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Donald Trump Shines a Spotlight on Domestic Manufacturing

What is the job of the President? I am not asking about the things the President has to do, but the things the President traditionally does. I ask this because the news media often says that the President traditionally does not do whatever Donald Trump just did. We might not all be in agreement on whether what he did was good or bad, that is except for his stance on domestic manufacturing.

Traditionally, the President works at the macro level and does not get involved in granular issues on a company level. Not Donald Trump. He has shown that he is willing to go after individual companies to achieve his goal of keeping/creating domestic manufacturing jobs. Donald Trump has already had an impact on domestic manufacturing with a couple of high-profile successes.

Compared to the overall economy, the public successes are just a drop in the bucket, but those successes are significant. Those successes are significant, not only the people keeping or getting those jobs, in raising awareness of the importance of buying products made in the United States.
This site, like many others, work to increase awareness of the importance of buying products made in the United States. I would argue that in a few short months, Donald Trump has expanded the awareness of this issue tenfold. The effect of this is already being seen as companies scrap plans to move manufacturing out of the United States.

As a businessman, Donald Trump has either manufactured, or purchased materials manufactured, outside the United States. As a businessman, he had to decide which of manufacturing domestically or a lower price would help his business more. Unfortunately, too many people just do not care where the things that they buy are made.

As I mentioned before, I feel that Donald Trump has greatly raised awareness of the importance of buying domestically manufactured goods. Unfortunately, the public has a short memory on issues like this. Donald Trump needs to continue his efforts in this area. If doing this means that Donald Trump will take credit for virtually all new manufacturing jobs from now until many years after he leaves office. Personally, I do not care because for every real success made public there will be numerous hidden successes he should get credit for.

This is why ProudlyMadeInAmerica.com proudly endorses Donald Trump in his efforts to expand manufacturing in the United States. As a businessman who has firsthand experience with the business drivers that push manufacturers to make their products elsewhere, Donald Trump can work to change those drivers to keep manufacturers here. We are also confident that Donald Trump, and his administration, will work in a way that will be least disruptive to the global economy while it strengthens our domestic economy. Our only request of Donald Trump is that he keeps this message alive even after he leaves office.

Star Trek vs. Elysium

What type of society is the world headed to?  Will it be more like Star Trek or Elysium?  Why is this important on a blog site about manufacturing?  For those of you not familiar with either science fiction depictions of earth generations from now, here is a quick synopsis.   In Star Trek there is enough of everything for everyone while in Elysium there is not enough of anything for everyone except the super-rich.  In both cases technology advances allows for ample production of virtually everything utilizing a minimal manufacturing workforce.

To answer the last question first, at some point manufacturing will be so efficient that supplying the worlds needs for an item will be satisfied by a relatively small workforce.   Companies are continuing to automate production and trim the number of workers needed.  Even China is finding that their large and cheap labor pool is becoming less competitive for many areas of manufacturing.   This is behind the movement of some manufacturing jobs back to the United States.  I would be remiss if I did not point out that the returning manufacturing jobs is also helped out by the stagnant wages of domestic manufacturing workers over the last several decades.   This is why businesses are relocating manufacturing closer to the market being served.  It is not surprising that manufacturing jobs have been moving into, or back to, many other countries and not just the United States.

When the United States, and other countries, started their push to globalize manufacturing it was a good thing for businesses and workers in rich countries and poor countries.  Low end manufacturing, such as flatware, quickly moved to low cost countries.   Our economy was okay for a while since we had new markets for other, more complex, items from automobiles to electronics.  Problems started to appear when two things happened; low cost countries developed the infrastructure to start producing higher end items and higher cost countries where producing some products better than we did domestically.  It could have been worse.  Thanks to the higher cost countries realizing that they needed to move their production closer to the markets they served, many foreign companies, such as automobile companies and other manufacturers, moved production and/or assembly to the United States.

Despite the recent, slight rebound in domestic manufacturing, the long term trend will continue to be less workers and more output per worker.   Eventually, there will be such a small percentage of manufacturing workers needed to supply an economy that a transition to another type of economy will be needed.

I have never been a strong believer that an innovation economy is the answer.  Innovation jobs do not have the same, multiplier, effect on job creation as manufacturing jobs and they often did not help the economy the innovation was from.  This means that more innovation jobs are needed to replace lost manufacturing jobs. also, innovation jobs are under the same pressure for productivity as manufacturing jobs.  At some point there will not be enough innovation to support any, or all, economies.

