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Made in the USA Reports – August, 2014

Made in the USA Reports 

A Publication of the Made in the USA Foundation

Vol. 26 No. 8 © Made in the USA Foundation–August, 2014

Made in the USA Foundation at Walmart Manufacturing Summit

 

The Made in the USA Foundation is working with Walmart to bring jobs back to the United States. The Foundation attended the Walmart Manufacturing Summit in Denver, Colorado August 14-15 and helped match Made in the USA component suppliers with manufacturers.  Walmart has committed to buying an additional $250 billion worth of American-made products over the next ten years.

The Foundation is preparing a report for Walmart on American-made products that it should carry.  If your company is interested in selling to Walmart, please send the Foundation information about the products that you to appear on the shelves of the world’s largest retailer.

The Made in the USA Foundation has been pressuring Walmart to increase its purchases of American-made products and Walmart is finally responding favorably.   Foundation members KNEX and Alliance Rubber have significantly increased their sales to Walmart over the last year.

Shame on Ralph Lauren and the U.S. Open

 

Two years ago, faced with the Made in the USA Foundation’s criticism of outsourcing of Olympic uniforms and souvenirs, Ralph Lauren promised to bring manufacturing back to the United States.  While Mr. Lauren did bring token manufacturing back before the 2014 Winter Olympics, his company manufactures all U.S. Open clothing offshore in third-world sweatshops.  Ralph Lauren’s polo shirts retail for $125, definitely high enough to leave a substantial profit if they were made in the USA.

In July, 2012, Polo Ralph Lauren released a statement, “Ralph Lauren promises to lead the conversation within our industry and our government addressing the issue of increasing manufacturing in the United States. We have committed to producing the Opening and Closing ceremony Team USA uniforms in the United States that will be worn for the 2014 Olympic Games.”

Ralph Lauren has failed to lead the apparel industry to bring manufacturing back to the United States.  There are many fine American manufactures who are ready, willing and able to make U.S. Open clothing in the United States including American Apparel and the All American Clothing Company.

You can make a high-quality T-shirt in the United States for $4.00 or less.  The U.S. Open sells its Ralph Lauren T-shirt for $45 and it is made in China.  There is plenty of room for profit for the USTA, and Ralph Lauren, if they sell American-made T-shirts and clothing.

The U.S. Open should be the showcase for American products.  It is the premier tennis event in the United States, and one of the four major tennis tournaments held worldwide.   

Ralph Lauren’s Website Violates Federal Law 

On RalphLauren.com the website fails to disclose that all of the U.S. Open garments for sale are imported.  The federal Textile Act provides that promotional material or mail order catalogs, including Internet websites and magazine ads, are falsely or deceptively advertised unless they clearly state if each product is made in the United States or imported.

The USTA Should Get on the Ball 

The United States Tennis Association, of which I am a card-carrying member, should require that its licensed products be made in the United States.  The USTA owns the U.S. Open.  The USTA should start with tennis balls.  For many years Wilson’s U.S. Open tennis balls were made in the United States.  Now they are made in China.  If the USTA required American-made tennis balls, Wilson, or a competitor, would restart production the in the United States.

Major sponsors of the U.S. Open include Emirates Airline (owned by the country or more accurately the Emirate of Dubai), Heineken beer (Dutch), Evian water (French) and Mercedes Benz (Germany).  I don’t think that the U.S. Open would have much difficulty finding American replacements for these imports.

Remarkably, the USTA has the U.S. Open T-shirt made overseas.  In violation of federal law, the USTA’s website does not disclose where the shirt is made, but says that it is made by “American Needle,” which sounds American, but it is not.  American Needle has the U.S. Open shirt made in India, and it also fails to comply with federal law on country of origin labeling.

The Federal Trade Commission 

The Foundation has filed a complaint with the Federal Trade Commission against Ralph Lauren, the USTA and American Needle for failing to disclose the country of origin of its U.S. Open apparel products on the Internet as required by the Textile Act.  The ball is now in the FTC’s court.

 

 

Richard Nixon’s Biggest Mistake

By Joel D. Joseph, Chairman, Made in the USA Foundation

Vladimir Putin said that the biggest mistake of the twentieth century was the breakup of the Soviet Union.  Au contraire, the biggest mistake of the twentieth century was President Nixon’s opening the door to China without imposing limits on imports and without having an agreement on pollution and currency manipulations.

