Holding American Exports Hostage

Normally, I try to present non-partisan and unbiased views, as I comment on issues of exports, international business development and risk mitigation. Yet, in certain rare cases it is impossible for me to contain my emotion and even outrage at certain actions, which threaten to undermine our national interests for the benefit of relatively few politically connected constituents.

As the article below discusses, certain political interests are holding hostage three Free Trade Agreements worth at least $13 billion dollars of U.S. exports annually, in order to extend a welfare type Trade Adjustment Assistance (TAA) Amendment that is used as a crutch to help a relatively small group of workers, whose jobs were displaced by outsourcing or imports, to hopefully transition to new positions in the new economy.  I am not here to debate the merits or shortcomings of the TAA’s longer unemployment benefits, extended healthcare and retraining. I am sure that in its core it is probably a good, well-intentioned program.  What I strongly disagree with, is using this program, which results in spending of about $1 billion of our stretched budget funds to help 235,000 workers, as a loaded gun to hold entire nation of 300 million people hostage.  If these trade agreements are not passed in the next several weeks, not only will U.S. forgo billions in critically needed exports, but it will also lose its competitive position, as other nations move in to strike their own Free Trade Agreements, pick up the slack and crowd out U.S. company thus reducing our national export capacity.

The TAA issue must be immediately uncoupled from the Trade Agreement legislation and Congress should pass Columbian, South Korean and Panamanian FTAs before this summer’s Congressional recess.

Dispute Threatens Key Deals on Trade

By ELIZABETH WILLIAMSON  The Wall Street Journal.   May 28th, 2011

WASHINGTON—The centerpiece of the American trade agenda—a trio of international trade pacts worth $13 billion in new U.S. exports—is in peril as Democrats and Republicans battle over a program that provides aid to U.S. workers.

The dispute over the future of the 50-year-old Trade Adjustment Assistance program, which provides benefits to American workers displaced by foreign competition, is putting pending free-trade pacts with South Korea, Colombia and Panama in jeopardy by pulling them into the contentious debate over federal spending.

The Obama administration and Democrats in Congress want the TAA program renewed. Some Republicans question its value and say it should be scaled back to narrow the deficit.

The delay caused by the congressional sparring means it is now virtually impossible to pass the South Korea agreement before a trade pact between Korea and the European Union takes effect July 1. That will put a wide range of U.S. industries at a competitive disadvantage.

Just a few weeks ago, the administration saw the TAA battle as surmountable. Now, unless lawmakers reach consensus soon, the trade pacts won’t pass before the August recess, congressional aides say. After that, chances of passage grow slimmer as the 2012 election nears and lawmakers avoid controversial votes.

“We’re fighting like hell because if the vote doesn’t happen by the recess, we risk it not happening in the fall,” said Christopher Wenk, senior director for international policy at the U.S. Chamber of Commerce. On Thursday, scores of business leaders visited all 100 senators to lobby for the agreements, and they plan to call on each House member in coming days.

Republicans say the administration should move forward on the trade deals and set the TAA dispute aside for later. “Why hold up three agreements that are going to create all kinds of jobs?” said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee.

“We have a duty to help American workers meet the challenge of global competition,” said the panel’s chairman, Sen. Max Baucus (D. Mont.), during a Thursday hearing on the U.S.-Korea Free Trade Agreement.

The standoff comes as other nations race to forge trade pacts with nations that are the U.S.’s chief commercial rivals.

In addition to the EU’s impending pact with Korea, a Colombia-Canada pact will enter force before the U.S.’s agreement with Bogota.In Senate testimony last week, Deputy U.S. Trade Representative Demetrios Marantis told the Finance Committee that delays in passing the agreements meant U.S. exporters would lose market share to rival nations.

The three pending trade pacts are the backbone of President Barack Obama’s plan to help businesses double U.S. exports by the end of 2015. Demand from markets abroad has helped support the U.S. economy—and employment—as consumers remain cautious. Exports contributed 1.16 percentage points to growth in the first quarter, when the economy expanded at a 1.8% annual rate.

The Korea deal, worth $11 billion in new U.S. exports, would immediately eliminate Korean tariffs on nearly two-thirds of U.S. farm products, from corn to wheat. U.S. beef exports to Korea would more than double, from to $1.8 billion from $600 million. It would eliminate a 15% Korean tariff on U.S. wine and afford U.S. financial services firms the same legal status as Korean firms.

The TAA program has been backed by both parties since the Kennedy administration, justified as a necessary price to induce lawmakers from industrial regions to support trade-opening legislation.

It provides training, extended unemployment benefits and health-care subsidies for workers idled when trade pacts shift jobs overseas.

But this year, TAA came up for renewal in the teeth of a polarized budget fight. It expired in February after a proposal to renew it failed in the House.

Two weeks ago, White House trade officials took a tough line, saying the president will not submit the finalized trade agreements to a vote until Republicans strike a deal on renewing TAA.

Republicans say the TAA is a sop to organized labor, and its merits don’t justify its inclusion in an already-bloated budget. GOP lawmakers say the program’s budget was swollen by the stimulus and point to past Government Accountability Office studies that question its implementation.

The program, they say, should be scaled back, although as an entitlement, by law it can’t be eliminated altogether.

“Politicians used to use TAA to buy votes for trade agreements, and now they’re holding the trade agreements hostage so they can get the expanded welfare program,” said Sallie James, trade policy analyst at the conservative Cato Institute.

Democrats say the program has grown increasingly important as more companies move jobs overseas, and point to Labor Department figures showing that the program’s size hasn’t changed substantially since before the 2009 stimulus.

In 2002, the program was expanded to include workers whose jobs were lost due to outsourcing in addition to those affected by increased imports. In that year, TAA went to 50,000 people at a cost of $500 million. In 2008, the year before the stimulus, the program cost $916 million. Last year, TAA cost $975 million and 234,000 workers participated.

Leaders of both parties say they’re confident they’ll reach a compromise, but a deal has yet to take shape.

Sarah Thorn, senior director of government relations for Wal-Mart Stores, Inc., said business leaders’ efforts to push the two parties together have so far led to frustration.

“Trade agreements have always moved in tandem with TAA—it’s part of the bargain on trade,” she said.

The Korea, Colombia and Panama agreements have been stalled for four years. The repeated delays underscore the difficulty experienced by every administration in overcoming the public skepticism and political roadblocks that have made the U.S. a global laggard on trade. Of the 202 regional trade agreements ever registered with the World Trade Organization, the U.S. accounts for only 11.

Meanwhile, rival nations are moving faster to forge global partnerships that open fast-growing markets for their exporters, and offer subsidies and rules that give their national champions an edge.


Princeton Council on World Affairs – announcement of upcoming events

To celebrate its birthday and release of the “Fluent In Foreign Business” book, Princeton Council on World Affairs is announcing a series of International Seminars and high-level networking events to be held in New York on June 30th, Washington, D.C. on July 7th and Princeton, NJ on July 21st. These invitation only events will feature remarks by leading government and international business professionals, book presentation and signing, along with presentation of exclusive economic development opportunities and networking reception.  To request an invitation and for more information, please follow the link below:
   “Is your business fluent in foreign?” – upcoming event announcement  
Those wishing to explore corporate sponsorship opportunities should email akoval@princetoncouncil.org

USTR.gov May 27th

New U.S.-Mexico Telecommunications Agreement Will Ease Burdens on U.S. Manufacturers

May 26, 2011

 

Paris, France – United States Trade Representative Ron Kirk and Mexican Secretary of Economy Bruno Ferrari today signed an agreement that will ease burdens on U.S. companies, especially smaller manufacturers, seeking to export telecommunications products to Mexico, while maintaining our high levels of safety protection and facilitating cross-border trade. Under the Mutual Recognition Agreement between the Government of the United States and the Government of the United Mexican States for Conformity Assessment of Telecommunications Equipment, Mexican regulatory authorities will accept tests performed by recognized U.S. laboratories to determine the conformity of telecommunications equipment with Mexican technical requirements, rather than requiring additional testing before the American products can be sold in Mexico. The full text of the agreement is available here.

 

“This agreement will save American manufacturers money and time by allowing them to test their products only once before exporting them to Mexico, supporting good jobs here at home and further facilitating the vital trade that happens between our two economies,” said Ambassador Kirk.

