[Congressional Record Volume 141, Number 49 (Thursday, March 16, 1995)]
[Extensions of Remarks]
[Pages E626-E627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     WHY U.S. INDUSTRY BOUNCED BACK

                                 ______


                         HON. MICHAEL G. OXLEY

                                of ohio

                    in the house of representatives

                        Thursday, March 16, 1995
  Mr. OXLEY. Mr. Speaker, I recommend to my colleagues the following 
column by Robert J. Samuelson from the opinion page of yesterday's 
Washington Post. The subject is the comeback of American manufacturing. 
Members would do well to consider the conclusions drawn by the author.
               [From the Washington Post, Mar. 15, 1995]

                     Why U.S. Industry Bounced Back

                        (By Robert J. Samuelson)

       Dial back your time machine about a decade. You'll find 
     plenty of newspaper and TV stories warning of 
     ``deindustrialization.'' American manufacturers (it was said) 
     were being pulverized. The Japanese were overwhelming our 
     automakers, repeating their triumph in steel. Computer chip 
     makers were rapidly losing ground. Americans had forgotten 
     how to make things. It was only a matter of time before U.S. 
     manufacturing sank into oblivion and we became a nation of 
     ``hamburger flippers.''
       None of these dire predictions came true; indeed, most were 
     always silly (and this reporter at least said so). Yet the 
     story of the comeback of U.S. manufacturing is still under-
     told and ill-appreciated, as economists Jerry Jasinowski and 
     Robert Hamrin argue 
     [[Page E627]] in a new book. In 1994 the United States 
     produced more cars than Japan for the first time since 1979. 
     U.S. companies account for half of global shipments of fiber 
     optic cable. The stunning manufacturing revival needs to be 
     better understood. It is important in its own right and also 
     teaches broader lessons.
       Consider first some basic facts:
       Between 1980 and 1994, U.S. manufacturing output rose more 
     than 50 percent. In the past three years, it has increased 15 
     percent. It is now twice as high as in 1970 and five times as 
     high as in 1950. Many things that didn't exist four decades 
     ago (many drugs, most computers, commercial jets, much 
     medical equipment, most anti-pollution devices) are produced 
     in huge quantities, along with such traditional items as 
     furniture and food. There has been no 
     ``deindustrialization.''
       In 1991 the United States regained its position as the 
     world's largest exporter. In 1993 the U.S. share of global 
     exports was 12.8 percent, compared with Germany's 10.5 
     percent and Japan's 9.9 percent. The American computer chip 
     industry is again the world's leader. General Motors and Ford 
     are still the first and second largest auto companies. 
     American companies still dominate in aerospace, computer 
     software and entertainment; they are strong in paper, 
     chemicals and pharmaceuticals, among others.
       Industrial productivity (efficiency) has increased at its 
     fastest rate in decades. Since 1985, manufacturing 
     productivity--output per worker hour--has risen about 3 
     percent a year. Since 1980 the man-hours to produce a ton of 
     steel fell from about 10 to four. Quality is also increasing. 
     In one survey, two-thirds of respondents felt product quality 
     had improved in the past five years; only 14 percent felt it 
     had worsened.
       Obituaries for U.S. industry were inevitably wrong for two 
     reasons. The first is that they mistook manufacturing's 
     stagnant job base for stagnation. In 1970 about 19 million 
     Americans worked in manufacturing; last year, the number was 
     about 18 million. So? Rising production and falling 
     employment merely signify higher productivity. Fewer people 
     produce more; other people provide other things, from health 
     care to software. This is the time-proven path to higher, not 
     lower, living standards.
       The second error was presuming that setbacks, once started, 
     were irreversible. Companies couldn't defend themselves; 
     economic conditions wouldn't change. In their book (``Making 
     It in America''), Jasinowski--president of the National 
     Association of Manufacturers--and Hamrin show that companies 
     did fight back. Costs were cut, processes streamlined. Xerox 
     reduced the time to bring a new product to market by 60 
     percent. AMP, a maker of electrical components, raised ontime 
     deliveries from 65 to 95 percent. Cannondale, a manufacturer 
     of mountain bikes, increased foreign sales from 5 percent to 
     40 percent.
       What also changed were exchange rates. The dollar's steep 
     rise in the early 1980s (up 63 percent between 1980 and 1985) 
     was a basic cause of industrial distress. It made imports 
     cheaper and U.S. exports more expensive. But the dollar had 
     to drop, because trade deficits were unsustainably large. 
     When foreigners had more dollars than they wanted, the dollar 
     would decline. It did. In 1985, a dollar was worth 238 yen; 
     now, it's worth 91. American exports more than doubled 
     between 1985 and 1993.
       American industry doesn't enjoy--and never will--
     preeminence in all areas. Japan still dominates consumer 
     electronics and some computer chips. Japanese auto companies 
     still make swell cars. In 1993 we imported 77 percent of our 
     toys, 43 percent of our ceramic tiles, 56 percent of our TV 
     tubes and 96 percent of our watches. Global markets mean just 
     that; other countries will achieve comparative advantage in 
     some products and technologies. But ``globalization'' is not 
     pulverizing U.S. industry.
       The first lesson of its revival is simple: Keep markets 
     open. What forced U.S. companies to improve was competition, 
     whether from imports, new technologies or deregulation. Some 
     industries received modest government help, mostly as import 
     restraints; but generally, companies created their own 
     comebacks. No one likes to change, and economic change is 
     often cruel and ugly. Bankruptcies, ``downsizing'' and 
     ``restructuring'' all disguise the human toll. The 
     alternative, though, is stagnation.
       A second lesson: Keep foreign ``success'' in perspective. 
     In the 1980s, the Japanese were celebrated. Their economic 
     policies were wise; ours were foolish. They invested; we 
     consumed. Now Japan doesn't look so good. In the late 1980s, 
     its economic policies fostered a speculative real estate and 
     stock market boom whose ill effects still linger. 
     Protectionist policies have aggravated the yen's rise, which 
     has hurt exports. Underconsumption also harms industry. Only 
     10 percent of Japan's households have personal computers, 
     compared with 37 percent in the United States. Japan's 
     computer industry suffers.
       The largest lesson is the contrast between economic and 
     political change. Economic change proceeds, often roughly. In 
     politics, people argue over winners and losers. Change occurs 
     slowly, if at all. Sometimes that is preferable, but often it 
     isn't. Paralysis can mean that everyone loses. If government 
     had decided to revive manufacturing in the mid-1980s, we'd 
     still be arguing over who should be helped and why. In this 
     case, the best policy was to insist that companies and 
     workers help themselves.
     

                          ____________________