Manufacturers Know All About Economic Collapse

Date: Thursday, October 02, 2008 5:57 PM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1927 -- 10/02/2008 >>>>>

"Yet, there is still NOT ONE mention from anyone in power -- especially not
the two presidential candidates, nor of a single congressional leader -- of
what is really needed to bail out the United States.

The only way out of this mess is for the United States do everything it can to
make the country what it was until 30 years ago: a nation that valued
manufacturing."

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.manufacturingnews.com/news/08/0930/commentary.html

September 30, 2008 Volume 15, No. 17

Commentary: Manufacturers Know All About Economic Collapse

By Richard McCormack
editor@manufacturingnews.com

It is sad what has happened to the United States.

For years, as editor of Manufacturing & Technology News, I have heard
dozens of domestic manufacturing company CEOs talk about an impending
"collapse" of the U.S. economy. These were the men who were in the
unenviable position of having to close their companies or shut down
factories and watch as most all of their competitors did the same thing.

These were the men who implemented Six Sigma, lean, ISO 9000, and the
Baldrige National Quality and Shingo Prize criteria. They were leaders who
agonized over having to move the world's most efficient production capacity
from the United States to Mexico and China in order to stay in business,
because no matter how good they were, it wasn't good enough to survive.
They could compete with other companies, but they could not compete against
other COUNTRIES -- countries that cheated in every way imaginable.

These manufacturing company CEOs were men who loved their employees. Who
grew up with their employees. Who knew their families. Who knew in their
hearts the economic, cultural, moral and physical destruction that was
being wrought upon their communities.

U.S. manufacturing company CEOs died many deaths, watching as Wall Street
mavericks and their economic ideological apologists in the U.S. federal
government, in Congress and their high-paid agents in Washington, D.C.,
forced hundreds of thousands of dedicated, hard-working Americans into the
street, to fend for themselves in a game that was rigged against them.

Has the financial class driven through the heartland of America lately?
Have they not taken AMTRAK between New York City and Washington, D.C.,
passing through the industrial back lots of Baltimore, Wilmington,
Philadelphia, Trenton and Newark? Have they not seen an American landscape
stretching for thousands of square miles that looks like it has been bombed
out?

There are places in America that are "healthy," but these places are even
worse: shopping and strip malls located on the edges of America's
deteriorating towns and cities, lined with vast parking lots and national
chain stores: Applebees, Home Depot, Wal-Mart, Wendy's, Days Inn, Outback
Steak House. They are soul-less places -- "Anywhere USA" -- as depressing
as the crumbling inner city cores of hundreds of American cities and towns.
This is what has become of America. Wall Street had a lot to do with this.
As part of the financial bail out bill, they needed to include a provision
on teaching ethics and civics.

The heroic men running companies that made durable goods wept on the phone
when I called to ask about why they closed their factory after it had been
in operation for 80 years or more.

These people were not selling financial paper or making products that were
obsolete and no longer in demand, like buggy whips. And yet when I speak
with economists about manufacturing, they invariably rationalize the loss
of America's wealth-generating sector by claiming the companies that are
dying are making "buggy whips." It is wrong and it is infuriating. We're
talking about the United States economy, which has just suffered a massive
financial heart attack.

I remember writing about the manufacturing job situation in early 2004. It
was the 35th consecutive month of manufacturing employment layoffs, with
the latest BLS figure coming in at 135,000 production workers being told to
go home and not ever come back. This was a crisis. I wondered why in the
hell not a single person in the Bush administration and only a handful of
people in Congress cared about the collapse of the wealth-generating sector
of the American economy. As is happening with the financial sector today,
manufacturing five years ago was being disassembled in front of their eyes.
There were no bailouts -- manufacturers weren't looking for them -- there
weren't even bromides.

I remember thinking as Bush invaded Iraq that it was America's last great
hurrah. As America's military hardware was being shipped to the Middle
East, America's industrial base was being shipped in the opposite direction
to China. The war was happening at the same time that "outsourcing" became
a big story in the media. But the business press got bored and started
covering the incredible run-up of housing prices. "Whoopee," said all the
journalists and economists. "Who needs industry when we've got finance and
housing!"

But the manufacturing industry's plight continued. I wanted to rename my
publication "One Outrage After Another." I was constantly questioning
whether I should continue writing all the stories of companies dying, of
industries leaving, of workers being laid off, of trade deficits
skyrocketing, of China cheating, of the perverse reaction among Washington
elites to rationalize the destruction. I wondered if I was the problem. If
being Irish meant fixating on the negative. But I had covered manufacturing
through the 1990s, and the story wasn't depressing. I even wrote a book
about U.S. companies' adoption of the Toyota Production System and lean
manufacturing and the good it was doing. It was not me. It was the story
that could not be ignored.

I got to know other people who couldn't sleep at night fretting over what
was happening to the United States industrial base. These were patriotic
people who started to coalesce around these issues, who were utterly
perplexed by the federal government's total unwillingness to act on behalf
of American producers and their workers.

