From: Bert Smith <bowler@athena.mit.edu>
Subject: CLINTON SPEECH: ON MANUFACTURING JOBS
X-Xxdate: Tue, 8 Sep 92 03:02:43 GMT
Organization: A big organization with lots of people
X-Useragent: Nuntius v1.1.1d7
Date: Wed, 9 Sep 1992 01:59:14 GMT


REMARKS BY GOVERNOR BILL CLINTON
STANDARD KNAPP, INC.
PORTLAND, CT
SEPTEMBER 8, 1992

I wanted to come here because I was so impressed
with the story of how this company was revitalized
with a partnership between labor and management,
with employee ownership, with the kind of spirit
that our country needs to compete and win in the
21st century.

For more than a decade, as all of you know better
than I do, we've been subject to very stiff
competition in manufacturing.  In the face of it,
productivity in manufacturing rose very sharply in
the 1980s, thanks  to people like you, at about 4
percent a year.  Helping us to compete with both
the hard work low wage countries, and the high
skilled, high wage countries.

In our state, we adopted a manufacturing strategy
that was specifically designed to help generate
expansions in our state and maintain the job base.

We provided an investment tax credit for anybody
who invested $5 million or more in expanding the
manufacturing base, intensified our retraining
programs, that did a lot of work to support
infrastructure, roads and sewer and water systems
needed for manufacturing, provided quality
management services and other training programs to
smaller manufacturers who couldn't get it on their
own.  And in the course of that, I learned a lot
about what it takes to maintain a manufacturing
work force.

In spite of all the productivity gains, the
percentage of our workers employed in manufacturing
has continued to decline in America, and now rests
at just a little over 16 percent of the work force,
slightly less than one in six Americans works in
manufacturing.  The comparative percentages for
Japan and Germany are 28 and 32 percent.

Now, just in the last four years we've lost 1.3
million manufacturing jobs and had a real decline
in manufacturing wages of 5 percent.  For the first
time in American history in the last four years
employment in government has exceeded employment in
manufacturing.

Unlike our competitors, this nation has no national
strategy, no comprehensive partnership between
business and workers and education and government
to create the kinds of high wage, high growth jobs
in manufacturing that I think are critical to our
future.  Not just because of the people like you
who work in factories, but because of all those who
depend on it.  And when we lose manufacturing jobs,
if people don't go to work in other manufacturing
jobs, as all of you know, they tend to get jobs
that pay lower wages with fewer benefits, in ways
that weaken the fabric of the communities in which
they live.

What we've had in America is a series of
unconnected piecemeal efforts and trickle down
economics.  We do have a manufacturing strategy,
for example, in defense, because we want to make
most of our defense products here, for obvious
reasons. We have had a partnership between
government and business. You've seen it in
Connecticut, where an enormous percentage of your
work force has worked in defense industries.  But
you also see the down side of that, that if there
is a defense cut and no corresponding effort to
increase that investment somewhere else, then those
manufacturing jobs are lost.

Under the theory that we have, I think it's pretty
clear that we haven't supported manufacturing.  The
theory of trickle down economics is that if taxes
are made low enough on the highest income
individuals, and the highest income companies, and
the  government does nothing else, all the right
investment decisions will be made and manufacturing
jobs will grow.  That's our theory.

Our competitors' theory is quite different. They
believe that government has to support the free
market with real incentives to always modernize
plant and equipment, with intense support for
constant retraining of the work force, and with
aggressive trade programs, not just for larger
companies, but for small and medium-sized companies
as well.

One of the most interesting examples is what you
find in the nation of Germany where medium and
small-sized manufacturers work together to support
export markets that most small companies could
never enter, and as a consequence of that, that
country which has about a third our population has
almost the same volume of exports that we do every
year, because they're working together hand in
glove, workers and management, business and
education, and government.

Fifteen years ago, for example, we made 80 percent
of the world's television sets and almost all of
our telephones. Today we're down to 25 percent of
our telephones and 10 percent of our TVs.  We've
seen industry after industry lose market share, and
most Americans today are working longer work weeks
for lower wages than they were making ten years
ago.  That is in no small measure caused
by the decline of the percentage of our work force
in manufacturing.


Just yesterday President Bush had a great photo-op
walking across the wonderful bridge that connects
Mackinaw Island to the mainland in Michigan, a
bridge that was built with steel from a mill that
has closed in the last four years.

We have to decide as a country whether we want more
people like you, whether we want to help people
like you to do things like purchase your plants
when they're in trouble, give you incentives to do
that, clean out the legal barriers to do that,
whether we want to help companies like this that
are smaller manufacturers to constantly modernize
their plant and equipment, have access to the
latest research and development, and have
incentives and support
to retrain their work force.

