Posted by David Ige on Fri, Jul 16, 2010 @ 01:09 PM
The US manufacturing sector generates about $1.2 trillion or 12% of our GDP. Our manufacturing sector produces about two thirds of our nation’s total exports of goods and services. The manufacturing sector supports about 20 million HIGH PAYING jobs. I believe our nation still leads the world in ideas, innovation and cutting edge technology. Where would China be without their amazing capacity to copy us? However at current pace, China will indeed pass us up in “cutting edge” technology, as well as “Green” or “Sustainable” technology, simply because they work harder and outpace us in graduates from Universities in Science and Engineering degrees.
The U.S. is one of many countries with a decline in manufacturing employment
However our culture and free society still provides the best potential for future innovation let alone our far superior skilled labor force to lead the world in the coming decade for what the next Global generation will consider to be “IN”.
Our future societies in America will depend upon our ability to maintain a strong manufacturing industry to improve our quality of life and develop the job growth our nation so desperately requires. The primary focus should be to look at what the Global community needs (not so much wants) instead of what the U.S. needs. Without an exporting vision behind what we manufacture in this country, I am afraid we will sink slowly into the Abyss we are now heading into as a nation of debt ridden consumers with rising unemployment. The hindrances we face now include an incredibly huge bureaucratic government that is intent on destroying our nation’s manufacturing power (see small business, the backbone of our industries) with rising health care costs, unions, taxes, and inflation which forces industries to look elsewhere to outsource to low wage countries. You add that to the ability for countries like China to cheat on international trade rules and we have an awfully hard uphill battle on our hands to be able to compete in the Global marketplace.
A bright spot in current trends is that certain sectors like finance, information, technology services are growing in this country. This of course is the backbone of any manufacturing industry. What we need is a renewed focus on how to make manufacturing work in this country with more efficiency and less waste. American’s just waste too much, we waste everything from what we consume to how we spend our time. Thomas Friedman hit the nail on the head in his latest book HOT FLAT and CROWDED when he addressed this problem. But we also need new people in our Government who will make it their priority to ensure government paves the way for the exporting industry to flourish rather than impede it’s progress.
Some facts:
- Nearly 80% of all patents filed come from the U.S. manufacturing sectors
- U.S. manufacturing are responsible for two thirds of all R&D investment in this country.
- American manufacturing are the leading buyers of new technology in the U.S.
- American manufacturing directly employs 14 million Americans while creating an additional 8 million jobs in related sectors.
- American manufacturing is the largest single contributor to our economy.
- America leads the world in technologies related to Robotics, Nanotechnology, Laser and Bio technologies.
It’s time for American’s to step up to the plate and renew our focus on where we are strong and don’t give in to the temptation to acquiesce to developing countries that are hungrier. I liken it to the L.A. Lakers continuing to get stronger so they can defend their title next year against those hungry “Beasts” of the east.
Devin T. Burke
CEO, Universal Cargo Management
Posted by David Ige on Fri, Jul 16, 2010 @ 12:45 PM
As we see the writing on the wall, CHINA will re evaluate their RMB relatively soon, we just don’t know how soon. In fact China (the People’s Bank) went so far as to claim in it’s statement that “the basis for a large-scale appreciation of the RMB exchange rate does NOT exist”. (Are they still smoking Opium ?) Don’t forget even with all of this surging growth in China, they are still at best 50% unemployed. A slight dichotomy to say the least. That is because there is all of those hundreds of millions of former government subsidized farmers still out of work. Behind the veil of prosperity lies the seeds of a real cultural revolution. A society abandoned by it’s self serving (another word for communism-socialism) government long ago.
So if the RMB goes to say 5 per $1.00, what happens to that percentage of the existing employed that gets their walking papers in the urban communities where all of the factories will be shut down and moved into central China, where they are moving anyways ?
I would say China has quite a delicate time bomb on their hands. But they will eventually figure out how to create more jobs while inspiring their own half a billion middle class (with a savings rate of 34%) to spend more once their currency gets strengthened, and feel like the wealthy people they so desire to become. (Mao Tse Tung would be turning in his grave) when that happens get ready for an emergence of a new world superpower.
But an even larger factor holding China back is the People’s Bank , the very body behind China’s exchange rate policy, is currently stuck in U.S. Treasury bonds to the tune of $2 trillion. Although China would love to create a new wave of appreciation in the Euro, Gold, Steel, etc and get a better return on their reserves, they have their hands tied to a sluggish recession in the U.S., which is the backbone of the China economy. You take away the power of the American consumer that borrows and borrows so it can spend and spend, you break the back of China’s biggest customer.
So with the Obama administration and other world superpowers pushing hard on China and calling it a “currency manipulator”, the most obvious reason China has made it’s recent overtures to re evaluation is to inspire goodwill ahead of the upcoming G-20 Summit.
So bottom line here is that China is continuing to be very shrewd with buying time to see where they can move some of their reserves, inspire confidence in with the “ Old Money Club”, wait for the U.S. to get stronger, deal with this Oil spill and eventually move one step closer to being the guys running the show.
In the meantime us Americans need to think what do we have, or what can we produce that China will if not right now, eventually need ? Because deep down inside the Chinese admire and want to emulate our backbone of honor, pride , integrity and ingenuity that is ingrained in the people of this great country while China’s honor is all about “saving face”.
Devin T. Burke
CEO, Universal Cargo Management
Posted by Carrie Brown on Fri, Jul 09, 2010 @ 04:49 PM
Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government in China is also pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.
In response, many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and some are even resuming production in the West. Some companies have moved production to other countries in the region such as Vietnam, Indonesia or Cambodia. However these countries lack the huge work force, infrastructure and markets China can offer, and most face the same labor issues as China.
These areas also lack the intricate supply chains and logistics systems that have helped make southern China an export manufacturing powerhouse. For manufacturers still looking to boost sales inside China, shifting production to the inland areas where many migrant workers come from, and costs are lower, offers the most realistic alternative.
Check out the full article on Yahoo! News: Companies Brace for End of Cheap Made-in-China Era