Re-surging Manufacturing Will Face Shortage of Skilled Workers

U.S. manufacturing sees shortage of skilled factory workers – The Washington Post.

This is a third and last of an education series.  First of all, I must clarify that there is no measurable manufacturing re-surgence in New Jersey but it appears to be happening in other states. Second, I must also emphasize that numerous employers prefer to entice experienced workers already employed to join their shops rather than train new, inexperienced workers – a very myopic policy in my opinion. Third comes the fact that automation has changed the nature of many manufacturing operations and the new employees must be computer literate and  must meet higher academic standards overall.

This is what has happened: As the manufacturing sector moved overseas, the actual industries were liquidated, and their old manual lathes and metal presses sold out. As labor and fuel costs entice some manufacturers to return to the United States, they equip their new shops with state of the art machinery which, more often than not, is computer controlled.

This is called is some disciplines “The Hamburg Factor” – from Hamburg when it was razed by allied bombing in WWII. When the city and its factories were rebuilt after the war, they installed state of the art machinery while the victors, in this case the United States and Britain, both of which had not seen such degree of destruction – the U.S. saw none – had their factories equipped with older, less efficient machinery. That effect was particularly damaging to Britain’s economy because it lacked the resources to modernize.

That effect will be playing here and the new industrial workers will have to know more. Dedicated schooling is needed.  And here enters the possibility of preparing some students – those less inclined to pursue an academic college-bound path – to follow this alternative.

It is unlikely that we will see any revival of manufacturing in New Jersey under the current political system. Some structural changes must happen first. But if elected and all the reforms I propose pass, there is a substantial likelihood that manufacturing will return to New Jersey. However that will only happen if the prospective employers see a readily available, qualified work force.

Thereof the importance of setting up a linkage between schools and current N.J. employers in order to create apprenticeships and enhance the scope and number of trade schools in the state.

Unfortunately, although I would like to expand and give more details on this plan, it is impossible because we can not foresee what the prevailing economic conditions will be in 2014 and 2015 . There could be a massive return of manufacturing to the U.S. or not. But the policy of New Jersey should be to plan ahead for an eventual return of significance and competing with other states for those businesses. To compete effectively, a number of conditions must be met and one very important is offering high quality workers.

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2011 Ends in Flux

BBC News – Ireland faces new wave of emigration.

It is not only the Irish. There are also many young Spaniards, French, Portuguese, Italians, emigrating to Germany Australia, Canada, and the U.S. But the euro is dropping and that may mean that European exports will become cheaper. Italy’s bonds are selling at lower interest. There could be light at the end of the long eurozone tunnel.

http://www.nj.com/news/index.ssf/2011/12/unemployment_claims_rise_after.html

Meanwhile, the U. S. economy continues to sputter. It is moving but painfully so.

Employment is a function of supply, which in turn is a function of demand, which in turn is a function of disposable, income, wages, wealth shaped in a reasonably low and widely-based  pyramid. Does anybody understand that concatenated relationship? It is of no use to have cheap credit if there is no demand.

http://www.cnn.com/2011/12/29/opinion/nasr-iran-oil-hormuz/index.html?hpt=hp_c1

Another War?

Who cares if Iran develops a nuclear weapon? That is why we have a nuclear deterrent, isn’t it? North Korea and Pakistan both have nukes and the chances of terrorists getting their hands on one bomb are at least as great in those countries as it would be in Iran.

Is it in the interests of the United States to enter another conflict? My answer is a resoundingly no and I urge the president not to sign the law black-listing the Iranian Central Bank. The ICB sells the Iranian oil. The law would essentially be  an embargo against Iran. President Obama has said he does not like the law but will sign it anyway… Why is he doing it then for?

Every war-monger I have seen would not be doing the fighting.

http://www.aljazeera.com/indepth/opinion/2011/12/20111226145144638282.html

China is looking north. China does not invade anybody for oil. They simply buy it.

China is the largest trading nation and has the largest merchant fleet in the world.  While we develop the new super aircraft carrier, the Ford Class, they build the largest container ships.

http://www.aljazeera.com/news/middleeast/2011/12/2011122944024838879.html

The Arab Spring stretches into Winter:

Fighting continues in Syria, Egypt, Yemen. Tunisia and Libya sound like success stories although un islamist party won the first elections in Tunisia – not a surprise considering they were the spearhead of the resistance for many years.

http://www.nj.com/news/index.ssf/2011/12/during_radio_appearances_chris.html

And poor New Jersey, ends the year with the announcement – by the governor himself – that 2012 will be the year of education. It is ironic, Fidel Castro, a master of demagoguery, used to dedicate the years to some grand enterprise too, at least during the first decade of the revolution. Yes, we had an education year in Cuba too and if I remember well it was 1961.

So for New Jersey, 2012 will be the year of the dismantling of public education while the root factors in the failing districts are ignored. Why are they ignored? Because they are ideological taboos for this governor.

To educate more and better, we must have the children in an education-auspicious-setting for longer time; much longer time.

In the meantime, out New Jersey economy stumbles along at a languid pace, and a dentist in central New Jersey measures our decay in the teeth of his patients:

http://www.app.com/article/20111228/NJNEWS/312280045/Manalapan-dentists-offer-day-of-free-care?odyssey=mod%7Cnewswell%7Ctext%7CFrontpage%7Cs

We are not only losing our jobs and our homes; we are losing our teeth too.

