Archive for October, 2012

How do Obama and Romney Stand on Issues Affecting Manufacturing?

Tuesday, October 23rd, 2012

Both President Obama and Governor Romney have put the manufacturing industry as the cornerstone of their plans to strengthen the U.S. economy and revitalize business activity. How would their differing plans affect manufacturers, and which would provide the most benefits to the manufacturing industry?

Government has the most impact on the manufacturing industry with regard to its tax, regulation, energy, and trade policies, but budget priorities of an administration also have a powerful effect for the good or the bad. We will use these policies and priorities to compare the plans of President Obama and Governor Mitt Romney. Governor Romney’s plan is extracted from his “Believe in America – Mitt Romney’s Plan for Jobs and Economic Growth” available on his website. President Obama’s plan is derived from his record and his “Blueprint for an America Built to Last,” released by the White House on January 24, 2012.

Taxes:  The more taxes a business pays, the less money a business has to grow the company, buy equipment, conduct R&D, expand into new markets, and hire more workers.

President Obama’s plans include:

  • Reduce overall corporate rate to 28 percent with an even deeper cut to an effective tax rate of 25 percent for corporations manufacturing in the U. S.
  • End tax breaks for outsourcing and provide a 20 percent tax credit for expenses of moving manufacturing operations back to America
  • Expand, simplify, and make permanent the R&D tax credit
  • Extend the 30 percent-Advanced Energy Manufacturing Tax Credit for clean energy manufacturing projects
  • Introduce a new Manufacturing Communities Tax Credit to encourage investments in communities affected by job loss
  • Reauthorize 100% expensing of investment in plants and equipment

Governor Romney’s proposal includes:

  • Reduce the overall corporate tax rate to 25 percent
  • Make permanent the R&D tax credit
  • Reduce the top individual tax rate from 35 percent to 28 percent since most small businesses pay taxes at the individual level, not corporate taxes
  • Eliminate the Death Tax
  • Pursue a Fairer, Flatter, Simpler Tax Structure

Taxes on corporations and individuals will increase January 1, 2013 when the current tax rates that have been in effect for 11 years expire (referred to as the Bush tax cuts) and return to the higher rates in effect under President Clinton. There are additional taxes that will go into effect at the same time as a result of the Patient Protection and Affordable Care Act, commonly called Obamacare.

As Governor of Massachusetts from 2003-2007, Mitt Romney closed a $1.3 billion state budget deficit in 2004 without raising taxes by using a combination of funding cuts, fee increases, collection of more business taxes from eliminating tax loopholes, and drawing from the state’s “rainy day fund.”

Regulations:  Regulations function as a hidden tax on manufacturers. A multitude of rules, restrictions, mandates, and directives impose stealth expenses on businesses and acts like a brake on the economy at large. The federal Office of Management and Budget own study places the annual cost of regulation on the economy at $1.75 trillion, which is nearly double the total of all individual and corporate income taxes.

President Obama’s record:

  • The Federal Register’s compendium of new rules and regulations hit a record in 2010 of 81,405 pages with a projected annual cost of compliance of $26 billion.
  • In one month alone, July 2011, the Obama administration issued 229 proposed rules, 379 final rules, and 10 economically significant rules—totaling more than $9 billion in regulatory costs.
  • The over 2,000-page Dodd-Frank Act mandates 259 rules and suggests another 188.
  • The Patient Protection and Affordable Care Act (PPACA) may generate up to 10,000 pages of regulations to implement.
  • The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 produced federal restrictions on credit card companies that have led to higher interest rates, higher annual fees, and lower credit limits.

Governor Romney’s proposal:

  • Issue an executive order paving the way for Obamacare waivers for all 50 states and work with Congress to accomplish full repeal
  • Seek to repeal Dodd-Frank and replace it with a streamlined regulatory framework
  • Eliminate the regulations promulgated in pursuit of the Obama administration’s costly and ineffective anti-carbon agenda
  • Press Congress to reform our environmental laws and to ensure that they allow for a proper assessment of their costs
  • Order all federal agencies to initiate repeal of any regulations issued by the Obama administration that unduly burden the economy or job creation
  • Impose a regulatory cap that forces agencies to recognize and limit these costs
  • Restore a greater degree of congressional control over the agency rulemaking process

Trade: The U. S. had an overall trade deficit of $558 billion in 2011, but our deficit with China was $295.5 billion, and the combined deficit with Canada and Mexico rose to a combined $185 billion of the total. In fact, we have a trade deficit with 66 countries. Both President Obama and Governor Romney support current trade agreements and propose additional agreements.

