If you enjoyed poisoned dog food, lead painted toys and toxic drywall, then China has the car for you!
 
It’s the government-owned Chery Automobile - stolen designs, flimsy construction - and desperately trying to come to a dealer near you.   Click here to watch it crumple like a piece of tin foil in a test that would be entertaining if it weren’t so horrifying. 
 
The first Chery cars rolled off the line in the late 1990s and like many other technology-based products from China, Chery’s designs were stolen, notably from other carmakers, including Daewoo and Chevy.
 
Chery produced 410,000 units in 2008.  Soon to be the largest carmaker in the world, Chery sells or manufactures autos in China and over 50 countries, but they still do not meet standards oin Japan, Europe and the U.S.
 
Both GM and Chrysler have negotiated with Chery in a bid to bring a model to the U.S., but as part of its concession package with the United Auto Workers, GM agreed – for now – not to import the Chery. 
 
Chery’s negotiations with Chrysler fell through late last year, but Chinese carmakers have noted publicly they are still actively pursuing strategies for entering the U.S. market.
 
Illegal government subsidies to Chinese manufacturers are enormous and the car industry is no exception.  Carmakers start up costs were absorbed by the government and it is currently receiving huge subsidies from several central government agencies.  Layer on billion of dollars of steel subsidies before cars even hit the assembly line, and no other carmakers in the world can compete on a level playing field with China’s artificial prices.
 
China’s illegal subsidies, labor abuse, lax adherence to environmental regulations, and currency manipulation leave U.S. manufacturing running up a rocky hill barefoot with an elephant strapped to its back. 
 
Cheating does get you there faster – China sold 1.1 million cars in March, finally exceeding U.S. sales - and the Chinese government has set a goal of 10 million units for its manufacturers in 2009. 
 
With its aggressive market strategy and its April Shanghai Auto Show becoming “the place to be seen” almost overnight for Chinese, pan-Asian and western car manufacturers, China is currently the greatest force in global auto sales.   Even billionaires Warren Buffett and George Soros are actively seeking to invest in its great leap forward into substandard cars.
 
Based on history and crash testing, driving a Chinese car is roughly equivalent to adding wheels to a dishwasher and expecting it to survive a collision.   At over 100,000 deaths per year, China leads the world in traffic fatalities. 
 
Let’s not wait for the cars to arrive in our ports -  there is no time like the present for American consumers and policy makers to preemptively block these un-safe, spawn-of-cheating cars from darkening the doorstep of American roadways.  

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A number of former U.S. government personnel who worked on U.S. trade policy have moved into the private sector and are now representing importers who have a direct stake in weakening U.S. trade laws and gaining an unfair competitive advantage over domestic producers.  

U.S. Representatives Mike Michaud (D-ME), Louise Slaughter (D-NY), Tim Ryan (D-OH), Gene Green (D-TX), Marcy Kaptur (D-OH), Phil Hare (D-IL), Dennis Kucinich (D-OH), and Betty Sutton (D-OH) have written to the Government Accountability Office (GAO) requesting a study of the activities of former senior trade staff and officials after leaving federal employment.

Of particular concern are a number of former trade officials and staff who are now involved in a pending Section 421 case at the International Trade Commission.  The case, which deals with a surge in tire imports from China, is the subject of an ITC hearing tomorrow.   The Chinese government has been aggressively seeking to influence the outcome of the case.

In their letter to the GAO, the Representatives noted that taxpayers make substantial investments in the training and salaries of federal officials “and trust that they will uphold the public’s interests.  American taxpayers should not find their hard-earned money used in ways that ultimately jeopardize the interest of those producers who are struggling to survive in an increasingly competitive world market.  These individuals should be helping to promote growth and opportunity, not undermine it.”

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The $266 billion that China racked up last year from its subsidized trade surplus with the U.S. affords Beijing plenty of opportunities.  And one of them is an expansion of China’s submarine fleet, according to an Associated Press report.

It looks like all those trips that U.S. consumers make to Wal-Mart– all the times they buy Chinese-made T-shirts, and toys, and radios– have helped to pay for the construction of new Jin and Shang class nuclear submarines.

