Job Creation - YJ Draiman
Bring jobs to LA by investing in our neighborhoods, aiding small businesses, improving transit and infrastructure, and investing in education and technology.
Jobs and the Economy – solutions – YJ Draiman r6
As Mayor of LA, how would I create jobs? We have a tremendous amount of natural resources here in Los Angeles, which we need to develop. To put it succinctly, "You can not drill for American oil and natural gas in China, Saudi Arabia or anyplace else other than America."
The more domestic energy we produce, renewable and non-renewable, the more domestic jobs we create. Moreover, jobs in the exploration and production of oil and natural gas pay more than twice the national average. At the same time, the domestic energy we produce will increase R&D in renewable energy sources, thus, increase efficiency.
Just look how far we have come in the development of renewable energy and energy efficiency in the past 10 years. I intend to accelerate that trend, and to take advantage of every resource possible in technology and funding. As I stated many times; “Those who control the energy supply control whole continents”; “Those who control the water sources control life”.
Americans should demand products made in the USA. We can produce a better product with better quality at a competitive price. It is my intention to provide numerous incentives to retain businesses here in Los Angeles, and to offer those incentives to bring businesses back to Los Angeles.
Employment creates revenues and saves the government money and resources by taking the unemployed off the government subsidy and social services. It also creates the “multiplier affect”, which is a snowball of economic growth.
One of my top priorities is to ensure that we continue to develop and promote renewable energy sources. Many in the natural gas industry believe the day when renewable energy dominates our energy landscape is far off. I disagree. With American ingenuity, innovation and determination, the dawn of renewable energy sources can be upon us now.
What I propose is a "do-it-all strategy" in which we focus not just on developing renewable energy, but also on the development of our abundant fossil fuels. While further technology and innovation in building construction would need to be developed, such need would also provide more jobs. More importantly, our reliance on over-priced outside energy would be decreased resulting in positive economic growth.
I would promote the design of a thermal solar system that provides energy, heat and hot water. In addition, I would initiate a new and advanced fuel technology for vehicles such as hydrogen, natural gas and ultra-capacitors for energy storage. Los Angeles wastes an enormous amount of energy and work hours due to traffic congestion. I plan on an expedient advancement of our public transit system and devise systems to reduce traffic congestion.
In urban areas: roads, sidewalks, buildings and other structures prevent rainwater from being absorbed in the ground and replenishing the aquifers. It is time for us to compensate for that loss by collecting the rain runoff into retaining ponds. We need to implement the use of rainwater harvesting, gray water technology, collecting the billions of gallons of rain runoff into retaining ponds, desalinization projects powered totally by renewable energy (solar and wind combo systems) and other methods of conserving natural resources. As such, we would make existing renewable systems more cost effective and more efficient.
The result of my programs would be the increase of jobs, the decrease of energy and operating costs, and a reduction of our reliance on foreign oil. That in turn would result in decreasing the deficit and creating permanent jobs.
In short, the key to Los Angeles economic recovery is not an increase in taxes and fees. Rather, true long-term recovery will rely on the increase of efficiency and productivity; the reduction of bureaucracy; and the promotion of businesses and employment. All of which will instill confidence in our economy, generate greater revenues for the city of Los Angeles and other governmental entities.
American confidence in government is at an all time low. We no longer have the same level of faith in our institutions and leaders that we once had. Consequently, we are seeing a continued erosion of our outlook on the future. This outlook must change by initiating a massive and sound education program that produces innovation and technology.
We have an opportunity to jumpstart our economy, protect our environment and put our city on the path toward energy security through greater use of our domestic energy production such as natural gas. Our domestic energy production can serve as a foundation for our energy and economic independence. This path will enable us to develop the required innovation and production of other forms of energy sources.
To realize a course toward energy and economic security we must do what is necessary to instill confidence in the responsible development of our energy sources. We can use natural gas as a solid foundation on which to develop extensive R&D in renewable energy sources, and the efficient means to operate and maintain the mechanisms needed for such use.
Improving our educational system is the key to our economic survival. In a global, knowledge-driven economy, there is a direct correlation between engineering education and innovative progress. Our success or failure as a city will be measured by how well we do in providing the needed educational tools to promote innovation in all fields.
