The High Cost of Neglecting Manufacturing

manufacturing

The United States is a rich country. We have accumulated much abundance throughout our history and the majority of that wealth was created through our manufacturing prowess. American companies invented and produced vast quantities of the goods we needed, in addition to much of what the rest of the world needed.

Today, American-owned corporations manufacture less and less of the world’s goods each year while American consumers import more and more. This difference between the amount we import and export has created a huge trade deficit, which this year will likely approach $400 billion (that’s over $1 billion per day). This trade deficit is a drag on economic growth and is responsible for the loss of approximately 1.3 million high-paying manufacturing jobs in the past year alone.

The trade deficit is the most visible sign of America’s economic decline. However, there are other, less visible, signs that the era of American economic and political preeminence are coming to an end.

As our American-owned companies produce less, they become increasingly inefficient and uncompetitive. This leads to many of them going bankrupt or worse. In their weakened condition they become easy takeover targets by foreign-owned corporations. These foreign corporations, gorged with huge supplies of dollars generated through the trade surplus they run with us, have been gobbling up our productive assets by the bushel basket in recent years.

Already, much of Wall Street has been bought by Japanese, German, Swiss, Dutch, English, and other foreign corporations in the last decade.

In fact, the vast majority of foreign investment in the United States is used to purchase American assets, not invest in new productive facilities. This means that foreigners are not creating new jobs here for Americans, they are simply buying up our wealth-creating assets and exporting the profits back home.

Another reason why Americans should be disturbed by the decline of U.S. manufacturing is national security. As America’s manufacturing base has been whittled away in recent years, U.S. defense industries are becoming ever more dependent on foreign manufacturers for key components and materials.

Today, no American-owned company makes televisions. Very few audio and other advanced electronic products are produced here by American-owned companies. In fact, many of those products that claim to be “Made in the USA” are often only assembled here from components that are imported from overseas.

In addition to the electronics field, our steel industry is in a disastrous condition and is headed for the slagheap. Much of our steel is now imported and much more will be if current trade policies continue. This vital supply line could be cut off easily by our enemies in wartime.

Here are just a few more examples of vital defense-related goods for which we now have to depend on foreigners:

  • Laser diodes. These are essential in a variety of high-tech civilian and military applications. Virtually the world’s entire production comes from Japan
  • Ceramic packaging. This is essential in making many high-performance chips used in weapons systems. Ceramic packaging was in critically short supply during the Gulf War a decade ago because of the reluctance of Japanese manufacturers to supply the U.S. war effort
  • Ferrite. This material is important in many high tech applications. TDK of Japan supplies the U.S. Defense Department
  • Gallium arsenide. This is a semi-conductor material that is crucial for making high-speed chips needed in certain military applications
  • Titanium and carbon fiber. These materials are essential in many aerospace applications. Certain key stages in their production are dominated by foreign suppliers
  • Charge coupled devices. These are the seeing eyes on U.S. missiles. Their function is to lock on to the target and guide missiles to it. Foreign producers dominate the industry

It should be noted that as with many other manufacturing industries now dominated by foreign producers, the United States pioneered the production of most of the devices and materials listed above. Unfortunately, as imports flooded our markets in the 1980s and 1990s, U.S. producers one by one exited these industries.

We call ourselves a super-power. How strong are we when we can’t produce needed products to maintain our strength? We must reverse this trend. We must develop an industrial policy to create incentives for American companies to manufacture in America. We must invigorate strategic industries and prevent their sale to foreign owners. We should not allow ourselves to become vulnerable and depend on others.

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