 

Mexico is the United States’ third-largest goods trading partner, with a total two-way goods trade of $393 billion in 2010. This agreement further cements the mutually beneficial U.S.-Mexico trade relationship and supports American and Mexican businesses and workers with opportunities for growth.

 

This agreement will permit recognized U.S. laboratories to test telecommunications products for conformity with Mexican technical requirements, and vice versa. This saves manufacturers the time and expense of additional product testing and lowers prices for consumers. The agreement covers equipment subject to telecommunications regulation, including wire and wireless equipment, and terrestrial and satellite equipment. Under the agreement, both parties have committed to undertake confidence building measures during an 18 month transition period, which will include joint meetings and training opportunities for government officials involved in designating and recognizing testing laboratories and reviewing test reports.

 

The agreement fully preserves the authority of the U.S. Federal Communications Commission to determine the level of safety protection it considers appropriate, and in no way lowers current U.S. safety requirements.

 

Letter of Support from U.S. Governors Regarding Administration Trade Priorities

May 23, 2011

 

On Monday, U.S. Governors from the states of Alabama, Arkansas, Colorado, Connecticut, Georgia, Guam, Idaho, Indiana, Iowa, Kansas, Main, Michigan, Mississippi, Nebraska, Nevada, New Jersey, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Dakota, Utah, Washington, Wisconsin, and Wyoming sent a letter in support of the pending trade agreements to President Obama, Senator Harry Reid, Senator Mitch McConnell, Congressman John Boehner, and Congresswoman Nancy Pelosi.

 

In an ever-competitive, global economy, it is important that the United States act on new and expanded trade agreements in order to achieve greater economic prosperity through international trade.  Three such agreements appear to be near at hand and we offer bipartisan support for the South Korean, Colombia, and Panamanian trade agreements.  In addition, we also encourage support for the Trade Adjustment Assistance (TAA) program and urge Congress to once again grant fast-track trade negotiation authority to the President.

 

Read more and find the original letter here.

 

Ask the Ambassador

 

U.S. Trade Representative Ron Kirk is committed to addressing Americans’ concerns about trade. He wants to hear your thoughts about the Administration’s trade policy and current events at USTR.  Submit your questions here, and the Ambassador will answer select inquiries on theUSTR blog.

USTR.gov Headlines

Watch Ambassador Demetrios Marantis’ Testimony before the Senate Finance Committee

May 26, 2011

 

Ambassador Demetrios Marantis testified before the Senate Finance Committee to discuss the U.S.-South Korea trade agreement.  You can review the hearing by video on the Committee’s website here.

 

Video: Ambassador Kirk on Small Businesses Benefiting from Trade at OECD

May 25, 2011

 

Ambassador Kirk is in Paris, France at the OECD Ministerial today.  Watch a short video here on how USTR is working to make it “cheaper, simpler, and faster” for American small businesses to export and grow.

 

Ambassador Kirk Meets with Trade Minister Pangestu of Indonesia

May 25, 2011

 

On Tuesday, Ambassador Kirk met with Trade Minister Mari Pangestu of Indonesia for a wide-ranging discussion of the bilateral trade relationship. They welcomed progress made in advancing the relationship between the two countries and agreed to hold the next meeting of the U.S.-Indonesia Trade and Investment Framework Agreement in the next few months in Washington, D.C. Read more

 

Watch Ambassador Miriam Sapiro’s Testimony before the Senate Finance Committee

May 25, 2011

 

Ambassador Miriam Sapiro testified before the Senate Finance Committee to discuss the U.S.-Panama Trade Promotion Agreement.  You can review the hearing by video on the Committee’s website here.

IS YOUR BUSINESS FLUENT IN FOREIGN? – Release of my new book

…”Essential reading for any U.S business looking to expand into foreign markets.
Informative and entertaining – personal insight and experiences make this a must-read if (and you should be) expanding into new territories…”
Industry Today Magazine. 


 

Today is a very special day for me.  After 23 months in the making, my book Fluent in Foreign Business  has finally been released.  In today’s post I would like to talk about the factors that led me to write this book and the benefits that I hope will accrue to its readers.  I’ll also discuss the role played by the Princeton Council on World Affairs in producing this book and the entire business educational program that is aimed at those wishing to grow or start a business abroad or simply learn more about international business.

What is the book about?  Fluent In Foreign Business is a candid account of my personal stories gathered during more than two plus decades of doing business overseas, with proven business concepts, risk management techniques and practical guidance.  It covers a number of questions that will benefit any reader wishing to consider developing or growing their international business. The book will help readers avoid costly mistakes and save them valuable time and money.  Furthermore, it puts the reader on the path of self-discovery and introspection  and will help them understand how committed they really are in their quest.  Students and those simply exploring the path of international business will find a number of stories that illustrate the dangers and the hardships, along with personal and professional rewards. Those already exporting to one country will learn how to evaluate and grow their operations into different markets.

Some of the questions answered in this book are:

•Why do I want to take my business abroad?

• Am I ready?

• Who will help?

• How do I pay for it all?

• They WILL be asking me to pay bribes; what should I do?

• What pitfalls await me?

•What happens when the proverbial s!&* hits the fan?

In writing this book, there were three things I wanted to avoid – a technical textbook product, reader intimidation and boredom.  Instead, I have tried to paint intensely practical and candid pictures of what it takes to do business abroad, what tools are needed, what support mechanisms are available, what dangers lurk and finally, what rewards await those who decide to go on the adventure.

To help reduce the intimidation factor, I introduced an avatar named Global Felix™. Every chapter includes a situational illustration of Felix, making it friendlier and more accessible to the reader. Those of you who regularly read this weekly blog, or publications such as “Industry Today,” “Industry Week,” “Business Finance,” “The NY Enterprise Report” and the Wharton Magazine blog have had a chance to read excerpted chapters from the book over the past six months.

Why did I decide to write this book? I truly believe that in today’s world, international business must be a component of every business (sans little mom and pop local enterprises). Regardless of whether it is export, direct investment or import, having an international strategy is key to long-term survival.

I also believe that to succeed in doing business abroad, a special state of mind is required along with proper coaching, deep cultural understanding, a superb information network and a sober risk/reward assessment framework. This state of mind can be achieved through education, information and empowerment of business owners, managers and entrepreneurs. Thus, along with my like-minded colleagues, we have undertaken a quest to enable as many people as possible to succeed in international business.

I also wrote this book to share my personal experiences and those of some of my colleagues. I believe these experiences serve as valid illustrations of what one can expect when doing business abroad. I have been fortunate to do business in more than 30-countries and I’ve encountered a wide variety of cultural and business situations, which I hope will benefit the reader.

Despite the fact that the U.S. has consistently been one of the largest global exporters, a vast majority of American businesses remain focused only on domestic business. Such a myopic vision makes them susceptible to economic downturns like the one we are now experiencing, and it precludes them from taking part in the breathtaking growth of some of the world’s emerging markets.  It also insulates them and undermines our country’s long-term competitive position.

Enter the Princeton Council on World Affairs ( www.princetoncouncil.org ), a non-profit organization whose mission is to Educate, Inform and Empower its members, helping them succeed in their international business and economic development efforts. It is a young organization, which is part of the 90-year old foreign affairs monolith – World Affairs Councils of America.  Led by a diverse and experienced group of Trustees and a very competent international Advisory Board, the Princeton Council has been an effective tool for its U.S. members who wish to enter various foreign markets and participate in complex multidisciplinary business opportunities. Over the last six months, the Princeton Council’s leadership has witnessed a very strong increase in cross-member activities where members and prospective members seek assistance within the Council’s membership roster to take advantage of opportunities in markets such as China, Africa, South America, Bangladesh, Jamaica and countries of Central Asia. Many foreign companies seeking to enter the U.S. markets have turned to the Princeton Council for guidance. Providing its members unparalleled access to government officials, corporate and civic leaders in multiple markets, along with numerous other education, business development advisory and cost-saving benefits, the Princeton Council has rapidly emerged as one of the most effective platforms for international business expansion, economic development and education.

