It’s great to have pride in our heritage and in America, there is such diversity of origins that a rich tradition in many communities is a celebration of their founders and the culture they brought with them.

Dutch settlers in America are a part of this wonderful American tradition. We all pretty much know from high school history that the Dutch had one of the world’s most valuable pieces of real estate–now known as Manhattan–but lost it to the English. Some may have heard about the Dutch tradition in Holland, Michigan where many settlers from the Netherlands went to live. But how many of you knew that Pella, Iowa has a legacy of Dutch settlers that is celebrated every year at this time, when the tulips bloom?

The accompanying picture is from the tulip festival in Pella, Iowa and shows in the background the Tulip Toren, or Tulip Gate. Mary Vermeer Andringa, a native of Pella and the chief executive officer at Vermeer Corporation there, told me about this festival a few days ago. Her family has Dutch roots as you might have guessed with names like Vermeer and Andringa. Mary’s family and friends were in town to see the parades, enjoy the children’s programs, concerts, auto shows and of course the tulips. I understand there are 30,000 tulips in Pella. Vermeer Corporation — manufacturer of a wide range of industrial equipment — alone plants 12,000 tulips on their own corporate campus. The tulip is one of the most beautiful flowers of the year, not least because it blooms early when we need some cheer after the long, grey winter. Some day I’ve got to make it to Pella at this time of the year to take in this floral spendor.

For more images of Pella, Iowa’s tulip festival just click here and get ready for their 2009 festival from May 7-9. And kudos to the Vermeer Corporation for helping to make their town special with support for this festival and their own magnificent plantings.

By the way, if you are a fan of tulips …

(continue reading…)

Innovation can be elusive. What is it exactly and how can a community nurture and encourage it? One thing is certain: innovation is the foundation of successful manufacturing and those firms that devise new processes and products are more competitive over the long-term.

The business and civic community in Chattanooga, Tennessee has hit on the right formula for identifying what innovation is within their metro region and–better yet–how to recognize and encourage it. More towns should follow their lead.

Every year at this time, the Chattanooga Area Chamber of Commerce announces the winner of the Kreusi Award for Innovation at its Spirit of Innovation Awards Luncheon. This year’s local winner was TR Automation; here’s a good synopsis from the local Chamber of Commerce about why TR Automation was selected.

Chamber President and CEO Tom Edd Wilson presented the Kruesi Award to Jerry Tyman Jr., TR Automation general manager, for developing a revolutionary approach to robotic work station manufacturing.

Called SuperCell, the innovation boosts productivity because the robot or robot group is working 95 percent of the time. The advance—particularly applicable to the automotive and aerospace industries—reduces floor space, improves the quality of parts manufactured and achieves a 30 percent reduction in production costs. TR Automation was selected from seven finalists, including Accurate Automation Corporation, Andersen Flaps, Inc., Astec Industries, Inc., Cleveland Tubing, Inc., EnWaste Recovery Systems and Transcard. All of these companies exhibited their innovations at the Convention Center event

The Chattanooga awards program always draws top speakers and a very large turnout of the regional business community. Tennessee Governor Bredesen spoke and Roger Staubach gave the keynote address.

Full disclosure requires that I let you know that I’ve been honored to be a Kreusi Award judge for the last several years. Chattanooga has drawn a wide range of judges from manufacturing and business to evaluate the nominees. It’s a hard choice, because there are so many excellent examples of successful innovation in the region.

Other candidates included Astec, which has developed a new method to make asphalt that reduces fuel use by 14 percent and reduces emissions as well. If used in the New York metro region, for example, it would save nearly 19 million gallons of diesel used in conventional asphalt making. Accurate Automation was another finalist, which has developed and implemented an unmanned ocean racer with artificial intelligence. This craft can be operated remotely and serves as a patrol boat that can thwart terrorist attacks on ships and oil platforms.

Congratulations to the Kreusi family for supporting this initiative and to the Chattanooga business community for finding a way to shine a light on those firms that are thinking outside of the box and creating new generations of products and processes.

Just a year ago today, the shots of a crazed student brought down 32 aspiring students and faculty at Virginia Tech. Then the madman took his own life.

Since then and more recently, the headlines about this Virginia Tech tragedy have centered mostly on who was to blame for this and compensation for the families who lost sons, husbands, daughters. Some of the families have put donations to incredible use, like the Cloyds who use those contributions to repair dilapidated houses in the poorest sections of Appalachia. Stories like this are truly inspiring.

Yet the huge Hokie Spirit that impressed the nation immediately after the shootings seems to have dissipated and many of the students are saddened by that loss, as the editor of their student newspaper reports in an article.

This is a poignant day for our family because our daughter, who is now a sophomore there, lived in the dorm and on the same floor where the first two students were gunned down. A girl a few doors away never came back from German class. And the girl whose family is rebuilding homes in Appalachia, Austin Cloyd, was in her 8 am communications class only to go on next to the fateful French class that took her life. To top it all off, April 16 is our daughter’s birthday.

