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Unclear Thoughts

According to a Washington Post article, “Aughts were a lost decade for U.S. economy, workers”, the decade just ended was the “worst for the U.S. economy in modern times.”  There are many reasons presented in the article to support the conclusion, but a few of the main reasons listed are; zero job growth, a reduction of  net worth, and decrease in median income for a majority of Americans.  The article does point out that the decade was bookended by an economic bubble and the worst recession since the great depression.   What I found more interesting then the article were the reader comments associated with the article.

Many of the comments put the blame for the problems squarely at the feet of the Bush administration and/or pronounced capitalism a failure.  Although some Bush policies might have exacerbated the problem, they certainly were not the cause of the problems.  As for the people that think capitalism is a failure, I am not sure what planet those people are from. 

Economic bubbles have the characteristic of inflating net worth.  The increase of net worth in the 1990’s, at 58%, is well above the average net worth increase of for the previous three decades, 35%.  Much of the 1990’s increase came at the end of the decade during the height of the bubble. If you ascribe the difference between the averages, the 1990’s vs. the previous thirty years, as artificial then the 1990’s really gave us an increase of about 22% in net worth.  That 22% increase is hidden in the loss of the net worth due to the collapse of the 1990’s bubble.  The 22% is lowest of the past four decades, but still not that bad.

I am not sure that capitalism could be considered a failure when our economy is still the world’s largest, our standard of living is exceptional, and most of the world’s population still wants to move here.  That is not to say our economy is trouble free.  We have a debt that is way out of hand, our country’s health care costs are out of line with the rest of the world, and as a country we spent the last decade plus putting more money into short term economic activity stimulators, such as housing, instead of long term economic stimulators, such as manufacturing.  To put it simply, we owe more than we should, we spend too much on our health care and our nation was more interested in building McMansions then manufacturing.  To be fair, this process started more than ten years ago. 

Our loss of economic focus on manufacturing was encouraged by economists telling us of the “innovation economy” and economic policy encouraging us to spend instead of save.  Unfortunately, as I documented in one of my first posts on this site, the “innovation economy” is a myth.  Since we were not saving our nation had to borrow from the rest of the world.  Combining this with the misdirection of resources caused our nation to see its manufacturing, and other, jobs to leave and never come back. 

In the end, I would not call this past decade “lost”.  I would call it more of an “obfuscated” decade.  By that I mean it is unclear how bad, or good, the decade was.  I use the old saying “nothing is as good as it looks or as bad as it seems” to describe this past decade.    What is clear, however, is that we must learn from the events of the decade and improve our economy in this next decade.

Made in America Christmas

As the holiday season rapidly approaches, it is time to start thinking about gifts.    I, like many of my friends and relatives, will be limiting my holiday spend to less than last years’ level.   This is in line with many surveys that indicate consumers in general will be spending less this year.  If true, this holiday season will probably not bring much joy to a majority of retailers and out of work manufacturers.  The lower level of spend is why it is even more important to try to buy “Made in the USA” products.  Therefore, I ask people to do a “Made in America Christmas”.

I know it is unrealistic to ask people to go 100% “Made in America”, but it does not hurt to try.  I realize some families will want that iTouch, PS3, or some item that can only be imported.  I have a suggestion for those families; put off that purchase and switch to one of the many items that have domestic alternatives.   Whether you are buying socks, handbags, ties, jeans, a coffee maker, or a vacuum cleaner there are “Made in America” choices.  Even in electronics you can often find a domestic alternative.  If you have to have a product that is foreign made, then see if it is assembled here and/or the company does its R&D here.    Using the iPod, as discussed in my post “The Innovation Myth”, it is better that some of the money, more than just to the retailer and importer, stay in the United States then leave our economy.

Putting off that foreign purchase and focusing on domestic items helps our economy now, when we need it most.  When the economy gets better, then make that foreign purchase.  That way you help our economy now and also give holiday joy, to people you will never know, by creating a job for another American.  Also, please talk to your friends, neighbors and co-workers to do the same.   It is especially critical now because America, and most of the world, is purchasing less.  Each domestic purchase matters.

What Does “Made in the U.S.” mean?

I am starting a new feature called “Company Spotlight”.  This feature will bring attention to companies that either manufacture in the USA, or work to bring attention to the importance of American manufacturing.  The first company I am spotlighting is Made In USA Certified Inc. of Delray Beach Florida.

As the name implies, Made In USA Certified Inc. certifies that the content of products that are labeled as “Made in the U.S.” are truly “Made in the U.S.”.  As the company’s website points out, it is legal for a company to label a product “Made in America”  even when components are from other countries, this is because they can include Mexico and Canada in their calculation of domestic production.  Some Central American countries can also be counted.

