U.S. Manufacturing Crisis: White House Talks, but Defense Industry Walks (Overseas)

TradeAlert.org ^ | Wednesday, October 08, 2003 | William R. Hawkins

[Willie Green]

For education and discussion only. Not for commercial use.

In response to the growing political agitation over the “jobless recovery” and the loss of manufacturing jobs under the impact of imports and outsourcing, the Bush Administration has launched a media campaign touting the importance of industry to the economy and the nation´s security.  In his Labor Day address, President George W. Bush said,.  “I understand for a full recovery, to make sure people can find work, that manufacturing must do better.  And we've lost thousands of jobs in manufacturing....some of it because production moved overseas.”

In a recent Washington Times column, Commerce Secretary Don Evans wrote, “manufacturing represents the backbone of our economy and the muscle behind our national security.” A fine and true sentiment, but is the administration doing anything more than trying to soothe public opinion? One example, drawn from the very nexus of manufacturing and national security, clearly indicates that the administration is not interested in reversing America´s industrial decline, but furthering it.  The sector involved is none other than the defense industry itself, where much of the Bush Administration is explicitly encouraging the foreign outsourcing of jobs and production capacity.

The 2004 Defense Authorization bill written by the House Armed Services Committee (HASC) under chairman Duncan Hunter (R-CA) mandated that the Pentagon draw up a list of components and technologies that are critical to the production of U.S.  weapons, and that the industrial capacity to produce such items be located within the United States.  

The Senate version of the bill did not include any of Hunter´s language.  Indeed, it expanded the waiver authority in current “buy America” provisions to allow the easier outsourcing of defense work overseas at the request of Defense Secretary Donald Rumsfeld.  The issue has been stalled in the House-Senate conference.  

Large defense prime contractors such as Boeing, Lockheed Martin and Raytheon—who assemble parts and components produced by smaller firms, oppose the HASC legislation and have been lobbying the White House hard to block it.  These giant defense corporations are succumbing to the same temptations that led firms in the commercial sector to become dependent on fragile “global supply chains” for their operations while sending millions of jobs to foreign lands.

To break the impasse, Rep. Hunter and Deputy Defense Secretary Paul Wolfowitz negotiated a compromise.  According to published reports, Hunter's concessions included dropping the 65 percent U.S.-made content requirement, keeping it at the current 50 percent level [alarmingly, the defense primes claim they cannot build more than half of major weapons systems here anymore].  Hunter also agreed to accept a less rigorous standard for the foreign sourcing of military items, and to drop the requirement that military production be done with U.S.  made machine tools.  He held to the position, however, that the most essential pieces of weapons systems be built in America.  It seemed like a workable solution, hammered out by two men who have made national security issues their lives´ work.

Unfortunately, other senior administration officials, who deal with trade and economic theory, such as the U.S. Trade Representative and the Council of Economic Advisors, are trying to block the compromise.  They oppose any limit on the right of corporations to outsource jobs or move production overseas.  Their “free trade” ideology raises real questions as to whether either trade negotiations or economic calculations in the Bush Administration are really predicated on a desire to gain advantages for the United States, or whether they are simply guided by academic sophistry.

The basic problem with this kind of interagency approach is that the defense industry is not like the commercial sector.  National security cannot be risked by letting such a vital industry be hollowed out the same way so many commercial sectors have been.  It is the government´s duty to set the parameters within which the defense industry will operate.  The defense industry exists only to fulfill public policy: to secure the preeminent position of the United States in world affairs and to secure the homeland, including everything needed to keep Americans safe and prosperous.  Defense managers used to take pride in their contributions to America´s strength.  It is tragic to see a new, more venal corporate culture tarnish this patriotic image.

Advocates of military outsourcing claim they need access to alleged superior European technology and to integrate their commercial and defense operations.  Yet, since the 1991 Gulf War, a wide gap in capabilities has opened between the United States and everyone else.  American forces continue to improve their weapons and doctrines while Europe invests little in new military technology as their defense budgets fall.  Indeed, the European defense industry is in deep trouble and is looking for the American taxpayer for a bail out.  The record of joint European defense projects is often one of delay and disappointment, making for unreliable partnerships.  

