Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)

Nearly one year ago, President Obama invoked a trade law known as “421″ for the first and only time in the decade the law has been in effect and imposed tariffs on some automobile tire imports from China, which have been surging into the United States from 2004 to 2008.

The decision was very controversial. Most editorials weighed in against it, the Chinese government threatened retaliation, and some of the more hysterical pundits predicted a death-spiral trade war. The Chinese government, the outsourcing lobby, and the large school of free trade economists all predicted that the relief would not accomplish its goal of reviving production, jobs, and market share for American-made tires in the domestic market.

I’m pleased to report to you that these skeptics were all dreadfully wrong. The sky hasn’t fallen. A trade war never materialized. And, America’s tire workers and domestic facilities are recording gains in jobs, production, and market share.

First, let’s review where the domestic tire industry stood at the end of 2008:

• production declined from 218.4 million tires to 160.3 million tires during 2004-2008;
• capacity utilization declined from 96.3% to 86.0% during 2004-2008;
• U.S. producer commercial U.S. shipments declined from 194.7 million tires to 136.8 million tires during 2004-2008;
• employment data on number of production workers, hours worked, and wages all declined substantially between 2004 and 2008; and,
• consumer tire imports from China increased 215 percent by volume (from 14.57 million tires to 45.98 million tires) and nearly 300 percent by value (from $453 million to $1.788 billion) between 2004 and 2008.

Now, what has happened since the relief took effect? Publicly available data compiled in a report released by the Alliance for American Manufacturing on September 1st concludes that production by U.S. facilities has increased over 15 percent, or by more than 10 million tires, based on Rubber Manufacturing Association data. Domestic producers such as Goodyear and Cooper Tires have experienced productions gains of between 9 and 35 percent. (more…)

Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)  

On Friday August 6th, no less an authority than the president himself heralded a USA Today front page story headlined: “Some manufacturing heads back to USA.” I watched CNBC that morning — the July unemployment figures were just out — and its anchors also trumpeted the news. So did the House Democratic leadership, which viewed the headline as a positive development and vindication of its recent focus on manufacturing. I don’t blame any of these folks for trying to squeeze the good news out of an otherwise horrible day of economic news, but it turns out that exactly the opposite is happening, 

Turns out they were all misinformed. Actual hard data released by the Federal Reserve Bank of Philadelphia last week shows that onshoring, in fact, has declined over the past two years. Only 4.5 percent of manufacturers surveyed indicated that they had brought work back to the U.S. since the beginning of the year, compared to 6.2 percent in a survey two years ago. On the other hand, offshoring continues at a higher, though slightly diminished, pace: 9.7 percent of companies indicated that they had offshored work, compared to 11.1 percent two years ago. 

There’s an explanation for why this “onshoring” myth has been perpetuated: it’s what multinational companies want you to think. These companies know that “Made in America” is a label that sells once again. Even KIA — the Korean automaker — advertises its minivan as being made in the USA. 

Companies know that they risk a consumer backlash if they offshore work. A survey done for the Alliance for American Manufacturing by Mark Mellman and Whit Ayres shows that the American people have an overwhelmingly negative view (83 percent unfavorable) of companies that ship jobs to China. So, corporations like General Electric and NCR build consumer goodwill by heralding an onshoring event. They don’t tend to publicize offshoring. (more…)

Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)

Made in America seems to be all the rage in the Capitol right now. Rahm Emanuel promised us that we’d be hearing a lot more from the White House about this over the next few weeks. House Speaker Nancy Pelosi previewed the House Democrats’ “Make it in America” plan to the President a few days ago. It’s perhaps the only issue on which liberals and Tea Party supporters agree. Jeep has launched an ad campaign (which, by the way, looks a lot like a video we premiered in 2007) to link the idea with its new Grand Cherokee. So, what exactly is Made in America?

