The Factory Factor: Why Outsourcing and ‘Made in America’ Could Decide this Election

Scott Paul

Executive Director, Alliance for American Manufacturing

American manufacturing is like apple pie to American voters: we love it and want more of it regardless of our politics, race, gender, income, or hometown. If you live in a swing state like Ohio, you already know that, because both presidential candidates have flooded the airwaves with ads labeling the other guy as the “outsourcer-in-chief.”

Beneath the recent accusations and counter-accusations on outsourcing, there is a simple truth: citizens believe manufacturing is central to our nation’s economic health, that America is in economic decline, that outsourcing to China is largely responsible for this condition, and they want their elected leaders to do something bold about it.

Voters of all political stripes are far ahead of the debate inside Washington, D.C. More importantly, perhaps, is that nearly all Americans — not only working-class Ohioans — share this view.

So don’t be surprised if both campaigns escalate the rhetoric and attacks on shipping jobs overseas in the coming weeks, in part to mask their own shortcomings.

That’s because no one is a knight in shining Made in America armor when it comes to this issue. Mitt Romney (rightly) criticizes President Obama for not labeling China as a currency manipulator, but glosses over the fact that Republican leaders in Congress are blocking a bipartisan currency bill that would pass overwhelmingly. Romney has also been on the wrong side of Administration decisions to defend American tire workers against China’s cheating and successfully rescue Chrysler and General Motors.

The GOP hypocritically accuses Obama of sending stimulus dollars overseas, while Republican Senators tried to block Buy America requirements for stimulus spending.

The fact is, accusing your political opponent of shipping jobs overseas is now an established American campaign tradition. What is missing is an honest debate about what could actually be done to promote American manufacturing jobs. Voters are ready for such a dialogue.

Read more of this post

This Column Was 100% Made in America

A Hyundai ad that ran during Super Bowl coverage showed workers from the company's plant in Montgomery, Ala.

A Hyundai ad that ran during Super Bowl coverage showed workers from the company's plant in Montgomery, Ala.

By   Published: February 15, 2012

BLUE-COLLAR workers in fields like manufacturing — particularly when they make products on American soil — are again becoming a favorite subject for white-collar workers on Madison Avenue.

The trend was born of the economic worries that followed the financial crisis in 2008. Recently, it is gaining steam — appropriate, since the ads often use blasts of steam to signal something is being built — with proposals in Washington to offer incentives to encourage the location or relocation of factories in the United States.

“We continue to see very heavy emotional response to anything that would leverage against the bad economy,” said Robert Passikoff, president at Brand Keys, a brand and customer-loyalty consulting company in New York. Read more of this post

Come On, China, Buy Our Stuff!

A Gap Inc. store in Shanghai, China.

A Gap Inc. store in Shanghai, China.

By NYT ADAM DAVIDSON    Published: January 25, 2012

The first time I visited China, in 2005, an American businessman living there told me that the country was so huge and was changing so fast that everything you heard about it was true, and so was the opposite. That still seems to be the case. China is the fastest-growing consumer market in the world, and American companies have made billions there. At the same time, Chinese consumers aren’t spending nearly as much as American companies had hoped. China has simultaneously become the greatest boon and the biggest disappointment.

It wasn’t supposed to be this way. In 2000, the United States forged its current economic relationship with China by permanently granting it most-favored-nation trade status and, eventually, helping the country enter the World Trade Organization. The unspoken deal, though, went something like this: China could make a lot of cheap goods, which would benefit U.S. consumers, even if it cost the country countless low-end manufacturing jobs. And rather than, say, fight for an extra bit of market share in Chicago, American multinationals could offset any losses because of competition by entering a country with more than a billion people — including the fastest-growing middle class in history — just about to buy their first refrigerators, TVs and cars. It was as if the United States added a magical 51st state, one that was bigger and grew faster than all the others. We would all be better off.

