Month: <span>November 2017</span>

Manufacturing in the USA – Our Stance

There’s no denying that over the past few decades there has been a significant increase in manufacturing of physical goods in countries outside the United States, correlating with a strong increase in the reliance of United Stated-based companies on foreign companies for said goods. At the same time, there has been a stark decrease in manufacturing on the United States homeland, as it has become increasingly difficult to compete with the prices offered in countries where manufacturing costs are significantly lower.

While low prices of raw materials and manufacturing may mean higher profit margins for American companies in the short term, we fear that the American economy is shifting to a “top-heavy” level of imbalance that could potentially be disastrous in the long term. As industrial manufacturing shifts more and more outside the border, our economy becomes increasingly reliant on other companies. If we cannot sustain ourselves independently – that is, provide the raw materials and the manufacturing that our companies need in order to thrive – then we are at the will of companies and countries outside our control. Simply put, if these companies or countries decided to raise prices or cut supply, we could potentially be put in an extremely tight situation.

To make paint a more tangible image, let’s imagine a hypothetical and simplified scenario:

Tim runs a farm stand in Santa Rosa. He inherited the stand from his parents, and it has run in the family for over 35 years. When his parents first started out there were dozens of local farmers from whom they would source their fresh produce every morning. Over time, however, one particular farm named Mayweather Produce progressed into a very sophisticated and efficient operation, and they were able to produce carrots, potatoes, and broccoli at a fraction of the cost of the other local farmers. Of course, the other local farmers had to lower their prices on these items in order to sell their produce before it spoiled, but they took a huge cut in profits.

The next year, the local farmers rearranged their plans and focused on the produce that Mayweather Produce had not sold the previous year. Meanwhile, Mayweather Produce used all of their profits from the carrots, potatoes, and broccoli to grow all sorts of grains and vegetables. Once again, by the time the end of the year came around a lot of the smaller farms had a tough time competing with the prices Mayweather Produce could offer. A few of them even had to close up shop because they couldn’t keep up with the prices.

Fast forward to today and Mayweather Produce is the sole supplier that Tim has to choose from when stocking his farm stand. The local farmers simply were not able to keep up with the lower profit margins, and one by one they had to close their doors until Mayweather Produce was the only farm left in town.

Now, to get one thing straight, Mayweather Produce still offers top quality vegetables and grain at an excellent price, but the fact of the matter is that they are the only supplier available to farm stand owners like Tim. This year, their corn succumbed to disease and their entire crop was wiped out. In order to recoup the losses from the corn disaster, they had to increase their prices across the board to make up for the loss. Not only was Tim unable to supply his customers with corn, but he also had to increase his stores prices, or suffer a loss in profits, in order for the farm stand to survive.

That’s bad enough, but what if Mayweather Produce weren’t Mayweather Produce, but instead a company with unethical operating policies? Tim would be be at the will of this company and would have to pay any price that the company demanded for whatever produce they offered, regardless of what Tim’s customers would be willing to pay.

Hopefully this analogy sheds some light on why we are concerned with having so much of the United States’ manufacturing being outsourced to countries beyond America’s borders. We think that one way to encourage manufacturing back on American soil would be to offer significant tax advantages to companies that qualify as American Industrialist Organizations (AIOs). This would hopefully bring the operating costs of manufacturing in America back to a competitive rate as compared with manufacturing in other countries. Manufacturers of top rated electric fireplaces, for example, have openly stated that they would have more interest in manufacturing within the United States territories if costs were more comparable. The logistics of running a business are simply less complex when operating entirely within the borders of a single country.

In summary, we feel that laws upholding the advantage of manufacturing within United States territories should be given priority, and paving a way to maintain a balanced economy for years to become should be a high priority for solidifying our future.