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The Devolution of the United States Manufacturing Base

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.S. Commerce Secretary Gary Locke issued the following statement:

 

While we are seeing signs that the worst part of the recent economic downturn is behind us, we still face challenges to resuscitate domestic manufacturing and expand U.S. exports,” Locke said. “The Commerce Department is using every tool at its disposal to help make the products and services of American companies available to people in markets around the world.

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Guest Norris

For the first time since the Great Depression, we have endured a decade with no private sector employment growth. In July 1999, there were 109 million Americans with jobs in the private sector; the comparable figure for July 2009 was ... 109 million. By contrast, at the depth of the 1981-82 recession, private sector job creation over the previous decade still averaged about 1.5 percent per year. Until the current downturn, the long-term annual growth rate for private sector jobs had not gone below 1 percent for nearly half a century.

 

Manufacturing employment, which stood at 18.4 million in July of 1999, plunged to 11.8 million--a 36 percent loss.

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Guest Chelsea

This should help our economy some...

 

Commerce Secretary Gary Locke Statement on China’s Decision to Remove Discriminatory Taxes on Imported Auto Parts

 

U.S. Secretary of Commerce Gary Locke welcomes news that, effective today, China will remove the discriminatory taxes it has been imposing on imported auto parts. China had until September 1 to come into compliance with a WTO ruling that China’s auto policies were inconsistent with WTO rules. The United States, along with Canada and the European Union, had welcomed that ruling. China’s Commerce Ministry and other government agencies announced action today abolishing the discriminatory taxes.

 

“I welcome China’s announcement to bring this aspect of its import regime into compliance with its WTO obligations and stop discriminating against U.S. auto parts exports. The Department of Commerce will continue to vigorously monitor all foreign countries' compliance with trade obligations to ensure U.S. workers and firms reap the benefits from our trade agreements.”

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Guest Duncan

I use Epson equipment. I wish there was an American Printing company.

 

Japanese electronics manufacturer Epson Imaging Devices Corporation (Epson) agreed to plead guilty and pay a $26 million criminal fine for its role in a conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (TFT-LCD) sold to Motorola Inc., the Department of Justice announced today.

 

According to a one-count felony charge filed today in U.S. District Court in San Francisco, Epson, a subsidiary of Seiko Epson Corporation, participated in a conspiracy to fix the prices of TFT-LCD panels sold to Motorola for use in Razr mobile phones from the fall of 2005 to the middle of 2006. According to the plea agreement, which is subject to court approval, Epson has agreed to cooperate with the Department’s ongoing antitrust investigation.

 

TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Epson, based in Japan, was known as Sanyo Epson Imaging Devices Corporation during the conspiracy.

 

Epson is charged with carrying out the conspiracy by agreeing, during bilateral meetings, conversations and communications with unnamed co-conspirators in Japan, to charge prices of TFT-LCD to be sold to Motorola at certain predetermined levels. Epson issued price quotations in accordance with the agreements reached and exchanged information on sales of TFT-LCD sold to Motorola, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.

 

Today’s charge is the result of a joint investigation into the TFT-LCD industry by the Department of Justice Antitrust Division’s San Francisco Field Office and the Federal Bureau of Investigation in San Francisco. Previously in this investigation, on Dec. 15, 2008, LG Display Co. pleaded guilty to participating in a worldwide conspiracy to fix the price for TFT-LCD panels and was sentenced to pay a $400 million criminal fine. On Dec. 16, 2008, Sharp Corp. pleaded guilty to participating in three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell, Apple Computer Inc. and Motorola Inc. and was sentenced to pay a $120 million criminal fine. On Jan. 14, 2009, Chunghwa Picture Tubes Ltd. pleaded guilty to participating in the same worldwide conspiracy as LG, and was sentenced to pay a $65 million criminal fine. On May 22, 2009, Hitachi Displays Ltd. pleaded guilty to participating in a conspiracy to fix the prices of TFT-LCD panels sold to Dell Inc. for use in desktop monitors and notebook computers from April 1, 2001, to March 31, 2004, and was sentenced to pay a $31 million criminal fine. Additionally, nine executives have been charged to date in the Department’s ongoing investigation.

 

Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660.

