Why ‘making it in America’ has become so difficult

Oil-and-gas man T. Boone Pickens and the presidents of Georgia Tech and Southern Company are among a thousand people expected in Dalton next week for a summit about the state of U.S. manufacturing. If you want to know why Dalton, you need to know a bit about how good things used to be in one of the cities hit hardest by the recent recession.

When I was a freshman at the University of Georgia, I had a fender bender on I-85 while driving home to Dalton for Thanksgiving. The damage: $800 to the hood of my car. To pay for it, I simply went to work over Christmas break at the same carpet mill where I’d worked the summer before.

I was available for just three weeks. No matter. There was plenty of work to go around, and I was given plenty to do during those three weeks. To be able-bodied and unemployed in Dalton practically required an aversion to work itself.

If it was pretty hard to be unemployed in Dalton 14 years ago, the opposite is true today. Unemployment in Whitfield and Murray counties, at 11.5 percent in March, was the highest of any of Georgia’s metropolitan statistical areas (MSAs). The state Labor Department reports just 200 net jobs created during the past year in the Dalton MSA, where some 142,000 people live and thousands more go to work. Or used to.

What worries people there now is that the good old days aren’t coming back. The end of a long housing boom, particularly in Georgia, doesn’t help. But Dalton’s mayor, David Pennington, said other manufacturers face the same challenges as the area’s dominant flooring industry: regulatory policy, tax policy and education.

“If Dalton doesn’t lead [in] that, I don’t know who will,” Pennington told me this week, “because we’re one of the last manufacturing centers in America where product is conceived, designed, manufactured and marketed.

“In other words, we’re not just some outpost for a global manufacturer” that could shift operations elsewhere, he said.

While tax policy is important — Pennington said the temporary full expensing of large capital purchases and the current capital-gains tax rates should be made permanent — the mayor says manufacturers are more concerned that burdensome regulations are leading to high energy prices they can’t afford.

“We’re not for polluting the world, but the regulators have really gotten out of control,” Pennington said. “Once you empower these people, let’s face it, elected officials aren’t standing over their shoulders watching what they do.”

And then this: “If we don’t start drilling for oil again in this country and use the natural gas resources we’ve found … we have no economic future. Just business with windmills and clean energy — that’s fine 50 years from now, but we’ve got to survive today.”

Pennington acknowledged that not every kind of manufacturer can survive in 21st-century America: “We’re not going to make socks in this country again.” His pitch for manufacturers that can make it echoed those common challenges: it’s energy-intensive (the regulatory challenge), capital-intensive (taxes) and needs a skilled work force (education).

The small companies that can innovate and grow are the ones that suffer most from this crushing trio, he said. Such firms can’t relocate around the world, “and they don’t have giant staffs to navigate these regulatory issues and tax issues.”

His approach is refreshing in light of raw populist calls from the likes of Donald Trump for a tariff on Chinese imports — if you aren’t familiar with “Smoot-Hawley,” you should be.

After all, the theme for the Dalton summit is “We Can Make It in America.” The same goes for many of our manufacturers’ challenges, and the solutions.

– By Kyle Wingfield

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92 comments Add your comment

carlosgvv

May 11th, 2011
6:32 pm

It’s really quite simple. A large number of manufacturers know they can make more money if they ship jobs overseas. And, since they have no patriotism and care nothing for the American worker, sending these jobs to other countries is easy.

Bart Abel

May 11th, 2011
6:48 pm

With all due respect to Dalton’s mayor, on most subjects, he doesn’t appear to know what he’s talking about.

In order for investors in carpet manufacturers to pay a capital gains tax, they would have to enjoy, you know, capital gains. With the significant decline in demand for new flooring, the capital gains tax rate is the least of investors worries, or should be.

Also, Penning suggested that we need to “start drilling for oil again” at a time when several new drilling permits have been issued by the Obama administration and off-shore drilling is at an all-time high. Further illustrating Pennington’s ignorance on the subject, no matter how much we drill, we don’t have enough oil to increase world supply in such a way that prices would be significantly impacted. As Obama correctly indicated in his 2008 campaign, we’d save more money by making sure that our tires are properly inflated.

On the other hand, I couldn’t agree more about the need for a skilled work force. Something our Georgia politicians don’t seem to value very highly.

