TradeReform.org - Truthiness on trade

Truthiness on trade

Written by Stumo

Wednesday, 18 June 2008

Truthiness is a word that U.S. television comedian Stephen Colbert popularized in 2005 as a satirical term to describe things that a person claims to know intuitively or "from the gut" without regard to evidence, logic, intellectual examination, or facts.

What is the truthiness that begets my presentation to you of the definition of truthiness? The free trader truthiness on trade. Brought to you today by Deloitte (fka Deloitte and Touche).

They say American manufacturers are optimistic. An email commenter said this about the Deloitte survey, performed in coordination with... you guessed it... the National Association of Manufacturers - the home of manufacturing truthiness.

Right at the very end of the article, the bias of the authors is revealed when they indicate that "The simplistic way to view manufacturing is to look only where production is located." Thus, it is okay to relocate production to allegedly low cost centers like China and India and still consider yourself a U.S. manufacturer if you leave other non-production operations here. And I am willing to bet that Deloitte has services to help U.S. producers do just that . . .

United States is No. 1 as Manufacturers Plan to Expand, New Deloitte Survey Shows

North American Manufacturers Are Bullish on NAFTA as Contributing to   Competitiveness; Production Remains Achilles' Heel as Companies Compete Globally

    WASHINGTON, June 18 /PRNewswire/ -- Despite intense global competition, manufacturers consider North America the most desirable region for expansion over the next three years, according to a new survey released today by Deloitte.

    The survey, Made in North America, targeted top-tier executives of manufacturing companies with North American operations. Results showed that these companies have expansion plans for a variety of operations, including sales, service, research and development, and sourcing. While expansion plans are global, North America -- especially the United States – was cited as the No. 1 likely location in the short term. Most surprisingly, these manufacturers seem to have a renewed emphasis on North America as the home for actual production facilities, hoping to turn around an area that has been lagging.

    In terms of the executives' agendas for expansion, the survey found that sales and services topped the list with 76 percent planning to expand sales in the United States, 58 percent in Canada and 67 percent in Mexico. Sourcing of raw materials and parts (50 percent in China, 49 percent in the United States, and 43 percent in Mexico) and production (44 percent in the United States, 37 percent in Mexico and 37 percent in China) rounded out the top three priorities.

    Overall, the vast majority of respondents said North America will not lose competitive ground in those areas over the next five years. And a significant number said they believe North America will become even more competitive by 2012 in sales and marketing (45 percent), information technology (41 percent), customer service (37 percent), R&D/engineering (36 percent) and finance/accounting (34 percent). A small percentage predicted that North America will be less competitive globally in these areas by 2012, with the balance being neutral.

    "While globalization will continue and some manufacturing jobs will follow, North America is showing significant resiliency, based on the plans of these executives," said Craig Giffi, a Deloitte LLP vice chairman and the U.S. Consumer & Industrial Products industry leader.

    The survey also shed new light on how North American manufacturers view free-trade agreements. Overall, manufacturers paint a positive picture of their experiences with the North American Free Trade Agreement (NAFTA) after almost 15 years, according to survey respondents.

    In fact, North American manufacturers said they are confident about their competitive position in the global marketplace, and expect that to remain true for the next several years. The only dark spot is production capability. Despite plans to expand in North America in the short term, survey respondents painted a gloomy picture of this region's ability to compete over the long run with lower-cost locations for production, especially Asia.

    More than half of survey respondents (61 percent) said they expect North America to become even less competitive globally as a site for production by 2012. The key barriers to making production competitive globally were seen as labor cost (cited by 71 percent), tax policy (66 percent), work rules (66 percent), lack of availability of skilled labor (51 percent) and costs of raw materials and energy (56 percent). Not surprisingly, these were the issues most frequently cited by executives surveyed as areas that governments should address as matters of public policy.

    By contrast, China and India were seen by executives surveyed as becoming increasingly competitive as locations for production facilities. For example, 37 percent of respondents said they plan to expand in China in the next three years, and 24 percent in India.

    As production shifts, manufacturers indicated they will move other operations as well. For example, more than 48 percent of respondents said they plan to expand sales operations in China over the next three years, and 34 percent said they plan to do the same in India. Additionally, 27 percent plan service operations expansion in China and 23 percent plan to do so in India.

    "While the focus on expanding both production capacity and sales and service in North America, China and India may seem like a contradiction," says Giffi, "it is evidence of the fact that to compete in the future, manufacturers need to be able to grow in all major markets around the world."

    Giffi added, "The simplistic way to view manufacturing is to look only where production is located. It's clear that a more accurate way to measure the economic impact of these companies is to look at where all operations are located, including sourcing, research and development, distribution, finance, marketing, and all of the other functions necessary for a company to thrive. In most cases, executives are telling us that North America provides a competitive business environment for most of these activities."

    About the Survey

    Deloitte, Deloitte Canada and Deloitte Mexico, with the cooperation of the National Association of Manufacturers (NAM), The Manufacturing Institute, and Canadian Manufacturers & Exporters (CME), surveyed 321 executives of leading North American manufacturing enterprises across product sectors to obtain their perspectives on their current and expected future competitiveness. The majority of companies represented in the survey (45 percent) are based in the United States. The survey responses have been summarized and represent the opinions of the executive management of these firms. No supplementary research has been added.

    For more information and to download the complete survey results please go to http://www.deloitte.com/us/NAFTA.

    About Deloitte

    As used in this document, "Deloitte" means Deloitte LLP. Please see http://www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

    Contact:    Allyson McKenney               Liz Torrez
                Public Relations               Hill & Knowlton
                Deloitte                       +1 312 255 3036
                +1 203 708 4406                This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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SOURCE Deloitte