proudlymadeinamerica.com

Trending for Made In America

I just did a a Google Trends on the phrase “Made In America”. What struck me is, expect for a few spikes in volume, the average search volumn has bee pretty steady for years up until 2011.  In 2011 we see a dramatic jump in search volume to three or four times the previous average.  Although the search level is still relatively low, it is a great trend that shows people are starting to hear our message.  

Looking for “Made In American” products does not jump because a few people have blog sites and twitter accounts pushing the idea.  The increase is due to many of you out there who discuss the importance with their friends and neighbors.  Letting people know that you looked for and found quality American made items encourages them to do the same.  Keep up the good work everyone.

Manufacturing Jobs Are Fine, For Somebody Else

A blogger named Derek Singleton emailed me about his blog post concerning manufacturing, How Manufacturing Can Attract Young Talent Again.  Derek does a great job in identifying how our society has short changed manufacturing as a career choice.  I want to focus on one of Derek points, the disappearance of shop class.  To me this is a great example of the cultural shift away from manufacturing.  Derek correctly points out that we need to work on the public opinion of manufacturing, specifically manufacturing workers, and that adding shop class back into our schools is an important first step.   Unfortunately, this is not an easy task.

For decades, economics have been talking about the “innovation economy” and the “knowledge worker”.  The level and the fervor of the talk lead many to believe that an “innovation economy”, comprised of “knowledge workers”, was mutually exclusive with an economy containing with robust manufacturing.   Public opinion made it seem that there was no future in manufacturing.  Even without the “mutually exclusive” undertones, public opinion of the “knowledge worker” jobs was that they are the high paying jobs everyone would want.

Parents, with their child’s best interest at heart, were pushing their school systems for the education needed for the “knowledge worker” jobs.  In the end they wanted computer classes over shop classes.  When I was in high school, I had a job as a glazer at a sunglasses manufacturer.   I did quite well at that company and when it came time to graduate high school, they offered me a fulltime job at a decent salary plus benefits.  To make a long story short, my parents vetoed the idea and told me that had to go to college, which I did.  Although, for several years I worked summers and school breaks at that company I eventually graduated college and got a job in my new field, as a chemist. 

At the same time as the “knowledge worker” push, school districts where being pushed to measure students by using standardized testing.  Spending limited educational budget money on classes that did not help a school’s rating were being trimmed or even cut completely.  The end result was a public that started to think that the only way to succeed in life was to go to college and get a “knowledge job” while the education system became nothing more than a feeder system for colleges.  If you were not “college material” there were less and less educational options for you.  Less and less workers were taught the skills they needed for manufacturing jobs. 

The good news is that many manufacturing jobs do not resemble the manufacturing jobs of old.  Rows of workers doing tedious work have been replaced by automated systems.  Gone are the sweatshops of yesteryear with a majority of manufacturing jobs, whether union or not, provided middleclass salaries and benefits.  Providing a better understanding of the current state of the manufacturing worker will do a great deal of good toward attracting more quality workers to manufacturing.

We are at a crossroad.  Public opinion has recognized that our economy needs to have domestic manufacturing to remain sound, while most people still do not want to work in manufacturing despite its importance.  The current level of union bashing that is going on does not help since many people tie unions with manufacturing.   Maybe, as Derek points out, if we start doing things to help educate people about manufacturing itself we can shift society back on a path for balanced economy, one that supports both manufacturing and “knowledge” jobs.  

Memories of My Youth

I was contacted the other day by Sean Bandawat, President of Jacob Bromwell Inc., about featuring his company in a post.  Before I responded, I did some research on the company to see if they were a company I would like to feature.  I was not disappointed by my search; Jacob Bromwell Inc. is an ideal company to feature, on this site, for many reasons.  They manufacture all their products in the USA and are the oldest house wares company in North America.  All I needed was something to write about.

There are many other sites that are aggregators of “Made in USA” products and companies.  My goal is different, I want to highlight a company and one or more issues concerning manufacturing and/or why manufacturing is so important to our economy.  So I replied to Mr. Bandawat with about a dozen questions covering basic company information, how they handled the recession, and other questions designed to get a handle on the challenges of being a manufacturer in the United States.

Mr. Bandawat responded quickly to my email with two attachments, so I could get started, and an indication that he would answer my questions in more detail a few days later.  This gave me some time to re-read the press release and scan the company’s website again.

