Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy
Source: National Academy of Engineering
Manufacturing is in a period of dramatic transformation. But in the United States, public and political dialogue is simplistically focused almost entirely on the movement of certain manufacturing jobs overseas to low-wage countries. The true picture is much more complicated, and also more positive, than this dialogue implies.
After years of despair, many observers of US manufacturing are now more optimistic. A recent uptick in manufacturing employment and output in the United States is one factor they cite, but the main reasons for optimism are much more fundamental. Manufacturing is changing in ways that may favor American ingenuity. Rapidly advancing technologies in areas such as biomanufacturing, robotics, smart sensors, cloud-based computing, and nanotechnology have transformed not only the factory floor but also the way products are invented and designed, putting a premium on continual innovation and highly skilled workers. A shift in manufacturing toward smaller runs and custom-designed products is favoring agile and adaptable workplaces, business models, and employees, all of which have become a specialty in the United States. Future manufacturing will involve a global supply web, but the United States has a potentially great advantage because of our tight connections among innovations, design, and manufacturing and also our ability to integrate products and services.
The National Academy of Engineering has been concerned about the issues surrounding manufacturing and is excited by the prospect of dramatic change. On June 11-12, 2012, it hosted a workshop in Washington, DC, to discuss the new world of manufacturing and how to position the United States to thrive in this world. The workshop steering committee focused on two particular goals. First, presenters and participants were to examine not just manufacturing but the broad array of activities that are inherently associated with manufacturing, including innovation and design. Second, the committee wanted to focus not just on making things but on making value, since value is the quality that will underlie high-paying jobs in America’s future. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy summarizes the workshop and the topics discussed by participants.
Manufacturing is experiencing a crisis of confidence in the United States. Americans view the manufacturing sector in the U.S. as fragile and unstable. They are concerned about the long-term stability of manufacturing employment and fear that manufacturing jobs will inevitably be moved to workers in other countries. Despite these fears, Americans remain steadfast in their support of manufacturing in the United States and the economic benefits that result.
Today there are new pathways to manufacturing opportunity in America that are both available and achievable. And public policy has a major role to play in supporting these directions.
This report relies on collaborative efforts with a number of organizations working on important issues affecting the manufacturing industry, as well as surveys of American citizens, business and labor leaders, university presidents, and directors of some of the United States’ largest national laboratories. It presents a case for optimism – and for hard work. It examines some of the main challenges facing any attempt to cultivate an American manufacturing renaissance, and highlights recommendations that could help the United States overcome these roadblocks.
Job Creation in the Manufacturing Revival (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The health of the U.S. manufacturing sector is of intense interest to Congress. Numerous bills aimed at promoting manufacturing have been introduced in Congress, often with the stated goal of creating jobs. Implicit in many of these bills is the assumption that the manufacturing sector is uniquely able to provide well-paid employment for workers who have not pursued advanced education.
U.S. manufacturing output has risen significantly over the past two years as the economy has recovered from recession. This upswing in manufacturing activity, however, has resulted in negligible employment growth. Although a variety of forces seem likely to support further growth in domestic manufacturing output over the next few years, including higher labor costs in the emerging economies of Asia, higher international freight transportation costs, and increased concern about disruptions to transoceanic supply chains, evidence suggests that such a resurgence would lead to relatively small job gains within the manufacturing sector. For more on supplychain risk, see CRS Report R40167, Globalized Supply Chains and U.S. Policy, by Dick K. Nanto, and CRS Report R41831, The Motor Vehicle Supply Chain: Effects of the Japanese Earthquake and Tsunami, by Bill Canis.
The past few years have seen important changes in the nature of manufacturing work. A steadily smaller proportion of manufacturing workers is involved in physical production processes, while larger shares are engaged in managerial and professional work. These changes are reflected in increasing skill requirements for manufacturing workers and severely diminished opportunities for workers without education beyond high school. Even if increased manufacturing output leads to additional employment in the manufacturing sector, it is likely to generate little of the routine production work historically performed by workers with low education levels.
As manufacturing processes have changed, factories with large numbers of workers have become much less common than they once were. This suggests that promotion of manufacturing as a tool to stimulate local economies is likely to meet with limited success; even if newly established factories prosper, few are likely to require large amounts of labor.
