Comments Posted By Frank K-F
Displaying 1 To 1 Of 1 Comments
SAVE THE AMERICAN FUR COMPANY!
Much of today's dialog about a government bailout/loan to the Big-3 concentrates on the labor union, and derision of these companies' management, and Detroit's product.
But let us be clear. Detroit has been building cars and light trucks that the market wanted; to be sure Detroit built a different mix compared to the transplants and imports; that is called market segmentation along with product differentiation, a perfectly defensible strategy and business model. But no futurist or planner, even the widest outliers foresaw the dual shock .. an alarming run-up of oil prices, and the collapse of the global financial structures that have led to staggering losses of wealth .. impacting virtually everyone with a pulse, both, here in America and abroad.
If we are to look for culprits precipitating this calamity, they are several. But the root for the financial crisis is the Democrat Congress aiming to buy the vote of the lower income (and no-income) masses by mandating relaxed mortgage terms to facilitate home ownership of these groups; this in turn became the seeds for abuse, fraud and securitized mortgage bundles with insufficient or wholly fraudulent assets backing them. To add to the injury, the elections just past returned a Congress even more Democrat .. so much for the due diligence of our electorate mesmerized by the empty slogan of "CHANGE". This election also amended our vocabulary .. no longer Republican vs. Democrat, but Republican vs. Marxist-Socialist. Change that we shall rue.
But I am digressing.
There are issues that are critical but not yet discussed relative to the Big-3's plight. High profile industries such as auto, primary metals, aerospace, machine tools, other heavy manufacturing .. as well as less visibles such as the highly fragmented 'tool and die' are essential manufacturing sectors of our economy as well as vital to our national security now and into the future. Tool and Die, now rapidly outsourced to Asia-Pacific suppliers, is an essential intermediate manufacturing support activity that is involved in virtually all product manufactures .. and once the last shop has closed its doors there is no quick recovery possible, as the chain of experienced, skilled craftsmen is broken. (And at this point derisive put-downs about 'buggy whips' spring from the minds of simpletons or malcreants, I suggest.)
While we are likely to find alternate foreign supplies of a commodity such as sugar, where would we procure our military hardware if we were to abandon our domestic industries, including autos. Would we turn to China, whose intentions toward us are adverse, or Russia, or Japan, or the European Union? We must not slide down the path to become reliant on foreign sources for our strategic needs.
A second point not discussed is that he who manufactures might license the technology today but owns the innovation into the future; and the corollary is that he who manufactures generates real wealth .. directly by their own activities, and indirectly by the multiplier effects of their primary manufacturing jobs. We have been reassuring ourselves that we are still the leaders of technology .. as measured by the number of patents granted to American residents. But in our globalization rush we are likely to see our advantage erode here as well.
Allow me personal note .. for some 20 years I worked in the international arena for two major American manufacturing firms. My specialty was business development at senior levels working with high volume OEM technical products, both export and import oriented. From that perch I was watching in dismay as the USSR was playing our machine tool industry for suckers as they were shopping equipment for their Kama River project to manufacture 'civilian' vehicles using Fiat licensed technology. I was there during the 'opening to China'. My employer was joining other American firms rushing to China to set up operations. During a dining room conversation my president ventured "to be on the ground when demand there develops". We have not only setup the most modern factories and exported valuable technologies and know-how, but have trained the Chinese in the use of these. The Chinese add the low cost labor, account for few social costs (health, retirement, environment, worker safety, working conditions) .. and we have now perhaps 9 of 10 items in any big-box store imported from China. Chinese manufactured cars in US showrooms are just around the corner .. at prices that will likely shock.
Under WTO China has now an absolute labor cost advantage, and a labor pool to overwhelm our domestic manufacturing base. India, with a college educated 'middle class' that is nearly as large as the US population, while not hostile to toward us at this time, is on the path of economic development to become a manufacturing powerhouse, likely to look to us as a prime export market. Like China, India is also likely to enjoy an absolute advantage in labor.
For years I cringed when I heard George Will and other pundits pontificate that the American consumer benefits from more competitively priced import goods on the shelves. But as these imports are crowding out our domestic offerings is an ever widening array of goods ... with resultant waves of American workers displaced, it may be time to ask if our policy makers in Washington are party to a national suicide pact or just too dense to see the currents eroding our nation.
So, what are we to do with our ailing industries .. whose fortunes have been adversely impacted by our trade policies, policies that resemble more the laboratory experiments of free-market economists than balanced policies of state .. serving our geopolitical and domestic economic goals while avoiding de-industrializing our country? We are at the threshold of agonizing decisions .. are we going to nurse ourselves back to some semblance of economic health while protecting the relatively free enterprise model that has been the engine of our becoming the leading economy, or are we going for the 'rescue' under a socialized model, and thereby kill the goose that lays the golden egg. To paraphrase Margaret Thatcher ... socialism inevitably fails once they have run out of other people's money.
On our current course by the next presidential election we may well be past our zenith as a nation and the prime world power. Beyond that point our world starts to look very ugly.
"CHANGE" that we can believe?
Comment Posted By Frank K-F On 16.11.2008 @ 05:23