This year, like last, she doesn’t see anything to celebrate on her birthday. She often talks about how short life is and this viewpoint influences her young life. That her grandmother lived to be 94 doesn’t count in her mathematics of longevity. There will be a number of solemn memorials today on the campus and classes are canceled. It’s a Day of Remembrance. Even though April 16, 2007 is long gone, its aftermath lives on with many students like my daughter. It’s good to pause today and remember those who fell as well as those who carry on with the kind of memories they never thought they’d acquire in a bucolic college setting.

To listen to Senators Obama and Clinton, one would think that the North American Free Trade Agreement (NAFTA) was like a meteor hitting U.S. manufacturing. Now, these otherwise smart officials know better. In fact one of their leaders, Congressman Rahm Emanuel and the Chairman of House Democratic Caucus said

NAFTA is not the main reason workers today are hurting.

He was pretty clear what some of the issues facing manufacturing are and he called in a Wall Street Journal article for a “new social contract” dealing with health care, job training and other changes which would help workers facing global competition.

Congressman Emanuel is right about NAFTA of course and the senators are dead wrong. A recent survey The Manufacturing Industry conducted with Deloitte of manufacturers in the U.S., Canada and Mexico showed this fact clearly. Our survey showed that 49 percent of companies had found NAFTA to help their competitiveness; 10 percent said it hurt and the remaining 41 percent said it had no impact one way or the other.

Several recent articles, which are reality checks for Senators Obama and Clinton, discuss what NAFTA has wrought. In today’s Business Section of the Washington Post, an article by Michael Fletcher, Don’t Blame NAFTA for Downturn, Many Economists Say lays out the fallacies. Most interestingly, he concludes his article on the right note with a quote from a professor at American University who sagely notes that

NAFTA is not the issue. That debate is finished. What the candidates should be debating now is the future of North America. That requires them to look forward, not backwards to NAFTA.

Please, candidates, deal with the real issues facing America’s future.

It’s a rainy, gray day in Washington, DC and by most accounts it’s been a cool spring thus far. Mostly I turned to the weather page to see how long the rain would last today and if I still needed an umbrella for the commute to work.

But it was almost like the sun was shining when I turned to the weather page in The Examiner newspaper to see a very short column by local weatherman, Topper Shutt, with local Channel 9 News.

I couldn’t find a direct link to his little column, so it follows. Mr. Shutt gave us a nice fresh breath of air by pointing out this important book by Bjorn Lomborg:

I read three books while I was on vacation [last week]. One book really made a lasting impression on me. it is entitled ‘Cool It’ by Bjorn Lomborg. I don’t want to give it away, but he doesn’t dispute global warming is occurring but rather how we should attack that issued from an economical viewpoint.

Lomborg also prioritizes what world issues are most pressing and what actions would give us the highest return from our investment, in terms of lives saved and dollars.

It is refreshing to learn about a new perspective on this highly charged issue. I try and remind our viewers that climate is always in a state of flux and yes, the world has warmed over the last 25 years but claiming that Katrina is a product of global warming is absurd.

We have had much stronger hurricanes hit the United States in the past, the Labor Day or Keys hurricane of 1935 and Camille in 1969 to name just two. There is much more development now on our shores. Anyway, check it out. It’s a quick and informative read.

By the way, it’s supposed to be rainy in DC through Saturday, although the sun came out today with this column. Thank you, Mr. Shutt. And if you’d like to comment on Mr. Shutt’s good sense, here’s a link to his blog whichi is on the same topic today.

Mark Bloomfield, President and CEO of the American Council for Capital Formation does an excellent job in today’s Wall Street Journal of laying out the case for a lower tax rate on capital gains from a historical perspective and debunking the myth that lower capital gains tax rates are “tax breaks for the rich.” As Mr. Bloomfield so accurately states in his column, “How We Beat the ’70s“:

Mainstream economists know that lower capital gains taxes result in lower capital costs, more savings and investment, and a strong economy. And ordinary citizens understand that low taxes on capital gains make it possible for them to buy a new lathe or the newest software, which will give them the chance to compete effectively in today’s global economy. Retirement security is also at stake. Low taxes on capital gains allow Americans to build up larger nest eggs.

From our perspective here at the NAM, there is strong evidence that the investment tax relief enacted in recent years—both the lower tax rates on capital gains and dividends—has played an important role in spurring economic growth. Any talk of raising these rates is, at best, irresponsible and, at worse, a serious threat to our country’s economy. NAM members believe it is critical that Congress make these investment tax cuts permanent.

