Hello all!
I read the following article this morning. I think that many of you will enjoy reading it. Reflecting upon it, I arrive at two major conclusions:
1) The current situation is not hopeless, but represents the largest challenge that our Domestic Industry has ever undertaken. The effort requires an underlying "zeitgeist" of something close to what the USA experienced when building the great "Arsenal of Democracy" in WW2.
2) The solutions discussed in this article are nothing new to the participants of this forum. We have brought to light (in one form or another) every single proposed solution. In fact, the article details something of a precis of a half-dozen threads. The similarities are quite stunning, really. This article is valuable because it corroborates our shared insights and solutions of the past few months.
One last word: Be proud of your intellect, and be confident that we have every capability to solve these problems.
------------------------------------------------------
Source: Industrial Information Resources, Inc.
Solutions for Unemployment and the Loss of Manufacturing Jobs in the U.S.
HOUSTON--October 20, 2003--Editorial by Paul Laine, Consulting Engineer with Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). There are two primary reasons for the increase in unemployment in the United States. First is the result of U.S. corporations attempting to compete in the World Trade Organization, while selling commodities to the world market. Commodities are commonly manufactured materials such as clothing, shoes, toys, chemicals, furniture, etc. Most countries (other than third world countries) can manufacture commodities as well as the U.S., but the problem is simply that the rest of the world pays much less for manufacturing labor than the U.S. For example, China and India have manufacturing workers who are happy to work for one dollar an hour.
Furthermore, India and China produce highly qualified engineers who are often better educated than ours and will work for much less. Many U.S. manufacturers answered this problem by laying off employees and relocating their plants to these areas of cheap labor. Blue Jean manufacturer, Levi Strauss & Company is a good example of this, recently announcing plans to close its last five plants in North America. (For details see archived IIR Industry Alert: World's Largest Jean Manufacturer Closes Last Five North American Plants
Other companies, as well, prefer to design products in the U.S. and then send parts to foreign countries for assembly. As a result, U.S. assembly workers become layoff victims.
The second reason for layoffs is the lack of new products coming into the marketplace. New products mean the hiring of new employees and greater job opportunities. If we can manufacture a new and unique product not elsewhere available, there will be a demand for jobs as well as an opportunity for profit. Initially, there will be no competition, and this will allow companies to set prices and control the sales. I can remember when our industries produced a flood of new and unique marketable products. What happened to cause this flood to dry up? The answer: American greed. Stockholders pressured corporate managers for a greater and quicker return on investment. CEOs became bean counters, and to obtain immediate cash they eliminated most or all of their research departments. This does not hold true for the Biotech/Pharmaceutical industry, which is spending billions on R&D and university type campuses for research. The result of this greed and mismanagement was the lack of new products. The fact that we have little research to develop new products forces manufacturers to produce commodities. We cannot maintain our standard of living by producing commodities.
Everyday, news headlines announce plant closures, cutbacks and mass numbers of employees whose jobs have vanished. Articles discussing the economy dismally recite that unemployment is near a high of over 6.2%. On television, we see charity food lines in Ohio a mile long. These people have to stand in line for hours trying to get food. What's wrong with this? This is the United States, not Africa or the Mid-East. I turn off the television in disgust, when I hear that the President has promised $15 billion dollars to Africa for relief. I have American friends in Ohio who should be the primary concern for relief. How does such a sad situation arise in Ohio and other U.S. states?
What are the underlying causes?
1) Manufacturing jobs are leaving the U.S. at an alarming rate.
2) Worldwide competition is growing rapidly in most areas of commodity manufacturing
3) In China, Southeast Asia, and India manufacturing workers are happy to work for one dollar per hour. In the U.S., the average wage is about twenty dollars per hour, and unions are constantly demanding more.
4) Many company executive officers have awarded themselves astronomically high wages and benefits, far beyond their actual worth. Stop this now. It's criminal.
