There is a common narrative when it comes to domestic manufacturing: Large corporation, in their quest for greater profits, have stuck it to the American worker by devastating unions and then sending jobs overseas. There is, however, another less populist and emotion version of this narrative. This other version comes from an observance of two decades of domestic manufacturing, where global competition and new regulatory legislation have changed the industry in ways that the reporters and political demagogues haven’t often mentioned.
Looking specifically at industrial printing we can see the alternative narrative more clearly. In the early nineties there were little print shops opening all over the country; each shop needed people and products to run their machines.
It was about this time (the mid-90s) that one of the great environmental controversies of the decade hit: The Spotted Owl. The risk of losing this precious, helpless creature brought greater and greater regulation on wood and paper production, driving the price of paper up markedly. And here’s the kicker: Even after the risk owl devastation was largely dismissed, the regulations remained. After the Spotted Owl an increasing amounts wood and paper was coming from Canada due to the high cost of domestic production.
Now, to add bad legislation to well…bad regulation, the lumber industry insisted on a tariff. And in a classic case of “we have to do something” syndrome, the tariff was approved. This action sent wood and wood byproduct prices soaring, even over the high prices after Spotted Owl regulations, increasing the cost of production which was then passed on to the consumer. Then the consumer grew creative in addressing increasing cost of printing. They began to buy their own paper, up until this point a majority of a print shop’s profit was made in paper mark-ups, and many shops began to struggle to make any profit.
To add to the loss in paper profits, the Dot.com bubble burst and the small print shops began closing rapidly; at that time a large percentage of new print contracts were coming from Dot.com start-ups. Thus, the large mostly corporate, shops were increasingly becoming the only shops who could stomach the decreasing profits.
Thus, consolidation became the trend after year 2000; large shops were buying other shops, not for their employees but for their client lists. Corporations were constantly merging (with varied success) into “new exiting” entities, all in an attempt to make a profit in an increasingly difficult environment. This was made even more difficult with emerging markets like China, India, Mexico and South America competing for print contracts.
Just in case there was a chance of these new entities making a profit, new regulation like the Sarbanes-Oxley Act and increasing environmental regulations made the cost of compliance increasing more strenuous. So, by the time the economy began to slow at the end of the decade, already consolidating large shops had to look for even greater trimming. Employee numbers decreased, a constant focus was put on increasing production with smaller crews. Finally, even these cost cutting measures didn’t bring bottom lines into the black and shops and plants were forced to close.
One might ask, “I still see printed material, where does it come from?” Well many corporations had union contract which gave the union shops preferential treatment. So, while the workload decreased, work done in non-union shops was moved to union shops. This left thousands of employees, who were generally paid less, out of work. Thus, a growing majority of domestic printing is done in by higher paid union worker, if it’s even done in the US at all.
Additionally, considering the damage done to the printing industry by steel tariffs and the increasing regulations on petroleum-based ink, the environment for the industry is beyond hostile. It is indeed little wonder that many corporation have looked at doing their printing in emerging foreign markets when the costs of production has increased so rapidly in the US--much faster than the rate of inflation.
So, while there is a constant mantra of “evil corporations sending our jobs overseas,” we need to look at the increasingly hostile environment in which domestic manufacturers find themselves. While many loud voices lament the “shrinking middle-class,” the same voices are imposing protectionist policies and new regulations. This is like shackling a runner and criticizing his/her poor performance in Track & Field.
If there is to be a revival in domestic manufacturing, there needs to be a deep look at how policies, at the federal and state level, impact industries. If the US is to regain the reputation as a country where things are made, the shackles have to come off, or we will continue to see domestic manufacturing die a slow but steady death.
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