I want to make one thing very clear.  No person
running for office can reasonably promise to make
the American economy the way it used to be.  You
area far more typical factory, for example, than
these factories with 4,000 or 5,000 employees. The
average American factory now maxes out at 300
employees, and most people think it's good for
productivity, so that people like Art and Mike can
know everybody that works in the plant, know the
names of their
spouses, know how many children they have, know
when they're having troubles, to increase the kind
of personal connections that lead to productivity.

No one can repeal the laws of change which now
dictate that the average 18-year-old American going
into the work force will change work eight times in
a lifetime.  And no government can ever replace the
marketplace.  The issue is whether America will
have the kind of partnership between government and
the private sector that will give us a high wage,
high growth, vital manufacturing society, one
that will help us to win in the face of change
instead of lose in the face of it.

And let me just give you one example, if I might,
that doesn't have anything to do with your
manufacturing sector. Everybody knows we've lost a
lot of auto jobs in the last ten years.  And we've
lost a lot of steel jobs in the last ten years. 
But if you look at the Germans and the Japanese,
they still don't use any more people to make
automobiles than we do.

But when they moved people out of automobiles, they
moved into other manufacturing technologies, with a
future in manufacturing. When our people moved out
of automobiles, they moved into the unemployment
lines and then by and large out of manufacturing
because we did not have a strategy to maintain a
constant effort to turn new ideas not new
manufacturing jobs in the United States.

So I want to make it clear what I propose to do
won't make it the way it used to be. Nobody can
promise that.  No one can promise to stop the laws
of change.

What we've got to do is decide how to make change
our friend instead of our enemy. That is what you
have done so well in this plant.

Building a new American manufacturing base is not
going to be easy.  It's going to take hard work and
new solutions and constant effort. It's going to
take continuous productivity increases, meaning
fewer people will do the same work and at the same
time opening up new areas of work for Americans who
want to be part of the productive work force.

We have simply got to become as able as other
nations are at finding new manufacturing
technologies and turning ideas into jobs in
America.  Let me just give you one other idea.

A lot of you may have at home or your children may
have at home a laptop computer with a very thin
screen.  That thin screen is an American invention.


The patent on it was held by an American small
businessperson for years.  Then Westinghouse bought
it.  Then finally those screens were produced.

There are now eight companies in the world that
produce those screens.  They're all in Japan. 
They're all providing high-wage high-growth jobs in
Japan.

We're not talking about Mexico.  We're not talking
about low-wage competition.  We're talking about a
country that had a better system than we did for
taking a good idea; giving the private sector
patient capital for the time to develop an idea
that would put people like you to work, thousands
and thousands of people like you to work.

That idea should have been working in America. 
There should have been eight factories in this
country producing that American idea.  And that's
the sort of change that we have to make if we
really want to move forward.

The kinds of things we have to do frankly don't
fall very well within political categories. They're
not Democrat or Republican or conservative or
liberal.

For example, when you had the employee buyout here
of the plant, was that a liberal or a conservative
thing to do?  It was liberal in the sense that it
was change and different; it was conservative in
the sense it was the only way you could save your
job.  You were conserving what you had, right?

Who cares.  It works.  That's the point.  What
we've got to do is look at the new world we're
living in, with new ideas, and find out what works.

My plan is called, for lack of a better term,
manufacturing for the 21st century.  It has a
simple goal, to turn ideas that work into jobs that
work in manufacturing--jobs for the last years of
this century, and jobs for the next century.

It is based on four simple but proven ideas.  Give
incentives for people to always modernize plant and
equipment here, and fewer incentives to shut plants
down and move them overseas.

Extend the technologies that work in America to
other companies that may not have access to them,
especially small and medium-sized companies that
can't afford large research and development budgets
on their own.

Innovate.  Constantly, constantly, constantly have
the government spending the kind of money that our
competitors do in supporting private research into
new commercial technologies and export, involving
not just big companies, but small and medium- sized
companies, in exporting, and making sure that our
country gets a fair shake.

My plan centers on helping the smaller and medium-
sized manufacturers, companies like this company,
caught between the pressure of international
competition against government- backed
conglomerates, and the demands of bigger clients.

Today, we don't really have a national policy, or a
strategy, or a commitment to help our manufacturers
adjust to global change.  What we need to do is to
go beyond what now seems to be the alternative that
you hear debated.  Some people say, do nothing and
let's just see what happens.  What that will mean
is what's going on now. Companies like you get more
productive and you survive, but overall every year
the percentage of the workforce in manufacturing
goes down.