Leadership is not a birthright. Despite what many Americans believe, our city does not possess an innate knack for greatness. Greatness must be worked for and won by each new generation. Right now that is not happening. However, we still have time. If we place the emphasis we should on education, research and innovation, we can lead the world in the decades to come. Nevertheless, the only way to ensure we remain great tomorrow is to increase our investment in science and engineering today. In addition, we must invest in trade schools to train our future workers in the new and old technology.
We have to learn how to balance the need of the people vs. the need to protect the environment. Any extreme to either side is not good.
In today’s fast moving technologies, government as well as companies must learn to adjust and maneuver quickly to keep pace, or they will be out of business or incur deteriorating revenues and infrastructure. We must learn how stay competitive and resourceful to survive and thrive economically.
I submit: Leadership by example. I plan to cut waste, maximize productivity, reduce bureaucracy, increase efficiency and conservation in all city departments and assets, eliminate duplicating tasks and reward excellent performance and innovative methods of job performance. In addition, we have to use the Neighborhood Council’s more effectively; they are the eyes and ears of all the communities in Los Angeles. These are hard economic times; we must all put our shoulder to the task.
We must put all our differences aside and work together in harmony for the good of the people and the city of Los Angeles. Your vote for me will be one more step in this positive direction and it will be a win for all the people in LA.
Draiman's Plan for Job Creation
Draiman believes that businesses – not government – are the chief engine of job creation and economic growth in LA. With a particular focus on small and innovative businesses, Draiman will focus on creating an environment that helps businesses to thrive by ending redundant regulations, simplifying the way small businesses interact with City government, and opening City contracts to the best qualified rather than the best connected.
LA’s strength and economic vitality are directly tied to the health and livability of its neighborhoods – communities where people can live, work and stay. Creating healthy communities and neighborhood jobs and investments, require careful planning and systematic implementation. Draiman’s plan will make sure planning efforts are coordinated and backed by sufficient resources to deliver results.
Improve LA's Position as a Global Technology and Education Leader
Draiman knows that continued job growth means supporting innovation and investing in emerging technology and talent. Draiman will support the growth of the technology industry in LA, giving entrepreneurs and technology talent the support they need to innovate, grow and stay in LA.
A campus for technological innovation
Draiman will accelerate LA’s growth as a global hub of technology innovation and start-ups, supporting the establishment of a technology innovation hub to promote collaboration and help technology businesses succeed. Google revolutionized the "technology campus" approach to innovation by providing a centralized work space with access to like-minded innovators, venture capitalists and, most importantly, to good transportation options and great food. Draiman will work with local businesses and investors to create a similar campus in LA. The campus will be close to multiple transit lines and bike infrastructure. Space will be available for businesses that focus on IT and green technologies.
Market LA for the next generation of tech employees and entrepreneurs
Draiman is committed to attracting and keeping the next generation of talent in LA. Working with private sector partners, Draiman will launch an annual recruitment weekend where the best and brightest from city and regional universities are brought to LA for an introduction to local tech companies and the city – to recruit and keep the talent here and out of Silicon Valley. Not just students from the City Colleges of LA, UIC, Northwestern, DePaul and other local schools, but also from Champaign, Purdue, Washington University, Ann Arbor and Madison Wisconsin. The weekend will be built around LA Ideas Week, LA's first annual week-long platform of ideas and innovation. LA Ideas Week will take place at venues throughout the city, featuring great thinkers, doers, and innovators from around the world, descending on LA to help us see the future and to shape it.
Create a “LA Workers of the Future” program
Businesses choose to grow in LA because of a diverse and educated talent pool. Draiman wants to ensure that more LA Public School high school students are given exposure to - and preparation for - viable college and employment options. He will establish a 'LA Workers for the Future' program that partners private businesses with LA's high schools and community colleges, giving students career-specific training they need to create a direct path from school to the workforce or higher education in their chosen area of study.
In addition to their regular course of study, students will have access to classes in technical instruction that will include a curriculum jointly developed with the private sponsor. Each student will also have a guaranteed internship with the program's sponsor between their junior and senior year, and will receive an industry-specific credential or certification upon graduation.
Invest in a skilled workforce that meets employer needs
Job training programs work when they are tailored to the needs of employers, but too many programs are disconnected from employers or the skills and requirements of the workplace. Draiman’s administration will conduct a comprehensive review of all job training programs supported by the City, and require that they are coordinated, have clear performance metrics and direct links to real jobs and employers. As part of the review, Draiman will meet with the CEOs and leadership of the major employers in LA and ask them straightforward questions about what they need from job training programs to hire and retain more LA workers.
