Wisconsin Public Radio

Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference

 

 Clyde Prestowitz giving presentation to CDI...

 

Steve Olson teaching trade negotiations at the Mekong Institute...

 

Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

(06/26/05) Clyde Prestowitz quoted in the St. Paul Pioneer Press

(06/26/05) Clyde Prestowitz quoted in the St. Paul Pioneer Press
Diaper prices signal changing times
St. Paul Pioneer Press (MN)
Copyright 2005 St. Paul Pioneer Press
June 26, 2005


Section: BUSINESS

Diaper prices signal changing times

The makers of Huggies diapers want to raise prices, and Federal Reserve Chairman Alan Greenspan will be watching the Wal-Mart checkout counter to see if they succeed.

The makers of Huggies diapers want to raise prices, and Federal Reserve Chairman Alan Greenspan will be watching the Wal-Mart checkout counter to see if they succeed.

Kimberly-Clark Corp. and other consumer-products makers such as Clorox Co. and Procter & Gamble Co. have announced the first widespread price boosts in a decade, in an effort to recoup higher raw-material costs. Meanwhile, discounters such as Wal-Mart Stores Inc. and Minneapolis-based Target Corp. are pushing back.

The conflict highlights an important force in the economy that is helping to keep prices stable: the influence of "big-box" retailers. Their resistance to price increases helps make Greenspan and other policy-makers more confident that inflation is being contained.

Pricing power, the ability of corporations to raise prices easily, is one of the key indicators the Federal Reserve monitors continually in its deliberations over how far to keep raising interest rates, Fed Gov. Donald Kohn said June 14.

During congressional testimony June 9, Greenspan said, "At the moment, we are finding little evidence of inflationary pressures on the product side." While he cited "some evidence" that pricing power is increasing, he said overall inflation remains "modest."

That's why the household-goods increases may be closely watched, despite the fact that they affect a small part of the overall economy. The Fed's Open Market Committee will decide whether to raise rates for the ninth time since last year when it meets Wednesday and Thursday.

China gives capitalist hegemony a try

For years, American workers have worried about losing their jobs to low-cost workers in China. Now a new trend is emerging that could be nearly as big: Wealthy Chinese companies are coming to the United States looking to swallow American companies whole.

Chinese state-owned refiner China National Offshore Oil Co. (CNOOC) last week topped Chevron Corp.'s bid for U.S. giant Unocal, prompting four members of Congress to raise security concerns should the deal happen.

Also last week, Maytag Corp. -- the maker of such quintessentially American products as Maytag refrigerators, Amana microwaves and Hoover vacuum cleaners -- disclosed a $1.28 billion takeover bid from a group led by Haier America Trading, a unit of China's Haier Group. If Haier is successful in outbidding an investor group led by New York-based Ripplewood Holdings, the company that is the bedrock of Newton, Iowa, likely would see much of its production move to China.

Haier's move to buy Maytag follows Lenovo Group's purchase of IBM's personal computer business completed in May.

Clyde Prestowitz, author of a new book focused on the competitive threat posed to the U.S. by China's economic expansion, said the Haier takeover bid for Maytag is an important symbolic step. "This is the debut of China into a global brand, a global presence," Prestowitz said. "It also signals that China has moved beyond just being a place for cheap labor. They're going for technology. They're going for brands."

-- Chicago Tribune

The latest trend: Mean guys finish last

For most of the postwar era, you could be a "my way or the highway" chief executive and survive, even thrive. Employees cowered or quit, but they didn't rebel. Directors were passive, as were shareholders. Business magazines exalted you for your "toughness."

Not anymore. Today, said Andrea Redmond, an executive headhunter at Russell Reynolds Associates, successful chief executives are "inclusive, open and transparent." In short, she said, "They have the ability to get people to trust them."

Chief executives who lack those qualities and who rule by fear will eventually be rejected. It usually takes some precipitating event -- a strategic mistake, a falling stock price, a whiff of scandal -- to create the conditions for such an ouster. But once the opening is there, the organization will take full advantage to rid itself of a boss it doesn't like. That's what happened a few months back to Carly Fiorina, the much disliked (and now former) chief executive of Hewlett-Packard. It helps explain the fall of take-no-prisoners Richard A. Grasso, the former chairman of the New York Stock Exchange. And most recently, that's what happened to Philip J. Purcell, chairman and CEO of Morgan Stanley.

Are there times when well-liked chief executives, the ones who know how to build consensus and trust, lose their jobs because their strategy doesn't work or the stock price collapses? Of course. But they have a far better chance of surviving because they have built a reservoir of good will they can draw upon. Nowadays, it's not the nice guys who finish last. It's the tough guys.

-- New York Times

Made in the USA: more foreign cars

The automobile industry in the United States is not dying -- it is just changing hands.

In other industries, U.S. manufacturers have been some of the most avid investors abroad. But in the case of the auto industry, the competition has been brought right to Detroit's doorstep as the strongest foreign companies are moving to states eager for their investments. Most of them are in the Deep South, and they are hiring workers seeking the stability that home-grown companies can no longer offer.

As a result, a quarter of all cars and trucks built in the United States are now made in factories owned by foreign automakers producing foreign brands, up from 18 percent in 2000. The assembly plants alone employ nearly 60,000 people, and that number continues to grow.

The employment at the U.S. companies still dwarfs that of the newcomers. Automakers in Detroit employ four times more hourly workers -- 250,000 -- but that number continues to fall. Already, GM has announced that it plans to cut 25,000 of those workers by 2008.

-- New York Times
 
 
   

Join our mailing list

Latest Publications


The Betrayal of American Prosperity.


The Trans-Paific Partnership and Japan.


Making the Mexian Miracle.


Industrial Policy and Rebalancing in the US and China.


The Evolving Role of China in International Institutions.

 

Contact us

Economic Strategy Institute

1730 Rhode Island Avenue, NW, Suite 414 |  Washington DC  |  20036
Ph (202) 213-7051  |  Fax (202) 965-1104  |  info@econstrat.org