Closing the New United Motors Manufacturing Inc. automotive plant in California will eliminate 25,000 jobs in the state and cost taxpayers $2.3 billion to replace the jobs lost, according to a March 3 report by University of California professor Harley Shaiken. The Daily Labor Report (subscription required) notes:
California and municipalities near the Fremont, Calif., plant will lose nearly a billion dollars of revenue in the decade after the plant closes, according to a blue-ribbon panel formed by state Treasurer Bill Lockyer (D). Using estimates by the President's Council of Economic Advisers, the report found that "just creating 4,700 jobs--the number lost at NUMMI itself--would cost $433 million."
Jobs lost. Lives destroyed. Communities weakened. Billions of dollars down the drain. All because companies can only improve their bottom line by going after the cheaper labor they can find in other countries, right? Not so, writes Ralph Gomory, president emeritus at the Alfred P. Sloan Foundation and former IBM senior vice-president of science and technology (h/t Alliance for American Manufacturing).
Cheap labor abroad is cited as the incurable handicap that explains why the United States cannot compete. But cheap labor doesn't explain the fact that Japan and Germany, both high-wage countries, are successful in the automobile industry. Nor does it explain how semiconductors, a model of a high investment, low-labor content industry, are mainly made in Asia. The premise that the inescapable burden of competing against low wages means failure is simply not correct.
Even more disturbing than this big lie, says Gomory, is the unwillingness of our nation's leaders to address the consequences of not competing.
Today our companies are motivated to take innovations abroad, produce there and import the goods into the United States. Increasingly we can expect services also to go overseas. We must produce here in the U.S.A., to employ the people of this country, and we must keep their activities effective by a steady stream of innovations in design and production. While other countries roll out a welcome mat of tax breaks and subsidies for our companies because their common sense tells them that their people being employed in productive work is the road to being a rich country, we provide no incentive for U.S. companies to produce here.
Good move, then, by Sen. Sherrod Brown (D-Ohio), who led a bipartisan group of 10 senators in sending a letter to President Obama urging the adoption of a national manufacturing policy. The letter states, in part:
The loss of manufacturing plants and jobs has stifled economic opportunity for middle class families and compromised our ability to compete in the 21st century economy. Indeed, for the last several decades, administrations have passed up critical opportunities to formulate a rational and comprehensive manufacturing policy. Continued apathy will undermine our country's ability to achieve energy independence and place our military readiness at risk.
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