Efforts to create new American jobs and make the nation more secure seem to involve one step forward, one step (sometimes, two) back. Consider one week’s news on this front:
The Good. Because the high yen makes exporting unprofitable and because of interrupted supplies from Japan’s tsunami and Thailand’s floods, Honda has announced a major expansion of its manufacturing in North America. It will increase manufacturing in five U.S. and one Canadian and Mexican plant each (plus building a second in Mexico) by as much as 40 percent, from 1.29 million vehicles a year to more than two million. Not only that, Honda will then export up to 300,000 vehicles from North America to other parts of the world, up from 35,000 currently.
A Honda plant that assembles its Civic model in Greensburg, Indiana, will double its capacity from 100,000 to 200,000 vehicles a year. This will involve hiring an additional 1,000 workers. Work has already begin to expand a Lincoln, Alabama plant that makes SUVs and minivans. When the expansion is in full force, Honda’s exports from Japan will drop from as much as 40 percent of total production to as little as 10 percent.
The Bad. For decades General Electric was considered a star of the American manufacturing scene. That star was recently tarnished when GE announced it would move its 115-year-old X-ray division from Waukesha, Wisconsin to Beijing, China. In the process, GE will invest $2 billion in China, train five dozen Chinese engineers and create six research centers. The stated reason? To greatly increase GE’s share of the China market. Could it have shipped equipment from Wisconsin to China instead? Yes, unless the China insisted that market access would depend upon the company making a deep investment in that country. This has been a common Chinese approach with other companies.
GE has already moved the Healthcare unit’s top executives to China and estimates that over the next three years it expects that as much as 25 percent of its X-ray products will be produced there. What of the 120 employees in Waukesha? GE claims the move will not result in the loss of any U.S. jobs. We shall see.
Since January, Jeffrey Immelt, GE’s CEO, has been the chairman of President Obama’s Jobs and Competitiveness Council. Like so much else in the upside-down world of the Obama Administration, this is the new way to create job and make the U.S. more competitive.
The Ugly. Speaking of China, the U.S. Chamber of Commerce has announced a large-scale hacking of its computers and some 300 Internet addresses by Chinese sources. This occurred between November 2009 and May 2010. The FBI alerted the Chamber to the invasion. It then launched a detailed investigation and took new security measures to prevent further hacking. The investigation found that four Chamber executives who worked on Asia policy issues were particular targets of the hackers. The hackers also gained access to the Chamber’s membership lists and data about members. Chamber chief information officer Stan Harrell, told the Wall Street Journal, “This is a different level of intrusion…. This is much more sophisticated.”
As they usually do, the Chinese authorities stoutly denied any involvement. Nevertheless, the sophistication and extent of the hacking operation could not have been possible (nor had a motivation) without tacit approval from the Beijing government. Time and again over the years, Beijing in its dealings with foreign business interests has always put Number One — itself — above all else.
“Number One” has a nice ring to. Maybe we should try it.
Peter Hannaford was closely associated for a number of years with the late President Reagan, beginning in the California Governor’s office. His latest book is Presidential Retreats.
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