Make U.S. Manufacturing More Competitive

By September 11, 2007Miscellaneous

As the NAM noted when the Department of Labor issued its August job numbers — which highlighted the loss of 46,000 manufacturing jobs — the federal government deserves much of the blame for failing to enact policies that make the United States more competitive.

Today’s Pittsburgh Post-Gazette’s business page features a column by Dmitri Shiry, partner with Deloitte Tax LLP, Pittsburgh, that makes the case for the specific kinds of policies that we need.

When it comes to the handicap U.S. manufacturers face in competing globally, the villain that usually grabs most of the public’s attention is cheap labor abroad.

But in the past several years a more silent character has crept into the picture. Structural costs — nonwage factors outside the direct control of management — are surfacing as arguably the most insidious competitive barrier facing domestic companies.

Structural costs in the form of corporate tax rates, employee benefits, torts, natural gas and pollution abatement add 31.7 percent to the production costs of American companies relative to that of our nine major trading countries, according to a 2006 study by the National Association of Manufacturers and underwritten in part by Deloitte & Touche USA. Three years ago, this cost disadvantage was 22.4 percent.

Right you are. And here’s a summary of the cost report.

The necessary course of action?

  • Open more domestic sources of natural gas to keep energy prices in check.
  • Reauthorize R&D tax credits and make federal tax cuts permanent.
  • Support consumer-driven health plans by making information on health costs and quality more transparent.
  • End frivolous lawsuits.
  • Environmental compliance costs must be brought into closer alignment with our European competitors’ costs.
  • Want to address the loss of manufacturing jobs? Start with the above list.

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