The losses track the impact of offshoring — the moving of jobs overseas — by multinational companies and the economy’s slide into the Great Recession. The data also shed light on the current debate over a $6 trillion cumulative trade deficit that piled up over a decade, and whether the U.S. should put more pressure on China to stop manipulating its currency, which undercuts domestic manufacturing.
The issue has split three top Ohio legislators who have pivotal roles in the debate. Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, believe the U.S. should take a harder line toward China by punishing currency manipulation. However, U.S. House Speaker John Boehner, R-West Chester Twp., said the move jeopardizes U.S.-China relations.
Boehner’s refusing to allow a House vote on an anti-currency manipulation bill.
“While I believe Ohioans deserve a level playing field when it comes to trade with China, I oppose this legislation because it will hurt our economy and result in fewer jobs for Ohioans,” he told the Dayton Daily News on Friday.
Boehner said China is the United States’ third-largest market for U.S. goods, and is the largest export market for United States’ agricultural products
His opinion is not shared by Republican Congressional Reps. Mike Turner, R-Centerville, and Steve Austria, R-Beavercreek, who both co-sponsored the bill.
“We only have to look at the Miami Valley economy to see the need to address our trade imbalance with China. I will continue to support measures which increase the United States’ competitiveness and to stop unfair trade practices,” Turner said.
Boehner did tell the Dayton Daily News he’d reconsider his decision to hold up the bill if President Obama would agree to sign it into law.
What does data mean?
The data illustrate the steep decline in products made in Ohio and across the U.S. and raises questions about when a durable jobs recovery could begin.
The number of manufacturing operations in Ohio fell 18 percent from 19,697 to 16,159 over the past 10 years. That has led to the loss of 369,097 jobs in Ohio since 2001, the data show.
Nationally, the number of factories fell 14 percent from 401,962 to 342,941.
The businesses include auto and processing plants, canneries, refineries, mills and consumer goods factories. Figures were gathered from employer-generated reports covering 98 percent of U.S. jobs, the bureau said.
Local numbers
In Montgomery County, the number of manufacturing businesses fell 21 percent from 1,010 in 2001 to 810 businesses in 2011.
“These new numbers show that Dayton’s manufacturing base has been particularly hard hit, in part because the Chinese government illegally undercuts Ohio workers and companies by manipulating its currency,” Brown said.
Few local communities have been as hard hit as Moraine, which lost 10,000 manufacturing jobs in a decade, said City Manager Dave Hicks. He’s working to find businesses for five million square feet of vacant manufacturing plant space, including a closed former GM plant.
For Hicks, fixing the nation’s trade imbalance should be job No. 1. “America is like that nice guy you know who is being taken advantage of, and it can’t go on forever. We can’t be taken advantage of forever.”
Peter Morici, former chief economist at the U.S. International Trade Commission, says the manufacturing bust from offshoring by multinationals is at the core of why the economy remains sluggish. It explains why government operations are harder to fund and people can’t find jobs.
In a nutshell, Americans no longer make enough of the things they use every day and rely on exports from abroad, primarily China and offshored multinational factories, to fill the gap.
China produced more than 40 percent of all consumer goods purchased in the U.S. last year, according to the U.S. Consumer Products Safety Commission. In 2010, the U.S. trade deficit with China was $273 billion, half the total national trade deficit with imported oil making up the rest.
“Economists agree the recovery is weak and a second recession threatens, because the U.S. economy suffers from too little demand for what Americans make. Every dollar that goes abroad to purchase oil or Chinese consumer goods that does not return to purchase exports is lost purchasing power that could be creating jobs. Halving the nearly $550 billion annual trade deficit would create at least five million jobs,” Morici said.
Congressional views
Sens. Portman and Brown have repeatedly criticized currency manipulation and product dumping for devastating Ohio industry. Both championed a successful Senate bill to set tariffs on nations found to be manipulating their currency to game the system. Brown was chief sponsor of the bill.
Ohio Gov. John Kasich, who has courted Chinese investors, has also criticized the People’s Republic for the manipulation.
Boehner, however, said he fears the currency bill would ignite a trade war. But some say Boehner won’t be able to lock the bill up forever following the Senate’s 63-35 vote in favor of the bill. The House version already has 218 co-sponsors, a majority.
Brown characterized the currency manipulation bill as the biggest bipartisan jobs bill Congress would entertain this year, citing a June report by the nonprofit Economic Policy Institute, an advocate of balanced trade.
EPI estimated that ending currency manipulation by China and other Asian nations could create up to 2.25 million jobs over the next 24 months, boosting gross domestic product by up to $285.7 billion and reducing the federal budget deficit by up to $857 billion over 10 years.
Daniel Ikenson, associate director of the Herbert A. Stiefel Center for Trade Policy Studies at the libertarian Cato Institute, which supports U.S. trade agreements, said the fight in Congress stems from public pressure.
“A majority of Americans think China’s rise is at our expense,” he said. “China is intent on taking care of itself. I don’t think their objective is to screw America, but we may get caught in their crosshairs. This legislation is borne out of frustration.”
Local response
At an Oct. 7 summit on revitalizing manufacturing held in Dayton and sponsored by the city, county and business and labor groups, a letter was drafted to Boehner urging him to allow a vote on the Currency Reform for Fair Trade Act.
“Dayton is an innovation and manufacturing hub,” said Michael Stumo, CEO of the Coalition for a Prosperous America, the national nonprofit that helped organize the summit. “Local leaders want to do the best for their region. After considering issues of regulation, banking, trade, tax and energy, they decided that balancing trade and tax reform were the top two core priorities.”
Brown said new tariffs have created good Ohio jobs, citing a 2010 International Trade Commission ruling against Chinese dumping on behalf of Ohio seamless steel tube producers. The tariffs allowed a manufacturer to build a $650 million plant in Youngstown, creating more than 400 good-paying permanent jobs, one of the state’s few employment bright spots.
Portman said product dumping has undercut saw blade workers in Elyria, 1,500 petroleum candle workers in Muskingum, Highland and Butler counties, 400 thermal paper workers in West Carrollton, and thousands of others across Ohio, including at U.S. Steel in Lorain which produces hot rolled steel.
Consumers have benefitted from Chinese imports, but those benefits have been wiped out by the costs, such as welfare payments, associated with the job losses, according to a study by economists David Autor of the Massachusetts Institute of Technology and David Dorn of the Center for Monetary and Financial Studies in Madrid.
U.S. response
The Obama administration hasn’t been idle, although it has repeatedly declined to declare China a currency manipulator, which could trigger sanctions.
The U.S. recently complained to the World Trade Organization about nearly 200 hidden Chinese government subsidy programs that make exports appear less expensive as a means to seize market share.
Another 50 subsidy programs were found in India.
The U.S. renewable energy industry, for example, has been hit hard with companies filing for bankruptcy.
“The situation was simply intolerable,” U.S. Trade Representative Ron Kirk said.
Critics say the problems show that the current state of U.S. trade relations is simply unmanageable. Additionally, because the WTO takes years to resolve complaints, by the time it does, jobs are destroyed.
Seven U.S. solar panel makers filed a trade case against China on Wednesday, saying it spent billions in government subsidies to rig the market.
“Given the jobs crisis, why can’t we pass currency legislation that enjoys broad, bipartisan support?” asked EPI economist Robert Scott.
Said city manager Hicks: “We have the capability to build anything here. But when we are faced with currency manipulation or unfair tariffs, it is not fair. You can’t compete with one hand tied behind your back.”
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