Buchanan's thoughts on the death of manufacturing

[Rubberanvil]

Competiting with countries where the average wage is less than a dollar a day and there are no environmental or labor laws is something else.

Somehow I get the feeling you're talking to the wall.

[Stormbringer]

Reasonable competition is healthy.

Competitng with the EU or other First world countries is one thing.

Competiting with countries where the average wage is less than a dollar a day and there are no environmental or labor laws is something else.

Yeah, it is. And that's why you impose reasonable tariffs and taxes. You don't move to quash them out right. But you'd also better be pushing hard to get your industry in as good a shape as possible. The idea is to give them a chance, not a to give them a free ride.

That's the problem with so much of the US industry. They haven't kept up or done enough to compete. Over priced labor, aging technology, and simple bad management have screwed it over.

And like it or not, the one thing that means is that the days of unskilled, highly paid workers is over.

[Darth Wong]

Reasonable competition is healthy.

Competitng with the EU or other First world countries is one thing.

Competiting with countries where the average wage is less than a dollar a day and there are no environmental or labor laws is something else.

Ah, but we should not be directly competing with such countries. Countries like that generally don't have skilled workforces, after all, and a first-world nation should not be in the business of manufacturing in such a low-tech manner that it can be performed by unskilled labour.

Honestly, if a North American's job is so simple that some 12 year old in a sweatshop can do it, then he's probably being overpaid.

[Tsyroc]

I have a college degree and I make about $20 an hour. If somebody thinks they should make $25 for simply turning a screw on an assembly line, well think again.

I have a college degree and make less than $14 an hour. Granted I'm not working in my degree field, which pays even less, but I am in a somewhat skilled field.

More on topic. Back in the 80's I lived in the Quad Cities (Iowa/Illinois) right when a bunch of the labor unions screwed themselves out of jobs. One guy I knew was making $36 an hour with nothing but a high school education. I'm not sure what his job was but I know that his company, Caterpillar closed the plant and moved to France. You know something is wrong with your manufacturing/business practices if moving the plant to France is an improvement.

[TrailerParkJawa]

I have a college degree and I make about $20 an hour. If somebody thinks they should make $25 for simply turning a screw on an assembly line, well think again.

I have a college degree and make less than $14 an hour. Granted I'm not working in my degree field, which pays even less, but I am in a somewhat skilled field.

More on topic. Back in the 80's I lived in the Quad Cities (Iowa/Illinois) right when a bunch of the labor unions screwed themselves out of jobs. One guy I knew was making $36 an hour with nothing but a high school education. I'm not sure what his job was but I know that his company, Caterpillar closed the plant and moved to France. You know something is wrong with your manufacturing/business practices if moving the plant to France is an improvement.

This is a good example from both Wicked Pilot and Tsyroc. I bet 20 dollars an hour is a decent wage in Florida, and 14 is okay in Arizona not the best. Where I live 20 bucks and hour is the minimum wage required to afford a 1 bedroom / economy car lifestyle. So you can image what kind of wages a manufacturing job would require to a middle class lifestyle. Hence most manufacturing long ago left Silicon Valley for other states or overseas.

At my last full time job I was making $26.44/hour with a college degree , in a technical position and was still one of the lowest paid people in the company.

[MKSheppard]

This is a good example from both Wicked Pilot and Tsyroc. I bet 20 dollars an hour is a decent wage in Florida, and 14 is okay in Arizona not the best. Where I live 20 bucks and hour is the minimum wage required to afford a 1 bedroom / economy car lifestyle

Anyone remember the cartoon from the Klinton years?

Klinton: "I created x amount of new jobs!"

Worker at McDonalds: "I have two of them"

[MKSheppard]

Um...is this good?

http://www.frontpagemag.com/Articles/Re ... sp?ID=6408

An important U.S. high-tech manufacturer is shutting down its American operations, laying off hundreds of workers and moving sophisticated equipment now being used to make critical parts for smart bombs to the People's Republic of China [PRC], Insight has learned.

Indianapolis-based Magnequench Inc. has not yet publically announced the closing of its Valparaiso, Ind., factory, but Insight has confirmed that the company will shut down this year and relocate at least some of its high-tech machine tools to Tianjin, China. Word of the shutdown comes as the company is producing critical parts for the U.S. Joint Direct Attack Munition [JDAM] project, more widely known as smart bombs, raising heavy security issues related to the transfer of military technology to the PRC. The factory uses rare earths to produce sintered neodymium-iron-boron permanent magnets that have many industrial applications but are essential to the servos critical to precision-guided munitions. According to documents obtained by Insight, Magnequench UG currently is producing thousands of the rare-earth magnets for "SL Montevideo Tech," a Minnesota-based manufacturer of servos. That company confirmed to Insight that it holds a Department of Defense [DoD] contract to produce the high-tech motors for the precision-guided JDAM.

