United Steelworkers – monoblogue

AC Week in review – July 20, 2014

It was a varied palette of items written about on my American Certified blog, The Sausage Grinder. Maybe it was a little more like scrapple. Regardless, I made several contributions to the discourse.

For most of the spring and summer, I’ve been following a sort of obscure Commerce Department case regarding allegations of Korean dumping of a processed steel piping product called Oil Country Tubular Goods – it’s strange that Korea is an OCTG producer when it has little oil. They made a decision favoring American steelworkers, which got positive reaction from a variety of interests.

One of those I quoted in the Commerce piece was the leader of the steelworkers’ union. His fellows at the United Auto Workers got an unexpected surprise from Volkswagen, which let the UAW in the back door despite workers at the Chattanooga plant voting against the UAW in February.

The concept of economic patriotism was brought out last week in a letter from Treasury Secretary Jack Lew, who pressed Congress to do something about the practice of tax inversion, where companies transfer assets overseas to take advantage of lower tax rates. While I didn’t bring up the argument in my piece, locally it’s just like the practice of stores selling big-ticket items locating just across the Delaware line so they can advertise their “no sales tax” prices and hope to increase volume accordingly.

Finally, I restated the obvious: Obamacare rates will go up in 2015. In a government takeover of the health insurance industry, did you really expect otherwise?

As always, I’m working on new stuff for next week, with other stories to follow.

AC Week in review: June 8, 2014

Wouldn’t you know it: I begin a series only to bump it in week 2 because of MDGOP debate coverage. So this will truly be two weeks in review, but I’m sure you really don’t mind.

I begin by asking the question: can America keep making things? I found an interesting perspective on the question and added my own thoughts. But I also found that workers, STEM-based or not, should be flexible and highly-trained. (And while it doesn’t pertain directly to AC, I was pleased that one of our gubernatorial candidates has the same line of thinking.)

In order for our manufacturing economy to succeed, though, we need to have others around the world play fair. Unfortunately, not only China has been caught cheating on trade, with them and other countries threatening up to 500,000 steel jobs, but right here at home one group of American manufacturers is concerned that federal regulators unfairly have them in their crosshairs as well.

Longtime readers know as well that I’m excited about America’s ongoing energy boom, and in this case I look at how manufacturing can benefit, with a little help from regulators. And while the EPA is trying to do away with the coal industry through onerous regulations, Congress on the other hand is trying to rein in that body run amok with accountability and transparency.

I’m sure in the next couple days – since the unemployment rate is always released on a Friday, for weekend analysis – we will get spin on it, but this is another pre-launch piece I wrote last month on May’s unemployment numbers.

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On the first Friday of this month, analysts cheered the new low unemployment number of 6.3 percent, a low not seen in nearly six years. Moreover, the economy added 288,000 jobs – although that news was tempered by a labor force participation drop of more than 800,000 workers.

Yet out of those 288,000 jobs, just 12,000 were added in the manufacturing sector. That was “surprisingly weak,” according to Alliance for American Manufacturing (AAM) president Scott Paul. The AAM, an advocacy group backed mainly by the United Steelworkers union, contends that 5.8 million jobs could eventually be created by stopping currency manipulation by China, citing a recent Economic Policy Institute report which called the practice the “primary cause” of our trade deficit.

On a similar front, economist Chad Mowbray, who writes for the Shopfloor blog for the National Association of Manufacturers, detailed a number of “nagging challenges” for American manufacturers, leading off with the weak 0.1% first quarter GDP growth announced last week. (Editor’s note: that number has since been revised to a negative 1 percent growth.) Mowbray added that high marginal tax rates and uncertainty about health care costs could be factoring into the slow market growth.

In all these cases, policymakers in Washington are at loggerheads on how to proceed. A bill to deal with the currency manipulation was introduced last year and has bipartisan support, but mainly from Democrats. Unfortunately, that side seems to be placing more time and effort into trying to increase the minimum wage, which is a political nonstarter and is thought by many, including the nonpartisan CBO, to be a job killer. Republicans seem to be content with introducing bills to tweak around the edges on both tax reform and health care, but know there’s little chance of them advancing through the Senate, particularly six months before the midterm elections.