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Guest Pesa

The "ownership rich" are doing very well because they can pump wealth from emerging markets, and the "working rich" who innovate and build domestically are feeling the squeeze. During the turbulence of mergers and acquisitions, management is more concerned with politics than production as production is farmed out.

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Guest Jack

Here is a great example of what you wrote:

 

US retail giant Wal-Mart Stores Inc. halted a plan to reshuffle its mid-level executives in China after local trade unions stepped in, a law official with the Changchun municipal federation of trade unions said Monday.

 

"Three mid-level executives came to my office this morning and told me the plan was shelved and they have resumed their work," said Yang Fengzhi, director of the law department of the northeastern city's federation of trade unions.

 

Mou Mingming, a public relations manager of Wal-Mart, told Xinhua Monday that the company had been communicating with the local trade unions and further explained the plan to the employees in detail.

 

Wal-Mart, the world's largest retailer, on April 10 offered three options to the executives. These included transfers to outlets in other cities, demotions or leaving the company.

 

The options were offered to 54 managers and officers working under the managers, according to Yang Zhongtian, an officer on the list in Wal-Mart's Linhejie chain store in Changchun, capital city of northeastern Jilin Province. Wal-Mart employed about 1,500 workers in the city.

 

"The company actually wants us to leave," said Yang Zhongtian, "because few will find the first two options unacceptable." He said the plan might put at least 2,100 mid-level executives like himself out of work.

 

Mou declined to say how many employees were affected.

 

"Wal-Mart is a company that is still growing, and we expect experienced executives to work in new stores to guarantee quality service," she said, when after a Xinhua reporter asked whether the decision had any connection to the global downturn.

 

Yang, 35 and a father of a 9-year-old boy, said he was shocked by the move. He has worked at Wal-Mart for five years and his family depends largely on his monthly salary of 2,000 yuan ($292.6).

 

"I simply can't believe it," he said. Earlier in March, Wal-Mart was among the multinational firms that announced it had expansion or hiring plans in China this year.

 

If Yang left the company, he would only get about 13,000 yuan as compensation, he said.

 

He led another 11 colleagues to the city's municipal federation of trade unions last Monday for assistance.

 

"We invited the general managers of four chain stores in the city to our office immediately and expected them to negotiate with the executives on equal terms," said Yang Fengzhi. "We don't think it's right for the company to announce such a decision without consulting the employees," she said. The organization wanted the managers to consider halting the plan.

 

She also contacted her counterparts in Dalian in northeastern Liaoning Province and Shenzhen in southern Guangdong Province. The trade unions in these cities were also communicating with local Wal-Mart officials.

 

The trade union of Wal-Mart played a positive role in helping settle the issue, said a spokesman of the Federation of Trade Unions in Shenzhen, the headquarters of Wal-Mart in China.

 

"The Shenzhen federation will hold a meeting Tuesday to give information about the issue to all the chairman of Wal-Mart trade union branches. We hope the trade unions can do a good job in keeping stability and development of the enterprise," he said.

 

On July 29, 2006, workers of Wal-Mart's Jinjiang Store in Quanzhou City, Fujian Province, held their first membership meeting after the trade union was set up. It marked the establishment of the first union in the world's largest supermarket chain in China.

 

But the restructuring issue was the first time the local trade unions were involved in Wal-Mart's affairs, according to Yang Fengzhi.

 

Wal-Mart runs 121 supercenters, three Sam's Club outlets, two Neighborhood Markets and 101 Trust-Mart chain stores in China, employing more than 70,000 associates, according to the latest statistics on the company's website.

 

Yang Zhongtian told Xinhua Monday that he and his colleagues involved in the issue were back at work. The general manager of his chain store phoned him personally Sunday, saying he could either leave the company with compensation or come back to work as usual, with his position and salary unchanged.

 

"But I fear I can't work as usual," he said, adding that he was worried he might still lose his job.

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Guest Jacko

A lot has been reported these past decades on the need for American workers to recognize their job worth in the new world market but, we hear no similar comparisons with manager and executive comparisons in the "new world market".

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Guest Ron

China has overtaken the U.S. as the world's biggest market for automobiles, the first time any other country has bought more vehicles than the nation that produced Henry Ford, the Cadillac and the minivan.

