Manufacturing Matters

Manufacturing Our Way to an American Comeback

Earlier this month, President Obama traveled to Detroit to preview his State of the Union message. He heralded the power of manufacturing in driving the “American comeback.” And, in his weekly radio address, he said he wanted to go “full speed ahead.” Well, Mr. President, we know how to step on the accelerator: a federal strategy that can unleash manufacturing and enable our nation’s job creators to boost America’s comeback.

The American economy is finally rebounding. Real GDP soared in the second half of 2014, and many economists expect it to grow another 3 percent or so this year. Manufacturing is leading the way, adding more than 15,000 net new hires per month in 2014. We’ve added 762,000 additional employees since the end of 2009 and contributed $2.09 trillion annually to the U.S. economy.

Yet, problems remain. The federal government has become steadily more involved in establishing poor policy and regulating manufacturing, creating too many obstacles for growth and opportunity.

Any reform strategy begins with tax policy. Our outdated tax code, including the highest corporate tax rate in the developed world, is sending the wrong signals. A study just released by the National Association of Manufacturers shows that over a decade, a pro-growth tax reform plan would increase GDP by more than $12 trillion over current Congressional Budget Office projections, increase private-sector investment by more than $3.3 trillion and add more than 6.5 million jobs to the U.S. economy.

What would reform look like? Well, specifics would include lower tax rates for manufacturers of all sizes, a strong and permanent R&D incentive, a robust capital cost-recovery system and a modern, competitive international tax system.

The next step is effective regulatory reform. Fair and transparent regulations must be the goal.

The regulatory burden in this country is growing as agencies, including the Environmental Protection Agency (EPA) and National Labor Relations Board, overstep their authority and impose new measures that unduly increase the cost of doing business. For example, the Obama Administration recently proposed a new ozone standard that, according to the EPA’s own estimates, could be the most expensive regulation in history. This new regulation could cause manufacturers to shutter facilities, and one-third of our coal-powered electricity plants could be forced into early retirement. 

This makes no sense. Manufacturers want a clean environment, and we’re delivering. Thanks to new technologies, ozone levels are the lowest in decades, and significant investments by manufacturers and other industries in clean and efficient technologies will further drive reductions in emissions.

The country also needs an energy policy around which manufacturers can plan. That means an “all-of-the-above” energy approach that encourages production of oil, natural gas, wind, solar and other sources. We’ll also want to plan for the future by building pipelines and transmission lines necessary to get our abundant energy resources to consumers, starting with the Keystone XL pipeline, which will deliver Canadian crude to American refiners. Affordable energy is the key input to any successful manufacturing strategy.

Lawmakers and the Administration should also work together for Trade Promotion Authority (TPA), which would help the United States open overseas foreign markets where 95 percent of the world’s consumers live. TPA is a proven framework that empowers Congress and the President to work together to create a fair and level playing field for goods manufactured in the United States.

While they’re dealing with trade matters, lawmakers ought to quickly provide long-term reauthorization for the Export-Import Bank, which helps manufacturers of all sizes increase exports. And there are at least two other ways to boost competitiveness. The moment is ripe for comprehensive immigration reform. It’s up to lawmakers and Administration officials to decide what actions to take, but they need to act. Manufacturers are counting on our leaders to fix the broken immigration system. Not to be left out, the federal government must invest in upgrading our failing infrastructure. Too many roads and bridges are reaching, or have already surpassed, the end of their useful lives. Our nation’s airports and railroads are also badly in need of attention.

Lawmakers took office this month vowing to tackle a wide-ranging agenda, including tax reform, regulatory reform, energy policy and jobs creation. That’s very similar to what President Obama delivered in his State of the Union address. So the stars are in alignment.

We need to renew the ideas, values and characteristics that have made our nation the envy of the world. Our country must remain the best place in the world to manufacture, innovate and attract foreign direct investment. Manufacturers in America are, and must remain, the world’s leading innovators. To thrive and grow, manufacturers in the United States must have access to the kind of skilled, highly trained and adaptive workforce the 21st-century demands.

The right policies can allow us to move forward and set the stage for creating more jobs, securing widespread economic growth and perpetuating American exceptionalism long into the future.

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