The situation, then, remains a challenging one. If, as some analysts have cited, the weather played a factor in slow economic growth, that excuse will dissipate in the summer sun. The question of whether the May jobs report was a mirage or portends better things is important, but there’s little doubt that if the manufacturing sector lags behind any recovery it will impede our progress going forward.

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It’s been a busy week, but I’ll keep monitoring the manufacturing market.

Competing views on manufacturing

As a follow up and way to revise and extend remarks on Friday’s post about the Alliance for American Manufacturing, I decided to dig a little bit more into who they are and what they are proposing. The idea of “Made in America” is a sound one, for a number of reasons, but as I pointed out the AAM seems to have many of its eggs in the protectionist basket. To some extent, they have a case: even their attempt to furnish their Washington, D.C. office with exclusively American-made goods fell a little short:

Our tour began in one of the small offices, where (AAM executive director Scott) Paul showed off a desk from Washington state. But things took a turn downhill from there, when we got to the products on the desk.

“You can’t find phones, video display terminals,” says Paul. “I mean, none of that is American-made.” Paul couldn’t find American-made computers, either, though that may change following Apple’s announcement that it plans to make some Macs in the United States.

But then I found an entire AAM-backed legislative agenda, for which they linked to this subpage on the website of Delaware’s junior Senator Chris Coons. In it, we find a number of top-down legislative proposals in the areas of skills training, exports, access to capital, and “conditions necessary for growth.” At the time of its last update, about half of these proposals hadn’t been introduced as bills, with the last introduced bill being S.1400 in July of this year – either the website is not often updated or these proposals have languished on the back burner of a do-nothing, obstructionist Senate. This to me is quite telling as most of the sponsors are Democrats, who have the majority in the body.

It should be pointed out, too, that the Alliance for American Manufacturing is the brainchild of the United Steelworkers union and a “select group of America’s leading manufacturers.” The list of this select group isn’t widely disseminated, but the AAM describes that:

Leo Gerard, the International President of the United Steelworkers, and CEOs of Steelworker-represented manufacturers understood that. These leaders launched AAM in 2007 to build on the success of the “Stand Up For Steel” coalition.

The roots of that coalition date back to the 1990s, so this fight is an old one under a relatively new name since the AAM was founded in 2007. Essentially it’s a union partnership with the closed shops under its wing; a business-labor pact in name only.

Now that you understand its roots, it becomes more clear why they prescribe their menu of solutions. The steel industry is long known as a bastion of protectionism, given the charges of foreign steel dumping a decade or so back.

So are there any other solutions out there? The competing group to AAM is the National Association of Manufacturers, a group whose board is representative of over 200 industrial leaders. Their vision is somewhat different than that of the union-backed organization, although there are elements of protectionism and top-down dictates in their plan as well. Most worrisome to me is their advocacy for immigration reform, which is needed but must be done in such a manner that law-breaking is not rewarded at the expense of those who went about it in the correct manner.

Yet NAM makes one sound point:

Because of our tax, tort, energy and regulatory policies, it is 20 percent more expensive to do business in the United States than it is in the countries that are our nine largest trading partners — and that excludes the cost of labor.

And it’s not like the problem is new, particularly here in Maryland. I mentioned Friday that Ron George is perhaps the gubernatorial candidate most attuned to the problem (David Craig has his own plan as well), although all but one of the players involved at the time had their say at an October manufacturing summit. Moreover, outgoing Governor Martin O’Malley was even forced to pay lip service to the issue.

But we have had this discussion for several years, and the prescriptions which were suggested a half-decade ago languished on the bookshelf while Maryland developed a growing reputation as a state hostile to business. It’s sort of strange that what I wrote on Friday – as a person who had never seen this report – nailed their first point about “a competitive and stable business environment.” They also talked about the need for a “balanced approach” to energy rather than the heavy emphasis on renewables, which is another pet peeve of mine. (Little did they know at the time the report was compiled – just five short years ago – that America and a portion of Maryland were sitting on an energy gold mine.)

In short, the solutions to the problem seem to be there and many fall into the conservative, pro-liberty camp. If we tell the radical environmentalists and regulators to go pound sand because we have work to do, chances are more of us would indeed have more work to do and more prosperity to spread around.