What will become of U.S. manufacturing?

Keeping in Touch: What will become of U.S. manufacturing?
Date June 10, 2005
Section(s) Columnists
By Dennis Black

Iowa Legislator

Readers should be very concerned about the problem our community, state and nation are facing. Within a month’s period of time we’ve learned of potential manufacturing transitions with ramifications that could affect generations.

We continually hear about “global economy.” I can relate to that, for in my numerous trips to Taiwan, mainland China and Korea, I’ve observed first-hand the areas where America competes very well with Pacific Rim economies. Yet in others, they can’t begin to compete with us and likewise, we can’t with them.

Southeast Asia has an insatiable appetite for Iowa’s agricultural products, i.e. corn, soybeans, pork and beef. Japan loves Iowa beef; Taiwan continues to purchase huge amounts of Iowa pork and soybeans; and, mainland China is just starting to consume Iowa’s bounty. We have the land, the technology and the work ethic of Iowa’s farmers to really be an integral part of feeding the world. Essentially, we’re doing that right now.

However, Iowa and America must be far more than agriculture. Not everyone can make their living on the farm. Besides, the profit-margin in food production is very slim, the result of a national cheap food-policy that is perpetuated by Congress’ action and inaction. A viable economy is a varied economy and both soft- and hard-good manufacturing are essential in the big picture.

We’ve been advised that “outsourcing” is necessary to compete in the global market. Sounds reasonable, until you realize there is no way America can, or America should, or America will compete in a global market where, in some “economies,” wages are our equivalent of 38 cents an hour and job security and health-care are non-existent.

This week’s news has the General Motors CEO announcing the company is in trouble, downsizing is imminent and 25,000 GM employees will be phased-out by the year 2008. That’s a 20 percent drop in the workforce for the nation’s largest automaker. Additional products utilized in automobiles will be manufactured abroad, and plants within the U. S. will compete for assembly. Sound familiar?

The reported big issue with GM is labor and health-care costs, with the price of each auto sold including $1,500 directly related to health care plans of current and retired employees. At least that assessment stays in America, funneled through our health care providers and insurance companies and back into the economy. Those companies and providers employ people and those people drive autos, many of which are GM products.

American manufacturers truly believe that the solution to rising costs is outsourcing to Southeast Asia, Central Asia, Mexico or South America. Outsourcing components and the outright manufacture of whole goods overseas is only a very short-term solution for the stockholders who control the corporations. As the quality of a product declines, then consumer demand for the product evaporates. Diminished demand is reflected in stock value, and everyone suffers in the long run.

With last week’s report of Kellogg’s Midwest Manufacturing facing trying times, I frankly wondered how that could be with the employees of that gear manufacturing business having had to work massive amounts of overtime to keep up with automakers demand. In fact, the orders to the Kellogg plant today far exceed the production. Wouldn’t that lead one to think that expansion would more readily meet the demand, versus reducing workforce?

Frankly, we know you get what you pay for, and that fly-wheel manufactured in China by Amtech India becomes one of the most integral components of your American assembled vehicle. A flywheel relates directly to the mechanical integrity of the vehicle, and the safety and welfare of your family! I’d prefer the peace-of-mind with the Midwest flywheel, for I know the integrity, commitment and work ethic of those employees and the quality product the men and women of that plant produce. I have a pretty good idea of what to expect from China.

As for Maytag, it’s been the “engine” that has driven Newton for a century. That’s a fact, but at the same time, there were and are many other parts of the “whole.” We must always be thankful for the many fine businesses and industry in our community. Too often they are overlooked when assessing the viability of the local economy. Ironically, they may become our means of survival.

A symbiotic relationship must exist between management, stockholders, labor and a satisfied and loyal consumer/customer. These four cornerstones were the basis for Fred Maytag‘s success. He considered Maytag as “family” and thus his legacy shall always be reflected in that conviction. I’m not so na & iuml;ve as to think those days will return. But I do recall not all that many years ago when Newton’s factories produced only washers and driers, employed nearly 3,000, were profitable, had no debt and reportedly had big-time bucks in the bank. Labor can’t be blamed for that transition!

I’m confident things will never be like they were for the multinational corporations have no community or regional affinity or identity. To a fairly great extent they look only at the “bottom line.”

Well, I guarantee you that if this nation fails to rise up and demand from Congress action in preserving the very heart and soul of domestic manufacturing, the disparity between this nation’s “have” and “have-nots” will only widen. And yes, readers, I do know that Bill Clinton was the big proponent of NAFTA. And likewise, I’ll never understand why!

Questions or comments? Senator Dennis Black. Box 1271. Newton, 50208.


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