Increase support to small businesses by expanding and enhancing the Small Business Improvement Fund
Sometimes, even the strongest small businesses need financial help. Today’s tough economy and highly constrained credit markets have been particularly hard on small neighborhood businesses, making it difficult, if not impossible to invest and grow. Draiman believes in the economic potential of these LA businesses and is ready to help invest in their future by expanding and enhancing the Small Business Improvement Fund (SPIF.) SPIF is a program targeted at small businesses located in TIF districts. The program provides grants up to $150,000 to qualifying small businesses to invest in their facilities. Draiman will increase funding for the SPIF program by $15 million annually. He will increase the cap on grant awards to $200,000, expand eligibility for LA businesses, and allow for progress payments to grant recipients as projects are implemented and reduce match requirements to address the difficulty that many LA businesses are having accessing credit to finance needed improvements.
Modernize LA's Approach to Keeping and Growing Industrial Jobs
Industrial jobs are a critical part of LA’s diverse economy, but continued competition for these well paying jobs means that LA has to be ready to compete to keep and expand its industrial base. Draiman will make sure LA is ready, making the necessary infrastructure investments, helping with land assembly and financing and creating a tax and business climate that attracts and retains industry and jobs.
Establish an effective LA Manufacturing Participation Loan program
One of the biggest impediments to the growth and success of LA’s small and mid-sized manufacturers is the inability to access capital. With the tightening of the financial markets, loans for the purchase of new equipment and materials have become increasingly scarce. Start-up operations with minimal collateral and little credit history have been especially hard hit. While many current government loan programs (including the City’s existing participation loan program) provide borrowers with access to cheap financing, they are largely ineffective in generating new lending in today’s economy because they do nothing to minimize the exposure of risk adverse banks and other lenders.
Draiman will create a $25 million Manufacturing Participation Loan Program that will address this problem helping to free up desperately needed financing for the modernization of many LA manufacturers. Under Draiman’s program, the City will work with banks and other conventional lending institutions to provide subordinated financial assistance to small and mid-size industrial operations.
The City’s participation in any loan won’t exceed 30 percent of total project costs and will be capped at $1,500,000. Manufacturers with 800 or fewer employees will be eligible. Loans could be used for the installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings. Funds cannot be used for debt refinancing or contingency funding. Participating lending institution shall be responsible for reviewing applications for eligibility and setting terms.
Connect people to jobs
Affordable and convenient transportation is essential to provide access to all Los Angelinos to employment. Draiman’s transportation agenda will make the investments that make LA a more attractive place for job growth. From making LA the West hub of high-speed rail to extending the Rail Line to the outlaying areas, Draiman will improve commute times for residents, establish convenient transportation links to growing employment centers and create regional industrial and commercial development opportunities in and near the new transit stations.
Move beyond planning to upgrade LA’s and the region’s freight infrastructure
LA is a leader in freight transport. It stands as a major hub for the country, sustaining 25,000 jobs and nearly $4 billion in annual economic activity, but that leadership and the economic benefits that go with it are in jeopardy. Freight rail traffic is projected to double over the next two decades, far outstripping the capacity of LA’s and the region’s infrastructure. The congestion and freight rail bottleneck are not just an inconvenience for the businesses that use rail to move goods to market, they are a tremendous threat to LA’s economy that must be addressed or LA will lose its position as the national leader.
The LA Region Environmental and Transportation Efficiency Program (LREATE) is a first-of-its-kind partnership between federal, state and city governments, along with Metro, Dash, Amtrak and the nation's freight railroads to invest in capital improvements to increase the efficiency of the region's rail infrastructure. Draiman will provide the leadership to move LREATE from an innovative strategy to a fully implemented reality. He will lobby federal and state governments to fully-fund the initiative and push expedite its implementation.
Draiman also knows that we need to do more than just implement LREATE, we need to seize the economic opportunities that come from it and prepare for what happens after it. Draiman will make sure LA is ready – he will direct his administration to assemble large tracts of developable land, coordinate economic development planning and incentives, and implement complementary infrastructure investments to maximize job creation and retention. At the same time, he will work with other public and private sector leaders to establish a framework for long term investment and improvement in freight infrastructure and better coordination with passenger rail service as the demand for that service grows.
