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September 26, 2010

Repatriating Jobs

By Edward Bernard Glick

One of the ways we can end the current "jobless recovery' is to repatriate as many former U.S. manufacturing jobs as possible, as quickly as possible.

In the 1970s about a quarter of our workers made their living by making things within our borders. Usually, they earned enough money to enjoy a middle-class lifestyle.

Today fewer than 10 percent of Americans work on a factory floor. Even if they have made successful transitions from blue-collar to white-collar employment, they generally earn less than they did when they worked  on the factory floor.

When I lived in Asia in the 1990s, there were few U.S.-made products to be found there. But neither did I find many U.S. products when I moved back to the States to retire. My jeans were made in Indonesia. My gloves were made in the Philippines. My storm coat was made in Sri Lanka. My other clothing was made in Macao, India, and Pakistan. My computer was made in Singapore. My calculators, most of my sweaters, my hooded jacket, my goose down vest, my alarm clock radio, my electric mixer, and my exercise machine were all manufactured -- and manufactured well -- in China. 

There are exceptions, of course. The United States still produces sought-after airplanes, weapons, earthmoving equipment, and farm machinery, for example. But in the main, most of our workers now toil in the service sector, and that is the rub: 

This country cannot remain great if most of its workers push paper or conceive, design, and assemble what others produce for it overseas. 

Without domestic manufacturing, the private sector keeps offering our workers fewer and fewer jobs at ever lower salaries. The result will be that more and more of them will end up either on the public's dole or in the public's prisons. Thus, before our businessmen send jobs abroad, they must weigh economic benefits against social costs.

Moreover, since two-thirds of our GDP is consumed in the United States, before Americans can buy, they must first be able to earn -- solidly and steadily. 

One firm that has successfully repatriated jobs back to America, and is glad it did so, is Peerless Industries. Its plant used to be in China, but now Peerless manufactures its entire product line in a 318,000 square-foot building near Chicago. 

Michael Campagna, its president, explains: "The unit price of the [overseas] product is enticing. But when you include the inventory-carrying costs, the freight costs, and all the things it really takes, it may not pencil out. [In Illinois] we control the process, we control the quality, we can react to customer demand faster because the manufacturing is here. We're tightening up our processes and bringing costs down every week." 

Like all firms operating in the global marketplace, Peerless has to compete on price and quality. It realizes that its wage scales will never be as low as those in Asia, nor should it be, for the productivity of American workers is the highest in the world. Despite the salary differential, Mr. Campagna and his employees have proven that "Made in the USA" can once again be a symbol of the highest quality.

There is a caveat, however. For job repatriation to spread to other industries and to other regions of the country,  Americans will have to accept this tradeoff: somewhat higher consumer prices in return for more domestic jobs and fewer taxpayer outlays for unemployment insurance, welfare payments, jails, and the like.
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