And American corporations are not just looking to Europe for integration, but to Asia – and particularly to China, which raises a host of security concerns.  Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

By letting private business desires override considerations of national security and economic revival, the Bush Administration is revealing why it cannot be trusted to back its high-sounding rhetoric about manufacturing and job growth with effective action.  As long as the corporate managers who want to send jobs overseas and buy foreign-made goods have influence in the White House, policy will continue to be made in their special interest, while the needs of domestic American enterprises and their workers will be dismissed.  

William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

[Willie Green]

U.S. Officials Misread Economic Warfare
The Administration's Manufacturing Plan Looks Bogus

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[EagleMamaMT]

Read later.

[oceanview]

good article.

what Bush should learn from the California recall election: an electorate angry about the economy and jobs can hurt you real bad.

[RiflemanSharpe]

what Bush should learn from the California recall election: an electorate angry about the economy and jobs can hurt you real bad.

No lie there, it is getting so that the only idealogy that a large number of people care about is will they be able to keep their jobs.

[RiflemanSharpe]

PING

[Elliott Jackalope]

Jobs = income. Income = food, shelter, medical care, clothing etc. It is rather hard to care about other issues if you don't have income.

[Voltage]

It's good to see that economics works. The government passes laws to discourage business by taxing and regulating them excessively. Business responds by failing or leaving.

I enjoy seeing cause and effect are working. Reality bites!

[RiflemanSharpe]

Last night I was in class, I am taking college classes two nights a week working on my second degree. I got there early and struck up a conversation with three people in class. All three had been touch by lay offs this month, a spouse laid off, watch coworkers laid off Monday, or their company had anounceed lay offs to occure Oct. 15th. The powers that be need to start paying attention to this. The election is coming up.

[harpseal]

Ping on or off let me know.

[LibertyAndJusticeForAll]

(ping!)

“[alarmingly, the defense primes claim they cannot build more than half of major weapons systems here anymore]
…
And American corporations are not just looking to Europe for integration, but to Asia – and particularly to China, which raises a host of security concerns. Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

By letting private business desires override considerations of national security and economic revival, the Bush Administration is revealing why it cannot be trusted to back its high-sounding rhetoric about manufacturing and job growth with effective action. As long as the corporate managers who want to send jobs overseas and buy foreign-made goods have influence in the White House, policy will continue to be made in their special interest, while the needs of domestic American enterprises and their workers will be dismissed.”

William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

[meadsjn]

For want of a nail, the shoe was lost,
For want of the shoe, the horse was lost,
For want of the horse, the rider was lost,
For want of the rider, the battle was lost,
For want of the battle, the kingdom was lost,
And all for the want of a horseshoe nail!

[Boxsford]

My husband was downsized out of his job and we had no income for 14 months. I'm not about to blame Bush at the ballot as Willie Green would like us to. Bush inherited this problem.

[harpseal]

Beijing has just announced that General Electric will cooperate with Chinese industry to produce a new jet engine with both commercial and military applications.

Perhaps the GE executives who negotiated this should be tried for treason and executed to give a lesson to others.

[RiflemanSharpe]

My husband was downsized out of his job and we had no income for 14 months. I'm not about to blame Bush at the ballot as Willie Green would like us to. Bush inherited this problem.

The fact that he did not cause the problem is true. But I do think that he could do more to solve it. And the point I am making is that there are a lot of scared hurting people out there. And these people vote.

[RiflemanSharpe]

What Bush could do is, targeted tax cuts for businesses that start jobs in the US, reduce regulation and useless paper work that strangles new business, and demand that if you want to have free access to US markets the US has free access to yours.

[hedgetrimmer]

Unfortunately, other senior administration officials, who deal with trade and economic theory, such as the U.S. Trade Representative and the Council of Economic Advisors, are trying to block the compromise.

Lets analyse this a bit. The article cites two groups that oppose the logical and pro-American ideal of a prosperous manufacturing base to keep America strong:

1. the Trade representative. The person who is not elected to office and therefore does not directly represent the American people and who is a member of a global socialist body(the WTO). Is it credible that he should oppose a buy American policy.

2. The Council of Economic Advisors. Lets see, isn't it the Soviet Union that ran government by councils? Yes I think that's what the word soviet means, it means council. Do you know who is on the Council of Economic Advisors? Do you have a say in their policies? Can you "unelect" them if their actions are anti-American or unConstitutional? Should they have more weight that the citizens in this issue, since it is a matter of national sovereignty and security?

They oppose any limit on the right of corporations to outsource jobs or move production overseas.

