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Editorial: Unrestricted free trade doesn’t benefit the country’s manufacturing industry

Last week President Obama gave a speech with his view of the future of job creation in the U.S. The Republican party countered with its own ideas. Is unregulated commerce destroying U.S. manufacturing? Yes, argues Glenn Beall, author of our By Design series of article and Plastics Hall of Fame inductee, in this editorial.

The demands made by the Second World War created shortages of aluminum, brass, copper, steel, and rubber. In many applications plastics were substituted for these scarce materials. That was the beginning of the rapid growth that produced the modern plastics industry. That war's demand for more and more of everything allowed the manufacturing industry to fully recover from the great recession of 1929. Manufacturing prospered and so did the rest of the country.

By the 1950s there were enough jobs in the U.S. for nearly everyone. The average wage earned could afford to buy a car, a refrigerator, a television, and eventually a house. The cities, states, and federal governments collected taxes, managed their budgets, and had enough money to pay their bills. The national debt was manageable. The economy fluctuated, but the good times mostly prevailed until the frightening recession of 1981-1982 when unemployment reached 11%. That recession slowly faded away, and the economy came back stronger than before.

I joined the industry in the 1950s at a time when there were an endless number of new applications for plastic materials. My first inkling that something wasn't right was in the 1970s when the escalating cost of molds became difficult to justify while delivery schedules were prohibitively long and unreliable.

The root of these problems was traced to the glory days of the 1950s. At that time many tool making companies were negligent in being too busy building molds and making money to worry about the future. As a result they failed to train enough apprentice mold makers to support the growth of the plastics industry.

This oversight forced injection molders and their Original Equipment Manufacturers (OEM) customers to go off-shore to procure the molds required to carry on their businesses. It took the Americans a few years to learn how to work with these off-shore mold makers. Once that happened, an increasing number of molds were imported into the U.S. The mold making industry there never fully recovered from that loss of business.

It quickly became apparent that there were advantages to sampling a new mold near where it was built. If tooling changes were required they could be made by the original mold maker and that reduced the cost and time involved in shipping molds long distances.

Why stop at just molds?

It wasn't long until OEMs eager to get new products to market started purchasing their first product run from the molders who sampled their new molds - typically one near the foreign mold maker. If the molded parts were acceptable and the costs were favorable, then there was no need to ship a mold back to the U.S. This situation was all very understandable, but it established a practice that led to the massive off-shoring of America's injection molding business.

There has always been an international marketplace. My first two jobs after college were with General Electric and Abbott Laboratories. Both were multi-national companies who manufactured and marketed products in many countries. In most instances they sold their products in the country where they were made. They were not imported for sale in the U.S. This left the U.S. market to its domestic manufacturers. Consumers worked for those manufacturers and made enough money to buy their products. The system worked well until rampant greed and globalization were set loose in the world.

Sometime during the late 1980s and early 1990s greed was reclassified from a sin to a virtue. At about the same time big money promoted the concept that unregulated commerce and uncontrolled free trade were the best way to maximize shareholder equity. Books such as "The Borderless World", "The World is Flat", and "One World Ready or Not", helped convince business leaders that globalization was the secret to future prosperity.

An increasing number of OEMs moved their manufacturing operations to low-labor-rate countries. Shortly thereafter the talking heads and politicians began claiming that the U.S. was transitioning from a manufacturing to a service economy. The governor of New York loudly proclaimed that heavy manufacturing was no longer welcome in his state. The trade media editors questioned these assertions and sounded the alarm, but no one took heed.

Get involved

By the turn of the century it was no longer possible to ignore that off-shoring benefited only a few at the expense of many. During the campaign leading to the 2008 presidential election the politicians stopped talking about a service economy and started mentioning the importance of rebuilding the U.S. manufacturing industry. Today, at the start of the build-up to the 2012 presidential election, most of our national leaders have come to realize that they do not have the will to manage the free-wheeling global economy created by the unregulated free market. They have now stopped talking about manufacturing and have started stressing the importance of creating jobs.

While all of this is happening the man-on-the-street is seeing his family's lifestyle declining while he is being told of record-breaking corporate profits and multi-million dollar salaries. The man-in-the-street feels helpless, but there is something he can do. For example,  approximately 50 of our 535 members of the U.S. Congress who represent regions with significant amounts of manufacturing. Let those 50, and the rest, hear your vioce.

There will be a presidential election in 2012. If every man-in-the-street seeks out and only votes for candidates with an appreciation for the importance of manufacturing, then we can make a difference. We cannot bring back everything that has been lost, but we can keep what we still have and build on that to allow America to continue to be a world-class manufacturing country.

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