WASHINGTON (Reuters) – A Chinese company’s attempt to take over government-backed battery maker A123 raises serious national security concerns, a bipartisan group of lawmakers said this week, adding to growing congressional opposition to the deal.
China’s Wanxiang Group Corp is currently competing with U.S.-based Johnson Controls Inc to buy bankrupt A123, which makes lithium ion batteries for electric cars.
The government must ensure that any sale of A123’s technology, which has also been used by the military and to support the U.S. electrical grid, does not threaten domestic security, the senators said in letter to Treasury Secretary Timothy Geithner, Energy Secretary Steven Chu and other top cabinet officials.
By Howard Wial @CNNMoney February 23, 2012: 5:34 AM ET
Howard Wial is a fellow for the Brookings Institution Metropolitan Policy Program.
At first glance, manufacturing jobs would appear to be a dying breed.
The United States lost 6 million manufacturing jobs between early 2001 and late 2009. And despite small gains during the last two years, the trend in manufacturing employment for the last 30 years has been downward.
That has led some to argue that long-term job loss in the industry is inevitable. But our research shows otherwise.
There are two common versions of the “inevitability” argument. One holds that U.S. manufacturing wages are too high to be internationally competitive. The other maintains that manufacturing job losses are the result of productivity growth. Both arguments are wrong. Continue reading “How to Save U.S. Manufacturing Jobs”→
The grand theme I want to put on the table is the concept of onshoring, sometimes called reshoring, which is the bringing back of U.S. jobs from overseas supply chains.
U.S. businesses have started to realize that while workers in far away lands garner miniscule wages compared to their U.S. counterparts, having operations outside of the country can be a strategic disadvantage. The speed and structure in which information is consumed has caused U.S. consumers to demand top quality products and to want to buy them whenever they please.
Having a manufacturing plant domestically aids in the quicker movement of goods from design table to sales floor. Furniture maker Ethan Allen is great example of a manufacturer producing most of its products in the U.S. and doing customization for clients, setting itself apart from price-point focused competitors.
Corporate managers are simply getting over their infatuation with cheap international labor and analyzing the total costs of doing business in the U.S. compared to say, China or India.
There is a dollop of icing on the cake here as well. The topic of focusing on onshoring to boost employment levels seems to be an area of agreement between bickering Republicans and Democrats. Republican presidential hopeful Rick Santorum, for example, wants to zero out the U.S. corporate tax for manufacturers.
Anytime the major political parties agree on anything, even the slight thing, it’s cause to sit up and take notice from an investment standpoint. The Donkeys and Elephants may be a little apart on how to precisely shepherd along the corporate onshoring interest, but at least they are talking the same language. It’s high time they do find common ground if the following is to be reversed:
Manufacturing employment has fallen by approximately 37% since 1980.
According to a survey done by the Manufacturing Institute and Deloitte, some 600,000 manufacturing jobs are currently unfilled due to a mismatch between job requirements and experience.
I have read a fair number of columns bantering about onshoring. Is it overhyped? Do we really need more jobs in the service sector U.S. economy? The debates are almost endless. Unfortunately, though, I have failed to stumble upon investment strategies to profit from onshoring, which has already begun to a certain extent, and could likely gain steam in the years ahead.
Buy-and-hold investors, this should be right in your wheelhouse: a highly probable future event to build positions around in companies with durable competitive advantages.
A few names that come to mind:
Waste Management: Owns 260 plus landfills and is the largest waste management business in the U.S. More manufacturing production means more waste to be piled into the company’s green bins.
ADP: Benefits in two manners. First, workers are hired to run new domestic manufacturing plants (hopefully by people that used the downturn to attain new technological skills). Second, there should be a trickle down effect in the overall employment sector via a ramp in higher paying manufacturing jobs.
Dunkin Brands: “America Runs on Dunkin” as the brand’s slogan goes. The company’s moat is not as wide as an ADP or Waste Management, but more U.S. manufacturers should mean more egg sandwiches (which Starbucks does not do superbly) and coffee. Store penetration is increasing in areas of the country that are manufacturing oriented.
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.
MILWAUKEE (Reuters) – President Barack Obama kept up his attack on Chinese trade practices during a campaign-style visit on Wednesday to a Midwest factory, where his call to bring jobs back home was intended to resonate with voters in an election year.
The day after meeting China’s leader-in-waiting, Vice President Xi Jinping, at the White House, Obama cited America’s chief rival a number of times in a speech to promote the potential of “insourcing” jobs back to America from overseas.
“I will not stand by when our competitors don’t play by the rules,” he told workers at Master Lock, a company he lauded in his State of the Union address last month for having moved back about 100 union jobs from China since mid-2010.
“That’s why I directed my administration to create a Trade Enforcement Unit with one job: investigating unfair trade practices in countries like China,” he said in prepared remarks.
Obama took a firm line over trade on Tuesday during his Oval Office meeting with Xi, who is in line to assume the Chinese presidency in March 2013.
This tough stance should appeal to voters in election battleground states like Wisconsin, where Beijing is often blamed for killing American jobs.
Republican presidential hopeful Mitt Romney, a former private equity executive, accuses Obama of being too soft on China and lacking the executive or other leadership experience to steer the U.S. economy toward lasting recovery.
Master Lock, a unit of Fortune Brands Home & Security, is the world’s largest manufacturer of padlocks and related products to secure homes, cars and bicycles. Its story is a positive one for Obama, who must tout his economic leadership to secure another White House term.
The firm says its Milwaukee plant is running at full capacity for the first time in 15 years – an example the White House is eager to replicate as the November 6 election nears.