CRS — Domestic Content Legislation: The Buy American Act and Complementary Little Buy American Provisions
Domestic Content Legislation: The Buy American Act and Complementary Little Buy American Provisions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
Congress has broad authority to place conditions on the purchases made by the federal government or with federal dollars. One of many conditions that it has placed on direct government purchases is a requirement that they be produced in the United States. The most well known of these requirements is the Buy American Act, which is the major domestic preference statute governing procurement by the federal government. The Buy American Act applies to direct purchases by the federal government of more than $3,000, providing their purchase is consistent with the public interest, the items are reasonable in cost, and they are for use in the United States. The act requires that “substantially all” of the acquisition be attributable to American-made components. Regulations have interpreted this requirement to mean that at least 50% of the cost must be attributable to American content. While the act has only been substantively amended four times since its enactment in 1933, every Congress in the intervening years has seen fit to enact some form of additional domestic preference legislation.
Other domestic preference statutes, known as “Little Buy American Acts,” either impose a higher domestic content requirement on procurements that are covered by the Buy American Act or apply to indirect purchases (i.e., purchases not made by a federal entity, but which are made with federal funds). The Buy America Act and the Berry Amendment, the most commonly recognized of the Little Buy American Acts, are representative of the two most prominent categories of Little Buy American Acts. The majority of Little Buy American Acts govern purchases not directly made by a federal entity, but which use federal funds. The Buy America Act, which attaches a domestic content requirement to purchases made with federal transportation funds, is illustrative of this type of legislation. Unless the definitions of the Buy American Act are referenced, these provisions generally require the purchase of 100% American-made products.
The second most common category of Little Buy American Act affects certain direct purchases of the federal government (i.e., ones that are governed by the Buy American Act), for which Congress has decided a greater percentage of American content should be required, as opposed to the standard 50%. The Berry Amendment is probably the most recognized legislation in this category. The Berry Amendment is a “super percentage” statute which limits the Department of Defense when purchasing certain goods to such goods that are 100% American in origin.
This report summarizes (1) the Buy American Act, what it does and does not cover; (2) the Little Buy American Acts found in permanent law, emphasizing what they govern, major exceptions and why Congress felt them necessary in light of the requirements of the Buy American Act; and (3) the temporary Little Buy American provision found in the American Recovery and Reinvestment Act.
U.S. Solar Photovoltaic Manufacturing: Industry Trends, Global Competition, Federal Support (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
Every president since Richard Nixon has sought to increase U.S. energy supply diversity. In recent years, job creation and the development of a domestic renewable energy manufacturing base have joined national security and environmental concerns as rationales for promoting the manufacturing of solar power equipment in the United States. The federal government maintains a variety of tax credits, loan guarantees, and targeted research and development programs to encourage the solar manufacturing sector, and state-level mandates that utilities obtain specified percentages of their electricity from renewable sources have bolstered demand for large solar projects.
The most widely used solar technology involves photovoltaic (PV) solar modules, which draw on semiconducting materials to convert sunlight into electricity. By year-end 2011, the total number of grid-connected PV systems nationwide reached almost 215,000. Domestic demand is met both by imports and by about 100 U.S. manufacturing facilities employing an estimated 25,000 U.S. workers in 2011. Production is clustered in a few states, including California, Oregon, Texas, and Ohio.
Domestic PV manufacturers operate in a dynamic and highly competitive global market now dominated by Chinese and Taiwanese companies. All major PV solar manufacturers maintain global sourcing strategies; the only U.S.-based manufacturer ranked among the top ten global cell producers in 2010 sourced the majority of its panels from its factory in Malaysia. Some PV manufacturers have expanded their operations beyond China to places like the Philippines and Mexico. Overcapacity has led to a significant drop in module prices, with solar panel prices falling more than 50% over the course of 2011. Several PV manufacturers have entered bankruptcy and others are reassessing their business models. Although hundreds of small companies are engaged in PV manufacturing around the world, profitability concerns appear to be driving consolidation, with ten firms now controlling half of global cell and module production.
The Department of Commerce and the U.S. International Trade Commission are investigating allegations that U.S. producers have been injured by dumped and subsidized imports from China. If significant duties are ultimately imposed, U.S. production could become more competitive with imports, but the cost of installing solar systems might rise. On the other hand, a number of federal policies that have helped to spur domestic demand for solar PV products have expired or reached their funding limits. These include the 1603 cash grant program and the advanced energy manufacturing tax credit; S. 591, which would extend the credit, has been introduced in the 112 th Congress. Under current law, the Investment Tax Credit for PV systems will sunset at the end of 2016.