The Valparaiso-based manufacturer, originally known as UGIMAG, became Magnequench UG when it was acquired by Magnequench Inc. in August 2000. Magnequench Inc. had been purchased in 1995 by a consortium that included the China-based San Huan New Materials and Hi-Tech Co., created and at least partially owned by the Chinese Academy of Sciences in Beijing. Magnequench was a spin-off company of General Motors Corp. [GM], and at the time of the buyout was headquartered in Anderson, Ind.

Clyde South was a negotiator for the United Auto Workers Local 662 representing the workers at Magnequench when the consortium began negotiating to buy the company in 1995. In an interview with Insight, South says that worker concern about PRC influence over the consortium led to an "agreement with GM" that the plant would remain in Anderson for at least 10 years According to South, the buyers made the same agreement with the union, but since he had doubts about their intentions he took his concerns to Washington. Warnings fell on deaf ears. In August 2001, the sixth year of the 10-year agreement, South's distrust was validated when the consortium's managers "told us they intend to close the plant" and eliminate roughly 400 jobs.

The Magnequench plant in Anderson transforms neodymium, iron and boron into powder using a unique patented process that produces the exotic rare-earth magnets. Following the buyout in 1995, the production line at Anderson was "duplicated in China" at a facility built by the PRC company. According to South, after the company "made sure that it worked, they shut down" the Anderson facility. South says he suspects the buyout was about getting the technology, adding, "I believe the Chinese entity wanted to shut the plant down from the beginning. They are rapidly pursuing this technology."

Meanwhile, says the union negotiator, "They told us, 'We are going bankrupt,'" and therefore had to close the Anderson facility. This was not long after the consortium purchased UGIMAG in Valparaiso, according to critics, telling the workers there that they planned to keep the factory running. But, according to some sources, Magnequench Inc. had "refused to buy the buildings or the property" on which the factory was located, "suggesting a temporary arrangement." South said of his experience, "You just couldn't believe anything they told you."

The plant workers at Magnequench UG are organized by the United Steelworkers of America. Insight contacted union official Michael O'Brien, who confirmed negotiations with Magnequench UG regarding the company's future, but declined to comment further.

The transfer to Communist China of technologies that make rare-earth permanent magnets also is a matter of concern for defense and national-security experts, says Peter Leitner, a senior strategic-trade adviser to the DoD. Leitner says rare-earth magnets "lie at the heart of many of our most advanced weapons systems, particularly rockets, missiles and precision-guided weapons such as smart bombs and cruise missiles." He tells Insight why the PRC's need for this type of technology is urgent, noting that "China has an ongoing high-priority effort to produce a long-range cruise missile. They are trying to replicate the capabilities the U.S. has, such as with the Tomahawk [cruise missile], as part of their power projection, and expanding their ability to strike targets at long distances."

Since the 1995 buyout of Magnequench by the consortium of two Chinese companies and a cooperating U.S. firm, it has in turn bought at least two more high-tech companies that deal in rare-earth magnets. In addition to UGIMAG in 2000, which became Magnequench UG, it has bought GA Powders, which was a spin-off company of the Idaho National Engineering and Environmental Laboratory, a U.S. national lab. An insider tells Insight that "Magnequench UG is the last American company making these rare-earth magnets. When it moves to China, there are none left." Leitner sees a pattern. He says the Chinese "have targeted the manufacturing process through a variety of suspicious business activities and have been furiously transferring the manufacturing technology to China, thereby becoming the only source. They are purchasing U.S. companies, shutting them down and transferring them to China."

According to Leitner, "The Chinese are clearly trying to monopolize the world supply of rare-earth materials such as neodymium that are essential to the production of the militarily critical magnets that enable precise guidance and control of our most advanced weapons and aircraft." He warns that risks are involved in allowing this kind of technology transfer, adding: "By controlling the access to the magnets and the raw materials they are composed of, U.S. industry in general and the auto industry in particular can be held hostage to PRC blackmail and extortion in an effort to manipulate our foreign and military policy. This highly concentrated control - one country, one government - will be the sole source of something critical to the U.S. military and industrial base."

