Reliable Security Information

Economic Treason: Abandonment of manufacturing except for weapons

The United States has spent a lot of time digging its own hole. Handy charts on the total abandonment of domestic manufacturing for non-military goods while arms manufacturing has surged are astonishing.

First, from the Department of Commerce, a pie chart of worldwide steel production as of November 2010:

The Commerce department report on steel production is full of graphical data. All of it a horror show of plotted statistics showing how the United States has disintegrated.

Like this one:

Top line = China. Checkmark = US. Source: Dept. of Commerce.

From 2009, another appalling graph -- produced from data taken by the US Census, part of Commerce, on military production in the US versus everything else (and originally shown in the NY Times):

This continues on the blog riff that the US produces nothing but weapons. At the expense of everything else.

And that while what production of durable goods in the US that remains is charted, it -- along with the fortunes of the middle class and the new mass of unemployed -- cratered in 2009.

However, military production did not. It went through a minor dip and then soared.

This is immoral. It destroys any argument on fairness and shared burden and consequences being a part of US society. It broadly and mercilessly insults the intelligence of all those who must listen to, see or read about the Department of Defense making nibbles around the edges to trim its budget in the coming time of austerity, particularly now that cuts are being proposed to radically punish everyone except those in US arms development.

A post at DD blog few days ago asked the rhetorical questions: What manner of leading western country has one company, General Atomics, devoted to only making killer drones for assassinating people elsewhere - that's half the size of the Food and Drug Administration? Or where the budget for killer drones is the same as the one to ""Transform Food Safety System, Invest in Medical Product Safety, [and provide] Regulatory Science"?

Perhaps one of the problems rests in the idea that the people who lead this country, and those who follow them around reporting on their insubstantial statements, don't really grasp how many things in the US are made overseas in China. And that all of it is stuff this country used to be able to make but can no longer.

It's not just a lot of things. It's virtually everything I come into contact during my daily travels, except cars and food.

Perhaps the people in power never look hard at the astonishing data revealing profound failure, all carefully produced by government agency. It's too ugly and impeaching. It reveals economic treason on a grand scale.

Here's a quaint poster, one sold to the upper middle class, a decorative thing that shows a government chart of US steel production from 1895. Now it's sold as a gift, presumably made in China, for hanging on the wall where perhaps someone fancy and fine will momentarily wonder what happened to all that and how the word "growth" was redefined as "looting."

Next for your consideration, another goverment report, one from the Dept. of Energy entitled "Critical Materials Strategy."

It shows mining and production of critical industrial materials, rare earth oxides for use in an entire range of critical technologies made and sold worldwide.

The US used to mine these materials domestically.

The rare earths are distributed widely across the globe. And there are supplies in the United States. But during the GWB administration, mining of rare earths in the US didn't just crater. It died! Kaput!

While mining in China and other nations took off.

Although the DoE report does not explicitly state it, the historical picture painted is one in which US business abandoned rare earth mining. Simply because it was easier and better for the bottom line to get the under-priced stuff from China and other countries for all the electronic kit they now have made overseas.

And that shortsightedness and singular inattention to the big picture has set up a problem with potentially strategic implications for the United States. Because utilization of rare earths is also critical in clean energy innovation. And so while such things are advancing elsewhere, again most notably in China, here the story is one of lassitude and the now held-to-be-stupid view that things would be just peachy if we let that country make everything for the consumer society.

More snapshots from the US Department of Energy's "Critical Materials Strategy":

US production of critical materials, in many cases, is effectively zero with the market left to China and, to a lesser extent, Chile.

The next DoE graph shows potential supply and demand trajectories for a strategic material used in clean energy manufacturing and production, using current trends. It is a projection for neodymium oxide, used in magnets. It shows that under current conditions, the US is showing virtually no interest in clean energy applications compared to what the rest of the world will be by 2025. This is shown in the pie chart at right. US clean energy rare earth demand is dark blue. The rest of the world's clean energy neodymium oxide demand is green. Global non-clean energy demand is light blue.

On the other hand, the above graphs can be contrasted from charts taken from a US Air Force report on the growth of drone acquisition, one of the always growing tentacles of arms production.

This is estimate continental US drone base expansion, 2008-2013.

Drones and base expansion, yes! Strategic materials use in domestic production of green technologies and energy, no!

What's the difference?

Drones and base expansion, materials and labor underwritten by taxpayer.

