Tag: Alliance for American Manufacturing

Odds and ends number 76

Once again I have a potpourri of items that I think need between a couple sentences and three paragraphs, so here goes.

Over the last few months I have followed the saga of atheists who have tried to have the Bladensburg Peace Cross removed thanks to attorney and second-time U.S. Senate candidate Richard Douglas. Early last week a federal judge dismissed the case in a brief, two-page order, although the plaintiffs promised to appeal. Douglas called the decision “a good day for liberty,” and I tend to agree. Kudos to the good barrister for lending a hand.

Something Douglas has stressed in his populist campaign is the plight of the working man. So while manufacturing jobs held relatively steady over the last couple months, those who advocate for manufacturing thought the job report was rather bleak. “It’s the latest evidence that manufacturing in America is at or near a state of recession,” said Alliance for American Manufacturing (AAM) head Scott Paul. “While much of the service sector is growing albeit with low wages, our goods-producing economy is struggling under the yoke of global weakness and China’s massive industrial overcapacity.”

That imbalance with China was also the subject of print ads sponsored by another industry group, the U.S. Business & Industry Council.

Their point is simple: there were no currency manipulation provisions included. While China, which has a long-standing reputation for the practice, is not a part of the TPP, other members have also been accused of similar tricks. The USBIC apparently desires a united front among many of China’s regional trading partners.

Those who can’t find jobs often need government assistance such as food stamps (now known as SNAP.) But the state of Maine recently grabbed the notice of the Daily Signal for a proposal to ban the purchase of junk food and pop with EBT cards. Certainly to some it would border on nanny statism, but the state argues that:

“Our current food stamp policy lets water in one end of the boat while bailing out the other,” said DHHS Commissioner Mary Mayhew. “If we’re going to spend millions on nutrition education for food stamp recipients, we should stop giving them money to buy candy and soda. Maine is facing an obesity epidemic, especially among its low-income population, and we should be solving that problem rather than enabling it.”

In short, if you wish to gorge yourself on Skittles and Mountain Dew, find a job and get off the dole. Maine has cracked down on welfare programs since Governor Paul LePage took office – maybe Larry Hogan should pay attention.

Someone in Hogan’s administration got the hot water turned up on him, as the James O’Keefe video I talked about a few days back had the sequel. Now we know his deputy isn’t particularly into martial fidelity, but then again we sort of factor that into the equation anymore. This guy named Clinton was elected president for doing far worse, so perhaps being on the large end of the Project Veritas telescope will be a resume enhancer for this liberal deputy AG.

Chances are, though, soon Thiruvendran “Thiru” Vignarajah will be ignored by the media, sort of like what we’re advised to do by columnist, fill-in radio host, and would-be Congressman Dan Bongino regarding Barack Obama. Whether it’s gun control, border security, Syrian refugees, or simply his method of leadership, America is better going in the opposite direction our feckless President desires us to go. Simple advice that’s worth the read, as Dan often is.

Yet Obama’s government is still powerful and has the capacity to make peoples’ lives miserable. Take the Internal Revenue Service and a new proposed rule that will ask nonprofits to keep Social Security numbers for donors who give more than $250. Tonya Tiffany of MDCAN got her moment of fame as an advocate against this regulation.

Those who are interested in stating their case have until December 16 to go here and give their opinion. Operations which only have sporadic activities and run on a shoestring would be most affected, and MDCAN falls under that umbrella as their primary activity is the Turning the Tides conference each January.

As they argue:

The IRS wants to make non-profit organizations responsible for storing and reporting the Social Security Numbers for anyone who donates more than $250. This will burden the non-profits financially as well as increase your chances of having your identity stolen. It could also make it easier for the IRS to target organizations based on politics and move on to also targeting the private individuals who support those organizations.

On the latter point, I think back to the emotion surrounding donations to the side supporting Proposition 8 in California some years back (in favor of traditional marriage.) Even years later, those who chose to donate in its favor had to deal with its fallout. Instead of harassment from a group, though, imagine the full weight of the government harassing donors. The system isn’t really broken so there’s no need to fix it.

There’s no need to fix my e-mailbox, either. While it’s not completely empty, the remaining items deserve more of a hearing. Look for these in the next few days.

The manufacturing perspective on TPP

Political junkies know the first Friday of the month will generally bring the unemployment rate and job creation numbers from the previous month. As of Friday, the government told us we were at 5% unemployment for the first time since the Bush years, when economists talked us into a recession. (This was back when tepid job growth actually increased the unemployment rate. Of course, people blamed the president at the time.)

