19 Facts About The Deindustrialization Of America That Will Make You Weep
Business Insider - September 27, 2010
The United States is rapidly becoming the very first "post-industrial" nation on the globe. It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. But now we are witnessing the deindustrialization of America. Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period.
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History lessons: Understanding the decline in manufacturing
MinnPost - February 22, 2012
New ideas for reviving American manufacturing seem to appear every day. Many of these notions have merit, but most are built on a flawed premise: that the decline in U.S. factory jobs is a recent occurrence, one that can be reversed through tax cuts or trade policy.
Unfortunately, U.S. industrial decline is a long-run phenomenon and will not be reversed by short-term fixes. Let’s take a look at the trends and their implications.
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U.S. has lost 5 million manufacturing jobs since 2000
CNN Money - March 29, 2016
Donald Trump claims trade with Mexico and China is killing America's middle class. Corporate America says that's false.
"History shows that trade made easy, affordable and fast...always begets more trade, more jobs, more prosperity," the founder and CEO of FedEx wrote in a recent Wall Street Journal op-ed.
Who's right? Take a look at what has happened to blue-collar workers.
Manufacturing jobs in the U.S. actually increased in the years after the North America Free Trade Agreement with Mexico and Canada went into effect in 1994.
But the story changed dramatically in 2000. Since then, the U.S. has shed 5 million manufacturing jobs, a fact opponents of free trade mention often.
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Who is Killing American Manufacturing?
Industry Week - February 23, 2016
In the week before Valentine’s Day, United Technologies expressed its love for its devoted Indiana employees, workers whose labor had kept the corporation profitable, by informing 2,100 of them at two facilities that it was shipping their factories, their jobs, their communities’ resources to Mexico.
A few workers shouted obscenities at the corporate official. Some walked out. Others openly wept as United Technologies shattered their hopes, their dreams, their means to pay middle-class mortgages.
Three days later, 1,336 workers at Philadelphia’s largest remaining manufacturer, Cardone, learned that the company planned to throw them out too and build brake calipers in Mexico instead. Two weeks earlier, a Grand Rapids, Mich., company called Dematic did the same thing to its 300 workers.
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The Loss of American Manufacturing Jobs: What Are The Facts?
morssglobalfinance.com - February 21, 2011
Many have bemoaned the loss of US manufacturing jobs to foreign lands.
One of the biggest challenges facing the American economy is that we lack a domestic manufacturing base. Simply put we do not produce anything anymore. We buy tons of foreign goods and then wonder why we are lacking jobs. We import most of our goods which has resulted in a huge trade deficit and industrial job losses. Our economy has transitioned from an agricultural society to an industrial society to a service economy.
Is it correct to associate job losses with the US trade deficit? Should the US worry about losing manufacturing jobs? After all, a growing service sector is a common characteristic of countries with growing per capita incomes. Are the current problems in manufacturing merely cyclical – a direct result of American bankers causing a panic that led to the global recession? Remember that between 1998 and 2007, the US unemployment rate averaged 4.9%. Or are there longer term structural problems at work?
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Manufacturing Moved South, Then Moved Out
Bloomberg - October 7, 2015
The Southern U.S. was, for the first century of the nation’s existence, a bunch of farms. It was a bunch of farms before then, too, but so was the North. After independence, though, manufacturing began to take off north of the Mason-Dixon line, while the states south of it stuck with agriculture and slavery. The Civil War ended the slavery. And finally, in the 1880s, “New South” boosters such as Atlanta’s Henry W. Grady began pushing the region to shift its focus from crops to industry.
Manufacturing employment peaked in the U.S. in June 1979, at 19.5 million jobs, seasonally adjusted. But after a sharp decline in the recessions of 1979 and 1980-1981, it actually held pretty steady for a couple of decades. Then, in 2001, the true collapse began, followed by a modest recovery starting in 2010. There were multiple reasons for this collapse, but the big three have to be the rise of China as the world’s new manufacturing headquarters, the rise of robots and the worst recession in 75 years.
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The Plight of American Manufacturing
The American Prospect - December 21, 2009
Since 2001, the U.S. has lost 42,400 factories and its technical edge.
Something has gone radically wrong with the American economy. A once-robust system of "traditional engineering" -- the invention, design, and manufacture of products -- has been replaced by financial engineering. Without a vibrant manufacturing sector, Wall Street created money it did not have and Americans spent money they did not have.