Our manufacturer’s need demand for their product. Until our politicians do something about unemployment besides seek to throw more public workers out of work, all the regulatory and tax incentives in the world isn’t going to help Dalton.

Honestly, I’d recommend that the people of Dalton find themselves some new leadership.

Bart Abel

May 11th, 2011
6:56 pm

By the way, why is natural gas so today, but clean energy is “50 years from now”? Again, Pennington is off base.

Solar and other clean technology is here, it’s tested, and it works. The only missing ingredients are public education, public will, and the same sort of government push that the fossil fuel and nuclear energy receives.

On this issue of natural gas, I’d recommend watching the movie Gasland and learning about the dangers of fracking: http://www.gaslandthemovie.com/whats-fracking

Aquagirl

May 11th, 2011
7:09 pm

I agree with Bart—why does the mayor of some podunk town think he’s an expert on oil? I read the article through several times, thinking he was complaining of specific regulations regarding factories in his town. But nooooooo….he’s apparently blaming the local collapse on Caribou huggers.

Considering Dalton’s notoriety for employing illegal workers, I don’t have a bit of sympathy for Mr. Pennington or his corporate overlords.

Lil' Barry Bailout

May 11th, 2011
7:16 pm

Pennington just put the bitchslap to the Idiot Messiah’s entire governing approach.

Idiot Messiah: Capitalism-hating, private-property-opposing, business-hating failure.

Lil' Barry Bailout

May 11th, 2011
7:18 pm

Bart Abel: Solar and other clean technology is here, it’s tested, and it works. The only missing ingredients are public education, public will, and the same sort of government push that the fossil fuel and nuclear energy receives.
————–

Wrong. The only missing ingredient is economic viability.

Lil' Barry Bailout

May 11th, 2011
7:21 pm

Yippee! Consumers continue to dig themselves deeper into debt. Consumer credit has now increased two quarters in a row after falling 1.7% during all of 2010. In the fourth quarter of 2010, Americans increased their borrowing at a 2.1% annual rate and in Q1 2011 that borrowing picked up the pace to 3.0%.

Maybe consumers need to borrow more because prices for the stuff they buy keep rising. Import prices jumped 2.2% from March to April and soared 11.1% YOY.

But not surprisingly, all of this inflation and borrowing isn’t helping the economy. The National Federation of Independent Businesses (NFIB) put out a survey of small business sentiment this morning. The Small-Business Optimism Index dropped for the second month in a row, down to 91.2 in April and the report also stated that small businesses posted a substantial increase in the number of owners who reported raising selling prices.

http://www.europac.net/pentonomics/two_different_worlds

Dave

May 11th, 2011
7:22 pm

I’ve read the piece twice and I don’t really know what your point is.

Mr. Abel has pointed out some of the flaws in the Mayor’s comments. Beyond that? Was this a fragment of something that you were planning on doing and decided to throw it out unfinished?

As an aside, I put myself through college by working summers and at the Christmas break. There was plenty of work available to me and that was several decades before you damaged your car. Again, your point?

The people in charge back then were Democrats. When I put myself through law school, alas again before your accident, the people in charge were Republicans.

Since then, I’ve always worked and earned what I’ve got, Democrats and Republicans notwithstanding.

Dalton may be a nice place on a high point on I-75 with a mayor that is speaking to his constituency. There’s tons of problems we face one of them being the decline in American manufacturing. That being so, there isn’t any way that American manufacturing is going to regain anything near its predominance a few decades back. That “world” is gone.

Michael H. Smith

May 11th, 2011
7:25 pm

No ideas Kyle? I mean, since you’ve taken tariffs off the table – which are in fact Constitutional according to article one section 8 – so what other suggestions do you offer?
And please don’t wimp-out on us, I’m interested in real solutions. Otherwise, you left a great deal of ground uncovered on the trade issue. China and other nations that we trade with don’t play by the same set of rules and you know it as well does everyone else. I’m challenging you on this so-called “Free Trade” “Free Market” bunk so step-up to the plate. So hit me with your best shots Mr. Wingfield as “they say” let’s see if you got anything, cause I’m armed and waiting with practical conservative solutions.

jose

May 11th, 2011
7:30 pm

idiot messiah? Jesus is the son of God. I don’t understand such language. Why must you denigrate Jesus.

