Report from America: Public Affairs Conference, Costs Panel

By March 21, 2006Report from America

Report from AmericaThere were some great panel discussions yesterday; one lobbying reform and trade and one on corporate citizenship. Let’s just say on those that we are unabashed on the first, we will continue to take the message about manufacturing to members of Congress and their staffs, and we will continue to fight for the right to do so. On trade, remember that we are the biggest exporters in the country, exporting at twelve times the level of agriculture, for example, so we know a thing or two about trade. On corporate citizenship, probably the best, most shining examples of corporate citizenship (we heard many today) are from manufacturers.

But the panel that caught our eye, our ear and our pocketbook was the one after lunch (maybe its ’cause our bellies were full) as on the ever-escalating costs of doing business. The panel included two NAM board members, Tom Murphy of RSM McGladrey, Dave Hawke of Brady Corporation and Tina Van Dam from the NAM. Tom Murphy had some great numbers on costs. We asked him later where he got them from and we blushed when he told us they were form the report we just put out on small and medium manufacturers.

Tom, a paper industry veteran himself, told of a relatively small ($100 million) paper company he knows and works closely with. Their energy costs have increase a million dollars per month — $12 million a year. They have three paper machines, have idled two out of three, and have laid off over half of their workforce — solely because of their energy costs. How many horror stories like this must we hear before we start taping our own reserves of energy? Admittedly it will take time for ANWR oil to reach us (it’d be reaching us now had President Clinton not vetoed it), but we could access the natural gas from the Outer Continental Shelf much more quickly if only the moratorium would be lifted. This is a real-life example of how the high price of energy is hammering our members, hammering manufacturers trying to compete and survive in this world.

Here was Tom’s fun fact – from our study. And it’s not very much fun:

In 2000, regulator compliance costs on manufacturers were some 67% higher than that of other businesses. By 2004, that number had moved in the wrong direction to 81%. So while we pay the highest prices for natural gas, we are also paying 81% more in regulatory compliance costs than other businesses on average. How on earth do we continue to stay in the game? We do it by being the best manufacturers in the world (one manufacturer in the room showed me today that they had cut their costs some 12% by adopting “lean” principles company-wide), but it gets harder and harder to compete. As we’ve said many times before, no manufacturers are looking for a handout, just some common sense steps — like easing the regulatory burden on manufacturers and unleashing our own stores of energy — that’ll hep us compete.