 

Boosted by Beijing’s stimulus, 2009 passenger car sales soared to 10.3 million and total vehicle sales are estimated at 13.6 million, the China Passenger Car Association said. That represents growth of about 45 percent from 2008.

 

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time any country bought more cars than Americans.

 

China’s small but ambitious automakers are starting to expand abroad and some have set up factories in Ukraine, Iran and other developing markets. Some want to break into U.S. and Western European markets but have yet to satisfy safety and emissions standards.

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I went this week to several factories in New England this week. I was really impressed with their pneumatic technologies. They can virtually go anywhere and not worry about retrofitting their machines voltage capacity.

 

I tried to convince them about moving their factories back to the United States.

 

The issues they addressed were:

 

Cheaper labor - China has the largest pool of laborers that will work for one U.S. dollar per hour.

 

Occupational Safety and Health Administration (OSHA) - OSHA compliance is expensive. China has none.

 

Environmental Protection Agency (EPA) - EPA puts many restrictions on what chemicals can be used. China does not.

 

Market Price - Retailers (i.e. Walmart, Target, etc...) purchase the cheapest priced manufactured goods.

 

Internal Revenue Service (IRS) - Working offshore provides a tax haven for manufacturers.

 

Nothing will change until American leadership considers subsidizing its manufacturing base. Instead of penalizing these innovators, we need to place a high strategic value on them and do what it takes to keep them here. They are the reason why China has grown so quickly. They will be the reason why the United States comes back from the current economic depression.

Edited by Luke_Wilbur

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Guest Luke

Case example.

 

New AAM Study Cites Market-Distorting Impact Of Explosive Growth in Chinese Glass Production

50-State Breakdown of Glass Industry Job Trends

 

Washington, D.C. – Citing massive increases in Chinese glass production and exports during the current decade, the Alliance for American Manufacturing (AAM) today urged the Obama administration to address the Chinese government's subsidies to its domestic glass industry at an upcoming meeting with its Chinese counterparts on trade issues.

 

In a letter to Secretary of Commerce Gary Locke and U.S. Trade Representative Ron Kirk, AAM strongly urged the Administration to "address the significant and market-distorting subsidization by the Chinese government of its domestic glass industry" at the Joint Commission on Commerce and Trade (JCCT) being convened on Oct. 29 in Hangzhou, China.

 

"Our domestic glass industry is the most efficient in the world," the letter states, "but it cannot compete against production that is heavily subsidized by the Chinese government," adding that the global overcapacity of glass products created by the explosive growth in Chinese production has led to U.S. "plant closings and thousands of lost jobs."

 

From 2001 to 2008 the U.S. glass industry lost almost 40,000 jobs, a decrease of nearly 30 percent according to the U.S. Department of Labor. Large cities and small towns alike have been impacted. States such as Arkansas, California, Florida, Illinois, Indiana, Massachusetts, Michigan, North Carolina, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia have lost at least one out of four glass industry jobs since 2001. Two fact sheets show state-by-state jobs trends in the glass industry since 2001, and a list of glass-making locations by state.

 

"With unemployment threatening to exceed 10 percent, the need to challenge the Chinese government's subsidies to its domestic glass industry is essential to prevent further damage to our glass industry, workers and economy," said AAM Executive Director Scott Paul.

 

Since 2003, glass production in China has increased by more than $576 million – more than 67 percent – according to a recent study by Dr. Usha Haley of Harvard University Through China's Looking Glass: Subsidies to Chinese Glass Industry from 2004-08. In fact, new production capacity in the glass industry of China in 2007 was nearly six times greater than that of 2003.

 

China's domination of the global glass market is already having a significant effect, none more dramatically than in decisions made about construction of the new World Trade Center. The New York/New Jersey Port Authority has decided that Chinese-made glass will be used in the construction of the new tower.

 

Despite the fact that three U.S. glass manufacturers, including Pittsburgh-headquartered PPG Industries, spent months working with the tower architects to plan and develop a new kind of glass for floors one through 20, none of these American companies was awarded the contract to make the glass.