Be that as it may, though, there were no net manufacturing jobs created during the month, a fact which concerned pro-manufacturing organizations like my old friends at the Alliance for American Manufacturing. To quote their president, Scott Paul:

Underneath the euphoria over a good topline employment number is this fact: Manufacturing hasn’t gained a single net job since January. 

That’s terrible news for our economy. The effects of China’s industrial overcapacity can be seen in waves of layoffs in American steel, aluminum, and other manufacturing sectors. This weakness in factory hiring comes at a very inconvenient time for the proponents of the TPP, which analysts predicted will widen our record manufacturing trade deficit. (Emphasis in original.)

Regarding the TPP, the U.S Business & Industry Council (USBIC), an advocacy organization for small businesses, said in a statement that the TPP is full of “special deals” for multinational businesses. USBIC president Kevin Kearns:

The TPP is anything but the free trade agreement it purports to be.  The use of the term ‘free trade’ is simply a codeword designed to attract the support of Congressional Republicans who lurch zombie-like to support anything so labeled, without examining the fine print.

A real free-trade deal could be written on a single sheet of paper, with commitments to remove all tariffs and non-tariff barriers of any kind.

Over at the National Association of Manufacturers (NAM), writer Linda Dempsey demanded a thorough review of TPP’s provisions. All this makes it clear that manufacturers are wary about the effects of this trade deal. I also covered some of the other potential pitfalls on Friday for my weekly Patriot Post piece, which leads me to wonder: just who the heck is for the deal?

Well, actually, NAM is part of a broad coalition of business interests seeking the deal, which makes it less of a Main Street vs. Wall Street issue and mote of a tug-of-war between union interest in protectionism and businesses after free trade. But one question worth asking (as Kearns does) is why we need over 5,000 pages of agreement to clear the trade docket? One can also ponder what benefits we really get as the largest partner by far – it’s not a coalition of equals by any stretch of the imagination, although depending on the source the per capita GDP has been measured slightly higher than ours for partners Australia and Singapore.

If there was ever a case where the devil is in the details, this may be the one. I noted in Friday’s article that time is not of the essence – the 12 nations have up to two years to ratify the agreement, with only 6 (one being the United States) being enough to enable it under certain conditions. (It boils down to we have veto power, and Japan also might depending on the direction of its GDP compared to the dozen as a whole. The Japanese are close to the 15% of total TPP GDP needed to sink the deal if they don’t pass it. By the way, we have a roughly 65% share so we are by far the biggest frog in this little pond.)

The concept of free trade works best among equals. Unfortunately, there aren’t many peers at the level of the United States so you get the complexity of the TPP, which I won’t dare profess to understand. Just on gut instinct I think the acronym KISS is in order here but when it comes to modern government it seems we can only weave tangled webs.

More woeful manufacturing news

It’s been a crusade of mine to encourage the rebirth of American manufacturing – unfortunately, we seem to be going the wrong way, according to the union-backed Alliance for American Manufacturing. Holding Barack Obama to his promise for one million new manufacturing jobs in his second term, the net gain has fallen with the September employment results and the August revision to 370,000. Even if you consider that their figure is a net figure, we’re still way short of one million jobs created.

Overall, the job market is creating about 200,000 jobs per month – slower than last year, but still positive growth. Unfortunately, it’s barely exceeding population growth.

You may ask yourself, though – why the emphasis on manufacturing in these quarters, particularly when you work in a service industry? To me, the answer is simple: economic growth is achieved when we add value to the overall economy. Sure, you can print money until the printing presses break but that just adds paper and not value.

Consider the iPad I’m writing this on. Originally it was a number of raw materials extracted from the ground. The first addition of value came when they were extracted, but a far larger one came when the component parts were created. A further increase in value came from the assembly process, which made the iPad into something usable by a member of the public. At that point, a little extra was added in shipping it to the venue of retail.

While I can’t ascertain where the raw materials came from, the iPad is manufactured overseas and shipped to the American market. Supposedly Apple has moved some production here, but not for iPads.

I don’t want to get bogged down in those nuts-and-bolts, but suffice to say that I think manufacturing adds more value per dollar invested than service industries. Certainly it can be fickle – the fanfare associated with this early ’70s plant expansion died quickly when a national recession shuttered it within a couple years – but more often than not good jobs are provided.

We are better off when we make stuff. China may be cheaper, but is it better? How many times have you purchased some Chinese-made trinket only to scrap it in a couple years because it was assembled in a shoddy manner with substandard parts? America used to be better than that, and I want to see us return there.

