Metals Matter in NE Ohio and So Does Trade Policy

I appreciated the Plain Dealer’s 11/29/07 article on a recent “Manufacturing Brief”, published by Cleveland State University’s Center for Economic Development  (see this link).  There was some good news in the Brief, which also raised some questions NE Ohio should consider as we look at the state of US based manufacturing.

 

First, our metals sector is alive and well.  The sector is adding jobs, investment and economic output.  It ships most of its products from the region, and through these exports, brings new money into NE Ohio.  It is thus one of the most productive and valuable industry clusters in NE Ohio.  The region should coalesce better around opportunities to maximize the wealth and job creation potential of this 100,000 job cluster that includes primary metal-making, metal forming, tool making, metal plating, local metals industry associations, our network of community college and high school career-technical training institutions and our university research facilities.  

 

The Manufacturing Access to Growth and Innovation in Cuyahoga County and NE Ohio (MAGICC NEO) is a good first step at addressing the training and workforce development needs of the metals sector, which is targeting metals firms that hire machinists, welders and industrial maintenance workers.  The machinery industry is closely related to metals, as most machines are built of metal.  It too is expanding employment and output.  Contact us at WIRE-Net if you are interested in learning more about MAGICC.

 

But why are so many other of our key manufacturing sectors lagging in both employment and output?  One key factor is our antiquated trade policies.  Not only does our trade bureacracy look the other way when our so-called “trading partners” break the rules of international trade – for example, by pegging their currency to an artificial value of the dollar and giving themselves a significant cost advantage for products made in their county, but it is confused between its two jobs of both promoting trade and enforcing trade laws.  We seen China backsliding on protection of intellectual property too, not to mention a dangerous and cavalier attitude about product and workplace safety.  Finding better ways to enforce fair trade rules, and updating our trade policy to the global economic realities are critical to NE Ohio’s future and to our manufacturing economy.

 

John Colm, President and Executive Director

WIRE-Net

Are Ohioans Leery of Trade?

The Plain Dealer ran an editorial recently that bemoaned the positions on US Trade Policy taken by several Ohio elected officials.  The editorial presumed that the policy we have in place now is in fact “free trade”.  At WIRE-Net, we beg to differ.  Our letter to the editor follows:

 

October 23, 2007

 

Cleveland Plain Dealer

To the Editor

 

While several of your conclusions in your October 21^st editorial regarding trade policy and protectionism were on the mark, much of your analysis was off-base.  

 

US trade bureaucrats have done a poor job of enforcing existing trade laws; tougher enforcement is needed, as you noted.  Our economic and trade policies could do more to encourage manufacturing innovation, and a retrained, more highly educated and skilled workforce.  We also need smarter investment in regions of the country that disproportionately feel the brunt of a rapidly changing economy, like NE Ohio.  All of these were part of the Bush Administration’s “Manufacturing In America” report from 2004, but precious little has been implemented.

 

You failed to recognize, as economist Alan Blinder noted last Spring on your editorial pages, that trade can have negative results for nations.  30% of the manufacturing job loss in the US can be traced to the huge and ever growing foreign trade deficit.  Much is at stake, not just “propping up uncompetitive industries”.  The US has lost more than 1 million manufacturing jobs, and several million other jobs in “downstream” industries like financial and consumer services due in large part to the trade policies of foreign governments, and our own inability to counter them.  When foreign governments win a 40% cost subsidy due to their currency manipulation, US firms are not playing on a level playing field.  When foreign governments use non-tariff barriers at the docks to prevent US products from entering their markets, then we do not have “free trade”. This is nothing short of foul trade.

 

However, Ohioans are not “leery of trade”, as you put it.  What we are leery of is a trade bureacracy that fails to enforce the rules, fails to hold foreign governments accountable, and that has led to the loss of good paying US jobs in industries that don’t need propping up, just a level playing field.  Our trade policy must create jobs in the US, encourage innovation and investment, and protect our national security.  Our policy makers have failed in each case.  What Ohioan and US taxpayers want is a “third way” in trade policy, one between protectionism and so called “free trade”, one that builds on US strengths and assets, but also is not afraid to confront flagrant violators of international trade laws.

 

Call to Energize Manufacturing Career Awareness

This story from the Associated Press ran in about 60 papers around the country in late May.

 

South Bend Tribune

Article published May 21, 2007

'Not like the old days'
New high-tech manufacturing struggles to find workers.