 

Prepared by the Economic Policy Institute (EPI) with support from AAM, Dr. Haley's study cites the Chinese glass industry's three-fold increase in exports to the United States from 2000 to 2008. The U.S. trade deficit with China on glass also tripled in the same period.

 

On Wednesday, Oct. 6, a day before the release, Dr. Haley presented her findings to the International Trade Commission (ITC), the U.S. Trade Representative, and the Commerce Department. She is also scheduled to make further presentations to Senate offices.

 

China's glass and glass-products industry received total subsidies approximating at least $30.29 billion from 2004 to 2008. These subsidies spanned heavy oil, coal, electricity and soda ash and have been growing steadily in the period under study, reaching about 35 percent of gross industrial output value of glass in 2008.

 

China is currently the largest producer of glass and glass products, has the greatest number of glass-producing enterprises, and has the largest number of float-glass production lines in the world. It has become the world's largest exporter of flat glass and glass fiber.

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Guest Laura N.

As U.S. manufacturers struggle to recover from the recession, a new report finds that manufacturing fuels economic prosperity but requires pro-growth policies to create jobs and remain globally competitive. The report released by the National Association of Manufacturers (NAM) and the Council of Manufacturing Associations (CMA) was written by economists Joel Popkin and Kathryn Kobe, noted experts on issues related to prices, wages, productivity and technology.

 

"Policymakers must recognize that a vibrant manufacturing sector is important to our nation’s economic recovery and long-term growth and prosperity,” said Lori Anderson, chair of the CMA and president and CEO of the International Sign Association. “Manufacturing generates more economic activity per dollar of production than any other business sector in the country. Manufacturing industries perform almost two-thirds of the private sector research and development (R&D), driving America’s leading edge in innovation and break-through technologies. But manufacturers in America face serious challenges that threaten to undermine their contributions to U.S. prosperity.”

 

America’s capacity to generate wealth and long-term economic growth and jobs depends on the enactment of federal policies that encourage manufacturing innovation, productivity and competitiveness,” stated NAM President John Engler.

 

The report offers a number of specific recommendations to create jobs and enhance U.S. manufacturing innovation, productivity and competitiveness including the following:

 

· Reduce the corporate income tax rate on profits earned from production in the United States to match those of our major trading partners.

 

· Make the research and development (R&D) tax credit permanent to provide more certainty for private sector decisions to undertake R&D.

 

· Make the commitments now that will guide private sector decisions on R&D investment for cleaner energy technologies and more varied energy sources.

 

· Continue to improve our education system to enhance the pool of science, technology, engineering and math (STEM) graduates and support programs of technical training and certification.

 

· Assure the health of small businesses, for example, by widening the lowest corporate income tax bracket. They are niche suppliers of components and parts for finished goods manufacturers. And they are also important investors in and initiators of high-risk, ground-breaking innovative endeavors.

 

· Invest in all levels of infrastructure – transportation, communication channels and the energy grid.

 

“The large U.S. trade deficit is one of the starkest reminders of why a strong, productive and innovative U.S. manufacturing base is essential to our country’s economic future,” said economist Dr. Joel Popkin. “In 2008, U.S. manufacturers produced and exported $918 billion worth of goods to other countries. Those exports helped pay for more than half of our manufactured imports, but that’s not enough to slow our indebtedness to foreign countries.

 

Dr. Popkin cited the erosion of America’s leadership in R&D as another major challenge facing U.S. manufacturers. “The United States is still the leader in the absolute number of dollars spent. Its strong R&D position, however, is being eroded by the impact of the economic downturn and the rapidly expanding R&D programs in other countries. When the data is available, we expect to see the U.S. share of world R&D fell in 2009.”

 

"America’s future prosperity depends on policies that accelerate and strengthen manufacturing production here in the United States,” noted William E. Gaskin, president of the Precision Metalforming Association and former CMA chair. “To remain strong players in a competitive world, U.S. manufacturers need government policies that encourage continued innovation and productivity gains. In particular, we need policies that encourage public and private investments to enhance productivity, such as those in R&D, capital goods, worker training and early education that nurtures math and science proficiency."

