Hollywood, Fla.
American manufacturing is in a deep crisis. As of December 2002, manufacturing has lost jobs for 29 consecutive months, the longest such stretch of monthly job losses since the Great Depression. Manufacturing employment has plummeted to its lowest level in 40 years—and it continues to fall. Since April 1998, the United States has lost 2.4 million manufacturing jobs, nearly 13 percent of the total manufacturing workforce. Well over one-half million—592,000— manufacturing jobs were shed in 2002 alone.
The United States is losing a large share of its capacity to produce material goods. Capacity utilization in U.S. manufacturing, a measure of production activity, dropped to 74 percent in November 2002, the lowest it has been since 1983. At the same time, the trade deficit in manufactured goods continues to grow, reaching unprecedented heights over the past three years, to over $450 billion in 2002, or $1.2 billion each day.
The crisis is undermining the livelihoods of American working families and has serious consequences for the nation’s economy as a whole. Manufacturing historically has been a major generator of good, high-skilled, well-paid jobs that, in turn, generate four additional jobs in the economy. It remains a mainstay of local and state economies throughout the nation. Manufacturing’s decline is undermining the quality of these jobs and contributing to the stagnation in all workers’ wages. The massive scale of manufacturing plant closings and job layoffs are directly contributing to the serious fiscal crises afflicting virtually every state in the nation.
Manufacturing has been the primary driver of productivity gains, technological innovation, and economic growth. A robust domestic manufacturing base is vital for maintaining a strong defense and homeland security. The loss of manufacturing capacity will weaken America’s leadership in critical technological areas and limit long-term productivity growth. The dependence on foreign sources for strategically critical products and components is in itself a threat to the nation’s defense.
Expanding manufacturing exports is essential for reversing the dangerously large trade deficit and returning it to a positive balance. This turnaround must be achieved soon. The rapidly rising massive foreign debt—nearly one-quarter of U.S. GDP—could provoke a financial crisis and prolong, if not deepen, the economic recession.
American manufacturing workers are the most productive in the world. But they operate under enormous competitive disadvantages: unfair trade and tax policies, an overvalued dollar and undervalued foreign currencies, inadequate investment incentives, health care costs not borne by overseas producers, lack of a level playing field between older firms and both foreign producers and newer firms with younger workforces and fewer retirees, and foreign government subsidies. These problems must be addressed immediately or American manufacturing capacity and jobs will be lost permanently.
The extent to which we successfully revive our manufacturing base will determine the depth of the nation’s economic recovery and shape its future economic prosperity. It is therefore vital that Congress begin to acknowledge the severity of this crisis and take immediate steps to address the crisis in manufacturing including:
Trade and industrial revitalization. We need measures that rectify the trade, dollar, and tax policies that put American manufacturers and American manufacturing workers at a competitive disadvantage in the global economy. We also need to return American manufacturing capacity to its former levels. Doing so requires “high-road” industrial development policies—increased access to capital investment, technical assistance and workforce training incentives—that modernize and expand the nation’s manufacturing industries, while preserving and creating good manufacturing jobs. Key measures include:
o Fair trade policies that reduce the U.S. trade deficit, protect U.S. trade laws, and provide for enforceable workers’ rights and environmental standards in trade agreements;
o Revised tax laws that eliminate incentives for corporations to move production overseas and punish those that do; opposition to any reform of the Foreign Sales Corporation (FSC) tax that would encourage shifting manufacturing jobs overseas; replacement of the FSC with tax incentives that help American manufacturers create U.S. jobs and help workers cope with retiree health care and pension costs;
o Legislation that penalizes companies that incorporate overseas to avoid taxes, and denies government contracts to these companies; and,
o Strengthening the manufacturing base for national defense and homeland security though procurement reform, enhanced “Buy American” requirements, an updated assessment of critical defense manufacturing capabilities, and limits to “offsets” which drain critical technology and good jobs.
Health care reform. Solving the health care crisis, for manufacturing in particular, will require an infusion of new public dollars as well as effective cost containment policies. We need to bring new public money into the system, ease cost and competitive pressures, and preserve employer-sponsored health care plans. Key measures include:
o A Medicare drug prescription benefit that provides continuous, comprehensive coverage for all seniors and appropriate cost relief to existing employer health plans that provide prescription drug coverage to retirees;
o Additional assistance (or subsidies) to employers to provide health care coverage to workers and retirees.
Labor law reform. Reforming and enforcing the nation’s labor laws are essential to addressing the manufacturing crisis, as well as for promoting good jobs for all American workers. We need:
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- Stronger labor laws to prevent employer interference and suppression of workers’ rights to organize and bargain collectively;
- A quicker and fairer process for determining union representation including card check recognition and employer neutrality;
- Opposition to proposals that weaken worker protections, such as “comp time” proposals that undermine the 40-hour work week, or that prohibit workers from organizing through voluntary card check recognition; and
- Guarantees of meaningful collective bargaining rights and legal protections extended to all workers, regardless of their employment classification.