A Message to the 112th United States Congress

American Writer by Pietro Savo

In the last 50 years of the 21st Century, the United States’ poor economy and high unemployment resulted from a combination of not investing in manufacturing, design research, human education, and government policy changes such as Free trade agreements (FTAs). Currently the United States has FTAs with 15 countries: Australia, Bahrain, CAFTA-DR, Chile, El Salvador, Guatemala, Honduras, Israel, Jordan, Morocco, NAFTA, Nicaragua Oman, Peru, and Singapore (“Free Trade Agreements “, 2010). One FTA in particular had a monumental effect on jobs in the United States. The North American Free Trade Agreement is credited for 1.1 million manufacturing jobs lost over the first 3 1/2 years (Prizinsky, 1997). The total number of people in the United States who lost their jobs from March 2001 to October 2003 was 2,400,000 (“NAFTA Turns Ten 1994-2004 “, 2004). The 2,400,000 lost jobs are those that left the United States shores completely. What also account for the high United States un-employment is the 24 million Mexican immigrants willing to work for a fraction of United States citizen wages. When NAFTA opened up the borders to Mexico, many illegal immigrants flooded into the United States. It is estimated 24 million immigrants live in the US today, and it is estimated that at least 12 million of these are un-documented. The former Mexican president, Vicente Fox, reported that in 2005 Mexican citizens working in the United States sent back $18 billion to Mexico and the World Bank estimates that in 2006 that figure reached well over $25 billion (Bacon, 2008). NAFTA is viewed negatively as a result of this job loss and the drain of resources out of the country. To remain competitive, companies not only lay off workers, but also did not spend money by investing in new technology and people education. Lost jobs means companies do not invest back in the industry. Consequently, the manufacturing industry began to experience the economic perils associated with not investing in manufacturing, design research, and human education.

The industrial foreign trade policy that attempted to balance the trade between Mexico, Canada and the United States, clearly had a greater negative effect on the United States workforce that policy makers predicted (Prizinsky, 1997). Robert Scott (2001) writing for the Economic Policy Institute addresses why NAFTA core principles better supported the 50 years of the strategic industrial growth policies of Japan, Korea, Taiwan, Malaysia, and China than the industrial growth policies of the United States. The Asian model simply protected their industries; Asia invests heavily in manufacturing process research, and employee education, and subsidizes R&D investment (Scott, 2001). This strategy represented the complete opposite of what occurred in the United States as the result of NAFTA (Scott, 2001).

The United States has failed to learn lessons from their past; they did not protect their manufacturing industries and consequently important knowledge was lost. Samir Gibrara (1998) compares the failure of the Unites States to learn from their mistakes in the manufacturing industry to the practice of driving into the same pothole day after day. A daily commuter in a harsh New England winter learns to avoid the displaced pavement and potholes created from months of frost. Commuter anger occurs when driving into the same pothole, the expensive automobile tire repair damaged by the pothole, and the numerous complaints required to fix it. The strategy then becomes learning from past mistakes, and avoiding the same mistake pothole in the future, resulting less wasted time, a reduce risk to unnecessary repairs. A sustainable solution to further reductions in jobs is documenting and sharing best practices throughout the US business and manufacturing industries. As the concept of globalization gains acceptance and momentum, the future will have occasional downturns. The manufacturing industry’s challenge is to avoid creating additional problems and focus on the intended goals. Employment also has a very important global element that now challenges the manufacturing sector.

The global labor market has become strong elsewhere in the global economy because of the high labor cost stigma associated with the United States. The United States’ high labor cost has empowered millions of people around the world to compete for millions of United States jobs (Colvin, 2008). The rise of a global economy poses a further threat to downsizing the manufacturing sector in the United States. Many products formerly manufactured in the United States now are manufactured in part or in whole elsewhere in the world. What is predicted is that by 2015, over 3.3 million United States jobs and $136 billion wealth of wages, will be outsourced Asian and African economies, because of their cheaper labor markets (Zamora, 2007). Further complicated by the United States, as a nation has failed to adopt competitive regulatory policies that promote, rather than hinder the ability of growing manufacturing sector.