Made In USA Certified Inc. also certifies other aspects of the business.   Some companies have their R&D in another country and/or outsource parts of their operations.  Where the majority of the “office” work is done does not affect whether a product can use the “Made in the U.S.A.” label.  This means that “Made in the U.S.A.” on a box does not always mean the same thing.

Julie Reiser, the President and Founder of Made In USA Certified Inc., is working to address this lack of a true standard with the “Made in U.S.” tag manufacturers put on their boxes.  Her company requires that a product “must be certified as having all or virtually all of their core components manufactured in the U.S.”  In addition, there is an added requirement that a products assembly be exclusively be done in the U.S.

Every week there are articles about product recalls due to inferior safety standards and controls in other countries.  These types of problems are less likely to happen with domestically.  From baby formula to dog food, other countries do not have the standards, and oversight, that we do.  That is why Made In USA Certified Inc. is even more stringent when it comes to consumables.  If something is to be ingested, whether by a human or an animal, Made In USA Certified requires that the core components are 100% U.S.A. made.  Being certified as virtually 100% U.S.A. made provides that additional level of comfort knowing that your products are truly safe.

Currently, the Made In USA Certified Inc. label can be found on packaging and websites of many companies.  There are two companies I want to identify.  The first is Tough Traveler. They design and manufacturer baby carriers, luggage, backpacks and more.  The other company is Franklin Clocks. Franklin Clocks offers a complete range of Clocks and Time Systems for Commercial, Educational, Government, Health Care and Industrial applications.

Most of my readers are already aware that manufacturing jobs are critical for our nation’s economy.  Having products certified to be fully “Made in the U.S.” ensures that more jobs are created domestically and that our economy benefits the most.  An added bonus is safety.

Companies like Made In USA Certified help raise the awareness of the importance of U.S. manufacturing, something we should all be working towards.  So now, if I have a choice between a “Made in the USA” product and a “Made In USA Certified” product I can make a more informed decision.  That way I can be sure that my purchase does the most possible good for our economy.

Tale of Two Stimuli

When the major economies of the world went into a deep recession many countries responded with stimulus packages.  The stimulus packages all had a similar goal; improve the domestic economy and, by extension, improve the global economy.  Unfortunately, different countries have different domestic drivers that resulted in differing methods used to stimulate their economies.  In several cases, the result of the stimulus will actually hurt the long term economies of the world.

Two specific cases are the burdensome national debt in the U.S. and the steel bubble in China.  While the U.S. stimulus is probably why we are seeing some life in the economy, many components of the stimulus did not provide the best bang for the buck.  In China, while some of the stimulus was used to increase domestic consumption, a significant portion of the stimulus was used to keep manufacturing humming even though there was little demand.

In the U.S. stimulus, money went to many initiatives that had little impact on the rest of the economy.  For example, the $2 million earmarked for swine odor research in Iowa.  As a stimulus, this project was an ineffective use of money and should have either been used in a better way or just not spent.  On the other hand, money spent on improving the country’s infrastructure has great value.  Local jobs are produced that require a resource such as steel and cement which creates other jobs.  Add to this the economic value of a better infrastructure and you get the most out of every dollar.  Admitted, the percentage of money that went to projects similar to the swine odor research was small, but that is not the point.  The point is that the benefit of the marginal projects did not justify the potential future damage.

China is estimated to have loss over 20 million jobs due to the global recession. Since they could not afford additional job losses, stimulus money went into keeping steel, and other, plants operating and people working.  The end result is that China is now producing more steel then ever and they have nowhere to sell it.  Steel industry analysts do not expect world demand to reach 2007 levels until 2012.  What China is doing is maintaining excess capacity and compounding the problem by producing an excessive stockpile, which only exacerbates the excess capacity problem.

In the end, the U.S. and China will have to deal with their own problems due to their stimulus packages.  What it means to the global economy ten years from now is anyone guess.

Bloggers Wanted

I am looking to start adding more bloggers to this site. If you are interested in blogging about U.S. manufacturing, please send me an email at Michael@ProudlyMadeInAmerica.com so we can discuss bringing you on-board. Direct U.S. manufacturing expertise is preferred, but not required.
In general, I am looking for differing opinions about manufacturing. I have gotten some private comments and emails that I am overly optimistic about U.S. manufacturing. My intent is to have this site as an open environment to discuss all viewpoints. Hopefully getting different views will stimulate discussion.