More on that later. But now, it’s important for you to know what BP didn’t make in America: the blow-out preventer on its failed rig. When the blow-out preventer on the Deepwater Horizon rig needed to be modified, it was sent to China. According to the UK’s Guardian newspaper:

BP ordered the owner of the Deepwater Horizon rig, whose explosion led to the worst environmental disaster in US history, to overhaul a crucial piece of the rig’s safety equipment in China, the Observer has learnt. The blow-out preventer – the last line of defence against an out-of-control well – subsequently failed to activate and is at the centre of investigations into what caused the disaster. (more…)

Astonishingly, as Wall Street reform enters its final hours a tired, generic corporate refrain against regulation is gaining traction. As bigwig bankers and their lobbyist brethren fight to defeat tough new rules on derivatives—the crazy casino that brought down AIG—all their sloganeers can come up with is the trite wail that serious rules will send this risky business overseas. It’d be funny if members of Congress weren’t taking it seriously.

“Oh no—the business will go overseas!” is the last-ditch, we’re-about-to-lose-this-one cry of despair for corporate executives in every industry. Crack down on a profitable abuse in the United States, and the entire business will move to London or Mumbai, sending jobs and tax revenue abroad– or so the argument goes. You only hear this line when CEOs know they have no case, and have to divert attention away from the real substance of the policy debate. In the case of Wall Street abuses, this nonsense is especially ridiculous. The bank lobby really just doesn’t have any good arguments to launch in its favor, so it’s falling back on generic corporate jargon.

In reality, the U.S. has extremely broad authority to crack down on derivatives activity abroad, we just don’t have a whole lot of good rules on derivatives for regulators to enforce. It’s extremely difficult for financial institutions to simply offshore their risky derivatives business to avoid oversight. Under current law, the Commodity Futures Trading Commission has the authority to regulate any trading done by foreign firms on behalf of U.S. clients, any trading of U.S. assets conducted by foreign institutions and any trading that causes a “substantial disruption” in U.S. markets. Just about anything the CFTC wants to get its hands on, it can, and the current CFTC Chairman, Gary Gensler, is a committed reformer. We just need to write good rules for his agency to enforce.

Moreover, finance tricksters will have no incentive to move their destructive derivatives trading abroad, because the rules in other countries are, in fact, much tougher than those the U.S. is currently considering.

There are a lot of ways to crack down on Wall Street, but none of them will work without reining in the insane, secretive market for derivatives—speculative instruments that allow financiers to gamble on anything from subprime mortgages to the price of corn. Right now Wall Street is making a big push to roll-out new derivatives on movie box-office receipts, allowing the financial world to place raw bets on how much money a movie is going to make. It sounds crazy and destructive, and it is.

Germany is leading the way on derivatives reform by simply banning this kind of naked gambling outright. The U.S. effort is critically important, but much more modest. Instead of banning the casino, reformers in Congress are hoping to shrink it by ending the taxpayer subsidies that fuel it. This is at the heart of the proposal from Sen. Blanche Lincoln, D-Ark., that has earned so much ire from the bank lobby. Bankers love their taxpayer subsidies, and love converting them into bonuses—who wouldn’t? The trouble is that this business is inherently risky, and can jeopardize the entire economy, as the collapse of AIG attests.

But ending subsidies is still not as strong as banning gambling, which Germany is doing. The entire European Union is currently making a move to follow Germany’s lead. Businesses can’t exit U.S. markets to skirt regulations if their Wild West trading schemes are outlawed everywhere else.

In the U.K., officials are poised to impose a hefty tax on all financial assets, prevent banks from ballooning their balance sheets with derivatives trades. That means, U.S. banks can’t send their derivatives operations to the U.K. without paying a big price.

Outside of Europe, few nations have the financial infrastructure to support derivatives trading on the scale of what we currently have in the U.S., where $300 trillion in trades are housed at just five banks. Some Asian nations do have this kind of infrastructure, big financial firms in Asia all realize that they will have to comply with U.S. rules if they want to keep doing business in the U.S. And indeed, policymakers in Hong Kong and other financial centers are looking to the U.S. for leadership on derivatives, and are likely to mimic whatever reforms are adopted here.