Reform the California International Port District
The Port District region is poised for industrial growth, but seizing the opportunity for growth will take effective leadership and institutions. The California International Port District is a major landowner. With a board jointly appointed by the Mayor and the Governor, the District manages both port operations and the industrial land and leases for private firms located on District property. The Port District has to be reformed and modernized to support industrial and environmental restoration of those areas of the city. Draiman will work with the Governor to make modernization of the Port District an economic development priority. He will commission a complete management audit of its functions and performance and establish clear qualifications for board and staff appointments and a detailed roadmap for making the Port and effective partner in the redevelopment of this critical region.
Enhance Industrial Revenue bonds
Industrial revenue bonds (IRBs) are tax-exempt financing vehicles typically issued by state or local governments to provide qualified manufacturing companies with an inexpensive form of debt. Under the recent American Recovery and Reinvestment Act, the applicability of IRB’s was greatly expanded to include activities beyond traditional manufacturing such as certain types of research and development and elements of warehousing and distribution. The new IRBs could be an important tool for economic revitalization, but they continue to be an unusable tool for many LA manufacturers looking to finance expansion due to unrealistic ceilings on total project costs. Draiman will lobby the federal government to reform the IRB law to promote urban redevelopment, increasing IRB caps on capital costs and streamlining requirements.
Overhaul Planning to Promote Economic Development in Every Neighborhood
Effective planning is the starting point for community development, but LA’s community planning efforts have been gutted, lack strategic focus and are ineffective. Community planning modeled after LISC’s successful New Communities program, needs to be implemented in a comprehensive way by the City. But plans only improve communities when they are implemented, and Draiman will make sure plans don’t just sit on the shelf. His administration will implement plans in a systematic and coordinated fashion to increase the impact, speed improvements and make dollars go further.
Make sure the City invests to make plans an implemented reality
Cities implement plans through land use and permitting decisions, strategic capital investments, provision of high quality services and creation of a supportive business environment for investment and job creation. Currently, the City has too many plans and not enough coordination and implementation. The City’s Capital Improvement Program, individual TIF Redevelopment plans, and the Community Development Block Grant Action Plan, allocate well over $3 billion annually, but don’t effectively coordinate that spending or define clear development and return on investment objectives for the dollars spent. As a result, opportunities are missed and accountability lost. As Mayor, Draiman will require that any plan must be accompanied by detailed multi-year investment strategy to get it implemented. He will direct Housing & Economic Development, Law and Budget to develop those strategies, and fully incorporate them into the City codes and regulations, the Capital Improvement Program, individual and city-wide TIF plans and the CDBG Action Plan.
Provide aggressive redevelopment leadership to help communities hard hit by the recession
Real estate values have lost 35 – 45% during the recession – much more in low to moderate income communities. LA’s most vulnerable communities are also plagued by high rates of foreclosure, unemployment, business vacancies and abandonment. The City estimates that there are approximately 25,000 vacant buildings and 12,000 to 18,000 vacant lots in LA. In communities hardest hit by the recession, there are severe barriers to private investment, and City leadership and action are essential. Draiman will make sure LA utilizes every tool possible – like land donations, demolition liens, and non-cash bids on delinquent taxes – to make sure investments are targeted and comprehensive, to give communities the greatest chance to redevelop and succeed. Draiman’s strategy will develop and implement plans for re-use of all buildings and vacant lots in the targeted areas from rehab and new construction, to adjacent neighbor land donations, parking improvements, community gardens and urban agriculture.
For example, Draiman’s plan to address food deserts will employ urban agriculture as an effective transitional use in communities hard hit by disinvestment. Draiman will increase support for urban agriculture by recognizing the important role that it can play in overall community development, systematically evaluating the potential of vacant lots and making more effective use of funds like the federal Neighborhood Stabilization Program and Community Development Block Grants to bring fresh produce, jobs and redevelopment to hard hit neighborhoods.
Make strategic capital investments and coordinate land assembly and disposition to spur development
Modern and efficient infrastructure and ready access to available land are essential to job creation and economic development, and produce the biggest economic impact when they are planned and implemented in a coordinated manner. Draiman will establish clear polices that set economic development metrics for infrastructure investments and land acquisition decisions, and he will report publicly how the City is performing.
Draiman’s plan for the Rail Line expansion demonstrates the benefits of this strategic approach. He will start by issuing an executive order that establishes clear and consistent principles for transit oriented development (TOD) – expedited permitting, set-aside of city-owned property to expand car sharing and bike parking, assistance with land assembly, expanded use of tax credits and loan guarantees, and identification of instances where the City will jointly invest with CTA to improve the transit system. The order will recognize the clear link between housing and transportation costs in keeping neighborhoods affordable, and will evaluate TOD improvements on their ability to reduce the combined cost of housing and transportation for LA residents. This policy will help to focus all investment – including in LA’s TIF districts – around developments that integrate station upgrades with mixed-use developments.