Intelligence analysts emphasize that the PRC routinely combines espionage operations with business deals. Internal PRC documents refer to this as advancing "economy and i national-defense construction." A 1999 congressional report on PRC espionage states that the Beijing government sees "providing civilian cover for military-industrial companies to acquire dual-use technology through purchase or joint-venture business dealings" as a responsibility of the government. The report lists "rare-earth metals ... for military aircraft and other weapons" as one of the primary targets of the PRC.

So how could this be happening? Because of the PRC's involvement in the 1995 buyout of Magnequench, the deal required the approval of the Committee on Foreign Investments in the United States [CFIUS], which is chaired by the secretary of the Treasury. CFIUS approval of the buyout predated a series of reports by the FBI and congressional committees warning of massive PRC espionage efforts against U.S. businesses and military technology. In one case, which involved the then-struggling McDonnell Douglas Corp., the China National Aero-Technology Import and Export Corp. [CATIC] targeted the U.S. aircraft giant's plant at Columbus, Ohio, according to government sources. Plant 85, as it was known, is where the bodies of the U.S. Air Force C-17 strategic transport plane and the MX intercontinental ballistic missile were made.

In 1994, CATIC made an offer to buy Plant 85 and relocate it to what was to be a civilian aircraft-production facility, according to government documents. The request for an export license for the plant's machine tools touched off a bitter feud among export-control officials at the DoD that still lingers nine years later. Those opposed to the sale argued that once the Plant 85 machine tools were exported to the PRC, they would be used to produce missiles for China's People's Liberation Army [PLA]. Those who favored the sale pointed to the ancillary deal the PRC dangled in front of McDonnell Douglas to purchase more than $1 billion worth of aircraft.

In the end, those in favor of the sale of Plant 85 won out and those opposed almost immediately were vindicated. According to government documents, within months of exporting the plant to China, U.S. officials learned that the sensitive machine tools had been diverted for use in a Chinese factory that makes the Silkworm missile that Beijing has provided to rogue nations. United Auto Workers union official South tells Insight he sees similarities between the cases of McDonnell Douglas and Magnequench, noting that immediately after the consortium's first Magnequench acquisition, "They transferred the patented jet-casting process to China."

In an interview with Insight, Magnequench Inc. President Archibald Cox Jr. initially denied but later confirmed having a contract for the production of rare-earth magnets for the JDAM. When asked about the shutdown of the Anderson plant last year, he acknowledged having a 10-year agreement with GM and the steelworkers, but insists that despite the early termination of that agreement the workers "got a fair deal" when the company bought out their contract. Cox tells Insight the closing of the Valparaiso plant was a matter of economics, and denies that the company is moving equipment to China.

"We are going to sell everything in the plant i unless we can use it somewhere else," says Cox. Insight has obtained evidence that "somewhere else" may mean China. A copy of an internal memo from the Valparaiso plant seems to contradict the "sell or auction" option. A brief memo, dated Jan. 23, states in part, "In the near future you will be seeing people in the plant performing measurements and a variety of estimating and planning activities in preparation for equipment sale and/or removal ... to give the company an idea of cost and logistics." According to eyewitness accounts, all such "people have been from China." Cox also acknowledges that Magnequench Inc. did not purchase the buildings or land where the Valparaiso plant is located, but refuses to characterize reluctance on the company's part: "It just wasn't part of the deal," Cox says.

And, Cox insists, "China is already selling the same products for less money."

A source with detailed and specific information about the internal operations of the company tells Insight that "the company set up their own competitors by transferring the machines and technology to China. Once the Chinese companies bought into Magnequench, they created their own competition."

According to company officials, Mangnequench asked for and received clearance to export equipment it has shipped to the PRC.

Meanwhile, employees of Magnequench UG have placed their hope in an unlikely labor-union ally. The one surefire deterrent to Magnequench UG's move to China would be for President George W. Bush to exercise his authority under the 1988 Exon-Florio amendment to the Defense Production Act and order San Huan New Materials to divest its holdings in this strategic U.S. company. In his State of the Union Address, the president offered a glimmer of hope for Magnequench employees by declaring his administration's intent to "strengthen global treaties banning the production and shipment of missile technologies." If so, say the workers, this may be a very good place to begin the process.

[Sea Skimmer]

More on topic. Back in the 80's I lived in the Quad Cities (Iowa/Illinois) right when a bunch of the labor unions screwed themselves out of jobs. One guy I knew was making $36 an hour with nothing but a high school education. I'm not sure what his job was but I know that his company, Caterpillar closed the plant and moved to France. You know something is wrong with your manufacturing/business practices if moving the plant to France is an improvement.

