Manufacturing
and Trade Data
Articles:
"A Prescription
for Suvival" by Jim Lorincz
TMA
News Bulletin - March 21, 2003,
Volume 60, Issue No. 12
TMA
News Bulletin - July 01, 2003,
Volume 60, Issue No. 26
 |
atlargeintheshop |
A
prescription for survival
By Jim Lorincz
Editor-at-Large
The view from the top is always a little more clouded
in difficult economic times. We long for the days
when the outlook for manufacturing was described—at
the very least—as “cautiously optimistic.”
While we scan the horizon of economic indicators with
T&P columnist Mike Whitney looking for hopeful
signs of recovery (and they will come), we might consider
the advice of Bruce Braker, president of the Tooling
& Manufacturing Association (TMA), Park Ridge,
IL. Braker was speaking at an open house held in early
March by Agie Ltd., at its new U.S. headquarters in
Lincolnshire, IL.
Braker
cited the popular business management book, Good to
Great by Jim Collins. In it, the author explains what
he calls “The Stockdale Paradox,” named
for Admiral James Stockdale, who survived being held
as a POW in Vietnam for seven years by clinging to
two contradictory thoughts: 1) My present situation
couldn’t be worse; 2) I will survive.
Stated another way: “Retain absolute faith that
you can and will prevail in the end, regardless of
the difficulties, and, at the same time confront the
most brutal facts of your current reality, whatever
they might be.”
The
implications of this unyielding spirit to the precision
contract machining (PCM) industry are many, according
to Braker, who points out that the market in the U.S.
for first, second, third, and fourth tier subcontractors
is still huge. In 2001, 214 sectors served by the
PCM industry accounted for $1.82 trillion (1997 dollars)
in business vs. $1.77 trillion in 1997.
“There is business to be had,” says Braker,
who offers his 20-point prescription for survival.
1) Target companies committed to manufacturing in
the U.S. 2) Export or sell to customers who export.
3) Hire skilled sales people or reps. 4) Sell to a
broad, diversified customer base. 5) Sell to customers
who pay their bills. 6) Develop unique market niches.
7) Build networks with subcontractors and partners
to joint-bid. 8) Provide diversified services. 9)
Add engineering, design, and consulting value to tooling
and parts. 10) Be customer-focused. 11) Plan and implement
plans. 12) Hire great people with the right skills.
13) Prune marginal people with the wrong skills. 14)
Educate, train, delegate, inspire, and lead. 15) Have
a global perspective. 16) Selectively source worldwide.
17) Invest in automation and technology. 18) Produce
better, faster, cheaper. 19) Have a clean balance
sheet. 20) Keep the faith—stay in the game.
Precision contract machining executives could do worse
than heed any or all of Braker’s advice they
find applicable. I particularly like Number 5, do
business with people who pay their bills. It's a winner.
http://www.manufacturingcenter.com/tooling/archives/0503/0503at_large.asp
TMA
News Bulletin - March 21, 2003
Volume 60, Issue No. 12
How BIG is the China
problem?
Written by Bruce Braker, Tooling & Manufacturing
Association, 1177 S. Dee Rd., Park Ridge, IL 60068,
847-825-1120, bbraker@tmanet.com, www.tmanet.com
What is our greatest concern? China or the recession?
The recession is the greater problem, even though
China gets most the press. China is a threat, but
put that threat in correct perspective. China has
contributed to the manufacturing recession, but they
didn't cause it. Over capacity and reduced demand
caused it. Chinese competition has hurt some U.S.
small to medium size manufacturers, but China has
not and will not destroy U.S. manufacturing.
We
have to recognize what the statistics show if we are
going to send a credible message to Washington. Overstatement
undermines credibility and subtracts from the message.
Anecdotal evidence must be delivered in the context
of reality. Yes, manufacturing in the U.S. is in crisis,
but let's keep the causes in correct perspective so
we can best determine the remedies that will improve
the outlook for manufacturers in the U.S.
The
brutal manufacturing statistics regarding China
1. U.S. imports of goods from China in 2002 were $125
billion.