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Guest Senator Byron Dorgan

When good-paying jobs are shipped to other countries, it hurts communities, families, and our economy. Senator Dorgan is working to stop the outsourcing of U.S. jobs to foreign countries and to create and keep good jobs here at home. He has been the lead proponent of eliminating the tax breaks enjoyed by U.S. companies that move their operations abroad.

 

Dorgan introduced legislation, S. 260, to shut down a tax loophole that rewards U.S. companies that move U.S. manufacturing jobs overseas.

 

The legislation would close the loophole that allows U.S. multinational companies to defer paying income taxes on profits they make from the U.S. sale of the products manufactured in foreign factories, until those profits are returned to the United States, if ever. Manufacturers who remain in the United States receive no similar subsidy.

 

You may not believe it, but when a U.S. company closes down a U.S. manufacturing plant fires its American workers and moves those good-paying jobs to China or other locations abroad, U.S. tax law actually rewards those companies with a large tax break called deferral. The tax code allows these firms to defer paying any U.S. income taxes on the earnings from those new foreign-manufactured products until those profits are returned, if ever, to this country. If a company making the same product decides to stay in this country, it is required to pay immediate U.S. taxes on the profits it earns here.

 

With the manufacturing sector laying off 791,000 people in 2008 alone, Senator Dorgan believes this legislation should be enacted immediately.

 

Since 2000, more than four million manufacturing jobs have been lost in the U.S. Dorgan's plan would discourage companies from shipping more American jobs to other countries and it would also save American taxpayers $15 billion in revenue over 10 years.

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Guest Human

I have seen with my own eyes the Trade deal that you agree with on Barack Obama with, It is to say the least eye opening.

 

To the rest of you; Do not look at china, south korea,japan, or india. Look Else where.

You will be surprised to say the least.

 

------------------------------------------------------------------------------------------------

When good-paying jobs are shipped to other countries, it hurts communities, families, and our economy. Senator Dorgan is working to stop the outsourcing of U.S. jobs to foreign countries and to create and keep good jobs here at home. He has been the lead proponent of eliminating the tax breaks enjoyed by U.S. companies that move their operations abroad.

 

Dorgan introduced legislation, S. 260, to shut down a tax loophole that rewards U.S. companies that move U.S. manufacturing jobs overseas.

 

The legislation would close the loophole that allows U.S. multinational companies to defer paying income taxes on profits they make from the U.S. sale of the products manufactured in foreign factories, until those profits are returned to the United States, if ever. Manufacturers who remain in the United States receive no similar subsidy.

 

You may not believe it, but when a U.S. company closes down a U.S. manufacturing plant fires its American workers and moves those good-paying jobs to China or other locations abroad, U.S. tax law actually rewards those companies with a large tax break called deferral. The tax code allows these firms to defer paying any U.S. income taxes on the earnings from those new foreign-manufactured products until those profits are returned, if ever, to this country. If a company making the same product decides to stay in this country, it is required to pay immediate U.S. taxes on the profits it earns here.

 

With the manufacturing sector laying off 791,000 people in 2008 alone, Senator Dorgan believes this legislation should be enacted immediately.

 

Since 2000, more than four million manufacturing jobs have been lost in the U.S. Dorgan's plan would discourage companies from shipping more American jobs to other countries and it would also save American taxpayers $15 billion in revenue over 10 years.

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Guest Ron

New manufacturing companies need to really to learn from GM's mistake. General Motors got their foot in the door in China, built modern factories and trained the workforce. But when it came time to take their profits out of China, that wasn't allowed and GM went bankrupt.

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Guest Paul

Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation.

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Guest gerhardt

60 years ago we had industry. Today we don't. I guess we'll be making the parsols for drinks while China makes industrial products. I guess the government can buy land and have industrial food farms. We would at least have food then ,instead of imported Mexican meat, mushrooms from Sri Lanka and contaminated Chinese shrimp at the Grocery store.

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The next decade could see negative growth thanks to our foolhardy fondness for "free market" philosophies that tell us it's OK to export all our jobs. The U.S. is down to four world leading industries:entertainment, out of Los Angeles (heavily indebted to Democrats);information technology, out of the Bay Area (likewise); energy, out of Houston (heavily indebted to Republicans); and financial services, out of New York (indebted to both parties). That's it, folks. We're otherwise second- or third-rung suppliers across the range of manufactured products—except for biotech, a small industry—and we can still (mostly) feed ourselves. Even aerospace has suffered.

