[Vision2020] Buying US Products?

[Phil Nisbet]

How American are the Made in the USA products that people are being urged to 
buy?

Take the example of the clothing being pushed as buying American.  How much 
of the actual cloth is American made fiber?  Was the cloth actually made in 
the USA?  Was it cut in the USA?  Was it assembled entirely in the USA?  Was 
it packaged in the USA?

My younger brother works in management in the clothing industry.  I can 
recall that venerable clothing company Sara Lee (It is not really a cheese 
cake maker, it is a very large clothing company that also makes some foods.) 
bought cotton from Kazakistan, shipped it to Pakistan to be milled into 
thread before being shipped to a third country to be turned into cloth and 
finally shipped it to a plant in South Carolina where it was assembled into 
BVD undergarments.  The labels read "Made in the USA", but the reality was 
that the bulk of the product was not American.

I can recall my brother laughing at the labels of many American Leather 
goods, because the leather itself and the cutting of the leather was not 
American at all, yet the goods were clearly marked as Made in the USA and 
also labeled with a Union Label.

America is very much a net import reliant nation.  China, for an example, 
produces 5 times the steel and iron that we do.  So as an "American" car 
runs off the assembly line in Detriot, its most likely made of chinese 
steel.  It's still a "Union" product, but hom many steel workers jobs are 
lost because we do not make that steel?  How many Iron miners are not 
employed?  Those were high paying jobs that placed American workers into the 
middle and upper middle classes, but now are swallowed by cheap to slave 
Chinese labor, but where is the beef for that.

Not too long ago I mentioned the lose of the United States of America's 
Silicon and Silicon Carbide industries.  Those industries were a major 
Pacific Northwest employer until 1998.  Rock Island Washington, Springfield 
Oregon and a number of other plants made the basis of the silicon chip, the 
basics for production of body armor, and the critical raw materials for the 
tool and die industries.  It was a billion dollar industry, with high paying 
Union wage scale jobs.  Now we are forced to buy all of those materials from 
China.  The guts of the computer, even your American made one, are Chinese 
in origins.  The companies that made Silicon and Silicon Carbide did not 
ship their operations out of country, the were pushed out of existance, even 
though they had won a major anti-dumping suit against the Chinese.

The truth is that NIMBY, Not In My Backyard, is killing America.  Nobody 
wants a steel plant, a mine, a Silicon Plant or a leather works to be 
anywhere even near them.  Permitting in China or in Mexico ahppens in a year 
at most, but takes up to ten years in the United States and once the new 
plant is built overseas, the jobs turning those raw materials into goods is 
going to head to the source.

And the net global effect to the environment of NIMBY is huge.  Its not 
about the regulations, its about the regulatory delays.  Too few here 
realize that the time cost of money and the time cost of getting a product 
to market in a timely manner are far more significant to driving American 
industry overseas than any other factor.  But once a plant is overseas, the 
lesser regulatory regime allows far greater pollution.

Say a plant is to be built for $100,000,000.  The company raises its funds 
and then has to hold for ten years waiting for its permits to come through.  
Even at 5% interest, those delays cost the company half again the price of 
the plant.  That cost alone dwarfs the ten cents on the dollar spent on 
actuasl environmental protection equipment and siting considerations that 
the average American plant deals with.

Then there is the question of market timing.  The objetive of business is to 
build a plant at a time of peak market pricing for the good that they intend 
to sell.  This allows the plant to be quickly paid off, cutting longer term 
financing costs.  The longer it takes to permit a plant, the less likely 
that the pant can hit the peak price and the more likely that it will be 
finished at the bottom of a market.  This makes the difference in paying off 
the plant or mill in a five year time frame versus paying it off in 10-15 
years, an extra 25-50 million dollar long term cost.

Its not highly paid American Workers that are killing us, afterall, the 
price they get paid that gives them that higher wage is actually not much 
more than the extra cost of transportation of the goods from overseas 
production sites.  Its the delay cycle and the resulting capital cost 
structure that make "Buying American" less and less likely.

Look at Latah County.  If a manufacturer wanted to build here, they first 
have to spend a couple of years getting a rezone.  Only once they have that 
in hand can they start to get the rest of the permits they will need.  They 
will most likely have to get DEQ to approve in a year lng process.  They 
will have to get a load of other State and Federal Agencies each to hand 
them other required permits, all with their own administrative and public 
input delays.  Or the company can simply say, to heck with this and have 
what ever they plan on making proiduced by a chinese firm and have it ready 
for Xmass 2006.  There is not much contest as to where that product will 
originate from then now is there?

Phil Nisbet

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