The China Juggernaut: We Must Outdo It to Revitalize New Jersey

China City Woos Apple Supplier With Workers, Low Wages – Bloomberg.

The article quoted is a must-read.

Getting the manufacturing facilities of a corporation such as Apple or the one mentioned in this article, Foxconn Technology Group, could turn around the fortunes of New Jersey. The question is how to attract them here.

Notice that Foxconn is not alone in its eternal quest for margins. Intel, Apple, Ford, GM, etc are all already in China, but even the relatively low wages of the China coast seem too high for them and they are now contemplating relocating to Vietnam, or Bangladesh. What the the city of Zhengzhou is trying to do is what we must do here in New Jersey.

But of course we can not bring down wages here to the levels of hinterland China – or Vietnam and Bangladesh for than matter. So we must be more creative in our approach. That is why I have presented in my political/economical/taxation plans what may seem an extraordinary overhaul of everything at first impression but happens to be absolutely indispensable unless we accept descending to Third World standards of living.

The fact is we must overhaul our tax and political systems if we want to turn the tide to our favor. We can not count on the federal government so we must do our own reform here in New Jersey. Do not count on the two dominant political parties either. They are the ones that have created this mess and they live well regardless of what happens around them.

It is not only about attracting new corporations; it is also about retaining those we still have here.

Britain Alone Worst Obstacle To Euro Rescue

‘Cameron Is a Coward’: European Politicians Slam British EU Veto – SPIEGEL ONLINE – News – International.

“We jumped into a rowboat… next to a supertanker” said David Milliband, former U.K. foreign minister under Labor, criticizing the posture taken by the Conservative PM in Brussels today.

Britain vetoed the 27-nation agreement today and the other 26 member nations had to reach an accord outside the framework of the E.U. Effective yes but it is not the same.

At the center of the British dissent is banking. The financial sector is a large portion of the U.K. GDP – larger than in Germany or France – and U.K. banking laws are modeled after their American counterparts, cut-throat and unregulated. The banking sector in continental Europe is more regulated and as long as anybody could do as they pleased, the U.K. would go along. But  the treaty proposed today, and adopted by the other 26, imposes supra-nationals controls which would affect the U.K. financial sector. British banks would be subjected to the stricter Franco-German norms that are the model in Europe.  Thereof the British veto.

But those supranational controls are the only way out of the crisis. Britain, or rather its conservative government, is being incredible selfish and short-sighted. If Europe fails, Britain sinks.

The euro crisis is affecting both the U.S. and China, two major traders with Europe. China just lowered the amount of cash Chinese banks have  to keep liquid to stimulate internal spending, even at the risk of worsening inflation. That is because Chinese manufacturing is slowing down due to a drop of demand abroad.

Many in Europe feel that the U.K. should leave the E.U. altogether and be like the Swiss. That would certainly benefit the euro rescue and the world economy.

Clarification on the Posting About the Central Banks Action Today

The U.S. Federal Reserve Board is not really giving  free money to Europe but making  more dollars available to lend at a lower interest so the other central banks borrow from the Feds and then in turn they can lend to their banks at a lower interest so the banks can also lend at a lower interest so the borrowers pay less interest and that is supposed to benefit businesses and consumers.

By the way, The Federal Reserve does not borrow money. The step taken today do not increase the deficit. The only one allowed to issue federal bonds – that is borrowing – is the U.S. Treasury Department. The Feds on the other hand, are independent from the federal government and they print money so when they do the money supply increases.

That could lead to inflation if the economy takes off but I think you’ll all agree with me that there no danger of a takeoff  for now – we are kind of stagnant. And the current crisis overrides any fear of inflation.

What the central banks are trying to prevent is a panic if the euro fails because then everybody puts their money under the mattress and in that case we have a Depression – with a D.

Thus I do support the move although, believe me, I am part of the 99% and closer to 99 than to the single digits.

Central Banks Take Joint Action to Ease Debt Crisis

Central Banks Take Joint Action to Ease Debt Crisis – NYTimes.com.

Very timely move as credit is tightening and numerous nations , including the U.S. depend on borrowing. Without readily available credit, any chances of growth are null.

At the core of the issue is that Chinese banks are also hoarding cash under orders of the government to reduce leverage and the money supply. The Chinese are worried about inflation.

In Europe, numerous banks are over-exposed with large holdings of sovereign debt. Just yesterday numerous banks were downgraded, including all the major American banking institutions.

Then investors do not trust sovereign bonds any longer, not after they lost 50% of their loans to Greece. The German 10 years notes offered last week received cool reception even though Germany is viewed as the most stable economy in the E.U.

The possible way out I see at this point is to further the union of Europe, democratizing the E.U – so that member of the European parliament are elected by the people – and establishing a supranational control system for national budgeting and eurobonds. The question is whether European political leaders can move fast enough or achieve those goals at all.

Euro Crisis, China’s Inflation Tighten Credit, Threaten Growth

Businesses Scramble as Credit Tightens in Europe – NYTimes.com.

Banks in general, but particularly European and Chinese have been warned by their governments to reduce leverage and increase their liquidity; in Europe to withstand loses from debt re-structuring and in China to reduce the money supply and tame inflation, Therefore there is less money available. It is mathematical.