But more broadly, we have to ask why the U.S. should be worried about this activity being offshored at all. Raw gambling by financial institutions brought on one of the greatest economic catastrophes in American history. It forced the government to pony up over $4 trillion in bailout funds, expanded the national debt by 40 percent, and killed over 8 million jobs. If this business goes overseas, so be it! Let other nations bailout their megabanks and wreck their own economies if they want to. Today’s derivatives casino is a job-killing nightmare that produces nothing other than megabonuses for bankers. Taxpayers have no business subsidizing such economic destruction.

Compared to international efforts, Blanche Lincoln’s derivatives bill is overpoweringly mild, but it remains the only serious attempt to rein in the speculative casino that crashed our economy. The fact that the bank lobby’s only tactic left is the wail “offshore!” shows how desperate our bank executives have become. Congress has no business caving to such nonsense at this stage of the reform process.

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This piece is re-posted from the Campaign for America’s Future blog, OurFuture.

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Zach Carter also is a Fellow a Campaign for America’s Future. His work has appeared in The Nation, Mother Jones, The American Prospect and Salon.

Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)

You may have heard by now that China’s Central Bank has said that it will begin to allow its currency, the yuan, to follow a more flexible exchange rate. So, can we all celebrate now? After all, many economists, American businesses, unions, lawmakers, Obama Administration officials, and other industrial countries have been demanding such a change for months now.

I’m here to report that the fight is just beginning.

China would like nothing more than pressure from American lawmakers to disappear after its big announcement. Just over the past two weeks, Senators and Members of Congress of both parties have raised serious concerns over China’s currency policy and grilled the Obama Administration on their response.

China’s currency will undoubtedly rise against the dollar, but the change may not be significant or fast enough to put a real dent in our enormous trade deficit or boost our exports enough to create a considerable number of manufacturing jobs. As I said over the weekend: “I will believe it when I see it. Unless the move is rapid and significant, China’s announcement is nothing more than a cynical ploy ahead of the G-20 and in the wake of mounting congressional pressure. America’s workers and businesses still believe that a strong response from Congress is warranted.”

World leaders — including President Obama and President Hu of China — are scheduled to gather in Toronto on June 26-27 for the G-20 summit. We hope that President Obama sets out objective criteria to China instead of merely offering praise for the announcement. We hope that our leaders in Congress on this issue — Senators like Chuck Schumer (D-NY), Debbie Stabenow (D-MI), Sherrod Brown (D-OH) and Representative Tim Ryan (D-OH) — will push forward with their efforts to deter China from cheating on its currency now and in the future.

Leading economists estimate that the yuan is undervalued by up to 40 percent. So, unless we see a 40 percent increase in the value of the yuan compared to the dollar over the coming weeks and months, we still have work to do. And even if the yuan does appreciate that much, we must make sure that other barriers to trade and jobs — China’s dumping, subsidies, and lax labor and environmental regulations — are addressed.

China may well surpass America as the world’s leading manufacturer next year. Many Americans think we’ve already lost our lead. And millions of American manufacturing workers remain unemployed. Stopping China’s currency manipulation is not the only challenge facing our manufacturing sector, but it is a prerequisite for progress.

America’s workers and businesses are guaranteed a level playing field under our own trade laws, and in theory, under the World Trade Organization. We’re not asking for special treatment, we just want the opportunity to compete.

So far, China’s announcement has been nothing but hot air. The President must demand results in Toronto this weekend and Congress must proceed swiftly with a legislative response. Acting otherwise will fulfill every Chinese wish: to make our demands for change disappear. We can’t let that happen.

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Follow Scott Paul on Twitter: www.twitter.com/ScottPaulAAM

Steven Capozzola

 By Steven Capozzola
Media Director, Alliance for American Manufacturing

When will we learn that outsourcing to China proves hazardous to our health?

The Miley Cyrus line of bracelets and necklaces contain toxic levels of cadmium.  As the Associated Press and USA Today are reporting, the jewelry (which was made in China) is dangerous to children’s health.  Cadmium is a known carcinogen, with long-term exposure leading to potential bone softening and kidney failure. Research also suggests that cadmium exposure can hinder brain development in the very young.

