Jay Timmons' Remarks to The University of Kansas School of Business

Remarks as Prepared for Delivery for Jay Timmons

Anderson W. Chandler Lecture Series

September 15, 2014
The University of Kansas School of Business
Lawrence, KS

Thank you, Dean Neeli [Bendapudi], for those kind words. It’s a pleasure to be here in Lawrence and to join hardworking students, distinguished members of the faculty, staff and administration and community and business leaders —in discussing the most vital sector to the U.S. economy and your place in that sector and the future of our nation.

It’s also great to be in the presence of accomplished alumni of this university, two of whom are part of the outstanding leadership team of the National Association of Manufacturers—or, for short, the NAM: Jeff Pierce, our senior vice president of strategic development, and Erin Streeter, our senior vice president of communications. As part of our innovative leadership structure, we have seven SVPs at the NAM—and the University of Kansas claims two. Now, of course, that wouldn’t be a great free-throw percentage, but it speaks highly of the leaders cultivated by this university—and the mark they are making every day across the country.

Like you, they became heirs to an extraordinary legacy—of the abolitionists who settled on the curve of the Kaw River 160 years ago last month to establish a free state and a university; of the pioneers who built KU from the ground up 150 years ago; of the leading servicemen and women, scientists, business executives, federal and state officials, journalists and beyond who all made the “walk down the Hill” and have brought groundbreaking progress to countless people.

KU has long been a unique and impactful community. A place where generations of aspiring leaders have come—from all corners of this state and around the world—to learn, to grow and to confront the most urgent problems—and seize the opportunities—of their times. A training ground where students don’t just talk policy in an abstract way—you regularly engage with, and even challenge, those who help to shape it.

Over the years, an impressive range of national and global leaders have arrived on this campus for the Anderson W. Chandler Lecture Series—to discuss the most important issues of the day. And it’s been an incubator for new ideas and a forum for the thoughtful exchange of ideas.

I am honored to add my voice to this dialogue. As the president and CEO of the NAM, I am privileged to lead the largest industrial trade association in the United States. We represent 12,000 manufacturers of all sectors and sizes—from the world’s largest multinationals to family businesses. They are the innovators and entrepreneurs, the builders and producers, the dreamers and leaders of America. They want to grow their business, create quality, good-paying jobs and strengthen our nation.

The NAM is their voice, the unified voice of the manufacturing economy in the United States. We’re dedicated to advancing public policy solutions that spur innovation, bolster job creation and promote economic growth. Solutions grounded on four principles that made our country great: free enterprise, competitiveness, individual liberty and equal opportunity.

These principles—principles that give rise to freedom, prosperity and security for our people—are anything but novel concepts. They are written into our nation’s founding documents. They are etched into our past. And they are woven throughout our history. For more than two and a quarter centuries, they have inspired untold millions—seemingly ordinary, but all extraordinary—to conceive life-changing ideas, create once unthinkable designs and products and improve the lives of countless people.

Manufacturing has been at the center of this story. Empowered by these ideals, manufacturing has fueled America’s rise like no other sector of our economy. It’s lifted us from the destruction and disarray of Civil War and the despair and distress of the Depression. It propelled an industrial and worker surge unlike anything that anyone—in any century—had ever witnessed—an “Arsenal of Democracy” that saved a continent, secured liberty and ended a global war. It’s driven innovation and created the opportunity that’s made the American economy the envy of the world.

And, today, manufacturing has led America out of the Great Recession—and ignited what could be the next great American century.

Innovation is a big reason why manufacturing is making a strong comeback. And nowhere is that more true than with the boom in domestic energy production, which is boosting manufacturing to new heights.

Affordable and reliable energy has made production more cost effective for manufacturers, and it has increased competitiveness across the board. The result is more jobs for worker, lower utility bills for families and more economic growth for the United States.

Now, not very long ago, many predicted that manufacturing in the United States was destined for the history books. Factories were closing, jobs were leaving, and they supposedly weren’t coming back. To be clear, there were ominous signs. But manufacturing still grew, although at a slow clip. Then the Great Recession hit, and manufacturing fell off the cliff. We shed millions of jobs. The naysayers suddenly looked pretty smart.

But they were wrong—because when manufacturers see a problem, they find and create a solution. That’s what drove America’s new energy advantage. They summon their drive and ingenuity and find a path forward. They discover. They evolve. They act.