More than a decade later, many are waiting for the payoff. Certainly, lots of American companies have made money, but many actual workers have paid a real price. What went wrong? In part, American businesses assumed that a wealthier China would look like, well, America, says Paul French, a longtime Shanghai-based analyst with Access Asia-Mintel. He notes that Chinese consumers have spent far less than expected, and the money they do spend is less likely to be spent on American goods. Read more of this post

Ford Salaried Workers to Get Raises & Bonuses

Associated Press – Thu, Jan 19, 2012

DEARBORN, Mich. (AP) — Ford Motor Co. is showing confidence in its turnaround and the U.S. economy by giving pay raises and bonuses to 20,000 white-collar workers mainly in the U.S. and Canada.

Workers got letters from President of the Americas Mark Fields last week saying they’ll get 2.7 percent base pay increases on April 1. They’ll also get bonuses this year based on their individual performances, spokeswoman Marcey Evans said.

Ford made $6.6 billion in the first three quarters of last year. It will report fourth-quarter earnings later this month. The company’s U.S. sales rose 11 percent last year. It has made a huge turnaround since 2006, when it lost $12.6 billion and had to borrow more than $20 billion to stay in business.

Salaried workers didn’t get pay raises last year, but many were granted performance bonuses. They got only merit pay in 2010 and no raises or bonuses were given in 2009, Evans said.

The raises are necessary to keep Ford’s pay competitive with other Fortune 100 companies, Evans said. Each year, Ford studies pay at competitors and other companies, she said.

Ford also raised its matching contribution to the salaried employees’ 401(k) retirement plan. The company now pays 60 cents for every dollar an employee contributes, up to 5 percent of their salary. This year the contribution will rise to 80 cents, Evans said.

She would not say how much the raises, bonuses and additional contributions will cost the company.

The raises rankled some United Auto Workers members because they did not get annual pay raises in a new four-year contract negotiated with the company last year. During the contract talks, the company told union negotiators that it didn’t want to give raises to avoid recurring annual expenses.

But the workers got signing bonuses and lump-sum profit sharing payments that are worth at least $16,700 over the four-year contract. Workers at General Motors Co. and Chrysler Group LLC agreed to similar contracts with payments smaller than those given to Ford workers.

“I’m disappointed to hear that,” Mark Caruso, president of a UAW local at a factory in Saline, Mich., said of the white-collar raises. Caruso said morale already is bad among workers at his plant west of Detroit. A Ford holding company is trying to sell the factory to an auto parts supplier.

A UAW spokeswoman in Detroit said Thursday that she would check with her superiors to see if the union will comment on the white-collar raises.

The pay raise announcement was reported early Thursday by the Detroit Free Press.

Ford compensation records obtained by The Associated Press last year show that UAW-represented hourly workers have seen larger increases in pay and benefits over the last decade than many white-collar workers.

The UAW, according to the records, was able to protect longtime factory workers from changes to health care, overtime and other benefit cuts that salaried workers were forced to take. The average hourly worker at Ford received wages, benefits and overtime totaling $109,020 in 2010, up 17 percent from 1999. But the average salaried factory supervisor made $99,760 in wages and benefits, up just 2 percent in the same period, the records showed.

State Of The Union Speech Text 2012

Below, Obama’s prepared remarks as released by the White House.

As Prepared for Delivery –Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought — and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home. Read more of this post

The State of the Union 2012

Watch it here tonight at 9PM ET.  State of The Union Address

“On Tuesday night, I’m going to talk about how we’ll get there. American Manufacturing – with more good jobs and more products stamped with Made in America. American Energy – fueled by homegrown and alternative energy sources. Skills for American Workers – getting people the education and training they need so they’re ready to take on the jobs of today and tomorrow. And most importantly, a Return to American Values – of fairness for all, and responsibility from all.” – POTUS

Kudos to President Obama for promoting manufacturing.  As Scott Paul said in a recent Huffington Post op-ed “now is the ideal time for the president to promote manufacturing: “If the president really wants to see “Made in America” stamped on products shipped all over the world, he needs to be bold. We’ll be watching. And so will voters.”

Will you be watching?

Dismantling Detroit

Dismantling Detroit

Dismantling Detroit

Dismantling Detroit: The filmmakers Heidi Ewing and Rachel Grady look at young men who salvage scrap metal from Detroit’s derelict buildings, set against the backdrop of globalization.  Check out their video here.

