America’s Business

Keeping the Focus on the Fundamentals of Competitiveness

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Former Michigan Governor Jennifer Granholm recently wrote that she is “obsessed — obsessed — with cracking the code on how to get more manufacturing in the U.S.”

Strong language perhaps—she uses a variant of “obsess” three times in the first 10 words of her op-ed—but so far, so good.  We all want more manufacturing because it means more jobs, more innovation, and stronger productivity, to name just a few of the benefits.

But Granholm’s policy prescriptions won’t satisfy her self-described obsession, as NAM President and CEO Jay Timmons explains in a response to the former governor. He writes,

Granholm fails to note that it is 20 percent more expensive to manufacture in the United States compared with our major trading partners, and that differential does not include the cost of labor….

The Granholm agenda includes many “incentives” that involve budget expenditures. That won’t work, particularly in light of today’s fiscal constraints. Instead, let’s get the U.S. government on the side of manufacturers. Internationally competitive taxes, balanced and less costly regulations and affordable and reliable energy supplies are three prescriptions that will enable manufacturing to grow and thrive in the United States. These are common-sense solutions that will work. Instead, too many politicians simply offer plans that sound good but avoid the real solutions needed to encourage investment and create jobs right here at home.

With manufacturing in the spotlight, it’s no surprise that politicos and pundits are offering up their ideas for growing manufacturing in the United States.  The debate is constructive and worthwhile. But we can’t overlook the fundamentals of competitiveness as we sift through the multitude of ideas to revitalize manufacturing.  Pro-growth tax, regulatory, energy and trade policies are prerequisites to a manufacturing renaissance in America.

With Conventions Over, Time To Put Policy Over Politics

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Just as he did in his State of the Union address eight months ago, President Obama again put manufacturing front and center last night in his nomination acceptance speech at the Democratic National Convention.

He touted some achievements of his term—new manufacturing jobs and three new free trade agreements—but then laid out a new challenge for the next four years: creating one million manufacturing jobs.

That’s a laudable goal, but it’s clear that something has to change. President Obama simply rehashed some of the policies of his current administration—growing exports, for example (which we, of course, support). But manufacturers need bolder policy prescriptions. After all, the jobs report this morning reflected that manufacturing lost 15,000 jobs last month. If the status quo isn’t working now, why should Americans expect more of the same to lead to one million new jobs?

Of course, the first step in creating one million jobs is to stop going backwards. But that is exactly what is going to continue happening in a few months if our leaders don’t decisively deal with the impending fiscal abyss. The fiscal abyss means job losses for small and medium-sized manufacturers as a result of tax increases as well as job losses for innovators in the defense industry, who will be hit hard by indiscriminate cuts that will do little to solve our long-term fiscal challenges. Add to that the significantly mounting regulatory costs on manufacturers, and the result is a business climate that stifles job creation.

Neither candidate offered policy specifics these past two weeks. Over the next two months, they should. The problems facing manufacturers are abundantly clear, and manufacturers want to hear what both candidates plan to do to solve them.

Trade Growth Essential for Manufacturing Renaissance

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NAM President and CEO Jay Timmons is blogging from the Democratic National Convention in Charlotte this week. 

Jay Timmons makes remarks at an NAM/Politico event on jobs and the economy. / Photo by David Bohrer

The National Association of Manufacturers (NAM) kicked off its week at the Democratic National Convention (DNC) today. Just as we did in Tampa, we are partnering with Politico, and today we hosted an event featuring a number of top policymakers who are attending the DNC.

Delaware Governor Jack Markell joined Rep. Brad Miller of North Carolina and former Rep. Susan Molinari, who is now a government affairs executive with Google, at the Politico Hub. White House Communications Director Dan Pfeiffer also participated, as did Austan Goolsbee, former chairman of the White House’s Council of Economic Advisors.

The panelists gave a nod to manufacturing as a bright spot in the economic recovery, but news this morning once again demonstrated that we have a lot of work ahead of us. Manufacturing contracted in August, the third month in a row. Reflecting on the global economic uncertainty, Goolsbee commented, “Most any country in the world would rather have our problems.”

But that is little consolation to the 8.3 percent of Americans who are unemployed, and the millions more who are underemployed.  The United States did not achieve its economic leadership by default—because our competitors were worse off.  We did so by out-innovating and out-working them, feats made possible by our system of free enterprise.

Economist Austan Goolsbee fields questions at an NAM/Politico event on jobs and the economy. / Photo by David Bohrer

One tenet of free enterprise is free trade, and a topic that came up repeatedly during the panel discussion today was trade. Ninety-five percent of the world’s consumers live outside of the United States. Reaching these customers is critical for manufacturers’ growth, yet obstacles stand in the way of increased exports.