President Obama – As a candidate in 2007 and 2008, he said, “there’s no doubt that NAFTA needs to be amended,” in December 2007 at the Des Moines Register debate, and at a June 2008 speech in Flint, MI, he said,” If we continue to let our trade policy be dictated by special interests, then American workers will continue to be undermined, and public support for robust trade will continue to erode.”

But as president, he pushed hard for passage of the trade agreements with Korea, Colombia and Panama, which were passed and signed in October 2011, all drafted on the NAFTA template. He has instructed his team at the U.S. Trade Representative’s office to spearhead the proposed Trans-Pacific Partnership, a trade agreement involving nine Pacific region nations, including Vietnam and Brunei, two undemocratic countries with serious and well-documented human and labor rights problems.

Unlike his predecessors, he has imposed tariffs on imported Chinese products that have been determined to be “dumping, such as the 2009 tariff on imported Chinese tires, and the recent Commerce Department final determination of anti-dumping duties from just over 31 percent up to 250 percent on photovoltaic solar cells, and anti-subsidy duties of up to more than 15 percent were also recommended.

His Blueprint states that he will:

  • Create a new trade enforcement unit that will bring together resources and investigators from across the Federal Government to go after unfair trade practices in countries around the world, including China
  • Enhance trade inspections to stop counterfeit, pirated, or unsafe goods before they enter the United States
  • Put American companies on an even footing by providing financing to put our companies on an even footing.

Governor Romney – As a candidate, he supported the free trade agreements with Korea, Colombia and Panama and also calls for passage of the Trans-Pacific Partnership, in addition to new FTAs with nations such as Brazil and India.

Romney would pursue the “formation of a ‘Reagan Economic Zone.’ This zone would codify the principles of free trade at the international level and place the issues now hindering trade in services and intellectual property, crucial to American prosperity and that of other developed nations, at the center of the discussion.”

Romney proposes to get tough with China in the following ways:

  • Impose “targeted tariffs” or economic sanctions for unfair trade practices or misappropriated American technology
  • Designate China as a currency manipulator and instruct the Commerce Department to impose countervailing duties
  • Improve enforcement at the border by allocating the necessary resources to investigate the actual point of origin for suspect products arriving on our shores
  • Impose harsher penalties on those who would circumvent our laws

Energy:  The manufacturing industry both produces and uses energy; therefore, government policies affecting energy have a major impact on the growth, development, and financial position of manufacturers. Energy policy is critical to our country’s economic future, and we have the natural resources we need to be more energy independent.

President Obama’s plan:

  • Promote safe, responsible development of the near 100-year supply of natural gas, supporting more than 600,000 jobs while ensuring public health and safety
  • Incentivize manufacturers to make energy upgrades, saving $100 billion over the next decade
  • Create clean energy jobs in the United States

President Obama’s Track Record:

  • Imposed a moratorium in 2010 on underwater drilling that eliminated more than 10,000 jobs and cost $1 billion in lost wages.
  • Delayed the construction of the Keystone XL Pipeline, which would bring enormous supplies of Canadian tar sands oil from Alberta to the U. S and create an estimated 25,000 to 100,000 American jobs.
  • Proposed a cap-and-trade system that was a complex plan for allowing industries to trade the right to emit greenhouses gases, which failed to pass Congress.
  • Under Obama, the EPA has issued a 946-page hazardous air pollutants” rule mandating “maximum achievable control technology” under the Clean Air Act, which could put 250,000 jobs in jeopardy.
  • New regulations for industrial boilers—the so-called “Boiler MACT”—may put another 800,000 jobs at risk.

Governor Romney’s proposed energy policy focuses on significant regulatory reform, support for increased production, and funding basic research instead of specific technologies, including the following:

  • Streamline and fast-track the permitting process for exploration and development of oil and gas
  • Consolidate procedures for issuing permits so that businesses have a one-stop shop for approval of common activities
  • Overhaul outdated legislation such as the Clean Air Act, Clean Water Act, and other environmental laws
  • Reform the regulatory structure of the nuclear industry
  • Inventory our nation’s carbon-based energy resources
  • Explore and develop our oil reserves wherever it can be done safely, taking into account local concerns, including the Gulf of Mexico, both the Atlantic and Pacific Outer Continental Shelves, Western lands, the Arctic National Wildlife Refuge, off the Alaska coast, and the more recently discovered shale oil deposits
  • Partner with  our neighbors Canada and Mexico to develop their oil reserves
  • Pave the way for the construction of additional pipelines that can accommodate the expected growth in Canadian supply of oil and natural gas
  • Extract natural gas by means of “fracking” (hydraulic fracturing, coupled for these purposes with horizontal drilling)
  • Redirect government funding of clean energy spending towards basic research and development of new energy technologies and on initial demonstration projects that establish the feasibility of discoveries

Manufacturing has been a key driver of what limited economic recovery we have had since 2009 and will play a major role in U.S. economic success in the future if it gets the right support. On the surface, Obama and Romney seem to have roughly the same economic goals – stimulate job creation, boost American competitiveness in the global market and drive down the deficit, but as we have seen, their plans for reaching these objectives differ greatly. I urge everyone to carefully compare their plans and what they have said and done before choosing for whom to vote. Don’t waste the precious freedom to vote that our ancestors risked or gave their lives to gain.



Workshops for Warriors Prepares Vets for Skilled Manufacturing Jobs

Tuesday, October 16th, 2012

While there are over 12 million people unemployed, there are hundreds of thousands of manufacturing jobs going unfilled due to the lack of people with the right skills to fill those jobs. Much of the demand for skilled workers arises because the automated factories of today demand workers who can operate, program and maintain the new computerized equipment.

On the other side of the equation, we have thousands of young men and women who are ending their  military service and having great difficulty finding jobs because there is a mismatch in the skills they acquired in the military and the skill needs to find a civilian job, particularly in the manufacturing industry. Transitioning from military service to civilian life is challenging in the best of times, but has been even tougher in the current economy. For the estimated two million veterans who served a tour — or multiple tours — of duty in the wars in Iraq and Afghanistan, there are even more hurdles than usual. The jobless rate amongst these veterans was more than 12 percent in 2011, well above the national average rate of the general population. It was even worse for veterans between 18 and 34 years old; their jobless rate neared 30 percent in 2011. In California, nearly one in four veterans ages 18-24 were unemployed in 2009, almost double the unemployment rate for the civilian population.

Other factors that come into play include medical advances that are resulting in greater survivability on the battlefield with more “Wounded Warriors” (severely injured service members) returning home.

On October 5th, I visited the Workshops for Warriors facility in San Diego during their Manufacturing Day Facility Tour and met retired naval officer Hernán Luis y Prado, founder and president of Workshops for Warriors (WFW), a Board-governed 501 (c) 3 nonprofit organization that provides free vocational training to veterans of the US Armed Services. WFW assists the transition of veterans and injured veterans into civilian life through mentorship, training, and education. Their mission is to certify and place veterans of the US Armed Services into manufacturing careers. The main objective of WFW is to enable veterans to move from economic insolvency into self-sufficiency by learning necessary job-skills and earning a steady income.

In a subsequent interview, I asked Hernán about how he started his program and was astonished to find out that he actually started helping his fellow service members when he got back from his tour of duty in Iraq in 2003. He was tired of seeing his friends lose everything ? their homes, spouse, and family ? after getting out of the service and experiencing financial from not being able to make the transition.

While he was stationed in the Washington D.C. area, he opened his house, garage and back yard to friends so they could come over during their medical rehabilitations and work with his metal fabrication and woodworking tools. He continued to do this as he moved to new stations in Newport, Rhode Island, Virginia, and Mississippi. He bought more and more equipment until his garage was filled. When he was stationed in Mississippi in 2008, he and his wife realized there was a great need for formal training in manufacturing skills, and they determined to do what they could to fill this need.

Hernán said, “We are a military family. And we will do whatever it takes to get veterans who have the desire to work, work. We are going to create America’s manufacturing infrastructure right here in San Diego. Every couple of weeks I go to either the Veteran’s Center near Balboa Park or Camp Pendleton to speak to the Wounded Warriors. I’ll get in front of a group of 200 to 400 Wounded Warriors and ask them how many have a job when they separate from the service. Up to now, I’ve only had one show of hands.”

After learning that one out of seven members exit the military in San Diego, he was able to get stationed in San Diego, and  he rented one storage unit, two, and then three, filling them with more and more equipment. Over the years, he and his wife financed all of this on their own by selling two homes, a car, and a motorcycle.

In February 2011, they rented a 4,500 sq. ft. building, but soon ran out of space and moved to a building twice the size in October 2011. In November 2011, Goodrich Aerostructures, in Chula Vista, California, donated $25,000 and a trailer in which their CAD/CAM training is conducted (powered by solar panels on the roof.) In addition, Goodrich Aerostructures business has donated nearly $1 million in equipment and materials to help WFW build out its class offerings.

When he left active duty in February 2012, he and his wife decided to formalize and structure a true training program to expand the scope of the impact they sought. Workshops for Warriors now has certified instructors teaching welding and machining to more than a dozen veterans in each 12-week course and offers training in CAD/CAM (Computer Aided Design/Computer Aided Manufacturing). The courses will expand to 16 weeks when they get their NIMS certification in welding and MasterCAM. A combination of vocational training and real-world job experience empowers veterans, increases their career options, their confidence and self-respect.