And while they’re at it……policy makers also should significantly reduce the U.S. corporate long-term capital gains tax rate. For corporations, capital gains represent the after-tax proceeds retained by a company for future investment in new business ventures or for dividend payments to shareholders. The current 35 percent rate on corporate capital gains — one of the highest tax rates on corporate capital investment in U.S. history—creates a “lock-in” effect that discourages corporate taxpayers from selling appreciated assets because the tax cost significantly reduces their after-tax return on investment. In contrast, reducing the corporate capital gains rate will enable U.S. corporations to redeploy and invest capital in its most productive use and contribute to economic growth and job creation.

From our perspective here at the NAM, U.S. corporations are true patriots. They play an integral role in our society and are major contributors to our country’s economic growth and strong democratic government. Corporate America provides well-paying jobs for employees, investment opportunities for shareholders and high-quality products and services for consumers both here and abroad.

That’s why we are more than a little concerned about the Patriot Employers Act (S. 1945) that includes a laundry list of requirements for a company to qualify as a “patriot.” The Wall Street Journal today does a good job of explaining why this legislation would actually destroy jobs and make U.S. companies less competitive.

We agree wholeheartedly with the Journal that “what’s really unpatriotic is the 35% U.S. corporate tax rate.”

For years, manufacturers of all sizes — particularly smaller ones — have been blindsided by unexpected tax bills from states where they have no real connection, e.g., facilities or employees. The House Small Business Committee this morning took a closer look at the problem and an NAM member from California was willing to share his frustrating and expensive story with the committee.

In his statement, Jerald Otchis, Vice President Finance and Administration at Bobrick Washroom Equipment, Inc. in North Hollywood, explained that his company has no problem paying business activity and other taxes in the five states where they have facilities — California, Colorado, New York, Oklahoma, Tennessee. It’s the tax bills from other states that cause them concern. In fact, the company right now is challenging an assessment from Texas — an effort that already has cost them more than $100,000 and an untold amount of staff time. And it’s not over yet.

Here’s the deal — different states have different rules about taxing out-of-state companies and challenging these tax assessment can be frustrating, timing-consuming and expensive. Unfortunately, many times the amount of taxes involved in an individual case is small in comparison to the cost of challenging, making it less costly for a company — particularly a smaller one—to pay the taxes. But all these extra taxes do add up.

Fortunately, help is on the way. Last week House Judiciary Committee members Rick Boucher (D-VA) and Bob Goodlatte (R-VA) introduced the Business Activity Tax Simplification Act (H.R. 5267) that would establish a bright-line physical presence test to determine when a state can tax out-of-state companies. There’s a similar bill in the Senate. NAM is pushing for quick action on the legislation and we’re hoping that Mr. Otchis’ story and others like his will help spur legislators to act.

Here at the NAM, we’re getting more and more anxious about the impact of our high corporate tax rates on the ability of U.S. manufacturers to compete in the global marketplace. We’d like to see the U.S. government follow the lead of our trading partners and lower the federal statutory rate down to 25 percent or lower.

It looks like Treasury Secretary Hank Paulson shares our concern that, by standing still, we are falling behind. According to BNA’s Daily Tax Report (subscription only), in comments yesterday to the Senate Budget Committee, Secretary Paulson noted that while corporate rates were lower in the 1980s than in the 1970s, they have been creeping up since, relative to international competitors. “The direction of change is what I find alarming,” he told budgeteers.

While the Secretary didn’t endorse a specific solution to the problem, he did suggest one possibility that appeals to us—reducing the rates and simplifying the system. He commented that “the whole momentum” of tax policy has been going away from simplification. We couldn’t agree more.

(Paulson’s opening statement is here.)

When a corporation sells an investment, “capital gains” is the amount left over after the company pays taxes on their profit. Companies use this money to invest in new business ventures or pay shareholder dividends.

And right now, there’s not much money left over after paying IRS. The 35 percent tax rate corporations currently pay on capital gains is one of the highest tax rates on corporate capital investment in U.S. history and 20 percentage points higher than the top rate paid by individuals. Rather than paying this 35 percent toll charge, many businesses choose either not to sell underproductive assets or to borrow against them, increasing their debt.

The NAM is working to lower this tax rate, at least to the 15 percent rate that individuals pay. Ending the “lock-in effect” of high taxes could unleash trillions of underused assets into the economy and help businesses operate more effectively and create more jobs. More broadly, it will help promote U.S. economic growth and competitiveness. As an added bonus, since companies will be paying taxes on sales that wouldn’t otherwise take place, Treasury will probably see billions of dollars of new revenue. This happened when Congress lowered the tax rate on individuals’ capital gains.

Now is the time for policy makers to make this change. The National Association of Manufacturers is cohosting a forum today with James Tisch of the Loews Corporation in New York City where corporate executives, legislators and economists will talk up this issue and get the ball rolling on an idea that will benefit, the economy, corporations, their shareholders and their workers.

For more details on today’s forum, please go the website of America Gains, a coalition urging reform of current capital gains taxation. A news release for the event is available here.