up that they’re having second thoughts. The paper lists KEEN, a footwear maker, and Master Lock as examples of companies that have brought back jobs. I personally know one consumer products company that shut down its manufacturing operations in China and relocated production back to the US (though it still operates plants in other parts of the world). And this is a trend that will likely accelerate.

    But low-wage countries will continue to draw jobs away from the US. The numbers couldn’t be clearer: in 2011, the trade deficit with China hit another record north of $320 billion. So taking credit for a wave of ‘insourcing’ from China, as the paper does, has an aura of political grandstanding.

    Even the US auto industry, which is relatively cost competitive, isn’t immune from China. Practically every car or truck sold in the US today contains Chinese-made components, though Chinese-designed vehicles haven't arrived yet. But it’s a priority of the Chinese government. And it’s through the back door(snip)

  2. #2
    Veteran Member
    Joined
    Jul 2011
    Posts
    455
    Thanks
    53
    Thanked 175 Times in 109 Posts

    Default Re: New Report on US Competitiveness in the World Economy

    Lower wages and higher costs to get your goods to market...... Sounds like a plan to rebuild America.
    The country has been looted.

  3. #3
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: New Report on US Competitiveness in the World Economy

    The Obama administration has been doing Wall Street's work since January 20, 2009. Lowering wages is just one of the tasks that Obama has taken to with amazing gusto. The other, handing out large bonuses to Wall Street bankers for taking large amounts of federal taxpayers dollars. What the White House report and most news outlets ignore is that manufacturing is very strong in the US. As a portion of total world manufacturing, we command about 27%. That is unchanged over the last three decades. What has changed is manufacturing employment. As Mel's chart above clearly shows, US manufacturers have cut jobs greatly over the last five decades. In short our manufacturers are much more efficient today than they were even last year. Thus, we continue to make as much, or more than we ever did but we do it with far fewer people.

    I see that in my own company. We have CNC machines that are wildly expensive, but make pieces much more accurately than a human machinist ever could. And those machines produce far more quickly than a machinist can. So now, we employe technicians, fewer than before, to make sure the machinery works. The CNC machines (routers, lathes and grinders mostly) do the actual work. That allows me to make more, both dollars and tons, than I did before with fewer people. A sad side effect is, we employe fewer people and don't have the urgency to pay more. Even though I pay very well. Northern pay and a southern climate.

    The problem though is not one little company in Durham NC, but when the government sets out to lower wages for everyone. The government's proper action when it sees me and my company reducing employee count is to make sure that people coming along (that is, those in school) have the proper training to profit from the evolving economy. That is people need to be able to read and write at a high level in English and they need to be able to do algebra, geometry and calculus well. The Bush administration had a good idea in raising reading levels. Unfortunately, some of the application failed. The Obama administration has abandoned even the best intentions of the Bush administration to raise reading levels and not replaced it with anything comparable Worse, now Obama is touting lowering wages as some sort of perverse advantage to attract manufacturers. Nothing could be farther from beneficial. As a manufacturer, I don't need to get into a wage race to the bottom. There is always someone cheaper to do the work somewhere. What I need is skilled people to do the jobs I do have. If I see 100 skilled machinists tomorrow, that's great. But, I need a skilled CNC router technician. It would be helpful if she could also work on a CNC lathe and maybe work on our network as well. How much that costs, I care, but not that much. I'm willing to pay a premium. Machinists, right now, I have all those I need. And they are really working on the computers to design the parts that the CNC machines will cut out.

    HTH
    Z

  4. The Following User Says Thank You to Zofia For This Useful Post:


  5. #4
    Veteran Member
    Joined
    Jul 2011
    Posts
    455
    Thanks
    53
    Thanked 175 Times in 109 Posts

    Default Re: New Report on US Competitiveness in the World Economy

    Could you tell me how the U.S. Govt. defines manufacturing?

    I have a hard time believing govt. stats..... And I would not put it past them to count people who place pickels on sandwiches..... as manufacturing something.
    The country has been looted.

  6. #5
    Veteran Member Krill_'s Avatar
    Joined
    Feb 2011
    Posts
    281
    Thanks
    180
    Thanked 270 Times in 123 Posts

    Default Re: New Report on US Competitiveness in the World Economy

    This section should be renamed "gloom and doom cave of economic sorrow".

  7. #6
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: New Report on US Competitiveness in the World Economy

    Krill you seem to be missing the point. Forewarned is forearmed. It's possible to make money no matter what direction the economy is moving ... you just need to be aware !

  8. #7
    Banned
    Joined
    Jan 2012
    Posts
    87
    Thanks
    51
    Thanked 14 Times in 11 Posts
    My Mood
    Chatty

    Default Re: New Report on US Competitiveness in the World Economy

    Quote Originally Posted by mikef View Post
    Could you tell me how the U.S. Govt. defines manufacturing?

    I have a hard time believing govt. stats..... And I would not put it past them to count people who place pickels on sandwiches..... as manufacturing something.
    I wouldn't believe anything anyone say's about manufacturing. The propaganda on both sides is a joke.

Similar Threads

  1. Replies: 4
    Last Post: 09-29-2011, 06:31 PM
  2. Replies: 13
    Last Post: 11-06-2010, 01:49 PM
  3. Replies: 0
    Last Post: 11-21-2007, 02:15 PM
  4. Replies: 0
    Last Post: 11-18-2007, 07:19 AM
  5. Replies: 6
    Last Post: 08-12-2007, 11:21 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •