The Future of U.S. Manufacturing

Monday, January 12, 2009

The Jan. 5 editorial "Terms of Trade; Why the U.S. Lost Manufacturing Jobs, and How It Can Replace Them," was on the mark. The bailout of U.S. automakers will not save their industry in the long run.

Manufacturing by the Big Three represents the remnants of an industry that has been relocating to other places for 30 years. The subsidy would only slow this trend, which is likely to follow the pattern set by other manufacturing industries. At the turn of the 20th century, the heart of American textile manufacturing was in New England. Throughout the century, it relocated to the South to take advantage of non-union labor, and it eventually migrated offshore to find even cheaper labor. As foreign carmakers in the South erode the market share of the Big Three, burdened by high labor costs and low-efficiency cars, the pull of relocation will become stronger.

The solution is moving substantial parts of the industry to the South or to low-cost foreign sites, where U.S. subsidiaries are already producing cars more efficiently. Just as we import television sets with such venerable American names as RCA and Zenith without batting an eye, we will eventually be importing American cars and trucks with familiar names.

RANSFORD W. PALMER

Professor of Economics

Howard University

Washington

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The Jan. 5 editorial about the impact of trade on U.S. manufacturing ignored a key fact: In 2007, the last year for which complete data are available, the production of U.S. manufacturers set an all-time high. While manufacturers continue to struggle with challenges including high energy costs, a burdensome corporate tax rate, the theft of intellectual property and crushing regulatory compliance costs, the hard work of their employees and innovative products were enough to overcome these burdens and accomplish this achievement.

Another fact also seemed to be overlooked. In 2008, the United States enjoyed a trade surplus in manufactured goods with the nations with which we have free-trade agreements. These pacts work because they open markets to allow our goods to compete on a level playing field.

Manufacturers will work with the Obama administration and Congress to implement legislative and regulatory solutions that will stimulate the economy and help the manufacturing worker compete successfully.

ARIC NEWHOUSE

Senior Vice President

Policy and Government Relations

National Association of Manufacturers

Washington