Monday, April 20, 2009

Still Number One

After the recent rogues' gallery of fundie spam by ugly Americans, it's only fitting that it be balanced with some good news.

" 'Made in the USA' Still Means Something — Despite Downturn, the Nation Remains the World's Leading Manufacturer"

…the U.S. "by far remains the world's leading manufacturer," producing goods valued at a record $1.6 trillion in 2007 — nearly double the $811 billion produced a decade earlier. … "For every $1 of value produced in China's factories [in 2007], America generated $2.50." Not bad for a country that doesn't produce anything anymore.

So why is our country, admired worldwide for its optimism, now enveloped in self-doubt and defeatism? One explanation is politics: Politicians and interest groups find it much easier to move their agendas forward during times of angst. Many of them therefore deliberately fuel the public's anxiety.

In fact, even in the midst of a global recession, the U.S. exported an estimated $1.377 trillion worth of goods last year, according to the authoritative CIA World Factbook. Nearly half of the exports were capital goods: aircraft, computers, electric power machinery, office machines, telecommunications equipment, and the like.

So what should be done?

1. Policymakers need to address the right problem.

For many years now, Washington has been attempting legislatively to discourage U.S. plant closings. But the closing of certain production facilities is often a sign of renewal: a naturally occurring phenomenon in which the old and outdated is replaced by something new. As Manufacturers Alliance/MAPI Chief Economist Daniel Meckstroth has noted, the "death rate in manufacturing" really isn't significantly higher than in the past. What has changed, Meckstroth says, "is that the creation of new factories has dropped so dramatically."

If Meckstroth is right and the problem is that too few new factories are opening, Washington should encourage companies to invest in new plants and equipment. It also needs to identify and change existing policies that discourage the building of new factories.

A recurring theme in my conversations with U.S. CEOs is that the effort it takes to build a new plant is barely worth it anymore. There's just too much red tape, too many hoops to jump through, too much bureaucracy, too many special interests fighting you tooth and nail, too many unnecessary, if not nonsensical rules to contend with, too many permits and legal roadblocks.

2. Executives need to speak up with candor.

We all know that Washington is as much to blame for our economic woes as any company or industry. But most executives are reluctant to speak up, except through the trade groups they support and the lobbyists they hire. This may be the price companies pay when they seek favors from government. So let's declare a moratorium, wherever possible, on government handouts — and speak forthrightly about policies that are hurting your company and how they might be changed to accomplish the same goals without the destructive side effects.

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