Mining of strategic materials, US labor and overhead too expensive, easier to pay off China.

The USAF presentation on drones, from 2009, is at Cryptome here.

Continuing the subject that the US economic environment preserves arms manufacturing while allowing everything else to go to hell in a handcart, DD gives readers a small profile of Combined Systems, the Jamestown, PA, firm recently in the news as the manufacturer of the tear gas used on crowds in Egypt.

It has already been noted by many that the other US product, the M1 tank, was used to lay smokescreens. And, in this, the Egyptian model, one which led to revolt, has some similarity to the US model.

Nothing for the people who went into the streets. Which is why they pulled down the dictator. But no expense spared for arms acquisition.

Combined Systems is the primary employer in Jamestown, PA.

Its entire business is arms manufacturing with a subsidiary in handcuff production. As such, in the market it is not subject to the pressures which have destroyed US non-military production.

The federal governments, as well as those of states and municipalities -- the taxpayer, underwrites it.

Obviously, Combined Systems has a significant business in the sale of tear gas worldwide. Egypt and Israel are two notable customers.

A brochure on high-explosive rounds, called FRAG-12, produced by the company is here.

"We believe FRAG-12 is a game-changing technology for the warfighter engaged in urban combat," it reads.

The message so far has been one of various metrics showing how domestic production of non-military goods in this country has been killed, along with millions of middle class jobs. This is in sharp contrast to weapons-making which is not subject to the same economic pressures that destroyed the manufacturing base.

For instance, the US Bureau of Labor Statistics shows unemployment in Mercer County, where Combined Systems is located. Mercer County has among the worst rates in an already strapped state, Pennsylvania.

In December 2009, unemployment was at 11.7 percent in Mercer. One year later it had decreased to 9.6.

Mercer County did have domestic non-military production. You can guess how it has fared.

From a 2009 Mercer County news report, when unemployment was at 11.7 percent:

The local economy continues to bleed jobs as two leading industries on Tuesday announced layoffs totaling more than 70 workers.

The latest layoffs have led two local economic advisors to peg Mercer County's manufacturing unemployment rate at 40 percent.

Cattron Group International Inc. said it was laying off 32 workers at its Sharpsville operation while Salem Tube Inc.'s Pymatuning Township plant said it laid off 41 workers since February and more will follow unless business improves.

These are the latest in a series of layoffs that have whipsawed the local economy. Large industrial employers such as Wheatland Tube Co. and Duferco Farrell have been forced to undergo rolling layoffs which have hit hundreds of its workers.

Other companies opted to shut their doors forever such as Signature Aluminum in Sugar Grove Township. When the company folded the local plant in March it employed 280.

In another article, from the New York Times today, Louis Uchitelle concludes that losing the manufacturing base might not have been such a a good idea.

He writes:

The loss of manufacturing capacity, measured in lost workers, is startling. From the high point in the summer of 1979, through last month, employment in manufacturing has fallen by 8.1 million, to 11.6 million, with most of the drop in just the last decade. While consumers have benefited from lower prices, made possible by unrestricted imports, on the other side of the ledger are tens of billion of dollars in lost manufacturing wages.

Uchitelle's piece, of course, leaves out one big thing.

The manufacturing of weapons.

In USA 2011, as it has been for a long long time, weapons manufacturing is not constrained by any of the things which have destroyed domestic product-making in the US.

It is immune to death spiral pricing competition; its workers are not constantly downsized for cheap overseas labor. And it is underwritten entirely by the US taxpayers even if the taxpayers can afford it less and less.

There is also no nationwide network of Walmart superstores pillaging the business, offering equivalent dirt cheap Chinese made kit for every missile, armored vehicle, landmine and drone manufactured in the States.

Diminished buying power and lost wages have no effect on US weapons manufacturing. Sacrifice is for everybody else.

Uchitelle's story frets that the US will cede "innovation" due to loss of domestic manufacturing.

It has not lost "innovation," if that's what one calls it, in arms manufacturing.

There are General Atomics drones for every future possible application in global assassination, elaborate grenade launchers for blowing up people hiding behind rocks, and robots galore, to no discernible effect, for the forever war in Afghanistan.

It's a great game for those on the winning side. For most of us, however, not so much.

Growth in US military drone budget.

This post comes from an ongoing series on the loss of the manufacturing base for non-military products at Dick Destiny blog.

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