 

THOMAS J. SHEERAN
Associated Press Writer

CLEVELAND -- Michael Starr was laid off in mid-career from his factory job and found himself back in the classroom to upgrade his skills -- for a new high-tech manufacturing environment struggling to find workers. Working in industry today "is not like the old days: get a hammer and fix it," the 45-year-old said.

Starr was laid off Jan. 15 from his sheet-metal working job in suburban Medina. He has enrolled in a Lorain County Community College program to take courses in computers, math, machining, industrial blueprint reading, advanced computerized numerical controlled milling and job-search and study skills.

When he showed up in class, "I was terrified, (like) training an old dog new tricks," he said.

The nation has shed 5 million manufacturing jobs in three decades, but higher-skill factory jobs like Starr's goal increasingly go unfilled as employers deal with applicants with poor reading and math abilities and a bad attitude about blue-collar work.The National Association of Manufacturers says the skill shortages have hurt production and the ability to meet customer demands.

And the pattern is likely to persist as the nation sheds old-style manufacturing to compete in a global economy.

The Federal Reserve Bank of New York, in a report last year, predicted a continuing trend of lower-skilled jobs lost to foreign competition and automation and giving way to a smaller number of higher-skilled manufacturing jobs.

The picture is similar across much of the nation's industrial base, with the Bureau of Labor Statistics reporting a consistent increase over three years in the rate of vacant manufacturing jobs, going from the 1.5 percent range to about 2.5 percent, or one in 40 jobs vacant.

The New York Fed report said the manufacturing share of the nation's work force has dipped from 20 percent in 1979 to 11 percent, with new manufacturing openings increasingly requiring fewer workers but higher skills, including math, communications, computer use and team work.The problem likely will worsen with baby boomer retirements. The Manufacturing Advocacy and Growth Network (MAGNET) organization in Cleveland estimated 800,000 manufacturing jobs in the Midwest will be vacated by retirements in the next six years. Laid-off workers often lack the skills needed in newer, high-tech jobs.

Hiring problems include job seekers with poor education -- sometimes high school graduates who can't read at an eighth-grade level -- an indifference to work issues, such as showing up every day, and the feeling that manufacturing is dirty work without a future.

There are indications that high-tech investments have created manufacturing jobs.

The nation's manufacturing job sector grew by 4.5 percent, on average, in 2006, while the U.S. economy expanded 3.1 percent, the National Association of Manufacturers said. U.S. manufacturing was helped by increased exports and more investment.

In a 2005 report, the association said skill shortages "are extremely broad and deep" and had affected 80 percent of the more than 800 companies it surveyed. The findings remain consistent for 2007, the group said.Adam Fekete, 17, hopes an innovative high school program in Cleveland will give him the 21st century skills needed to become a third-generation blue-collar employee working in manufacturing and computers.

Fekete, son of a sugar refinery worker and grandson of an autoworker, is one of 118 students enrolled in a manufacturing program at Max S. Hayes High School overlooking Lake Erie in a gritty Cleveland neighborhood where small, high-tech plants sit alongside locked factories.

The program has a rigorous curriculum, including calculus, chemistry, physics, robotics competitions and rotations in computer-aided design and drafting, computer numerical control machining, robotics and engineering welding.

The school encourages good work habits by letting younger students pair up with more studious older students, like those who watched Fekete work in an area that looks like a shop floor.

A partner in the school program, the industry-supported WIRE-Net organization, tries to ease the transition for less-skilled workers to land a good-paying manufacturing job.The nonprofit organization offers vocational training with a strong dose of life and job skills, like acting responsibly on the plant floor -- meaning you won't have a supervisor standing over you all the time like your grandfather may have. And you won't be assigned to run the same machine for 40 years.

Newcomers must be ready to keep improving their skills and know how to do more than one job, according to John P. Colm, president and executive director of WIRE-Net.

"There's a future but, again, you have to be smart. You can't sit on your high school diploma," Colm said. "Manufacturing is far from dead. It's changing. Every part of our economy is changing."

 

 

Manufacturing Careers Showcase & Shoreway Classic Car Show Attract Thousands

From the Cleveland Plain Dealer:

Good Deeds Car show benefits trade education

Tuesday, May 22, 2007

It's always nice to see manufacturers, school officials, government and auto enthusiasts come together for a worthy cause. That's exactly what happened recently at the Max S. Hayes Career and Technical High School's Career Opportunities Showcase.

