Saving American Saving American ManufacturingManufacturing

Why activism is essentialWhy activism is essential

The Manufacturing SectorThe Manufacturing Sector

• By itself – the 5By itself – the 5thth largest “economy largest “economy globallyglobally

• Employs 14.3 million directly, millions Employs 14.3 million directly, millions more indirectly. (Impacts 44 million more indirectly. (Impacts 44 million jobs)jobs)

• Consumes over 60% of R&D in U.S.Consumes over 60% of R&D in U.S.

• Is the country’s engine of growth and Is the country’s engine of growth and wealthwealth

U.S. Manufacturers HaveU.S. Manufacturers Have Suffered Massive Job Losses Suffered Massive Job Losses

14

15

16

17

18

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

In M

illi

ons

of U

.S. M

anuf

actu

ring

Job

s

Source: Bureau of Labor Statistics, Series CES3000000001.

U.S. Manufacturing U.S. Manufacturing DisadvantagesDisadvantages

• Corporate tax rates and tax policy – Corporate tax rates and tax policy – 5.6%5.6%

• Litigation costs – 3.2%Litigation costs – 3.2%

• Regulation costs – 3.5% or moreRegulation costs – 3.5% or more

• Health care/other benefits – 5.5%Health care/other benefits – 5.5%

• Other (energy policy, etc) – 4.6%Other (energy policy, etc) – 4.6%

The United States’ Current The United States’ Current Account DeficitAccount Deficit

($600)

($500)

($400)

($300)

($200)

($100)

$0

$100

'82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03

Do

llar

s In

Bil

lio

ns

U.S. Trade Balance in Advance U.S. Trade Balance in Advance TechnologyTechnology

-30

-20

-10

0

10

20

30

1999 2000 2001Bil

lio

ns

of

$

Source: U.S. Census Bureau.

2002 2003

Currency Intervention and Currency Intervention and ManipulationManipulation

What is it and what does it do?What is it and what does it do?

• Pic of ChinaPic of China

© 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

U.S. Trade Balance with ChinaU.S. Trade Balance with China

-140

-120

-100

-80

-60

-40

-20

0

Bil

lio

ns

of

$

Source: U.S. Census Bureau.

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

© 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

China and Japan Set the China and Japan Set the PatternPattern

• Malaysia – 52% in 1997-1998Malaysia – 52% in 1997-1998

• Thailand – 60% in 1997Thailand – 60% in 1997

• Indonesia – 285% in 1997-1998Indonesia – 285% in 1997-1998

• Russia – 485% in 1998Russia – 485% in 1998

• Egypt – 40% in 2003Egypt – 40% in 2003

Manipulated Currency ReservesManipulated Currency Reserves

Phillipines

Indonesia

Thailand

Malaysia

Singapore

India

Hong Kong

South Korea

Taiwan

China

Japan

AWASH IN DOLLARSAsia’s growing foreign reserves, in billions of dollars

Country Year-End 2003 % Change From 2002 $673.5 43%

$403.3 41%$206.6 28%

$155.4 28%$118.4 6%

$100.6 43%

$96.3 17%

$44.9 30%$42.1 6%

$36.3 15%$16.7 5%

Source: Reuters

The Effects of Intervention and The Effects of Intervention and ManipulationManipulation

• On ManufacturingOn Manufacturing

• On SteelOn Steel

• On Other industriesOn Other industries

The Dollar goes up; The Dollar goes up; Manufacturing Profits go downManufacturing Profits go down

The Dollar Goes UpThe Dollar Goes UpManufacturing Profits Go DownManufacturing Profits Go Down

  

  

Sources: Federal Reserve Statistical Release H.10; U.S. Department ofSources: Federal Reserve Statistical Release H.10; U.S. Department ofCommerce, Bureau of Economic Analysis, National Income and Product AccountsCommerce, Bureau of Economic Analysis, National Income and Product Accounts

Broad Real Dollar Index(right scale)

Profit Share of National Incomein Domestic Manufacturing(left scale)

19951995 19961996 19971997 19981998 19991999 20002000 20012001 20022002

2828

2424

2020

1616

1212

88

44

130130

115115

100100

8585

7070

5555

4040

One Trillion Dollars !One Trillion Dollars !

