The High Cost of Neglecting Manufacturing

Editor's Note This article was originally written in 2004. We tried to inform the country five years ago that our direction and priorities were not on the right track. Our erroneous ways continued unchanged, which have caused our present plight.

The United States is considered to be a rich country. We have accumulated much abundance through most of the twentieth century, as we were a very productive country whose wealth derived to a great extent from manufacturing. Our companies invented and produced many of the things we needed plus much of what the rest of the world needed.

Today, American owned corporations manufacture less and less each year and import more each year. This difference between the amount we import and export has created a huge balance of trade deficit. This has caused us to lose over 1 million high paying manufacturing jobs this year alone.

As our American owned companies produce less, they become inefficient, uncompetitive, and ultimately go out of business or are easily taken over by foreign owned corporations with huge supplies of our cash generated through their trade surplus with us.

Much of Wall Street, for instance, has been bought by Japanese, German, Swiss, Dutch, English and other foreign corporations in the last decade. Now no American owned companies make TV's anymore and very few audio and other electronic products are produced here by American owned companies and many of those products that we say we manufacture are often only assembled from components that we import.

The American book publishing industry is now largely foreign-owned. German corporations alone are estimated to own a huge percentage of that industry. Our steel industry is in a disastrous condition and is headed for the slagheap. Much of our steel is now imported. Our movie industry is 69% foreign owned. Our cement industry is 81% foreign owned.

Another reason why Americans should be disturbed by the decline of U.S. Manufacturing is national security. As American's manufacturing base has been whittled away in recent years, U.S. defense industries are becoming ever more dependent on foreign manufacturers for key components and materials. Here are just a few examples of vital defense-related goods that we now have to depend on foreigners for:

Laser diodes. These are essential in a variety of high-tech civilian and military applications. Virtually the world's entire production comes from Japan.

Ceramic packaging. This is essential in making many high-performance chips used in weapons systems. Ceramic packaging was in critically short supply during the Gulf War a decade ago because of the reluctance of Japanese manufacturers to supply the U.S. War effort.

Ferrite. This is important in many high tech applications. TDK of Japan supplies the U.S. Defense Department.

Gallium Arsenide. This is a semi-conductor material that is crucial for making high-speed chips needed in certain military applications.

Titanium and carbon fiber. These materials are essential in many aerospace applications. Certain key stages in their production are dominated by foreign suppliers.

Charge coupled devices. These are the seeing eyes on U.S. missiles. Their function is to lock on to the target and guide the missiles to it. Foreign producers dominate the industry.

It should be noted that as with many other manufacturing industries now dominated by foreign producers, the United States pioneered the production of most of the devices and materials listed above. Unfortunately, as imports flooded our markets in the 1980's and 1990's, U.S. producers one by one exited these industries.

We call ourselves a superpower. How strong are we when we can't produce needed products to maintain our strength? We must reverse this trend. We must develop an industrial policy to create incentives for American companies to manufacture in America. We must invigorate strategic industries and prevent their sale to foreign ownership. We should not allow ourselves to become vulnerable and depend on others.

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