According to this Aero-News.Net piece, Sikorsky’s Chinese partner has just produced its first S-76 airframe. This is one of the most sophisticated American-designed products, a helicopter that costs close to $12 million and faces little competition due to engineering and regulatory barriers. For the past 30 years it has been produced exclusively in the U.S. The Chinese announcement comes on the heels of Sikorsky’s major investments in Poland, where factories are producing Blackhawk helicopters for the U.S. Army (more).

I’m wondering whether Sikorsky’s offshore expansion should make us think a little harder about what it will take to restore our manufacturing economy. Rust Belt states have millions of surplus workers. A Sikorsky helicopter faces less competition than almost anything else that we make and labor costs are a relatively small part of its retail price. Sikorsky’s manufacturing operations are subject to FAA regulation, which is easier to deal with when nobody has to get on a plane to Asia or Europe.

If Sikorsky does not want to set up shop in Michigan or Indiana, or expand its existing operations in Connecticut and Florida, why would we expect any other manufacturer to do so?

An alternative statement of the same facts would start with the observation that an American is unemployed when no company believes that, in the current regulatory and tax environment, it is possible to hire that person and make a profit. The American will become employed when he or she gets more education and skills, when the regulations and tax rates change, or when the global economy booms so much that every qualified worker in a foreign country has already been hired. Our government is not doing anything significant with education. Our government is making the regulatory and tax environment harsher for business. Thus we can infer that the government is counting on a global economic boom and an exhaustion of the supply of workers in other countries, which effectively means that whether or not the U.S. employment situation improves is primarily controlled by foreigners.

[A second example is EMC choosing to invest $1.5B in India rather than near its headquarters in Massachusetts (press release).]