Good (But Mostly Bad) Journamalism

(Yes, I stole that word coined by Atrios – sue me.)

This story of the Chinese launching a satellite-destroying missile (a truly scary but unsurprising development, as noted here) was the front-page story of the New York Times today (and I say unsurprising because Bushco’s antagonizing of North Korea and treaty abrogation gave China the pretext to do something like this).

Update 1/23/07: I thought this was a good column about that subject, by the way.

Meanwhile, The Philadelphia Inquirer put it on the last page of its front section behind stories of bid rigging at a Camden, NJ high school, an article titled “Philadelphia Republicans: An Endangered Species?” (given front-page treatment, of course), a report on wired Canadian coins (?), and a hit piece on John Kerry written by Jonah Goldberg.

However, the newspaper actually did something right yesterday and published this Op-Ed piece:

Road to industrial has-been

The U.S. is losing ground to foreign-made goods - even in high-value tech sectors.

By Alan Tonelson and Peter Kim

It's been all over the news: Imports have helped decimate the U.S.-owned automotive industry. What hasn't been as widely reported is that dozens of other U.S.-based manufacturing industries are suffering similar losses. As revealed in a new study by our organization, the United States remains a military superpower, but it is steadily becoming an industrial has-been.

The council's survey of import levels in domestic manufacturing shows that 111 of 114 key U.S.-based industries lost domestic market share to foreign-produced goods between 1997 and 2005. From 2004 to 2005 alone, import penetration rose for 83 of these sectors and fell for just 31.

These industries, moreover, are exclusively the kinds of high-value, capital-intensive sectors - such as aircraft engines and wireless communications gear - that make up the backbone of any world-class national manufacturing base. Lower-value, labor-intensive sectors that were long ago overwhelmed by foreign competition - such as apparel, toys and low-end consumer electronics - were left out of the study.

In many cases, imports have made stunningly rapid inroads into critical U.S. manufacturing markets. Between 1997 and 2005, 26 of the 114 industries saw their home market share shrink by 50 percent or more, including pharmaceuticals, computers, telecommunications hardware, navigation and guidance equipment, broadcasting and wireless communications equipment, and motor vehicle power train and transmission equipment.

Eight more sectors experienced market-share losses of nearly 50 percent to imports, notably tires, switchgear and switchboard apparatus, and commercial and service industry machinery.

As a result, by 2005, imports represented at least 50 to 59 percent of sales in the United States of 24 of the 114 industries studied, including telecommunications hardware, heavy-duty trucks and chassis, and broadcast and wireless communications gear.

Imports have captured between 60 and 69 percent of the U.S. market in eight more industries, including autos, environmental controls, and aircraft engines and engine parts. And in six sectors - including machine tools - imports control 70 percent or more of the American market. If current trends continue, imports soon will account for the majority of U.S. domestic sales in sectors such as electricity measuring and test equipment, X-ray equipment, turbines and turbine generator sets, laboratory instruments, and construction machinery.

Rising import penetration means that U.S.-based producers are flunking the most important test of competitiveness: winning and keeping customers. Just as revealing, surging imports are already replacing and depressing U.S. production throughout domestic manufacturing. Between 1997 and 2005, output actually fell in nearly two-thirds of the 53 industries in which import penetration is highest or grew fastest, stagnating in many of the rest.

These losses at home are especially worrisome because the American market is the arena in which U.S.-based manufacturers should do best. After all, they should be most familiar with local tastes, and they face no trade barriers at home. If domestic industry can't even defend its home turf, how can it hope to compete abroad?

American manufacturing's woes extend even to the high-tech sector, supposedly the nation's best hope for prosperity and an area of natural advantage for the United States. Yet some of the biggest recent losers include such technology pillars as semiconductor production equipment, electricity measuring and test equipment (critical for all high-tech manufacturing), telecommunications hardware, navigation and guidance devices, and pharmaceuticals.

Two major failures of U.S. international trade policy bear much of the blame. First, Washington has done a terrible job of combating the numerous predatory trade policies, ranging from currency manipulation to illegal subsidies, pursued by other major trading powers to gain industrial supremacy. Second, too many U.S. trade agreements since the North American Free Trade Agreement have encouraged American-owned multinational companies to supply U.S. markets by moving abroad - thus helping build powerful manufacturing bases in foreign countries.

The manufacturing sectors suffering these mounting losses at home have traditionally led the U.S. economy in productivity and innovation, and on average have generated America's best-paying jobs. They also undergird the nation's security. But if imports' growing domination of American industrial markets is not reversed soon, scores of these critical industries could get pushed past the point of no return.

As the Inquirer noted, Alan Tonelson (tonelson@usbusiness.org) is a research fellow at the U.S. Business & Industry Council Educational Foundation, a contributor to the AmericanEconomicAlert.org Web site and the author of "The Race to the Bottom." Peter Kim (kim@usbusiness.org) is a research associate at the council.