U.S. becoming an industrial has-been


By ALAN TONELSON

Published Friday, January 05, 2007




It’s been all over the news: Imports have helped decimate the U.S.-owned automotive industry. What hasn’t been as widely reported, though, is that literally dozens of other U.S.-based manufacturing industries are suffering similar losses in their home market. The bottom line, as revealed in a new study by the U.S. Business & Industry Council: While the United States remains a military superpower, it is steadily becoming an industrial has-been.
The council’s survey of import levels in domestic manufacturing shows that 111 of 114 key U.S.-based industries lost domestic market share to foreign-produced goods between 1997 and 2005. From 2004 to 2005 alone, import penetration rose for 83 of these sectors and fell for just 31.

These industries, moreover, are exclusively the kinds of high-value, capital-intensive sectors, like aircraft engines and wireless communications gear, that make up the backbone of any world-class national manufacturing base. Lower-value, labor-intensive sectors that were long ago overwhelmed by foreign competition, like apparel, toys and low-end consumer electronics, were left out of the study.
In many cases, imports have made rapid inroads into critical U.S. manufacturing markets. Between 1997 and 2005, 26 of the 114 industries saw their home-market share shrink by 50 percent or more, including pharmaceuticals, computers, telecommunications hardware, navigation and guidance equipment, broadcasting and wireless communications equipment, and motor vehicle power train and transmission equipment.
Eight more sectors experienced market-share losses of nearly 50 percent to imports during this period, notably tires, switchgear and switchboard apparatus, and commercial and service industry machinery.
As a result, by 2005, imports represented at least 50-59 percent of sales in the United States of 24 of the 114 industries studied, including telecommunications hardware, heavy-duty trucks and chassis, and broadcast and wireless communications gear.

In eight more industries, imports have captured between 60 and 69 percent of the U.S. market, including autos, environmental controls, and aircraft engines and engine parts. And in six sectors, imports control 70 percent or more of the American market, including machine tools. If current trends continue, imports will account for the majority of U.S. domestic sales in sectors such as electricity measuring and test equipment, X-ray equipment, turbines and turbine generator sets, laboratory instruments, and construction machinery.
Rising import penetration means that U.S.-based producers are flunking the most important test of competitiveness - winning and keeping customers. Just as revealing, surging imports are already replacing and depressing U.S. production throughout domestic manufacturing. Between 1997 and 2005, output actually fell in nearly two-thirds of the 53 industries where import penetration is highest or grew fastest, and stagnated in many of the rest.

These losses at home are especially worrisome because the American market is the arena in which U.S.-based manufacturers should do best. After all, they should be most familiar with local tastes and they face no trade barriers at home. If domestic industry can’t even defend its home turf, how can it hope to compete abroad?

The import penetration data also show that American manufacturing’s woes even extend to the high-tech sector, supposedly the nation’s best hope for future prosperity and an area of natural advantage for the United States. Yet some of the biggest recent losers of home market share include such technology pillars as semiconductor production equipment, electricity measuring and test equipment (critical for all high-tech manufacturing), telecommunications hardware, navigation and guidance devices and pharmaceuticals.

Why such dismal results for such important U.S. industries? Two major failures of U.S. international trade policy bear much of the blame.
First, Washington has done a terrible job of combating the numerous predatory trade policies, ranging from currency manipulation to illegal subsidies, pursued by other major trading powers to gain industrial supremacy.

Second, too many U.S. trade agreements since NAFTA have encouraged American-owned multinational companies to supply U.S. markets by moving abroad - and thus literally to build powerful manufacturing bases in foreign countries.
The core manufacturing sectors suffering these mounting losses at home have traditionally led the U.S. economy in productivity and innovation and have generated America’s best-paying jobs on average. They also undergird the nation’s security. But if imports’ growing domination of American industrial markets is not reversed soon, scores of these critical industries could get pushed past the point of no return.

Alan Tonelson, a research fellow at the U.S. Business & Industry Council Educational Foundation, is a contributor to the AmericanEconomicAlert.org Web site and the author of “The Race to the Bottom” (Westview Press, 2002). Peter Kim is a research associate at the council.
www.americaneconomicalert.com
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AND: more job losses

WYNNE, AR--About 175 people will soon be looking for work after the Addison Shoe Company announced plans to close a factory there.

The plant manufactures shoes for the military and private labels.

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Whirlpool to eliminate 370 jobs in Tennessee

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The Associated Press

CLEVELAND, Tenn. — Whirlpool Corp. will eliminate 370 jobs at a cooking products factory in Cleveland as it shifts production to another facility in Tulsa, Okla., and a yet-to-be determined location in Mexico, the company announced Friday.

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GM 'will impose further job cuts'
BBC
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Whirlpool sells Maytag headquarters, factories
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• Comment: "The sales are part of Whirlpool's plan to lower operating costs by as much as 5 percent to fend off competition from Asian manufacturers such as Samsung Electronics Co. and LG Electronics Inc."

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Missouri manufacturer cutting 125 Valley mattress plant jobs
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