Categorized | China, Trade

Bold plan needed to revive American industry


Reposted from the Dayton Daily News


Bold plan needed to revive American industry

Steve Bennish | October 5, 2012 | Dayton Daily News

Local and national business authorities are giving both President Barack Obama and Republican challenger Mitt Romney low marks for failing to spell out how they plan to boost the industrial core and address the nation’s trade and budget deficits.

“The great frustration of this election is neither candidate or party is convincingly laying the way forward,” said Charles Blum, who spent 17 years as a State Department diplomat and a trade negotiator in the Office of the U.S. Trade Representative. “There is labeling, name-calling, the advertising of half-truths if not outright distortions, but what is lacking from everybody is how we get out of this.”

The local business community wants to see “a favorable tax policy, and favorable trade policies, less regulation on business that lets them operate free of government regulations,” said Chris Kershner, vice president of public policy for the Dayton Area Chamber of Commerce, which does not make presidential endorsements.

Bill Lukens, CEO and owner of manufacturer Stillwater Technologies in Troy, said the U.S. is losing to other nations by not focusing on the “entire package” of what’s needed to foster domestic industry.

For example, educational institutions seem to lag in directing students toward advancing manufacturing technology while hundreds of thousands of jobs are going unfilled for lack of qualified applicants, he said.

“We are in the third industrial revolution now,” Lukens said. “We are competing with the rest of the world for who will be the poster child for the 21st century. We need to get our heads on straight and realize what competition is out there.”

Longtime national critics of the nation’s economic and trade policies agree Obama and Romney should offer more comprehensive national strategic policy and a call to action to improve U.S. prospects..Neither man is calling for a national declaration, nor offering anything in the way of an ambitious or inspiring “moon shot” effort, those interviewed said.

Suggested solutions vary, but there’s agreement among many businesspeople that balancing an annual international trade deficit of $600 billion is two-pronged. The U.S. must produce more domestic energy and revive a manufacturing base for home market consumption, creating jobs in the process, they say. Half the trade deficit is imported oil, the other half are manufactured goods from China. In a decade, the cumulative trade deficit is $5.85 trillion.

Blum, who now runs IAS, a trade consulting group, wants something on the order of a national mission to balance trade. He said top neglected issues are countering foreign currency manipulation and border taxes, or value added taxes, that 151 other nations play to stifle United States exports while boosting their own.

“We are pricing ourselves out of foreign markets,” he said.

To Blum, the U.S. is working problems piecemeal, without a real program or plan, and the proposals from Obama and Romney are too incremental and low powered to have much real impact. Multinational corporations that benefit from offshoring are a powerful counterweight to real reform, he added.

Rick Little, president of contract manufacturer Starwin Industries in Kettering, said that both candidates “say we will get tough on China. Everyone has talked about it for 20 years and I haven’t seen anything come along that shows any of that. We do need a national strategy.”

Until then, Blum said, breakthrough inventions might be made here, but they won’t go into production here - a key to job creation.

Richard A. D’Aveni is professor of strategy at the Tuck School of Business at Dartmouth College and the author of the recently-published “Strategic Capitalism,” his fifth book, published by McGraw-Hill.

Winning what he calls the “capitalist Cold War” can occur by going on the offensive against predatory trade practices by other nations, penalizing violations with more aggressive tactics.

“Free trade and open trade and free markets are being undermined by the way the Chinese are violating rules,” he said. “They have more to lose in this process. I would put as many arrows into it as possible.”

Ohio has a lot riding on the outcome, and Obama and Romney know that.

One of 10 new manufacturing jobs created in the U.S. since 2009 was in Ohio, or about 50,000. The widely-reported state unemployment rate that’s now 7.2 percent roughly doubles when discouraged workers and the underemployed are added. Ohio lost 3,500 factories in a decade and 600,000 jobs during the job loss peak.

Obama chose Toledo and Cincinnati for speeches announcing World Trade Organization complaints of China cheating related to autos and auto parts. In August, he announced the creation of the National Additive Manufacturing Innovation Institute in Youngstown, a potentially transformative technology.

Romney has ripped Obama for declining to declare China a currency manipulator that keeps its exports artificially cheap.

Robert Atkinson, the founder and president of the Information Technology and Innovation Foundation think-tank, warns the U.S. is headed for British-style industrial decline without a new and strategic global approach. He favors the U.S. taking an international role to assemble a power bloc of exporting industrial nations to battle abusive trade tactics by countries such as China, India and Brazil.

Alan Tonelson, research fellow at the U.S. Business & Industrial Council, a group representing small and medium size manufacturers, said it’s a mistake to place too much hope on a recent trickle of manufacturers who’ve moved jobs back to the U.S. Serious trade reform is needed to assure the trickle becomes a stream, he said.

“Since economic recovery began, we had a manufacturing rebound. But since spring, that has been running out of gas,” Tonelson said.



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