Professors Gary Pisano, Harry Figgie, and Willy Shih from the Harvard Business School in Boston summed it up best in their article published in the Harvard Business Review (Pisano, 2009). The professors stressed that for twenty years that United States companies have been outsourcing manufacturing because the company’s leaders honestly believed they held no competitive advantage to cheap off shore labor. This strategy has caused great devastation by bringing a halt to investments in manufacturing technology and educating people. The United States perhaps is on the verge of or has already lost the ability to develop and manufacture new products for the future (Pisano, 2009). This observation appears to be another cry from history such lessons that Charles Babbage often spoke about, resulting in economic perils connected with not investing in manufacturing technology, design research, and human education, a lesson not yet learned.

The United States can survive and take the lead in a global market by exploiting manufacturing strengths and by specializing in broader markets. The future of the United States economic base is now dependent on the ability of businesses to lead the world by engaging business strategies that favor the United States once again (Colvin, 2008). Through education and accreditation, the risk to the manufacturing industries is significantly reduced when manufacturing practitioner and scientist join forces with a common language and common goals. This is not a new lesson, only a lesson that the United States manufacturing industry has failed to learn (Dickson, 1996). Thus, the decline in the manufacturing industry is not so much about outsourcing or jobs sent abroad, but jobs today that never show up here at all (Colvin, 2008).

Today because of the miracle of advanced science, advanced technology, and embraced organizational development proven techniques, business manufacturing practitioner, and manufacturing scientist can operate on the same playing field. With better technology comes the potential for seamless communication. Seamless communications, having the ability to discuss manufacturing strategies, and share solutions to problems in real-time define the need to better communication skills between practitioners. Focusing on groundbreaking innovation comes about by reduced government restriction with a predictable structure delivering a predictable future. With less rules, businesses are able to implement new ideas with fewer restrictions. With creating policies that protect and benefit the United States manufacturing industries come greater opportunities to invest, teach, and excel the industry. Rick Wayman (2008) contributed by bringing to light the different compensation plans and how they influence the workforce and how they contribute to obtaining the best talent. In addition, both Richard Freeman and Knight Kiplinger (2004) studies regarded government as an influencer on directional change that when applicable to market share could contribute to positive business growth. How the government encourages business to seek out new market opportunities determines the level of economic success that is achievable nation-wide (Kiplinger, 2004). Knight Kiplinger’s also pointed out a business can help itself by staying within its business reality or core business practices; this becomes a form of self-help by not creating adverse business environment (Kiplinger, 2004). What is important is experiencing the value from exploiting groundbreaking innovation such as to establish a long-term benefit to people for their hard work; this becomes an attribute of leadership.

The interesting aspects are that business quality perception in both the customer’s eyes and a business’s self-perception must match for validation, and considered an accurate measurement (Llusar, 2002). Glen Ryen and Geraldo Vasconcellos focused on the business’s equity as a means to build business advantage in competing in different markets. Business’s financial stability then becomes a critical component in helping themselves take on positive business market opportunities (Ryen, 1997). The authors identified for this review of literature have influenced the necessary expansion of thought, new ideas, and improved understanding through empirical inquiry. Resulting, improved understanding of a “real world” manufacturing industry’s shortcomings, bringing about loss of manufacturing jobs in the United States jobs.

The United States, as a nation has failed to adopt competitive regulatory policies that promote, rather than hinder the ability of growing manufacturing sector. Regulatory policies have not been created to sustain a strong United States economic base, and future manufacturing are threatened when an exports tools and machinery without replacing the resources. This creates lost market opportunities, which in the end, results in lost jobs (Dickson, 1996). Regulatory policies have not been created to sustain a strong United States economic base, and future manufacturing are threatened when a company’s seeking any revenue at all, export tools and machinery without replacing the resources. For twenty years that United States companies have been outsourcing manufacturing because the company’s leaders honestly believed they held no competitive advantage too cheap off shore labor. This strategy has caused great devastation by bringing to halt investments in manufacturing technology and educating people, resulting in good paying jobs becoming lost…