Lil' Barry Bailout

May 11th, 2011
7:31 pm

Keep your religion off the blog, please.

slim

May 11th, 2011
7:33 pm

if carpet is king ——– then the king is dead!! better start selling tacos, or move

Not Blind

May 11th, 2011
7:34 pm

Boo hoo hoo, poor Dalton. Their industry lead the way in importing illegal aliens. They made millions riding the illegal alien enabled housing bubble. Now that the bubble has burst they are crying because their past actions have come back to haunt them. Short term gain, long term woe.

Dave

May 11th, 2011
7:36 pm

Barry, does your ire with Jose necessarily require that you should keep your opinions off the “blog?” You might argue that his concern is not totally on point; but, then I could argue that your denigration of the President isn’t exactly on point either.

jconservative

May 11th, 2011
7:37 pm

carlosgvv at 6:32 has a valid point.

Exactly when did “America First” become “Me First”. I would guess the late 1970’s and early 1980’s.

And “…. it’s energy-intensive (the regulatory challenge), capital-intensive (taxes) and needs a skilled work force (education).”

If the Mayor is correct we have a problem. The Democrats want to increase regulations and the Republicans want to gut education spending. We just did a deal on taxes in December to renew the Bush Tax Cuts for two more years. But the Regulation problem amd the Education problem remain. Democrats do not trust private business and Republicans have earmarked Education as a major spending cut.

I guess we all need to hope the Mayor has it wrong.

leonard

May 11th, 2011
7:41 pm

Corporations hate middle America.

Michael H. Smith

May 11th, 2011
7:46 pm

If putting America first is the objective in trade then a “Mirror Trade” policy would top the list i.e. as China trades with us we trade with them. If China closes portions of their market to U.S. products or services we do likewise, which is not the case presently with China or many others that could be named.

Okay, Kyle, I led off. Your turn? How about addressing “currency pegs” – again China?

I mean seriously Mr. Wingfield, if we’re all going to play ball, don’t you think we should at least be able to play on the same turf !

Michael H. Smith

May 11th, 2011
7:58 pm

Suppose Kyle’s intent was to whitewash trade with a pacification article and went home for the evening ? You owe your readers better than this, you really do.

TjAtl

May 11th, 2011
8:02 pm

Lil’ Barry Bailout said: “Wrong. The only missing ingredient is economic viability.”

Wrong. The public suffers from the mis-perception that somehow oil is independently profitable while solar, etc. require taxpayer props. Do you have any idea of the magnitude of tax incentives currently given to oil companies?

try reading this one: http://www.nytimes.com/2010/07/04/business/04bptax.html
“an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses…”

“capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.”

“Some of the tax breaks date back nearly a century, when they were intended to encourage exploration in an era of rudimentary technology, when costly investments frequently produced only dry holes. Because of one lingering provision from the Tariff Act of 1913, many small and midsize oil companies based in the United States can claim deductions for the lost value of tapped oil fields far beyond the amount the companies actually paid for the oil rights.”

Your statement is 100% myth. The playing field is not level. Oil production is a mature industry, and all agree it is a declining resource, yet still enjoys taxpayer perks to a degree that no other business can touch. I’d love to be able to deduct 70% of my capital expenditures in the first year. The rest of us little guys in the real world of “private enterprise” have to depreciate it.

Oil companies do not need the tax breaks they currently enjoy. They have earth-shattering profits. Emerging sources now need the treatment that was extended to oil companies in the early 20th century. The oil companies will be fine.

Michael H. Smith

May 11th, 2011
8:04 pm

Something for the readers to mull-over: Why does our government give American corporations tax breaks for locating in foreign countries. In fact, why does our government also loan these American corporations money to build plants in foreign countries?

Why do we loan Brazil money to drill for all and refuse to drill at home? If another refinery is needed in the Americas, then why not build it here instead of assisting Columbia in building it there?

With our government looking after our interest like this, why do we need to stop terrorist?

Dave

May 11th, 2011
8:09 pm

MHS, you’ve thrown out a lot of questions. One for you: why tax corporations at all? They don’t pay taxes, they collect them as part of the price they charge us and remit them to the government, masking what we actually pay.

Tom

May 11th, 2011
8:11 pm

We need to return to the old days of true free enterprise, when 10-year-olds were free to work in the mills manually cleaning lint from the lathes and presses for 50 cents per day. Sure, the kids had a high death rate, but that’s just the price of sweet, sweet freedom.