Fluent In Foreign Business is the first book to be published by the Princeton Council on World Affairs. It is part of the Fluent In Foreign Academy™  – a collection of webinars and seminars dealing with topics on foreign expansion (“Fluent In Foreign™” workshops levels I-III), financing (“Fluent In OPIC™” and “Fluent In EXIM™”), “Foreign Corrupt Practices Act “(called, what else – “Fluent In FCPA™”) and project development (“Fluent In USTDA™”).  The Council is an open non-partisan foreign affairs organization that has four types of memberships available –  Student (free with .edu email), Individual, Professional and Corporate. (for more info or to join visit http://www.princetoncouncil.org/members/receive-membership-benefits.html )

On June 30th, July 7th and July 21st between 5 and 8pm, the Council will host three “Is Your Business Fluent In Foreign?” receptions in New York, Washington D.C. and Princeton, N.J., respectively. These receptions will feature important speakers from Ambassadors and U.S. Government officials to international corporate practitioners and industry leading lawyers and journalists. The presentations will offer high-level networking opportunities, surprise performances and the chance to learn about how to grow their business through exports, insure against political risks, participate in international infrastructure projects and contribute to international economic development.  Please Save the Dates and watch your email for upcoming announcements and for your personal invitation.

For the remainder of May and the entire month of June, the Princeton Council is having its annual Membership Drive. All those who purchase Fluent In Foreign Business, either on Amazon.com  http://tinyurl.com/3gf4oeq or through the Princeton Council website (www.princetoncouncil.org) between May 21st and July 1st, will receive a 90-day complimentary corporate membership, a $625 value and a 20% discount on all corporate training and advisory offerings for the duration of the membership. As part of the birthday celebration, the Council is upgrading its Websiste to be unveiled June 1st.

Princeton Council members can enjoy exclusive access to diplomatic hotel rates at some of the leading hotel chains throughout the U.S. and in many foreign countries, with discounts up to 40% off the regular rates. Members also enjoy weekly geopolitical  intelligence briefings from Stratfor, access to exclusive international business opportunities and industry alliances, deeply discounted publication subscriptions including “Foreign Affairs” magazine, reduced rates on language training and translation courses, as well as Berlitz’ proprietary Cultural Navigator ® system.

Additional benefits, of course, include  proprietary educational offerings from the Fluent In Foreign Academy™,  member only business &  foreign affairs networking events as well as  high-level market entry access and advisory services.  Every book purchased through the Princeton Council during the membership drive will be autographed by me. As a way of giving back, I will be donating 20% of the proceeds of every purchase via the Council to the U.S. Tornado Disaster Relief Fund to help the victims of the tornadoes in our Southern states.  To arrange for corporate purchases or any service issues please contact kgigineishvili@princetoncouncil.org .

My colleagues at the Princeton Council on World Affairs and I are deeply committed to international economic development and foreign affairs issues.  We will continue to  do all we can to help facilitate economic development and seek out international business opportunities for our members.  I hope you enjoy the book and I welcome your comments, reviews and suggestions.  Also, I look forward to meeting all of you at the upcoming Princeton Council events and during my promotional book tour.

For event sponsorship information, conference or corporate function speaking engagements, to arrange a private book signing or advisory assignment, please contact Bambe Levine or David Reich at 212 490-6500.  I can be reached  at agordin@broadstreetcap.com or agordin@princetoncouncil.org .

http://www.amazon.com/FLUENT-FOREIGN-Business-Company-Expanding/dp/1462862780/ref=sr_1_5?s=books&ie=UTF8&qid=1305859807&sr=1-5l .

USTR.gov 5.20.11

05/20/2011 – 5:02pm

Kamut International was founded by farmers Bob Quinn and Mack Quinn in 1990 with a dream to provide high quality organic food by selling a unique, ancient breed of wheat called khorasan. Although generic khorasan wheat is grown throughout the world, Kamut’s Montana-grown wheat guarantees certain qualities such as being organically grown, not hybridized or genetically modified, and having high nutritional values. The family-owned company has enjoyed a lot of success from selling khorasan which is known for the guarantee of organic production and preservation of the original seed.

Kamut knows that exporting can be a key ingredient to success in today’s global economy. Global consumer demand for higher quality, organic food is a huge driver in the company’s success and continued growth. In 2010 alone, Kamut’s global wheat sales grew by 39 percent. Kamut’s wheat became popular in the European market where Italians especially love it for homemade pasta. Today, the company exports to six continents throughout the world including the Asia-Pacific region. The company also partners with businesses who directly sell KAMUT grain to their domestic markets or in the form of processed foods.

Although demand for Kamut’s unique wheat is strongest in Europe, the Asia-Pacific region is becoming a highly lucrative growth opportunity. As purchasing power increases in these consumer markets, so does demand for better food. Currently, the company exports to APEC member economies Australia, New Zealand, and Japan, and is developing relationships with new partners in Taiwan and South Korea. These new partners are interested in selling products made from the unique Montana-grown wheat.

“USTR is working in APEC on behalf of companies like Kamut to reduce trade barriers in the Asia-Pacific region and create more American jobs.

05/20/2011 – 11:20am

The Asia-Pacific region offers tremendous opportunities for U.S. exporters. In a world where 95 percent of consumers reside outside our borders, APEC comprises 40 percent of the global population. Many of these dynamic economies are growing faster than the world average and together generate 56 percent of global GDP in 2010. The Asia-Pacific region is the largest market in the world for U.S. exports and receives over 70 percent of U.S. agricultural exports.

Today, USTR.gov is showcasing the importance of trade with the Asia-Pacific Region for Illinois’s businesses and workers.

Illinois’s goods exports in 2010 totaled nearly $50 billion. Of Illinois’s total exports, $33 billion, or 67 percent, went to markets in the Asia-Pacific region. The top three product categories to APEC member economies exported in 2010 were machinery, transportation equipment, and chemicals.

Goods Exports Support Jobs for Illinois Workers: Jobs supported by Illinois’s goods exports are estimated to be 360,200. One-quarter (24.7 percent) of all manufacturing workers in Illinois depend on exports for their jobs, the ninth highest share among all 50 states. Although not measured, there are also additional jobs supported by Illinois’s exports of services (2008 data are the latest available).

A total of 16,902 companies exported goods from Illinois in 2008. Of those, 15,170 (90 percent) were small and medium-sized enterprises (SMEs), with fewer than 500 employees.

Small and medium-sized firms generated 22 percent of Illinois’s total exports of merchandise in 2008. Notably, small and medium-sized firms benefit from the tariff-elimination provisions of free trade agreements. The transparency obligations, particularly those in the customs chapters, are vital to small and medium-sized firms, which may not have the resources to navigate customs and regulatory red tape.

05/19/2011 – 4:19pm

As part of USTR.gov’s APEC 2011 outreach, USTR.gov spoke to American business leaders about their companies, the importance of international trade, and how trade within the Asia-Pacific region can help their organizations grow. Today’s CEO discussion is with CEO of TicketRiver, Lance Trebesch.

TicketRiver.com Benefits from Increased International Trade

“Our competitive advantage is in the very quality of our software that runs the entire e-commerce website and order e-management system. This software is the heart of our company’s intellectual property and offering – in this case, our website. The value of this offering is what the customer sees, which includes our huge inventory of online templates. Our website is popular due to the e-commerce market demand for simple, easy-to-use web interfaces.

“Increased international trade provides more market access and opportunities for our company to engage in market expansion, which diversifies our revenue streams and contribute to company growth right here in Montana.

“When we launched Ticket River Australia 18 months ago, we were excited to see just how successful our business can be in international markets. Essentially, we just leveraged our existing U.S. digital assets – e-commerce code, online template, e-commerce management system – and planted that in Australia. Expanding into Australia has allowed us to create a brand new revenue stream and business, and now we have well over 1,000 customer in the Australian market.

“Our experience expanding our business into Australia and our proven success with an international customer base is driving our expansion plans into the Asia-Pacific region.”

“In markets like Australia, we’ve effectively addressed this market of consumers largely unfamiliar with e-commerce as a medium for transactions usually obtained through brick-and-mortar service providers. When we enter a new market like Australia, our success is attributed to a very competitive offering, because of the e-ecommerce experience the customer enjoys and the quality of product they receive.

TicketRiver is Looking for Increased Market Access Abroad

“Before we launched the Ticket River Australia site, overseas customers had to order in the U.S. and have it shipped to them. Once we launched our business in Australia, we had many customers write to us to express their joy that we’ve made their lives easier.