For one, many nations have tariffs or other trade barriers that make products from the U.S. less competitive. The U.S. can help bring these barriers down through free trade agreements. But right now, out of the dozens of trade pacts being negotiated around the world, the U.S. is party to just one.

Revitalizing the nation’s trade agenda is one part of a pro-growth plan to strengthen manufacturing and grow jobs and the economy. The NAM has an agenda that will lead the way.

Manufacturing Can Lead the Way Toward 12 Million New Jobs

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NAM President and CEO Jay Timmons is blogging from the Republican National Convention in Tampa this week.

Last night, Mitt Romney wrapped up the Republican Convention and succinctly summed up what this election is about.  “What America needs is jobs,” he said. “Lots of jobs.”

Jobs are indeed what will get voters to the polls.  Unemployment has stood over 8 percent for 42 consecutive months—that spans President’s Obama’s entire presidency.  Worse still, millions more Americans are working in jobs for which they are overqualified, not getting the full benefit of the skills they have worked so hard to acquire.

Governor Romney promised to create 12 million jobs, and while he did not single out manufacturing, he did lay out a number of priorities for manufacturers. He talked about an “all-of-the-above” energy plan—though he did not use that term—but it was clear what he meant when he talked about “taking full advantage of our oil and coal and gas and nuclear and renewables.”

He talked about new free trade agreements, a key priority if American manufacturers are to reach the 95 percent of consumers who live outside the United States.  President Obama deserves credit for seeing the Colombia, Panama and South Korea trade pacts through to completion, but our country’s trade agenda has since stalled.  We need to get it moving again.

Romney talked about providing our young people with the skills they need to succeed in the modern workplace and simplifying and modernizing our complex and onerous regulatory system.  Both are important to manufacturers’ ability to grow and create jobs.

Now it’s on to Charlotte, where President Obama and his supporters will have their chance to make the case for another term.  President Obama will undoubtedly defend his record, but manufacturers are also expecting to hear what he plans to do if voters decide to extend his stay in the White House.

Eight percent unemployment and stagnant economic growth is unacceptable, and with the elections just two months away, manufacturers expect a clear pro-growth vision from Republicans and Democrats alike.

South Carolina Governor Highlights Manufacturing

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NAM President and CEO Jay Timmons is blogging from the Republican National Convention in Tampa this week.

The Republican National Convention kicked off in earnest last night.  The atmosphere in the Tampa Bay Times Forum was electric.

For me, the highlight of the evening was the speech of Nikki Haley, the governor of South Carolina.  The Palmetto State is a great place to manufacture, and the industry has had a significant, positive impact on the state’s economy.  As Governor Haley said, “We build things in the Palmetto State. We build planes. We build cars.”

But it’s not always easy. As the Governor pointed out in no uncertain terms, in recent years, the federal government has put up obstacles to growth in the state.

When the Boeing Company expanded into South Carolina, it was a great opportunity.  Boeing’s billion-dollar investment meant 1,000 new jobs, and it meant that the state would be at the forefront of aerospace innovation, building the new 787 Dreamliner aircraft.

The National Labor Relations Board, however, stepped in and said the investment violated our labor laws, an action that threatened to wipe out Boeing’s investment and the new jobs.  Ultimately, Boeing prevailed, and today the South Carolina facility is up and running.

Governor Haley told this story well last night and offered an incisive perspective about the consequences of government overreach and its impact on a state and its citizens

I’m looking forward to hearing more about manufacturing from the speakers tonight.  In the meantime, the NAM continues to ensure manufacturing remains on everyone’s radar in Tampa.

This morning, I had a conversation with Sen. Ron Johnson of Wisconsin, who was a manufacturer before coming to the Senate in 2011.  We talked about the devastating impact the fiscal abyss would have on the economy and about the need for Congress to act quickly to avert this threat.

The fiscal abyss is a common theme in Tampa. The issue has come up repeatedly in my conversations with members of the press and media, and given the dire predictions that inaction by Congress could plunge the nation back into a recession, it’s no surprise why.

Leaders Highlight Manufacturing Challenges at NAM-Politico Event

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NAM President and CEO Jay Timmons is blogging from the Republican National Convention in Tampa this week.

In a matter of hours, we’ll hear the first speeches at the Republican National Convention in Tampa, but the National Association of Manufacturers (NAM) had an early opportunity to hear from some of our nation’s top leaders earlier this afternoon.