That’s why today manufacturing is back. Manufacturers are creating jobs again—more than 17 million jobs are supported by our sector. We’re making more products today and making them better than ever before. Manufacturing output has increased 18 percent since the end of the recession in 2009. For the first time ever, manufacturing contributes more than $2 trillion to the U.S. economy. It accounts for 12.5 percent of our nation’s GDP and would represent the world’s eighth-largest economy if it was on its own.

In Kansas, manufacturers are helping to build a better future for workers, for families and for the state’s economy—and improve the job market for students here. Manufacturing contributed about 15 percent to Kansas’ total output in 2012, producing $20.5 billion in goods.
According to the August manufacturing survey of the Kansas City Federal Reserve Bank, manufacturing companies have expanded production for eight straight months. And manufacturing employs 12 percent of the Kansas workforce.  And you know what? Our jobs pay better. Someone employed in a Kansas manufacturing facility can expect to earn $27,000 more a year on average than other nonfarm workers.

And the manufacturing comeback means a great deal more than these numbers signify—because every dollar that is invested in manufacturing adds another $1.32 to the economy. That’s the highest multiplier effect of any sector. Now depending on the type of manufacturing, each job inside a manufacturing facility can trigger the creation of three to five more jobs outside of it.

So whether you enter manufacturing—on the shop floor, in the research and development lab (maybe as a scientist, as my four year-old announced to me that she wants to be), in an executive office—or not, your future likely depends on the sector’s success.

But the trajectory that we are on is not the design of a program on a continuous loop. We can’t rely on a repeat button to re-create the same climate that sprung the inventions, innovations and opportunities previous generations of Americans bestowed upon us. Simply put, progress is not inevitable. Progress is built by commitment, by a will to persevere and by the courage to transcend history—to move beyond the status quo and improve—to always improve.

From policymakers in Washington to Topeka, from business leaders in New York to Wichita, from students in Los Angeles to Lawrence—we need that commitment, that will and that courage because many challenges still stand in the way of advancing manufacturing and America’s future. Too many obstacles to progress could set back manufacturing. And, as a result, those obstacles could prevent us from leaving future generations with a country that is more productive, that is more free, that is more prosperous and that is more secure than ever before.
Our obligation to pass the American Dream on to future generations is the challenge that brings me to this great university and brings all of us together today.

Ask any manufacturer what could stop the manufacturing resurgence and you’re going to hear a common refrain. They can’t operate in a fog of total uncertainty on how they will be taxed or on how government will dictate vital aspects of their business. And if you want to ask their opinion about the impact of government regulation on their businesses—from the Affordable Care Act to the thousands of other regulations outlined in the Federal Register—don’t even go there, well, I advise you don’t even go there unless you have a few hours to kill.

Look, it’s not that manufacturers do not want health care for more Americans. We do—in practical terms, healthy employees mean more productive employees. That’s why 97 percent of manufacturers who are NAM members provide health care benefits to their employees. They did that on their own and they did it because it is the right thing to do. 

It’s not that manufacturers don’t want a better environment. We do—and manufacturers are leading us to a sustainable and efficient manufacturing future.

It’s not that manufacturers do not want any regulations—to level the playing field and keep us healthy and safe and protect our air, land and water. We do—but those regulations need to be consistent, balanced and fair.

But here’s what’s happening. Regulators in Washington are creating an ever-increasing maze of inconsistent and duplicative and complex regulations that escape any routine value-added analysis. They harm growth and create barriers to global competitiveness.

Last week, the NAM released a study that showed that the total cost of federal regulations in 2012 was $2.028 trillion. Manufacturers face a disproportionate share of that burden, or almost $20,000 per employee per year—and that’s nearly double what the average U.S. business pays to comply with federal rules. Small manufacturers are hit much harder. They pay more than three times as much as the average U.S. firm, or nearly $35,000 per employee per year.

That’s money that is going to compliance costs instead of being used for innovation and business expansion. That’s money that depresses the job market. That’s money that increases the costs of everything thing you buy.

And many of the changes to regulations that are being proposed today, like the Administration’s greenhouse gas rules and the ratcheting down of the ozone standard will exacerbate those effects. The president’s Climate Regulatory Action Plan could in one fell swoop annihilate America’s new energy advantage—and, according to another NAM study, the ozone change alone would result in 2.9 million fewer jobs per year on average through 2040.