All is not doom and gloom.  Many things can happen that can make this a non-issue, but who knows when/if that will happen.  This makes the need to support domestic manufacturing more important.  The longer we support and maintain our domestic manufacturing, the longer we provide a foundation for our economy.

So what type of society is the world headed to?  I do not have an answer, but I hope for the best.  All I want to do is keep our economy strong for the next generation and on.  Buying domestic products will help our economy and maybe help ease into a better low manufacturing workforce economy that will have enough of everything for everybody.

If it was only low wages, that would be fine.

The recent collapse of a factory building in Bangladesh is a tragedy. The massive loss of life and the large number of injured are appalling on many accounts. What this major tragedy shows clearly is that the lure of low cost countries for manufacturing is not just about the low pay for the workers. In many cases not having to worry about worker safety and building standards is where major costs are reduced.

To be clear, low worker wages is part of the overall equation, but it is not the whole story. Some studies indicate that if certain garments were made in the United States, the overall price increase would be about a dime per item. In many cases, the extra cost of a “Made in the US” garment is worth the additional cost since it puts a neighbor to work and it increases the overall domestic economy.

According to the OSHA website, http://www.osha.gov/oshstats/commonstats.html, there are, on the average, 13 work related deaths a day (2011) in the United States. This number is down from an average of 38 a day in 1970. Even with all the regulations, and the cost to the individual business of complying with the regulations, there are still deaths.

We can argue whether or not the cost justifies the need, but the goal of the safety regulations should be to make the overall environment safe. This costs money to do, and in some cases it impinges on productivity. Sometimes this makes it hard to compete with places like Bangladesh where the workers are paid less, the factory costs less to build, the equipment does not have all the safety features so they cost less, etc. The overall cost of doing business is less in almost all areas, but at what cost.

The United States does have its own problems. We might have the regulations, but as the explosion at the West Fertilizer Company proved, the resources are just not there to do proper inspections. This leads to some cases where there is a violation that leads to a catastrophe. Even with its flaws, the system in the United States is still pretty good and should be what other countries strive for.

As consumers, we need to understand what our purchasing choices are what they mean. The label “Made in the U.S.A.” means more than jobs for the domestic economy. That label also means that the people responsible for the goods or service we buy were able to work in a safe environment, and usually for reasonable wages.

President Obama or Governor Romney – Who should I vote for?

I have spent a great deal of time debating myself on whether or not this site should endorse a candidate for President. I have tried to keep this site neutral, as best I could, on the topics discussed. I know that my tendency to lean “Green” slants some of my opinions. There are some very important issues involving manufacturing that I have stayed away from due to their political nature. In general, websites, twitter accounts, and Facebook groups that deal with a specific topic should stick to that topic only and not branch out into unrelated issues in support of a particular candidate. It is fair to praise or criticize a particular candidate on the specific issues related to the site. I have seen some pro “Made In America” websites tweet about candidate issues having nothing to do with manufacturing.

Some of the major issues that affect manufacturing are very political. Issues such as healthcare costs, regulations, taxes, China and cheap energy are highly charged political issues. Which candidate you support depends on some clearly personal opinions on what is an acceptable balance in the results of a candidates stance.

Concerning healthcare and manufacturing, all the parties want to bring down the cost disadvantage of healthcare for our manufacturers. The issue that divides the different parties’ boils down to whom in this country gets coverage. The views range from getting rid of Medicare and Medicaid to complete government control of healthcare. The two major parties are, for the most part, in the middle of this spectrum. Just remember that many studies on ObamaCare often reflect the politics of the organization doing the study. The CBO’s analysis is considered impartial and is probably a good place to start.

The issue of regulations is a little more complicated and covers sub-topic from the EPA to labor laws. On many of the sub-topics the many issue is where to draw the line on what needs to be protected. Although there are some members of each party that go to the extreme, for the most part the parties are not that far apart. Does anyone really believe that one party wants to remove regulations so we have the ecological problems that China now has? On the other side, I find it hard to believe that there are politicians that would take down the economy to save a few trees.

On taxes and manufacturing, there is more in common than disagreement between the two major parties. It is not uncommon for either blue or red states to give tax breaks for manufacturing companies to locate in their area. The issue with taxes is that there is a big difference between statutory (or sometimes referred to as marginal) vs. effective tax rates. The United States has one of the highest marginal tax rates at 35.6%, as compared to Canada which has a 19.9% marginal rate. The effective tax rate, which is what companies actually pay, is lower in the United States (13.4%) than Canada (14.5%). The problem is that the larger manufacturers often have more offsets that lower their effective tax rates to, in some cases, nothing. The small to midsized manufacturers pay significantly more. What I am looking for from the candidates, and their parties, is to get rid of the disparity so most of the companies are paying around the average effective rate.

