We were pleased to be quoted in the weekend edition of the Wall Street Journal in an article by Tim Aeppel titled Feds Try Redefining Manufacturing.
Our initial post on Factoryless Goods Producers was cited in the article.
The issue is that federal agencies are trying to redefine “Manufacturing” to recognize “Factoryless Goods Producers” as Manufacturers.
If you don’t actually make something- how can you be considered a Manufacturer?
If you contract to have some company in a foreign country make your product, why should you be credited as manufacturer and why should US get balance of trade credit for being the manufacturer?
We think that definitions ought to be honest.
Manufacturing is actually making things. not designing them, ordering them, or buying them from another company.
We think that manufacturing ought to be credited where the making things actually happens. Apple designs and sells some really cool electronics- but the manufacturing is not done in the US.
Why would we want to let US companies claim to be manufacturers when in fact they don’t make the products in the first place, and often have them made overseas where the operations are not governed by US legal protections for labor rules, safety, environment?
Deceiving consumers and the voters with fraudulent numbers is what this about. It’s not about reacting to globalization. It is about counting the hollowing out of US Manufacturing as actually manufacturing.
- Yet no new employees are hired.
- No new assembly lines or factories are built.
- No new payroll taxes are being paid.
Manufacturing is about making things.
If you don’t actually make it, you aren’t a manufacturer.
Sorry if that offends you.
You may be a great designer. Broker. Outsourcer. Wholesaler, Distributor. Whatever.
But you aren’t a manufacturer unless you actually make things.
My guess is that USA’s enterprises who claim to be “manufacturers” while “off-shoring” their physical product manufacturing are doing so to avoid possible import duties or loss of existing and potential tax breaks and other incentives intended for our actual “on-shore” US “manufacturers”. Clearly, the designation as a US “manufacturer” must be qualified by a mandatory requirement for “on-shore” facilities, operations and actual, hands- on product manufacturing jobs.
The process for legitimate classification of a US enterprise as “manufacturer” needs to be formalized. It’s not clear to me by whom, but now that you have opened the “manufacturer” debate, the door is now wide open for suggestions.
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