Americans stopped making the products they continued to buy: clothing, computers, consumer electronics, flat-screen TVs, household items, and millions of automobiles.
America's economic elite has long argued that the country does not need an industrial base. The economies in states such as California and Michigan that have lost their industrial base, however, belie that claim. Without an industrial base, an increase in consumer spending, which pulled the country out of past recessions, will not put Americans back to work. Without an industrial base, the nation's trade deficit will continue to grow. Without an industrial base, there will be no economic ladder for a generation of immigrants, stranded in low-paying service-sector jobs. Without an industrial base, the United States will be increasingly dependent on foreign manufacturers even for its key military technology.
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Record number of manufacturing jobs returning to America
Market Watch - May 1, 2015
Made in the U.S.A. is hot again, and the number of manufacturing jobs that are returning to the U.S. — or coming to the U.S. for the first time — from overseas has hit a record level.
Sixty thousand manufacturing jobs were added in the U.S. in 2014, versus 12,000 in 2003, either through so-called reshoring, in which American companies bring jobs back to the U.S., or foreign direct investment, in which foreign companies move production to the U.S., according to a study from the Reshoring Initiative. In contrast, as many as 50,000 jobs were “offshored” last year, a decline from about 150,000 in 2003.
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What’s driving American firms overseas
The Economist - August 16, 2015
AMERICAN companies are on the move. On August 6th CF Industries, a fertiliser manufacturer, and Coca-Cola Enterprises, a drinks bottler, both said they would move their domiciles to Britain after concluding mergers with non-American firms. Five days later Terex, which makes cranes, announced a merger which will involve moving its legally recognised headquarters from Westport, Connecticut, in New York’s tri-state area, to the tiny town of Hyvinkää, Finland. What’s driving these firms to pack up and go?
For more than 30 years companies, especially American ones, have been merging with foreign firms or acquiring them outright in order to shift their tax bases abroad. It started in 1982, when McDermott, a construction company, outsmarted America’s Internal Revenue Service (the IRS) by moving its base from New Orleans to Panama, where it had a subsidiary.
Pulling off a successful inversion requires only a modest sleight of hand. When company A (based in America, say) acquires company B (based in Ireland) the managers of the combined A+B entity get to choose a domicile. If they choose the United States, they are in effect choosing to pay relatively high American corporate rates—up to 39%—on all the overseas profits they repatriate; unusually, the IRS taxes income on a global basis. If they choose Ireland instead, they will have to pay a much lower tax rate (12.5%) on profits generated in Ireland, but the crucial bit is that they will pay only the local rate on whatever profits are generated in foreign subsidiaries—because Ireland, like most other countries, taxes on a strictly territorial basis.
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North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA; Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada–United States Free Trade Agreement between the U.S. and Canada.
Following diplomatic negotiations dating back to 1990 among the three nations, U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed the agreement in their respective capitals on December 17, 1992. The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.
After much consideration and emotional discussion, the House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993, 234-200. The agreement's supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, 61-38. Senate supporters were 34 Republicans and 27 Democrats. Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994.
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NAFTA's effect on United States employment
The North American Free Trade Agreement's impact on United States employment has been the object of ongoing debate since the 1994 inception of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. NAFTA's proponents believe that more jobs were ultimately created in the USA. Opponents see the agreements as having been costly to well-paying American jobs.
NAFTA's opponents attribute much of the displacement caused in the US labor market to the United States' growing trade deficits with Mexico and Canada. The trade deficit in goods (excluding services, which are typically a small surplus) rose from $2 billion in 1994 to $60 billion in 2015. According to the Economic Policy Institute, rise in the trade deficit with Mexico alone since NAFTA was enacted led to the net displacement of 682,900 U.S. jobs by 2010.
According to the Economic Policy Institute's study, 61% of the net job losses due to trade with Mexico under NAFTA, or 415,000 jobs, were relatively high paying manufacturing jobs. Certain states with heavy emphasis on manufacturing industries like Michigan, Ohio, Pennsylvania, Indiana, and California were significantly affected by these job losses. For example, in Ohio, Trade Adjustment Assistance and NAFTA-TAA identified 14,653 jobs directly lost due to NAFTA-related reasons like relocation of U.S. firms to Mexico.
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