The government knew what was going on. But its political appointees made
nonsensical ideological arguments concerning "free trade" and "free
markets." "We've got a war going on, we can't support U.S. manufacturing"
was a refrain I heard over and again by political appointees at the
"Commerce" Department and White House.

Manufacturers weren't looking for a hand out or a bailout. They only wanted
one thing: for the United States government to put the interests of
American producers above the interests of foreign countries, foreign
producers, importers and the multinational companies that were taking
advantage of mercantilist practices in China. American manufacturers wanted
the U.S. government to put the interests of American producers ahead of the
law firms representing foreign shipping companies, the lobbyists
representing Wall Street and, again, the multinational companies that were
swimming in record profits by sending their production offshore; all while
the critical manufacturing sector was left for dead. "Good riddance," said
the financial elite and its power structure: "those jobs sucked anyway."

Those same free-market, capitalist, anti-government, anti-regulation
ideological zealots are now begging -- demanding -- that taxpayers give
them a trillion dollars for destroying the American economy.

I never once reported about the dire warnings of an economic meltdown --
about the inevitable financial catastrophe being caused by the asymmetrical
global trade imbalances that were mounting by the day. I had my own 401k to
worry about along with three older children, and I was not going to be a
reporter who stoked the possibility of economic Armageddon.

I guess I was wrong. I guess I should have been reporting on the impending
collapse because President George Bush, Treasury Secretary Hank Paulson and
Federal Reserve Chairman Ben Bernanke sure haven't had any such
reservations about scaring the bejesus out of us.

What strikes me as particularly sad, however, is the clear FACT that in all
of the discussion about bailing out the financiers and their agents who
killed the American economy, there has not been one mention of the real
reason for America's collapse, nor of what is needed to start the long
process of restoring the country back to some semblance of economic health.

The housing bubble and sub-prime loans are only part of the problem.

The real culprit is the fact that almost everything Americans buy is made
somewhere else. The country continues to ship all of its wealth overseas.
Did the economic policy makers not watch the opening ceremony of the
Olympic Games in Beijing? Have they not seen the 200-story skyscrapers
going up in Dubai?

The core of America's economic problems stem from the trade deficit and the
elimination of tens of thousands of factories and millions of jobs that
were creating the wealth the country needed to pay for everything. Without
that wealth, the financial sector invented playthings and the nation
borrowed until it could borrow no more.

Oh, but wait! The answer to the problem is to borrow more to bail out the
people who over borrowed. The Paulson proposal, unexpectedly defeated on
Monday September 29 in a harrowing live television broadcast, was to allow
the U.S. government to pay off bad debts by going deeper into debt. It did
not sit well with anybody.

September 29, 2008, will be an important day in the history of the American
Republic. It is the day the American era ended. Watching the live pictures
on CNBC of the traders in the pits watching the television monitors above
their heads as the vote on the House floor was tallied was like watching
New Yorkers standing in horror as they watched the burning World Trade
Center towers in 2001. The congressional vote count was simulcast with the
Dow, and they were crashing in unison. There was shock in the eyes of the
traders, and a panic among the CNBC broadcasters, who couldn't believe what
they were witnessing. These men and women are consummate professionals and
are not prone to panic. But there they were barking out: "What's happening
with gold?" "Look at the oil markets!" The market did what the towers did
and what our President predicted: it collapsed. For the second time in
seven years, the energy was visibly drained out of Lower Manhattan and the
country at large, as it realized a scary new era had begun.

Yet, there is still NOT ONE mention from anyone in power -- especially not
the two presidential candidates, nor of a single congressional leader -- of
what is really needed to bail out the United States.

The only way out of this mess is for the United States do everything it can
to make the country what it was until 30 years ago: a nation that valued
manufacturing.

The U.S. economy long ago collapsed around domestic manufacturers. Now it's
collapsing around the financial wizards who either forget or didn't know
that their livelihoods depended on a robust industry and workers making
livable wages.

As someone who works in Washington, attends press conferences, government
meetings, congressional hearings and who asks questions of the power elite,
I can assure you from first-hand experience that the United States
government did not do a single thing -- nothing -- to re-set the global
ground rules to allow U.S. industry and its millions of workers to be
competitive. In fact, all the rules were changed to favor the foreign and
financial interests. The country is now paying the real price of saving a
few bucks at Wal-Mart.

The United States government and its elected representatives long ago
stopped representing the interests of American workers and American
producers. If there is any silver lining in the historic House vote on the
Bailout Plan on September 29, it is that maybe Congress has woken up to the
power of the people. Unfortunately it was the wrong time to wake up. "The
people" must now pay the consequences of their elected representative's
somnambulance. They must now prepare to confront the "dire" consequences
caused by decades of Wall Street's short-term focus on quarterly profits at
the exclusion of everything else.

The country has a lot to learn from American manufacturers and their
workers, and it will not like what's coming one bit.

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