Board Chair Gregg Sherrill’s Remarks at the Detroit Economic Club (Detroit, MI)

Remarks as Prepared
Gregg Sherrill, Chairman and CEO, Tenneco Inc.
Chair of the Board of Directors, National Association of Manufacturers
Detroit Economic Club
October 5, 2016

Good afternoon, everyone. It’s always good to be in Detroit, and I thank Roy for that kind introduction and my thanks to the Detroit Economic Club for giving me an opportunity to speak with all of you today.

I consider myself lucky to have been a part of the automotive industry for 40 years. And 40 years in this industry means that a part of my heart will always be here in Detroit. Now, while I have strong ties to Detroit, you may have guessed from my slight “downriver drawl” that I’m actually a native of Texas. I was born and raised in a small town near Houston, became a Texas A&M Aggie and eventually moved north for the opportunity of a lifetime to begin my engineering career with Ford. I come here today wearing two hats. One is the chairman and CEO of Tenneco.

Tenneco is an $8.2 billion company, one of the world’s leading designers, manufacturers and distributors of clean air and ride performance products for the automotive, commercial truck and off-highway markets and the aftermarket. We employ more than 30,000 people worldwide, with more than 90 manufacturing facilities on six continents and 15 engineering centers.  

My other hat this morning is the chair of the Board of Directors of the National Association of Manufacturers, so it’s fitting that I’m in Detroit where manufacturing roots run deeper than perhaps any other American city.

The NAM is the voice of the more than 12 million men and women who make things in America. We represent more than 14,000 manufacturers—from global brands to family businesses.

The NAM is one of the most powerful, respected advocates in Washington, D.C. Working together, we can achieve what no company can do alone. And the more manufacturers and allied companies unite behind the NAM, the more powerful our voice in Washington becomes. So, if you’re not a member of the NAM yet, we need to talk.

* * *

I’d like to begin now with a proposition. At no time in history has a country enjoyed such comparative advantages as the United States in the 21st century, thanks to our:

  • Unquestioned democracy and federal system;
  • Rule of law and free enterprise system;
  • Reserve currency and our financial system;
  • Military strength;
  • Unique diversity; and
  • Of course, all our natural advantages—arable land, energy and natural resources, clean air and water, borders on three oceans and, a passion of mine, protected wilderness.

And yet, we are a nation gridlocked and polarized by political extremes on both sides and often unable to enhance, protect or take advantage of everything I just mentioned. 

Take this current presidential campaign. There’s really nothing like it in modern history. And that’s not meant as a compliment. The level of divisive rhetoric, the intense partisanship and negativity we’re witnessing, while not unprecedented, is the worst we’ve seen in our lifetimes. Each of the two main candidates began their general election campaigns with popularity ratings lower than any other presidential candidate in the modern era. Recent polls indicate that the majority of likely voters plan to support their candidate simply to oppose the other.

How did we get here? I believe a part of it is the rise of populism still in full force from the aftermath of the Great Recession. Couple this with a federal government that has now been locked for years in a partisan political stalemate and with a well-earned reputation for essentially getting nothing done, at times shutting down the government and even threatening defaults on our sovereign debt.

So this crisis has been growing for a number of years, resulting in elected officials unable to cooperate, collaborate or compromise, placing their party politics above all. Which brings me to the question: Where is the leadership? Where can “We the People” find principled unselfish leadership in Congress and on both sides of the aisle, and if not, why do we keep returning them to office?

This is particularly concerning to me, as the common theme in overcoming every major crisis this country has faced was the emergence of leadership that was willing to sacrifice themselves for the future and not sacrifice the future for themselves.

Everyone in this room knows we face plenty of challenges. Global volatility—from violence and instability in some parts of the world to dramatic political shifts in others. Raise your hand if a year ago you thought we’d be talking about something called Brexit. We have weak GDP growth, a shrinking labor force, and the list goes on. But beyond these macro issues, what is most concerning to me is our political polarization. We’re shooting ourselves in the foot, unable to control what should be in our control, and that’s a lack of leadership.

But I want to be very careful here. The leadership I’m thinking about is first and foremost based on character and values and an understanding that the best solutions often come from the airing of diverse views. It comes through judgment and respect and putting the welfare of America ahead of any party doctrine or personal ambition.

Before I turn to a forward look, I realize my comments so far have been painted with a pretty broad brush. To be fair, we do have elected officials who are true statesmen and public servants. I think it’s also fair to say we need a lot more of them. As my mother would often say to us, “If the shoe fits, wear it!”