 

http://online.wsj.co...0254258772.html

Edited by Luke_Wilbur

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Guest Tea Party Patriot

You are now seeing the largest transition of wealth right before your eyes. With the deterioration of manufacturing, comes the decline of wealth. Our nation is get poorer and poorer.

Meanwhile nations like China and India economies are growing stronger and stronger. Soon consumers will burn through this wealth and be left with a memory of yesteryear.

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Guest ALWAYSRED

Something for voters without jobs to chew on.

 

http://newsmax.com/InsideCover/obama-stimulus-green-jobs/2010/02/11/id/349703?s=al&promo_code=9731-1

 

Although Barack Obama and other Democrats touted the $787 billion stimulus package as a way to create green jobs that would put Americans back to work, new reports show the spending package has mostly created green jobs for foreign workers.

 

U.S. Department of Energy statistics show 79 percent of the $2.1 billion in stimulus money allocated for wind energy has been paid to foreign manufacturers.

 

The Spanish company Iberdrola has received $443 million; the Portuguese company EDP has received $229 million; and the British company Terra Firma, which bought a large wind farm in western Pennsylvania, received $42 million.

 

Analysts worry the stimulus funds will also help create manufacturing jobs in China, and a Texas consortium’s plans to build a wind farm that primarily will rely on Chinese-made turbines using $450 million in stimulus money underscores this fear

 

A report from the Investigative Reporting Workshop at American University found 80 percent of the stimulus money had created 6,000 jobs, and only a small percentage of those jobs went to American workers.

Only two American companies ̶ General Electric Energy and Clipper Wind ̶ are major wind turbine manufacturers, and the American Wind Energy Associations has said the United States saw a drop in the number of wind turbine manufacturing jobs last year.

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Guest LAW

On Bloomberg, Senator Warner discussed the America Recruits Act of 2010, his new job creation legislation that would create a federal loan program to provide employers an additional incentive to locate IT and manufacturing jobs here in the United States.

 

I used to be governor and as a former business guy, I remember recruiting companies to Virignia. I could compete against North Carolina or against California, but I couldn't compete against Korea or China or Ireland, whose government put a ton of money in [to attract those jobs]. I put forward a propsal that says let's jump-start, up to $10,000 per job, to supplement local and state economic development efforts so that we can drive more foreign direct investment here in America.

 

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Guest Truthout

Today, the U.S. employs fewer manufacturing workers than in April 1941, eight months before the attack on Pearl Harbor. This has got to change. No nation can maintain a strong economy if it is dependent upon other countries for the products it consumes.

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Guest aflevine

Exports = Jobs. It's that simple. The American Dream has been sold and our politicians need to get a clue. A few additional comments ...

 

The US does not have a trade policy. We have agreements that we fail to enforce. US companies are globally 20%-60% disadvantaged for exports due to artificial trade barriers!

 

http://www.ustr.gov/about-us/press-office/reports-and-publications/2009/2009-national-trade-estimate-report-foreign-trad

 

There are so many ways that we COULD level the playing field. We're not doing ANY of them.

 

In Obama's State of the Union, he spoke about a renewed focus on exports and trade agreement enforcement. I'm about at the point where I view this as a ploy to attract campaign financing for the Democrats. I campaigned for Obama. What a vast disappointment! Still, I'd rather gnaw my arm off than vote for a Republican. Trickle-down economics DOES NOT work in a globalized economy.

 

What many here fail to realize is that most of the electronic components that underpin our military systems are now made in China.

 

Everything the Treasure and Fed have done up to this point has been a delaying tactic. With no way to ever create enough jobs to match demand, debt and balance-of-trade disparities must necessarily spiral out of control. Looking at a good point to buy $GLD with what meager savings remains.

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Guest Ron

The fact is that only small sections of specialist industry within the United States has kept abreast of global change and the pace of global competition. China and India forge ahead in developing domestic capabilities, typically riding 'piggy-back' on western knowledge to achieve in 25 years what took our country 100 years.

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This email forwarded to me caught my attention. It was written by Richard A. McCormack. Attention White House this should be a national security priority!