"Basically, this was not about cars, it was designed to engage students from the Cleveland City Schools who are in grades 7 through 10 to get them interested in technical and trade education," says David Mallie, president of D.A. Motorsports. "Max Hayes is the only trade school in the Cleveland system and it's only at about half capacity. So we put together an event where we invited students in those grades to come to Max Hayes with their parents to learn about technical and trade education."

Certainly, trade education and touring Max S. Hayes' facilities in and of itself would pull in some people, but even Mallie acknowledges that more was needed to pull in the crowd.

 

"We realized we needed something with a little more excitement, so we put together the Cleveland Shoreway Classic," Mallie says.

The area from West 44th through West 49th was blocked off and RTA diverted on Saturday, May 12 from 11 a.m to 6 p.m. The show included race cars, specialty vehicles, classic cruise cars and bikes of all shapes and varieties. More than 150 trophies were given out including two for Best of Show in car and bike categories.

"We also had Larry Nance who had his race car on hand, and was there signing autographs," says Mallie. "When Larry found out this event was going on at Max Hayes, he was particularly interested because he went to high school for automotive mechanics and then went to Clemson for industrial welding. He took trade education throughout his scholastic career because he thought he was going to be a mechanic."

After being a standout with the Cleveland Cavaliers, Nance went on to a career in automotive racing. He now owns Larry Nance Racing.

"Mayor Frank Jackson was also there for about 45 minutes as was Tracy Martin of the Cleveland City Schools," Mallie adds.

Best of all, the event exposed Cleveland City School students to the many career opportunities available in a wide variety of industrial trades - the same trades that are the backbone of our local economy.

"In addition to the show, students saw the many career opportunities in building, construction, transportation, welding and machining trades - which were all among the stops on their tour," says Mallie. "After the tour was over, students received a packet of information and then went to a manufacturers' showcase where they were shown various products made by local companies. Here they could see what they might be making if they chose a specific career path such as machining. They also found out what company they might be working for and what they may be making."

The event was a resounding success.

"We far exceeded our goal of the open house, which was to bring in some 250 new freshman for the 2008 class," Mallie says. "Between the time of putting on the event and right now, we have more than 275 students pre-registered for fall classes - and that number is still growing."

Mallie stresses that D.A. Motorsports simply produced the show.

"A lot of credit has to be given to the Westside Industrial Retention and Expansion Network (WIRE-Net), the organization responsible for underwriting the event," he says. "But we also had a large number of other partners who really stepped up to the plate."

While proceeds from the entrance fee for the auto show helped to support the event, many organizations went that extra mile to ensure the event's success, adds Mallie.

Special thanks go out to: D.A. Motorsports' Jim Fagan who went above and beyond as director of operations for the event; Max S. Hayes Principal David Volosin; T.E.A.M. Academy's David Mikita; Cleveland Municipal School District's Tracy Martin; Mayor Frank Jackson; Councilman Matt Zone; Larry Nance of Cavaliers fame and Larry Nance Racing; CORNWELL TOOLS; Advance Auto Parts; Steve Legerski of the Grand Prix of Cleveland; Mr. Gasket; Time Bandit Racing; Jergens; Talan Products; Criterion Tool; The Great Lakes Towing Company; Midwest Box; National City Bank; The Cruisin' Times Magazine; Cleveland Public Power; Dominion; Alcoa; Dairymens and Summers Rubber, among others without whose time and support the event wouldn't have been possible.

 

Ohio Needs a New Approach to Trade Policy

by Gordon Barr, President, NewKor, Inc. and Chairman, NE Ohio Campaign for American Manufacturing. 

 

The Plain Dealer May 24 editorial (“Clearing the way for trade”) regarding the recently foreign trade deal between Congress and the Bush Administration, concluded that the deal “appears to make sense for both parties and for the American people”.  However, appearances aren’t always what they seem.

 

This plan will do no more to create US jobs than did NAFTA.  The US is not enforcing existing regulations, so how will we enforce abuses in thousands of new Chinese and east European factories?  And contrary to what appearend to make sense then, China’s entry into the World Trade Organization has netted the US no additional jobs, instead displacing production and nearly 1.8 million US jobs since 2001.

