Manufacturing Competitiveness

In last Wednesday’s paper was an article about how the White House wanted to focus on the economy at large and more specifically at improving manufacturing.  In this same article the wanted to raise the minimum wage from $7.25 to $9.00 per hour, as though this would help.  Here is where are could write something sarcastic, but I won’t.  Instead, I will put down a few bullet points that would help increase manufacturing from the prospective of someone who is actually in that field.

·       Lower the minimum wage – at the very least in underdeveloped areas with higher unemployment

·       Increase the work week from 40 to 44 hours, many countries have a 48 hour work week, making them more productive/competitive the minute they show for work

·       Give manufactures a lower corporate tax rate, say 25% instead of the current 40%

·       Increase oil exploration, even in Alaska – this could not only lower energy costs, but increase manufacturing jobs in its own right

·       Limit access of international students to our engineering and science graduate degrees, where they can take our own research and knowledge home and compete against us

These are just a few ideas; there are many more that could improve our manufacturing competitiveness. They are probably too controversial for politicians, not that these are not.  Below is a Hubpage on Creating Wealth we wrote sometime back that might be apropos.

 

Creating Wealth Instead of Transferring It

 This is a subject that is near and dear to my heart, as I am associated with the electronic component manufacturing and the agriculture industries. These both happen to be industries that create wealth.

How does one create wealth as opposed to merely transferring it? When I explain this to my children, I tell them that in order to create wealth it was come from the ground. It must be grown, mined, or manufactured. This may be an over simplification, but for the most part wealth is extracted from the ground.

This is not to say that the accounting or legal professions are not important, in fact they are imperative. They do not, however, create wealth but transfer it. The act of manufacturing a transformer that is made with steel and copper, both of which come from the ground, is creating wealth. The liability insurance that is sold to that same manufacturing company is transferring it and before that money can be transferred it must first be created.

I contend that the only way to truly bring back our economy, without the use of smoke and mirrors, is to bring back manufacturing. There is a reason that China has been able to finance the United States’ enormous debt. China is where everything is now being manufactured and hence where the wealth is being created. On the agricultural front, Brazil is coming into its own and while agricultural made not be glamorous it will be an industry that we will regret having not defended more vigorously.

The old English Empire once thought that they could “sub out” their manufacturing and agriculture to their colonies while they would be the banking and finance center. In other words, they would hold our money for us. It didn’t take long for the colonies to decide that they could hold their own money. The money will always be located where it’s being created and unfortunately that is less and less in the United States.

Ireland has realized this some time back and for more than twenty years has lured manufacturing companies to locate there by offering attractive packages in order to not only create these type jobs, but create wealth. In the meantime, the U.S. saddles manufacturing companies with higher taxes and more regulations.