It really is a shame that such freedom is gone from America.

Michael H. Smith

May 11th, 2011
8:15 pm

Dave – why tax corporations at all?

I’ve not only asked that question myself but I’ve advocated that we stop taxing corporations and businesses for the very reason you stated. However, for American corporations and businesses that locate off shore and in turn sell their products in the U.S. market… oh well, TAX THE HELL OUT OF THEM ! :lol:

Dave

May 11th, 2011
8:18 pm

I didn’t know you had; and I understand the sentiment; but, if we didn’t tax even foreign companies, we’d become a tax haven, attracting investment with resultant jobs and, ta da, taxes that actual working people pay.

Michael H. Smith

May 11th, 2011
8:19 pm

Tom, enterprise has never been “Free” at any time and staying within the confines of the Constitution means enterprise shall always be regulated.

Michael H. Smith

May 11th, 2011
8:22 pm

Dave, here’s the rest of it: For foreign companies that locate jobs inside America they shall escape taxation as well. :)

Now all we got to do is figure out how to control inflation as a result of such actions, because this economy would go blinding white-hot in a flash.

Dave

May 11th, 2011
8:29 pm

MHS, If you aren’t totally right, you are close to it. The solution might be that other countries would get on the bandwagon of trying to attract investment and then some of your other concerns set out in comments above would be moot – investment would go to the place with the best economic conditions, infrastructure, labor, management, etc. – a true free market (with some necessary regulation – the social liberal, commie, pinko in me). Another thought, since we tend to be a better place to live than some others, we have an ace in the hole.

Michael H. Smith

May 11th, 2011
8:46 pm

Dave, the thing is, other countries are already on that bandwagon, it is we who need to climb on-board. In fact, we’ve held our corporate taxes high while other countries dropped theirs very low or zeroed them out altogether.

Infrastructure is another issue which I addressed on a previous blog, although, to make short of it: There would be no more “proprietary infrastructure” that could by any ways or means impede or prohibit the conveyance of any product, service or intellectual property within the marketplace. Infrastructure would be Nationalized and the government would collect user/seller fees. (Yeah I know that don’t exactly fit “conservative thunking!” :lol: )

Dave

May 11th, 2011
8:54 pm

I’m not sure what you mean by propietary infrastructure, unless you are talking about a broad view of the concept of “net neutrality,” in which case you may well be right, other than the government fees beyond the cost of maintenance.

Dave

May 11th, 2011
8:58 pm

And, Kyle, sorry for using your space for a comment conversation.

Michael H. Smith

May 11th, 2011
9:05 pm

Proprietary Infrastructure e.g. Pipeline, power-lines, communication lines etc. Of course Constitutional amendments would be needed to protect enterprise and consumer alike from government receiving what is an awesome amount of power, in exchange for a very, very, liberated marketplace where “true competition alone” – without any proprietary infrastructure involved – would determine the economic winners or losers.

Dave

May 11th, 2011
9:08 pm

Maybe, I think I’d be more comfortable with private ownership and government ensurance of equal access. I’m off to other things, enjoyed the conversation.

Michael H. Smith

May 11th, 2011
9:13 pm

I enjoyed the conversation as well. Equal access is the true objective. With private ownership, even with government regulation, it is not a sure thing but you probably have the better plan on that item.

godless heathen

May 11th, 2011
9:22 pm

When the cost of labor is determined by the government in a country, the jobs will go to the countries where the cost of labor is determined by the market.

old teach

May 11th, 2011
9:24 pm

Kyle, I think this is the best exchange of constructive ideas (without insults, etc.) I’ve seen. Way to go, Dave and MHS!

Lil' Barry Bailout

May 11th, 2011
9:48 pm

Dave: Barry, does your ire with Jose necessarily require that you should keep your opinions off the “blog?”
———————–

Yes. I find it offensive when religiophobes hypocritically invoke religion.

Dabir Dalton

May 11th, 2011
9:52 pm

@ godless heathen:

Many years ago NIKE got caught having its products manufactured in sweat shops in foreign countries some of which used child labor which is illegal here in the USA. As a result I have never and will never knowingly purchase a product sold by NIKE. Because unlike two faced Christian Conservative Republicans I absolutely refuse to knowingly subsidize Financial Immorality.