The competitiveness of solar PV as a source of electric generation in the United States will likely be adversely affected both by the expiration of these tax provisions and by the rapid development of shale gas, which has the potential to lower the cost of gas-fired power generation and reduce the cost-competitiveness of solar power, particularly as an energy source for utilities. In light of these developments, the ability to build a significant U.S. production base for PV equipment is in question.
Talent, the ability to innovate and the strategic use of public policy will play a significant role in defining manufacturing sector competitiveness in developed and emerging economies going forward, finds The Future of Manufacturing, a report by the World Economic Forum. Written in collaboration with Deloitte Touche Tohmatsu Limited, the study finds that the global manufacturing ecosystem is undergoing a dramatic transformation, with many emerging economies developing significant manufacturing and innovation capabilities, enabling them to produce increasingly complex products, leading to the globalization of manufacturing supply chains. Fading labour rate arbitrage, exposure to currency volatility, sovereign debt pressures and emerging protectionist policies will be countervailing forces to further globalization of manufacturing value chains.
The report highlights the key trends that will define manufacturing competition over the next 20 years and which will require the attention and collaboration of policy-makers, civil society and business leaders. With an estimated 10 million jobs with manufacturing organizations worldwide that cannot be filled today due to a growing skills gap, the report identifies talent as one of the key differentiators that will define the future of the sector. The other top differentiators identified in the report include the strategic use of public policy and the ability to innovate. The infrastructure necessary to enable manufacturing to flourish and contribute to job growth will grow in importance and sophistication and be challenging for countries to develop and maintain. Growing materials resources competition and scarcity will fundamentally alter country and company resources strategies and competition, and serve as a catalyst to significant materials sciences breakthroughs.
Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline
Source: Information Technology & Innovation Foundation
In the 2000s, U.S. manufacturing suffered its worst performance in American history in terms of jobs. Not only did America lose 5.7 million manufacturing jobs, but the decline as a share of total manufacturing jobs (33 percent) exceeded the rate of loss in the Great Depression. Despite this unprecedented negative performance, most economists, pundits and elected officials remain remarkably blasé about what has transpired. Manufacturing, they argue, has simply become incredibly productive. While tough on workers who are laid off, outsized job losses actually indicate superior performance. All that might be needed are better programs to help laid-off production workers. And there is certainly no need for a determined national manufacturing competitiveness strategy.
+ Full Report (PDF)
EPA Finalizes Air Toxic Emissions Standards for Polyvinyl Chloride (PVC) Production Facilities/Standards will cut harmful emissions that impact local communities
EPA Finalizes Air Toxic Emissions Standards for Polyvinyl Chloride (PVC) Production Facilities/Standards will cut harmful emissions that impact local communities
Source: U.S. Environmental Protection Agency
The U.S. Environmental Protection Agency (EPA) today issued strong final standards requiring facilities that produce polyvinyl chloride and copolymers (PVC) to reduce harmful air emissions, which will improve air quality and protect people’s health in communities where facilities are located. Exposure to toxic air pollutants, like those emitted from PVC facilities, can cause respiratory problems and other serious health issues, and can increase the risk of developing cancer. In particular, children are known to be more sensitive to the cancer risks posed by inhaling vinyl chloride, one of the known carcinogens emitted from PVC facilities.
The final standards are based on currently available technologies and will reduce emissions of air toxics, such as dioxin and vinyl chloride. Facilities will have the flexibility to choose the most practical and cost-effective control technology or technique to reduce the emissions. Facilities will be required to monitor emissions at certain points in the PVC production process to ensure that the standards are met.
Currently, there are 17 PVC production facilities throughout the United States, with a majority of these facilities located in Louisiana and Texas. All existing and any new PVC production facilities are covered by the final rule.
+ Full Document (PDF)
It is expected that climate change could lead to an increased frequency of severe weather. In turn, severe weather intuitively should hamper the productivity of work that occurs outside. But what is the effect of rain, snow, fog, heat and wind on work that occurs indoors, such as the production of automobiles? Using weekly production data from 64 automobile plants in the United States over a ten-year period, we ﬁnd that adverse weather conditions lead to a signiﬁcant reduction in production. For example, one additional day of high wind advisory by the National Weather Service (i.e., maximum winds generally in excess of 44 miles per hour) reduces production by 26%, which is comparable in order of magnitude to the estimated productivity drop during the launch of a new vehicle. Furthermore, the location with the best weather (Arlington, Texas) only loses 2% of production per year due to the weather, whereas the location with the most adverse weather (Lordstown, OH) suffers an annual production loss of 11%. Our ﬁndings are useful both for assessing the potential aggregate productivity shock associated with inclement weather as well as guiding managers on where to locate a new production facility – in addition to the traditional factors considered in plant location (e.g., labor costs, local regulations, proximity to customers, access to suppliers), we add the prevalence of bad weather.