Another Trump criticism

Donald Trump took a lot of criticism from all sides last night, so this little bit of piling on won’t make much of a dent in his self-esteem. But Scott Paul of the Alliance for American Manufacturing found another reason to diss on The Donald:

Love him or hate him, Donald Trump is never shy in front of the camera, and his appearance at tonight’s first big GOP presidential debate will be must-see TV – especially because he takes a hard line on unfair trade with China.

Here’s one question I’d love to hear him answer: Why aren’t any of his Trump-branded goods made in America?

(snip)

During his campaign announcement speech and plenty of times since on the stump, Donald Trump has blamed China and Mexico for the loss of American manufacturing jobs. But, again, his own Trump-branded stuff is made overseas.

Trump certainly talks tough on China, jobs, and trade, but he doesn’t back it up with his own actions – while many manufacturers fight to Make it in America in spite of the odds.

I don’t believe Scott Paul is related to Rand, by the way. But this Paul’s statement is actually a valid point to make, particularly when Trump makes a loser out of America by manufacturing his goods elsewhere.

The AAM has also vowed to check on the other candidates as well, although they seem to be a bit behind. One notable omission on the Democratic side is Martin O’Malley. I did a cursory check of his website, though, and found he has no merchandise store. (Now I feel like I need a shower, though.)

When there are millions of dollars flowing through a campaign, there shouldn’t be a question about making the goods in America where possible. Given the fact most campaign merchandise comes from the apparel and printing industry it should not be hard to find these items. (Surely my old friends at American Certified can help with that.) Naturally Democrats prefer to have all their items come from union shops, while Republicans have their own list of favored suppliers. On a local level, we know which businesses are owned by Republicans so we try and steer business their way.

Like it or not, political campaigns are a multi-billion dollar business – especially on the Presidential level. So why not keep that money flowing in American hands? Hopefully the Alliance for American Manufacturing will be pleased with the level of American products they find in the various campaigns.

It also reminds me to plug my dossier series, as trade and job creation is next on the schedule. I am shooting for early next week with that one.

On the flip side of Congress…

Yesterday Cathy wrote at some length about the pressure being placed on Congress to give trade promotion authority to the Obama administration in order to complete work on the Trans-Pacific Partnership. But there are also those in Congress who want to strengthen our hand, and it was up to my old friends at the Alliance for American Manufacturing to point this out:

You wouldn’t wait until you needed life support to go to the doctor, right?

Well, that’s what it’s like for U.S. manufacturers and workers facing trade cheating from countries like China. They have to wait until factories close and thousands of people lose their jobs before they can even begin to fight back.

It makes no sense. But there’s something you can do right now to help.

A new, bipartisan bill would level the playing field for U.S. workers by strengthening our enforcement laws against unfair trade practices. Please tell your Member of Congress to cosponsor this legislation.

You and I have worked together in recent months to fight for U.S. jobs and against unfair trade. The introduction of the American Trade Enforcement Effectiveness Act shows we’re making progress.

Thousands of American workers have faced layoffs this year because there’s been a surge in trade cheating and imports from countries like China. The new bill seeks to make it easier for companies and workers to seek remedy against trade cheating like this — before the layoffs and plant closures begin.

With Congress currently debating fast-track trade legislation and new free trade agreements, now is the time for action. Join me in telling Congress to stand up for American workers and manufacturers.

Congressman Mike Bost of Illinois, a lead sponsor of the bill, points out that several entities within the steel industry, including AAM, support this bipartisan effort. As a whole, the steel industry has taken a beating from foreign competition. [Unfortunately my American Certified archives are no longer online – within that venue I detailed a long-standing dustup between American manufacturers and numerous other countries, particularly South Korea, over oil country tubular goods (OCTG) being dumped on the U.S. market during the fracking boom. That’s just one familiar example.]

Yet some of these same nations are now looking to get into our market via the TPP. And while the goal of any libertarian worth his salt is free and unfettered trade, there has to be an assurance that neither side is sticking a thumb on the scale. Dumping products on our market is one thing, but prospective TPP partners (particularly China, but also Japan) also have longstanding complaints against them for currency manipulation as well. While the idea is dismissed by some, we have other nations who want to make the rules as they go, too.

I suppose the operative question is just who wanted the TPP (or any trade agreement) in the first place? Generally it’s not the stronger entity who is looking for a break, and the United States economy is still among the world’s strongest and largest despite the best efforts of this administration to change that. There is a fine line between being too protectionist and stifling innovation (I love to use the Trabant automobile as the extreme example of this) and being taken advantage of by unscrupulous partners.

