The Dutch have a saying: Goed Koop is Duur Koop, Cheap is Expensive.

That came to my mind yesterday as I read in the Sunday New York Times of the new San Francisco-Oakland Bay Bridge having been made in China and now being readied for shipment to San Francisco where the its modules will be placed on their supports and snapped together like an erector set.

I am old enough to remember the pride my parents took in telling me of the completion in the middle of the Great Depression of the Golden Gate Bridge, then the world's longest suspension bridge. In that trying time, the bridge, almost entirely made in America, was a symbol of hope because it demonstrated that Americans could still do great things when properly led and organized.

Now, in these trying times as Federal Reserve Chairman Ben Bernanke tells us the economic recovery from the Great Recession is stumbling for reasons he doesn't understand, it seems that we take pride in what China can do for us. Thus California Department of Transportation program manager Tony Anziano told the Times "they've (the Chinese) produced a pretty impressive bridge for us." In this, Anziano was only following the lead of former Governor Arnold Schwarzenegger who strongly backed the Chinese project on the basis of an estimated $400 million saving to the state and who praised "the workers that are building our Bay Bridge" during a visit to China last September.

In view of the quality problems that have arisen with major construction projects in China such as the Three Gorges Dam and the High Speed Railroad lines that have recently had to be speed restricted, U.S. industry and union groups have raised questions about the safety of the new bridge. But those who have awarded the contracts to the Chinese say their audits have convinced them of the engineering integrity of the projects. Furthermore, they say, American companies don't have the fabrication facilities, warehouses, or deep financial pockets to do these kinds of very large scale projects. " I don't think the U.S. fabrication industry could put a project like this together," Brian A. Petersen, project director for American Bridge/Fluor Enterprises, told the Times.

So it's cheaper to do it in China and anyhow Americans can't do that kind of stuff anymore seems to be the essence of the story. But is that really the case?

Let's look first at the cost question. The Times notes that 55-year old steel polisher Pan Zhongwang arrives at work at 7 a.m. and leaves at 11 p.m. seven days a week earning $12 a day and a bed in the company dorm. So the $400 million estimated saving is largely a result of cheap Chinese labor. But is that a pure saving? If California and/or the United States have no unemployed workers who could make steel or polish it or do fabrications, then it is a pure saving. But last time I looked both California and the United States have close to 10 percent reported unemployment and closer to 15 percent if we count part time workers who want full time work and those who have become discouraged from even looking for work. Now those unemployed workers get some unemployment compensation and their health care has to be paid for by public means if they can't pay it themselves, and the banks have to repossess their homes when they can't make the mortgage payments, and then states and the Feds have to bail out the banks. I can count way over $400 million in unemployment costs pretty quickly and that's without even considering the downward pressure on all wages in the United States that arises from the import of these low wage products in the midst of high unemployment. I mean, I guess we could have had a cheaper Golden Gate Bridge in 1937 if we had just brought over a bunch of Chinese workers to do the job. But that would have defeated the purpose of building the bridge which was a major project in the effort to cut U.S. unemployment in the midst of the Depression.

Then there is the issue of American capability. I wonder how the Chinese got these capabilities that Americans apparently no longer have. It was by building their own projects for themselves and developing the capabilities. Twenty years ago China didn't have companies that could do most of this kind of work. But the Chinese didn't call the Americans in to build their bridges for them. They invested in developing the capacities necessary to build their own bridges. That's what we did when we built the Golden Gate. People and corporations learn by doing and if they don't do they don't learn and they don't invest and then they can never do.

And the cost of never being able to do is extremely high - a lot more than $400 million. So I say the new San Francisco-Oakland Bay Bridge is not only not inexpensive. It's going to cost us a fortune.

How apt that this was all carried out by the Terminator. It's definitely going to terminate a lot of California and American jobs, companies, and skills.

PHILIPPE LOPEZ/AFP/Getty Images

 

FRED LIST

2:27 AM ET

June 28, 2011

Yes!

Thank you!

Hope that in January 2017, newly elected President Sherrod Brown appoints you head of the new Department of Industry and Technology!!!

Hopefully it will only take five more years of high unemployment before free tradism is debunked...

 

FARWEST

4:37 AM ET

June 28, 2011

Sorry Clyde

Your comments make sense - but only if you don't know what you are talking about.

Fact is the US doesn't have the capability to manufacture the bridge components of the scale necessary. It could build manufacturing capacity at exorbitant cost, but would simply be a white elephant as the US has mostly built out it's major infrastructure and wouldn't have any customers as US labor costs aren't competitive. If that's your great idea to provide jobs, it's pathetic.

As much as I scorn the gross incompetence of Caltrans (learned first-hand on a daily basis for years), they made the correct decision to allow Chinese built components.