By HEIDI EWING and RACHEL GRADY Published: January 18, 2012

We chose to focus our cameras on Detroit out of a gut feeling that this city — often heralded as the birthplace of the middle class — may well be a harbinger of things to come for the rest of the country.

Detroit lost 25 percent of its population between 2000 and 2010, and now, broke, finds itself on the verge of a possible state takeover. Yet visual reminders of a better time both haunt and anoint the residents here. The past is achingly present in Detroit, and the way its citizens interact with the hulking, physical remnants of yesterday is striking.

A few years ago, there was a rash of power outages in Detroit, caused by people illegally cutting down live telephone wires to get to the valuable copper coils inside. The Detroit police created a copper theft task force to deter the so-called “scrappers,” young men who case old buildings for valuable metals, troll cemeteries to steal copper grave plates and risk their lives to squeeze any last dollar out of the industrial detritus.   Read more of this post

Small Parts Suppliers Fight to Survive

Wall Street Journal

Wall Street Journal

“We’re just fighting to stay alive,” said Tim Knisley, PMT’s chief financial officer.

The high-profile bankruptcies of Chrysler, General Motors Corp. and a few big suppliers have overshadowed the financial peril now facing the hundreds of small subsuppliers whose fate is also tied into the auto industry.

Yet the woes at PMT are being replicated across the country. And the situation could get worse in the weeks ahead if a two-month shutdown of most GM plants goes forward as planned.

Since these smaller players don’t get financial help from the federal government, many could follow GM and Chrysler into bankruptcy court.

Kimberly Rodriguez, who heads the automotive practice at consulting firm Grant Thornton LLP, said these smaller, Tier 2 and Tier 3 suppliers are in distress. “There’s no support going their way.”

Most small suppliers have already made deep cuts in order to stay in business. But at least a dozen small suppliers have liquidated so far this year, according to Craig Fitzgerald, a partner at consulting firm Plante & Moran PLLC.

The Treasury Department’s Auto Supplier Support Program allocated $5 billion to insure the receivables of direct suppliers doing business with GM and Chrysler. But that aid has yet to have a big effect on those suppliers’ vendors, like PMT.

Mr. Knisley estimated that PMT won’t make it past the end of this month if business doesn’t pick up soon.

PMT a year ago employed 200 people, was running at nearly 90% capacity and planning on a “big growth year,” Mr. Knisley said. It spent millions of dollars on a new press and on refurbishing one of its two old ones. Now PMT is running at just 30%-40% of capacity and one press is idle. Payroll has tumbled to around 120 people.

The company last year had $40 million in revenue and projected $59 million in revenue for this year. But Mr. Knisley since has cut his 2009 sales forecast to no more than $25 million.

The most immediate problem for most small suppliers is cash.

“Everybody in our situation right now is managing for cash flow, not for profit,” said Ralph Hardt, president of the North American unit of Switzerland’s Feintool International Holding. Feintool’s U.S. employment has dropped to 260 people from a peak of around 400 in late 2007. Its Cincinnati-based operations stamp metal parts for doors, seats, engines and transmissions that go into vehicles made by GM, Honda Motor Co. and Ford Motor Co.

At Termax Corp., President Bill Smith said he is confident his company’s balance sheet is strong enough to survive until production climbs, but he is worried about some of his suppliers. One of the Lake Zurich, Ill., company’s suppliers coats fasteners that Termax makes for Ford vehicle interiors. Mr. Smith said he isn’t sure the plater, which he declined to name, will survive. If it doesn’t, he will have to go to Canada or Europe to get the plating done at higher cost.

PMT, meanwhile, is getting assistance from customers. One is the U.S. unit of Germany’s Mahle Group.

PMT ships pistons 38 miles southwest from its Surgoinsville facility to a Mahle plant in Morristown, Tenn. “They determined us to be the key strategic supplier” and shifted business to PMT, said Mr. Knisley, the finance chief.

And Mr. Knisley said Metaldyne is treating PMT as an essential supplier, giving it some priority as a bankruptcy creditor. He said Metaldyne told him that PMT could expect payment of the $844,180 Metaldyne owes in 20 days.

He hopes the company can last that long. “We’re holding on with bare knuckles.”

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Printed in The Wall Street Journal, page B2

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