Interesting story from the Associated Press about the U.S. being on target with the five-year goal President Obama set in January 2010 to double American exports by the start of 2015. Experts doubt the goal will be met in two years but there are five big reasons for optimism about “insourcing” for American manufacturing after a decade of “outsourcing” production elsewhere.
- Cheap U.S. natural gas and other increased energy production are helping to power U.S. factories more efficiently.
- Higher wages in China are making U.S. outsourcing there less attractive.
- Congressional approval in 2011 of trade agreements with South Korea, Colombia and Panama and other agreements being negotiated with Asia and Europe are opening markets and leveling the playing field for U.S. goods. Those agreements, by the way, have helped Marlin Steel export material handling containers of steel wire and sheet metal to 36 countries.
- U.S. wage increases have been held down by unemployment.
- Technology advances have boosted efficiency and productivity and made automation more accessible and affordable to smaller manufacturers, such as here at Marlin Steel where we’ve invested $3.5 million in automation.
President Obama’s starting point was 2009 exports of $1.57 trillion. They reached a record $2.19 trillion in 2012. The 2015 goal: $3.14 trillion.
“Some of the headwinds we faced last year have started to improve,” Chad Moutay, chief economist for the National Association of Manufacturers, as quoted as saying by the AP. “And I think energy is a game-changer. We definitely have increased the competitiveness of U.S. manufacturing.”
At an engine component factory in Asheville, North Carolina today, President Obama outlined a plan to achieve the commitment he made in his State of the Union Address to make America a “magnet for new jobs in manufacturing.” The White House chose the setting of the Linamar Corp. factory because it recently filled an industrial site that had been vacated a few years earlier and represented the rebound that’s been building in U.S. manufacturing. A half million jobs in manufacturing have been added during the past three years following a decade of decline.
We received a welcome e-mail recently from Alexandria Liu, a bright master’s student at Peking University. We met Alexandria during a trade-mission trip to Asia that we took with Governor O’Malley and a business contingent from Maryland in 2011. Alexandria recently sent a photo of her with a friend on horseback in Beijing. They seemed to be riding in a cloud, so thick was the smog. In the photo, the trees were only 200 feet behind her, as she described it, but you could barely make them out. After being out in the elements for two hours, Alexandria and her friend were sick with a sinus infection for two days, she wrote.
Recent news reports about the horrific air quality there appeared in the Los Angeles Times and in a Washington Post blog. The blog even mentioned a Twitter account @BeijingAir tied to a monitor a top the U.S. Embassy in Beijing that continually spits out air quality readings.
We noticed the severe conditions on our trip to China. The smog in Shanghai was stunning. The Yangtze River there is about as wide as the Inner Harbor in Baltimore, but you couldn’t see across it. Amid President Obama’s emphasis this week on reaffirming a commitment to combat climate change, it might sound counter-intuitive but bringing back more manufacturing to the United States would help. Continue reading