U.S. Manufacturing Slips in Competitiveness
The United States' manufacturing industry slipped from fifth place to eighth in global cost-competitiveness, according to new rankings from business advisory firm AlixPartners PPL.

The study, announced on Wednesday, shows that Mexico continues to lead as the No. 1 low-cost country for U.S. outsourcing, followed by India. Even though it improved over last year's study in many aspects, China slipped from fourth to sixth place. Vietnam, Russia and Romania, newly entering the ranks of the study this year, made impressive showings as No. 3, No. 4 and No. 5, respectively.

Almost all of the countries analyzed improved their cost competitiveness relative to U.S. manufacturers.

"There is no doubt that economic forces worked against U.S. manufacturers this past year," Stephen Maurer, a leader of AlixPartners' Manufacturing Improvement Practice, said in a statement. "This study shows that despite recent improvement in U.S. productivity, hungry global competitors have become even more formidable, both as out-sourcing destinations and as competitors to U.S. companies."

AlixPartners took into account seven key cost drivers: exchange rates, labor costs, transportation costs, raw-materials costs, inventory costs, capital-equipment and overhead costs and duties, as well as their combined impact on total cost for a range of fabricated parts and products.

New Initiative Focuses on Doubling U.S Exports
In his first State of the Union speech, President Obama set a goal of doubling U.S. exports over the next five years. Last Thursday, U.S. Secretary of Commerce Gary Locke outlined how to ensure that will happen.

Facing pressure to revive the economy, Obama unveiled a broad initiative to open foreign markets for U.S. exports, targeting emerging economies in particular. Locke said the president ordered a cabinet-level group to oversee the strategy with a vigorous effort to remove trade barriers and make accessible export financing to U.S. firms.

Releasing details of the new National Export Initiative, Locke outlined three ways the government aims to make that happen: 1) increasing financing available for small and mid-sized businesses to $6 billion a year from $4 billion through the U.S. Export-Import Bank; 2) boosting the presence of trade experts to serve as advocates for U.S. companies in fast-growing nations; and 3) rigorously enforcing international trade laws to remove unfair barriers to U.S.-made products.

"This initiative will correct an economic blind spot that has allowed other countries to chip away at the United States' international competitiveness," Locke said. "We simply must elevate exports as a key part of our economic recovery efforts," Locke said in a speech on Thursday.

The National Association of Manufacturers (NAM) applauded Commerce Secretary Locke's new export initiative and announced it looks forward to working with the administration to increase manufacturing exports. "America needs a broad array of trade initiatives and pro-growth tax policies to significantly boost manufactured exports and jobs," NAM said in a statement. "America's manufacturers look forward to working with the Administration and Congress to obtain the programs and policies that will enable manufacturers, farmers and services producers to double exports in five years."

U.S. Factory Orders Rise in December
"Orders to U.S. factories posted a big gain in December, far exceeding expectations and adding to evidence that the manufacturing sector is supporting the economic recovery," the Associated Press reports.

According to the U.S. Department of Commerce on Thursday, new orders for manufactured goods in December, up eight of the last nine months, rose 1 percent to $370.4 billion. Excluding transportation, new orders increased 1.2 percent. Shipments, up six of the last seven months, increased 1.9 percent to $383.1 billion and followed a 1.6 percent increase in November.

Bloomberg News notes that manufacturers are expected to "keep boosting production to limit further declines in inventories after a record drawdown last year." Inventories, down following two consecutive monthly increases, decreased 0.1 percent to $495 billion in December. The inventories-to-shipments ratio was 1.29, down from 1.32 in November.

U.S. and Canada End "Buy American" Trade Dispute
Numerous trading partners this time last year warned that a "buy American" clause in the U.S. economic stimulus bill would set off a global round of tit-for-tat trade reprisals. The provisions drew criticism from a number of U.S. trading partners, including Canada and members of the European Union, who branded them as a protectionist measure. The Senate eventually softened the "buy American" requirement by including a requirement that international trade agreements such as the North American Free Trade Agreement must not be violated.

On Friday, however, the U.S. and Canada ended the year-old dispute when Washington agreed to waive the provisions barring Canadian firms from projects under the massive stimulus package.

"Under a tentative agreement reached between the U.S. and Canada, Washington would provide Canadian suppliers access to state and local public works projects under the American Recovery and Reinvestment Act of 2009 aimed at stimulating the world's largest economy from recession," Agence France-Presse (via IndustryWeek) reports.

"In return, Ottawa will also provide U.S. suppliers with access to construction contracts across its provinces and territories, as well in as a number of municipalities — seen as a breakthrough by Washington," AFP continues.

Jobless Rate Down to 9.7 Percent
In its latest report on employment, the U.S. Department of Labor said on Friday that the unemployment rate fell from 10 percent in December to 9.7 percent in January. However, the latest government report also said that American employers shed 20,000 non-farm jobs in January and that job losses in 2009 were worse than previously reported.

Under revisions released Friday, job losses since the start of the recession in December 2007 totaled 8.4 million. The number of long-term unemployed (those jobless for 27 weeks and longer) continued to trend up in January, reaching 6.3 million. Since the start of the recession, the number of long-term unemployed has risen by 5 million.

Employment in manufacturing was little changed in January. After experiencing steep job losses earlier in the recession, employment declines moderated considerably in the second half of 2009. In January, job gains in motor vehicles and parts as well as plastics and rubber products offset small job losses elsewhere in the industry.

The Senate is expected to take up a jobs bill this week, whenever the snow melts.