The Red Line investments will then be linked to other strategies like his plan to bring healthy food to underserved areas, and Draiman will coordinate infrastructure investments to spur development of new stores, making sites more attractive to developers and more convenient for customers. Grocery stores will be a critical part of his transit oriented development policy and a priority for new station developments as part of the construction of the Rail Line expansion.
Free Business to Innovate and Expand
LA’s bureaucracy and tax structure stand in the way of business growth and job creation. Draiman will target the regressive taxes that undermine business expansion and professionalize inspection and regulatory programs, making them fair and effective. Draiman will make it easier for businesses to understand their obligations and comply with the law so they can focus on the critical job of creating jobs and rebuilding LA’s economy.
Cut taxes that impede business growth
Too many parts of the LA tax code are impediments to growth. The City boasts the highest sales tax of any big city in the country, burdening consumers and making it harder for LA retailers to compete. In fact, LA lags behind the State and nation in retail jobs – losing sales and jobs to on-line transactions and businesses outside of LA. Draiman’s plan would cut LA’s portion of the sales tax by 20 percent – from 1.25% to 1% – while working with state legislators to expand the tax base by closing the loopholes that allow luxury services to go untaxed. Taken together with county action to return its sales tax rate to 2008 levels, these changes will reduce the sales tax in LA to 9% from the current 9.75% by 2014. Draiman plans to eliminate the gross revenue tax, which is an impediment to new business.
Smaller businesses are also burdened by a regressive percent-based natural gas tax. When gas prices skyrocket, the City reaps a tax windfall at the expense of LA businesses and homeowners. Draiman will convert the utility tax to a fixed per-unit fee, giving a break to taxpayers and reducing financial barriers to improving building energy efficiency. Draiman’s plan to triple energy efficiency upgrades will then be available so those businesses can get the financial support they need to invest in efficiency upgrades that cut energy costs and increase competitiveness.
For medium-sized businesses, the so-called “Gross Revenue Receips Tax” penalizes businesses in LA by adding a gross revenue tax for every revenue. LA’s economic well-being depends on its ability to attract, create and retain good paying jobs in critical sectors like manufacturing so that all Los Angelinos have access to employment opportunities. Taxing manufacturers and other employers for the jobs they create is bad, short-sighted policy and Draiman will put a stop to it. He has proposed a complete phase-out of the tax over the next four years, with a full offset of the revenue lost by reducing duplicative regulatory requirements and bureaucracy that further burden investment and job creation.
Cut bureaucratic red tape and streamline business permitting, regulation and inspections
LA businesses face a dizzying array of City regulations, fees and requirements that are difficult to navigate and far too often, inconsistently applied. The requirements can discourage innovation and job creation and can be especially daunting for small businesses. The system is too complex and regulation, permitting and enforcement are too splintered.
Draiman will make it easier to follow the law, streamlining the bureaucracy and professionalizing regulatory programs. He will issue an executive order that mandates a coordinated inspection process and requires department heads to work together to simplify and standardize licensing and permit processes. The complete review of regulatory programs will cover everything from simplifying permit forms to upgrading professional training and certification requirements for city inspectors. The use of nationally recognized codes and standards will be increased to modernize and simplify compliance. He will reduce duplicative inspections that create confusion and waste taxpayer resources and increase opportunities for self certification of compliance for routine matters by licensed professionals.
Make it easier to work with the City establishing an on-line, one stop for businesses
The vast majority of LA businesses want to comply with the law, respect the important and legitimate role of government in protecting consumers and don’t object to reasonable taxes and fees. But the City makes it too difficult for hard-working businesspeople to work with the City and follow the law. LA business is burdened by excessive paperwork and out of date City bureaucratic processes. Draiman will eliminate burdensome reporting requirements and establish easy, paperless reporting for all business permit, regulatory and procurement transactions within 24 months of taking office. All businesses will able to file for permits, certify performance, file bids and proposals for city work and check the status of City action electronically. Businesses will only have to use paper reports if they choose to do so. He will further enhance electronic services with and easy, smart phone application that will include filing compliance information regarding City inspections. Businesses will be able to use their smart phones to file their applications and submit information like photos of compliance as part of City inspections. The on-line system will be the backbone of a one-stop shop for business dealings with the City, and Draiman will appoint a strong advocate for businesses so they don’t have to waste time and money trying to navigate the maze of City agencies and requirements.