 

Officials like Senator Sherrod Brown, Congresspersons Betty Sutton, Zack Space and over 25 others were elected because they see a fundamental flaw at the core of US trade policy.  Look no further than the all-but-hollow-shell of Hoover in Canton and you can see it is far from apparent how Ohio voters will find any sense in this deal that learns so little from past experience. 

 

Americans want two things from our foreign trade policy.

 

First, Americans want a trade policy that creates jobs.  Foreign protectionism creates competitive advantage that has put US manufacturing companies and workers on the endangered species list.  If China had been effectively pressured to stop manipulating their currency, Hoover vacuum cleaners and other US products would have a cost advantage of between 25-40% working for us instead of against us.   This is the hidden “currency tax” on US made products. 

 

Second, Americans want a level playing field.  In our current system, everything from intellectual property, to the “unofficial” red tape that stalls US imports at the dock, and currency manipulation are all deployed to protect foreign industries, jobs, and markets and keep US made goods and services out.  Foreign protectionism in China, Korea, Japan and elsewhere is rampant and it is costing Ohio jobs, while our markets are flung open to the world.

 

Here are two immediate actions Congress should take now to get our Trade Policy on-track: 

 

1.      Pass the Hunter-Ryan Fair Currency Act, giving us the tools needed to hold accountable non-market economies, like China, that undermine the competitiveness of US made products through currency manipulation;

 

2.      End Fast Track trade authority.  The Congress should end the President’s Fast Track Trade Authority. Given Washington’s penchant for wrongheaded foreign trade deals, a “time out” on further trade agreements makes sense until we can build a new approach to US trade policy for the 21^st century.

 

A trade policy based on fairness, combined with a commitment to growing our own manufacturing base (as the Chinese, Germans, Koreans and every other nation does), will allow us to demonstrate that the US economy is the greatest in the world, one that works to the benefit of communities, workers and investors across the nation. 

 

Give us a level playing field.  As American manufacturers, we can do the rest.

 

Manufacturing a Break in the Weather.First Quarter Thoughts on US Manufacturing

I was recently interviewed by a writer for the Cleveland-based COSE Update for an edition they are doing on manufacturing.

The interview started off with the usual questions related to the view that “that manufacturing is dead”. We spent a few minutes correcting that misperception. Manufacturing still represents roughly 19% of northeast Ohio’s jobs and roughly one-third of its gross regional product. So much for being “dead”.

WIRE-Net staff have visited over 140 unique manufacturing companies (i.e., no repeat visits in that count) over since September 2006, nearly all located in the City of Cleveland. Roughly 23% of those visists were with companies that were expanding in one way or another: buying property they formerly rented, moving so they could expand, adding equipment, or hiring new staff. That amounts to 32 Cleveland based companies expanding in the manufacturing sector just in the last few months.

According to the US Federal Reserve, factory output declined slightly in the Sept-October 2006 period, due primarily to slumping automotive output. Put differently, output in everything but automotive improved.

Industry Week reported in December of 2006 that there were nearly 400 mass layoffs (of more than 50 employees) in manufacturing. However, 67% of the mass layoffs were in non-manufacturing sectors of the economy. Guess the “BOE” (balance of economy) is dead and dying!

Timken is adding almost 80,000 square feet to their Harrison Steel operation in Canton, in a deal they put together with Daido Steel. This will improve Timken’s position with the automotive transplants.

Companies need two things to survive and thrive, and neither is simple nor easy.

• First, a solid strategic plan that is well executed; and
  
• Second, a receptive political environment that allows the individual US based firm to compete fairly here and around the world.

To the seond point, the November election was a wake-up call for the Bush Administration and many Democrats, and led directly to the US Trade Rep filing a major “export subsidy” case against the Chinese government before the World Trade Organization . Look for that complaint to go nowhere fast.

Meanwhile, mainstream Democrats (like Charlie Rangel of NY, the influential head of the House Ways & Means Committee) are horsetrading around the President’s Fast Track Trade Authority, which expires this June. They are getting a receptive ear to include tougher rules on currency manipulation, labor and environmental protections in new trade agreements. This reminds me of similar deals that the Fair Trader Congresspersons made with former President Clinton during the NAFTA negotiations, and that resulted in nothing productive. Lets hope the “surge” of new Fair Trade reps elected to both the House and Senate in November stand firm and learn from the NAFTA failure. Some 39 of 42 newly elected Congressional reps signed a letter recently, stating that trade policy was a major issue in their election, and that the status quo as far as trade policy would not be acceptable.