In my state the road workers who holds the STOP/GO signs makes 30 dollars and hour and the flagmen get something like 45 all because its hazardous duty. The job requirements are a high school diploma and a six or so week training course. You know I can understand people like telephone linemen making big salaries, a dangerous job with awful hours that requires both physical and mental skills. But holding a fucking sign and turning it every few minutes? The American job market is just fucked up.

And then of course we have the US merchant marine. Its union got a law passed requiring any American flagged ship sailing from an America port to another American port to have an all union crew paid union wages. The result was the number of ships flying the US flag dropped from the high thousands to its current level of less then three hundred. Meanwhile about twelve million tons of shipping now fly's the Liberian flag and a similar number that Panama. Heck you don't even have to travel to either country to register as they both opened offices for the task in New York City.

[MKSheppard]

The American job market is just fucked up.

A California company says it wants to bring workers from the other side of the world to harvest crops in Hillsborough County. If Agrilabor succeeds, the company could be the first to bring laborers from Thailand to the sandy fields of Florida, said Walter Jants, a labor specialist with Florida's Agency for Workforce Innovation. Thais would come under the federal guest worker program that allows companies to bring foreigners into this country to do farm labor on a temporary basis when a sufficient number of domestic workers aren't available.

[MKSheppard]

http://www.jsonline.com/bym/news/may03/144360.asp

Knudson's company, Modern Fence Technologies, developed a unique and proprietary, fully adjustable gate hardware for vinyl fences. The product was well received, but before long, a Chinese company had copied its design and is selling the hardware at half of MFT's price.

"That's lower than my raw materials costs," Knudson said Thursday during a round table on the state of manufacturing.

This is economic warfare on a vast scale never before seen.

[Edi]

Hell, when I get a job after my studies, I'll be very happy if my salary is €10 an hour. It'd be more than adequate for me to live on, because I own the apartment I live in. Average wages (across the board) here are around €2200, which means that a lot of people have salaries ranging from €1300 to €1700 a month depending on what they do and who they work for. Unskilled labor like cleaning jobs and such pay around €650 to €900 a month. And you guys have salaries of $20 to $25 dollars or higher per hour for low skilled (or no-skilled) jobs? No wonder your industries are fucked up!

Edi

[MKSheppard]

This is economic warfare on a vast scale never before seen.

And it's not just limited to one company. As a routine fact...

Linky to article

Chinese manufacturers are quoting projects at less than the cost of raw materials for U.S. manufacturers, said Paul Ericksen of the Wisconsin Supplier Development Consortium, a manufacturing group that fosters relationships between the state's suppliers and original equipment manufacturers.

[MKSheppard]

And holy shit, even the Mexicans are getting fucked:

Mexicans now getting the shaft too

In Mexico, there is growing concern over job losses in manufacturing, blamed in part on plants moving to China and other cheap labor markets. Spokesmen for the so-called Maquiladora sector are crying out for help.

Looks like they're not so in favor of "free" trade now that their ox is being gored.

[Axis Kast]

And then of course we have the US merchant marine. Its union got a law passed requiring any American flagged ship sailing from an America port to another American port to have an all union crew paid union wages. The result was the number of ships flying the US flag dropped from the high thousands to its current level of less then three hundred. Meanwhile about twelve million tons of shipping now fly's the Liberian flag and a similar number that Panama. Heck you don't even have to travel to either country to register as they both opened offices for the task in New York City.

Please tell me this is in the process of being repealed. How is it legal for a union to "freeze out" those unaffiliated from a specific job market? Hell, our Merchant Marine is active in national defense during certain emergency periods.

[Dahak]

The EU is facing the same problem.
If your average worker costs more than a whole bunch of them in the former Soviet Block, then you'd move production there, too...
Todays companies don't care for their employees, their reigning godess is the shareholder. Anything that makes the share rise is good.

And about that Steel: Europe doesn't mass produce steel. We produce special, high-quality steels.
And for the US to catch up, you'd better invest billions, for a long time...
The vast majority of "normal" steel comes from Asia.

[MKSheppard]

I just found out that when Bush put in his 30% tariff to protect the American
steel industry, he caused the Asian steel companies who were trying to dump
the market with steel at below scrap prices had to go and unload it
onto the Chinese, whose steel industry took a beating.

