Domestically imposed costs, such as health care insurance and litigation, harm American manufacturers more than offshore competition from China and other low-cost countries. But, other factors also affect the ability of our assembly lines to compete in today's global market.
Five years ago, I wrote an article entitled “Build It in the USA.” I pointed out that domestically imposed costs, such as health care insurance and litigation, were harming American manufacturers more than offshore competition from China and other low-cost countries. I warned that those costs would place a huge burden on the future competitiveness of American industry.
In the article, I also referred to a landmark study that had just been issued by the U.S. Commerce Department. The Manufacturing in America report outlined five key challenges that were vital to the success of American manufacturers.
The much-anticipated Bush administration report was supposed to be “a blueprint for helping American manufacturers expand their business, create new jobs and spur economic growth.” Commerce Secretary Donald Evans claimed that “President Bush is dedicated to growing the manufacturing industry and creating new jobs.”
So, exactly how successful was that 88-page report? Well, let’s just say that if I was assigning a grade, I’d be generous if I gave Evans and his colleagues a “D.” Since the report was ceremoniously unveiled in January 2004, manufacturing in this country has eroded even further for a wide variety of reasons. Along the way, thousands of jobs have been lost. However, due to lean manufacturing initiatives, productivity has actually increased in many instances.
It’s not worth pointing fingers and placing blame on government officials who are no longer in office. Focusing on ways to move forward and restore American competitiveness today is more important.
Speaking of that, I’ve just started working on our 2009 State of the Profession report. We’ll be conducting an online survey this week [be sure to watch for it in your “in” box], then tabulating and analyzing the data for a full report in the July issue of ASSEMBLY]. While reviewing current issues related to the state of the profession, such as compensation trends, a new study conducted by the Economic Policy Institute (EPI, Washington, DC) crossed my desk
In the report, an EPI economist argues that, contrary to widespread public opinion, greedy blue-collar workers are not the main culprits behind America’s shrinking manufacturing sector. “In hourly pay and productivity, U.S. manufacturing workers give their companies a significant competitive edge-one that is being drained away by other negative forces,” claims Josh Bivens, the author of the “Squandering the Blue-Collar Advantage” report.
Bivens argues that managerial pay actually creates a competitive disadvantage for American assembly lines. Among other things, he claims that “U.S. managers are overpaid.” If managers in the United States were compensated more in line with the median wage of other nations, Bivens believes that overall labor costs in this country would be more than 6 percent lower.
“The competitive decline and job loss has been caused overwhelmingly by the overvalued U.S. dollar, with a mismanaged health care sector and the high labor costs of its supervisory and managerial workforce exacerbating matters,” says Bivens. “Anybody truly concerned about the future of U.S. manufacturing should address these influences.”