As the Alliance for American Manufacturing (AAM) has reported previously, there are a disturbing number of unsafe products coming from China, including: toys, cars, drywall, chocolate, medicine, baby formula, tires, and pet food.

We’d like to know, then, why celebrities would choose the quick-buck option of manufacturing products in China when there are plenty of safe and reliable domestic U.S. producers standing ready to meet their needs? 

Will Miley Cyrus be the Kathie Lee Gifford of her generation?  Or will she recognize that American manufacturers can provide the same products without the safety worries and workplace labor abuses that continue to emerge from China?

“Making it in America” makes good economic sense, too, and as such, the Alliance for American Manufacturing would be pleased to help Miley and Wal-Mart find dependable American manufacturers to meet their needs.

Kevin Connor

By Kevin Connor
Co-director, Public Accountability Initiative

There is a surprisingly tough provision in the current financial reform bill that would force commercial banks to spin off their derivatives trading desks, but big bank lobbyists are fighting hard to make sure Congress strips the language out of the bill.

One rumor floating around Washington is that Democrats will hold off on an amendment that weakens the language until Senator Blanche Lincoln’s primary election in Arkansas on Tuesday. The derivatives language originated in the Senate Agriculture Committee, chaired by Lincoln. A delay will essentially help Congress avoid electoral accountability for caving in to the big banks.

Wall Street executives are pushing for the change to be made behind closed doors, out of the sight of the public. Today’s Washington Post quotes an anonymous executive spelling out their strategy with startling clarity:

Several senior industry executives, who spoke on the condition of anonymity so they could discuss the matter freely, say that based on recent meetings with congressional staff, they expect the rule to be dropped through backroom negotiations “in the dead of night with no recorded votes” on the measure.

Big banks love derivatives for the same reason they want legislation to be negotiated in the “dead of night”: they want to be able to do their dirty work with little oversight, transparency, or accountability.

Market transparency would put an end to their derivatives gambling profits, and democratic transparency would keep Congressional leadership from taking the side of the big banks, against the interests of the American people.

Congress has done this before. As Big Bank Takeover notes, an infamous provision in the Commodity Futures Modernization Act (CFMA) of 2000 opened a giant loophole for a Houston-based energy company that continues to deliver profits for Wall Street banks — at the expense of American consumers.

The Enron Loophole, a regulatory exclusion for energy-based derivatives, has since been blamed for rampant speculation in various energy markets. In 2000, Barack Obama and his presidential campaign blamed high gas prices on the “Enron loophole,” and subsequently Congress passed somewhat watered-down legislation to close the loophole.

That loophole has since been blamed on former Senator Phil Gramm, a Republican from Texas. The Senator was close to Enron, and his wife joined the company’s board shortly after the passage of the CFMA. The story goes that Gramm slipped the provision into the bill in the dead of night, and that the Senate was essentially unaware of what it was voting on.

Gramm has denied that this is the case, and there is plenty of evidence that the Clinton administration — including Larry Summers, currently a top official in the Obama administration — was partially complicit in the passage of the Enron loophole.

This fuzzy blame game is a direct result of a lack of transparency surrounding that legislation, and that’s what the bank lobbyists want now; they are calling for the same sort of “dead of night” situation that gave rise to the Enron loophole. No transparency means no accountability, and that’s a recipe for disaster when the big banks and their army of insider lobbyists are working the Hill.

One difference between this legislation and the CFMA: in 2000, Republicans controlled Congress, and Clinton was in the White House. Now, with Congress in the hands of the Democrats, and Obama in the White House, there will only be one party to blame for a dead-of-night provision that leads to further financial catastrophe — all for the sake of big bank profits.

As it turns out, some of the original Enron lobbyists are still on the scene, including Samuel Woodall, who has been engaged to work for a consortium of big banks, and scored the single most lucrative big bank lobbying contract in 2009.

Will he get his way this time?

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This piece is re-posted from The Campaign for America’s Future Blog for OurFuture

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Kevin Connor is a writer, activist, and web developer. Before co-founding LittleSis, a project of the Public Accountability Initiative, he was a researcher at SEIU 1199 – United Healthcare Workers East. Most recently, he authored the report “Wall Street and the Making of the Subprime Disaster.”

Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

People care about jobs. They still care about jobs. And politicians who don’t care about jobs will lose their jobs, because that is what motivates voters.

Polling at Pollingreport.com proves that people are much more concerned about jobs than deficits. (Note there are some polls that show equal concern, no polls that show deficit with a higher concern)

* FOX News/Opinion Dynamics Poll. May 4-5 Economy and jobs 47% Deficit, spending %15
* BS News/New York Times Poll. April 5-12 Economy/Jobs 49% Budget deficit/National debt 5%
* CNN/Opinion Research Corporation Poll. March 19-21 The economy 43% The federal budget deficit 8%

Lesson: Spending and deficits matter, but jobs matter more. When Dick Cheney said, “Reagan proved deficits don’t matter” he meant that voters didn’t vote against politicians like Reagan and Bush for running up huge deficits. Bush’s tax cuts and military spending increases left us with a $1.4 trillion deficit, but that isn’t the reason people voted for Obama. The biggest reason was that we were losing millions of jobs.

Why don’t DC elites see this?

It is obvious that people vote on jobs, not deficits. But for some odd reason the DC politicians don’t seem to grasp that. I think I know part of the reason why they don’t. If you are in DC the “information environment” is making it look as though the public is clamoring about deficits and doesn’t care that much about jobs.

DC is a manufactured information environment

People in DC see things differently because there is a manufactured environment there. The one time when lobbyists do care about manufacturing is when they are manufacturing the appearance of public support for their issue.

If you are trying to influence national policy you influence DC. You spend a lot of money to make the DC opinion leaders think that your issue is urgent and the public is demanding action. You create “astroturf” which is a name for a lobbyist-manufactured appearance of grassroots support. You get your stories into the morning Politico, which every DC staffer reads on the train into the capital, but no one outside of DC cares about. You get the cable news show producers to book your talking heads. You wine and dine (and get lucrative speaking engagements for) the DC punditocracy so they’ll talk urgently about your issue. You put ads on the DC radio stations.

After a while everyone in the DC area thinks your issue is the only thing voters are concerned about, while outside of DC everyone wonders why DC people are talking about something so idiotic and unimportant to regular people.

Deficits: a manufactured drumbeat

There is a well-funded effort to stampede Congress into thinking there is an urgent voter concern about deficits. One source of the manufactured concern is a Wall Street billionaire named Peter G. Peterson, who has for years been trying to get the Congress to cut the Social Security benefits that people paid for all of their working lives. Recently, for example, he made a deal with the Washington Post to print stories for the DC elite to read, about how the deficit needs to be cut and that “entitlements” like Social Security are the problem that needs fixing. There are numerous other examples of the deficit drumbeat manufacturing process..

Tea Party vs real grassroots concerns

Example: The other day there were mass rallies all around the country, by people who want the government to act on immigration. Hundreds of thousands of people turned out in cities from LA to New York. But if you are in DC, this barely registered. In DC it is “Tea Party, Tea Party, Tea Party.” A few hundred people turn out (also here, here, here,here) for Tea Party rallies, and “the Tea Parties” are just about the only thing in the news, and the discussion topic on the cable news shows for weeks. (And never mind the Coffee Party, with more members and more events than the Tea Party.)

Politicians should remember the bailouts

These were just a few examples of how it works. And, for sure, it works. The process is so well-tuned that DC politicians can be stampeded easier and faster than Wal-Mart shoppers promised $100 flat-screen TVs on Black Friday.

Remember the Wall Street bailouts, with the Bush administration demanding they be passed in just 48 hours, or the entire world would end? (Remember “non-reviewable by any court or any agency?”)

So how is it working out for politicians who were stampeded into voting for bailouts for Wall Street instead of jobs for Main Street?

Lesson: It’s the jobs, stupid. JOBS FOR MAIN STREET!

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project and the “Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck The Economy.” Sign up here for the CAF daily summary. 

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Johnson also is a fellow at the Commonweal Institute and a Senior Fellow at the Institute for the Renewal of the California Dream.