Sustainable Solution

  • Documenting and sharing best practices throughout the US business and manufacturing industries
  • The United States can survive and take the lead in a global market by exploiting manufacturing strengths and by specializing in broader markets
  • Reduced government restriction, with less rules, businesses are able to implement new ideas. Adopt competitive regulatory policies that promote, rather than hinder the ability of growing the manufacturing sector
  • Our government must make laws that encourage and favor US business to seek out new market opportunities
  • Business can help itself by staying within its business reality or core business practices

References

Bacon, D. (2008). Displaced people: NAFTA’s most important product. NACLA Report on the Americas, 23-27.

Free Trade Agreements (Publication. (2010). from International Trade Administration, U.S. Department of Commerce:

Kiplinger, K. (2004). Perception versus reality. Kiplinger’s Personal Finance. Washington, 58(9), 48.

Llusar, J. C. B., Zornoza, Cesar Camison (2002). Development and validation of a perceived business quality measurement instrument. The Quality Management Journal, 1/1/2002.

NAFTA Turns Ten 1994-2004 (2004). NACLA Report on the Americas, 37(4), 6-39.

Pisano, G., Shih, W. (2009). Restoring American Competitiveness. Harvard Business Review, 87(7/8), 114-125.

Prizinsky, D. (1997). “NAFTA levels a soft blow to Ohio jobs so far.” Crain’s Cleveland Business. Crain Communications, Inc. 1997. Retrieved June 21, 2010 from HighBeam Research: http://www.highbeam.com/doc/1G1-50355528.html.

Ryen, G. T., Vasconcellos, Geraldo M. (1997). Capital structure decisions: what have we learned? Business Horizons, 40(5), p41, 10p.

Zamora, E., Jacob K. . (2007). Compensation costs in manufacturing across industries and countries, 1975-2007. International Compensation Costs, Monthly Labor Review, 4(5).

by AMERICAN WRITER Pietro Savo Tradition Books Publication © 2011

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Manufacturing Research Practitioner ™ by Pietro


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About Dr. Pietro Savo

Dr. Pietro (Pete) Savo is a Principal Consultant with over 28 years of diverse experience in Business Strategy Improvement (BSI), Leadership Development, Operations, Engineering, Manufacturing, Quality Systems, Material Management, Supply Chain, Union Shop and consulting environments. Pietro created the term Manufacturing Research Practitioner ™ as the foundation for his Doctoral thesis dedicated to improving the United States Manufacturing Industry.  Dr. Savo has lectured at, Boeing Aircraft, Lockheed Martin, Rolls Royce, Northup Grumman, Raytheon and United Technologies on various subjects such as Lean Thinking, Leadership, Team Building, Quality Systems ISO Registrar Selection and Root Cause Analysis. Taught Root Cause Analysis for American Society for Quality (ASQ). Customized Training Specialties Leadership & Culture & Conflict Resolution Made Simple Root Cause Analysis (RCA) Problem Solving & Mistake-Proof It! Lean Manufacturing & The 6S's: Workplace Organization Evolving Quality Systems ISO 9001:2000/AS 9100:2000 Industry Evolution Building Business with the United States Government and Prime Contractors New Project Bidding Team Improvement Training “Know Your Front End” Published: Root Cause Analysis System for Problem Solving and Problem Avoidance Published: PERFECTION - 10 Secrets to Successful Lean Manufacturing Implementation. United States Navy Veteran View all posts by Dr. Pietro Savo

One response to “A Message to the 112th United States Congress

  • azsilverminer

    You have hit the nail right on the head Dr. Savo. We need more people to speak up so that solutions can be developed and implemented.

    Another resource that goes along with manufacturing which the American populace have stored away is the resource sector. For many years now the focus has been on investing in and developing raw materials in other countries and saving American resources for “a rainy day”. Well that rainy day is here now.

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