Now I’m not trying to pick on the Obama Administration—because, believe me, there’s plenty of blame to go around on both sides of the political aisle. It simply makes no sense to directly target American manufacturers and job creators with these misguided policies. Manufacturers develop new technologies to promote energy efficiency. Manufacturers lead the way on recycling and reducing waste. Manufacturers develop sustainable production practices. And manufacturers in the United States lead the world in creating innovative approaches to advance renewable and alternative energy and technology to reduce greenhouse gas emissions.
We need to incentivize more innovation—not saddle manufacturers with overly burdensome mandates that limit what is achievable.

Beyond the disadvantages imposed on manufacturers by our current regulatory system, a highly uncompetitive tax structure threatens manufacturing in the United States. Until comprehensive tax reform is enacted, manufacturers will continue to struggle under the highest corporate tax rate in the world. High corporate taxes do not just hurt profits; they put the jobs of Americans at risk. When a company is deciding where to locate a new plant, one of the things every CEO has to consider is the comparative cost of doing business in America.

Tax rates are a major part of that calculus. When U.S. tax rates are uncompetitive, plants get shut down and facilities move elsewhere. Start-ups build their future on foreign soil. So high corporate taxes don’t just hurt companies, including small and medium-sized businesses. They hurt the American people—those who work in the plant or somewhere else in the supply chain.

And those workers’ jobs are threatened for other reasons, including the failure of Congress to make the research and development tax credit permanent. The R&D credit has created millions of jobs and built a number of essential new industries. But, each single year, businesses have to face the distinct possibility that the R&D tax credit will be suspended, cut or discontinued—while many of our foreign competitors continue to offer substantially better incentives for innovation than we do.

All across the world, foreign competition is stepping up its game. And if Mizzou was doing that, wouldn’t KU do the same?

But what manufacturers also see is an unwillingness in Washington to move on another important component to competitiveness and a sustained manufacturing comeback: free and fair trade. With 95 percent of the world’s customers living outside of the United States, manufacturers must reach growing global markets if we want to stay competitive and create jobs on our shores.

Free trade agreements open these markets, strengthen institutions of law for fair transactions and result in protections of intellectual property rights. The United States can’t afford to play catch-up as the rest of the world negotiates and adopts market-expanding free trade agreements.

Nor can we afford to lose ground on export financing. The Export-Import Bank, a funding mechanism for manufacturers in the United States that export, is set to expire in 15 days.
The Ex-Im Bank has a simple mission—to grow jobs in America by helping companies of all sizes export U.S. products abroad. In the past five years, the Ex-Im Bank has supported 1.2 million jobs—and helped thousands of small businesses up and down the supply chain. Without a long-term reauthorization of the bank, thousands of U.S. exporters face substantial risk and, once again, American jobs on the line.

Addressing these issues is essential. And the NAM is actively engaged to reform our regulatory framework, to fight back against attacks on affordable and reliable energy, to modernize our byzantine tax policy and to expand trade opportunities. And we’re moving on other important issues as well, like rebuilding our nation’s infrastructure. But we can’t affect the changes that manufacturers need and all Americans deserve on our own. We need your engagement. We need your voices. And we need your votes. Because this is your future. So own it. Claim it. Shape it.

The people of this country always have and always will determine our future.

And people are the most critical component of our country’s manufacturing outlook. As hard as it is to imagine with a significant unemployment rate, we have a critical shortage of human talent in the United States. More than 80 percent of manufacturers report a moderate to severe shortage of highly skilled workers. On average, manufacturers lose 11 percent of their earnings because of increased costs from production delays, wasted materials and shutdowns associated with the skills gap, primarily the STEM skills—Science, Technology, Engineering and Math.

At the NAM, we’re working to turn this tide. We’re fighting for comprehensive immigration reform—to ensure that the highly skilled workers who study at our universities and work in our labs build their futures—and ours—here.

Our Task Force on Competitiveness & the Workforce gathers the finest experts in the country to find a way to promote and provide STEM education so that more and more young women and men enter those fields. The NAM’s Manufacturing Institute manages a skills-certification program that enables American workers to receive a portable credential demonstrating the skills they possess. We are also active in the “Get Skills to Work” program, which connections veterans with manufacturers who have openings.

We’re leading initiatives like Manufacturing Day, which we will celebrate this year on October 3rd, to educate the public about modern manufacturing and to springboard discussions with students about potential careers in the sector.

And through our “Dream It. Do It.” campaign, we’ve engaged 250,000 students from coast to coast—to change the perception of the industry and inspire next-generation workers to pursue the high-skill, high-paying and highly rewarding jobs in manufacturing.

