Thursday, January 27, 2011

Korean Garlic?

Back in October I posted a couple articles dealing with "free trade": Chinese Garlic and Chinese Garlic 2. Today we have a variation on a theme, only centering on Korea.  The reason is the announcement yesterday that Hyosung USA is closing its Utica plant and taking 85 jobs with it.
When Hyosung bought the company in 2006, there were about 175 local employees.

“Unfortunately, we have to be reactionary in this process,” said Randall Soggs, Utica economic development commissioner. “That’s the least desirable position we can be in.” . . .

“I was told that this has to do with excess capacity within their system,” Soggs said. “This decision was made in Korea, and it’s reflective of the company wanting to reduce their manufacturing footprint in the U.S.”
Of course.  The goods produced by this company are bought directly or indirectly everyday by American consumers or companies ... but if they can be "more efficiently" produced overseas, why produce them in America . . . especially when America lets them be sold here?

Is it only coincidence that this announcement comes on the eve of Congressional Republicans and the President pushing another Free Trade Deal . . . now with Korea?

Why are we SO CONCERNED about opening up foreign markets to our goods, when our markets are saturated by foreign products.

It's interesting that the Utica Master Plan parrots the consensus that manufacturing is dead and that our future is in "service" or "knowledge" industries.  Poppycock! Its this plain acceptance of this notion that has gotten us in trouble.

We depend on manufactured items every day.  The need for manufacturing never will go away.  The question is do we do it here to meet our own needs?  Or do we depend upon other countries to do it for us . . . making us dependent upon them much like a colony depends on the motherland.

I'm not going to go into the economic theory today.  We've seen the results of it.  Free trade does not work when there are cultural differences.  And I don't think many are ready to give up their American culture . . . at least not yet.


Brother Jesse said...

Poppycock is it, your Strikeship? Better get ready to give up your American Culture, Strike. It's been bested by those who can make a product for less, (partly) by not giving a fig for the working man or woman or child. American middlemen couldn't care less either, as long as they can make lots of money on wholsesale and retailing and run for cover when the next Rock Star (can't these people stay in their recording studios?) goes to Asia and (OHMIGOD!) discovers another sewing sewer (that's sue-er).
We're now run by bankers, dontcha know, and we'd better keep that in mind. Whatever makes money is good for whatever America is or will be, to paraphrase Charles Erwin Wilson of General Motors. We no longer have a culture to speak of. Just paychecks. (Or unemployment checks.)

Anonymous said...

I believe the reason that politicians parrot the "service industry" as the wave of the future is that it makes it easier for them, i.e., they don't have to admit their incompetence or failure in attracting good paying jobs. That & the fact that public officials don't have to support a family on the wages that these jobs provide. As our standard of living {at least for the middle class} continues to deline, we'll be able to afford the cheap crap imported from overseas. Think about it.

Anonymous said...

Corporate America is out to teach the workingmen & women of America a lesson. Either work for less pay & benefits, or we'll ship your job overseas. That's it. No unions, lower labor costs, less regulation, & no benefits to pay. And they're doing a good job of it. The middle class is going to have to get used to a lower standard of living, like it or not. While corporate America sits on 2 trillion dollars of profits earned in the past year, 9 million American workers sit home with no job & watch as their livelyhoods are shipped to China. Multi national corps. don't give a damn what is good for this country. Why should they?

Austinwalker said...

Since 2002, the U.S. has not mined any rare earth elements used in smart bombs, silent helicopter blades, night vision, missiles, and tank guns, as well as computers, cell phones, DVD players, and other civilian technologies. The U.S. has about 13 million metric tons in reserves according to the U.S. Geological Survey.
China has rapidly developed its rare earth element mining sector, with over 55 million metric tons in reserves and 130,000 metric tons of annual production. It now controls over 97 percent of REE mining and refinement in the entire world. China is largely able to do so because it holds about 36 percent of global reserves, has lower labor costs, and because it largely ignores the environmental impact of the REEs. It lacks competition since the U.S. dropped out of the market.

Anonymous said...

Quite simply - Hyosung was effected by the high costs of energy, labor, and global factors. Energy in NYS was costing them twleve cents per killowatt hour and their plant in Alabama was costing them six cents per killowatt hour. Labor costs? The jobs are going to Vietnam, enough said!

In addition, the auto market in the US has not been good while the auto market in Asia has been robust.

Manufacturing is not dead in the US, but it will look different than it did 50 years ago. It will be high value, R&D, and specialty related Mfg. Food, pharmaceutical, or nano related for example. NYS has a high % of R&D related jobs, we need to keep and grow these.

The US labor force will/must change to reflect the realities of domestic and global factors. The reality is that NYS and even the US is becoming unfriendly to do business. Businesses must lower overhead, labor, material, and other costs of doing business to survive. ie. don't turn on the lights/heat, don't hire people, don't expand your footprint, don't do anything wrong because you will be sued, fined, or jailed - at the very least you will pay$$$$, probably more than you make in profit, even in your best years. Sorry, this is just a fact.

Successful businesses of the future will offer a high value product/service, employ very few people, with expertise which they can charge a premium for their services, and where there is a mote around their business. Services - lawyer, doctor, IT professional, CPA, government mandated or funded, etc... Yes, there will be employment for those who do not have skills - Wal-Mart - it used to be the local factory....Wal-Mart is our new factory like environment - like it or not - it is what it is.

Don't like it? Go to school, get an education in a high demand field where you can work for yourself and charge a premium for your services. But quit your bitching from the sidelines!

Strikeslip said...

I like the way some people place the blame for fleeing jobs on "the US Labor force" and offer getting "an education in a high demand field" as the solution . . . The labor force's implied lack of education is not a cause of our problem . . . otherwise we should be having jobs coming out of our ears in the Greater Utica area since the opportunity to get a higher education here has NEVER been greater. Frankly, throwing more money into education is throwing it away.

If everyone got "an education in a high demand field" and applied for jobs in those fields, the fields would no longer be "high demand" and pay would drop.

No doubt NYS policies have driven businesses away, but the idea that "free trade" is good for the US has been dis-proven by reality.

China is every bit as capable of producing "high end" products as we are. There is no reason to think that China will be not able to use technology to make its individuals every bit as productive as America's individuals are, when they have a need to do so. You are fooling yourself if you think otherwise.

If your competitor can produce a comparable product at a cheaper cost than you can, you lose. Your alternative is to become more like your competitor.

Free trade in such an environment would inevitably lead to U.S. becoming like China: A small wealthy and powerful elite governing the multitudes working at slave wages with no middle class.

This is exactly the transformation we seem to be witnessing now.

Anonymous said...

I agree Strike. I don't think that it's a coincidence that thousands of manufacturing plants in the U.S. have closed in the last decade. Since these free trade agreements have been instituted our manufacturing base has been decimated. It's pathetic. Someone mentioned Alabama for it's cheap energy costs. So what. A few years ago, Chicago Pneumatic moved it's manufacturing plant from Utica to I believe, South Carolina or Georgia. The plant lasted at the most 5 years before it closed. Why? According to a plant manager that I spoke to from this area who moved down there, to put it simply, the work force sucked. They simply did not have the work ethic that is found in CNY. CP found out the hard way. And if it wasen't for these free trade agreements & tax breaks that Corporate America is getting, funded by the very same taxpayers that are losing their jobs to China & elsewhere, this area would be swimming in manufacturing. What good is cheap energy, when people just don't want to work?