2. U.S. exports of goods to China in 2002 were only
$22 billion.
3. U.S. trade gap in manufactured goods with China
was $103 billion in 2002.
4. China's exports of goods to the U.S. surged 22.3%
in 2002.
5. China accounted for 21.2% of the U.S.'s manufactured
goods trade deficit of $484.3 billion in 2002.
The
manufacturing facts in perspective
Overall manufacturing statistics
1. In 2001 U.S. value of manufacturing shipments was
$4.0 trillion.
2. In 2001 China accounted for 9.0% of U.S. goods
imports growing to 10.8% in 2002. (Canada was first
at 18.2%).
3. In 2001 China accounted for 2.4% of manufacturing
market share in the U.S.
4. Approximately 10% of foreign investment in China
is U.S.
5. About a third of China's $326 billion in exports
went to the U.S. in 2002.
The
mold industry statistics
1. In 2001 U.S. value of mold shipments was $5,224,354,000
(not counting molds made in captive U.S. shops for
internal use).
2. In 2001 mold imports were valued at $1,160,624,871.
3. In 2001 China accounted for 2.09% of mold imports.
Their market share increased to 2.23% of imported
molds in 2002. In 2002 over half (51.83%) came from
Canada.
4. In 2001 China accounted for 0.38% (38 one-hundredth
of one percent) of molds used or produced in the U.S.
The
bold copy below has been seen in letters to Washington.
TMA commentary clarifies the facts.
Myth: Almost every large American
manufacturer has moved its factories to Communist
China.
Let's
look at some United States 2001 manufacturing statistics.
These totals are for a manufacturing recession year.
Pre-recession shipments in 2000 were $4.2 trillion.
United States 2001 Manufacturing
Statistics
Total number of employees: 15,879,477
Payroll $593,050,590,000
Production workers 11,235,111
Wages $342,990,489,000
Value added: $1,853,929,431,000
Total cost of materials: $2,104,865,642,000
Total value of shipments $3,970,499,812,000
We still produce $4.0 trillion worth of manufactured
goods in the U.S. We have more than a few factories
left here.
Myth: Nearly everything we use in
our daily lives has "Made in China" on the
package.
Countries
of origin - China is third
Country |
2001
U.S. Imports |
Country's
share |
| Canada |
210,517,903,533 |
18.2% |
| Mexico |
134,121,175,240 |
11.6% |
| China |
124,795,665,331
|
10.8% |
| Japan |
121,262,473,368 |
10.5% |
| Germany |
60,984,563,064 |
5.3% |
| United
Kingdom |
40,428,885,885
|
3.5% |
| Korea |
35,283,810,346 |
3.1% |
| Taiwan |
32,054,280,974 |
2.8% |
| France |
28,232,365,153 |
2.4% |
| Italy
|
24,211,711,478
|
2.1% |
| Malaysia |
23,953,358,296 |
2.1% |
| Ireland |
22,373,676,507
|
1.9% |
| Brazil |
15,609,228,033 |
1.4% |
| Total
of above |
873,829,097,208 |
75.7% |
| All
others |
280,981,770,156 |
24.3% |
| 2002
Total Imports |
1,154,810,867,364 |
100.0% |
China is in third place accounting for 10.8% of imports.
Canada accounts for 18.2%. So 10.8% is not quite "nearly
everything" yet. China's share of imports has
grown since 1997, but is still well behind Canada's
18.2%.
China's share of U.S. imports has grown to
10.8%
| Year
|
Imports
from China |
Total
Imports |
Percent
China |
| 1997
|
61,995,926,355 |
862,426,345,847 |
7.2% |
| 1998 |
70,815,035,767 |
907,647,005,778 |
7.8% |
| 1999 |
81,522,281,394 |
1,017,435,397,065
|
8.0% |
| 2000 |
99,580,514,118 |
1,205,339,018,700 |
8.3% |
| 2001
|
102,069,326,282 |
1,132,635,339,930 |
9.0% |
| 2002
|
124,795,665,331 |
1,154,810,867,364
|
10.8% |
Let's take one more step to further put China's market
share in perspective. United States manufacturing
value of shipments in 2001 was $3,970,499,812,000.