Overhaul LA’s broken procurement process
LA’s government is one of the largest consumers of goods and services in the city, processing contracts valued at nearly $1.6 billion in the last year alone. But the City’s procurement process is antiquated, slow, and not transparent. Draiman will work to professionalize procurement by increasing coordination of procurement efforts and dramatically expanding joint purchasing with the City’s sister agencies. Streamlining these disparate processes will result in common forms, standards, and reporting requirements so that companies – and small businesses in particular – face lower entry barriers to city contracts.
As part of Draiman’s overhaul, there will be a new LAFirst policy to mandate that procurements decisions will favor LA companies when all other factors are equal. Draiman believes that by using the purchasing power of the city, we can help small businesses stay and grow right here in LA.
"Made in USA"
"Made in USA" syndrome. It is no longer just where a product is made, it is also where is the company headquartered and are they using double Irish to avoid paying US taxes. I don't blame the corporations such as Google and Accenture and Microsoft for serving their taxpayers but I am blaming us the American citizen for not understanding the loss of this income to the US government.
Many items are made on US soil but the corporate headquarters where the majority of the jobs are located as now in Europe. The loss of marketing, accounting and administrative jobs is a huge loss to the US.
Celebrate made in US is not about just where a product is made, it is about the support of the US economy - the jobs it provides, the corporate taxes paid.
American citizens need to read this discerning trend but also consider the other ramifications of the company behind the product they are buying.
A purchase, even the tiny purchase such as bubble gum, chocolate, moisture cream can provide economic benefits to the United States.
Cocoa is not "made" in the USA, but the companies who market, distribute MAY be more American than some candy bars that you and I grew up with. The names in the game have not changed but in many cases, the corporate ownership HAS CHANGED.
Candidate for Mayor of LA 2017 – YJ Draiman
The Future is Made in America
American manufacturing has been decreasing for two generations – It is time to reverse that trend.
Measured as an engine for employment or as a chunk of the economy, American manufacturing has been retreating for two generations. The economy has shifted steadily from generating wealth by making things to counting on finance, insurance, real estate, and other white-collar activities to fuel growth. In 1947, manufacturing accounted for more than 25 percent of the nation's gross domestic product, while finance, insurance, and real estate produced less than 11 percent. By 2009, manufacturing had shrunk to 11 percent of the economy, while those other activities' share had doubled to 21 percent.
Moreover, the profile of American manufacturing has been transformed. Labor-intensive, low-value-added production has all but disappeared. The textile, leather, and apparel industries, which in 1977 accounted for nearly 7 percent of all manufacturing activity, shrank to less than 2 percent by 2008.
Increasingly, U.S. manufacturers have focused on producing capital-intensive goods: computers, electronic products, chemicals, and, soon, energy technologies. "The nuclear business has come alive again," said Eric Garrard, president of Wise Machine, whose shop is making coils for a nuclear reactor. "[It] may be the saving grace for a lot of the manufacturing firms."
But the new American manufacturing sector employs far fewer workers. Only 11 million people now make things in the United States, the lowest number since World War II.
Before the recent recession, however, the value of U.S. manufacturing output had reached an all-time high. The United States still hosts the world's mightiest manufacturing economy, producing 21 percent of all goods made globally. Japan is a distant second, at 13 percent. China, at 12 percent, ranks third.
The reason that the United States has remained the world's manufacturing leader while in relative decline is, in a word, productivity. U.S. manufacturers are the most efficient in the world. AK Steel, for instance, produces more steel today than in the 1970s, with a third of the workforce. This productivity has also helped fuel the rest of the economy. For every dollar that manufacturers spend directly, they foster another $1.40 in economic activity--a multiplier larger than for any other sector.
Manufacturing remains critical to American economic success. Exports of goods account for three-fifths of all U.S. sales abroad, paying the bill for imports of consumer products and oil. Without them, the U.S. trade deficit--at record levels before the recession--would be even worse.