5) Many U.S. companies are moving or building new plants in Asia to take advantage of cheap labor.
6) Most companies have drastically reduced or eliminated their research departments, because of stockholder pressure and quick return on investment. The end result of this is that fewer new and unique products come to the market. Corporations today invest only 10% of sales dollars into research. In the 1960's and 1970's, 40% of sales dollars were directed to research. This was the time when the world beat a path to our door to buy products they couldn't get elsewhere. No more! Now our industrial segment generates few products that can be classified as new and unique. Without research and new product generation, we are reduced to commodity manufacturing, and we will have to compete on the leveling plane of the World Trade Organization.
On the positive side, the advent of new products, born of research, will dictate the hiring of thousands of new employees.
7) Recently, we have heard that some universities are cutting back on their engineering, physics, and chemistry facilities because of a lack of student interest. If this becomes a common practice, our days as a great nation will soon be over.
8) In Information Technology (IT), jobs are being lost at a record rate as companies all over the U.S. have been outsourcing 60% of their work, with much of it going to India. CAD/CAM program work (design) is also being outsourced to India.
Economics forces the need to cut costs. The availability of cheap foreign labor and current immigration laws are creating a serious threat for process control and instrumentation professionals in North America. At risk are jobs ranging from process engineering and control system integration to plant operations and maintenance.
One of the biggest problems appears to be the L-1 Visa, which allows cheap labor without restriction. The more familiar H1-B Visa allows foreigners with special skills to work in the U.S. Few people are aware of the L-1 Visa, which allows U.S. companies with overseas offices to transfer foreign employees to their U.S. operations. According to the New York Times (Oct 1, May 30), the use of L-1 Visas to bring in workers, with a large fraction coming from India, has become a popular strategy among firms seeking to cut labor costs. They are now routinely used by companies based in countries like India and elsewhere, to bring workers into the U.S. and then to contract them out to American companies. Unlike the H1-B Visa, The L-1 does not require employers to pay workers prevailing wages. In addition, there is no cap on the L-1 visas. One estimate says there are 325,000 L-1 visa holders in the U.S. today. This amounts to 325,000 jobs lost by Americans, because of L-1 visa holding foreigners, who work for much less money.
9) We have failed to impress upon our children the importance of acquiring knowledge. Our high schools are graduating seniors that have poor skills in reading and comprehension, in addition to having a lack of depth in math and science. Meanwhile, European and Asian students have a greater appreciation for the value of knowledge, and work harder to achieve academic success. Thus, their ability to comprehend and rationalize exceeds that of American students. Fifty years ago, our schools were the envy of the world. Not now! If we do not correct this problem, there is little chance that we can maintain our leadership in technology as well as our standard of living.
In conclusion, there is a fundamental truth involved here. The U.S. cannot maintain its standard of living and belong to the World Trade Organization at the same time unless we can produce a continuous flow of new products not elsewhere available. We cannot continue to manufacture commodities and maintain our standard of living. Every country can produce commodities. Sales will go to those with the lowest labor costs.
How do we solve this problem?
Here are some of the actions we might consider:
1) Re-establish research as a major function of corporations.
2) Revitalize the school systems to meet the long-term needs of industry by producing highly educated technical employees. Re-establish the idea that learning can be fun and the acquisition of knowledge is of paramount importance to the future of our country.
3) Hire highly educated people to run the research departments.
4) Reduce the pay of the CEO and other executive officers to be consistent with their real contribution to the corporation.
5) Write your representatives in Congress. Explain objectives. Ask their help on issues such as education and L-1 Visas.
A final word: If we can maintain a flow of new and unique products into the world market, we will maintain our position as the world's greatest economy.