- $80 billion- $80 billion

Change in:Change in: Stable Dollar (‘91-’96)Stable Dollar (‘91-’96) Strong Dollar (’97-’02)Strong Dollar (’97-’02)

Trade DeficitTrade Deficit - $176 billion- $176 billion - $468 billion - $468 billion

ImportsImports

ExportsExports

$800 billion$800 billion

+ $204 billion+ $204 billion

“Six Years After” Coalition for a Sound Dollar March 2003

Overvalued Dollar Devastates Overvalued Dollar Devastates U.S. ManufacturingU.S. Manufacturing

When the Dollar When the Dollar goes up so do US goes up so do US Steel ImportsSteel Imports

150

140

130

120

110

100

90

80

35

30

25

20

15

10

5

0

1995 1996 1997 1998 1999 2000 2001 2002

Steel Import ShareSteel Import Share(right scale)(right scale)

Fed’s BroadFed’s BroadReal DollarReal Dollar(left scale)(left scale)

Sources: Federal Reserve Statistical Release H.10; U.S. Department ofSources: Federal Reserve Statistical Release H.10; U.S. Department ofCommerce, Bureau of Economic Analysis, National Income and Product AccountsCommerce, Bureau of Economic Analysis, National Income and Product Accounts

Change in:Change in: Stable Dollar Stable Dollar (‘92-’96)(‘92-’96)

Strong Dollar Strong Dollar (‘97-’02)(‘97-’02)

Exports:Exports: Up $20.9 billionUp $20.9 billion Down $2.6 billionDown $2.6 billion

Imports:Imports: Up $9.2 billionUp $9.2 billion Up another $7 billionUp another $7 billion

Trade Trade Surplus:Surplus:

Rose to $27 billionRose to $27 billion Fell to $11 billionFell to $11 billion

Overvalued Dollar Hits U.S. Overvalued Dollar Hits U.S. AgricultureAgriculture

Investments Are Investments Are Down …Down …

$37 Billion$37 Billion

Status Report on the Dollar Status Report on the Dollar IssueIssue

• Administration actions to dateAdministration actions to date– ““Jawboning”Jawboning”– Assigned special treasury representative Assigned special treasury representative

to China situationto China situation– Has offered technical support to China to Has offered technical support to China to

deal with loan problems, banking deal with loan problems, banking infrastructure problems, economic policyinfrastructure problems, economic policy

– China is sending mixed messagesChina is sending mixed messages

Status Report on the Dollar Status Report on the Dollar Issue Issue

• Industry reactions generally skeptical to Industry reactions generally skeptical to highly negative on impact of administration highly negative on impact of administration efforts to dateefforts to date

• Mission is to keep the heat on the issue – a Mission is to keep the heat on the issue – a business coalition was formed to pursue trade business coalition was formed to pursue trade law remedy for the currency situationlaw remedy for the currency situation

• A 301 trade petition would formalize the issue A 301 trade petition would formalize the issue and provides leverage to counter Chinese and provides leverage to counter Chinese (and others’) currency intervention practices(and others’) currency intervention practices

Status Report on the Dollar Status Report on the Dollar IssueIssue

• Administration has been negative on Administration has been negative on 301 Trade Petition301 Trade Petition– Says they want to deal with issue in a Says they want to deal with issue in a

different manner – would reject a 301 different manner – would reject a 301 petitionpetition

– Petition was filed by the Chinese Petition was filed by the Chinese Currency Coalition on 9/9/04. The Currency Coalition on 9/9/04. The Coalition felt it was critical to introduce Coalition felt it was critical to introduce this in the election cycle.this in the election cycle.