So let’s turn to how we make the most of the situation in this election year. To their credit, both candidates have expressed their support for manufacturing. They seem to know what most Americans instinctively know: when manufacturing is strong, America is strong.

And they’re right.

The most recent data show we contributed $2.17 trillion to the U.S. economy last year. We employ 12.3 million people, or 9 percent of the workforce. For every dollar spent in manufacturing, another $1.81 is added to the economy.

And, if manufacturing in the U.S. were its own country, it would be the ninth-largest economy in the world.

Modern manufacturing in the United States is leading an innovation revolution. It’s high tech. It’s 3-D printing. It’s connected technologies and the Internet of Things.

That’s certainly on display in the automotive industry, where we’re moving forward at a rapid pace of innovation that will deliver greater connectivity, safety and efficiency—and, yes, driverless cars. Talk about a transformational industry. This is it. This is manufacturing.

So, clearly, manufacturing is an essential part of the American story.

Now our task is making sure the campaign-season enthusiasm for manufacturing is later matched with a policy agenda that is good for manufacturing. 

When we talk about the need for compromise and leadership on issues that will move us forward, we need look no further than the issues at the forefront for manufacturers.

So at the NAM, we said, okay, there are a lot of things out there we can’t change. But there are some big things that our leaders in Washington can get right—if they just showed some political will. And if they get these things right, we would see a surge in manufacturing and, in turn, the economy as a whole.

Back in January, before we even knew who the nominees were, the NAM released a policy agenda, called “Competing to Win.” It is a platform for economic growth. It is solutions and a tool for us to hold elected leaders accountable.

“Competing to Win” focuses on 11 areas: tax; trade; energy; environment; transportation and infrastructure; labor; immigration; workforce; health care; research, innovation and technology; and regulatory and legal reform.

Today, I’ll spare you. I won’t go into all 11. But I do want to touch on four of them: infrastructure, trade, regulation and workforce.

First, infrastructure. This year marks the 60th anniversary of President Dwight D. Eisenhower’s visionary achievement: the Interstate Highway System. With that historic investment, Americans gained access to jobs, health care and housing. Manufacturers had reliable, safe ways to ship goods to consumers.

The time has come for a new vision for the future that matches Eisenhower’s scale and ambition. We are not going to build a modern economy when we’re relying on a frail and crumbling infrastructure.

Former U.S. Transportation Secretary Ray LaHood has said, “Our infrastructure is on life support right now.” The United States, which used to have the finest infrastructure in the world, is now ranked 16th, according to the World Economic Forum, behind Iceland, Spain, Portugal and the United Arab Emirates. It’s a national embarrassment.

Go elsewhere in the world and you will find more up-to-date, modern infrastructure systems. But here in America, deteriorating roads and aging railways threaten not only our quality of life but also our very ability to compete economically.

The highway bill last year was a good start, but we’re still missing important economic gains in the form of increased jobs, growth in GDP, improved productivity and even an increase in take-home pay. Short-term approaches are not sufficient to reverse the 10-year backlog of essential infrastructure projects.

We need greater commitment to build the system of the future, including our ports, inland waterways, railways and aviation system. We can do better—and create jobs along the way.

* * *

The second issue is trade. We have an amazing opportunity right in front of us to open up new markets for the products we make; an incredible opportunity to reach new customers and secure good jobs here in the United States.

Unfortunately, the Obama administration and Congress can’t seem to reach a consensus on how to move forward on the Trans-Pacific Partnership—no matter how hard the business community and manufacturers push for its approval.

I understand some people have principled concerns. I get that. Those should be addressed. The bigger problem, though, is that we have candidates and campaigns pushing falsehoods about trade altogether, saying that we need to shut it down. But that just doesn’t square with the facts.

Here’s the most important fact about free trade, broadly speaking: 95 percent of the world’s consumers live outside the United States. Ninety-five percent.

Manufacturing in the United States isn’t going to reach its full potential if we’re not reaching those consumers—especially in developing countries where there is new demand for our goods.

So we need more agreements that tear down those barriers to entry, while also setting high standards that allow for fair competition.

We are talking about an $11 trillion global market. We can’t win in the global economy if we’re not in the game.

And here’s the second-most important point: If the United States doesn’t write the rules, other countries will. No one wants the United States to abandon TPP more than our competitors. It will be our loss if we let them.

But, here’s the good news: All is not lost yet. The American people actually get it. Despite what you hear on the campaign trail, a recent NBC/Wall Street Journal poll found that 55 percent of voters agree that free trade is, quote, “good for America.”

