OIT Times: Keynote Opening Address--Eamonn Fingleton
March 26, 2001
The U.S. manufacturing industry is crucial to the world economy, and it in trouble. That was the key message of Eammon Fingleton, a former editor for Financial Times and Forbes magazines and the Tokyo-based author of In Praise of Hard Industries.
e had an American trade deficit of 4.5% of gross domestic product last year,said Fingleton. hat shocking. It easily the worst trade deficit figure the United States has ever incurred.Fingleton sees that deficit directly tied to a decrease in manufacturing in the United States. merican manufacturing is in general decline, but the fault doesn lie with manufacturers. Manufacturers are victims of trends beyond their control./p>
Fingleton believes that both the media and policymakers have had a hand in the decline of U.S. manufacturing. He sees the United States moving out of manufacturing and into post-industrial services, in part because the media has created the impression that manufacturing doesn matter any more.
Manufacturing industries generate exports. While he acknowledges that we do enjoy our computers and the Internet, the problem is that these post-industrial services do not export. In terms of value added, Fingleton estimates that manufacturing industries in the United States generate about 11 times more exports than do services.
In addition, Fingleton believes that manufacturing more closely matches the employment needs of our society. Traditional manufacturing creates jobs for almost everyone, whereas the new economy creates jobs for only the intellectually elite. learly a lot of people are left out in the cold by a movement of that sort,he said.
Fingleton also sees manufacturing as a key to a high wage economy. He explained that Japan, Switzerland, Germany, Denmark, Sweden, and Austria boast higher wages than the United States, and a higher proportion of their workforce is in manufacturing.
Role for policymakers. Fingleton believes policymakers have played a significant role in the current state of manufacturing. overnment helps in many ways this gathering is certainly one example of a helpful role for government. But other policymakers have not done enough to level the playing field in world trade,said Fingleton. For decades the United States has been the victim of dumping and, in some cases, deliberately predatory tactics by foreign suppliers. Profit margins are depressed, so U.S. companies have less to reinvest.
In other countries, explained Fingleton, manufacturers work behind tariff barriers and can set prices in their home markets to recover full overheads. They can then sell to American markets at marginal cost. American companies become weakened and the media blame management for not reinvesting more. Fingleton believes this misplaces the blame. olicy makers have applied Band-Aid solutions to the trade problem rather than looking at it in a more comprehensive and effective way./p>