 

 

The United States is not a desirable place to build a newsemiconductor wafer fabrication (fab) plant. Such plants are massive,costing upwards of $8 billion and generating thousands of direct and indirect high-paying jobs, spinoff revenue for local communities and massive investments in research, equipment and materials.Semiconductors sit at the top of the electronics industry pyramid. The United States invented the technology, but it's become a small player as measured by global production.

 

In 2009, 16 fabs began construction throughout the world. Oneof them was in the United States, according to Daniel Tracy, senior director of industry research and statistics at Semiconductor Equipment Materials International. Seven of the fabs that began construction will produce light-emitting diodes, one of the most promising energy-saving technologies developed in 50 years. None of those fabs will be in the United States.

 

The only semiconductor fabrication plant that started construction last year in the United States is in Saratoga County,N.Y., a Global Foundries facility that will produce 40,000, 300-mm wafers per month (at 28 nanometers and below).

 

China led the world last year in new semiconductor factoryconstruction, with six fabs, followed by Taiwan with five, and Korea,Japan, the European Union and Southeast Asia, all with one apiece.

 

As of 2009, the percentage of global semiconductor production capacity located in the United States was 14 percent, down from 25 percent in 2005 and 17 percent in 2007. Japan has the highest share of global capacity (at 25 percent), followed by Taiwan (18 percent, up from 11 percent in 2001), Korea (17 percent, up from 11 percent in2001), Europe and the Middle East (11 percent), China (9 percent, up from 2 percent in 2001) and Southeast Asia (6 percent).

 

The United States does lead the world in one category, however:closures. In 2009, 27 fabs closed worldwide, with 15 of them in theUnited States (followed by four in Europe, four in Japan, two in China,one in Korea and one in Southeast Asia). The number of closures last year almost doubled from the previous year, when 15 fabs were shut down worldwide, again, with the largest number in the United States (at four).

 

Why is the United States losing out on the next phase of thesemiconductor boom? "It's not direct labor," says George Scalise, president of the Semiconductor Industry Association. "It's not materials -- they cost the same everywhere. If you go down the list of expenses, every-thing is the same, except for tax policies and subsidies."

 

Every country except the United States tries to attract investment in semiconductor manufacturing by offering companies tax holidays, tax abatements and subsidies. "Sometimes the land is given toyou free," says Scalise. "Other services, such as water and electricity, are made available to you at favorable rates. What it boils down to is that there is a constructed comparative advantage"available in other nations.

 

If a semiconductor manufacturing company wants to make aninvestment in another country those incentives will save at least $1billion in costs over a 10-year period compared to operating a plant in the United States.

 

If the United States wants to remain in the global semiconductor ballgame, then it is going to have to pony up. "If you talk about a $5-billion fab that you put in the United States, the incentive program over a five- to seven-year period would be a total of$1 billion," says Scalise. "Now that is not very much money when youthink about the four-X multiplication factor of that investment in thethousands of new jobs, economic vitality and the supply lines that gointo those plants."

 

Without new manufacturing plants, the U.S. economy is facingperilous times. The semiconductor industry has entered the nanotechnology era, and the manufacturing processes it is developing for the deposition of materials will transform the next generation of products and determine the economic fate of countries.

 

The semiconductor industry operates in an "innovation ecosystem" whose two primary pillars are manufacturing and research and development. Without one, there cannot be the other, according to alargely ignored report from the President's Council of Advisors on Science and Technology (PCAST) and authored by Scalise. The United States economy cannot be dependent on "knowledge" if its research and development is "de-coupled" from manufacturing.

 

"Design, product development and process evolution all benefit from proximity to manufacturing, so that new ideas can be tested and discussed with those working 'on the ground,' " says the report that was released during the George W. Bush administration entitled"Sustaining the Nation's Innovation Ecosystems, Information Technology Manufacturing and Competitiveness." "As the velocity of technology development accelerates, the interdependency between new research and manufacturing becomes vitally important, and those linkages are provided by people. Locations that possess both strong R&D centers and manufacturing capabilities have a competitive edge."