So, on trade, I would say to the next president: Listen to manufacturers. Listen to the American people.

* * *

And that brings us to the third policy area. Regulations—or should I say over-regulation. This affects every one of us. But manufacturers really shoulder a heavy burden.

For small manufacturers, it’s devastating. For manufacturers with fewer than 50 employees, regulation costs total almost $35,000 per employee per year—more than three times the cost for the average U.S. company.

You know, nothing is more important than the health and safety of our workers and consumers and our commitment to environmental stewardship. But the unrelenting stream of new regulations coming at us in so many areas is counterproductive. It actually makes it harder to do right by our employees. It makes it harder to hire new ones and keep good ones.

A study just released by the NAM found that rules issued by the Department of Labor, the National Labor Relations Board and the Equal Employment Opportunity Commission in the administration’s last year will cost the economy roughly $80 billion over the next 10 years, and companies will need to invest nearly 400 million paperwork hours for compliance with the law.

The impact on small manufacturers, in particular, is why the NAM launched a campaign, called the Power of Small, to tell the stories of small manufacturers about the real-life burdens they face.

Taken together, these labor regulations have the potential to undermine successful business models, as well as completely change the economies of scale in several industries and all but drive out small, independent firms.

So we need action. It’s time to streamline the regulatory system and sunset outdated and ineffective regulations. It’s time to hold independent regulatory agencies accountable. And lastly, it’s time for Congress to step up and provide its own regulatory review and analysis.

It’s on us to speak out for real reform. And if that’s a cause you believe in, which I’m sure it is, I encourage you to learn more about our Rethink Red Tape campaign at rethinkredtape.com.

*  *  *

The fourth and final issue is workforce: Today’s manufacturing demands a more skilled, more capable workforce than ever before. One of the real tragedies, though, is that we can’t fill jobs—because we can’t find enough people with the skills in demand.

According to the NAM’s Manufacturing Institute, we will likely need to fill 3.4 million manufacturing jobs over the next 10 years or so. But 2 million of those jobs will go unfilled because there’s a shortage of workers with the right skills. These are often high-tech skills.

This is the skills gap. Not enough people are getting the training and education that would empower them to pursue a rewarding career in manufacturing.

And I mean “rewarding” in every sense. The satisfaction of building something that can improve, change or save lives. The excitement of being able to innovate and turn an idea into something tangible. And, of course, the security of a solid income.

Manufacturing jobs, on average, just pay better. The average manufacturing worker earns more than $79,000 annually, about $15,000 more than the average worker across all sectors.

But here’s the problem: only 37 percent of parents encourage their kids to pursue manufacturing careers, and only 18 percent view manufacturing as a top career choice.

We have an awareness problem. That’s why every year, thousands of manufacturers across the country open their doors to students, teachers and parents on Manufacturing Day. That’s coming up this Friday. And we’ll be showcasing modern manufacturing.

But we also need leaders in Washington, and in the states, on board. We have to update and invigorate our training programs. We need more industry partnerships between companies and schools. We need curriculum aligned with work-based learning.

As long as this skills gap persists, we are depriving a generation of good, fulfilling careers in a dynamic industry. Manufacturers are going to keep doing our part, but we can’t do it alone.

 *  *  *

So, there’s plenty of work to do, and I believe we can build a bright future for manufacturing if we can drive collaboration on issues that should be viewed positively on both sides of the aisle.

But in today’s environment, that’s a big if.

Politicians have always been politicians, and partisanship has always been part of the political equation. History teaches us that with the right kind of leadership and hard work, we can press forward and make progress.

During a hot summer in 1787, in a stifling State House in Philadelphia, delegates to our Constitutional Convention from every region and every political and economic faction in our new country hammered out the terms on which the republic would be governed.

Every view was aired; every dissenting voice was heard. Factionalism was intense, with the whole idea of bipartisanship laughable.

But they fought it out and finally came together to form a national government. And I would ask you, had one side overwhelmed the other to get their way, would we have a better Constitution?

Since the beginning, our country has faced numerous consequential issues, and in environments of intense partisanship, and have ultimately found solutions through principled compromise.

So in this bizarre election, in our dysfunctional Congress, in these anxious times, do we have enough leadership focused on solutions that will move us forward? I’m not convinced we do—not yet.

But I am convinced that we can unleash the full power of manufacturing by working together on some of the issues I’ve outlined here and in the process perhaps discover how to break through gridlock and help move our country beyond this period of inertia and conflict. And to that end, it’s on all of us to keep pushing and striving for better.

With that, I’m happy to take your questions.

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