Lil' Barry Bailout

May 11th, 2011
9:53 pm

TjAtl: The public suffers from the mis-perception that somehow oil is independently profitable while solar, etc. require taxpayer props.
——————

Wrong. The oil companies get all of $4 billion in tax credits. If those went away and the $4 billion in lost tax cuts were passed on to consumers in the form of higher gas prices, gas would still be much more economical than purchasing a $45,000 Chevy Volt and powering it with electricity.

Solar and wind aren’t economically viable. If they were, they would already have replaced coal and nuclear and natural gas. Someday they will be, and most folks will be happy to make the switch.

In the meantime, please keep your economically non-viable green religion off the blog.

JF McNamara

May 11th, 2011
9:54 pm

Boy, this is hard hitting journalism. Just because the mayor of Dalton said it, then it must be true! We don’t need any charts, pictures, economic articles or other book learning to back our claims or assign causation. A hick mayor will do just fine…

TruthBe

May 11th, 2011
9:55 pm

America will contiune to lose manufactoring jobs abroad as long as the Government is ran by corrupt Politicans and their puppet masters the Lobbyists. And “We the People ” are at fault because we keep electing idiots like Obama and Company.

Lil' Barry Bailout

May 11th, 2011
9:59 pm

JF McNamara: Boy, this is hard hitting journalism. Just because the mayor of Dalton said it, then it must be true!
———————–

I’ll take the word of a local guy who knows what he’s talking about over a fascist community organizer any day.

Lil' Georgie's Bailout?

May 11th, 2011
11:03 pm

Bush signed the bailout in Oct 2008. President Obama was sworn into office in Jan 09.

Lil' Barry Bailout

May 11th, 2011
11:04 pm

Our President Bush’s bailout (TARP) did what it was supposed to do, and is mostly paid back.

Can’t say the same for the $800 billion your Idiot Messiah blew on his failed “stimulus” program, which succeeded in raising unemployment from 8% to 10%.

Idiot Messiah: Epic fail.

jose

May 11th, 2011
11:45 pm

idiot messiah? Jesus was/is the son of God. Please stop denigrating Jesus. God Bless.

satch

May 12th, 2011
12:30 am

it must be a mofo to be a racist white male and to see a black man the most powerful man in the world.little barry this black man was in a higher league than you since hs deal with it!.stop whining

Jefferson

May 12th, 2011
12:50 am

Dalton cannot produce what is not being bought. The problem is money in the consumers hands not goods to sell, nor production facilities. Dalton is not losing sales to other countries, the sales just are not there. The bust in housing is most of the problem, changing flooring options are others, don’t blame your woes on the gov’t, it is just not the cause. This article is just a attemp to blame the lack of money in the hands of consumers on the wrong cause.

johnc

May 12th, 2011
1:42 am

Lil Barry seems to ignore the fact the ‘his President Bush’ gave money to the automotive industry with no requirement that it be paid back. Not so for money distributed by the current administration.

Cobb Woman of Color

May 12th, 2011
5:58 am

Should’ve kept out the illegal workers…

Some of the negative impacts of illegal immigration follow:

Overcrowded and under-funded schools
Communicable diseases
Increased health care costs
Degraded health care service
Higher auto insurance premiums
Poverty 
Lawlessness
Social conflict
Over-population
Unemployment
Lowered wages
Vote fraud
Increased crime
Illegal drugs
Environmental degradation
Depletion of natural resources
Loss of common language and culture
Increased traffic congestion
Higher taxes
Source: Illegal Aliens US

destin dawg

May 12th, 2011
6:12 am

Unions.. especially public unions….. and lawyers… especially plantiff lawyers… we need tort reform… term limits… look at the Post Office… we all E mail.. pay bills and banking on line…for 10 years now… then we have all these liitle trucks running around delivering junk mail at bulk rates… put a CEO with real world business experience… could raise bulk rates… deliver mail Mon. Wed. Fri… show a profit… Fed Ex.. UPS.. does… need to cut all Gov’t and military like wise.. and balance the budget…. Pickens plan on Nat. Gas for trucks and buses…

destin dawg

May 12th, 2011
6:15 am

Cobb Woman… Never happen… these illegals .. vote democrat. as in vote fraud.. in your negative impacts…