New Reports Add Urgency to Call for President Obama to Stop China’s Cheating
Source: Alliance for American Manufacturing
More than 400,000 jobs in the U.S. auto supply chain have been lost since 2000 and another 1.6 million U.S. jobs are at risk unless China’s illegal trading practices are curtailed, according to three separate reports released today.
“Taken together, these three reports show beyond a shadow of a doubt that China’s blatant use of illegal government subsidies and a web of predatory trade practices on a massive scale are undercutting companies in the U.S. auto supply chain,” said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM), a non-profit, non-partisan partnership of leading manufacturers and the United Steelworkers.
“It’s essential that federal action be taken to challenge these abuses before they completely undermine the job recovery underway in the U.S. auto industry,” Paul said.
As a result of this web of subsidies and illegal practices, China’s exports of auto parts have surged over the past decade. A large portion of these exports are bound for the U.S. market. China is the fastest-growing source of U.S. auto parts imports. In fact, since 2001, an AAM investigation has found that $62 billion worth of Chinese auto parts have been imported into the U.S., causing the auto parts trade deficit between the U.S. and China to increase by more than 850%.
+ Growing Threats to the U.S. Auto-Parts Industry from Heavily Subsidized Chinese Tires and Parts (Economic Policy Institute)
+ Putting the Pedal to the Metal: Subsidies to China’s Auto-Parts Industry from 2001 to 2011 (Economic Policy Institute)
+ China’s Support Program for Automobiles and Auto Parts Under the 12th Five Year Plan (PDF; Law Offices of Stewart and Stewart)
Manufacturing hourly compensation costs in the United States in 2010 were lower than in several northern and western European countries, Australia, and Canada, but higher than in the United Kingdom and 19 countries in southern and eastern Europe, Asia, and South America, the U.S. Bureau of Labor Statistics reported today (see chart 1). U.S. hourly compensation costs rose about 2 percent from the previous year to $34.74 (see table 2).
From 1997 to 2010, U.S. compensation cost competitiveness in manufacturing improved relative to all but five countries covered: Brazil, Germany, Japan, the Philippines, and Taiwan (see table 1).
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry (PDF)
Source: Congressional Research Service (via Novogradac & Company LLP)
Increasing U.S. energy supply diversity has been the goal of many Presidents and Congresses. This commitment has been prompted by concerns about national security, the environment, and the U.S. balance of payments. More recently, investments in new energy sources have been seen as a way to expand domestic manufacturing. For all of these reasons, the federal government has a variety of policies to promote wind power.
Expanding the use of wind energy requires installation of wind turbines. These are complex machines composed of some 8,000 components, created from basic industrial materials such as steel, aluminum, concrete, and fiberglass. Major components in a wind turbine include the rotor blades, a nacelle and controls (the heart and brain of a wind turbine), a tower, and other parts such as large bearings, transformers, gearboxes, and generators. Turbine manufacturing involves an extensive supply chain. Until recently, Europe has been the hub for turbine production, supported by national renewable energy deployment policies in countries such as Denmark, Germany, and Spain. Competitive wind turbine manufacturing sectors are also located in India and Japan and are emerging in China and South Korea.
U.S. and foreign manufacturers have expanded their capacity in the United States to assemble and produce wind turbines and components. Nearly 400 U.S. manufacturing facilities produced wind turbines and components in 2010, up from as few as 30 in 2004. An estimated 20,000 U.S. workers were employed in the manufacturing of wind turbines in 2010. Because turbine blades, towers, and certain other components are large and difficult to transport, manufacturing clusters have developed in certain states, notably Colorado, Iowa, and Texas, which offer proximity to the best locations for wind energy production. The U.S. wind turbine manufacturing industry also depends on imports, with the majority coming from European countries, where the technical ability to produce large wind turbines was developed. Although turbine manufacturers’ supply chains are global, recent investments are estimated to have raised the share of parts manufactured in the United States to 50-60%, up from 25% in 2005.
