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How’s Business?: Manufacturing woes

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When one thinks of manufacturing, giant product-producing plants often come to mind. Attention is seldom directed to the many who depend on those jobs in their weekly quest to pay bills and put food on the table.

Without even landing on our shores, Chinese laborers have caused a foreign labor invasion. The fallout of past substantial U.S. and European corporate investment is now flickering over New York. Although we have not reached a point of deflation (so worried about in Japan), we have entered the market era of the lowest bidder.

Unlike the past, in today’s market whatever is needed can simply be farmed out to the lowest bidder. Let’s look at China. Its infrastructure and quality continue to improve but are not concurrent with pricing. This factor continues to give it a growing advantage. The average New York employee in this segment earns $14 an hour, as compared with a mere 25 cents an hour made by Chinese workers in the same industry.

If there are any doubts as to how fast this Asian giant is moving, it is just a billion dollars short of taking over the No. 3 spot from Japan as the U.S. government’s largest source of imports; it was more than $20 billion behind Japan just a year ago. Even Queens is feeling the bite.

I spoke with Chris Stoehr, sales manager of Queens Village’s Volkert Precision Technologies on 222-40 96th Ave., which produces metal components for the automotive, electronics and telecommunications industries, among others. Overhead is simply too low in China, and it’s not just China, Stoehr said. Many manufacturers also are shutting their plants and moving them to Mexico.

This is the result of the North American Free Trade Agreement, which may be keeping company costs down but has cost many Americans their jobs.

Stoehr said there is “no way” we can get this business back. So how’s business for the manufacturer in Queens? The forecast must be considered negative. The trend started some time ago when Swingline Staples moved from Long Island City to Mexico.

Queens and the rest of New York City continue to experience the loss of thousands of jobs in just the garment industry alone as a result of the farming out of work beyond U.S. borders. With an average disparity in wages of $14 an hour vs. 25 cents an hour the trend certainly is not the friend of the New York labor market.

Joe Palumbo is the fund manager for The Palco Group, Inc. and can be reached at palcogroup@aol.com or 461-8317.

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