- Toolmaker For The World
- By Richard N. Baldwin T. /HispanicVista.com
-
- The title here is taken from the poem "Chicago" by Carl Sandburg
in 1916. "Hog Butcher for the World, Toolmaker, Stacker of Wheat, Player
with Railroads and the Nation's Freight Handler." In the almost century
that this poem was written, a lot has changed.
The Hog Butcher part has long ended as most meat processing is done
closer to the source of production.
As far as the Toolmaker, I spent 35 years of a prior life in Chicago
in that business. The Chicago area had over 600 toolmaking firms locally
then. The normal Sunday classified advertisements for Moldmakers (a
specialty of toolmaking) averaged at least 12 ads, sometimes as many as
20. Now, a countrywide search for moldmaker ads will net about 6. If you
are looking for molds (for plastic or diecasting), you go to China. More
on this below.
As for Wheat (and grains), this is still a vital economic area for
Chicago.
And Chicago remains a major transportation hub for the US in rail,
sea and air.
A lot of the former economy of Chicago has been taken up in the
financial area, but as a manufacturing center, Chicago, once host to
thousands of smaller manufacturing firms, is no longer a "smokestack
city".
I am reminded of Pat Buchanan's "Hollowing out of America" phrase.
Although I don't agree with many of his conclusions, his facts are good.
Toolmaking is a vital foundation for a manufacturing economy. Without
tools, you make nothing. By making, I mean actually making what is sold,
not just assembling components. And as such, toolmaking was one of the
most important leading indicators for economic trends.
Let's step back a little. Remember Germany a few years ago as being
written off as a dying economy? A country that due to various internal
policies became overpriced and moribund as an exporter. Surprise! Germany
(since 2003) is now the leading export country in the world. The US with
China creeping upward follows this. Japan runs a distant third. The one
thing that Germany never abandoned was placing the highest emphasis on
quality along with innovation. The German manufacturers overcame their
problems by using temporary labor, setting up "offshore" plants and
concentrating on higher technology for developing products with very high
R&D spending. (The largest Volkswagen plant is now in México along with a
large Bosch plant for auto components.) For the record, Bosch runs a
large in-plant school division to train their incoming employees how to
function in a modern plant. I would imagine that Volkswagen does the same.
And Bosch prefers prospective employees right off the farm, not products
of México's educational system.
But lately, Germany has been pulling more and more of these
"offshore" plants back into Germany. Germany's machinery exports has been
growing at 15% a year, the auto sector by 11%. Germany's share of the
world export market is at 9.4%. The US stands at 8.6% with China at 8.1%.
Almost inverse to their respective populations. And Germany is doing this
with a very highly priced currency (the Euro). The US is hanging on by
exploiting their lower valued Dollar.
The bottom line is that Germany has gone back to a vital fundamental
economic basic: manufacturing makes the foundation to a country's economic
well being. It creates the jobs that build a vital internal market.
As far as internal markets go, it is the stated policy of China to
develop, as fast as practical, a strong internal market. And this is while
the internal market in the US, the world's largest, is falling behind.
There are lessons here for both the US and Mexico here. Exporting
products forms the basis for a prosperous economy and provides the jobs
for an internal market. Lessons that México has not learned and that the
US seems to have forgotten.
In addition, consider this: In a foreign owned plant or company
(foreign direct investment or FDI), the profits go to the investor. In an
internally owned plant, the profits stay in the host country. México
should consider using more of their internal capital to build Mexican
owned plants and companies. Yes, the money is there if a more favorable
government environment were present. But in the US, offshore countries
increasingly own more and more businesses. This has something to do with
the fact that the US is now operating as a debtor country with its out of
control national budget and negative trade balances.
From the US view, a Mexican location for a plant to import product
from is more favorable to national finance that one in Asia. At least the
trade balance is much better in México's case.
For México, it is of note that México is increasing manufacturing at
a fairly good pace. What are needed are more educational innovations to
upgrade their worker base to higher levels of work in Mexico.
Both countries should remember is that to really make money, making
and exporting goods is best. Playing with other people's money (the
financial sector) is not broad enough. And simply importing goods from
overseas and marketing them internally is the poorest way for a country to
make money.-
By
Richard N. Baldwin T. /HispanicVista.com