The outlook for wind turbine manufacturing in the United States is partially dependent upon federal and state policies. A variety of federal laws and policies have encouraged both wind energy production and the use of U.S.-made equipment to generate that energy. Some of these policies are subject to change at the end of 2011, and others are scheduled to expire in 2012. Future decisions about these policies will affect the extent to which wind turbine manufacturing becomes an important industrial sector in the United States.
Boiling Point? The Skills Gap in U.S. Manufacturing
The past year has shown a renewed attention to the future of the manufacturing industry in the United States. In the media, in online conversations, and in person, people are wondering whether the U.S. has what it takes to compete, and whether we can and should rededicate ourselves to strengthening the manufacturing sector in the face of increased global competition and persistent economic challenges.
Year after year, studies continue to show that Americans remain stalwart in their support of a strong manufacturing industry.
Our own recent joint study on U.S. public opinions of manufacturing found that throughout one of the most turbulent periods in U.S. economic history, public views on the importance of manufacturing – both in terms of its role in the U.S. economy and its function as a job creation engine – have remained strong.
As many U.S. manufacturers look to regain momentum, they will likely face some well-documented challenges.
Not least among these is the issue of talent.
This is not new – for years, manufacturers have reported a significant gap between the talent they need to keep growing their businesses and what they can actually find.
+ Full Report (PDF)
Cleaner Vehicles Create Opportunities for Jobs, Economic Growth, Study Shows
Source: Natural Resources Defense Council/National Wildlife Federation/United Auto Workers
More than 150,000 American workers already are making components for clean, fuel-efficient vehicles, and that number could grow significantly as the United States continues to embrace new generations of fuel efficient cars and trucks, according to a new study released today.
The report, jointly produced by the Natural Resources Defense Council, the National Wildlife Federation and the UAW, comes just two days before President Obama is to visit an advanced battery facility in Holland, Mich., to tout how the new 54.5 mpg fuel standard for cars and light trucks will lead to innovative technologies that will enable automakers to achieve even greater mileage for their products—and save consumers money.
The report, “Supplying Ingenuity: U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies,” underscores the strong link between fuel-efficient vehicles and economic vitality.
The Case of the Disappearing Large-Employer Manufacturing Plants: Not Much of a Mystery After All
Source: Federal Reserve Bank of Minneapolis
This paper seeks to contribute to policy discussion over recent declines in U.S. manufacturing through close investigation of employment trends in U.S. manufacturing plants with 1,000 or more workers, “large-employer plants.” These plants are disappearing at a rate much greater than the decline in manufacturing as a whole. To determine what is happening to these plants, the paper links the 1997 and 2007 published Census Bureau tabulations of the locations of manufacturing plants. This makes it possible to distinguish between plants that are no longer large employers because they have downsized to a smaller employment level and plants that have closed outright.
The author concludes that the dramatic disappearance of large employers is neither mysterious nor surprising. Most of the missing large employers from 1997 are still open, only with fewer employees. The plants that have closed have tended to rely on large quantities of unskilled labor, making them vulnerable to strong import competition from China and other nations, where unskilled labor is less expensive.
The analysis begins with trends in all of U.S. manufacturing and narrows successively. The initial narrowing focuses on a specific geographic area, the “Piedmont region” of the southeastern United States, which has specialized in manufacturing industries that use unskilled labor intensively. Scrutiny then narrows further within the Piedmont to industries heavily impacted by imports from China, designated here as “China surge industries.” The analysis ends by contrasting how two large-employer plants making furniture in the Midwest have managed to survive, while the furniture industry in the Piedmont region has collapsed.
“Hollowing Out” in U.S. Manufacturing: Analysis and Issues for Congress (PDF)
Source: Congressional Research Service (via Congressman J Randy Forbes R-VA)
The health of the U.S. manufacturing sector has been a long-standing concern of Congress. Although Congress has established a wide variety of tax preferences, direct subsidies, import restraints, and other federal programs with the goal of retaining or recapturing manufacturing jobs, only a small proportion of U.S. workers is now employed in factories. Meanwhile, U.S. factories have stepped up production of goods that require high technological sophistication but relatively little direct labor. Labor productivity in manufacturing, as measured by government data, has grown rapidly, suggesting that the manufacturing sector as a whole remains healthy.
