June 26, 2019

Made in America: Not Anymore

Sad but so true!  There used to be somewhat of an outrage among Americans when the topic came up regarding foreign goods being sold here in America.  I used to like the Union sticker that said “Out of a job yet, keep buying foreign.”  Over the years, we have come to accept the fact that many of the things that we buy today in America are no longer made here.  It used to be that people tried to buy American-made goods, but most of us know that it is a futile effort, and that in many cases it is not possible to find an American-made product of a certain type.  In any major store that you go to today in America, you may find that as many as 90% of the products are not made in America.  Who is to blame?

Many of the products we see in America that are manufactured in third world countries are not being sold in America by foreign companies; rather, they are being sold in America by American companies.  American companies are the ones who lobby American lawmakers to allow this type of trade to happen and they are the ones that choose to have their products made overseas because they can manufacture them more cheaply in foreign countries.  This is a situation that has been created by American companies with the cooperation of the American government, and that is where the outrage needs to be directed.

American companies have moved the “American job market” overseas.  One effect of this on the job market is what is called “fragmentation.”  This recognizes that there is a growing separation between higher-skilled jobs and lower-skilled jobs, with fewer jobs in the middle for medium-skilled workers.  In addition, the American trade deficit is continuing to grow.  Despite the fact that a flood of new and cheap products are flowing into America every year, it is hard to consume anything if you don’t have a job.

The situation becomes even more complicated with the advent of the production of “foreign” products in the United States.  Hondas made in Ohio; Buicks made in Germany.  Not long ago, the United Auto Workers union made it known that one of it’s own workers could not park his 2010 Lincoln MKX in the parking lot of their Detroit headquarters. Their main rationale? The Lincoln MKX was assembled in Hermosillo, Mexico!  Between Honda, Hyundai, Nissan, and Toyota, they produced over 2.3 million vehicles in the United States in 2009 – nearly 40% of the total U.S. production.  They have invested over $44 billion dollars in more than 300 U.S. facilities that employ 81,000 Americans, with a payroll of $6 billion dollars.

There is no easy answer.   The products that are produced overseas seems almost endless: Rawlings, the official supplier of baseballs to Major League Baseball moved its plant from Puerto Rico to Haiti and eventually to Costa Rica in 1969; Converse shoes made their last pair in the United States in 2001.  Their shoes are now made in Indonesia.  The last major shirt factory in America closed in October, 2002. Mattel toys are now all made in China.  Even vending machines are made overseas along with Levi jeans, televisions, cell phones, and now Dell computers.  It is depressing.

To make matters even worse, many former American companies such as Miller Beer, Coors Beer, and Budweiser are now owned by foreign companies.  In 2008, Anheuser-Busch, the St. Louis-based company that had nearly 50% market share in the U.S., was sold to InBev, a Belgium-based conglomerate run by Brazilian executives.  I am afraid that the trend is irreversible.  Until the third world labor market makes significant strides in wages and working conditions, the flow of American jobs overseas will continue.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer