Transcript Manufacturing and Trade

Saving American Manufacturing
Why activism is essential
The Manufacturing Sector
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By itself – the 5th largest “economy
globally
Employs 14.3 million directly, millions
more indirectly. (Impacts 44 million jobs)
Consumes over 60% of R&D in U.S.
Is the country’s engine of growth and
wealth
U.S. Manufacturers Have
Suffered Massive Job Losses
In Millions of U.S. Manufacturing Jobs
18
17
16
15
Source: Bureau of Labor Statistics, Series CES3000000001.
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
14
U.S. Manufacturing Disadvantages
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Corporate tax rates and tax policy – 5.6%
Litigation costs – 3.2%
Regulation costs – 3.5% or more
Health care/other benefits – 5.5%
Other (energy policy, etc) – 4.6%
The United States’ Current Account
Deficit
$100
Dollars In Billions
$0
($100)
($200)
($300)
($400)
($500)
($600)
'82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
U.S. Trade Balance in Advance Technology
30
20
Billions of $
10
2002
0
1999
-10
-20
-30
Source: U.S. Census Bureau.
2000
2001
2003
Currency Intervention and
Manipulation
Devalue your currency to:
* gain competitive advantage
* increase your exports
* decrease your imports
* attract investment
* create jobs
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Pic of China
© 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.
Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.
U.S. Trade Balance with China
1992
0
-20
Billions of $
-40
-60
-80
-100
-120
-140
Source: U.S. Census Bureau.
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
© 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.
Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.
China and Japan Set the Pattern
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Malaysia – 52% in 1997-1998
Thailand – 60% in 1997
Indonesia – 285% in 1997-1998
Russia – 485% in 1998
Egypt – 40% in 2003
Manipulated Currency Reserves
AWASH IN DOLLARS
Asia’s growing foreign reserves, in billions of dollars
Country
Year-End 2003
$673.5
Japan
$403.3
China
Taiwan
South Korea
Hong Kong
India
Singapore
Malaysia
Thailand
Indonesia
Phillipines
Source: Reuters
% Change From 2002
$206.6
$155.4
$118.4
$100.6
$96.3
$44.9
$42.1
$36.3
$16.7
43%
41%
28%
28%
6%
43%
17%
30%
6%
15%
5%
The Effects of Intervention and
Manipulation
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On Manufacturing
On Steel
On Other industries
The Dollar Goes Up
Manufacturing Profits Go Down
28
130
Broad Real Dollar Index
(right scale)
24
115
20
100
16
85
12
70
8
4
Profit Share of National Income
in Domestic Manufacturing
(left scale)
1995
1996
1997
1998
1999
55
2000
2001
2002
Sources: Federal Reserve Statistical Release H.10; U.S. Department of
Commerce, Bureau of Economic Analysis, National Income and Product Accounts
40
Overvalued Dollar Devastates U.S.
Manufacturing
Change in:
Stable Dollar (‘91-’96)
Strong Dollar (’97-’02)
Trade Deficit
- $176 billion
- $468 billion
Imports
$800 billion
One Trillion Dollars !
Exports
+ $204 billion
- $80 billion
“Six Years After” Coalition for a Sound Dollar March 2003
150
When the Dollar goes
up so do US Steel
Imports
35
140
30
Steel Import Share
(right scale)
130
25
120
20
110
15
100
10
Fed’s Broad
Real Dollar
(left scale)
90
80
1995
1996
1997
1998
1999
5
0
2000
2001
2002
Sources: Federal Reserve Statistical Release H.10; U.S. Department of
Commerce, Bureau of Economic Analysis, National Income and Product Accounts
Overvalued Dollar Hits U.S.
Agriculture
Change in:
Stable Dollar
(‘92-’96)
Strong Dollar
(‘97-’02)
Exports:
Up $20.9 billion
Down $2.6 billion
Imports:
Up $9.2 billion
Up another $7 billion
Trade
Surplus:
Rose to $27 billion
Fell to $11 billion
Investments Are
Down …
$37 Billion
Status Report on the Dollar Issue
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Administration actions to date
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“Jawboning”
Assigned special treasury representative to
China situation
Has offered technical support to China to deal
with loan problems, banking infrastructure
problems, economic policy
China is sending mixed messages
Status Report on the Dollar Issue
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Industry reactions generally skeptical to highly
negative on impact of administration efforts to
date
Mission is to keep the heat on the issue – a
business coalition was formed to pursue trade
law remedy for the currency situation
A 301 trade petition was filed to formalize the
issue and provides leverage to counter Chinese
currency intervention practices (petition
rejected)
Nucor Trade Position – Trade Laws
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Background
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Prior to 1997/98
The Impact on Nucor of the Beam Case
The “201” Case
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What is a 201
Trade law abuse prior to 201
Results of 201 (even though terminated early)
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Curtailed illegal trade
Stabilized markets
Fostered environment for consolidation
Created mechanism for global subsidy negotiations
Trade Law Reform
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What are the weaknesses in current laws?
