Manufacturing Critical to the U. S. Economy and National Security

About 15 - 20 years ago we began to hear the words "The United States is becoming a service economy". These words came from some of the business schools in America and from some of the "elite" economists in our country. If you repeat something often enough people begin to accept it and believe it. Yet if you look around you see "things". These things are computers, tools, appliances, cars, furniture, and a whole bunch of items for businesses and homes. These things ALL have to be manufactured and that will never change. The greatest core strength of America since the Industrial Revolution has been our ability to manufacture. We are blessed with an excellent labor force; an abundance of raw materials; domestic energy sources that can be tapped into; readily available transportation through rail, roads and waterways; and a huge market right here in America.

It was a betrayal of America to lull us into believing that we should just accept becoming a "service economy".

It runs much deeper. A nation that resigns itself to becoming just a consumer nation is always a loser. They become a dependent nation and economically weaker, and that is exactly what is happening to America today. Yet a nation that manufactures can always be a winner in control of their own destiny. When you give up manufacturing you give up much, much more. The need for research, development, and technology become much less over time. Manufacturing know-how and manufacturing process technology slip away since there is no need. This state of dependency becomes a threat to national security...economically, as well as for vital parts and items to run our country, and for national defense. A dependent nation becomes weak, vulnerable, and economically devastated.

Many of the reasons for manufacturing overseas, or giving up manufacturing, are based upon false economics, and a failure to look at ALL factors. It is too simplistic and incomplete just to look at "cheaper labor" as being the answer. Such things as the capital investment and start up costs required; raw material and finished product market proximity; shipping, freight and tariffs for raw materials and finished products; money exchange issues; the cost of poor quality (just ask some of the toy companies and building product companies, as just two examples); and finally productivity.

You can pay an employee $1 per hour and only produce 100 units in a day vs. paying $20 per hour and producing 10,000 units in a day. Which is cheaper? The most important measure of all when it comes to labor cost, however, is the cost of good quality units produced per hour. This should be the real measure.

In many companies there seems to be an obsession with labor costs. Yet many manufacturing companies are material intensive. This means the cost of raw materials in the manufacturing process is the overriding cost factor. In at least two companies studied the labor cost, out of the total cost of running the company (this includes executive salaries, advertising, etc.), was only in the range of 5 to 7% of the total cost of running the company. If you were an executive intent on reducing cost and improving the bottom line where would you look? At the 5-7% or the 93 - 95% ? Surprising few look thoroughly at this, there is an obsession with labor costs and major decisions by the company are made on that basis.

Corporate executives need to re-think where to manufacture, and there needs to be incentives to manufacture in the U.S. A final point...the American people would flock to buy goods or items that are Made in America! They tire and are actually angered over seeing everything that they purchase Made in China or elsewhere.

No single factor would improve the economy of the United Sates more than bringing manufacturing back to America. This would also lead to millions of jobs, strengthening us as a nation and lead to a more secure national defense.