Ex-Marine Tells It Like It Is:
U.S. Is Losing Its Strategic Electronics Industries
And The U.S. Government Encourages Their Departure. More information on the situation caused by the deluded thinking of free-traders.
U.S. printed circuit board makers didnıt suddenly forget how to compete, said Bartlett, whose companyıs revenues have declined from $20 million in 2000 to $9 million in 2003. Instead, Chinese companies have been able to produce comparable products at half the price due to unfair export subsidies and currency manipulation. “In high-tech industries, low-cost labor alone cannot create such price advantages,” Bartlett said.
This comment is interesting to me. Having visited a large keyboard maker in China whose employees were paid the going rate of $25 a week I was told that they were going to get rid of the cheap labor and use more reliable robots. I thought to myself, hell WE can do that! Contrary to popular belief China probably uses more robots than we do for this stuff. Yet when we automate to the same degree we still cannot compete.
The overseas producers produce. In the United States, corporations spend tons on R&D, marketing studies, golf outings you name it. Look at Maglev, the latest in transportation technology as an example. A test track in northern Germany was built nearly 20 years ago, but the Germans haven’t launched a commercial magnetic levitation line because of the cost. They researched it and then all agreed they couldn’t use the thing they developed.
Enter China
The maiden voyage of the maglev was applauded by a jubilant crowd of Chinese along the entire track, as uncontestable evidence that with this first commercial maglev route in the world, China has achieved the number-one rank of the world’s nations in, not only land transportation investment, but 21st-Century railroad technology.
The United States has pondered maglev, but we can’t figure out how we can develop a weapons system out of it before we build it. Then we had this big national contest, where cities and regions floated proposals down the Potomac into Washington and everyone involved attended Georgetown cocktail receptions and social gatherings while nothing got built. The Chinese were busy turning out product and investing our cash in their own maglev that we or the Germans couldn’t very well develop after spending all the money on the research. The Chinese are making a killing, they have maglev and are technically in a great position as manufacturers. We on the other hand, for the most part in the U.S. are stumbling around, making no sense in places like Iraq intoxicated by our power. Iraq might end up with a maglev that we get to pay for via the federal government, while we have Amtrak and a bunch of economically retarded airlines losing billions of dollars flying idiots around trading stories and selling political hope. We have drawings and plans for maglev, but unlike the Chinese we don’t have money for construction. We are spending that money rebuilding Iraq, after spending more money bombing the hell out of it. We are nation building, while the Chinese are maglev building.
Outsourcing is done to bring down costs, but not really increase production. Offshoring has little or nothing to do with production or these costs. Offshoring involves setting up a tax shelter by operating the corporate entity outside of the United States, in someplace without many taxes and banks that don’t ask a million questions about where you got the $30 Million in cash.
Companies are looking for advantages outside of the U.S., while at the same time forgetting about the advantages of being in the United States. It’s a big shell game, full of nonsense. There are way too many consultants out there designing goofy business structures and promoting this kind of nonsense.
Look at all of the companies from Asia and Europe operating in the United States. Sony has a big plant in New Stanton, Pennsylvania. We have companies here trying to go someplace else for competitive reasons and most of them don’t produce anything, they just want to not produce it in Asia and then not pay tax on not producing it by setting up some tax haven in the Caymans. Many consultants will borrow your watch to tell you the time and then walk off with the watch. Americans will buy millions of watches and American manufacturers will refuse to produce any of them, then we’ll complain about all the imported watches. If we produce the watches, we’ll run the plant for a few years and close it because the Swiss watches are better and the Chinese watches are cheaper. Can you buy an American watch today? Wasn’t John DeLorean working on designing watches and going back to the future? I was once at a bank that gave away watches if you opened an account with them, no questions asked!