Exporting Our Technology and
Our Jobs
Larry LaBorde
September 16, 2004
My son recently took a trip to a large Gulf Coast city in the
Southern US on a buying trip with one of my brothers/partners.
My son is a recently graduated engineer and is interested in
working globally in general and on the Pacific Rim in particular.
During their trip they visited two very different importing companies.
The first importing company was run by two brothers from India.
Both were engineers. They mainly dealt with small metal castings.
They had connections with 30 or so small foundries throughout
the Pacific Rim. They could have almost anything copied and cast
in a variety of metals. The more technical castings with exotic
metals went to Korea while the simple bronze and cast iron jobs
went to India and China. If there were over 3,000 units or pieces
a year they could have the part custom manufactured for you at
a substantial savings.
The second company was a large old line machine shop. This company
had slowly moved into the manufacturing business by having semi-complex
castings poured in Korea and importing the rough castings. (They
were currently working with a foundry in China to improve their
quality.) They would then perform the final machining and assembly
for large refinery pumps here in the US. By using the Pacific
Rim foundries they were undercutting the domestic pump companies
by a large margin. In order to work with the foundry overseas
they had purchased a very detailed three axis tracing machine.
This machine had a large 3 axis arm that literally touched the
part and traced out a shape on their computer. After a few hours
of tracing a complex part an exact digital shape was obtained
that could be transmitted via the internet to an overseas foundry
and allow work to begin on the part that same day.
It became apparent to me that the overseas import market was
opening up to more than just Wal-Mart and fortune 500 companies
who could afford to visit and forge alliances with Pacific Rim
companies. With digital communications and the help of a facilitator
almost any part could be copied and reproduced if there was a
reasonable volume needed. Many of our engineered products that
were developed over the years in the US are now simply copied
overseas and shipped back here for final assembly. How much longer
until the final machining and assembly is performed overseas
as well?
Every time another casting, machining or assembly process is
moved overseas a US manufacturing job is lost. We are slowly
turning from a nation of producers (that exported our surplus)
into a nation of consumers. I see almost no new manufacturing
jobs in the US, only the slow and steady erosion of the existing
ones. (Even though federal statistics have now re-classified
hamburger flipping as a manufacturing job the stats still look
bad.) Perhaps we can turn the entire US into a service economy
where we do each others dry cleaning and serve each other hamburgers.
Somehow we may make enough money that way to import a few manufactured
goods from abroad - I just do not understand how. As the only
growth industry (government programs) gets larger and the domestic
manufacturing industry gets smaller I do not see good things
ahead for the US economy. The only thing ahead is what I call
the "great equalization" where the standard of living
gets better for the 3rd world and it gets worse for us.
In the past the thing that allowed us to live better than the
rest of the world was our wonderful US productivity rates. Our
high productivity was a result of our capital markets allowing
us to accrue capital and invest it in tools that made us more
productive. We are now spending everything we make and borrowing
more. Our savings rate (remember back two sentences about accruing
capital to invest in better tools) is negative! One US worker
with his "modern factory" in years past could out produce
dozens of 3rd world workers using hand tools. Well the 3rd world
worker, in many instances, now has as good or better tools than
the US worker. In many foreign factories they are as productive,
or even more so, as US workers. Why then are we entitled to live
better or at a higher standard of living?
The fact that the dollar is the world's reserve currency has
a little to do with it. As long as foreigners are willing to
accept our dollars in exchange for their finished goods and let
them pile up in their central banks as "reserves" then
the game can continue. Whenever the foreigners decide they have
enough dollar reserves and start to spend our IOUs then the game
is over. There will be a rush for the exits as central bankers
around the world dump dollars and spend their US IOUs at the
same time while trying to exchange them for anything they can
before they devaluate even further.
At that point in time the US economy will be exposed for what
it has become - just another 2nd rate world economy. In order
to trade with the world for goods that we no longer produce we
will have to export something - any ideas?
Trade your dollars for precious metals while your dollars are
still worth something. When all those dollars finally do come
home flooding the US economy they will certainly be worth less.
If we are ever to become a powerhouse economy again we must PRESERVE
and accrue capital to reinvest at the right time in the future.
No matter how little or how great your income, save something
every month and live below your means.
September 16, 2004
Larry LaBorde
 Silver Trading Company
318-470-7291
website: www.silvertrading.net
email: llabord@aol.com
Larry lives in Shreveport, LA with his wife Puddy, and sells
precious metals at the Silver Trading Company.
Larry can be contacted at llabord@aol.com. You can view his web
site at www.silvertrading.net.
Send questions, comments or corrections to llabord@silvertrading.net.
"Please note that I am by no means a financial advisor and
all investments should only be made after performing your own
due diligence." -Larry
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