They give the corporations rights that have more weight that the rights of citizens. Citizens through their government charter corporations. Corporations under the protection of the US military and various trade agreements and assurances given to them by our government should be able to harm the American economy and still lay claims to that charter and those protections? Doesn't seem fair, does it.

Their “free trade” ideology raises real questions as to whether either trade negotiations or economic calculations in the Bush Administration are really predicated on a desire to gain advantages for the United States, or whether they are simply guided by academic sophistry.

[alrea]

Oct. 8, 2003--Ceradyne, Inc. (Nasdaq:CRDN - News) has acquired a 115,000 square-foot manufacturing plant on six acres in Leestown Industrial Park in Lexington, Kentucky, to expand production capacity.
The Company intends to equip the new $2.4 million facility with state-of-the-art ceramic processing equipment for the production of its proprietary advanced technical ceramic sintered reaction bonded silicon nitride (SRBSN), which is used to produce cam followers for certain Class 8 large diesel truck engines, other engine parts, and industrial applications.

The Company also said it may use this facility to expand its hot pressing capacity to meet anticipated additional military requirements for its lightweight ceramic armor product line.

Ceradyne Chief Executive Officer Joel Moskowitz stated, "We plan to maintain our large manufacturing base in California, but as we grow, we intend to expand in those geographical areas that offer us, and thus our customers, the most cost-effective, technology-enhanced environment. The state of Kentucky, Fayette County, and the City of Lexington all provided significant assistance to Ceradyne.

"The single most important consideration in our decision to expand operations in Kentucky was the cost of electricity, which will be reduced by approximately 65% compared to the rates we pay in California," Moskowitz added.

[LibertyAndJusticeForAll]

If Clinton was allowing this, that's just what all Republicans would be calling him a traitor.
I remember when trade first began to open to Red China and someone who worked for General Electic said (with eyes glowing), "Imagine, one light bulb for every single person in China, that's a billion dollars".

[oceanview]

Bush is not to blame regarding the cause, but he is in the drivers seat regarding the fixes.

[Boxsford]

For what it's worth here is what Bush said today on the economy: We're making good progress on the economy; looks like we're growing, and that's important. Last month we -- people are finding work, but we're not satisfied with the progress that is being made. We talked about ways to continue the economic vitality of our country. The tax cuts need to be made permanent so there's certainty in the tax code. We need an energy plan so that our businesses and employers, both large and small, know there's a reliable source of energy available.

We talked about trade and this administration's commitment to free and fair trade, that administrative officials will continue to press certain countries to open up their markets to U.S. product.

[LibertyAndJusticeForAll]

Most appropriate, thanks.
I found this variation attributed to Benjamin Franklin, but it appears to be a Nursery Song and an old proverb or cautionary tale, (but not memorized by enough Americans).

For want of a Nail the Shoe was lost; for want of a Shoe the Horse was lost and for want of a Horse, the Rider was lost; being overtaken and slain by the enemy, all for want of Care about a Horse-shoe Nail.
- BENJAMIN FRANKLIN, POOR RICHARD'S ALMANACK

[Scott from the Left Coast]

I lost my job 6 months ago. But politics is not going to help me get another, and political changes anyway are too marginal and too long in coming to make any difference in my life anyway. Political changes are NEVER dramatic, and occur over long periods of time. The effects of political changes are usually subtle, compared to the business cycle. If I wait for politics to provide an answer, my wife and I will starve to death in the meantime!

Like I suspect your husband feels, it's simply up to me to do what I can to get another somewhere. I can't think that someone else, or some political process, will come around to save me. I've just got to find some way on my own.

[RiflemanSharpe]

Bush is not to blame regarding the cause, but he is in the drivers seat regarding the fixes.

Hear, Hear!!! He needs to step on the gas.

[Voltage]

Bush is not to blame regarding the cause, but he is in the drivers seat regarding the fixes.

A good start would be eliminating about 50% of what the federal government does, half of the agencies should close. I would keep the Army, AirForce, Navy and Marines and that is about it!

[harpseal]

All some of these executives see is the number of people in China not the government.

[LibertyAndJusticeForAll]

And, what short-sightedness! I cannot imagine that the PRC bought light bulbs for more than 5 years from GE.
By then, they probably had their own factory and never bought another product from GE.
I see this as the end result of any corporation offshoring or setting up shop in Red China. It has started already with such disparate products as Wrigley's Gum and Cisco's routers.