Despite the recent boom in exports of goods, the nation's share of the world's manufacturing trade has been shrinking. China is predicted to overtake the United States next year as the world's leading producer of manufactured items measured by value. And the future looks bleak. From 1989 to 2001, the United States recorded a trade surplus in advanced-technology products, including biotech. Those are the same capital-intensive goods that economists have long argued would naturally be Americans' domain, as the production of labor-intensive wares, such as apparel, moved overseas. Since 2002, however, the U.S. has run a deficit in advanced-technology trade.
Other hindrances may lie ahead. Workers can produce only as much as their plant and equipment permit, and until recently, U.S. industrial production capacity had grown robustly--through good times and bad. In the past decade, however, companies have shown a reluctance to invest in new capacity, which has grown at a third of its 1990s pace. When the economy eventually rebounds, this may limit U.S. manufacturers in satisfying domestic and foreign demand.
Manufacturers are also an important source of innovation, accounting for more than two-thirds of all research and development conducted in the United States. Since 1999, however, American manufacturers have increased their research-and-development investments outside the United States three times as fast as at home.
Manufacturing wages also bolster the economy. Manufacturing workers get higher pay and more generous benefits--20 percent higher in 2007--than Americans in nonmanufacturing jobs, although wages have recently been growing slowly, if at all.
"If you give up on manufacturing," New America's Schwenninger cautioned, "you give up lots of future productivity gains--and gains in the standard of living."
INNOVATION IS THE KEY
The conventional wisdom is that the United States can thrive simply as a place for research and development--that the country no longer needs to actually make things. But this assumes that new products spring full-blown from the minds of laboratory scientists. The reality is that in most industries, the manufacturing process itself is a critical factor in developing radically new products.
In the County, the presence of multiple manufacturers has been self-reinforcing. "People don't understand how much manufacturers feed off each other," said Diane Sheets, the business-development manager of the County Community Development Corp. That symbiotic relationship is vital, she said, in prompting innovation and an entrepreneurial spirit.
For one thing, creating and sustaining a network of competitive manufacturing entails day-to-day interaction between suppliers and customers, which allows each to learn from the other. "The knowledge underlying emerging technologies requires person-to-person contact among manufacturing industries and between manufacturing and services," said Gregory Tassey, a senior economist at the National Institute of Standards and Technology. That interaction is harder when a company's supply chain stretches around the world.
New manufacturers also rarely emerge in a vacuum. They typically morph from existing businesses, when coworkers who think they can build a better gadget than their current employer go out on their own. In the 1970s, the founders of Penn United did just that, spinning off from Oberg Industries, another precision-tool firm down the road. This was history repeating itself: Oberg Industries, too, got its start when its founder left a larger local company in the late 1940s. If U.S. manufacturers move abroad, foreign entrepreneurs create these start-ups.
Consider what happened when the U.S.-based manufacturing of semiconductors and flat-panel displays for computers and televisions moved to China more than a decade ago, as Harvard Business School Professors Gary Pisano and Willy Shih have recounted. At first, American economists saw no cause for concern, arguing that these weren't part of the core manufacturing capability that the United States needed. The experience that the Chinese gained in making computer chips and screens, however, taught them how to process ultrapure, crystalline silicon into wafers and to apply thin films of the silicon onto large glass sheets. By so doing, they created a solar panel industry that has become a major international player.
"The United States cannot continue to rely on outdated economic-growth strategies that fail to understand the complexity of industrial technology and the synergies among supply chains," economist Tassey said.
METHODS OF REVIVAL
During the past couple of years, a national preoccupation with Wall Street's meltdown and the ensuing recession has crowded out any serious debate about how to revive American manufacturing. So has the customary aversion to government-directed industrial policy, often demeaned as "picking winners and losers."
These attitudes, however, may be changing. Despite the distrust of government that Americans displayed in the November congressional elections, four of five Americans support a national manufacturing strategy, according to a poll that the Alliance for American Manufacturing conducted last spring. Proponents of a government-led strategy say that it needs to be comprehensive, with tax cuts, helpful regulations, and interrelated efforts to preserve and rebuild core industries, the small companies that cluster around them, and their skilled managers and workers.
So far, the specter of such a strategy hasn't raised the tea party's hackles or provoked a political furor over government's proper role. Indeed, political antagonists have found points of agreement. Recommendations issued in November by a bipartisan budget commission suggest growing sentiment that the corporate tax rate--among the highest in the world--ought to be reduced to encourage companies to base their operations in the United States.