“One customer wrote, ‘We are so happy you expanded to Australia! We have nothing like this in our country. Your site and the ease of use of the template and your product quality are just so excellent.’

“We are proud to have delivered ticket printing and ordering in a different way for Australians and introduced them to the a new e-commerce experience in printing. We are an example of a U.S. company that has really benefited from access to markets in the Asia-Pacific region because it has allowed us to capture the opportunity to introduce a new kind of product and build a sustainable market demand for our innovation.”

The Asia-Pacific Region is a Potential Growth Market for TicketRiver.com

“Our goal is to expand to all Asia-Pacific markets one day. More market access and intellectual property protection, greater ease of market entry, and stronger regulatory business environments makes our company more agile and able to expand our operations here at home.”

“By expanding into new markets, we create new jobs here in the U.S. When we build new revenue streams from new markets like the United Kingdom and Australia, we need more manpower to support the flood of new customers and first-time transactions. This adds jobs to our customer support team in the U.S. which helps our U.K. and Australian fulfillment providers and customers in those markets.

“Expanding into new markets also requires us to constantly improve and customize our software, which creates software development jobs here in the U.S.

USTR is working hard this week to create new opportunities for U.S. exporters like TicketRiverin the Asia-Pacific Region. Be sure to follow our progress on USTR.gov.

05/19/2011 – 12:20pm

Today is day four of USTR.gov’s profiles of American businesses that can benefit from the work of the Asia-Pacific Economic Cooperation (APEC) forum.

Teltronics, Inc. is a technology manufacturer specializing in communications, alarms management and contract manufacturing. This company provides innovative solutions to enhance the performance of communications and data networks. This enables its customers to increase their revenues, decrease costs, and improve productivity.

Since Teltronics began exporting their communications and alarms management products from their corporate headquarters and state-of-the-art manufacturing facility in Palmetto, Florida, they have placed products in 68 countries throughout the world, including several in the Asia-Pacific region.

Teltronics provides communications equipment to governments such as Brunei Darussalam, the Navy; Army; and other organizations in Chile, hospitals in Singapore and the metro in Taipei. They have exported their alarms management products to South Korea and Okinawa, Japan for the U.S. military. While about 10 percent (and growing) of Teltronics customers are abroad, the company maintains all of their manufacturing within U.S. borders.

“While serving companies worldwide, Teltronics continues to maintain most of our manufacturing in the US , which contributes to the stability of the local economy,” says Ewen Cameron, CEO of Teltronics. “We have invested in facilities that will allow us to expand manufacturing for our existing product lines and accommodate an increase in our contract manufacturing services business.”

Business in countries of the Asia-Pacific region currently account for about 5 percent of Teltronics’ total sales. Senior Vice President of International Sales Richard Begando anticipates these numbers to increase as Teltronics continues to expand their communications product lines to include IP-based paging, intercom, and mass notification.

“The Asia-Pacific Region holds four times more business opportunity than any other region in the world for certain Teltronics products. This is where the growth is. It’s where new businesses are sprouting up and existing businesses from around the world are moving too. Many of them need communications equipment,” said Mr. Begando. “Teltronics customers, as well as the clients in our target markets, are willing to pay a premium over our competitors for the features and capabilities our products offer.”

While the demand for Teltronics’ products in the Asia-Pacific are growing at a fast pace, the company is not able to capture its full business potential in the region because of trade barriers. USTR is working to reduce trade barriers within the APEC region so that businesses can compete on a level playing field.

As Teltronics increases sales to the Asia-Pacific region, the company may need to hire more people to support the increased demand for its technology and manufacturing. Increased demands for its products will lead to the creation and support of well-paying American jobs throughout the company’s supply chain, benefiting communities and workers across the country.

05/19/2011 – 10:27am

The Asia-Pacific region offers tremendous opportunities for U.S. exporters. In a world where 95 percent of consumers reside outside our borders, APEC comprises 40 percent of the global population. Many of these dynamic economies are growing faster than the world average and together generate 56 percent of global GDP in 2010. The Asia-Pacific region is the largest market in the world for U.S. exports and receives over 70 percent of U.S. agricultural exports.

Today, USTR.gov is showcasing the importance of trade with the Asia-Pacific Region for Michigan’s businesses and workers.

Michigan’s goods exports in 2010 totaled $44.5 billion. Of Michigan’s total exports, $35 billion, or 79 percent, went to markets in the Asia-Pacific region. The top three product categories to APEC member economies exported in 2010 were transportation equipment, machinery, and chemicals.

Jobs supported by Michigan’s goods exports are estimated to be 269,900. More than one-quarter (27.8 percent) of all manufacturing workers in Michigan depend on exports for their jobs, the fifth highest among the 50 states. Although not measured, there are also additional jobs supported by Michigan’s exports of services (2008 data are the latest available).

A total of 11,796 companies exported goods from Michigan locations in 2008. Of those, 10,651 (90 percent) were small and medium-sized enterprises (SMEs), with fewer than 500 employees.

Small and medium-sized firms generated 13 percent of Michigan’s total exports of merchandise in 2008. Notably, small and medium-sized firms benefit from the tariff-elimination provisions of free trade agreements. The transparency obligations, particularly those in the customs chapters, are vital to small and medium-sized firms, which may not have the resources to navigate customs and regulatory red tape.

05/18/2011 – 5:43pm

Today, Ambassador Kirk arrives in Big Sky, Montana for the 2011 APEC Trade Ministerial.  To kick-off the meetings, he wrote a blog post on WhiteHouse.gov regarding the importance of trade within the Asia-Pacific region for American businesses and workers.  Read the blog post below.

Expanding Trade to the Asia-Pacific Region, Supporting American Jobs
Posted by Ambassador Ron Kirk on May 18, 2011 at 03:30 PM EDT

This year, the United States is hosting Asia-Pacific Economic Cooperation (APEC) annual meetings for the first time since 1993. As part of these efforts, I am leading meetings in Big Sky, Montana this week with 21 of my fellow Ministers Related to Trade. This week, we are working to advance common APEC objectives that complement President Obama’s forward-looking, export-focused trade agenda.

APEC is the premier forum for facilitating sustainable economic growth, cooperation, trade and investment in the region, and the Asia-Pacific region is the largest market in the world for U.S. exports. In fact, APEC economies represent nine of the top 15 export markets for U.S. goods. Over 60 percent of U.S. goods exports and 70 percent of U.S. agricultural exports in 2010 were to APEC economies.

Why America Needs Immigrants

I came across a very interesting article on reverse migration of young entrepreneurs, inventors and scientists who complete their education in the U.S. and return back to their native countries.  The study mentioned in the article supports the observations made by our Group over the last several years.   The trend is disturbing and not easily reversible.  Although U.S. continues to be the country of choice for many immigrants who wish to receive world-class education, it has developed a bit of a staid image when it comes to economic opportunities.  Thus, when newly minted immigrant scientists or entrepreneurs survey the landscape post graduation, many of their home markets offer much more robust economic growth prospects, a lot more excitement and greater ability to make a more tangible impact.  U.S. educated entrepreneurs also have a strong competitive advantage back home, as they integrate their newly acquired knowledge with mastery of their home language, culture and ability to navigate through local bureaucracies. I cover this issue in greater detail in my new book “Fluent In Foreign Business”.

Immigrants represent a massive component of America’s scientific and business innovation. Yet, until such time as out investment climate improves and U.S. will again will be perceived as the thriving economic entity, the reverse immigration trend will likely continue and our competitor countries will benefit. Thus it is important to recognize the potential of immigrant entrepreneurs and focus on reforming our immigration policies and developing post educational business incubation programs and financing incentives to try and retain them in the U.S.   Please enjoy the article below and as always, I welcome your comments and suggestions.
Why America Needs Immigrants

The Wall Street Journal MAY 14, 2011
  • By JONAH LEHRER

If there’s one fact that Americans take for granted, it’s that other people want to live here. As President Barack Obama noted in his speech on immigration earlier this week, the U.S. has always attracted strivers from every corner of the globe, often willing to risk great hardships to get here.

Getty ImagesU.S.-trained entrepreneurs see bigger opportunities in their home countries.

Lehrer

During the 20th century especially, America became a magnet for the bright and ambitious. Millions of talented foreigners, from Alfred Hitchcock to Sergey Brin, flocked to our universities and benefited from our financial capital and open culture.

