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Manufacturing advocates decry lack of government support at Cleveland summit

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Reposted from Crains Cleveland Business

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Manufacturing advocates decry lack of government support at Cleveland summit

Ginger Christ | September 24, 2012 | Crains Cleveland Business

American manufacturing needs a fair shot if it’s going to succeed, industry representatives said this morning during a gathering called the Northeast Ohio Summit on the Revitalization of Manufacturing.

Elected officials and executives of manufacturing companies decried the way the U.S. government is handicapping industry by not reforming tax and trade policy and, above all, by not developing a national manufacturing strategy.

Michael Stumo, CEO of Coalition for a Prosperous America, a Washington, D.C.-based nonprofit that organized the event at Cuyahoga Community College’s Unified Technology Center, said the difficulty finding American-made products in stores illustrates a central problem for the United States: The country is running a trade deficit because it’s not aggressive in its manufacturing policy.

Other countries, including big rivals such as China and Germany, have national manufacturing strategies, which give manufacturers there an edge over their U.S. competitors, according to Bob Baugh, executive director of the AFL-CIO Industrial Union Council.

“They actually want manufacturing. It’s a policy in their countries. They want it. They want the jobs and the income that come of that,” Mr. Baugh said of China, Germany and other countries. “As far as I can tell, we do not. This country does not have a strategy. Or, to put it another way, it has a very perverse strategy of letting it go, of not paying attention, of not doing things to ensure that we have a strong industrial base in this country.”

At the federal level, the government at the very least should be addressing Chinese currency manipulation and enforcing trade laws, according to state Rep. Mike Dovilla, a Republican from Berea.

In allowing other countries to manipulate currency, the United States is letting others weaken its public policies on trade, said Pat Choate, an economist and author. As a result, the country will not be able to effectively compete globally, he said.

Charles Blum, president of IAS Group, a Washington, D.C.-based consulting firm, called for complete tax reform in the United States. He said this country should follow the lead of countries such as Australia and Canada by placing a consumption tax — a tax on money spent on goods and services — on imports.

Apart from political action, Jack Schron, president of Cleveland-based tooling components maker Jergens Inc., said there’s a need beyond supporting existing manufacturing: developing a new work force.

“We’ve gotten to the boiling point in U.S. manufacturing,” Mr. Schron said.

As baby boomers leave companies, so too does their knowledge, he said. Without a pipeline of new, skilled workers, manufacturing will be unable to grow, Mr. Schron said.

10 Responses to “Manufacturing advocates decry lack of government support at Cleveland summit”

  1. Mo says:

    No support from government? Not a surprise. All Washington is interested in doing is printing money out of thin air to fund un-needed wars, overseas military bases, offhsoring, consumption and finanical speculation. Washington is only interested in foreign policy and not economic policy. The gov’t wants offshoring to continue because it can export inflation. Thats why so many countries in the world today have hundreds of billions if not trillions in dollar reserve assets. Other countries knowing this like China adjust their monetary policies to encourage the US to offshore and transfer technology. But remember it takes two to tango, countries may implement policies to encourage offshoring but in some cases only after US multinationals have made it in their interest to do so like promises of tech transfers.

  2. Mo says:

    A first step to get manufacturing on track in USA is to for every state to create their own state bank where tax revenues get deposited into. Money collected in taxes within a state should be mostly recycled within that state to fund industrial activity. North Dakota has been doing this since 1919.

    Currently there is a movement for states to create their own banks based off the North Dakota mode. North Dakota was one of the only states to have regular budget surpluses for the last few years, a growing GDP, low unemployment, low foreclosure rates and low bankruptcy rates.

    For more info about the public banking movement see link below:
    http://publicbankinginstitute.org/state-info

  3. Joe Brooks says:

    Mr Baugh is correct; the Feds do not want manufacturing. It is not rocket science, if they wanted it, we would have it.

    Recently, a friend asked me what I would like to correct in the current version of American History:

    The ridiculous notion that the US was founded on International “free trade”.

    Just the opposite is true. The Founders promoted free trade and free markets, alright. They did this within our own borders, to promote US prosperity and nationalism.

    They protected business, employee interests, US goals, independence and US patriotism that way. We had large and strategic import tariffs, grants and subsidies from 1789 to 1970.

    Now we throw our American industrialists to the wolves, in favor of no nation Multi National corporate entities that go where the most economic protections and bribes are policy.

    150 nations have the Value Added Tax, large import tariffs, border duties, monetary tricks and quotas on imports, we have nothing. A 2.5% average import tariff is worthless, compared to up to 300%.

    At the end of the fiscal year in Red China, Germany, India, etc., the corporations are paid [bribed] whatever the VAT revenue was. In China this is 17%.

    This bribe to relocate to Communist China works this way; if you have revenue generating manufacturing in China you get a bribe of that amount kick backed to you EVERY year of 17% to keep your manufacturing there. This besides free electricity, free land, no pollution controls, 33 cent/hour employees.

    Bribery is a way of life in China, India, Viet Nam, Mexico, Brazil and many of our “competitors”. A zoning problem? Pay off the government and off you go. Protesters? We will imprison/hospitalize them for you.

    Where would you go to invest under current US trade law?

