Brenda Krueger Huffman is CEO of Women’s Voices Media, LLC and Executive Editor of Women’s Voices Magazine, Columnist, Journalist, Political Analyst, Talk Radio Co-Host, SM Strategist
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The U.S. economy is at a standstill, and Americans are looking for answers to the crisis. With the Standard & Poor’s downgrade of the U.S. credit rating from AAA to AA+ and warning it could be downgraded even further, Americans are fed up and looking for solutions.
Many do not believe the solution that will pull the U.S. from the brink will come from spending addicted politicians that created a kick-the-can-down-the-road piece of legislation to enable the debt ceiling hike just a week ago.
To look at the problem, the politicians created yet another panel naming them the “Super Committee”. Do they get capes? Was the S & P’s down grade President Obama’s 3:00 AM call? Is it Congress’ wake-up call?
Americans are also angry with big corporations offshoring jobs to foreign companies to cut costs. Americans see a once prosperous middle class losing ground in the U.S.
No one can deny the huge negative impact offshoring U.S. manufacturing has had on the economic growth and stability of Americans personally and on the nation’s GDP, tax revenues and government expenditures. Unfair trade deals are unacceptable, and trade imbalance promotes American economic depression.
There could not be a better time for cooler heads to prevail all the way around. There could not be a better time to view our problems realistically and to look at the root causes to develop real solutions which will benefit all. Manufacturing has a job and tax revenue multiplier effect in an economy.
Americans need jobs to survive, politicians need GDP growth to reduce debt, and corporations need a stable and cost effective environment to prosper. We do not need free trade that is not fair trade.
Even with all the chaos in the markets, and some world governments, the U.S. remains where many will and should put their money for the lowest risk.
It needs to make sense realistically for companies to do so. Harry Moser, the Founder of the Reshoring Initiative knows what many U.S. companies need to know. It does make more sense than they might realize, including more economic sense for businesses.
The mission of the Reshoring Initiative, an educational non-profit company, is to return manufacturing work and jobs to the U.S. by helping manufacturing companies recognize they will be more successful if they reshore more and offshore less. They promote government understanding how to support reshoring effectively.
The Reshoring Initiative offers companies a look at the “Total Cost of Ownership” (TCO) with its TCO Estimator software as well as other research and organizational tools that support the manufacturing industry’s business owners, government officials, and union groups.
Harry Moser holds a Bachelor of Science in Mechanical Engineering and a Masters in Engineering from Massachusetts Institute of Technology. He received an MBA from the University of Chicago in 1981.
He was the President of GF AgieCharilles and retired as Chairman Emeritus in 2010. He is on the board of NIMS, credentials for skilled manufacturing, and is President of the Swiss Machine Tool Society.
Moser, an Inductee to the Industry Week’s Manufacturing Hall of Fame 2010, has had his work highlighted in Fortune, Wall Street Journal, and Industry Week. He shares his reshoring expertise:
BKH: Do you believe the S & P credit rating downgrade of the U.S. will have any impact on reshoring manufacturing to the U.S.?
HM: The most likely direct impacts are a lower dollar and higher interest rates. A lower dollar unambiguously makes U.S. manufacturing more competitive. Higher interest rates may hinder manufacturing investment in general but will increase the carrying cost of inventory, making local sourcing with delayed payments relatively more attractive in comparison to offshoring.
BKH: We have seen unemployment over 9% for a record setting period of months. How can reshoring manufacturing immediately help?
HM: Eventually, we have to balance the trade deficit or the dollar will collapse. When we balance the $550 billion per year trade deficit by reshoring manufacturing, we will create 3 million manufacturing jobs and 5 million or more multiplier effect jobs. This could reduce the unemployment rate to about 4%.
BKH: We have seen politicians taking the annual budget deficit and the overall debt seriously these past few weeks. Can reshoring help deficit reduction by balancing trade deficits?
HM: Balancing the trade deficit by reshoring will increase tax revenue from workers and companies. It will decrease expenditures for unemployment, trade adjustment assistance, stimulus programs, etc. The total impact could be $2 trillion federally over 10 years and $500 billion at the state and local level over 10 years.
BKH: Are you meeting with local, state, and federal government about the needs and goals of reshoring?
HM: I met on July 22, 2011 with SelectUSA, a new Commerce Dept office to motivate foreign direct investment and investment by U.S. companies. They are quite interested in using and distributing the Reshoring Initiative’s tools to economic development groups around the country.
BKH: Are they listening to you?
HM: Generally yes. However, they tend to be too focused on exports and not enough on reshoring. It is far easier for most U.S. factories to compete here where they have the home-field advantage, rather than overseas.
BKH: Does Steve Wynn have it right about capital investment in the U.S. right now being scared to death over possible higher taxes, carbon emission regulation, redistribution of wealth, and socialism fears?
HM: Steve has a powerful argument. I think the impact is greater on small to midsize privately owned companies whose owners in effect personally pay the expenses for those government programs. Overall, the lack of demand due to offshoring is a greater issue for most companies.
BKH: Do you believe government is capable of understanding what environment is needed in the private sector to create jobs?
HM: Certainly some individuals in government must understand. President Reagan understood. Most elected officials are too torn between competing constituencies and their own need to be reelected to take the necessary actions.
BKH: Are tax breaks for reshoring manufacturing prudent and necessary?
HM: It’s far better to help all domestic manufacture be competitive via a lower dollar and an end of Chinese currency manipulation. The Yuan is still about 75% lower than it was in 1980 despite the huge improvement in the Chinese economy, balance of payments and productivity. We need consistently good basic education with much more emphasis on “professional” training of the technicians needed to be competitive producing tradable goods and much less emphasis on liberal arts university degrees.
BKH: Are tax breaks for repatriating manufacturing capital back to U.S. prudent and necessary?
HM: I am not sure doing so will stimulate manufacturing. The big companies here have all of the cash that they need. They can borrow more at very low rates. An ideal solution is to have a low 5% tax on repatriated earnings, and spend 1% of the taxes raised educating companies about Total Cost of Ownership (TCO); so they make and source more here, increasing domestic demand.
BKH: What is your opinion of the NLRB and Boeing dispute?
HM: Boeing may have violated the letter of the law by telling the union what it would do if they struck. If so, the law is the problem. It is certainly in the interest of the union, the workers, the company, and the country for companies to be able to communicate honestly and openly.
Read the original article on AXcess News. Copyright 2011.