Recent data, however, challenge the belief that the manufacturing sector, taken as a whole, will continue to flourish. Unlike previous expansions, the two most recent cyclical upturns in the U.S. economy have not generated jobs in manufacturing. Moreover, statistics suggest that domestic value represents a diminishing share of the value of U.S. factory output. One interpretation of these data is that manufacturing is “hollowing out” as companies undertake a larger proportion of their high-value work abroad. These developments raise the question of whether the United States will continue to generate highly skilled, high-wage jobs related to advanced manufacturing.
The evidence concerning “hollowing out” is ambiguous, as conceptual issues and statistical deficiencies make it difficult to determine whether the recent decline in manufacturing value added, relative to shipments, is a short-term phenomenon or a long-term trend. Despite improvements in recent years, U.S. statistical agencies still tend to treat manufacturing and services as unrelated economic activities, and it is not clear that existing data series on domestic economic activity, trade, and freight transportation adequately capture changes in the nature of manufacturing, the sources of employment, and the creation of value.
Nonetheless, evidence suggests strongly that physical production activities account for a diminishing share of the final value of manufactured products, with service-related inputs such as research, product design, and marketing becoming more important. Further, the production of many goods is dispersed across multiple locations along global supply chains, making it difficult to determine where value is added. Such shifts pose a challenge to efforts to capture economic value by promoting goods production in the United States.
In the context of national security, the fact that U.S. manufacturers of vital products are critically dependent upon inputs from abroad is frequently a subject of concern. International comparisons indicate that the United States is in no way unique in its dependence on foreign inputs to manufacturing. Although the output of U.S. factories contains a large proportion of foreign value added, many other countries appear to be even more dependent upon foreign value added than is the United States, at least with respect to goods traded in international markets.
The Motor Vehicle Supply Chain: Effects of the Japanese Earthquake and Tsunami (PDF)
Source: Congressional Research Service (via Original Equipment Suppliers Association)
The March 2011 Great Tohoku Earthquake and Tsunami devastated the northeast coast of Japan with the most powerful natural disaster in Japan’s modern history. Compounding the challenge for Japanese government, businesses, and communities was the resulting destruction of several nuclear reactors in the region which supplied electricity for homes and industry. Not only was electricity unavailable, but a large area was temporarily evacuated, making rapid reopening of affected industries impossible.
Located in the disaster region and adversely affected by these forces are a number of manufacturing facilities which are integral to the global motor vehicle supply chain. They include plants that assemble automobiles and many suppliers which build parts and components for vehicles. Some of the Japanese factories that were forced to close provide parts and chemicals not easily available elsewhere. This is particularly true of automotive electronics, a major producer of which was located near the center of the destruction.
The effect of these disasters has been first and foremost borne by Japanese automakers, which closed many of their Japanese assembly plants for several weeks as they assessed their supply chain issues and impact on their Tier 1, 2, and 3 suppliers. Japanese motor vehicle plants in other parts of the world have also been affected, including facilities owned by Toyota, Nissan, Honda, and other manufacturers in the Midwest and South of the United States. Detroit 3 automakers, by contrast, are less affected, although they, too, have taken extraordinary steps to keep production moving, including visiting suppliers in Japan to help them rebuild, locating alternative sources for some parts and chemicals, and shifting plants’ summer vacations to accommodate the loss of parts.
IHS Global Insight, a global consulting firm, forecasts that over 4 million units of vehicle production will be lost because of the disasters in Japan, with 90% of them from Japanese automakers. It is possible that a shortage of some popular Japanese vehicles may develop over the summer in the United States. The Detroit 3 and South Korean automakers may be able to fill a portion of whatever demand Japanese producers are unable to meet.
Congress has shown an interest in the economic effects of these disasters, and at least one hearing has been planned to examine the effects. Not only is Japan one of the United States’ largest trading partners, but it is also an ally in Asia, and its rebuilding is an important step in global economic recovery. In addition, Congress may be interested in evaluating the resilience of global supply chains as a result of new information about the vulnerabilities of supply chains in the automotive sector.
WTO Airbus Case – Appellate Body overturns key findings of the Panel in favour of the EU
Source: European Commission
The European Commission welcomes the WTO Appellate Body report on the Airbus case published today. The Appellate Body has overturned several key findings made by the Panel. Most importantly, the Appellate Body found that support provided by Germany, Spain and the UK for the launch of Airbus’ A380 aircraft is not a prohibited export subsidy under WTO Law. It also rejected the US appeal that other instances of Repayable Launch Investment (RLI) were export subsidies.