Carly Fiorina, Rep. Darrell Issa and Gov. Bob McDonnell discuss jobs and the economy at the RNC in Tampa, Fla./Photo by David Bohrer

The NAM has partnered with the Politico newspaper to host policy events with political and business leaders in Tampa and Charlotte. Today, Governor Bob McDonnell of Virginia, Congressman Darrell Issa of California and former Hewlett-Packard CEO Carly Fiorina talked about the challenges job creators face and the policies that will get our economy moving again.

Manufacturing is clearly a priority in the economic recovery.  After all, it has the highest multiplier effect of any other industry. Every dollar invested in manufacturing generates another $1.35 in economic activity. What’s good for manufacturing is good for our entire economy.

McDonnell, Issa and Fiorina each talked about the impediments that job creators face in this country and singled out taxes and regulation as challenges—sentiments that echo what manufacturers have been saying. As the recent NAM/Industry Week survey of manufacturers found, 64 percent of manufacturers cite the unfavorable business climate created by taxes and regulation as their biggest challenge.

Competitive tax and regulatory policies would go a long way toward restoring our economy to full strength. With the right policies, like those outlined in the NAM’s Manufacturing Renaissance, manufacturing will lead the economic resurgence and put Americans back to work.

The NAM-Politico event was great opportunity to highlight manufacturing and its crucial role in our nation’s future.  That’s why the NAM is attending the conventions: To make sure that the national conversation about manufacturing continues into November and beyond.

Our collaboration with Politico is just part of our efforts. This morning, I talked about the policy challenges manufacturers face and what we are looking for from both presidential candidates on CNBC’s Squawkbox.

Sweet Success for Cookie Maker

By | America's Business, Miscellaneous, Trade | No Comments

Every so often, manufacturing reaches a milestone.  Today is one of those days, for the Oreo cookie turns 100.  It is one of the many delicious snack foods produced by manufacturers in this country.

The Oreo’s success reflects a key point about modern manufacturing: today’s marketplace is global. While the Oreo may be “America’s Favorite Cookie,” consumers in this country represent a just small share of consumers worldwide.  Indeed, 95 percent of consumers live outside our borders, and reaching those individuals is key to growth.

It’s not always easy.  A story in the Wall Street Journal a few years back highlighted efforts to bring the Oreo to China.  After a “grassroots marketing campaign to educate Chinese consumers about the American tradition of pairing milk with cookies” and a reformulation of the Oreo to suit Chinese tastes, the cookie won China.

That’s what manufacturers do: adapt, innovate and ultimately provide consumers with products that make life better.  Today, the Oreo is enjoyed around the world.

What’s in store for the next century?  No doubt the Oreo will face challenges, as it did over the last 100 years.  The cookie, however, has proved resilient. Whether it’s dispatching a competitor like Hydrox or beating back attempts by nanny-staters to take away life’s little pleasures, the numbers don’t lie: 450 billion cookies sold.

Dallas and Richmond Fed Manufacturing Surveys Are Mixed

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Two regional surveys on manufacturing released this morning provided mixed results regarding activity in their districts.

First, the Richmond Federal Reserve Bank found that manufacturing activity picked up slightly after stabilizing last month. The index of general business conditions rose from no change in November to +3 in December. The Richmond district observed contracting activity from July to October.

There were improvements across the board in a number of areas, including shipments, new orders, finished goods inventories, the average workweek and wages. But the number of employees contracted slightly.

Looking ahead six months, manufacturers remained very positive, but their expectations eased somewhat from last month. For instance, the index for new orders fell from 37 to 21 for the month, with similar shifts seen in data for shipments, employment and capital spending.

Pricing pressures have also eased. Last month, respondents said that prices paid for raw materials rose 3.42 percent on an annual basis. This month, that increase was just 0.81 percent. Moving into 2012, prices paid for raw materials are expected to go up 2.7 percent.

Meanwhile, the Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas found that manufacturers were contracting less than in November. Measures for production, new orders and shipments were less negative in December than the previous month, signifying some improvement in the market.

In addition, businesses had a better outlook for themselves than for the economy as a whole. The general business activity index dropped from 3.2 to -3.0 for the month, suggesting a slight increase in pessimism. Yet, the company outlook index rose from 4.7 to 6.6, reflecting improved company performance. Perhaps because of this, measures for employment were higher.

The future outlook is also rosier, with manufacturers optimistic on all of their production, employment and capital spending indicators. Most of them suggested strongly positive growth in the months ahead — a good sign.

Overall, these surveys observe some modest improvements among manufacturers in their respective districts, with the Texas indicators still showing some contractions. As we move into 2012, though, the outlook is brighter.