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Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson

Scott N. Paul

By Scott Paul
Executive Director of Alliance for American Manufacturing (AAM)

Today, April 22nd, marks the 40th Anniversary of Earth Day. To mark the occasion, groups representing workers, manufacturing, and environmental groups will be hitting Capitol Hill, urging lawmakers to support policies that ensure American manufacturing capacity is used to meet the increasing demand for renewable energy production. They will be joined by clean energy manufacturing workers from across the country who contribute to the clean energy economy.

Currently, billions of dollars are being invested to support the production of clean energy in the United States. However, Americans have been frustrated to learn that efforts to create jobs here at home are resulting in the creation of manufacturing jobs in China and elsewhere. A prime example is the recent Texas windfarm story, where $450 million in taxpayer subsidies would go to a Chinese wind turbine manufacturer. In fact, Russ Choma at the Investigative Reporting Workshop reports that of $1.05 billion in clean-energy grants handed out by the government, 84 percent – a total of $849 million – has gone to foreign wind companies.

The truth is that the U.S. is struggling to compete against subsidized overseas competition and already runs a green goods trade deficit. In 2008, the U.S. ran an overall green trade deficit of $8.9 billion, including a deficit of $6.4 billion in the critical category of renewable energy.

This week, Vice President Biden told a Building Trades Legislative Conference, “To me, it’s a good thing if we get cleaner electricity from a windmill. But it’s only a great thing if our guys build the windmill.” He couldn’t be more right.

As Congress debates energy policy and ways to address climate change, it needs to look to the revitalization of American’s renewable energy sector. Specifically, Congress must support Buy America domestic content requirements, increased access to capital for plant re-tooling, and the important 48c manufacturing tax credit for clean energy equipment.

Simply put, without properly designed tax and investment incentives for clean energy generation, loan guarantees for nuclear reactor construction, and other federal supports, efforts to rejuvenate our manufacturing base will continue to be unseated by subsidized imports from countries seeking to capitalize on new demand for clean energy products in the United States, such as wind turbines and solar panels.

Congress and the Obama Administration need to take strong steps to make sure that the U.S. becomes a world leader in clean energy manufacturing. The opportunities for American manufacturers and workers are great, but the challenges are significant. If not addressed properly, the U.S. will replace dependence on foreign oil with dependence on imported renewable goods from China and other competitors, and that’s a losing proposition.

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Follow Scott Paul on Twitter: www.twitter.com/ScottPaulAAM

Julie Eckert

By Julie Eckert
Alliance for American Manufacturing Media Coordinator

Hu knew. Chinese president Hu Jintao knew that upon coming to Washington for Obama’s nuclear security summit he would have to have a serious chat about currency with President Obama and Secretary Geithner.  Hu also knew that he wasn’t ready to cooporate. 

On Monday, talks between the three economic power players (Jintao, Obama, and Geithner) ended in a total lack of budging on the part of the Chinese. Hu said that revaluing the yuan would not only not solve trade imbalances between the two countries, but it wouldn’t help U.S. employment either.

Hu Jintao

America begs to differ. And once again, AAM has a map to prove it.

As U.S. policymakers have strongly encouraged domestic consumption,

“exports, for now, remain a major engine of economic growth in China, a reason why the government has kept the yuan virtually re-pegged to the dollar since mid-2008 as China’s export sector was hit by the worst global economic downturn in decades. The move followed a more than 21% appreciation in the yuan against the dollar between mid-2005 and mid-2008.”

According to an Associated Press article on the meeting, “The yuan was only one of several issues Obama and Hu discussed — Iran’s nuclear program chief among them. Bader described the meeting as ‘positive and constructive’ and the presidents are ‘familiar and comfortable with each other.’ ”

We’ll wager that China taking its sweet time revaluing the yuan doesn’t sound positive nor constructive to the millions of Americans that have lost, and are still losing, their jobs.

On top of this, Hu made a few demands of his own, including urging the United States to “loosen its export controls over high-tech products.”

Read more about the meeting here, here, and here.

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This piece is re-posted from AAM’s Manufacture This blog