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RedEarth Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 03:14 PM
Original message
The Fate of 'Made in the USA'
The Fate of 'Made in the USA'

By Robert J. Samuelson
Wednesday, October 19, 2005; A21



The question posed by the bankruptcy filing of Delphi Corp. -- the largest U.S. auto parts company -- is whether manufacturing in America has a future. Or is it sliding toward extinction? Viewed historically, the question is misleading. It's true that manufacturing employment now accounts for only one in nine jobs, down from one in three in 1950. But the decline mostly reflects higher efficiency. Americans make more things with fewer people. From 1990 to 2000, for example, manufacturing output rose 61 percent while employment fell 2 percent, reports economist David Huether of the National Association of Manufacturers (NAM). This is generally a good thing. It frees more workers to produce services (software, education, health care) that Americans want.

Of late, however, the news about manufacturing has seemed particularly dismal. Since mid-2000, 3 million jobs have vanished. Though overall corporate profitability has been strong, manufacturing has until recently been a conspicuous exception. From 2000 to 2004, the sector's profits averaged only 60 percent of their 1999 peak. It's retailing, finance (banks, stockbrokers) and real estate that account for big profit gains. Finally, imports represent a growing share of Americans' consumption of manufactured goods. In a recent report, the NAM cites these figures for 2003: 35 percent for motor vehicles and parts; 45 percent for computers and parts; 22 percent for chemicals.

Delphi's bankruptcy suggests that the whole auto-industrial complex faces another wrenching shakeout. Delphi, once the auto parts subsidiary of General Motors, was spun off in 1999. The idea was to reduce GM's costs by forcing Delphi to compete for its contracts and to sell to other companies. Since then, Delphi's dependence on GM has dropped from about 80 percent of sales to 50 percent.

The trouble is that Delphi isn't profitable. The entire industry is caught in a cost-price squeeze. It needs price discounts (aka "incentives'') to sell vehicles. In 2004, GM's average selling price of $26,479 was $435 lower than in 2002, reports the consulting firm J.D. Power and Associates. Unfortunately, the resulting revenue pinches profits or pushes high-cost producers, such as GM and Ford, into the red. True, GM's distress (and hence Delphi's) stems partly from unappealing vehicles that don't sell well even at lower prices. Since 1999, GM's U.S. market share has dropped from 29.6 percent to 26.4 percent. But high labor costs are also a huge problem. GM and Delphi's hourly wages average about $27 under similar contracts with the United Auto Workers (UAW). Counting fringe benefits and retiree costs (health care and pensions), these soar to $65 for Delphi and $74 for GM

http://www.washingtonpost.com/wp-dyn/content/article/20...
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RaleighNCDUer Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 03:23 PM
Response to Original message
1. National Healthcare can save American manufacturing.
If companies were not providing health insurance they would be able to compete with overseas competitors. The current solution is part-time and contract work, which does not provide health insurance, but that can only go so far. Not everybody can be a temp. Single payer national healthcare would relieve business of this burden and would result in increased wages, higher retention rates and, ultimately, a more profitable bottom line.
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phantom power Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 03:39 PM
Response to Reply #1
2. It will be very interesting to see if we catch on to this idea.
On the one hand, American health care is rapidly approaching a meltdown, and I have some hope that out of the chaos, we'll rise to follow the successful examples of European socialized health care.

On the other hand, the GOP has been brainwashing America to distrust "socialized medicine" for so many years now, that it's become one of our unconscious and unquestioned assumptions. It's not a guarantee that even a health care meltdown will cause people to say "wow, we should try socialized health care!"
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RaleighNCDUer Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 03:46 PM
Response to Reply #2
3. As long as we don't let it get framed as 'socialized' it should sell.
Of course the insurance industry would fight it because it would take a major chunk out of them.

That wouldn't bother most people - I don't personally know anyone who loves an insurance company.
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DavidDvorkin Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 08:30 AM
Response to Reply #3
5. National health care run by the insurance companies
Paid for by the insured, perhaps with government subsidies, and with the current outrageous profits still in place. It seems to me that that's what we're most likely to get.

It would ease the cost to employers, but it wouldn't be an improvement for the rest of us.
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RaleighNCDUer Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 01:50 PM
Response to Reply #5
8. Even that would be a small plus --
employers would no longer be afraid to hire full-time workers on account of having to provide health benefits. The trend toward temp/contractor work, and people being forced to take 2 25hr jobs instead of 1 full-time job, would lessen. And those that choose to work temp or part time would still get health benefits.

But I think you're right - the insurance companies will administer the program, preserving their profits and influence, and there would be constant fights with them over trimming benefits.

I guess it comes down to good benefits for those covered, with millions not covered (today) as opposed to poor benefits, but with nearly everyone covered.
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DavidDvorkin Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 08:30 AM
Response to Reply #3
6. National health care run by the insurance companies
Paid for by the insured, perhaps with government subsidies, and with the current outrageous profits still in place. It seems to me that that's what we're most likely to get.

It would ease the cost to employers, but it wouldn't be an improvement for the rest of us.
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DavidDvorkin Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 08:31 AM
Response to Reply #6
7. Ack. Sorry about the repeat.
I must have clicked on the "Post message" button twice.
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sarcasmo Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 03:43 PM
Response to Reply #1
9. Cheap labor in India and China, nothing can save us now.
The new head of Delphi said that if the UAW doesn't take the cuts the product will be made in either China or India. That was his quote from a Detroit Free Press article last week. Made in the USA is DEAD.
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The2ndWheel Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-21-05 04:58 PM
Response to Reply #1
10. Increased wages?
Why?
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Blue_Tires Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-20-05 11:36 PM
Response to Original message
4. sadly, this could be the beginning of the end for the UAW
nt
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WhiteTara Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-22-05 09:02 PM
Response to Original message
11. these guys never seem to learn
They lost the whole enchilada to foreign fuel efficient cars in the 70s and here we are again.
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Gatchaman Donating Member (944 posts) Send PM | Profile | Ignore Sun Oct-23-05 10:16 AM
Response to Reply #11
12. What's going to happen when China unionizes?
Sooner or later, the Chinese John L. Lewis is going to be born. He may already be loading steel wire barehanded into a nail making machine in some little plant today. What's going to happen when he's finally had enough and he leads the people of china into a world where they can work in safety for a living wage?
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WhiteTara Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-23-05 02:37 PM
Response to Reply #12
14. "they'll" move on. The global workers have to
unionize. The effort to do that would so enormous that the corporations will be a step ahead of the mob for along time to come. But as I say that, I hope I'm wrong.
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sarcasmo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-23-05 11:08 AM
Response to Original message
13. Made in the USA is over. We can't even produce our own bullets for War.
Prime time for a joint Invasion of China and Russia to liberate us from our Corrupt Fascist Government.
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