US Policy Changes Vol.58 (Trade Vol.6 – Manufacturing)

Here are articles on trade and manufacturing. Excerpts are on our own.

Can Wilbur Ross Engineer a Turnaround at Commerce? (1/18/2017) | Daniel R. Pearson @thehill @CatoInstitute
… China’s expansionary steel policies have made it the world’s largest producer and exporter, leading to depressed global prices. In response, U.S. steel mills have sought more than 160 anti-dumping and countervailing duty measures to restrict imports of a wide variety of steel products.
Those extra import duties are intended to offset unfair trade, and there’s little doubt that Chinese exports are unfair. …
…since the Smoot-Hawley Tariff Act of 1930 was being unwound. The United States has become, in essence, a high-priced island in an ocean of low-priced steel.
The problem is that an increase in revenues for steel mills means an increase in costs for the many companies that use steel as an input. …
…value added to the economy by iron and steel mills amounted to $36 billion in 2015. Manufacturers that utilize steel as an input generated value added of $1.04 trillion, almost 29 times larger.
The disparity in employment is even greater. Iron and steel mills employed140,000 workers in 2015, but manufacturers utilizing steel as an input employed 6.5 million, or 46 times more. …
…he bought Bethlehem Steel, Weirton Steel and LTV Steel to create International Steel Group (ISG). He later sold ISG to Arcelor-Mittal. ISG appears to have benefited from steel import restrictions, so Ross knows that protection can be convenient for U.S. firms. …
However, he also has owned multinational businesses, including International Automotive Components Group (IAC), with 20 facilities in nine countries. …

Automakers Are Global Companies, Not National (1/3/2017) | @snlester @thehill @CatoInstitute
… What if other governments begin pressuring their companies to not open factories in the U.S.? Will U.S. companies be at a disadvantage against their foreign competitors that have greater flexibility to produce wherever is most efficient? …
… Total U.S. employment for Ford is about 43,000 in the manufacturing sector, but Ford employs 123,000 people worldwide in 51 different production facilities.
As for Toyota, while there are 16 Japanese production facilities and about 70,000 Japanese employees, Toyota has overseas employment of about 166,000. …
… A 35 percent tariff on Mexican imports, a 10 percent across-the-board tariff, or tariffs on specific U.S. companies that produce abroad would bring legal and political chaos to a globalized system that provides enormous benefits to people around the world. …

Will Dollar Strength Trigger Intervention in 2017? (12/30/2016) | CARMEN REINHART @ProSyn
… In the first half of the 1980s, following the Federal Reserve’s record interest-rate hikes, the dollar appreciated by almost 45% against other major currencies. As a result of the strong dollar, the US lost international competitiveness and the trade balance sank to record lows in 1985.
…the Plaza Accord, which my colleague Jeffrey Frankel has described as probably the most dramatic policy initiative in the foreign-exchange market since President Richard M Nixon floated the dollar in 1973. …
…unlike 1985, in a scenario where the euro survives its current challenges, it will not be the Bundesbank that sits at the table in 2017. From the vantage point of the European Central Bank, which is coping with another round of distress in the periphery…

Global economic forces conspire to stymie U.S. manufacturing (12/29/2016) | @davidrdollar @thehill @BrookingsEcon
An obvious one would be a steep carbon tax used partly to fund infrastructure and partly to reduce the fiscal deficit. Reducing the deficit, other things equal, would reduce interest rates, lower the value of the dollar, and support tradable sectors, such as manufacturing.
Third… It is one of the curious laws of economics, however, that an import tax is equivalent to an export tax. Protecting the import-competing industries will indirectly disadvantage our export industries, many of which are manufacturing industries, such as aircraft.
… Assuming that we want more investment, the trade deficit can only decline if there is an even larger increase in national savings. …
In summary, it is extremely unlikely that any set of U.S. policies could reverse the long-term trend for manufacturing employment to fall as a share of the labor force…