It seems to me that neither Cathy nor I believe we have a ruling class that is looking out for America’s best interests on either trade or immigration. I believe that there is such a thing as trickle-down economics, but using the power of government to assure yourself a slice of the pie means what trickles down isn’t something very clean.

Is the era of full employment over?

Simply put, March was not a good month for job creation around the country. Numbers were down markedly from previous months while, as the Americans for Limited Government advocacy group pointed out, the labor participation rate tied a 37-year low.

The news was even worse in the manufacturing sector, where it contracted by 1,000 jobs. While Scott Paul of the Alliance for American Manufacturing blamed the strong dollar, calling it “a big loser for factory jobs in the United States,” it’s only a piece of the puzzle.

Paul would favor a more interventionist solution, adding:

There’s plenty that could be done to turn this around. The Treasury should crack down on currency manipulators, the Federal Reserve shouldn’t act prematurely, USTR should be assertive about enforcing our trade laws, and Congress must address currency and trade enforcement in the context of new trade legislation.

Based on Barack Obama’s promise to create a million manufacturing jobs in his second term, he needs to add 628,000 in the next 21 months – a Herculean task for any president, and almost impossible for this one. Let’s consider a few facts:

First of all, the continued low price of both oil and natural gas has tempered the energy boom to some extent. According to Energy Information Administration data, the number of oil and natural gas rigs in operation last week was 1,048. In terms of oil operations, the number is down 45% from last year and for gas it’s down almost 27%. While gasoline in the low $2 range is good for the overall economy, oil prices need to be between $60 and $80 a barrel for operators to break even, and the benchmark price has held lately in the high $40s.

As I noted, low energy prices are good for some aspects of job creation, but the energy boom is on a bit of a hiatus and that affects manufacturing with regard to that infrastructure. Throw in the unfair competition we’re receiving when it comes to OCTG pipe and it doesn’t appear this will be the cure to what ails us as far as job creation goes.

More important, though, is the financial aspect. Our corporate tax structure is among the most punitive in the developed world, which leads to capital flowing offshore despite the “economic patriotism” appeals of our government to demand it come back. Once you have the opportunity to take advantage of other countries’ willingness to charge 20% or even 15% tax, why should you willingly pay a 35% rate? Their slice of the pie may be less, but they get a lot more pies this way.

And then we have the aspect of regulations, particularly when it comes to the financial restrictions that Dodd-Frank places on the lending industry and the environmental mandates an overzealous EPA is putting on industry – look at coal as an example. If we went back to the conditions of 2006 the environment would likely not suffer serious harm and companies would have a much easier time with their accounting. I haven’t even touched on Obamacare, either.

Not all of this is Obama’s fault, but the majority of these problems can be laid at his feet. Alas, we have 21 months left in his term so many of these things will not change despite the presence of a Republican Congress which will be blamed for any setbacks.

So the question becomes one of just how many employers in general, not just in manufacturing, will be able to weather this storm. Even the recent news that both Walmart and McDonalds will be increasing their wages brought out the cynics and doubters. But it’s worth pointing out that both Walmart and McDonalds have stated they wouldn’t oppose a minimum wage hike. Such a move makes sense for them because their bottom lines can more easily manage a modest wage hike for their employees and they know their local competitors can’t. Both also have the flexibility to adopt more automation where they used to have a row of low-wage employees. As an example, most of the local Walmarts adopted a number of self-serve checkout lanes over the last year or so. If you hire a dozen fewer cashiers it’s easier to give the others another dollar an hour.

Change is a constant in the labor market, and we know this. But there are some circumstances under which businesses thrive and others where they struggle, and history has gone long enough to suggest the broad outlines we should follow. It’s unfortunate that some want to blaze a new trail when we know where the correct path is.

Physical labor may be good for your career

I grew up in a blue-collar family in a blue-collar, auto-making town, so I feel a certain kinship with those who believe that America should still be making things big and small. So I liked the news that America accelerated the pace of manufacturing job creation at the tail end of last year, adding 115,000 manufacturing jobs in the last two months of the year based on revised federal figures.

But Alliance for American Manufacturing President Scott Paul called January’s 22,000 figure “so-so,” blaming “a combination of a strong dollar and unchecked foreign currency manipulation” for the slowdown. His group has called on the Obama administration to include currency manipulation provision in the Trans-Pacific Partnership being negotiated.