 

The U.S. leadership in high technology is at risk if the manufacturing "anchor" is damaged, said the PCAST study. "Other countries are moving swiftly to co-locate R&D centers of excellence next to the manufacturing plants they attract." China's swift entry into this arena "has created a new level of nervousness, because of its size and its commitment to a high-tech industrial policy." PCAST points out that "China also has a flexible, entrepreneur culture, which some of its neighbors do not."

 

Politicians in Washington "keep stumbling around and have been absolutely ineffective in doing anything about" improving the competitive underpinnings of the United States high-tech industry, says Scalise. "If the competition demands that you put in place incentives and subsidies then that is what you have to do to win."

 

The U.S. government might chafe at the idea of providing incentives as being "corporate welfare," but this attitude is not helping improve the fortunes of the high-tech industry or its hundreds of thousands of well-paid workers. In its annual jobs forecast released in December 2009, the Bureau of Labor Statistics said that semiconductor manufacturing will lose 146,000 jobs over the coming decade, from 432,000 in 2008 to 287,000 in 2018, a decline of 34 percent.

"People want to turn the cart over and ask, 'Is this corporate welfare?' -- as if you're bailing somebody out," says Randy Goodall,former director of business development at Sematech, the semiconductor manufacturing R&D consortium. "But the fact is if a company likeAMD wants to build a new $4-billion or $5-billion manufacturing facility that will draw supply chain players, universities, researchers and engineering around it, it's going to be a powerhouse in your economy. If you're going to do that, then buying them -- if you will --is very different from propping up some old manufacturer that isn't competitive with someone in another part of the world. In that case,propping them up artificially so you don't lose the jobs is corporate welfare. In the other case, you're in the marketplace for economic development drivers and you're buying one. It is a free market. You don't have to participate. You don't have to go buy anything that you don't want to go buy. Governments have to decide whether they want to participate -- 'Will we go get things?' Some of the states have made that decision: they're going to take a shot at it and bring these things in."

 

Scalise says that it is time for Washington politicians to do"what they said they were committed to doing, which is to create high-value jobs and create exports. They have to have the courage and the political will to do the right thing. It is time for them to act."

Edited by Luke_Wilbur

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Guest LAW

Secretary of Commerce Gary Locke

Remarks at Sustainable Manufacturing Tour of Matworks Company with

House Majority Leader Steny Hoyer

Beltsville, Maryland

 

Manufacturing is a vital source of middle-class jobs, as manufacturing employees make 13 percent more than the average for all other workers in America.

 

Manufacturing is also a major contributor to American innovation; comprising two thirds of our nation’s research and development spending.

 

And as this country attempts to transition to a cleaner energy economy, we're going to need companies churning out both old and new products in ways that don’t harm our environment.

 

The question is, how do we get more companies moving in the right direction?

 

President Obama has already made a significant down payment, with over $100 billion dollars worth of grants, tax cuts and incentives in the Recovery Act devoted to manufacturing investments.

 

But that's only the beginning. We've also got to fundamentally rethink the way we build and produce goods in this country to meet the twin imperatives of rising energy demand and reducing greenhouse gases.

 

And we know how to do this. The American economy is already more than twice as efficient as it was in 1970.

 

Building on that success is simply a matter of working with industry to implement efficiency processes that work for their businesses.

 

In 2007, Commerce launched its Sustainable Manufacturing Initiative to both:

 

* Identify U.S. industries’ most pressing sustainability challenges;

* And to coordinate public and private sector efforts to address those challenges.

 

And that’s just a small portion of our overall sustainability efforts.

 

We’re out on tour across the country, hosting Sustainable Manufacturing American Regional Tours, or “SMARTS”. That’s why we’re here today to promote awareness and best practices on the benefits of sustainable manufacturing.

 

And the National Institute of Standards and Technology, is partnering with other federal agencies and industry to help small and mid-sized companies cut costs.

 

This public-private effort has already reviewed more than 125 companies and found ways for them to cut $62 million in costs by reducing water and energy use, and air emissions and solid waste production.

 

And the return on the companies’ investment to implement these practices is estimated to be 130 to one.

 

And we offer the successful Manufacturing Extension Program, or “MEP”—where Commerce joins with state and local initiatives to partner with private sector companies to drive billions of dollars worth of gains in efficiency and productivity.

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