Total imports from all countries in 2001 were $1,132,635,339,930
in 2001. Add those two together for a total of $5,103,135,151,930.
Chinese manufacturing market share in the U.S. is
2.4%, considerably short of "nearly everything."
China 2001 market share of total manufactured
product
| 2001
U.S. value of shipments |
3,970,499,812,000 |
| 2001
U.S. imports of manufactured products |
1,132,635,339,930 |
| Total
manufactured goods produced in the U.S. and imported |
5,103,135,151,930 |
| Total
manufactured goods imported from China |
124,795,665,331 |
| Chinese
manufacturing market share in U.S. |
2.4% |
Myth: China exports all of these
products to the U.S.....
According
to an article in the February 22, 2003 Taipei Times
in 2002 about a third of China's $326 billion in exports
went to the U.S.
Hard
to quantify: . . . and our country's biggest exports
to Communist China are our American manufacturing
jobs and technology.
We
only shipped them $22 billion in 2002. We'll have
to ship more past that Great Wall. Technology flows
worldwide. Trading technology for market access may
hurt in long run. In the meantime multinationals from
Taiwan, Japan, Hong Kong, Germany, UK, US, and elsewhere
will continue to build plants in China to access Chinese
market and for export. Strengthening of Chinese currency,
the RMB, would help.
Myth:
Our government doesn't know what's going
on.
They
know. They're just not effectively addressing the
issues yet.
The
following is from the February 22, 2000 Taipei Times:
"The US' record trade deficit with China last
year may increase pressure on Beijing to meet its
market-opening pledges and let its currency strengthen,
government officials and analysts said.
"The US trade gap with China widened by about
a quarter last year to US$103 billion, the biggest
ever with any country, as companies such as Motorola
Inc took advantage of the country's low manufacturing
costs to sell more China-made goods to American consumers.
"China's exports to the US last year surged 22
percent.
"At
the same time, some US exporters say China, the country's
No. 4 trade partner, hasn't given them the market
access it promised when it joined the WTO in December
2001.
"This
week, US Trade Representative Robert Zoellick delivered
that message at several meetings in Beijing.
"'China
is selling a lot to the United States,' Zoellick said,
after urging Chinese officials to remove barriers
to US farm goods. 'It's good for our consumers, it
is good for their growth, but it does mean that we
have to have a fair shot at selling products here,'
he said.
"The growing deficit is fueling complaints from
the US Congress and business groups that China is
dragging its feet in opening its markets, Zoellick
said.
"China
has also drawn charges from Japan, its biggest trade
partner, that it's keeping its currency artificially
weak to undercut other countries' exports.
"The
Chinese yuan, pegged at about 8.3 yuan to the US dollar
since 1995, has weakened against the yen and other
currencies in the past year as the dollar's value
fell.
"Japanese
Finance Minister Masajuro Shiokawa said earlier this
week he may argue at today's meeting of the G7 industrialized
nations in Paris that China should revalue the yuan.
"'The worse the US deficit gets, the more fuel
it will provide for people who want China to adjust
its exchange rate,' said Michael Kurtz, an economist
at Bear Stearns Asia Ltd in Hong Kong.
"The
US, responding to farmers' complaints, is considering
taking its case against China to the WTO, Secretary
of Agriculture Ann Veneman said last month.
"If
successful, the move would allow the US to impose
sanctions on China."
http://www.tmanet.com/publication/news/viewarticle.asp?ID=3758
TMA
News Bulletin - July 01, 2003
Volume 60, Issue No. 26
Study
shows manufacturing is key to innovation, productivity,
strong growth and good jobs
The
Tooling & Manufacturing Association is a member
of the National Association of Manufacturers Council
of Manufacturing Associations. The CMA is an independently
funded division of the NAM with more than 200 manufacturing
trade association members. TMA provided $1,000 toward
the cost of the Popkin paper. TMA's Bruce Braker was
one of several reviewers who provided feedback to
Mr. Popkin during the drafting process.