Month-to-month fluctuations are one thing, but what about adopting a broad-based approach to encouraging manufacturing and learning a trade at the optimal time, during the formative years of schooling? I don’t often agree with NPR, but last week they ran a story extolling the Millennial Generation to learn a trade in order to avoid the pitfalls of college loans and perhaps get a jumpstart on a good-paying career. While there was spirited argument in the comment section which made the case that their economic ceiling would be lower than their college-educated brethren could achieve – and that is true – not all children are college material and they should have a path to success which doesn’t involve spinning their wheels and racking up thousands in debt from college loans without a degree to show for it or one that bounces them from menial job to menial job just to get by. Alas, that is the fate of millions of young people today.

One paragraph sums up the opportunity:

With so many boomers retiring from the trades, the U.S. is going to need a lot more pipe-fitters, nuclear power plant operators, carpenters, welders, utility workers — the list is long. But the problem is not enough young people are getting that kind of training.

Personally, I’m on the wrong end of the baby boom. But those in the Millennial Generation (which my daughter is on the lead of as she was born in 1983) are indeed coming in at a good time. Problem is that we as parents have been fooled into believing college is the only path to success; that is, until we have to call the plumber, the electrician, or the mechanic who is good with his or her hands and has the proper aptitude to fix things. Chances are there’s a little gray in his hair, and while the last few years have been tough on these tradesmen economically they still have the skills to succeed.

What I seek is a path to success for our kids which doesn’t necessarily involve college and the massive debt that goes with it. If America can get back to building things and working with its hands, we can succeed like my father did with our family. We may never have been rich, but we had a roof over our head, food on the table, and those things we needed to succeed. Once every couple years we would go on vacation, and until I was in high school my mom was a stay-at-home mom. In short, we were a fairly typical middle-class Midwestern family in a blue-collar town.

The blue-collar upbringing really wasn’t that bad, and it’s a model we went too far away from for too long. Hopefully we have a chance to bring it back with today’s youth.

Different perspectives

It’s not quite a GO Friday, but relatively close. I’m going to point out a piece on the Manufacture This blog, which is a product of the Alliance for American Manufacturing. In it, they note: “We asked Americans in manufacturing about the State of the Union. Here’s what they said.” The post excerpts from interviews with 10 Americans about how they assess the current economic situation; of course, most are worried about some of the pet issues AAM talks about and advocates for as well.

Jobs, opportunity, and a growing economy are what middle-class families want President Obama to speak to during Tuesday’s State of the Union address. The faces in the Alliance for American Manufacturing’s (AAM) “Manufacturing State of the Union Box” will not be in Washington for the speech. Instead, they will watch from home or work, hoping President Obama will offer solutions on issues that matter to them, including manufacturing jobs that afford them a middle-class lifestyle.

Quite honestly, the AAM’s leftward bias shows through in that statement because it’s highly likely both the Republican and TEA Party responses will advance possible solutions for what ails the middle class as well. In fact, I would be brash enough to state that government is not the solution at all – getting it out of the way as much as possible seems to me a more likely prescription to cure an ailing economy. Let entrepreneurs of all stripes thrive, workers have the freedom to work in a union shop without joining the union, and minimize regulations so that more labor is spent being productive than reactive. Somehow, though, I don’t think these will be addressed in either the State of the Union speech or its responses, although the TEA Party one may come relatively close. Unfortunately, not a lot of people will see it because viewership for the SotU is relatively light to begin with and the patience of most Americans with Barack Obama wears thin quickly.

So it will be interesting to follow the reaction of the AAM ten after the speech on Tuesday, and whether they paid any attention to the Republican or TEA Party responses.

186,000 reasons to smile (and one to worry about)

In the quest to get America back to making things, it was good news to find that manufacturers added 17,000 jobs in December. That brought the 2014 growth in that sector to 186,000, continuing the steady growth in that sector since the job market hit bottom there in 2009-10. When you consider that 2012 predictions saw the manufacturing sector losing jobs through this decade, having a very positive number nearly halfway through is a good sign.

Naturally Barack Obama tried to take some credit for this during a speech at a Ford plant near Detroit last week. As I noted in a piece I wrote for the Patriot Post, it’s ironic that the plant was idled due to slow sales of hybrids and small cars built there, but the auto industry has played a part in the resurgence of manufacturing jobs in America. This is particularly true in the construction and expansion of “transplant” auto plants in the South by a number of foreign automakers.

But there has been criticism of Obama from his political peers. As a carryover from my American Certified days I often quote Scott Paul, the president of the Alliance for American Manufacturing, because his organization is strongly influenced by Big Labor and presumably supported Obama in both his elections. Yet Paul is none too happy with Obama’s progress:

Manufacturing job growth slowed to 17,000 in December, which portends some of the challenges an overly strong dollar, weak global demand, and high goods trade deficits may bring in 2015. While President Obama is touting factory job gains and our Congressional leaders are looking for ways to rebuild the middle class, what’s missing for manufacturing is good policy.