As I was going through the website, I came across a campfire popcorn popper.  I was instantly struck by the fact that it looked exactly how I remember the popcorn popper my father use to use in the fireplace when I was growing up.  I am not saying that it was a Jacob Bromwell popcorn popper, but I would not be surprised if it was.  In any case, I started reminiscing about my youth and the great fun we had popping the popcorn and having some real nice family time.  Then I remember a quote from what Mr. Bandawat sent me, “what we’re really selling is an emotional journey: away from the madness of modern life and into nostalgia, tradition, and the longing for a simpler era.”  I agree with Mr. Bandawat on this point, as a kid I looked forward to those weekend evenings when my dad did not have to work.  We turned off the television and, as a family, had freshly made popcorn by the fireplace. 

I then decided to see what other popcorn poppers were on the market and I found a wide range of styles and prices.   I found that there were some copycat products and other design types.  It is interesting to point out that one of the round poppers was advertising that they had just redesigned their product. 

I think it is great that a company such as Jacob Browell Inc. has such a wonderful American history and can easily invoke a nostalgia that very few companies can, but nostalgia only goes so far.  At some point, the comparative costs of the products come into the equation.  That is if all else is equal.  This leads me to another excerpt from what Mr. Bandawat sent me; “Jacob Bromwell manufactures all its products in the USA using American workers who take pride in their craftsmanship.  Management will not outsource production to low-wage labor countries to reduce costs because it has faith in the creativity and productivity of American workers.”   The company also takes pride in using the same manufacturing processes used almost two hundred years ago. 

In an age where companies work to reduce the cost of production down to a point where the product quality is “just good enough”, Jacob Bromwell is making products at a level not found, at many other companies, for a generation or two.  When the company was first founded their products were made to last forever, and the same is true today.   That fireplace popcorn popper my family used for my entire childhood never broke or had to be replaced.  It would be still in use today if I had the foresight to take it when my parents sold their house.  I looked at other campfire popcorn poppers and it is evident that a majority would probably only last a couple of seasons at best.  The distinct quality advantage for the Jacob Bromwell product is apparent.   

One of the questions I asked Mr. Bandawat was, “what one or two products are a must have and why?”  His answer was the following; “Our two products with the most historical significance are the Original Popcorn Popper and All-American Flour Sifter.  Jacob Bromwell held the original patents on both of these products for years and they were proudly invented and build right here in the USA for years.  Still today, we make them the same exact way, on the same original machinery, as they were made nearly 200 years ago.  These products are staples of American households and folks can’t seem to get enough.” When I read the answer I realized that my family also had a flour sifter.  My mother loved to bake, and I remember helping her sift cups and cups of flour until my forearms ached.  Yet another quality, old style product that never broke, even under heavy use.

One of the best lessons my father taught me was that quality matters.  If you plan on using something over time, it should be built to stand the test of time.  In the case of the Jacob Bromwell Inc., their quality products have helped make wonderful, lifelong memories for many people.  With the help of a truly American company such as Jacob Bromwell Inc., when you are sitting at a fireplace or campfire with your family popping popcorn, or baking a cake with your kids, you can make your own wonderful memories.

Out of Gas

As the national average for unleaded gasoline has spiked to around $3.77 a gallon, drivers are cutting back on their driving.  What makes this cutback in driving, compared to the previous price spike, and subsequent driving cutback, interesting is that it seems to have occurred prior to a cutbacks in other discretionary spending, such as clothes and entertainment.    In general, people are driving less while still buying more clothes, furniture, eating out more, and going to the movies more.

In the overall scheme of things, higher fuel prices are a drag on the economy.  Every extra dollar paid for a barrel of crude oil hurts the economy.  As pointed out in an article titled Moody’s: Effects of Rising Crude Prices are Immediate on the U.S. Economy, “The $18.50 increase in oil prices that we’ve experienced over the past couple weeks will, if sustained over the course of a year, cost consumers $20.4 billion just in higher home heating oil and diesel costs. It will cost consumers $46.3 billion in higher gasoline costs if sustained over a year. That’s equivalent to more than a third of the $120 stimulus that we got from the payroll tax reduction in the tax compromise last December.”  To minimize the effect of the higher fuel prices, the best place to cut back spending is on the fuel itself. 

The problem with cutting back on fuel usage is that fuel costs have risen over 20% and there is no way we can cut back fuel usage by that amount.  The silver lining is that, as a nation, we are addressing the higher fuel costs in a relatively good way by cutting back on fuel usage before cutting back on other spending.  Also, more and more people are making long term changes to how they consume fuel, such as gasoline, by switching to higher mileage vehicles, or improving the insulation on their houses.  With the current spike in price due mostly to a supply uncertainty premium, when things settle down and the price drops, we will have a lower base usage to move back to.