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Repeat dumping (country/product switching)
Major offenders provided special consideration that
encourages repeat behavior
The WTO “legislation” problem
What are the solutions?
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H.R. 2092 and S. 136 (Berry/Lincoln)
H.R. 3716 (English), S.2212 (Collins, Bayh)
H.R. 2365 (English, Levin, Houghton, Cardin) and S.
1258 (Bayh) & S. 676 (Baucus) and H. Con. Res. 243
(Levin)
Other Trade Related Reforms
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Import Monitoring, Licensing and
Enforcement
OECD Update
The “Byrd Bill” (or CDSOA)
What Can YOU Do?
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Alabama can be a pivotal state in the
outcome of these issues.
How?
The issue and the elections
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97% of the state’s voters say that the economy is an
important issue this election year
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Almost 20% of Alabama workers are in manufacturing
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Almost 74% of eligible voters are registered (2.4 million
out of 3.2 million)
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Average Alabama voter turnout: 60%
Your vote can make a big
difference
For example
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1,500 Nucor employees live in Alabama
Voting power – 1,500 people times 1.7
registered voters per household = 2,550
votes
537 votes -- The margin of victory in
Florida in the 2000 electoral college vote
How can I make a difference?
Four Simple Suggestions
Ask your elected officials how they are actively
opposing currency manipulation and other unfair
trade practices
2. Ask your local officials to pass resolutions and to
write your congressional delegation to urge
immediate action
3. Spread the word – to friends, business people,
your community – on the negative impacts of
unfair trade, currency manipulation
4. Register to vote. Vote for candidates who will
stand up for U.S. jobs
1.
A Survey of Alabama Voters
A summary review of the issues,
their importance to voters and
their potential influence on
candidates and races in 2004
Profile of the survey sample
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100% are registered and likely voters
Race
Employment Status
Other
3%
Unemployed
5%
Black
21%
Retired
28%
Full Time
54%
Political Party
Don't Know
3%
Part Time
12%
Democratic
24%
Independent
27%
Republican
46%
White
76%
Identify the one or two most important issues that
the state government should deal with.
Jobs/Unemployment
23%
19%
15%
Education/Schools
Crime/Drugs
12%
Medicare/Medicaid
19%
Miscellaneous
Identify the one or two most important
issues that the federal government should
deal with.
War
24%
Terrorism
13%
12%
Economy
8%
Health Care
17%
Miscellaneous
Rate the importance of these issues in determining
your vote for president in 2004.
Taxes
65%
28%
7%
5%
Iraq
76%
17%
2%
Jobs/Foreign
Competition
4%
69%
24%
3%
5%
Education
Healthcare/Medicare
70%
25%
68%
25%
6%
1%
2%
Terrorism/Security
81%
16%
1%
3%
Economy
Very Important
80%
Somewhat Important
17%
Not Important
Don't Know
Have free trade agreements (NAFTA, WTO)
been good or bad for the U.S.?
Don't Know
12%
Bad
40%
Good
20%
Mixed
Results
28%
Has the emergence of China as economic
superpower been good or bad for the U.S.?
Don't Know
12%
Bad
38%
Good
18%
Mixed
Results
32%
Do you agree with foreign governments “pegging”
currencies to U.S.$, making foreign goods less
expensive, and exporting U.S. jobs?
Agree
18%
Don't Know
19%
Disagree
63%
Do you agree or disagree that “outsourcing”
of U.S. service jobs is inevitable and good
for Americans?
Don't know
11%
Agree
18%
Disagree
71%
For each: A major reason, minor reason, or not a reason
for U.S. job losses to foreign competitors
Foreign
subsidies/incentives
48%
U.S. labor unions
48%
25%
20%
7%
Weak corp.
leadership
47%
26%
19%
8%
Foreign health/enviro
standards low
Consumers put price
1st
Investor/CEO put
profit 1st
30%
65%
19%
59%
21%
79%
Foreign pay much
lower
Major reason
9%
85%
Minor reason
Not a reason
13%
9%
15%
7%
4%
13% 4%4%
6% 5%4%
Don't Know
In today’s economy: Are you worried about
a major wage earner losing a job?
Not
Worried
55%
Worried
44%
Don't Know
1%
Alabama voters were asked to rate how well
national, state legislatures have done their jobs
“lately”
Alabama State
Legislature
29%
47%
17%
7%
1%
27%
U.S. Congress
43%
24%
4%
2%
Excellent
Good
Fair
Poor
Not Sure