Richard Nixon resigned from the presidency forty years ago.  While most commentators have praised Nixon’s China Gambit, the opening of trade to China has caused the United States more lasting harm than any decision made by any occupant of the Oval Office in history.  Unless we reverse Nixon’s course, our trade with China will lead to the downfall of American leadership and the evaporation of the American dream.

Until 1972 the United States did not trade with China.  We were on top of the world.  The unemployment rate was a low 5.6%.  The average college tuition was a modest 7% of median income; now it is a staggering 26%.  To pay this outsized tuition bill Americans owe more than $1 trillion in college loans.

Trade was virtually balanced in 1972.  By 2012 the United States had a staggering $535 billion trade deficit, $315 billion of which was with China.  This trade deficit is an anti-stimulus of more than one-half a trillion dollars a year—no wonder the economy has been stagnant and most Americans are living paycheck to paycheck.

In 1972, the top one percent of Americans earned 9% of all income; today the top one percent earns 19% of all income.  Emmanuel Saez of the University of California, Berkeley, “Striking it Richer: The Evolution of Top Incomes in the United States.”

The top ten percent earned more than half of all income, 50.4%, in 2012.  In 1972 the top ten percent earned one-third of the total.  “Top Incomes in the Long Run of History,” Journal of Economic Literature, 2011. The middle class in America has been severely wounded: The Century Foundation concluded, “in the United States, real average annual earnings for production and other non-supervisory workers peaked in 1972 at $40,884, while total consumer credit amounted to just $2,804 per person. By 2008, average annual earnings had fallen by $6,408 to $34,476, and households were making up the gap with an extra $4,940 in credit per person—more than triple the ratio of credit to earnings as in 1972.”

Trade with China Dramatically Increased Income

Inequality in the United States and Undermined the Middle Class 

Most economists agree that expanded international trade increases income inequality in developed countries like the United States.  The pro free-trade Peterson Institute for International Economics sought to quantify the effect of trade policy on U.S. income inequality and found that 39 percent of the increase in inequality was attributable to U.S. trade policy.  William Cline, Trade and Income Distribution, (Washington, D.C.: Peterson Institute for International Economics, 1997), at 264.

Nixon’s policies exported jobs to China by allowing a long laundry list of goods to be imported. China began exporting more and more goods, seizing opportunities to take over U.S. manufacturing by offering cheap labor. America fell into the trap.

Now, the U.S. imports almost every conceivable product from China.  It is estimated that the U.S. economy has lost more than three million manufacturing jobs to the Middle Kingdom.

Currency Manipulations

 Nixon also relaxed currency controls allowing China to use American dollars.  The Nixon Administration imposed no controls or regulations regarding China trade nor did it study what a trade deficit would mean to the American economy.

A major cause of the rapidly growing U.S. trade deficit with China is currency manipulation. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar.  Instead, China has tightly pegged its currency to the dollar at a rate that causes a large trade surplus with the United States.

As China’s productivity improved, its currency should have been adjusted by Adam Smith’s “invisible hand,” increasing in value to maintain balanced trade. But the yuan has remained artificially low as China has aggressively acquired U.S. dollars to further depress the value of its currency.

To lower the value of its currency, a government can sell its own currency and buy foreign government securities such as U.S. Treasury bills.  According to the International Monetary Fund, China purchased $337 billion in U.S. Treasury bills and other securities in 2011 to maintain the peg to the U.S. dollar.

Pollution 

According to the New York Times, within four years China is expected to build 160 new coal-fired power plants, in addition to the 620 operating now. China will be building about one new carbon-spewing power plant every ten days.  Chinese factories of all kinds do not have the pollution controls required in U.S. factories.  Not only is this unfair competition, it is polluting the world and causing global warming.  Our trade agreements with China place no restrictions on pollution.

Endgame 

American consumers continue to be the drivers of the world economy.

What the future holds in the Trade War with China is not up to China. It is up to the America government, the American consumer and American companies.  Our Congress must stop allowing Chinese pollution and currency manipulations.  Consumers should vote with their wallets and just say no to imported products from China.  American corporations are beginning to come back home and this trend must be expanded into a landslide that keeps the United States as the world leader.

 

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