  4. William Ryan says:

    Seems to me with all the correctly stated comments from Mo and Bruce and a few others that manufacturing in this country is pretty much doomed because Washington does not see the value in it…I guess with all my life knowledge,experience and wisdom in manufacturing will just go to wast as I should now focus my energy to the service sector and become an expert sandwich maker or puppy walker…Thanks Washington for the support…

    • Mo says:

      Because Washington refuses to do anything meaningful; the states should and can get industrial activity back on track. A first step to get manufacturing on track in USA is to for every state, city or county to create their own bank where tax revenues get deposited into. Why deposit the money in a bank that lends mostly overseas or funds offshoring? Money collected in taxes within a state should be mostly recycled within that state to fund industrial activity. North Dakota has been doing this since 1919.

      Currently there is a movement for states to create their own banks based off the North Dakota model. North Dakota was one of the only states to have regular budget surpluses for the last few years, a growing GDP, low unemployment, low foreclosure rates and low bankruptcy rates. One important thing to note about the Bank of North Dakota is that the funds are insured by the state not the FDIC which causes the bank to lend conservatively for the real economy not for speculation.

      For more info about the public banking movement see link below:
      http://publicbankinginstitute.org/state-info

    • Bruce Bishop says:

      William,

      I gave up on manufacturing about ten years ago, and like you, I saw years of hard-earned knowledge and experience go down the drain.

      I don’t blame the “greedy” corporations, the “greedy” unions, the “greedy” stock-traders, or the “greedy” big-box stores. I do blame our GREEDY GOVERNMENT. Through a combination of negligence, incompetence and corruption, our government has allowed our engine of wealth creation, manufacturing, to be stolen by Communist China.

      Thanks to CPA and a few others, I am beginning to see a glimmer of hope that manufacturing could return to this country. I am also enthusiastic about Warren Buffett’s 2003 recommendation that Congress impose “balanced trade.” (You can Google “balanced trade.”) There seems to be a growing awareness of balanced trade on this and other web sites. In my opinion, it is the only realistic solution to the problem. I do not subscribe to the “currency manipulation” arguments for two reasons: 1. A 40% currency differential is insignificant compared to the labor differential. 2. There isn’t a damned thing we can do about China manipulating its currency — and the politicians who mumble about it know this.

      • Tom T. says:

        I think we are all seeing where China gets its cheap labor. The Foxconn saga continues to play out. We have always had overseas (and sometimes in New York–slavery in the South historically) sweat shops. Is it morally incorrect to hold companies and management who use these sweatshops to maximize profits? I think it essential and necessary to hold them accountable. As public policy, our government should know that these type of operations compete with outfits that follow the rules of human decency of manufacturing in our country.

        I don’t think we go far enough from a government stand point and some of these managers maximizing profits in this way should be held criminally accountable here in the U.S.

        These acts of inhumanity exist because the benefits outweigh the costs. Adjusting that formula will change the results. If the managers of these companies had to endure the conditions they put their workers in, they MIGHT develop empathy. In any case, people in the U.S. should never have to compete with these conditions and our government is failing in its responsibility to regulate trade in this manner. It often falls to the outrage that comes when people see how the world is operating in the name of greed. The sad thing is that much of it is unnecessary and consumers, when aware of the abuses, are against such exploitation.

        One of the intellectual reasons for “free trade” is that it will increase the standard of living for other people around the world by giving them work through access to markets. It could be argued that this is not the case and that the fruits of labor are being harvested by those other than the laborers. In the case of Chinese industry, it is party bosses and ultimately the Chinese government. This totally dismantles the argument that free trade increases the wealth of all participants. Incidents like Foxconn and the Chinese system show how utterly ridiculous the assumptions underlying free trade really are yet these arguments are still part of the underlying assumptions of free trade. The reality starkly contrasts with the theory.

        Our US Trade Representative is either totally incompetent of these facts or so bureaucratically challenged as to be a liability to the country instead of an asset. I guess that can be said about everyone in the chain of responsibility. It is so bad that both presidential candidates are having to address it even as their parties have been complicit in betraying the interests of the American public and humanity as a whole.

        Tom T.

        • Bruce Bishop says:

          Tom,

          On page 22 of Ian Fletcher’s book, “The Conservative Case Against Free Trade,” he states: “Now the first thing to remember about this is that what we have today under the name “free trade” isn’t free trade at all. It’s free on America’s part, because our market is about 98 percent open to the world. But in the other direction, it’s not. It’s mostly mercantilism: gaming the system. So even if the theoretical case for free trade were valid, it wouldn’t apply to our present circumstances.

          Paul Craig Roberts, on page 155 of “How The Economy Was Lost,” says: “The offshoring of American jobs is the antithesis of free trade.” “Jobs offshoring is an activity in pursuit of the lowest factor cost–an activity that David Ricardo, the originator of the free trade theory, described as the betrayal of one’s own country in pursuit of an ‘absolute advantage.’”

          Bruce

          • Tom T. says:

            Yes, Bruce, I totally agree. We have basically allowed our jobs to be sold around the world and now we are seeing the consequences.

            Tom T.

  5. Mo says:

    The reason Washington has actually encouraged offshoring to countries like China is because these countries are a dumping ground for dollars in which money is printed in exchange for real goods. These countries allow Washington to export inflation. The cost to export inflation may be the transfer of technology or capital consumption but as long as price indexes can stay artifically lower for a while thats all that matters in the eyes of Washington.

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