China is also a very complicated issue. Some of the manufacturing issues with China are driven by social issues. In the end, both parties will talk tough, but operate in a small band of what they can actually accomplish. Labeling China as a currency manipulator might make a good sound bite, but most economics feel it is bad policy.

Cheap energy is probably the best thing we can do for manufacturing and our economy in general. By cheap energy I mostly mean natural gas, coal, nuclear power. The supply of cheap natural gas will produce jobs in the chemical and other high energy need manufacturing. The problem with natural gas is fracking and the potential for environmental problems. For natural gas, coal and nuclear energy the issue is where you draw the line on what the acceptable risk to the environment is.

So who should you vote for if domestic manufacturing is your most important issue? You will have to find out for yourself. Research the topics above, and others that you think are important, so you can decide for yourself. I am happy that we now have two candidates that have clearly stated that they understand the importance of domestic manufacturing for the economy.

All I want for Christmas

For several years I have been promoting a “Made in America Christmas”.  My family knows this so they try and give me gifts that were made in America.  This year, one of my gifts was a Lodge Logic Combo Cooker, which is a cast iron skillet and lid/griddle combo.   My first two thoughts about the gift were, “boy is this heavy” and followed immediately by “how am I going to use this on my electric stove.  Fast forward a few weeks to a Sunday morning when I was making breakfast for the family.  I had a craving for hash brown potatoes, so out comes the new skillet and I proceeded to make hash browns.   

Being that the skillet was pre-seasoned, all I had to do was take it out of the box, wipe it with a dry piece of paper towel and I was good to go.  When I put the skillet on the stove I told my wife that I was not sure how this was going to turn out. I then turned up the heat on the skillet and let it warm up.  I used that time to read the pamphlet that came with the skillet and do a quick online search on cooking with a cast iron skillet on an electric stove.  The initial information was not inspiring, since it documented problems and references to electric stove manufacturer’s statements that cast iron skillets should not be used on “glass top” electric stoves.   As I read further down I found people who used cast iron without problems, with many using the cast iron item weekly.  The major things I discovered from the online sources was that as long as I was careful not to drag the cast iron skillet across the stovetop and not overheat it, I would be fine.  With this information in hand, I went back to cooking my hash browns.   I was surprised at how well the cooking went.  From onions to the shredded potatoes, the skilled did a great job.  In all, the skillet took the heat well, maintained a consistent temperature, kept the food hot as my family took second and third helpings, it was easy to clean, and my hash browns came out great.  In fact, my family told me that I should make hash browns again.   

So now that I used the skillet, with great success, and my life became less hectic, I started looking into the Lodge Manufacturing Company.   From their website I discovered that the company was founded in 1896 by Joseph Lodge, in South Pittsburg, Tennessee, and that they are the oldest family-owned cookware foundry in America.  I was disappointed to learn that they import, from China, two lines of enamel coated cast iron cookware.  I emailed the company for some information and got some general information with a pledge to answer any additional questions not covered in the supplied material. 

From the supplied material I found that the Lodge Manufacturing Company is ahead of the curve on being green along with some basic company information.  In doing an internet search I found that they also have been a good corporate citizen.  They even have a $2,000/yr scholarship given out to a child/grand-child of their workers.  The Lodge Manufacturing has 220 U.S. employees, and Mark Kelly, of the Lodge Manufacturing Company, wrote “based on continuing record demand for Lodge Cast Iron, we are reviewing our production needs and may expand our US foundry but the final decision hasn’t been made.”  The company currently only attributes 6% of their sales to exports, but that percentage is growing.

The Lodge Manufacturing cites two main reasons why they import the enamel coated items from China; Production costs, and EPA restrictions on the manufacturing of bright-colored enamel.  So odds are that if you want enamel coated cast iron items they are not made in the U.S. no matter who the manufacturer is.

As stated before, in my research I found many posts on the internet about cast iron skillets, Dutch ovens, etc.   There are many avid users of cast iron on electric stoves, which I am now one of.  I would also point out that when a brand name, for the cast iron item, was mentioned by someone; it was almost always Lodge.  The company’s website says that some of the items made 100 years ago are still in use today.   Based on my experience I can see why and I also understand why they are having record demand.