So some do well, but overall as a nation we're not
continuing to maintain our manufacturing base.
Others say what we need to do is just have a
protectionist policy, and try to have America take
care of itself.  That doesn't work either.

One in five of our jobs today is tied directly or
indirectly to global trade.  We can't put a wall
around America. If we did, it would just slow the
world's economic growth further and hurt us even
more.

What we've got to do is have a new  partnership
that makes sense to help people who are committed
to being productive workers compete and win in the
global economy.

First of all, let's talk about the incentives.  And
let's just take any company.  I've been all over. 
Like I said, I've spent a lot of time in
manufacturing companies.  I've had a lot of plants
in my state shut down and move to Mexico.

Let me tell you how the tax system works today.
Suppose you're running a small American company and
you need to buy a $5 million piece of equipment, or
a $10 million piece of equipment, to modernize and
increase productivity, so you can stay in a place
like Connecticut, where the cost of living is
fairly high.

And you have three choices: you can not buy the
equipment and stay in Connecticut and go broke. 
You can buy the equipment.  Or you can shut the
plant down and move it to a country like Mexico
where the labor costs are lower.

Now here's how the tax system works today.  If you
buy the new piece of equipment, you don't get an
investment tax credit for a quicker write-off.  But
if you shut the plant down, you get a deduction for
the cost of shutting the plant down. Then when you
start the plant up in another country, you get loss
carry-forwards on your income tax, for the years
when you lose money.

Then when you start to make money in the other
country, as long as you keep the money in a
separate bank, you never pay a penny of American
income tax on it.

So I don't--believe me, I don't think there was any
evil spirit that designed this tax system.  But our
tax system was designed with no thought for the
fact that we're in a global economy where we've got
to fight for every last job we get.

So I say we ought to copy our competitors, and give
more incentives for reinvesting in modern plant and
equipment here, and fewer incentives for shutting
the plants down and moving them abroad.

If people want to invest abroad because that is
good economics, that's one thing.  But the tax
system in America should work to benefit Americans
without being protectionist.

And that's what I call for by saying we ought to
have a permanent investment tax credit.

I also think we have got to encourage, not only in
a negative sense, in a positive sense, the
continuous production of productive equipment. 
Senator Lieberman has been very outspoken on this
issue.  But we spent a great deal of money coming
up with new products in the defense area.  We do
all this basic research, and people come up with
great ideas, and then they turn them into things
like the Patriot missile which will go through
doors or down chimneys; we all saw that on
television.  And that is critical to our future
national defense.

We don't want the Patriot missiles manufactured any
place else. But the VCR was an American idea; it's
manufactured somewhere else.  The flat screen for
computers was an American idea, as I said;
manufactured somewhere else.

We now have a list, the same list all the other
advanced countries have, of the 20-25 technologies
that will produce much of the high wage work of the
21st century. Everybody has got the same list.

The issue is, are we going to have all this work
done in our laboratories, have our people come up
with these ideas, and have then the jobs somewhere
else?

I don't think it has to be that way.  The second
thing we have to do is to figure out how to turn
these ideas into American jobs here at home, with
incentives, and with extension work.  And that
leads me to the second point I want to make.

Over the next five years, I think we ought to
create 150 manufacturing extension centers and
technology alliances throughout this country. 
Japan has 172 such centers right now. We can move
ahead of them if we move aggressively.

These centers serve as incubators for new ideas,
and they give an access to new ideas to small and
medium-sized manufacturers.  Things like, what we
did in Arkansas, by taking in all the manufacturing
companies that wanted it, ideas for new energy
efficiency; ideas for total quality management.

We've got plants in our state where 100 percent of
their profit now over last year is due not to
increased sales but to reduced energy uses. 
Because of the kind of extension work that we've
done.

Now, I'm very partial to this idea, because I grew
up in an agricultural state.  And when I was a boy
the agricultural extension service in America
played a major, major role in increasing the
productivity of farmers all across the country.

They didn't get in the way of private agriculture;
they simply supported private agriculture with the
best ideas.

Today, we are still spending over a billion dollars
a year in agriculture extension, and only $18
million in manufacturing extension, which is 20
percent of our gross national product.

There is no way in the world that a company with
200 employees will ever be able to afford to do
some of the things on its own that with just a
little bit of money you could provide services for
through manufacturing extension networks modeled on
the agriculture extension service.

There are now seven of them in this country, thanks
to Senator Ernest Hollings of South Carolina.  If
we can prevail in this election, we can put another
170 out there.