Congress and the president need to hold China and Japan accountable for currency manipulation and mercantilism, and invest in our infrastructure. New innovation institutes are a good thing, but their presence alone won’t bring manufacturing back. And as the president enters the final half of his second term, he’s falling way behind his goal to create one million new manufacturing jobs.

The innovation institutes Paul refers to are public-private partnerships being created around the country in various fields, in the most recent case advanced composites. But Obama lags behind on his promised 1 million new manufacturing jobs for this term as it nears the halfway mark as he’s created just 283,000. It’s great if you’re one of those newly employed workers, but his policies are leaving a lot of chips on the table. In fact, National Association of Manufacturers economist Chad Moutray frets that:

…manufacturers still face a number of challenges, ranging from slowing global growth to a still-cautious consumer to the prospect of increased interest rates. With the start of the 114th Congress, manufacturers are optimistic that there will be positive developments on various critical pro-growth measures, including comprehensive tax reform, trade promotion authority and a long-term reauthorization of the Export-Import Bank, and focusing on important infrastructure priorities like building the Keystone XL pipeline and addressing the solvency of the Highway Trust Fund.

While manufacturers would like to see these measures, attaining some of them may be tough sledding in a conservative Congress. There are a number of representatives and conservative groups who don’t want to give the President fast track trade authority, wish to see the Export-Import Bank mothballed out of existence, and will not consider increasing the federal gasoline tax – an action for which Moutray uses the euphemism “addressing the solvency of the Highway Trust Fund.” These actions may benefit the large manufacturers but won’t help the bread and butter industries solely serving the domestic market like the 24-employee machining shop or the plastics plant that employs 80.

Turning to the state level, our local manufacturing (so to speak) of poultry has a big week coming up. On Wednesday morning, the final deadline to submit new regulations to the Maryland Register for the January 23 printing will pass. You may recall that the December 1, 2014 Maryland Register featured the new Phosphorus Management Tool regulations as proposed (page 1432 overall, page 18 on the PDF file.) The new regulations were not in the January 9 edition, so January 23 may be the last chance to get these published under the O’Malley administration due to the deadline being set in MOM’s waning days.

Yet I’m hearing the rumors that a legislative bill is in the works, to be introduced in the coming days by liberal Democrats from across the bridge. Doing this legislatively would perhaps buy a few months for local farmers because such a bill would probably take effect in the first of October if not for the almost certain veto from Governor Hogan. If Democrats hold together, though, they would have enough votes to override the veto in January 2016, at which time the bill would belatedly take effect. Still, it will be difficult to stop such a bill given the lack of Republicans and common-sense Democrats in the General Assembly. To sustain a Hogan veto would take 57 House members and 19 Senators, necessitating seven Democrats in the House and five in the Senate to join all the Republicans.

We haven’t received the data yet to know whether the installation of Bob Culver as County Executive was enough to break an 11-month job losing streak year-over-year here in Wicomico County, but his task would be that much tougher with these regulations put in place.

‘Made in America’ gains strength in November

It was good news in November for manufacturers, at least as expressed on the employment front – based on the November jobs report and revisions to previous reports, the sector gained 48,000 workers over that timeframe.

Naturally, manufacturing supporters were cheered by the news, with the union-backed Alliance for American Manufacturing (AAM) noting that Barack Obama is now over 1/4 of the way to his promise of a million new manufacturing jobs in his second term, while economist Chad Mowbray of the National Association of Manufacturers (NAM) trade group pointed out robust growth in new orders was beginning to translate into new employees.

However, both groups saw some clouds among the silver linings. In the case of AAM, their complaint was the “failure to stop currency manipulation by China and Japan” while NAM cited “headwinds such as rising health care costs and regulatory burdens.”

Each complaint has some validity, but for the majority of manufacturers the specter of operational costs is a key deterrent to expansion or even staying in business. While it’s not manufacturing in a traditional sense – and certainly applies on a more limited scale than federal edicts which can overturn an entire industry – one example could be how the local processing of chicken would take a blow from ill-advised state phosphorus regulations that have the potential to drive the poultry business to different areas of the country. Needless to say, such a result would be devastating to this part of the state, leaving just tourism and some limited local services to provide the employment to support our region.