[TrailerParkJawa]

In my state the road workers who holds the STOP/GO signs makes 30 dollars and hour and the flagmen get something like 45 all because its hazardous duty. The job requirements are a high school diploma and a six or so week training course. You know I can understand people like telephone linemen making big salaries, a dangerous job with awful hours that requires both physical and mental skills. But holding a fucking sign and turning it every few minutes? The American job market is just fucked up.

Here a lot of those flag guys are on work release from prison! I dont think they make much money though.

[phongn]

As quality of life (and thus costs) starts to raise in Asia (witness former strongholds like Korea beginning to lose manufacturing to China) what will happen as costs for workers increases? Will the Western nations begin to be competitive once again?

[Rubberanvil]

Will the Western nations begin to be competitive once again?

Only if it's cheaper for business to relocate to the West and hire western workers and not the import workers. Ortherwise businesses will keep relocating wherever it is cheaper for them as it is now.

[Darth Wong]

I love the way people bitch and moan about relocation of industry to China but when you go to buy shoes, do you pay the lowest price for the cheapest sweatshop-made goods, or do you pay more for something made locally?

I can respect Glocksman even though we disagree, because he says upfront that he will pay more for domestically made goods. He puts his money where his mouth is. When the time comes to pony up the cash at the checkout counter, do you?

[Stormbringer]

Seeing as how I've got no beef with imported stuff, I buy the cheaper ones. Excepting my army surplus boots which are expensive but American.

[Darth Wong]

Indianapolis-based Magnequench Inc. has not yet publically announced the closing of its Valparaiso, Ind., factory, but Insight has confirmed that the company will shut down this year and relocate at least some of its high-tech machine tools to Tianjin, China. Word of the shutdown comes as the company is producing critical parts for the U.S. Joint Direct Attack Munition [JDAM] project, more widely known as smart bombs, raising heavy security issues related to the transfer of military technology to the PRC. The factory uses rare earths to produce sintered neodymium-iron-boron permanent magnets that have many industrial applications but are essential to the servos critical to precision-guided munitions. According to documents obtained by Insight, Magnequench UG currently is producing thousands of the rare-earth magnets for "SL Montevideo Tech," a Minnesota-based manufacturer of servos. That company confirmed to Insight that it holds a Department of Defense [DoD] contract to produce the high-tech motors for the precision-guided JDAM.

I smell bullshit. I think the author of this article is seriously exaggerating, by making it seem as if exotic technology is being exported. Did you know that sintered-metal neodymium iron-boron magnets can be purchased at science stores in Toronto, and that it is commonly used in home theatre loudspeakers? Or that sintered-metal fabrication is older than any of us, and is hardly exotic since you can buy sintered-metal products in something as simple as the DME toolmaking catalogue?

Methinks someone is trying to make a mountain out of a molehill.

[Glocksman]

I can respect Glocksman even though we disagree because he says upfront that he will pay more for domestically made goods. He puts his money where his mouth is. When the time comes to pony up the cash at the checkout counter, do you?

The price difference isn't as large as you'd think.

The Rocky 911 postal/service shoes I buy are about $90-$100 per pair depending upon where I purchase them.

The New Balance (US Made) shoes I used to buy were in the $75-$80 bracket.

They may not be as gaudy as the latest pair of 'gotta have' Nikes, but they're not much more expensive.

The last time I owned a pair of Nikes, they fell apart within 2 months. I get at least 6 months out of the Rockys, so TCO is less when I buy American in this instance.

The sad thing is that most of the time, there is no domestic (US/Canadian made) alternative to the foreign product.

US made consumer electronics? Forget about it.

You can find a US assembled TV, but the parts come from overseas and the company isn't a US company.

That's why my TV is a 15 year old Sony that was assembled in California instead of a Korean made RCA.

Hell, RCA isn't American, they're French.

[Shinova]

Since blue-collar jobs are moving off-seas anyway, the US should probably do what it can to facilitate and help protect those interests off-seas.

But then that would cause the US to have to have a secure foothold in lots of places, since American businesses have their stuff in there. And what happens when the number of countries US corporations are involved in rises to the hundreds? Unless those companies can pay for their own militias, the USA is going to have to keep and eye on more territory as time goes on.

This kinda looks like the USA expanding and getting more and more stretched out. Once blue-collar jobs like manufacturing go completely off-seas, the US has to watch those places cause it they lose them, there goes manufacturing. And it doesn't look like the USA would try to nationalize some manufacturing like how France did to some of its farms.


So the cost of military goes up. Or the companies keep their respective countries in line through the sheer force of economic dependency.

Anyway, there'd be a lot going on.

[Joe]

NB is U.S., eh? They make damn good shoes.