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Manufacturing a U.S. decline

BY MATT HEINZE | JULY 28, 2011 7:20 AM

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As debt ceiling negotiations sit deadlocked, the economy continues to sputter on the home front.

Recently, a Roberts Dairy plant in Iowa City closed its doors for good, costing nearly 50 workers their jobs, while the Whirlpool plant in my hometown of Middle Amana laid off more than 300. These prominent manufacturing facilities, which have long employed area workers, unfortunately represent a trend throughout the country.

According to researchers at the Brookings Institute, between 2000 and 2009, the U.S. lost more than 30 percent of its manufacturing jobs, and employment in the industry has steadily dropped since the early 1980s.

While there's no quick fix for such a massive problem, it's important we begin to address the major contributors behind the decline of American manufacturing. For starters, legislators need to address two trouble spots: a gross trade imbalance with China and a need for immediate reinvestment in American research and development initiatives.

Manufacturing has long provided the bedrock for American ingenuity and leadership in the world; it provides millions with decent-paying jobs, increases domestic economic stability, and ensures intellectual and innovative dominance. Without a strong industrial base, America risks falling into mediocrity.

Now, some will immediately take issue with the claim that American manufacturing is faltering. Instead, they'll claim jobs are being lost because of technological innovations; machines, in their view, have replaced the American worker by increasing productivity. And though it's true industry productivity has grown over the past 10 years, the rate of growth has been substantially slower as compared with other U.S. industries.

A trend few would dispute, however, is the prevalence of outsourcing over the last decade. Our loss of jobs to global competition has been significant to put it mildly, most especially to China. So significant, in fact, that in a 2010 report from the Economic Policy Institute, researchers estimated that more than 1.5 million manufacturing jobs were lost between 2001 and 2008 because of the exorbitant trade imbalance held between the United States and China. So it would seem when pundits endlessly damn Corporate America for outsourcing, they are not entirely unfounded.

Numerous nonprofits and think tanks have advocated the need to implement changes to the current U.S-China trade imbalance. From the Alliance for American Manufacturers to the Center for American Progress, it's well understood China doesn't play by the rules when it comes to global trade.

For example, it artificially devalues its currency to gain a competitive advantage. By doing so, imported goods to the United States are sold at values much lower than they can be produced domestically. Worse still, the lower value means exported U.S. goods face a faux tariff, preventing American producers access to expanding Chinese markets.

But China also uses oppressive labor practices to gain the upper hand on foreign investment. By enacting measures to suppress workers' wages and allowing firms to demand excessive work hours, Chinese industry remains artificially low-cost.

Though current proposals in Congress — such as H.R. 639, which seeks to pressure proper Chinese currency valuation — represent steps in the right direction, more pressure must be placed on China to reform unfair trade and labor practices.

Funding for research and development also remains a vital concern if American manufacturing is to be rebooted. Without innovation, production is rendered largely irrelevant; and given the delicate state of the economy, innovative research remains hard to come by. Thankfully, lawmakers are willing to run with the idea of investing in research for future production, despite current deficit woes.

Last month, President Obama announced a $500 million program aimed at creating advanced manufacturing jobs. He said the program will work to promote university and private-sector collaboration in an attempt to expedite job creation and high-quality business operations.

Whether Washington will fully buy in to rebuilding America's manufacturing industry remains to be seen. For the sake of continued American prosperity, though, there is no other option.


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