While manufacturing has been the engine for healthy
economic growth and good jobs, intense global competition
and the rising cost of doing business in the U.S.
threaten manufacturing's capacity to maintain the
nation's economic strength and standard of living,
according to a new study by economist Joel Popkin.
"Manufacturing spawns more additional economic
activity and related jobs than does any other economic
sector," stated Popkin, president of Joel Popkin
and Company. The study, "Securing America's Future:
The Case for a Strong Manufacturing Base," commissioned
by the Council of Manufacturing Associations (CMA),
contends that manufacturing is "the heart of
an innovative process that powers the U.S. economy
to global leadership" and that "America's
unprecedented wealth and world economic leadership
are made possible by a critical mass of manufacturing
within the geographic confines of the American common
market."
"Popkin
shows how the unique linkages of manufacturing to
the rest of the economy create more innovation, productivity
and good jobs than any other sector of the economy,"
said Jerry Jasinowski, president of the National Association
of Manufacturers. "Popkin attributes America's
high standard of living to the manufacturing innovation
process. Research and development stimulates investment
in capital equipment and in workers, leads to new
processes and products, generates spillovers that
benefit other economic sectors, and ultimately leads
to higher living standards.
"Manufacturing
has an amazing impact on our economy," Jasinowski
said. "Every dollar of specific manufacturing
production creates an additional $0.67 in other manufactured
products and $0.76 in products and services from non-manufacturing
sectors. Manufacturing contributes more than 60 percent
of U.S. investment in research and technology, and
manufacturing workers make 20 percent more than the
average wage.
"However, America's industrial leadership is
being squeezed between unprecedented foreign competition
based upon predatory trade practices that make it
impossible to raise prices, and rising costs due to
rising health care costs, soaring runaway litigation,
and excessive regulation. The result is a dramatic
decline in manufacturing cash flow that forces firms
to cut back on R&D and capital investment, and
to reduce employment. The U.S. manufacturing base
is receding - and with it the all-important innovation
process that is the seedbed of our industrial strength
and competitive edge."
"The
loss of 2.3 million manufacturing jobs poses a real
and present threat to the American middle class,"
said Thomas Dammrich, president of the National Marine
Manufacturers Association, and chairman of the CMA.
"These are among the best paying jobs in our
country, and almost all of them offer a full range
of benefits, including health insurance. Every lost
manufacturing job is a tragedy for someone's family."
The greatest long-term impact of the erosion of U.S.
manufacturing, according to the Popkin study, is on
innovation. "U.S. manufacturing generates the
greatest innovation process in the world by germinating
and nurturing innovations from concepts through to
full-fledged improvements in the products and processes
that provide the basis for improved productivity,
prosperity and a higher quality of life," the
study concludes. "But as U.S. manufacturers face
serious challenges to their continuing existence,
the critical mass necessary to maintain a dynamic
innovation process is jeopardized."
"If we want to maintain the R&D investment
and innovation strength of the U.S. economy, we must
require out competitors to compete on a level playing
field, hold down the costs of doing business at home,
and encourage R&D and investment," said Jasinowski.
"It is increasingly important that policy makers
hike spending on R&D activities, that we enact
a permanent R&D tax credit, and that the government
provide incentives to increase the supply of scientists
and engineers. The U.S. is facing a critical skills
shortage in the near future as the current generation
of manufacturing workers retires and few young people
are coming into industry."
"If
the U.S. manufacturing base continues to shrink at
the present rate and the critical mass is lost,"
the Popkin study concluded, "the manufacturing
innovation process will shift to other global centers.
If this happens, a decline in U.S. living standards
in the future is virtually assured."
The
Popkin White Paper and the Executive Summary can be
accessed at the NAM web site at www.nam.org/future.
A copy of the Executive Summary is also with this
Bulletin.
http://www.tmanet.com/publication/news/viewarticle.asp?ID=3986
