Manufacturing Jobs Top Election Issue

Spring has finally sprung, and, as the air warms, so too does the election rhetoric, fueled by the issue of jobs in the manufacturing sector.  Democratic Presidential candidate John Kerry has vowed to penalize “Benedict Arnold” companies that ship US manufacturing jobs overseas, while Republicans have promoted job creation in other industries.  Since mid-2000, one in six US manufacturing jobs has disappeared, largely because American consumers demand the lowest prices and the highest value, and manufacturing labor costs are as much as 90% lower in China, India, Korea, Mexico and other developing nations. 

Since last December, when Sadam emerged from his hole and saw his shadow, signaling 11 more months of Presidential campaigning, Kerry has hit hard on the job theme.   He does not promise to bring back lost jobs with “Dawn of the Dead” programs to make them “deadish.”  Instead, Kerry plans to use the tax system to force companies with foreign operations to pay taxes on earnings from their foreign manufactured goods that are sold in the United States.  Currently, they can defer those payments, almost indefinitely.  The tax deferral program would remain in place for products manufactured and sold abroad.  Would the program protect US jobs?  Not likely, suggests David Wyss, chief economist at Standard & Poor's in New York.  He says tax deferral is a “very minor” reason for companies moving their manufacturing operations abroad.  We’ve already mentioned a major one – up to 90% lower labor costs – and the other is proximity to markets that are booming, which, again, would not be affected by the proposed tax changes.

The Republican take on the issue, as voiced recently by Stephen Friedman, the government’s top economic advisor, is higher level.  He told the Detroit Economic Club that “isolationist walls” in the US will lead to “tit-for-tat” retaliation abroad.  Friedman pointed out that protectionism was tried with import tariffs in 1930, and that history remembers the move as one that deepened and extended the Great Depression.  Friedman also referenced the Bush administration’s efforts to establish more free trade agreements, crediting the existing ones with boosting the standard of living of the average American family of four by about $2,000 per year. 

The AFL-CIO has orchestrated a “Show Us the Jobs” bus tour that puts unemployed human faces on the statistics.  At a recent stop in the Machine Shed restaurant in
Davenport Iowa, a parade of jobless told their stories of hardship and worry.  Who better to pull the heartstrings than an unemployed quadruple-bypass survivor and an out-of-work dad who can no longer afford to send his high school senior son to college.  They were among the group of 51 who made an appearance.  A spokesman for the Republican National Committee, David James, addressed the issues raised by the bus tour participants by pointing out that 364,000 new jobs have been created since last September, and he said the AFL-CIO was actually preventing participants from looking for work by getting them to appear at the Machine Shed, calling it a “political stunt.”   

In a previous edition of the Adexa Arrow, we wrote about “China Syndrome 2004,” the core meltdown of the US manufacturing industry and jobs burning their way through the earth’s crust to China.  The story referenced the operations shift to developing nations, the need to re-train North American factory workers, Adexa’s ability to synchronize supply chain and operations planning and to remotely manage planning and execution.  It also covered how Adexa extends the lifespan of American-based manufacturing operations by delivering unparalleled time and cost savings at each step in the planning and execution process.  Today, as manufacturing jobs are becoming a cage match issue in the “Presidential Smackdown,” it’s clear that Adexa has solutions for both Democrats and Republicans.  We protect jobs in the US by increasing planning accuracy and factory performance, and we enable an extended enterprise planning model to manage facilities and suppliers in other countries and gain access to new markets.  Adexa’s election platform is one of profitability, at home and abroad.

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