And while I’m mentioning Maryland politics, I may as well make one other pronouncement here. As I followed his gubernatorial campaign for a year, I paid attention to how Ron George studied and shared his thoughts on the prospect of making things in Maryland. I hope Larry Hogan can utilize Ron’s passion and expertise in his administration. While we would love to score an auto plant or other similarly large employer in this area of the state, a more realistic goal might be to, as Ron stressed during his campaign, fill up the existing facilities and areas several towns on the Eastern Shore have already laid out for manufacturing. To use a local example, adding 100 jobs for Wicomico County residents would immediately shave 0.2% off our unemployment rate, not to mention bring up the standard of living for everyone else.

A week ago yesterday we celebrated Small Business Saturday, but the best way to support them (other than shopping there) would be to make their lives easier by calling off the government regulator’s dogs and encouraging them to grow so that sometime down the road we can be the manufacturing power we once were.

A doable goal?

Yesterday we received word that the unemployment rate dropped again, with another month of job growth in the 200,000 range. It’s not the Reagan recovery of the 1980s – when we had 15 straight months of job growth in 1983-84 that would put this latest number to shame, including a whopping 1,115,000 jobs created in September 1983 – but it is a reasonably decent run.

Yet just as manufacturing didn’t share in the Reagan-era gains as much as other sectors did (in fact, it lost some ground), the second Obama term has also fallen well short of manufacturing growth goals. I’ve discussed this group and its job tally before both here and on my former American Certified site, but the Alliance for American Manufacturing tracks progress toward the one million manufacturing jobs Barack Obama promised in his second term.

AAM’s president Scott Paul isn’t all that pleased about it, either.

The good news is that manufacturing jobs have grown over the past few months. The bad news is that they haven’t grown fast enough. I’m very concerned that a surge of imports from China and a paucity of public investment in infrastructure will continue to hamper the great potential of the productive sector of our economy.

Hopes of achieving the White House goal of 1 million new jobs in the Administration’s final term are fading fast. Without some progress on the trade deficit and a long-term infrastructure plan, I don’t see that changing. No doubt the economic anxiety that many Americans still feel is compounded by stagnant wage growth and diminished opportunities for middle class careers.

Two of the key issues AAM harps on are, indeed, currency manipulation and infrastructure investment, although they also took time recently to praise Obama’s manufacturing initiatives and chastise Walmart for their ‘buy American’ effort because much of it comes in the form of produce and groceries. Around these parts, we don’t really mind that emphasis because we produce a lot of American-grown poultry so if Walmart is willing to invest in us we’re happy to provide. (Then again, that promised distribution center would be nice too.) Of course, AAM is backed in part by the steelworkers’ union so one can reasonably assume their view is the center-left’s perspective.

Even so, the group is useful because it makes some valid points. And I think we should have some focus on creating manufacturing jobs in Maryland, as the defunct gubernatorial campaign of outgoing Delegate Ron George tried to do.

Thus, I think the incoming Hogan/Rutherford administration should make it a goal to create 50,000 new manufacturing jobs in Maryland over his first four-year term – if he succeeds, you better believe he deserves a second. According to BLS figures, as of September an estimated 103,000 people are employed in manufacturing in Maryland. But if you look at past data, it’s not unprecedented to have 150,000 (as late as November 2002) or even 200,000 (as late as June 1990) working in the field. And when you take the confluence of a state that is supposedly #1 in education and combine it with the proximity to both major markets and inexpensive energy sources, there’s no reason we should have lost 30,000 jobs in the manufacturing sector under Martin O’Malley – or 16,000 under Bob Ehrlich, for that matter.

But how do you turn things around in four years? Maryland has to make people notice they are open for business, and there are some radical proposals I have to help with that turnaround.

First of all, rather than tweak around the edges with lowering the corporate tax rate, why not just eliminate it altogether? The revenue to the state from that toll is $1.011 billion in FY2015, which is far less than the annual budgetary increase has been. Would that not send a message that we are serious about job growth and immediately improve our status as a business-friendly state?

The next proposals are somewhat more controversial. To the extent we are allowed by the federal government and its environmental regulations, those who choose to invest in the state and create jobs should have an easier path to getting environmental permits and zoning approvals. Even if a moratorium is temporary, making it easier to deal with MDE regulations would encourage job creation. Most of Maryland’s towns and cities already have industrial sites available, but we shouldn’t discourage construction in rural areas if a job creator needs more space.

