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I believe everyone agrees that we need to bring manufacturing back into the USA. The question is how and how much.
Manufacturing over the years has vacated the Northeast and more. Some of it has simply moved south, but most of it has moved overseas. If the cost of making a $10 component overseas is $2, then it obviously make good business sense to have the manufacturing done overseas.
So how can we manufacture this component within the United States at a competitive rate? We can’t, but do we need to?
First of all, we don’t need to bring back all of our manufacturing. In fact, I suspect that if we brought 5% of Essential Manufacturing (manufacturing of technological components, electronics and necessities, rather than items in categories such as toys) back into the United States, we would not have enough people to fill those jobs.
That is the Idea! If we have the jobs available, then down sizing no longer means unemployment. It means cross training, but it doesn’t mean no more jobs. If people have jobs, then they have money and they will prosper.
So, back to the question of the $10 component. Actually, there are many questions and I have some of the answers but not all. Let’s get started. Assume the Item is a toaster. (Which may not be considered essential but it’s just a fine example). First, we are only bringing back 5% of the MFG… that's all… so, for example if we apply a tariff (or a front end tax) to the toasters increasing the cost from $2.00 to $2.45 (remember this is on 95% of all toasters imported into the United States). The revenue derived from this tariff should be used to offset or buy down the labor on that $10 toaster creating a fair market.
Is it fair to buy down American labor? Definitely, we have different standards in the U.S. i.e., benefit programs, education, insurances, public works, labor laws, etc..
Would countries losing this percentage of jobs, object? Yes, but they also know that if the United States isn’t healthy, it would severely effect world markets. Therefore, their economies may gain jobs by giving back a few. And the same goes for U.S. manufacturers.
U.S. manufacturers must also realize that this is a prerequisite to a healthy economy: without a healthy economy they will not prosper.
So let’s talk about funding for these non-profits. Subsidizing labor can be done through tariffs. However the funding of assets of these manufacturers can be accomplished by the sale of low yield tax-free bonds, backed by the U.S.
Is there a conflict if a corporation purchases these bonds? I don’t see any conflict at this point. Ownership of the bond does not carry any control as these are non-voting instruments.
Let talk about control. It would be the responsibility of America’s largest manufacturers/distributors of toasters to sit on the Board. I would expect participation on the Board to be without compensation. The Board would hire or fire the CEO who in turn would be responsible for the Management Team.
Compensation: The compensation of the CEO would be set by the Board, however it should be in line the that of the typical manufacturing entity of similar size. Management’s salaries should set in a similar manner. The wages for the factory personnel should be similar to that of US Postal Workers. Bonuses for management should be based upon efficiency. Efficiency being defined by output per man as compared to foreign labor.
Where possible, we do not want a single manufacture of toasters producing 5% of U.S. consumption but rather a number of manufacturers competing for a bigger slice of that 5% and competing for efficiency bonuses.
Profit in excess of a fixed distribution to preferred stockholders should be paid into a fund, which reduces the tariff for toasters.
Last Question: How do we adjust for the varying cost of U.S. Labor? Labor in the Northeast cost more than labor in the South or the Southwest! (I haven't figured this one out yet!)
Thank you for taking the time to consider this!
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