There are signs, however, that the allure of America is fading. A new study by researchers at U.C. Berkeley, Duke and Harvard has found that, for the first time, a majority of American-trained entrepreneurs who have returned to India and China believe they are doing better at “home” than they would be doing in the U.S. The numbers weren’t even close: 72% of Indians and 81% of Chinese said “economic opportunities” were superior in their native countries.

Some of the local advantages cited by these global entrepreneurs were predictable: cheap labor and low operating costs. What’s more worrisome is that these business people also cited the optimistic mood of their homelands. To them, America felt tapped out, but their own countries seem full of potential. This might also help to explain why the number of illegal immigrants entering the U.S. has plunged more than 60% since 2005.

These trends are troubling because they threaten to undermine a chief competitive advantage of the U.S. Though politicians constantly pay lip service to the importance of American innovation, they often fail to note that it is driven in large part by first-generation immigrants.

Consider some recent data. The U.S. Patent Office says immigrants invent patents at roughly double the rate of non-immigrants, which is why a 1% increase in immigrants with college degrees leads to a 15% rise in patent production. (In recent years, immigrant inventors have contributed to more than a quarter of all U.S. global patent applications.) These immigrants also start companies at an accelerated pace, co-founding 52% of Silicon Valley firms since 1995. It’s no accident that immigrants founded or co-founded many of the most successful high-tech companies in America, such as Google, Intel and eBay.

Why is immigration so essential for innovation? Immigrants bring a much-needed set of skills and interests. Last year, foreign students studying on temporary visas received more than 60% of all U.S. engineering doctorates. (American students, by contrast, dominate doctorate programs in the humanities and social sciences.)

These engineering students drive economic growth. According to the Department of Labor, only 5% of U.S. workers are employed in fields related to science and engineering, but they’re responsible for more than 50% of sustained economic expansion (growth that isn’t due to temporary or cyclical factors). These people invent products that change our lives, and in the process, they create jobs.

But the advantages of immigration aren’t limited to those with particular academic backgrounds. In recent years, psychologists have discovered that exposing people to different cultures, either through travel abroad or diversity in their hometown, can also make them more creative. When we encounter other cultures we become more willing to consider multiple interpretations of the same thing. Take leaving food on one’s plate: In China, it’s often a compliment, signaling that the host has provided enough to eat. But in America it can suggest that the food wasn’t good.

People familiar with such cultural contrasts are more likely to consider alternate possibilities when problem-solving, instead of settling for their first answer. As a result, they score significantly higher on tests of creativity. Perhaps it’s not a coincidence that many of the most innovative places in the world, such as Silicon Valley and New York City, are also the most diverse.

We need a new immigration debate. In recent years, politicians have focused on border control and keeping out illegal immigrants. That’s important work, of course. But what’s even more important is ensuring that future inventors want to call America home.

Beyond Borders, the Key to Survival

As published in the Business Finance Magazine
May 11, 2011

http://businessfinancemag.com/article/beyond-borders-key-survival-0511#commentsby Alexander Gordin

Ninety-five percent of the world’s consumers live outside the U.S. In 1999, one-third of the revenues derived by the companies on the S&P 500 index came from outside of the U.S.; today it is already one-half, and by 2025 two-thirds of the revenues of the 500 largest American companies will come from beyond our country’s borders.

As the global economic landscape evolves, it has become increasingly clear to a majority of business owners and top managers that international expansion is no longer simply an option to diversify markets, obtain larger profit margins and reach more target customers. It has become an absolute necessity for long-term survival.

Yet companies in the U.S. need to shore up their competitive positions in order to successfully compete on the new global playing field. Sixty-five percent of the world’s population is bilingual, but only nine percent of the U.S. population speaks a second language. Only one percent of U.S. businesses now export, says the Small Business Administration. Roughly one-half of them export only to a single country.

Much has been written about the need for more effective policies, education, information and support from government and Non-Government Organizations (NGOs). I would like to focus here on steps that companies themselves must take to develop and implement successful plans for international expansion. Each step could command its own chapter in a book, but here is a brief overview. Take a hard look at your business and ask yourself and your colleagues if international expansion is suitable for your organization.

  • Is there an organizational culture in place to facilitate and support cross-border transactions?
  • Do your company’s products or services offer a strong and sustainable international competitive advantage that is adaptable, if needed, to local market conditions?

If the answer is yes, then ask yourself if there is sufficient commitment among your top management to mount a sustainable, long-term, focused, and somewhat expensive effort to expand internationally? Without true commitment, any efforts will be doomed.

If the answer is no, then a key question remains: Is your organization willing to invest time, effort and money to develop the international culture, and modify or change the product or service offerings to become competitive overseas?

Once these issues are addressed, next steps would be to assess potential markets and their current and hopefully future economic, political and business climates. Most foreign expansion takes place either via a top-down approach of systematic analysis and orderly market penetration, or bottom-up market entry, which could be a result of an individual foreign buyer meeting a U.S. seller at a trade show or finding him/her on the Internet. A combination of the two is a rather frequent scenario.

Once the market selection is set, a comprehensive scouting trip needs to take place by senior management to visit all the target countries. Prior to the trip, and on an ongoing basis, management and relevant personnel need to immerse themselves in studying the language and culture of the chosen market(s). The objectives of such trip include:

  • Developing a comprehensive local network of U.S. government and NGOs, financial, legal and business development professionals;
  • Finding local partners and assessing the competition, understanding organizational issues, personnel qualifications and availability, reviewing available financial systems and financing alternatives. (This is not a complete list, but just a sample of the many issues that must be addressed.)
  • Most importantly, it is vital to look beyond the veneer of high-voltage optimism and hype, which often accompany rapidly growing emerging markets. You must carefully piece together the true and realistic picture of what is happening in the target country. Many international markets today can and will offer superb opportunities for the U.S. companies. Yet, entering a situation with rose-colored glasses and not doing thorough due-diligence to understand the market is tantamount to suicide.
  • If the initial scouting visits confirm the viability of the target market(s), it is then prudent to explore political risk insurance for direct investment, or credit insurance with a political risk component for export shipments. Then, your company must institute a compliance program in accordance with the Foreign Corrupt Practices Act (FCPA) and indoctrinate all its employees and foreign partners in what constitutes compliance.

In larger organizations, it is vital to create an environment where international managers have sufficient autonomy to make decisions locally without having to involve the home office in every step. On the flipside, top management needs to become comfortable enough with the international markets so as not to panic with every headline coming out of those markets.

International expansion is a very serious business that requires commitment, deep understanding of local culture, language and the business landscape. It requires constant management and analysis, with total focus and a strong team of professional advisors.

Expansion abroad should be planned for the long-term and be impervious to the “shakes and rattles” that can occur even in mature, let alone emerging and frontier markets. Risk mitigation is key and risk-reward analysis is even more important when doing business outside our borders.

USTR.gov Headlines May 13th

05/13/2011 – 3:51pm

Today, President Obama signed a proclamation regarding World Trade Week. Below is the proclamation.

WORLD TRADE WEEK, 2011

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION

American businesses embody the ingenuity and entrepreneurship that has defined our Nation since its founding, and they consistently reinvent themselves to adapt to changing times. As we recover from a historic economic recession, enterprising commercial leaders continue to look beyond our borders to supply the world with innovative and technologically advanced products and services. Millions of jobs in the United States are tied to exports, and our world continues to grow more interdependent.

World Trade Week is a time to highlight the vital connection between the global economy and the prosperity of our own country. Our 21st-century economy requires American businesses and workers to compete in an international marketplace. To ensure our success, we must advance a robust, forward-looking trade agenda that emphasizes exports and domestic job growth.

Last year, my Administration launched the National Export Initiative, an effort to marshal the full resources of the Federal Government behind America’s businesses, large and small, and help them sell their goods, services, and ideas to the world. Though the United States remains a leading exporter, this Initiative is redoubling our efforts to ensure American companies have free and fair access in trade, and it is building on our successes in export-driven growth. Through this effort, we can help even more American companies grow, compete, and thrive in global markets and help reach our goal of doubling exports in 5 years by 2015. In turn, those companies will be able to hire more American workers to produce the goods and services they sell to customers around the world.

By out-innovating, out-educating, and out-building the rest of the world, we can keep Americans working and export more of the high-quality products and services for which our workers and companies are admired. With a commitment to winning the future, we can continue to lead the world in attracting the jobs, businesses, and industries of tomorrow.

NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim May 15 through May 21, 2011, as World Trade Week. I encourage all Americans to observe this week with events, trade shows, and educational programs that celebrate and inform Americans about the benefits of trade to our Nation and the global economy.

IN WITNESS WHEREOF, I have hereunto set my hand this thirteenth day of May, in the year of our Lord two thousand eleven, and of the Independence of the United States of America the two hundred and thirty-fifth.

BARACK OBAMA

05/12/2011 – 9:42am
Today Ambassador Ron Kirk and Secretary Tom Vilsack are testifying before the House Agriculture Committee regarding the pending trade agreements with South Korea, Panama, and Colombia. You can watch the hearing live on the Committee’s website here starting at 10:00 a.m. ET.
05/11/2011 – 1:11pm

On May 4, Assistant U.S. Trade Representative for Textiles Gail Strickler traveled to Yadkinville, North Carolina to participate in the official opening of the REPREVE® Recycling Center at Unifi’s state of the art G. Allen Mebane Industrial Complex. Unifi is a producer of polyester and nylon textured yarns. The company develops branded yarns that provide unique performance, comfort, and aesthetic advantages.

05/09/2011 – 10:08am
On Thursday, Ambassador Kirk spoke with Fred Katayama of Reuters Insider about the three pending trade agreements.  Watch the interview here.
05/05/2011 – 2:22pm

Today, Ambassador Kirk was a guest speaker at Congressman Adam Smith’s annual Ninth District Day. This event brings constituents from the Seattle-Tacoma area to Washington, D.C. for a day of briefings and discussions with top policymakers in the United States government.

Ambassador Kirk outlined the positive impact of trade on Representative Smith’s district, and he described how the Obama Administration’s trade agenda aims to double exports in support of Washington State jobs. For example, in the communities around the Ninth District, there are more than 66,500 jobs in the manufacturing sector that are expected to benefit from the U.S.-South Korea trade agreement. Ambassador Kirk noted that today staff from USTR and Congress began the next step, working together on the draft implementing bill, needed to move forward with this trade agreement.
Ambassador Kirk and Congressman Adam Smith

Overall, in 2009, the Seattle-Tacoma-Bellevue metropolitan area exported $36.9 billion worth of goods in a wide variety of sectors, including: Transportation Equipment ($25.8 billion); Computer and Electronic Products ($2.5 billion); Miscellaneous Manufacturing Products ($1.3 billion); and Processed Foods ($1 billion).

05/04/2011 – 5:13pm

Today, on a rainy day in Washington, D.C., 15 USTR staff members ran in the 30th Capital Challenge. It is a three-mile race for runners and wheel chair athletes from the executive, legislative, and judicial branches of the Federal Government, as well as members of the media. Proceeds from the race benefit the Special Olympics of Washington, D.C.

Under the rules of the race each team must have a senior official of the agency as its captain. The three USTR teams were led by Stan McCoy, Assistant U.S. Trade Representative for Intellectual Property and Innovation; Luis Jimenez, Assistant U.S. Trade Representative for Legislative Affairs; and Jim Sanford, Assistant U.S. Trade Representative for Small Business, Market Access, and Industrial Competitiveness. USTR teams included runners from nine offices within the agency. Jim Sanford also took home the award for fastest sub-Cabinet level Male.

Among executive branch teams, USTR’s “Fast Trackers” took fifth place honors. “Deal Makers” and “Special Three-Oh-Run” finished in 15th and 23rd places, respectively.

05/03/2011 – 11:20am

This week, Ambassador Kirk will be delivering remarks in recognition of World IP Day. Established by WIPO (World Intellectual Property Organization) Member States in 2000, World IP Day Day (officially observed on April 26) focuses global attention on the critical contributions of creativity and innovation to economic growth. This occasion also emphasizes the importance of protecting intellectual property rights to foster advancement in the arts, science, and beyond.

American creativity and innovation help drive the U.S. economy. American ingenuity is a major competitive advantage in world markets. Intellectual property-intensive industries support an estimated 18 million jobs in the United States.

USTR takes its stewardship of U.S. creativity and innovation through trade policy very seriously, and fights for enhanced protection of U.S. intellectual property rights (IPR) throughout the world. Because now, national economies are more closely linked than ever through international trade and new technologies, our trade agreements include state-of-the-art protections of intellectual property rights.

In addition to negotiating and enforcing such agreements, USTR also uses the “Special 301” process to continue a dialogue with our trading partners and to press for reforms and enhanced IPR vigilance. On Monday, May 2, USTR released the 2011 Special 301 Report that includes an open invitation to all trading partners listed in the report to cooperatively develop action plans to resolve IPR issues of concern.

See statements of support regarding this year’s Special 301 Report below.

“USTR’s Report signals strongly the Administration’s commitment to protect our nation’s creative industries abroad through strong copyright protection, reducing piracy through more effective enforcement, and toppling market access barriers, steps that will help boost U.S. exports, create good jobs here at home, and contribute to U.S. economic growth, in line with the Administration’s goals.”

– Statement by Eric H. Smith, counsel to the International Intellectual Property Alliance (IIPA)

“The USTR’s Special 301 report is a stark reminder of the challenges facing the strongest and most reliable American exporters – the creators of filmed entertainment. Movie theft, especially online, is a growing threat – not only to the 2.4 million men and women working in the motion picture and television community, but also to the health of the American economy as a whole…We thank the Ambassador Ron Kirk for his continued commitment to enhancing protection for American products abroad, and workers at home.”

– Statement by Senator Chris Dodd, Chairman and CEO of the Motion Picture Association of America, Inc. (MPAA)

“USTR continues to shine the light on illicit practices around the globe that must be addressed in order to expand trade in legitimate products and services. We thank them and their colleagues in other agencies for their diligence and vision in identifying such practices, and in demanding that U.S. trading partners adopt legal or enforcement reforms designed to achieve better copyright protection, particularly in connection with digital commerce.”

– Statement by Neil Turkewitz, Executive Vice President, International, Recording Industry Association of America (RIAA)

04/28/2011 – 3:41pm

This week’s trade spotlight highlights a new online tool for small businesses to take advantage of exporting to U.S. trade agreement partners.  Deputy U.S. Trade Representative for Small Business, Market Access, and Industrial Competitiveness Christina Sevilla talks below about the new online tool and its importance for America’s small businesses.

New Online Free Trade Agreement Tariff Tool Will Help Small Businesses Take Advantage of Export Opportunities
By: Christina Sevilla, Deputy Assistant U.S. Trade Representative for Small Business, Market Access, and Industrial Competitiveness

More than a quarter million American small businesses export from across all fifty states. They sell U.S. products and services around the world – thereby increasing their revenues, broadening and diversifying their customer base, and supporting good jobs in their communities. A particular priority of President Obama’s National Export Initiative (NEI) is to expand exports by small businesses. This will contribute to his goal of doubling U.S. exports by the end of 2014 in order to support two million additional jobs for American workers. We invite more small and medium-sized businesses to join us in this national effort to grow our economy through exports. To help do that, the Office of the U.S. Trade Representative, the Department of Commerce and the Small Business Administration have unveiled a new Free Trade Agreement (FTA) Tariff Tool. This is a free online tool available to businesses and the public for the first time.

The new FTA Tariff Tool empowers the user to perform, instantly and at a glance, searches for tariff treatment for specific industrial products under each U.S. FTA. This will help small manufacturers with planning to enter into new export markets. The tool also enables the user to access market and sector reports and other FTA-related information useful for small businesses seeking new opportunities to sell goods and services abroad.

As a small business owner, manager, or employee seeking to begin or expand your exports, which foreign markets should you consider? Some markets are easier to do business in than others. U.S. FTA partner markets are a very good place to start looking. Most U.S. small firms begin by selling to our North American Free Trade Agreement (NAFTA) partners Canada and Mexico. However, the United States is a party to 17 FTAs with partners around the world, like the five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) and the Dominican Republic, Chile, Peru, Singapore, Australia, and Morocco. Agreements with Korea, Colombia, and Panama are pending. Small and medium-sized businesses represent the vast majority of U.S. exporting companies to these countries.

