Saving American Manufacturing Why activism is essential.

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Presentation transcript:

Saving American Manufacturing Why activism is essential

The Manufacturing Sector By itself – the 5 th largest “economy globally By itself – the 5 th largest “economy globally Employs 14.3 million directly, millions more indirectly. (Impacts 44 million jobs) Employs 14.3 million directly, millions more indirectly. (Impacts 44 million jobs) Consumes over 60% of R&D in U.S. Consumes over 60% of R&D in U.S. Is the country’s engine of growth and wealth Is the country’s engine of growth and wealth

U.S. Manufacturers Have Suffered Massive Job Losses Source: Bureau of Labor Statistics, Series CES

U.S. Manufacturing Disadvantages Corporate tax rates and tax policy – 5.6% Corporate tax rates and tax policy – 5.6% Litigation costs – 3.2% Litigation costs – 3.2% Regulation costs – 3.5% or more Regulation costs – 3.5% or more Health care/other benefits – 5.5% Health care/other benefits – 5.5% Other (energy policy, etc) – 4.6% Other (energy policy, etc) – 4.6%

The United States’ Current Account Deficit

U.S. Trade Balance in Advance Technology Source: U.S. Census Bureau

Currency Intervention and Manipulation What is it and what does it do?

Pic of China Pic of China © 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

U.S. Trade Balance with China Source: U.S. Census Bureau

© 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

China and Japan Set the Pattern Malaysia – 52% in Malaysia – 52% in Thailand – 60% in 1997 Thailand – 60% in 1997 Indonesia – 285% in Indonesia – 285% in Russia – 485% in 1998 Russia – 485% in 1998 Egypt – 40% in 2003 Egypt – 40% in 2003

Manipulated Currency Reserves AWASH IN DOLLARS Asia’s growing foreign reserves, in billions of dollars Country Year-End 2003 % Change From 2002 $ % $ % $ % $ % $ % $ % $ % $ % $42.1 6% $ % $16.7 5% Source: Reuters

The Effects of Intervention and Manipulation On Manufacturing On Manufacturing On Steel On Steel On Other industries On Other industries

The Dollar goes up; Manufacturing Profits go down The Dollar Goes Up Manufacturing Profits Go Down The Dollar goes up; Manufacturing Profits go down The Dollar Goes Up Manufacturing Profits Go Down Sources: Federal Reserve Statistical Release H.10; U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts Broad Real Dollar Index (right scale) Profit Share of National Income in Domestic Manufacturing (left scale)

One Trillion Dollars ! - $80 billion Change in: Stable Dollar (‘91-’96) Strong Dollar (’97-’02) Trade Deficit - $176 billion - $468 billion ImportsExports $800 billion + $204 billion “Six Years After” Coalition for a Sound Dollar March 2003 Overvalued Dollar Devastates U.S. Manufacturing

When the Dollar goes up so do US Steel Imports Steel Import Share (right scale) Fed’s Broad Real Dollar (left scale) Sources: Federal Reserve Statistical Release H.10; U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts

Change in: Stable Dollar (‘92-’96) Strong Dollar (‘97-’02) Exports: Up $20.9 billion Down $2.6 billion Imports: Up $9.2 billion Up another $7 billion Trade Surplus: Rose to $27 billion Fell to $11 billion Overvalued Dollar Hits U.S. Agriculture

Investments Are Down … $37 Billion

Status Report on the Dollar Issue Administration actions to date Administration actions to date –“Jawboning” –Assigned special treasury representative to China situation –Has offered technical support to China to deal with loan problems, banking infrastructure problems, economic policy –China is sending mixed messages

Status Report on the Dollar Issue Industry reactions generally skeptical to highly negative on impact of administration efforts to date Industry reactions generally skeptical to highly negative on impact of administration efforts to date Mission is to keep the heat on the issue – a business coalition was formed to pursue trade law remedy for the currency situation Mission is to keep the heat on the issue – a business coalition was formed to pursue trade law remedy for the currency situation A 301 trade petition would formalize the issue and provides leverage to counter Chinese (and others’) currency intervention practices A 301 trade petition would formalize the issue and provides leverage to counter Chinese (and others’) currency intervention practices

Status Report on the Dollar Issue Administration has been negative on 301 Trade Petition Administration has been negative on 301 Trade Petition –Says they want to deal with issue in a different manner – would reject a 301 petition –Petition was filed by the Chinese Currency Coalition on 9/9/04. The Coalition felt it was critical to introduce this in the election cycle.

Nucor Trade Position – Trade Laws Background Background –Prior to 1997/98 –The Impact on Nucor of the Beam Case The “201” Case The “201” Case –What is a 201 –Trade law abuse prior to 201 –Results of 201 (even though terminated early) Curtailed illegal trade Curtailed illegal trade Stabilized markets Stabilized markets Fostered environment for consolidation Fostered environment for consolidation Created mechanism for global subsidy negotiations Created mechanism for global subsidy negotiations

Trade Law Reform What are the weaknesses in current laws? What are the weaknesses in current laws? –Repeat dumping (country/product switching) –Major offenders provided special consideration that encourages repeat behavior –The WTO “legislation” problem What are the solutions? What are the solutions? –H.R and S. 136 (Berry/Lincoln) –H.R (English), S.2212 (Collins, Bayh) –H.R (English, Levin, Houghton, Cardin) and S (Bayh) & S. 676 (Baucus) and H. Con. Res. 243 (Levin)

Other Trade Related Reforms Import Monitoring, Licensing and Enforcement Import Monitoring, Licensing and Enforcement OECD Update OECD Update The “Byrd Bill” (or CDSOA) The “Byrd Bill” (or CDSOA)

How can I make a difference? Four Simple Suggestions 1. Ask your elected officials how they are actively opposing currency manipulation and other unfair trade practices

How can I make a difference? Four Simple Suggestions 1. Ask your elected officials how they are actively opposing currency manipulation and other unfair trade practices 2. Ask your local officials to pass resolutions and to write your congressional delegation to urge immediate action

How can I make a difference? Four Simple Suggestions 1. Ask your elected officials how they are actively opposing currency manipulation and other unfair trade practices 2. Ask your local officials to pass resolutions and to write your congressional delegation to urge immediate action 3. Spread the word – to friends, business people, your community – on the negative impacts of unfair trade, currency manipulation

How can I make a difference? Four Simple Suggestions 1. Ask your elected officials how they are actively opposing currency manipulation and other unfair trade practices 2. Ask your local officials to pass resolutions and to write your congressional delegation to urge immediate action 3. Spread the word – to friends, business people, your community – on the negative impacts of unfair trade, currency manipulation 4. Register to vote. Vote for candidates who will stand up for U.S. jobs

How can I make a difference? Seek support of elected officials for a comprehensive, pro-manufacturing platform Tort reform (i.e. H.3744) Tort reform (i.e. H.3744) Tax reform & tax relief (i.e. H. 4925) Tax reform & tax relief (i.e. H. 4925) Containing health care costs Containing health care costs Cost benefit analysis of new regulatory requirements Cost benefit analysis of new regulatory requirements