Fwd: RE: Factories Move Abroad, as Does U.S. Power WELL WORTH READING djf

[Dave Farber <dave () farber net>]

> Date: Mon, 18 Aug 2003 15:08:09 +1000
> From: Nathan Cochrane <ncochrane () theage fairfax com au>
>
>
> Dave
>
> As a citizen of a country that has had to endure American trade protection
> of its primary industries for years all the anger expressed by Americans
> that other countries are also protecting their industries seems
> hypocritical. The US should take the subsidies out of its own exports and
> the tarriffs off the imports of others first before it complains about the
> actions of others.
>
> And why is China to blame if US companies take their manufacturing offshore?
> Congress has but to outlaw US companies decamping for overseas, if that is
> the will of the people.
>
> But put blame, if such there should be, where it belongs -- on the heads of
> the corporate leaders who are taking their businesses offshore.
>
> But don't forget that your share portfolios, pension and college funds all
> depend on greater shareholder returns. If you don't want greater returns,
> tell your corporate boards you won't tolerate the race to the bottom
> mentality.
>
> -----Original Message-----
> From: owner-ip () v2 listbox com [mailto:owner-ip () v2 listbox com]On Behalf
> Of Dave Farber
> Sent: Monday, August 18, 2003 10:17 AM
> To: ip () v2 listbox com
> Subject: [IP] Factories Move Abroad, as Does U.S. Power WELL WORTH
> READING djf
>
>
>
> >Date: Sun, 17 Aug 2003 20:09:31 -0400
> >From: Claudio Gutiérrez <gutierrezclaudio () terra cl>
> >Subject: Re: [IP] Factories Move Abroad,
> >  as Does U.S. Power WELL WORTH READING djf
> >To: dave () farber net
> >
> >Not only is the U.S. suffering from manufacturing moving overseas, there
> are
> >many other countries losing its industries to China, Filipinas, Bangladesh
> and
> >many others. Here in Chile some industries have dissapeared (textile,
> >cars) and
> >others are in the verge of the abyss. However, as these industries are
> >dissapearing, China, Korea and others are becoming important buyers from
> our
> >products (fruit, wood, fish, copper, not manufacturing) and we are
> >assisting to
> >a shift in the focus of producers and investments.
> >
> >Some days ago I read the story "Booming China trade rankles US" in
> >http://www.csmonitor.com/2003/0805/p01s02-usec.html where you can read a
> good
> >account about what is happening in US and that, for example, the trade
> deficit
> >with China, now at $120 billion a year, surpasses the total US trade gap
> >of six
> >years ago.
> >
> >here it goes
> >
> >"For the past 20 years of their marriage, Delores and Robert Gambrell
> >strode the
> >heart-of-pine floors at Pillowtex's Plant 16. The noise from the looms
> forced
> >the couple to communicate in a sign language. They even had their own
> >signal for
> >"I love you."
> >
> >Those days are over for now - the victim of a flood of imports from China.
> The
> >nation's third-largest textile company, where the Gambrells worked, closed
> its
> >doors last week. For the moment, that means the end of sheets and towels
> with
> >the household names of Cannon and Fieldcrest. The trend reaches far beyond
> the
> >textile industry or Kannapolis - a community whose name means "city of
> looms"
> >but which is shedding 5,000 Pillowtex jobs. Manufacturing businesses from
> >electronics to furniture and fishing lures are closing their doors or
> moving
> >production to China.
> >
> >The rapid erosion of well-paying jobs has wide implications for the
> economy.
> >Consider that the US trade deficit with China is now running at an annual
> rate
> >of $120 billion - a record single-country amount that is larger than
> America's
> >entire trade deficit only six years ago.
> >"This will become the dominant economic policy issue in the US [over] the
> next
> >five years," says Don Straszheim of Straszheim Global Advisors in Santa
> >Monica,
> >Calif.
> >
> >Indeed, China's export push is already becoming a front-burner issue in
> >Washington. Congress has asked everyone from think-tank experts to Federal
> >Reserve Chairman Alan Greenspan for answers to the problem. Three members
> >of the
> >president's cabinet on a cross-country jaunt to promote the Bush economic
> plan
> >have gotten an earful from angry businesspeople trying to compete with
> Chinese
> >imports made by workers getting 50 cents an hour. The loss of jobs to
> >imports is
> >almost certain to be a recurring theme in the Presidential campaign next
> fall
> >and beyond.
> >
> >The numbers are eye-opening. Chinese exports soared 22 percent last year.