Trade agreements have helped to open the door to American small business exports with key partners around the world. This new FTA Tariff Tool will empower many more small and medium-sized firms to take advantage of these trade opportunities. Go here to discover cost-saving tariff reductions for your product, and consider an FTA market for your next foreign sale.


Made in the U.S.A.’ may be staging comeback, but Who Will Work The Factory Floor?

“Be careful what you wish for, as you may get it”,  says the proverb.  Well, it looks like we are getting it, but are in danger of dropping the ball.

The signs are persistent; more and more U.S. manufacturers are bringing production back home.  In the recent months we have seen a fair amount of anecdotal evidence to substantiate this trend.  On Thursday, Boston Consulting Group  released a study, whose findings largely substantiate the “Made in the USA” comeback we have observed for some time.

Yet, those manufacturers who are now ramping up production in the U.S. find themselves dealing with a very unpleasant problem – shortage of qualified factory labor. And this is at the time when national unemployment is at 9% and unemployment among teenagers is closer to 25%.  Unfortunately, the problem is not easily solved as it seems to have fundamental causes.   Our educational system does not produce enough math and science graduates, and those who do earn technical degrees bypass factory floors and head for high-tech industries.  There are not enough retraining programs, incentives and public awareness messages to steer unemployed youth into manufacturing jobs. There is also a geographic mismatch and a lot of unemployed urbanites are not able to take advantage of the typically rural manufacturing opportunities.

To address this problem, simply putting out more math and science graduates will not be enough.  Our policy makers and educators must work closely with manufacturers, public relations and marketing personnel to develop a national initiative to recruit, train and retain into the ranks of American manufacturers. Some of the items, which should be implemented include:

  • Modified science and math curriculum offered in regular, not vocational middle and high schools,
  • A broad-based advertising and PR program geared at young people and carrying the message that manufacturing is “cool”,
  • Government incentives for college and retraining tuition akin those offered for service in the Military or the National Guard,
  • Funding all these programs through a combination of Private Public Partnership (PPP) efforts with majority of costs borne by the manufacturers, but with the government providing targeted tax breaks directly tied to the number of jobs filled.
  • Union leaderships must rethink their position and policies, as they brace for the new influx of fresh recruits. One of the reasons manufacturing left U.S. in the first place were high labor costs and low productivity, which resulted from the very comfortable and complacent environment, which was created by the unions as they grew more powerful and top heavy. Lean and competitive rather than bloated, top heavy and overprotective should be the guiding principles.

The quest for the creation of the new working class capable of competing in the 21st century must begin immediately as we risk to have our hard-earned comeback slip away.

Two articles below provide a comprehensive look at the subject. I hope you enjoy and welcome your comments and suggestions.

Made in the U.S.A.’ may be staging comeback

Study says American labor may be more cost-effective than China before decade’s end

Below:

Caterpillar earth moving equipment is ready for shipment from a facility in Elmhurst, Illinois. The company says it may produce more excavations domestically.

Image: Caterpillar earth moving equipment is displayed at Patten Industries in Elmhurst, Illinois.

Getty Images
By Nick Zieminski
updated 5/5/2011 MSNBC.com

NEW YORK — The “Made in the USA” label may be poised for a comeback, a new study argues.

The next few years will bring a wave of reinvestment by U.S. multinational manufacturers in their home base, as rising wages and a strong yuan currency make China a less attractive production center, the paper by the Boston Consulting Group predicts.

The study, published on Thursday, says U.S. reinvestment will accelerate as the United States becomes one of the cheapest locations for manufacturing in the developed world. If it came to fruition, such reinvestment could speed up a delicate economic recovery that has yet to gain much traction. There is evidence the trend has already started:

  • Caterpillar Inc. said last year it may produce construction excavators at U.S. facilities that are currently imported.
  • NCR Corp. brought back production of automatic teller machines to Georgia, creating 870 jobs.
  • Toymaker Wham-O moved production of Frisbees and Hula-Hoops from China and Mexico to the United States.

More such announcements are likely over the next year or two, BCG says, citing conversations with clients.

“If you work the math out using today’s numbers. you’d still say it’s a good idea to go to China,” said Hal Sirkin, a senior BCG partner and lead author of the study. “(But) around 2015, you get to a point of indifference between producing in the U.S. and producing in China.”

Wages in China are still a fraction of what U.S. workers earn. Direct pay and benefits for production workers in the United States are about $22 per hour, versus only about $2 in China, roughly 9 percent of the U.S. cost.

But that difference is expected to narrow, with the Chinese worker earning about 17 percent as much as his or her U.S. counterpart four years from now. Factoring in higher U.S. productivity rates, the weaker U.S. dollar and other factors, such as shipping costs, that difference could narrow further.

The study predicts China will remain a major global player — just less of an exporter to the United States.

China will still export to Europe, whose workers are less able to move for jobs than U.S. workers are. U.S. wage advantages could eventually reach the point that European automakers will export U.S.-made cars to Europe, the study said.

The appeal of a shorter supply chain and fewer headaches from issues like intellectual property will also help encourage jobs and production to come back to the United States, BCG said. Policy could also nudge manufacturers to make the move. High unemployment is driving state incentives to attract factories, while unions are becoming more flexible.

Still, the study’s thesis is based on assumptions that may not play out.

One is that supply and demand of labor in China are increasingly moving out of balance. Another is that demand from a growing Chinese middle class will raise costs, as factories shift to producing for domestic consumption and workers demand more pay to pay for goods that were out of reach before.

Also, the yuan’s rally could reverse. Since China first loosened restrictions on trading the yuan, its value has steadily strengthened from more than 8 yuan to the U.S. dollar in 2005 to fewer than 6.5 per dollar now.

The expected U.S. reinvestment, meanwhile, will affect some industries more than others.

Shoes or clothing are work-intensive and do not require highly skilled labor. But higher-value goods made in lower volumes, such as home appliances and construction equipment, are more likely to bear the “Made in the USA” label in coming years — especially if they are large and expensive to ship.

General Electric Co’s example supports the study’s contentions. GE’s appliance unit is in the middle of a four-year, $600 million plan to build up its manufacturing presence in Louisville, Kentucky, adding some 830 new jobs.

“The default has been to say: ‘Let’s put the next plant in China,'” Sirkin said. “We’re saying: ‘Sit back and think through your options.'”

Help Wanted on Factory Floor

By JAMES R. HAGERTY  The Wall Street Journal  May 6, 2011

U.S. manufacturing companies, long known for layoffs and shipping jobs overseas, now find themselves in a very different position: scrambling for scarce talent at home.

Large and small manufacturers of everything from machine tools to chemicals are scouring for potential hires in high schools, community colleges and the military. They are poaching from one another, retraining people who used to have white-collar jobs, and in some cases even hiring former prisoners who learned machinist skills behind bars.

Ross Mantle for the Wall Street JournalBill Schaltenbrand, 59, a 40-year veteran at Hamill, does his own math to double-check plans.

Even with unemployment near 9%, manufacturers are struggling to find enough skilled workers because of a confluence of three trends.

First, after falling for more than a decade, the number of U.S. manufacturing jobs is growing modestly, with manufacturers adding 25,000 workers in April, the seventh straight month of gains, according to payroll firm Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. The Labor Department’s jobs report on Friday is expected to show moderate employment growth in the overall economy.

Second, baby-boomer retirements are starting to sap factories of their most experienced workers. An estimated 2.7 million U.S. manufacturing employees, or nearly a quarter of the total, are 55 or older.

Third, the U.S. education system isn’t turning out enough people with the math and science skills needed to operate and repair sophisticated computer-controlled factory equipment, jobs that often pay $50,000 to $80,000 a year, plus benefits. Manufacturers say parents and guidance counselors discourage bright kids from even considering careers in manufacturing.

“We get people coming in here all the time who say, ‘I can weld,'” says Denis Gimbel, human-resources manager at Lehigh Heavy Forge Corp., of Bethlehem, Pa., whose products include parts for ships. “Well, my grandmother could weld.” He needs people who understand the intricacies of $1 million lathes and other metal-shaping equipment.

Manufacturers have anticipated for years that baby-boomer retirements would create difficulties. Among those who have tried to get ahead of the demographic curve—with mixed success—is Jeff Kelly, chief executive of Hamill Manufacturing Co., a family-owned company near Pittsburgh that cuts metal into parts for ships and machinery.

