Posted on 10/08/2003 12:08:33 PM PDT by 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.
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.
No problem. I was not even sure if you referred this phrase to me :)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.