These kinds of extension centers can fill the
technological gaps that companies have, and they
can also serve another very valuable purpose, and
that is, to help retrain the scientists and
engineers who won the Cold War who are now being
laid off to do work to rebuild the American economy
here at home.

There are 200,000 unemployed defense workers,
technicians, scientists and engineers, in
California alone today.  And these people have all
this incredible potential to add to our national
wealth.  But we don't have a system for moving them
from the defense sector into the non-defense
sectors. The extension centers will help to do
this.

Let me just tell you that some people say, well,
how much money are you going to spend on this?  I
propose to spend up to $500 million a year, five
years from now.

You may think that's a lot of money.  But let me
tell you today, Germany spends 70 times more on
research and development to help private industry
than we do, per capita. That's the kind of
competition we're up against.

The overall research and development budget for
Japan is twice ours, even though they've got half
our population.  We have got to do these things if
we want to catch up and compete.  In the post Cold
War world, the people who work in partnership are
going to win as nations, just like you win in this
plant because you've worked in partnership.
 
The last thing I want to say is, we've got to
launch a national export campaign to benefit small
and medium-sized producers.  We've got mounting
trade deficits which we can do something about if
we just quit importing as much foreign oil, and
I've talked about that on other occasions.

But we've got to understand that our future
economic security and national security rests on
our ability to compete in a global marketplace.

Our government--listen to this--spends more today
promoting the exports of almonds and walnuts than
promoting all manufacturing exports to Japan.  Just
an example.  Big market for us.  Now there is
something wrong with that.

I mean, I'm all for exporting almonds and walnuts. 
I don't want to get in trouble with the people that
raise them. But there is something wrong with that,
when you realize the enormous potential we have for
exports for small and medium- sized manufacturers.

We ought to strengthen the export sections of our
foreign embassies, and help American manufacturers
sell abroad, just like all of our competitors do.

We ought to strip away unnecessary export controls
and reduce the incredible bureaucratic mess that
surrounds a lot of them.  Certain technologies are
already available throughout the world.  Americans
ought to be able to sell them just like other
countries, but they can't today.

We've got to strip away--I'll say this again--we've
got to strip away our ideological blinders.  A lot
of what we have to do does not fit neatly into
somebody's notion of a political party platform of
10 or 15 years ago.  We've got to look at the world
that we're facing today and go after it.

We've got to get rid of regulations that don't make
sense.  And we've got to permit our companies to
join together and do common research and
development in global competition as long as it
doesn't affect their competitive pricing here at
home.

For too many years, we have just sat by while other
nations have moved swiftly beyond us.  We've got to
have a new strategy.  And it's got to be based on
the proposition that since Americans are working
harder than most countries, we ought to be able to
be more productive, and we ought to be able to make
more money, and that when there is American
teamwork, and American ingenuity, and American
sense of can-do spirit, and a sense of
competitiveness, we ought to be winning.

We should not be punished by having manufacturing
productivity grow, and then having a percentage of
our workforce in manufacturing drop.

We shouldn't be punished by seeing our productivity
go up and our wages go down.

For 89 years, this plant has seen thousands of men
and women come through its doors to earn a living. 
It has supported the dream of countless families.

It would be a real tragedy if future American
families didn't have those same ideas and those
same opportunities.

Mike was telling me back here when we were talking,
when Art was making his remarks, that his niece,
Carleen works here, on the same shop floor doing
the job that her uncle ought to do.  That's the
sort of commitment we ought to make to America,
that generation after generation should have the
opportunity to make things.

My granddaddy used to tell me that in the Great
Depression in Arkansas people were so poor that
they took in one another's washing for a living. 
Now that is what would happen to America if nobody
made anything.

There are people who really believe it doesn't
matter if we have manufacturing jobs in America. 
There are people who seriously say, we could have
100 percent service economy.  They have not
examined the economic realities in which we live.

We need a manufacturing base.  We need more
companies like this one.  I have done my best in
this election to offer a responsibility strategy
for manufacturing, one which we're releasing in
greater detail today, and one which is also
contained in this little book that Senator Gore and
I put together of our various positions in this
campaign.  It's called putting people first.

I hope everyone of you for the next 56 days,
whatever your political party, will think about
this.  I want you to think about what it took to
put this plant back together in the tough years of
the 1980s, and the kind of things you have to do
today to stay ahead of the curve.

And I want you to think about what we should do to
make sure that people who do what you do are
rewarded for their work and their effort, and that
this country does not become a second-rate economic
power, after we won the Cold War, because we simply
didn't have the vision or the will to do what it
makes to maintain our manufacturing base.

I am determined to see that we do. 

Thank you very much.