Hamill doesn’t have any button-pushing work. The 127-employee company is constantly resetting its mills and lathes to produce small numbers of parts to meet precise and ever-changing specifications. There are no long, routine production runs.

One morning in late April, Trent Thompson, a 20-year-old Hamill apprentice wearing shredded jeans and a black baseball cap, was assigned to drill three holes in a piece of carbon steel about the size and shape of a hockey puck. To make sure he was spacing the holes exactly right, he scrawled a triangle and some trigonometric calculations on a notepad. Even a tiny error would mean wasting about $400 of metal.

Ross Mantle for the Wall Street JournalTrent Thompson, 20 years old, is an apprentice at Hamill Manufacturing.

Factory

Factory

Ross Mantle for the Wall Street JournalMr. Thompson.

In another corner of the factory, Bill Schaltenbrand, 59, was cutting bigger, more complicated parts. A computer had worked out where he should drill and cut, but Mr. Schaltenbrand, a 40-year veteran at Hamill, does his own math to double-check the plans. Computers, he says, sometimes “punch out stupid stuff.” Part of Mr. Schaltenbrand’s skill is reading blueprints with myriad numbers and symbols that would baffle most people.

In its search for talent, Hamill works with nearby vocational schools—serving on advisory boards, donating equipment and providing guest lecturers. Mr. Kelly helps organize a program called BotsIQ in which high-school students learn to build fighting robots. On a recent Saturday evening, he handed out trophies after a robot dubbed Grim Reaper 3, resembling a bathroom scale with spinning metal blades, flipped a rival called Black Mamba and left it in a smoking heap.

Through its ties to area high schools, Hamill met Walter Gasper about five years ago. Mr. Gasper, whose father is a mechanic, had good grades in high school and took college-prep courses. He says a counselor tried to discourage him from vocational courses, but he took them anyway because he liked working with machinery. Hamill signed him as an apprentice when he was 17 and let him work part time while finishing high school.

Last June, Mr. Kelly beamed as he posed for a picture with Mr. Gasper and the first-prize trophy he won in a national competition in which apprentices displayed metal-working skills.

Three months later, Mr. Gasper bolted for a new job with a Cheswick, Pa., unit of Curtiss-WrightCorp., a much larger maker of pumps and generators that buys parts from Hamill. Curtiss-Wright offered him about 40% more pay than he was getting at Hamill. “I was just looking to further my career a little,” says Mr. Gasper, now 21. Though he has no college degree, his annual pay tops $55,000. Unlike many young adults, he has no college debt.

Hamill’s Mr. Kelly says he has raised wages 18% to 25% over the past two years or so, but still has lost about 10 workers in that period to Curtiss-Wright.

Greg Hempfling, a senior vice president at Curtiss-Wright, says he isn’t poaching but merely posting job offers. The pool of skilled manufacturing labor has been “decimated” in the Pittsburgh area, he says, and that has forced Curtiss-Wright to advertise for help as far away as Detroit and Buffalo, N.Y.

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Even some global giants are stretched to find enough qualified workers. At a U.S. division ofBayer AG that makes plastics and polyurethane, the average age of employees is about 52, says Gregory Babe, chief executive of the German company’s U.S. business. The skill shortage “is a real issue, and it’s going to get much worse,” he says.

Bayer has had particular trouble filling positions in such areas as chemical-process technology at its plastics plant in Baytown, Texas, near Houston. A decade ago, Mr. Babe says, a job opening typically would attract 100 applications. “These days I get about 10,” he says. After screening, Bayer often finds that only a couple are qualified. Some jobs have been open six to nine months.

“This place is five acres, and it’s three stories tall,” says Donny Simon, 55, who has worked in the plant since 1988. It takes time to understand how all the pipes, valves, pumps and feedstock tanks work together and how to avoid explosions or other accidents. Technicians need basic math and science for such tasks as calculating the rate at which dyes and stabilizing agents need to be added for specially ordered batches of plastics.

Because it can’t find enough candidates with relevant experience, Bayer this summer will for the first time hire interns to learn how to operate machinery at the Baytown plant. It plans to offer $18 to $23 an hour—unusually good pay for summer jobs—and to choose among students in “process technology” at local community colleges. Those who do well are likely to be offered permanent jobs.

Manufacturers are having trouble now partly because some of them stinted on recruitment and training when it was easier to find workers. Woodward Inc., a maker of parts for aircraft and power-generation equipment based in Fort Collins, Colo., for decades operated its own academy to train workers, but it closed it during a late-1990s cost-cutting drive. As a result, says Keith Korasick, who supervises manufacturing at Woodward’s Fort Collins plant, “we kind of lost our pipeline of skilled machinists and technicians.”

Now Woodward is sponsoring two dozen students at community colleges in Fort Collins and Rockford, Ill., the company’s other big U.S. manufacturing site. It pays their tuition and other costs for two-year programs in manufacturing skills. The students also are paid for 20 hours or so of work per week. To stay in the program, they need to maintain a grade-point average of at least 3.0.

Once the students finish those two-year degrees, Woodward aims to hire them for full-time manufacturing jobs starting at $25,000 to $48,000 a year.

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As a high-school student in Fort Collins, Zach Wagner met Mr. Korasick and other guest lecturers from Woodward. Mr. Wagner, now 18, says he was interested in “computer stuff” and hadn’t thought much about manufacturing. Most of his friends were heading for four-year universities. He considered doing the same, but he worried about running up debts. So he accepted a community-college scholarship from Woodward. He aims eventually to get a degree in engineering while working at Woodward.

Manufacturers say the U.S. education system doesn’t produce enough students strong in math, science and engineering. About 5% of bachelor’s degrees awarded in the U.S. are in engineering, compared with an average of about 20% in Asia, according to the U.S. National Science Foundation. In the most recent comparison of math and science test scores of 15-year-old students by the Organization for Economic Cooperation and Development, American students trailed far behind those from China, Japan, South Korea, Canada and Germany.

While community colleges and technical schools struggle to keep up with demand for skilled workers, some prisons are trying to help. At California’s San Quentin prison, the machine shop offers training to prepare prisoners to pass exams demonstrating skills in such areas as operating computer-controlled lathes and mills. Some inmates get classes in calculus and trigonometry to help them work with machinery.

Swift-Cor Aerospace, a maker of airplane parts, has hired several former prisoners for its plants near Los Angeles and Wichita, Kan., and is happy with their work, says Cecilia Mauricio, human-resources manager.

The impending retirement of boomers isn’t a problem for everyone. Advanced Technology Services Inc. of Peoria, Ill., sees the trend as a huge opportunity. ATS provides maintenance and related services for manufacturers. Jeff Owens, president of the company, says he expects demand for those services to surge as manufacturers can’t find enough qualified employees and need to outsource more tasks to firms like ATS.

ATS now has about 2,400 employees in the U.S. and aims to reach 2,800 by year-end. Nearly a third of the people ATS hires come from military backgrounds, often with experience in fixing tanks or airplanes. Aside from knowing how to fix machines, the military vets are good at “being on time, being clean-cut,” Mr. Owens says.

ATS also helps pay for 40-week community-college training programs for some people it hopes to hire, and it funds scholarships for engineering students at universities. Two ATS managers spend nearly full time working with high schools, attending career days, conducting plant tours and meeting with guidance counselors.

“They’re out there selling the idea of working in a manufacturing plant—and trying to dispel the notion that it’s dark and dirty and unsafe and boring,” Mr. Owens says.

Henry Welsch, 36, is one of ATS’s converts. For the first 15 years of his adult life, he worked as an insurance agent and claims adjustor and as a sales manager for a moving company. But he decided a couple of years ago that he would rather have a job that was more secure and provided steady pay rather than unpredictable commission income.

One problem: He had never worked with tools or machinery. “I was starting from just nothing,” he says. He signed up for a nine-month manufacturing-skills course at Illinois Central College in East Peoria, Ill., and got a job at ATS in late 2009. That company assigned him to a CaterpillarInc. plant, where he repairs machinery.

It was a rough transition. He had to prove himself to his new colleagues, some of whom, he says, were “a little rough around the edges.” The job may lack glamour, Mr. Welsch says, but he thinks he made the right choice. “This is what I do in the daytime, and I go home and don’t have to think about it.”

USTR.gov Headlines Friday, May 6th


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