Nucor Trade Position – Trade Nucor Trade Position – Trade LawsLaws• BackgroundBackground

– Prior to 1997/98Prior to 1997/98– The Impact on Nucor of the Beam CaseThe Impact on Nucor of the Beam Case

• The “201” CaseThe “201” Case– What is a 201What is a 201– Trade law abuse prior to 201Trade law abuse prior to 201– Results of 201 (even though terminated early)Results of 201 (even though terminated early)

• Curtailed illegal tradeCurtailed illegal trade• Stabilized marketsStabilized markets• Fostered environment for consolidationFostered environment for consolidation• Created mechanism for global subsidy negotiationsCreated mechanism for global subsidy negotiations

Trade Law ReformTrade Law Reform

• What are the weaknesses in current laws?What are the weaknesses in current laws?– Repeat dumping (country/product switching)Repeat dumping (country/product switching)– Major offenders provided special consideration Major offenders provided special consideration

that encourages repeat behaviorthat encourages repeat behavior– The WTO “legislation” problemThe WTO “legislation” problem

• What are the solutions?What are the solutions?– H.R. 2092 and S. 136 (Berry/Lincoln)H.R. 2092 and S. 136 (Berry/Lincoln)– H.R. 3716 (English), S.2212 (Collins, Bayh)H.R. 3716 (English), S.2212 (Collins, Bayh)– H.R. 2365 (English, Levin, Houghton, Cardin) H.R. 2365 (English, Levin, Houghton, Cardin)

and S. 1258 (Bayh) & S. 676 (Baucus) and H. and S. 1258 (Bayh) & S. 676 (Baucus) and H. Con. Res. 243 (Levin)Con. Res. 243 (Levin)

Other Trade Related Other Trade Related ReformsReforms

• Import Monitoring, Licensing and Import Monitoring, Licensing and EnforcementEnforcement

• OECD UpdateOECD Update

• The “Byrd Bill” (or CDSOA)The “Byrd Bill” (or CDSOA)

How can I make a How can I make a difference? difference? Four Simple Four Simple SuggestionsSuggestions1.1. Ask your elected officials how they are Ask your elected officials how they are

actively opposing currency manipulation actively opposing currency manipulation and other unfair trade practicesand other unfair trade practices

How can I make a How can I make a difference? difference? Four Simple Four Simple SuggestionsSuggestions1.1. Ask your elected officials how they are Ask your elected officials how they are

actively opposing currency manipulation actively opposing currency manipulation and other unfair trade practicesand other unfair trade practices

2.2. Ask your local officials to pass resolutions Ask your local officials to pass resolutions and to write your congressional delegation and to write your congressional delegation to urge immediate actionto urge immediate action

How can I make a How can I make a difference? difference? Four Simple Four Simple SuggestionsSuggestions1.1. Ask your elected officials how they are Ask your elected officials how they are

actively opposing currency manipulation actively opposing currency manipulation and other unfair trade practicesand other unfair trade practices

2.2. Ask your local officials to pass resolutions Ask your local officials to pass resolutions and to write your congressional delegation and to write your congressional delegation to urge immediate actionto urge immediate action

3.3. Spread the word – to friends, business Spread the word – to friends, business people, your community – on the negative people, your community – on the negative impacts of unfair trade, currency impacts of unfair trade, currency manipulationmanipulation

How can I make a How can I make a difference? difference? Four Simple Four Simple SuggestionsSuggestions1.1. Ask your elected officials how they are Ask your elected officials how they are

actively opposing currency manipulation actively opposing currency manipulation and other unfair trade practicesand other unfair trade practices

2.2. Ask your local officials to pass resolutions Ask your local officials to pass resolutions and to write your congressional delegation and to write your congressional delegation to urge immediate actionto urge immediate action

3.3. Spread the word – to friends, business Spread the word – to friends, business people, your community – on the negative people, your community – on the negative impacts of unfair trade, currency impacts of unfair trade, currency manipulationmanipulation

4.4. Register to vote. Vote for candidates who Register to vote. Vote for candidates who will stand up for U.S. jobswill stand up for U.S. jobs

How can I make a How can I make a difference? difference? Seek support of elected officials Seek support of elected officials for a comprehensive, pro-for a comprehensive, pro-manufacturing platformmanufacturing platform

• Tort reform (i.e. H.3744)Tort reform (i.e. H.3744)

• Tax reform & tax relief (i.e. H. 4925)Tax reform & tax relief (i.e. H. 4925)

• Containing health care costsContaining health care costs

• Cost benefit analysis of new Cost benefit analysis of new regulatory requirementsregulatory requirements