It’s something to think about when pondering Made in USA vs. Made in China.

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There is a steady stream of bad news coming from Detroit these days: GM announces 1600 more layoffs.  Meanwhile, rival “cash-for-clunkers” proposals compete in Congress.  ManufactureThis likes Rep. Sutton’s bill.

Also in the news, computer spies broke into the Pentagon’s costliest weapon program ever–the Joint Strike Fighter project.  The hackers were apparently Chinese.  That is just wrong.  What else is wrong?  Dumping goods on the U.S. market.  United Steelworkers file a trade case against Chinese tire manufactures, stating that a four-year surge of unfairly imported tires for cars and trucks cost U.S. jobs.  They hack into our most advanced weapons system and cause layoffs in the U.S.  Remind us what’s so good about this “economic alliance?”

And, will the controversy surrounding car czar Steve Rattner’s Quadrangle Group catch up with him?

Yesterday, I joined more than 1000 people–mostly laid-off Steelworkers and their families–in a dusty, windswept lot where piles of subsidized, imported steel pipe from India destined for a major oil pipeline served as the backdrop. 

Just a mile or two away stood the Granite City, Illinois works of United States Steel, a massive facility that is now shuttered because of the recession.  When it is operating, the mill employs over 2000 workers and makes a quality, competitive product. 

The familiar noises of a busy, industrial town have vanished in Granite City.  The hum of machines is nowhere to be found.  The downtown is now a ghost town.  It would be easy for the laid-off workers and their families to simply stay at home, hang their heads, hope for the best, and complain about the hand they’ve been dealt. 

But that’s not what I saw.  Instead, I saw hundreds and hundreds of workers and family members gathered together, unified in their call for jobs, justice, and a change in the way we do business.  They were angry, but not xenophobic.  Upset about unfair trade, but unafraid to compete.  Not asking for a bailout, only an opportunity.  Concerned about their own jobs, but downright scared about the future their children and their community might face.

Across the Mississippi River from Granite City lies the famous Gateway Arch in St. Louis.  To me, the Arch is a symbol of hope, of a new day dawning, of a call to move forward.  It’s the gateway to what’s possible in America, one of the simplest yet most meaningful structures in our nation.  And it’s made with a lot of steel:  stainless, rebar, and carbon.

All of these things are visible from 15,000 feet in the air, in a plane on my way back to DC:  the massive Granite City works, the piles and piles of green pipe, and the Gateway Arch.  But you can’t see humans from that altitude.  Yet I’m afraid that’s the view too many Americans have of our manufacturing crisis.

The pipe for TransCanada’s oil pipeline project should have been made in America.  But TransCanada chose the low road and selected the subsidized Indian pipe for the vast majority of the project.  While Granite City doesn’t make pipe, it is capable of making the hot-rolled steel that eventually becomes the pipe.

It might be too late to ditch this pipe.  But it’s not too late for TransCanada to make the right call on its new Keystone XL pipeline.  And it’s not too late for federal, state, and local officials to tell TransCanada that if the company wants to secure permits and right-of-way, they need to make the pipe in America. 

Besides pipe, we make a lot of other things with steel.  Everything from durable goods, automobiles and commercial jets to the tanks and warships that keep us safe.   But we are losing the capacity to manufacture at an alarming rate.  Our nation has lost 1.5 million manufacturing jobs since the recession began in December 2007.  Forty thousand factories have closed over the past decade. 

One lesson of the recession is that we need to make more things here.  Developing new technology and consuming alone do not make for a stable economy, but that’s been our economic strategy for the past decade.  Manufacturing generates real wealth, family-supporting jobs, and exports.  It does matter where things are made.

Granite City is ground zero in the crisis in manufacturing.  To recover, it will take a trade policy that insists on reciprocity and fair play.  India subsidizes its steel and should be held to account.  Other countries that cheat should understand the consequences.  It will take smarter domestic policies on health care, taxes, and energy to make manufacturing more competitive.  Finally, it will take sizable investments in infrastructure, innovation, and education.  This will only come about through the initiative and collective action of Americans across the political spectrum.