[hedgetrimmer]

Walmart moved their corporate headquarters to China.

[Boxsford]

Like I suspect your husband feels, it's simply up to me to do what I can to get another somewhere. I can't think that someone else, or some political process, will come around to save me. I've just got to find some way on my own.

You nailed it. Your entire post. Exactly. Yes, my husband did have the same exact attitude you have. And he found a job. You will too. It's incredibly painful and I'd not want to go through it again for anything but we did learn some valuable lessons that could not have been learned any other way.

[EverOnward]

bump -- thanks for keeping these articles coming --

[Willie Green]

You're quite welcome -- and thank YOU!!!

[blueriver]

I can't think that someone else, or some political process, will come around to save me. I've just got to find some way on my own.

So in your opinion we should do nothing to try to change the direction things are heading because it won't help you in your situation. Apathy will be our downfall.

[Lael]

By letting private business desires override considerations of national security and economic revival, the Bush Administration is revealing why it cannot be trusted to back its high-sounding rhetoric about manufacturing and job growth with effective action. As long as the corporate managers who want to send jobs overseas and buy foreign-made goods have influence in the White House, policy will continue to be made in their special interest, while the needs of domestic American enterprises and their workers will be dismissed.”

Shrub, aka Bush, is a one termer.

Let's BOTTOM LINE it...We are well into the Second Quarter of the FOURTH promised SECOND HALF UPTURN since Bushco took office.

Layoffs and OFFSHORE OUTSOURCING are ACCELERATING.

After the Holiday Shopping season, Staff reductions and concommitent offshoring accelerate, in anticipation that a DEMOCRAT President will "slam the door."

In other words, "All's Offshore that's Going Offshore" in the hope that the damage will be "Grandfathered."

Around February, expect a 'California recall' size Tectonic Shift to hit the National Political scene.

Of course, the Stupid Party is too, well, STUPID to see the approaching Cataract of DISASTER on November 2, 2004.

And, in Delicious irony, the election is at the EARLIEST date possible...Nov.2, 2004 IS the First Tuesday after the First Monday in November!! Hence, there will be less time to "talk up" hunters at the local sporting goods store about DemocRATS and gun control in crucial blue collar states.

Shrub, er, Bush is, like father like son, a ONE TERMER!!

[A. Pole]

My husband was downsized out of his job and we had no income for 14 months. I'm not about to blame Bush at the ballot as Willie Green would like us to. Bush inherited this problem.

He wasted a few years.

[Euro-American Scum]

what Bush should learn from the California recall election: an electorate angry about the economy and jobs can hurt you real bad.

Which is why you should look for the flood tide of jobs going offshore to slow to a trickle in the next year or so. And I submit that's already happening.

Unemployment has slowed a bit (and just a bit). And there is a hint of net job creation being reported by the major media (although they're vague about just what kind).

I suspect you won't see the stampede of offshoring to resume until after 2004, which will conveniently put Bush in the White House for a second term. In the meantime, look for the AWB to be renewed by GWB, as promised, with more punative anti-gun measures to come.

A poverty-stricken middle class must be a disarmed middle class, you see.

[Euro-American Scum]

All three had been touch by lay offs this month, a spouse laid off, watch coworkers laid off Monday, or their company had anounceed lay offs to occure Oct. 15th. The powers that be need to start paying attention to this. The election is coming up.

I took a Microsoft SQL Server course from UC Irvine Extension earlier in the year. The instructor was an H1-B from Sarawak. There were two Russian H1-Bs, an Indian L1 and three Chinese programmers who could barely speak English. All were being financed by U.S. government grants.

The powers that be are paying attention to this. They just don't care about it.

[Euro-American Scum]

In response to the growing political agitation over the “jobless recovery” and the loss of manufacturing jobs under the impact of imports and outsourcing, the Bush Administration has launched a media campaign touting the importance of industry to the economy and the nation´s security.

Media campaign, eh? Well, that ought to take care of the problem.

[NRA2BFree]

Thanks for the ping!

This is quite a mess alright. What is Bush thinking about? IF he breaks the back of the economy by outsourcing how is America going to pay the billions of dollars to ALL the world he has promised it too? He just doesn't care about Americans! It's time we faced it.