We’ve also heard about the construction of the Purple Line in Montgomery and Prince George’s counties and the Red Line in Baltimore – combined, the two are expected to fetch a price tag of $5.33 billion. For that sum, it seems to me we could build a lot of interstate highway – even if this $4 million per mile figure is low (and it would be 1,267 miles of highway based on the combined cost of the Red Line and Purple Line) we could do a lot to assist in moving goods through and from Maryland, whether by finishing the originally envisioned I-97 through to the Potomac (and with Virginia’s assistance, to I-95 near Richmond) or enlisting Virginia and Delaware’s help in improving the U.S. 13/58 corridor to interstate standards to provide a secondary route around Richmond, Washington, and Baltimore.

Once we eliminate the onerous restrictions proposed for fracking and begin to open up the western end of the state for exploration, and (dare I say it?) work on making Maryland a right-to-work state like Virginia – or even creating right-to-work zones in certain rural counties like the Eastern Shore and Maryland’s western panhandle – the potential is there to indeed create those 50,000 manufacturing jobs – and a lot more! It just takes a leader with foresight and the cajones to appeal to the Democrats in the General Assembly as well as a Republican Party unafraid to take it to the streets in the districts of recalcitrant members of Maryland’s obstructionist majority party.

But even if we only create 40,000 or 25,000 manufacturing jobs through these policies, the state would be better-positioned to compete for a lot of other jobs as well, and the need is great. For too long this state has put its economic eggs in the federal government’s basket and there’s a changing mood about the need for an expansive presence inside the Beltway. Rightsizing the federal government means Maryland has to come up with another plan, and this one has proven to be a success time and time again across the nation.

A mediocre manufacturing day

As I was down a computer over the weekend thanks to the need for maintenance and a new part, I didn’t get a chance to talk about last Friday’s National Manufacturing Day; a day which coincided with the disappointing news that only 4,000 jobs were added in that sector last month (out of 248,000 total.) An industry insider I often cited when I did my American Certified blog is Scott Paul, president of the union-backed Alliance for American Manufacturing. His take:

The past two months show manufacturing job gains have again stalled, at least temporarily. Numbers like these are a blow to the president’s goal of 1 million new manufacturing jobs in his second term. A large and persistent trade deficit and a paucity of investment in infrastructure are two obstacles that stand in the way of actual progress.

AAM measures the progress toward that goal of one million, and current numbers place the additional manufacturing jobs at a puny 189,000. The total actually retreated thanks to negative revisions in July and August reports, but has not eclipsed 200,000 yet at a point when Obama is nearing the halfway mark to his term.

So again one has to ask the question: why isn’t the manufacturing that used to support a solid middle-class band of Americans coming back home? Are we not able to supply workers who Barack Obama noted last week are “not just punching in and pounding rivets anymore; you’re coding computers and you’re guiding robots. You’re mastering 3D printing. And these jobs require some higher education or technical training.” Perhaps the push toward getting everyone into a four-year college in order to get that liberal arts degree is affecting workforce readiness, but that’s only one part of the answer.

I have never been able to figure out just how it can be that a company moves to China to make money. The most obvious answer would seem to be the extremely cheap labor cost. One figure I found pegged Chinese manufacturing wages at 46,431 yuan annually, which is roughly $7,429 per year. Obviously that is significantly less than even our minimum wage would be ($15,080 a year) and the vast majority of factory workers make well above minimum wage. But there’s also the time and expense of shipping products back to market to consider, risks which could be mitigated to some extent by manufacturing locally but apparently those costs don’t affect the ledger sheet enough to bring a lot of the manufacturing we’ve lost back here. “Made in China” is still a familiar sight on consumer products.

But there’s still a large piece of the pie which we can help ourselves to locally, even without the protectionist trade theory AAM supports. America as a whole and Maryland in particular have some significant assets in place, but there’s so much room for improvement if the will to make these changes can be found. Tax policy on both the federal and state level can be made into a far smaller impediment, as would a more hands-off regulatory approach. And new infrastructure can be put in place within the transportation realm to make it easier for our products to get to the East Coast market of which we occupy the southern fringe.

Yet as a nation and state we continue to work in the opposite direction, and somehow are amazed that the results aren’t what we thought we would get. We’re on a pace well short of that million-job goal, and adding 4,000 a month won’t get us there. The number should be upwards of 20,000 a month on a normal pace and we’re going to need 30,000 a month the rest of the way to meet the goal. Put another way, we would need to open 10 new Chattanooga Volkswagen assembly plants a month, or each month add 300 more modest facilities employing 100 apiece. Public policy being what it is today, that’s not going to happen and it’s a shame.

It took the better part of a century to make America into a manufacturing power, and perhaps three decades to erode away our advantages. But if we put our nose to the grindstone, the next generation of Americans may bring us back to where we were.