Manufacturing Our Escape from the Third World

Most of you agree that a Secretary of Manufacturing would be good for the country. Your suggestions ranged from cutting down on imports by various means to forcing other countries (somehow) to comply with fair trade practices. Others suggested a cap on top management salaries and federal help in terms of research and development. Unfortunately, it looks like President Bush has buried the idea in the Commerce Department.

As I noted last month, the country has Secretaries of Agriculture, Labor, Energy, Education, Defense, Health and Welfare, Treasury and Commerce, among others. In very real and very clear ways, manufacturing pays for all of them. It’s time the rest of the country recognized that fact.

The President has a lot on his mind. There’s a war on and we’ve got terrorist issues and all sorts of economic worries like health insurance, unemployment and competitiveness in the world. Yet, manufacturing is key to all of these issues. We know this. The problem is the rest of the country has come to believe that the United States can survive and thrive on the manufacturing successes of other countries — like China and various Third World nations.

China’s trade imbalance with us was more than $103 billion last year. Through August of this year we owed them $77 billion. So this year’s negative balance with the People’s Republic alone may total more than $116 billion. Now, that is not a huge percentage of our $10 trillion-plus economy — just one-tenth of one percent. The issue is what’s in that imbalance; the bulk of it is in manufactured goods. We don’t, yet, buy Chinese insurance or bank with the Bank of China.

Further, our total trade imbalance is running at nearly five times the Chinese share, on the way to half a trillion dollars a year — again mostly manufactured goods. We don’t buy much insurance or use banking services from Mexico or India either — yet.

These are excellent examples of why we need a Secretary of Manufacturing. The reports about job losses in key manufacturing over the past few years hover around 2 million. Just clearing the air, refining the debate about what damages our own producer sector is suffering, would be a huge help.

Economists note that the Yuan is undervalued by as much as 40%, giving the People’s Republic a huge price advantage on the international scene. Price advantage? Well, who’d a thunk it? Only last month, a Chinese steel maker began dismantling the former J & L steel plant on the Cuyahoga River in Cleveland for shipment to China. They bought the whole plant. Reports are also circulating that the Chinese are negotiating with American iron ore companies to reopen an iron ore mine in Michigan and ship ore to China. Macabre? Yes, but true. This begs a question: why them and no longer us? Labor costs? Regulations? Subsidies? Good questions for the new Secretary.

Ideas about how we can continue to encourage China’s and other countries’ entry into the world of manufacturing and free enterprise and international trade, while at the same time keeping the playing field fair and level for our own citizens, would be another major task for the new cabinet secretary. And let’s get this argument out of the way now: the inspiration for this is recognition of importance, not a call for protectionism.

Americans have been the world’s leaders in manufacturing innovation for generations. Production successes built this country into the envy of the rest of the world. Without those successes, we are Third World. That crucial and basic sector of our huge economy seems to be in danger, according to manufacturing managers, union leaders and economists across the land. They need and deserve a voice at the top of the government in Washington — for the good of us all.

Feel free to send a copy of this to the White House and Congress. Nothing should stop an idea whose time has come.

George Weimer, contributing editor

[email protected]

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