Similarly, Democrats as well as Republicans support a tax credit for research and development, which lapsed a year ago for the 14th time in the past three decades. The United States accounts for about a third of the world's R&D spending, far more than the second-place Europeans. Still, relative to the size of its economy, America’s spends on research and development ranks eighth among major industrial economies.
But R&D isn't enough. "An R&D policy should not be confused with a manufacturing policy," First Solar's Sohn warned. "The worst thing would be for us to tap into the ingenuity of our engineers and come up with products and manufacturing processes, and then go and put [them] overseas because that is the only place that it makes sense to make things."
Manufacturers gravitate to societies that show they want them, said Sohn, whose company operates factories in Germany, Malaysia, and Perrysburg, Ohio. "We were attracted to Malaysia," he noted, "because of their focus on manufacturing. It starts with a tone in the country. Politicians and businessmen there have acknowledged the utility and value of having manufacturing as a base, and they have established a set of policies that were attractive," including lowering taxes and providing access to low-cost capital.
Subsidies can dry up, of course, and tax benefits can be withdrawn. Manufacturers also look for stable--preferably growing--domestic demand. That's one reason First Solar built a factory in Germany and is expanding it. German utilities are required to buy electricity produced by consumers' roof-top solar panels
at a price set high enough to enable them to pay for its installation. Giving every consumer a chance to earn money as an electricity producer has sent German demand for solar panels skyrocketing.
Research and development alone won't assure a future for American manufacturing.
A vibrant American market for manufactured goods will be harder to achieve, given the likelihood of continual slow growth. The 2009 economic-stimulus package sought to encourage the market by requiring that projects it funded include substantial U.S.-made content. Many economists and foreign governments decried the provision as inefficient and jingoistic. Yet it enabled United Streetcar in Clackamas, Ore., to begin the first production of streetcars in America in more than half a century. "The buy-America provision took the risk factor out, so we could make the start-up investment," said Chandra Brown, United Streetcar's president.
Foreigners, too, can be lured into making in the United States more of what they sell to Americans and to the rest of the world. Because of the recent decline in the dollar and the slow growth in American wages, it's become cheaper in many cases to manufacture in the United States than in Germany or Japan. As a result, Volkswagen is building a plant in Tennessee, and BMW's factory in South Carolina has become the largest exporter of U.S.-built cars. The federal government might also attract and keep manufacturers by matching the investment subsidies and tax breaks that China and Singapore offer.
Lowering the value of the dollar would preserve and expand the U.S. manufacturing base by making homemade goods a better buy for Americans and foreigners. The dollar is estimated to be overvalued against the Chinese renminbi by at least 20 percent. Reducing that to zero, according to the Peterson Institute for International Economics in Washington, would create about a half-million well-paying American jobs, mainly in manufacturing.
KNOWLEDGE, SKILL, AND DESIRE
But something more is needed to assure a vibrant future for American manufacturing: a skilled workforce. That's a scarce commodity these days, even in the County. "Every kid who grows up here wants to go to college and work on Wall Street," said Wise Machine's Garrard, "not follow their fathers into AK Steel."
A local High School has a highly regarded vocational education program that teaches the latest in manufacturing techniques. Almost all of its graduates find jobs. But there are only 43 participants--more students choose training to become beauticians than machinists. "If we want to replicate the highly skilled German workforce," said Scott Paul, executive director of the Alliance for American Manufacturing, "we need a seamless four-year program that starts in high school and goes through community college or technical schools that prepare students for manufacturing jobs."
That proposal costs money. County Community College conducts extensive training programs for local manufacturers, but demand is down, partly because of cuts in the state funding that picked up much of the cost. Nationally, only 0.17 percent of America's GDP is invested in worker training. Germany spends nearly five times as much.
If skills are an obstacle, more money can help. But if it's desire that's lacking, all bets are off. In the past few decades, as manufacturing's share of the American economy and workforce has slipped precipitously, the perception has grown that U.S. manufacturing has no future. No doubt this has contributed, in turn, to the County youths' tepid desire to pursue a manufacturing career.
Yet in the County, where the surviving manufacturers are showing some spunk, these fears seem premature. "There will always be a manufacturing sector in the United States--there has to be one," said Frank Vargo, NAM's vice president for international economic affairs. "The question is what kind of manufacturing. And that is a matter for policymakers to shape."
In any event, there is reason to hope. "The future is still in our hands," said Kent Hughes, director of the program on America and the global economy at the Woodrow Wilson International Center for Scholars in Washington, "if we don't sit on them."
Complying with the Made in USA Standard