But it starts with a single act.  Paul Revere’s “midnight ride” sounded the alarm in the American Revolution.  Ironically, he was also a famous metal manufacturer after the war.  Perhaps Granite City’s Paul Revere is Jeff Rains, a retired Steelworker.  On his way to a meeting in February, Jeff saw the green pipe from India loaded on rail cars, took a couple of pictures, and alerted his local union.  The rest is now history.   

We owe it not just to Jeff Rains and the thousands of unemployed workers in Granite City, but also to our children and grandchildren to make things in America again.  American manufacturing and American workers will do their part by producing quality, competitive products.  We’ll even remind people why it is so important to make things here.  We need a government as willing to fight for manufacturing as it is willing to give out $700 billion to Wall Street.  The difference is this:  we don’t need $700 billion, we just need a level playing field. 

Recent reports from Canadian analysts that describe cyber hacking by the Chinese government came as no surprise in the household of this ManufactureThis contributor.

I was appointed in 2006 as a Commissioner to the U.S. China Commission.  Since that time, I’ve noticed that each morning my fellow commissioners and I have said “Good Morning!” to our Chinese friends when we turn on our computers.  Just as soon as our friend-who-shall-remain-nameless (and counter-hacking expert) clears our computers of Chinese keystrokes, they reappear.  My son has also learned how to do this and is endlessly amused by the Chinese hacking into our home.
  
The People’s Republic of China is free to read my Christmas card list and son’s homework assignments.  We find it ironic that they are likely perusing my blog posts and editorials on China, as they are all published in the public domain under freedoms insured under our nation’s Constitutionally protected speech.

But their cyber hacking is very serious, and poses a serious threat to America and its allies.  Although the recent release of a Canadian think tank report on China’s GhostNet cyber stalking  made a big splash in late March, it was no surprise to China watchers.

As far back as 1996, a high level Chinese military official noted in the Liberation Army Daily newspaper, “Thanks to modern technology, such as the development of information carriers and the Internet, many can now take part in fighting without even having to step out the door.”

China has long believed that because our weapon systems and defense infrastructure is so advanced, they could only challenge and even defeat us on the cyber intelligence and information warfare battlefield.

China been remarkably successful in cyber warfare, compromising at least 1,300 computers used by the offices of His Holiness the Dalai Lama, NATO, global financial institutions, numerous government ministries, and embassies around the world and of course –my laptop.   China’s military capacity is growing in leaps and bounds.  Through standard industrial and military espionage combined with successful hacks into Pentagon computers, the Chinese are known to have already created a plan to disable our Navy carrier and battle groups using cyber attacks.

The worst part of this is that OUR MONEY has enabled the Chinese to carry out much of this cyber war against us and many of our friends around the world.  China’s current account surplus with us is approaching $400 billion per year.  As Americans continue to buy consumer products from China that are artificially cheap due to China’s continuous economic cheating, our balance of trade remains upside down — we ended 2008 with a $266 billion trade deficit with China.

At the same time, our ability to source materials used in our own military machinery continues to dry up as our manufacturers go out of business, in large part due to unfair, unbalanced and decidedly lopsided trade with China. 

Actions have consequences (both intended and unintended), our world has no walls, and skirmishes can pop up anywhere at anytime.  

We don’t know when we will have to defend ourselves militarily against a county in which China has an energy or political interest.  Do we want to continue to fund their military as they continue to steal our defense secrets?  I think not.

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CongressDaily’s Art Pine reports: The latest Chinese military surprise — in which Beijing sent five vessels to harass a U.S. surveillance ship, and then complained angrily that the Americans were operating illegally inside Chinese waters — might have discomfited U.S. policymakers, but it likely won’t be the last such incident the United States will face.”

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The U.S. imports million of pounds of fish each year.  Unfortunately, as the volume of imported seafood has steadily increased between 2003 and 2006, the number of samples taken for laboratory testing by the Food and Drug Administration decreased by 25 percent.

