U.S. Manufacturing -- An Update by Jim Altfeld

July 21, 2003

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U.S. Manufacturing -- An Update

by Jim Altfeld

In last week's issue of MCAD Weekly Review, we published a guest commentary by Jim Altfeld that explored some of the issues and concerns facing U.S.-based manufacturers as they struggle to compete in a global economy. This week, Jim gives us an update.

Well, apparently the first shot has been fired by the Bush administration. The China North Industries Corp. (NORINCO) has been banned from importing anything into the US for two years. The Bush Administration found that this major Chinese industrial conglomerate had been selling missile parts to Iran. According to the State Department, Norinco sold parts for ballistic missiles to the Shahid Hemat Industrial Group, an Iranian producer of medium and long range missiles. The State Dept. went on to say that these parts were sent in October, clearly two months after the Chinese government had been issued an edict banning the sale of such products to Iran. Norinco began as a provider of tanks,

machine guns and other weapons. They have since diversified and now produce more than 40,000 products, including light industrial goods, electronics, textiles, handicrafts, motorcycles and guns. China exports in excess of $100,000,000 worth of products to the US annually. Apparently this is the first time that a state-owned company has been issued a blanket sanction on its entire product line. Is this just the first of many? Perhaps, but perhaps not. We'll have to wait and see.

Organizations

I have done a lot more investigating as to what is or is not going on with China. Turns out that there is not just one, but several groups all worried sick about the U.S. losing its manufacturing base. These include: (Save American Manufacturing)

www.SAMNOW.com, NAM (National Association of Manufacturers)

www.nam.org, the National Coalition for Manufacturing Leadership, the Manufacturing Coalition, and more. However, everyone seems to be running hither and yon yelling the sky is falling. There is no one spokesperson, and there needs to be. Former GE CEO Jack Welch was my first choice, but he declined the offer. Other suggestions?

Roundtable Discussions

On Monday, July 7th, the Dept. of Commerce held a roundtable discussion at the Davidson Conference Center at USC (University of Southern California) to discuss the problems of manufacturing in California. Nearly 100 small to mid-size manufacturers attended, as well as a number of heads of manufacturing associations. It was standing room only. In short, National Director of the US Dept. of Commerce's Minority Business Development Agency, Mr. Ronald Langston, received an earful. The two primary complaints were "give us a level playing field" and "give us access to capital." No one in attendance was either shy or bashful about how they felt. There was passion, zealousness and anger.

A number of key points were made, including:

U.S.-based manufacturers are forced to deal with high operating costs due to city, state and federal regulations and mandates when the rest of the world does not.

Higher operating costs equates to fewer workers, higher unemployment, lower profit margins, less working capital, poor cash flow, and downsizing. Which part of that don't you get?

U.S.-based manufacturers have limited access to cash. What a manufacturer has to do to get an SBA loan is ridiculous. We are competing with foreign countries using the latest machinery and equipment with the cheapest labor pool. Without easier access to low-interest loans, a U.S.-based manufacturer cannot buy the machinery and equipment it needs to compete

Unfair tariffs favor those companies importing to the U.S. I pay 60% going out and they pay 2% coming in. What sense does that make?

A final point made was that we felt Mr. Langston himself was sincere and concerned. But taking the message of what he heard to the Secretary of Commerce and President Bush, and then getting action is something we can only hope to see happen. In the meantime, these manufacturers have few options. They can hang on and try to cope, leave California, partner with whichever foreign country works best, or call it quits. Apparently, these kinds of roundtable discussions are happening throughout the United States and I am confident they are hearing many of the same things stated with the very same passion. The thing that is on our side is that we have an election year coming up.

Jim Altfeld has over thirty years of experience as an industry marketing and sales professional in the manufacturing sector, with a key part of his career spent at GE Plastics. He is also a successful author and business consultant who is dedicated to preserving the future of U.S.-based manufacturing. Write to Jim at:

jaltfeld@altfeldinc.com.

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