Five ways the Maker Movement can help catalyze a manufacturing renaissance (1/4/2017) | @markmuro1 and Peter Hirshberg @BrookingsInst
…“new industrial revolution“…
That approach would embrace the Maker Movement as a deeply American source of decentralized creativity for rebuilding America’s thinning manufacturing ecosystems.
…as a new generation of designers and entrepreneurs has employed online tools, 3-D printing, and other new technologies to “democratize” manufacturing and reinvigorate small-batch production and sales.
Two years ago, 100 mayors signed a Mayors Maker Challenge to bolster making in their communities, and now, the just-published book “Maker City: A Practical Guide to Reinventing Our Cities” reports how these strategies are working across the nation. Long to short, the story here is that the Maker Movement isn’t just about reviving manufacturing in cities (though it is doing that). In addition, the movement is proving that anyone can be a maker and that genuine progress on the nation’s most pressing problems can be made from the bottom up by do-it-yourselfers, entrepreneurs, committed artisans, students, and civic leaders through what our colleague Bruce Katz calls “new localism.” That’s both empowering and a quintessentially American story, one that de Tocqueville would immediately recognize, and that Donald Trump might even like. …
Start organically
…Urban Manufacturing Alliance…
Make space for makers
…to organize a Maker Faire that convenes a region’s enthusiasts to celebrate the ingenuity and creativity of local makers. … Such spaces do not just provide space and equipment like 3-D printers and CNC machines; they also provide workshops and courses, and function the way social clubs did for previous generations, by bringing together people with shared purpose and values. And there’s more: If done right and situated well, a makerspace can anchor a local innovation district or other such neighborhood redevelopment. …
Engage community colleges, universities, and national laboratories
… Arizona State and Case Western Reserve universities have each opened up their impressive maker spaces to the broader public, for example. Institutions as diverse as Northern Illinois University and Lorain County Community College near Cleveland have created publicly accessible incubators and accelerators to promote manufacturing. And for its part, Oak Ridge National Laboratory in Tennessee operates its Manufacturing Demonstration Facility, which helps companies adopt crucial technologies like additive manufacturing even as the lab supports many of the region’s maker activities. …
Pull in the private sector
… Chevron, for example, has pledged significant funding to create Fab Lab maker spaces to support STEM education in regions where it operates. Autodesk provides free access to its CAD software tools to educators and makerspace partners. And in Louisville, GE has played a lead role in energizing the entire maker ecosystem in the area. There, the global conglomerate opened FirstBuild, a makerspace micro-factory and co-creation community for household appliances that has wound up stimulating the local maker community and establishing new educational links throughout the region. …Bluegrass Economic Advancement Movement (BEAM)…
Experiment with new forms of education and training
… Pittsburgh, for example, started out by placing a single maker space inside a single school. From this evolved the Dream Factory at the Elizabeth Forward Middle School: A set of integrated classrooms where middle-schoolers learn how to use computers, 3-D printers, and CNC tools to create robots, drones, or whatever else they want. As a result, drop-out rates have fallen drastically at the school. … Houston Community College just opened a massive $26 million maker facility, for example, while the California Council on Science and Technology recommended the state create a network of 10 makerspaces linked to community colleges as a tool for preparing students for the innovation economy. … The Detroit luxury goods manufacturer Shinola, for example, has been reinventing the traditional apprenticeship by bringing in long-retired master artisans to help teach relevant crafts to younger, less experienced makers. …

Do We Benefit from Trade? (10/20/2016) | PETER K. SCHOTT @YaleInsights
… Q: What was the scale of the change in manufacturing employment?
Well, to give perspective, the highest number of manufacturing workers the U.S. ever had was 19.5 million in 1979. It had already fallen in the 1980s and 1990s, but not so dramatically. Then about 3 million manufacturing jobs are lost in about in a year and half, roughly speaking, after the change in U.S. trade policy. That occurs around the time of the 2001 recession, but that recession was not severe enough to explain the swift decline in manufacturing employment. There was another big decline in manufacturing employment during the Great Recession, but that makes sense in terms of the severity of that recession. …

How Did Volkswagen Go Wrong? (w Video; 12/14/2015) | DAVID BACH, PAUL BRACKEN, DAVID CAMERON @YaleInsights

How Will the Trans-Pacific Partnership Affect Global Business? (10/7/2015) | @YaleInsights
Keith Head, HSBC Professor in Asian Commerce, Sauder School of Business
Raúl Francisco Montalvo, Professor of Economics and International Business and Director EGADE Business School, Tecnológico de Monterrey, Guadalajara.
Julia von Maltzan Pacheco, Professor and Associate Dean for International Relations, FGV Escola de Administração de Empresas de São Paulo

The Canada-U.S. economic playbook is on the verge of a rewrite (11/19/2016) | @bhaggart @GlobeBusiness
… Since the end of that war, Canada and the United States have become increasingly integrated against a global backdrop of economic liberalism. Over this period, we developed an informal system that “limited opportunities for linkage among issues and emphasized the virtues of responsiveness and conciliation,” as political scientists Robert Keohane and Joseph Nye wrote in 1977. …
…“domestic concerns trump regional issues.” …