  The Food and Drug Administration (FDA) is simply swamped by these massive fish imports.  According to a new report by Food and Water Watch, “less than one in a million pounds of seafood imported into the United States are tested in laboratories for Salmonella, Listeria, chemical and drug residues, metals, and pesticides.”

Apparently, the FDA’s field laboratory resources and staffing are simply inadequate for the vast amount of food that needs to be checked.

A prime example is that, unfortunately, the FDA waited several years to issue a ban on fish from China in 2007 after finding “very high failure rates for illegal veterinary drugs and chemicals on the imports for several years – including violations much higher than the FDA admitted in 2007.”

Food and Water Watch notes that one of the solutions proposed by the FDA to monitor imports is “using private laboratories hired by exporters to certify which exporters and products are safe.”  Needless to say, the self-interest of exporters like China calls in to question the reliability of such a plan.

Some key findings of the report:

* Imported seafood shipments grew by 15 percent between 2003 and 2006, and the volume grew by 11 percent to 5.4 billion pounds. During this same period, the number of imported fish samples taken for laboratory analysis fell by 25 percent.

* The number of laboratory tests the FDA performed declined by 27 percent from 9,552 laboratory tests in 2003 to 6,995 tests in 2006.

* Between 2003 and 2006, about one in 11 (8.7 percent) of FDA laboratory tests on imported seafood turned up unacceptably high levels of disease, decomposition or adulteration.

To read all recommendations and key findings from the new report, entitled ‘Laboratory Error,’ click here.

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The aerospace industry has long been a leading manufacturing sector in Arizona, housing such giant worldwide names as Honeywell, Boeing, and Lockheed Martin (maker of the famous SR-71 Blackbird reconnaissance jet), as well as numerous smaller aviation parts firms.  Much of Arizona’s economy is tied to the good-paying jobs that these companies provide.

  It’s rather sad then to see that Honeywell Aerospace, a firm that has provided avionics and weapons systems for the U.S. military since World War II, will be shuttering plants in Phoenix, Arizona and moving some operations to Mexico and the Czech Republic.  700 Honeywell workers will lose their jobs in the move.

The plant being closed has built jet engines for almost 60 years and has been a hallmark of the modern American aviation age.

An irony of this plant closing is that, in addition to housing much of America’s aerospace defense industry, Arizona is home to U.S. senator John McCain, an ardent champion of America’s naval aviators and Air Force.  Curiously, Sen. McCain has been a consistent opponent of the very “Buy America” provisions in U.S. legislation that would help American defense manufacturers remain competitive against illegally subsidized foreign production.

And so, right under the nose of one of America’s famous military aviators, the renowned Honeywell Aerospace is quietly folding up one of its shops and moving its military aerospace production overseas.

  John McCain, are you paying attention?

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Alan Tonelson at USBIC has an insightful post up today on John McCain’s trade and economic policies.  ManufactureThis readers probably know about McCain’s opposition to most trade enforcement measures and his seeming disdain for manufacturing (here, here and here), but I thought a couple of Alan’s points deserve praise.

McCain’s answer to manufacturing job loss is essentially a “wage insurance” program that would retrain manufacturing workers for lower-paying service sector jobs and have the government, for a period of time, make up part of the difference in their wages.  To be fair, McCain has borrowed this idea from centrist Democrats.  But the irony is rich.  McCain, a self-professed small-government, deregulating conservative, proposes a government wage supplement program as his answer for globalization.  And, as Tonelson points out, McCain embraces a Wall Street bailout, with conditions, while consistently opposing even a level playing field on trade for domestic manufacturers and workers, calling it “protectionism.”

Last, but not least, McCain has led the charge against “Buy American” requirements in military procurement.  Buy American laws ensure our national security by preserving a defense industrial base.  These laws ensure that at least some tax dollars stay in America rather than funding the defense industries of other nations. 

I’m hoping that one of the presidential debate questions will focus on this topic, so that McCain can tell us why he doesn’t support buying military goods made by Americans.