“They’re deciding that if the cost of doing business here is no longer much different than the cost of doing business in countries like China, they’d rather place their bets on America,” said Obama.
It was his first stop in a three day campaign-style swing when the Democrat will raise funds in California and stop at aircraft manufacturer Boeing in Washington state.
How to cope with a rising China – and compete against cheap Chinese exports – is one of the toughest challenges for Obama to navigate as the election approaches, particularly as opinion polls showing rising U.S. voter frustration with the Asian economic powerhouse.
(Reporting By Laura MacInnis; Editing by Peter Cooney and Cynthia Osterman)
David Paul – President, Fiscal Strategies Group – Posted: 02/13/2012 8:30 am
Apple aficionados suffered a blow a couple of weeks ago. All of those beautiful products, it turns out, are the product of an industrial complex that is nothing if not one step removed from slave labor.
But of course there is nothing new here. Walmart has long prospered as a company that found ways to drive down the cost of stuff that Americans want. And China has long been the place where companies to go to drive down cost.
For several decades, dating back to the post World War II years, relatively unfettered access to the American consumer has been the means for pulling Asian workers out of deep poverty. Japan emerged as an industrial colossus under the tutelage of Edward Deming. The Asian tigers came next. Vietnam and Sri Lanka have nibbled around the edges, while China embraced the export-led economic development model under Deng Xiaoping.
By Parija Kavilanz @CNNMoney February 13, 2012: 11:51 AM ET
NEW YORK (CNNMoney) — U.S. small businesses that initially rushed to Chinese factories to get their products made are now dumping them for American manufacturers.
And the shift is gaining traction, said industry experts who match U.S. small companies with domestic firms.
Mitch Free, the founder and CEO of Atlanta-based MFG.com, said his company has seen a 15% uptick in inquiries since 2009 from U.S. firms looking for American factories to replace their Chinese suppliers.
MFG.com is one of the largest online directories used by businesses to find domestic manufacturers.
One reason behind the trend is that “Chinese manufacturing has become expensive,” Free explained.
Another is that the U.S. economy is still uncertain. Most small businesses are forced to order large quantities to justify costs when dealing with companies overseas, he said. And that’s a risky move if American consumers are not splurging yet.
Manufacturers closer to home allow small businesses to order smaller batches, which means less of their money is tied up if their inventory is unsold, he said.
Revive Made in USA? Easier said than done
WindStream Technologies knows well the value of manufacturing in the United States.
In December 2010, the startup selected a Chinese factory to make 35 prototypes of its wind turbines, because they wanted them “quickly and cheaply,” said David Dingman, Windstream’s lead mechanical engineer.
It was a disaster. “The prototypes that the Chinese manufacturer sent back to us were junk,” said Dingman. “There were parts that were put upside down. Other parts were poor quality. Some even fell off.”
WindStream decided not to have the final products made in China.
The company was able to snag U.S. manufacturers with the help of MFG.com.
And last month, it started mass producing its small wind turbines for home use at its new 45,000-square-foot manufacturing facility in North Vernon, Ind. The company employs 30 workers and is hoping to ramp up to 100, if it lands a deal to sell the turbines at a mass retailer, said Dingman.
WindStream now has its turbine covers made in Chicago, while some metal parts are produced in Ohio.
Some of the turbines parts are still made in China, simply because the raw materials to make them don’t exist in the United States, said Dingham. But “the Midwest proved to be terrific for us,” he said.
Indeed. WindStream produces its turbines at a 10% lower cost per unit compared to what the company would have paid in China, thanks to its American suppliers that provide competitive prices and the elimination of overseas shipping and travel costs.
Del Mar, Calif., entrepreneur and inventor Julie Zizka actually liked the way her tote bags looked after a Chinese manufacturer produced 5,000 of them for her in 2008.
But she still was not a fan of having her manufacturing done overseas. She had concerns about production delays and fretted about how the extensive amount of transportation used was hurting the environment. What’s more, she noticed that her customers were preferring products that were made in the United States.
By 2011, she was looking for a U.S. manufacturer to produce her “Tote Buddy,” a colorful tote for storing reusable plastic bags.
She came across one after searching online and seeing ads for Bristol Custom Solutions, which heavily advertises on MacRAE’s Blue Book.
MacRAE’s has seen a pickup in inquiries — just like Zizka’s — from companies wanting to replace Chinese suppliers with American ones, said Lori Meloche, MacRAE’s vice president of marketing.
The directory — first published in the United States in 1893 as a “blue-colored book” — has since evolved into a website with more than 1.2 million North American industrial manufacturers, which averages 1.5 million users monthly.
What small firms want from Obama’s manufacturing plan
Zizka connected with Bristol, a 26-year-old, Tennessee-based manufacturer, best-known for making secure locking bags used by banks and the federal government to transport cash and other valuables.
“People have been contacting us all the time lately, telling us they don’t want to produce their products in China,” said Brandon Cantrell, Bristol’s general manager.
When Zizka sent Bristol a sample of the tote, the company redesigned it and brought down some of her costs, said Cantrell.
Today, Bristol is making 1,000 new Tote Buddy bags for sale this spring. For Zizka, the unit price for one of her Tote Buddy bags made in Cantrell’s factory is still 170% higher than for one made in the Chinese factory, said Cantrell.
But that doesn’t bother Zizka.
“My customers want my bag made in the U.S.,” she said, “I’m willing to absorb that cost if I can control the quality, get them to my customers faster and help the environment as well.”