Industrialinfo.com (IIR) is the leading provider of global industrial market research. We specialize in helping companies develop information solutions to maximize their sales and marketing efforts. For more information send inquiries to industrialmanufacturing@industrialinfo.com or visit us online at
I read the following article this morning. I think that many of you will enjoy reading it. Reflecting upon it, I arrive at two major conclusions:
1) The current situation is not hopeless, but represents the largest challenge that our Domestic Industry has ever undertaken. The effort requires an underlying "zeitgeist" of something close to what the USA experienced when building the great "Arsenal of Democracy" in WW2.
2) The solutions discussed in this article are nothing new to the participants of this forum. We have brought to light (in one form or another) every single proposed solution. In fact, the article details something of a precis of a half-dozen threads. The similarities are quite stunning, really. This article is valuable because it corroborates our shared insights and solutions of the past few months.
One last word: Be proud of your intellect, and be confident that we have every capability to solve these problems.
------------------------------------------------------
Source: Industrial Information Resources, Inc.
Solutions for Unemployment and the Loss of Manufacturing Jobs in the U.S.
HOUSTON--October 20, 2003--Editorial by Paul Laine, Consulting Engineer with Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). There are two primary reasons for the increase in unemployment in the United States. First is the result of U.S. corporations attempting to compete in the World Trade Organization, while selling commodities to the world market. Commodities are commonly manufactured materials such as clothing, shoes, toys, chemicals, furniture, etc. Most countries (other than third world countries) can manufacture commodities as well as the U.S., but the problem is simply that the rest of the world pays much less for manufacturing labor than the U.S. For example, China and India have manufacturing workers who are happy to work for one dollar an hour.
Furthermore, India and China produce highly qualified engineers who are often better educated than ours and will work for much less. Many U.S. manufacturers answered this problem by laying off employees and relocating their plants to these areas of cheap labor. Blue Jean manufacturer, Levi Strauss & Company is a good example of this, recently announcing plans to close its last five plants in North America. (For details see archived IIR Industry Alert: World's Largest Jean Manufacturer Closes Last Five North American Plants
Other companies, as well, prefer to design products in the U.S. and then send parts to foreign countries for assembly. As a result, U.S. assembly workers become layoff victims.
The second reason for layoffs is the lack of new products coming into the marketplace. New products mean the hiring of new employees and greater job opportunities. If we can manufacture a new and unique product not elsewhere available, there will be a demand for jobs as well as an opportunity for profit. Initially, there will be no competition, and this will allow companies to set prices and control the sales. I can remember when our industries produced a flood of new and unique marketable products. What happened to cause this flood to dry up? The answer: American greed. Stockholders pressured corporate managers for a greater and quicker return on investment. CEOs became bean counters, and to obtain immediate cash they eliminated most or all of their research departments. This does not hold true for the Biotech/Pharmaceutical industry, which is spending billions on R&D and university type campuses for research. The result of this greed and mismanagement was the lack of new products. The fact that we have little research to develop new products forces manufacturers to produce commodities. We cannot maintain our standard of living by producing commodities.
Everyday, news headlines announce plant closures, cutbacks and mass numbers of employees whose jobs have vanished. Articles discussing the economy dismally recite that unemployment is near a high of over 6.2%. On television, we see charity food lines in Ohio a mile long. These people have to stand in line for hours trying to get food. What's wrong with this? This is the United States, not Africa or the Mid-East. I turn off the television in disgust, when I hear that the President has promised $15 billion dollars to Africa for relief. I have American friends in Ohio who should be the primary concern for relief. How does such a sad situation arise in Ohio and other U.S. states?
What are the underlying causes?
1) Manufacturing jobs are leaving the U.S. at an alarming rate.
2) Worldwide competition is growing rapidly in most areas of commodity manufacturing
3) In China, Southeast Asia, and India manufacturing workers are happy to work for one dollar per hour. In the U.S., the average wage is about twenty dollars per hour, and unions are constantly demanding more.
4) Many company executive officers have awarded themselves astronomically high wages and benefits, far beyond their actual worth. Stop this now. It's criminal.