 

WILLINA

7:20 AM ET

June 28, 2011

Projects

In view of the quality problems that have arisen with major construction projects in China such as the Three Gorges Dam and the High Speed Railroad lines that have recently had to be speed restricted, Watch Movie Online Free – Online Movies – Streaming Movies U.S. industry and union groups have raised questions about the safety of the new bridge. But those who have awarded the contracts to the Chinese say their audits have convinced them of the engineering integrity of the projects.

 

KARMAPOLICE

3:02 PM ET

June 28, 2011

The height of hypocrisy.....

" Now those unemployed workers get some unemployment compensation and their health care has to be paid for by public means if they can't pay it themselves, and the banks have to repossess their homes when they can't make the mortgage payments, and then states and the Feds have to bail out the banks."

While Americans continue to pour into WalMart for the best "deals".

If you want to see the enemy, look into a mirror.

 

LANDSHARK

5:19 PM ET

June 28, 2011

Projects

I dunno what's the beef here: It is ok to buy clothing, furniture, electronics both cheap and expensive and all sorts of stuff from China but big ticket items like bridges no?

 

BARKER13

9:03 PM ET

June 28, 2011

A Nation in Steep Decline

Hey... we were once a great nation. All good things must pass.

 

CC88

9:07 PM ET

June 28, 2011

lack of capacity

So we don't have the warehousing or mfg capacity to build a steel bridge in California? Nonsense.

A bridge was recently built in Missouri (documented on the show NOVA). The cables were entirely US made. The trusses were admittedly cast in Japan from scrap from the old Chicago "El". But the supply line for that covered a lot of ground, including empty land on the plains and some steel sites: I recall the Bush administration financed an upgrade of one in Utah. Probably with capacity to spare in this economy.

And I was not aware that China had the land to spare for warehousing supersize bridge parts. More likely that JIT, or just-in-time manufacturing and shipping was involved to keep bridge assembly on time and under budget.

Sounds like a military base realignment, a new version of Area 51 for industry, and some commitment to upgrading steel mills and steel product would have taken care of the whol thing. You could just as well shipped a bridge in from Alaska for the effort spent in Cina -- or how about the bridge to nowhere?

 

NICHOLAS WIBBERLEY

2:04 AM ET

June 30, 2011

Sow and reap

In the past, ‘surplus’ treasure was employed creatively on constructive projects like building places of worship, exploring, opening new trade routes, founding schools, hospitals and housing. Today it is spent on weapons of destruction and the associated costs of their deployment. The result of this is that if you need of a bridge, there is no one to build it, but if you want a running, jumping, standing still stealth fighter we are your people.

 

MRUBOAT

7:43 PM ET

June 30, 2011

How About a Little Perspective

While $400 million sounds like a lot of money, let's put it into perspective. That's only 5% of the project's $7.2 billion cost. Nearly every dollar paid to the Chinese is coming out of our future economy, in the form of bonds, to immediately stimulate theirs. Our fragile domestic economy cannot afford to "lose" projects like these. The Buy American Act of 1933 was put in place to prevent exactly this type of travesty.

California was first in line to collect funds from the American Recovery and Reinvestment Act. I believe the majority of which went towards education related expenses such as teachers salaries. The entire country gets to share in repaying back those funds. They then turn around and award a MAJOR infrustructure project to China? This economic treason. If Caltrans was in charge of our Navy vessel contracts, Newport News, VA would be a ghost town.

 

DALLAS WEAVER

3:49 PM ET

July 1, 2011

Bay Bridge

All the lamenting about our significant unemployment and having to buy the components for the new Bay Bridge in China has sidestepped the real issue of why we can't build these major projects in the US anymore. We have evolved into a society where NIMBY (not in my back yard) and BANANA (build absolutely nothing anywhere near anyone) have become major factors in decision making. Every activist group seems to have veto power or significant delay power over every development.

In So. California where water supply is a major issue and we face the real risk of a major earthquake taking out much of our supply for years, people have been trying to get permits to put in seawater desalinization for over 9 years. Objections ranging from thou shalt not kill some plankton in the water to thou shalt not disrupt the traffic while putting in the pipeline to connect to the existing distribution system. Even objections which are patently absurd must be given a full hearing and may be the basis for a law suit which can eat up another year while costing the activist almost nothing.

Try to imagine getting permits for a major industrial manufacturing facility or even upgrading some existing facility for this bridge contract in California. Someone would surely object. There will be fumes from the welding, there will be noise, there will be traffic, there will be hazardous waste, there will be air pollution, there will be heavy equipment. There will be jobs and beer bars serving the workers with workers coming into the community from outside. If you could get all the required permits, approvals, etc. from the dozen or more agencies with authority to say NO, in less than 5 years, you would have to have special legislation and superior political connections.

We killed our own heavy manufacturing ability and our ability to create new jobs for skilled workers. The only jobs we can create are for educated paper pushers, bureaucrats, and lawyers, which have a very low unemployment rate, while our blue collar workers face the highest unemployment rates.

 

Clyde Prestowitz is the president of the Economic Strategy Institute and writes on the global economy for FP.

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