Getting young people interested in manufacturing is key. That’s why the NAM is using video, social media and eye-catching visuals to portray modern manufacturing as it truly is: high-tech, sleek and exciting. So let me ask you, raise your hand if you set a goal to get a job in manufacturing?

Now, there you go. Look around folks. Manufacturing has a perception problem. Only 3 in 10 parents would encourage their children to pursue manufacturing careers. Many view manufacturing jobs as a caricature of what they were decades ago. They think of boring and monotonous jobs. They imagine themselves soldering the same metal part to the same metal frame hour after hour, day after day, without deviation. They think of burnt-out smokestacks and shuttered factories.

But here’s the secret. If more people, and particularly young people and their parents, really knew what modern manufacturing had to offer, there’s no doubt many more would jump at opportunities to experience it firsthand. That’s why programs like the Supply Chain Management Club here at KU are so important. They expose some of our best and brightest minds to the realities of manufacturing—with guest speakers and plant and distribution site visits.

Students see that leading innovators have cutting-edge technology and state-of-the-art plants—and they’re developing exciting new products. So take, for example, Excel Industries in Hesston, Kansas—a company that first held the patent on a zero-turn riding mower more than 50 years ago.

This family-owned business revolutionized the mowing industry. And, today, its Hustler and BigDog mowers—for commercial and residential use—are delivering some of the smoothest and most precise steering in the industry and most durable and high-performing mowers on the planet. On their shop floor, they’re using laser technology—to speed up their manufacturing process and improve quality. They’re incorporating the latest high-tech components into their products—like Kawasaki engines that are built in Maryville, Missouri. And their facility has been redesigned to be more efficient and productive than ever. Over the past two years, they’ve seen a 100 percent increase in production volume—and have more than 1,700 dealers worldwide.

Students are also seeing that a career in manufacturing pays: the average salary of a manufacturing worker is $77,000.

There’s no shortage of different paths within manufacturing—from satellite technology to breakthroughs in lifesaving medical devices … or energy advances that could light the world.
In manufacturing, you have the chance to invent, to create and to bring innovation to the lives of those in need. It’s a bright future with expansive opportunity.

In the not too distant future, students are going to arrive on campus in an accident-free car that drove here, possibly manufactured at a Ford plant in Kansas City.

Twenty years from now, the new business school building under construction now might be retooled to generate its own power, adding energy back to an interconnected grid that is smart and efficient. Heck, even today, with just the press of a button, I can turn the lights off at my own house over a thousand miles away. That drives my family crazy. Pretty soon your home appliances will be able to regulate themselves—and draw power from, or add to, your own localized grid.

On the horizon, cancers will be wiped out with preventive vaccines. And companies like Archer Daniels Midland will be able to engineer new ingredients that make more foods not only delicious but also good for you.  

This is not a vision based on fantasy. It’s the possibility grounded in science developed today by manufacturers. This is modern manufacturing—powering our nation today for a promising tomorrow. And young people—you all—are the resource we need to keep the fire burning and ensure America’s exceptionalism in the world.

Listen, I realize that many of you are not likely headed for a job in a research lab or a shop floor. But you need to spread the message that manufacturing is an opportunity. It means wealth … it promotes growth … and it provides promise for everyone. We simply cannot sustain America’s manufacturing comeback until the American people see things the same way—until they want those jobs and those plants and those possibilities bad enough to demand them—and policies that strengthen them—from our nation’s leaders.

This quest is deeply personal to me. During the Great Depression, my grandfather, Harry Timmons, left the family farm to get a job in manufacturing. Because he knew that was the best way to support his family. He stood in line for six months trying to a getting a job at the local Mead paper plant in my hometown of Chillicothe, Ohio.

His tenacity paid off. His job soon became a career in manufacturing. His was a lifetime career of 40 years—until he retired. It moved my family into the middle class and gave his son and his grandson—me—opportunities that were never available to him.

I know what manufacturing can do—because I’ve been a part of its success story. Manufacturing lifts people up. Manufacturing transforms lives. Manufacturing makes our country strong.

This legacy now belongs to you.

This heritage of innovation  and discovery and opportunity it belongs to you.

So how will you use it? How will you extend it? How will you upon improve it? That, my friends, is up to you.

Now I’m an optimist. I’m optimistic because I do not know any generation of Americans that has not been up to the challenge. Our proud history stretches behind you. And a boundless future awaits—a future we can and must build together.

And so … Rock Chalk, Jayhawk, KU! And I’d be happy to take some questions.