> And
> >it's not just low-cost towels. Exports of computer and telecom products are
> >growing 60 percent annually. While American firms have struggled, Chinese
> >companies reported profits rose in the first quarter by 56 percent from the
> >previous year.
> >
> >To some, this may seem like a replay to the 1980s, when the US trade
> deficit
> >with Japan swelled to about $50 billion a year. It seemed as if Japanese
> >automakers and semiconductor companies would devastate the US economy. "The
> >atmosphere today reminds me of the 1980s," says Clayton Yeutter, who was
> the
> >United States Trade Representative back then. "Everyone worried about the
> >Japanese being 10 feet tall, and all of that turned out to be inaccurate,"
> >recalls Mr. Yeutter, now of counsel at Hogan & Hartson, a Washington law
> firm.
> >
> >Back then one of the major complaints was about the Japanese yen, which
> many
> >felt was kept unreasonably low to benefit the big exporters. Today,
> >business is
> >complaining about the value of the Chinese yuan, which is pegged to the US
> >dollar. "It is hugely undervalued," says Frank Vargo, of the National
> >Association of Manufacturers. "It could be as much as 40 percent
> undervalued,
> >and that is a major reason for the trade deficit." The argument has been
> >picked
> >up quickly by members of Congress. Last week, Rep. Donald Manzullo (R) of
> >Illinois, chairman of the House Small Business Committee, was among 14
> >cosigners
> >of a letter to the administration encouraging "stronger action."
> >
> >Last week, Treasury Secretary John Snow said it was a critical issue that
> he
> >intended to discuss with the Chinese during a planned trip this fall.
> Yeutter
> >says a floating yuan would make China, now a corn exporter, a net importer
> of
> >corn and soybeans.
> >
> >Mr. Manzullo says his district is among those feeling the heat from China.
> >Unemployment in Rockford, Ill., is now 11.3 percent. Machine tool
> >manufacturers,
> >tool and die companies, and bolt and screw manufacturers are all
> struggling.
> >
> >One of those who has testified at the end of June before Congress is
> >businessman
> >Jay Bender of Falcon Plastics Inc. in Brookings, S.D. In an interview, he
> >recounts how one of his customers, a manufacturer of fishing lures, has
> >decided
> >to move its production from the US to China. This would allow the company
> >to cut
> >its manufacturing costs by half. It asked him to bid on molds to make the
> >plastic bait. He bid $25,000 per mold. "That was a competitive price," he
> >says.
> >Instead, the company found a Chinese source for $3,000 a piece. "I can't
> even
> >buy raw materials for that," he says. "There are two possibilities: Either
> >they
> >are subsidized by the government or they gave away the molds to get the
> >manufacturing business," says the businessman, who has to lay off 30
> >percent of
> >his workforce so far.
> >But Mr. Bender has fared well compared with the US textile business. US
> >markets
> >are getting flooded by Vietnamese and Chinese goods. "People are moving
> jobs
> >faster than you can count," says Charles Bremer of the American Textile
> >Manufacturers Institute, which is lobbying for emergency protection.
> >
> >It may get worse for the industry. In 2008, all quotas come off Chinese
> >imports.
> >"At that point, the Chinese will completely dominate the market," says Mr.
> >Bremer.
> >The effects can be seen in Kannapolis, where the Cannon Mill closing has
> taken
> >on the air of a natural disaster. The layoffs are the largest in state
> >history,
> >and social workers are descending on the town to set up satellite offices.
> >People are turning off cellphones, cutting cable TV, and pleading with
> >creditors. Already, 200 have had their water shut off.
> >
> >"They're going from $35,000 a year with overtime to making maybe $9,000 a
> >year,"
> >says Joe Rogers, a local official with the Union of Needletrades and
> >Industrial
> >Textile Employees (UNITE!).
> >Sen. John Edwards says he will try to secure $38 million in federal aid,
> and
> >Sen. Elizabeth Dole is opening an office in town to take questions. But
> >workers
> >are leery: "We don't want questions answered, we want a paycheck," says Mr.
> >Rogers.
> >
> >Hundreds of businesses rely directly and indirectly on the mills, including
> >everything from pizza palaces to mortgage brokers. For the Gambrells, the
> plan
> >now is for Ms. Gambrell, in her early 50s, to go back to school, while Mr.
> >Gambrell tries to find a job - doing what, he doesn't know. "We always said
> we
> >wouldn't do anything if we couldn't do it together," says Ms. Gambrell,
> >offering
> >a tired smile to her husband.
> >
> >
> >http://claudiogutierrez.blogspot.com
>
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