5) Many U.S. companies are moving or building new plants in Asia to take advantage of cheap labor.
6) Most companies have drastically reduced or eliminated their research departments, because of stockholder pressure and quick return on investment. The end result of this is that fewer new and unique products come to the market. Corporations today invest only 10% of sales dollars into research. In the 1960's and 1970's, 40% of sales dollars were directed to research. This was the time when the world beat a path to our door to buy products they couldn't get elsewhere. No more! Now our industrial segment generates few products that can be classified as new and unique. Without research and new product generation, we are reduced to commodity manufacturing, and we will have to compete on the leveling plane of the World Trade Organization.
On the positive side, the advent of new products, born of research, will dictate the hiring of thousands of new employees.
7) Recently, we have heard that some universities are cutting back on their engineering, physics, and chemistry facilities because of a lack of student interest. If this becomes a common practice, our days as a great nation will soon be over.
8) In Information Technology (IT), jobs are being lost at a record rate as companies all over the U.S. have been outsourcing 60% of their work, with much of it going to India. CAD/CAM program work (design) is also being outsourced to India.
Economics forces the need to cut costs. The availability of cheap foreign labor and current immigration laws are creating a serious threat for process control and instrumentation professionals in North America. At risk are jobs ranging from process engineering and control system integration to plant operations and maintenance.
One of the biggest problems appears to be the L-1 Visa, which allows cheap labor without restriction. The more familiar H1-B Visa allows foreigners with special skills to work in the U.S. Few people are aware of the L-1 Visa, which allows U.S. companies with overseas offices to transfer foreign employees to their U.S. operations. According to the New York Times (Oct 1, May 30), the use of L-1 Visas to bring in workers, with a large fraction coming from India, has become a popular strategy among firms seeking to cut labor costs. They are now routinely used by companies based in countries like India and elsewhere, to bring workers into the U.S. and then to contract them out to American companies. Unlike the H1-B Visa, The L-1 does not require employers to pay workers prevailing wages. In addition, there is no cap on the L-1 visas. One estimate says there are 325,000 L-1 visa holders in the U.S. today. This amounts to 325,000 jobs lost by Americans, because of L-1 visa holding foreigners, who work for much less money.
9) We have failed to impress upon our children the importance of acquiring knowledge. Our high schools are graduating seniors that have poor skills in reading and comprehension, in addition to having a lack of depth in math and science. Meanwhile, European and Asian students have a greater appreciation for the value of knowledge, and work harder to achieve academic success. Thus, their ability to comprehend and rationalize exceeds that of American students. Fifty years ago, our schools were the envy of the world. Not now! If we do not correct this problem, there is little chance that we can maintain our leadership in technology as well as our standard of living.
In conclusion, there is a fundamental truth involved here. The U.S. cannot maintain its standard of living and belong to the World Trade Organization at the same time unless we can produce a continuous flow of new products not elsewhere available. We cannot continue to manufacture commodities and maintain our standard of living. Every country can produce commodities. Sales will go to those with the lowest labor costs.
How do we solve this problem?
Here are some of the actions we might consider:
1) Re-establish research as a major function of corporations.
2) Revitalize the school systems to meet the long-term needs of industry by producing highly educated technical employees. Re-establish the idea that learning can be fun and the acquisition of knowledge is of paramount importance to the future of our country.
3) Hire highly educated people to run the research departments.
4) Reduce the pay of the CEO and other executive officers to be consistent with their real contribution to the corporation.
5) Write your representatives in Congress. Explain objectives. Ask their help on issues such as education and L-1 Visas.
A final word: If we can maintain a flow of new and unique products into the world market, we will maintain our position as the world's greatest economy.
Industrialinfo.com (IIR) is the leading provider of global industrial market research. We specialize in helping companies develop information solutions to maximize their sales and marketing efforts. For more information send inquiries to industrialmanufacturing@industrialinfo.com or visit us online at