So why is the reaction to this price spike different from the last time?  There are several reasons, but first is “been there and done that”.   As a nation, we have been through this before and realized that cutting excess driving and changing the thermostat a couple of degrees was not as big of a burden as we feared.  The relative pain of driving a little less is not a bad as the pain of buying less of what we want   Walking to the store down the block or grouping errands is no big deal when it means you can still buy that new jacket.

Another factor is the economy is picking up.  More people are working as businesses slowly start to hire again.  If it was not for the local government layoffs, the job numbers would look much better.  The increase in private sector jobs has helped, in general, raise confidence in the economy.   

The improved outlook means that this time around higher fuel costs are a more isolated factor affecting our economy.  Over the past few years, many families did a good job of getting their household finances in order.  Many families greatly reduced their debt and ‘right-sized’ their consumption to be more in line with income and less reliant on debt.  In the past fuel price spike, consumers had to reduce their spend spending in addition to the reallocating more funds to fuel charges.  This time the reaction is more about targeted reductions in consumption.

At the end of the day, the U.S. is made up of consumers.  As the economy improves more Americans will feel comfortable with the relative debt, savings rate, and economic prospects.  This translates to consumers being more willing to consume.

When tensions in the Middle East dissipate, and the uncertainty premium on crude oil is reduced, we can hope that the current trend continues.  That the American consumer will maintain the cutback in fuel usage and use the subsequent savings in fuel cost  to either do more saving or spend it on something that helps the economy the most.  Of course, they used the savings to include more domestically produced items it would benefit the economy the most.

Digging Ourselves Out

I was reading a book about cyber warfare last week and I came across an interesting statement concerning non-battlefield warfare.  The book sites a Chinese official statement indicating that non-traditional warfare, such as economic disruption and control of rare earth metals (REMs), will be as important as battlefield warfare in any major war.  The book, and the Chinese statement, was published several years ago.  Is it surprising to find out that today the Chinese control a vast majority of the world’s rare earth element mining?

Why is the control of REMs so important?  Basically, the REMs are used for much of our advanced military weapons, such as nuclear weapons, cruise missiles, advanced electronics, and more. Non-military usage includes many consumer electronic devices and much of the green technologies.  By controlling the market, China has already reduced the supply of REMs available to the rest of the world and this has increased the overall cost for other countries by imposing taxes on the REMs.  A more sinister use of their control of the REMs market would be to shut off supply in the time of battlefield war.  Opposing countries would start having difficulty resupplying equipment and munitions lost and used during the conflict.

The name rare earth metal is something of a misnomer.  REMs are not really that rare.  The U.S. and Canada have a large supply of such elements, in the ground, if needed.  The problem is that it could take over a decade to startup a new mine and generate a significant output level.  Even reopening or expanding an existing mine will take years to produce significant quantities.

Regulation and restriction on mining in the U.S. makes it a long and expensive process for any company to do mining.  Even with China artificially increasing the cost of REMs, they are still cheap enough where U.S. mining still will not be profitable enough to invest in new REMs mining here. 

What can the U.S. do to address the current problem and protect ourselves against a future cutoff of supply?  Under the goal of national security, the U.S. needs to subsidize domestic mining of REMs so that companies can adhere to U.S. regulations while still being able to be profitable.  Mining regulations are needed to protect our environment for the long term.  China will eventually have to address their growing national pollution problem due to their lack of environmental protection. 

Now is the time to put money into mining.  According to a 2009 study of the effect of mining on the economy in 2007, almost 1.5 million direct and in-direct jobs are due to U.S. mining operations.  For every one mining job, there are 2.9 other jobs created that are needed to support the mining job.  In addition, mining jobs average annual wage is about 33% higher than the overall national average for all industrial categories.

I honestly do not believe that China is thinking about a battlefield war with the U.S. anytime soon.  I do believe that China has already shown that they are in an economic war with the west.  If China feels that it is in their long term interest to cripple the U.S. economy, by any means, they would do it in a heartbeat.  It might not be in China’s interest today, but what about ten years from now.  Since it could take us that long to be truly prepared, we need to start now.  In the end, it is a win-win for us.  By taking REMs off China’s list of possible threats, the U.S. stimulates the economy effectively with high value mining jobs while protecting national interests against already identified threats.