[RiflemanSharpe]

The powers that be are paying attention to this. They just don't care about it.

I hate to say it but I am beginning to think they do care, just not about Americans.

[riri]

Denim maker Cone Mills to cut 625 jobs in plant closings
By THE ASSOCIATED PRESS

CLIFFSIDE, N.C. (AP) - Cone Mills, the world's largest denim maker, announced Wednesday it would eliminate 625 jobs when it closes two North Carolina denim plants within the next 60 days.

John L. Bakane, Cone Mills' chief executive, blamed a reduced market demand that has been severely weakened by the recent flood of low-cost imports from Asia.

"The steps we have announced today are necessary in order for the company to remain competitive in an environment where unfair trade policies are decimating the U.S. textile industry," Bakane said in a news release.

Cone Mills' future has been under local scrutiny since it announced last month it would file bankruptcy to clear the way for a sale to financier Wilbur Ross.

Both Ross and Cone officials have indicated that part of the transaction would include merging Cone Mills' denim operations with those of Burlington Industries, which Ross acquired this summer in a bankruptcy sale.

The closings announced Wednesday will affect the Haynes Plant in Avondale and the Cliffside Finishing Plant.

The operations at the Cliffside Weave Plant will also be reduced, leaving about 225 employed.

The cut does not affect Rutherford County's Cone Jacquards Plant, which employs about 245. However, the fate of that operation remains uncertain because of the bankruptcy and sale.

Founded in 1891, Cone Mills makes the fabric for Levi's jeans, among others. It employs more than 3,000 people in five factories in the Carolinas, along with a joint venture in Mexico.

[riri]

Great Lakes Chemical to cut about 400 jobs
indystar.com - October 9, 2003

Great Lakes Chemical Corp. is closing three Polymer Additives plants and laying off 9 percent of its employees in an effort to reduce operating costs by as much as $30 million a year.

The Indianapolis-based company will lay off about 360 manufacturing workers at Polymer Additives plants in Tennessee, the United Kingdom and Toronto, and about 40 administrative employees globally, including a "handful" of administrators in Indiana.

Great Lakes, which has 4,600 employees worldwide, is negotiating with employees and unions to decide when the U.K. and Newport, Tenn., Polymer Additives plants will close and what severance packages might include.

The company is moving the U.K. Polymer Additives operations to El Dorado, Ark., where production will be cheaper, said Wendy Chance, Great Lakes manager of corporate communications. The packaging part of the Toronto plant will move to Georgia.

Great Lakes produces chemicals for water treatments, flame retardants, specialty household cleaners and other uses.

Consolidation will cost Great Lakes about $120 million, half of which will be recognized in the third quarter and the remainder by the third quarter of 2004. The company will realize savings from the cost-cutting moves by the beginning of next year.

Rising manufacturing costs and the weak economy are to blame for the cutbacks, Chance said.

Trimming down Polymer Additives will make Great Lakes' other divisions more profitable, said Dmitry Silversteyn, senior research analyst with Longbow Research in Ohio.

Profits for Polymer Additives have been down, from $52.4 million in 2000 to $16.4 million last year. Bans in Europe and an impending ban in California on one of the division's products, bromine-based flame retardant, could negatively affect future sales, Silversteyn said.

"Polymer Additives hasn't been a good business to be in since 2000," he said. The company needs to sell more and needs to sell its products at higher prices, he said.

Great Lakes had $18.9 million in net income in the second quarter, down from $105.9 million during the same period last year. Its second-quarter sales of $416.7 million were better than the $408.5 million it recorded in the year-ago period.

In trading Wednesday on the New York Stock Exchange, its stock dropped 34 cents to $20.81.

[Boxsford]

ignorant fool

[Boxsford]

I'm sorry. After thinking about what you wrote I realized you were probably talking about Bush. My husband took a lot of grief from his own family for taking time off looking for work while taking care of his bed ridden mother. I thought you were referring to his taking so long to find work. Forgive me.

[A. Pole]

I'm sorry. After thinking about what you wrote I realized you were probably talking about Bush. My husband took a lot of grief from his own family for taking time off looking for work while taking care of his bed ridden mother. I thought you were referring to his taking so long to find work. Forgive me.

No problem. I was not even sure if you referred this phrase to me :)

[Boxsford]

How funny. Talk about miscommunication! Thanks for understanding.

[Lael]

BTTT!!