That is a good question, sir.
We have asked ourselves the same question. In the midst of what one would have to say was a serious problem, governments were asleep at the switch. What we would get here from governments would be, well yes, the manufacturing sector is losing jobs, but it's a global phenomenon and unemployment is only 6%. We're having surpluses in our budget, governments would say, and we really want to have a service economy anyway, and maybe we're not sure that manufacturing is really critical to the economy anyway. That's the kind of message we would hear from government officials, so you can see they were not that seized with it being a problem.
That's why the recession is kind of important, because now I think we're starting to realize that manufacturing jobs are kind of important, and you can't build your whole economy on the service sector. Take a look at what the U.K. did. The U.K. basically decided that manufacturing wasn't that important and they were going to invest in the banking sector. Now they have the highest rate of unemployment in Europe. It's not a very good strategy to build on just one sector.
But coming back to the second part of your question, it was about why that was happening. Global change, with China, India, and lower manufacturing locations, has meant that manufacturing industries have had to change, modernize, and become more high-tech and more environmentally sensitive, as I think Jay Myers explained so well yesterday.
You heard Jay explain some of that, but in particular during that period, we had two other problems. We had the dollar spike. When the dollar moved from 76¢ to—what was it?—$1.05 or $1.08 at one point, it had a huge impact on those manufacturers. The second problem was energy costs. When we, along with Jay's organization, did a survey of manufacturers, we were finding that energy costs were adding huge costs to our industries. That, plus the dollar, meant that manufacturers had to use all their money just to pay for the energy. Then, when they went to sell their product, they were losing 20% to 30% on the dollar. Essentially what was happening was that they were not making any money, and since they weren't making any money, they weren't investing in technology to increase their productivity.
That's the kind of problem we've had for five or six years. The recession has only made it worse. However, it has reduced energy costs and the dollar's down.
All those problems have been there and we did not see a response by government to those issues, although some of the tax rates did come down, which was helpful.