This hands-on training as well as classroom education ranges from hobby-level skills and access to common tools to fabricating commercially viable products on state-of the art machining systems. The program provides classroom experience, practical training, paths towards vocational certification, work-experience, and mentorship programs in order to assure long-term independence and integration into the workforce. Instruction is offered by skilled veterans, active-duty service-members, and industry experts.

Workshops for Warriors offers assistance to graduates of their program and previously certified veterans and their entrepreneurial endeavors in the following ways:

  • Job placement
  • Work experience,
  • Equipment
  • Tools
  • Metal stock

In order to provide actual work experience for veterans and be self-sustaining, Workshops for Warriors frequently undertakes projects to help disabled and homeless veterans, the community, and local businesses. The most recent projects include:

  • Fabricating handicapped railings
  • Fabricating handicap-accessible ramps
  • Fabricating metal cylinder pallets
  • Fabricating new doors for a local restaurant

The students also make products for sale to raise money for the program. These products have been designed and patented by Hernán Luis y Prado. One is a set of leveler plates used to level machines on the shop floor, and the other is a machined skate used for moving machines and other heavy equipment around in a shop. Another product is a cofferdam designed specifically for use by the Navy to plug up battle damage in a ship hull until a ship can get to port to be repaired.

On May 24th, Hernán Luis y Prado was one of the 11 veterans honored as the Champions of Change by the White House Office of Public Engagement for the week of May 21st. The individuals honored that week had shown continued support for efforts to end veterans’ homelessness, boost veterans’ employment, treat problems with substance abuse, and develop treatment programs for those dealing with PTSD. In early 2011, the White House created the Champions of Change program to recognize ordinary Americans across the country that are doing extraordinary work in their communities.

On July 5, 2012, Goodrich Foundation announced that it awarded Workshop for Warriors (WFW) $100,000 to support its program that provides job training and skill certification to U.S. veterans at no cost to students.

“One area of our giving focus at Goodrich is to honor the men and women who serve their country in the armed forces,” said Marc Duvall, president of Goodrich’s Aerostructures business. “Enabling Workshops for Warriors to provide much-needed job training to veterans one of the best ways that we as a company can tell our veterans, ‘Thank you for your service.’” Hernán Luis y Prado said, “America is hungry for manufacturing employees; there are more than two million unfilled manufacturing jobs in the U.S. right now, Hiring our graduates is a win-win for this country and the people who served it. We want to be a major driver for retraining the world’s greatest fighting force into the world’s most modern manufacturing force.” The Goodrich Foundation grant will be used to hire additional instructors in order to increase the number of graduates from Workshops for Warriors.

The Society of Manufacturing Engineers also donated $25,000, recently provided another $5,000 towards getting NIMS certification for their welding training, and connected WFW to the Gene Haas Foundation. On September 11, 2012, the Gene Haas Foundation, formed in 1999 by SHR co-owner Gene Haas, has announced a grant of $50,000 to Workshops for Warriors.

In addition to the grant, Haas Automation has also entrusted the program with four state-of-the-art Haas-CNC machines and made a donation of eight training simulators with a value of $444,000 to WFW.

To help get national exposure for Workshops for Warriors, the logo for Workshops for Warriors was featured on the Stewart-Haas Racing car No. 39 driven by Ryan Newman at the GEICO 400 NASCAR® race that took place at Chicagoland Speedway on Sept. 16, 2012. Mr. Newman said that while his goal is to be the best of the rest, “his No. 39 Chevrolet carries a special paint scheme this weekend that recognizes an organization whose goal is to assist veterans in job training and helps them create the best post-military-service life possible. It’s called Workshops for Warriors and it was founded in San Diego, Calif., by U.S. Navy veteran Hernán Luis y Prado, who recognized and acted upon the need to help veterans find jobs after leaving military service.”

To date, the list of companies and organizations that have donated equipment, materials, and supplies not mentioned already includes, but is not limited to, Betenbender Manufacturing, Inc., Industrial Metal Supplies, MasterCAM, Microsoft, R-K Press Brake Dies, Inc., Sandvik, Scotchman, SolidWorks, and Torchmate. All we hear about in the news media is that corporations are only interested in maximizing profits and here we see evidence of them being generous to a fault to help a veteran realize his dream of helping other veterans.

Since October 2011, Workshops for Warriors has served 109 veterans, of which 57 veterans have graduated from the program for manufacturing jobs like welding and fabricating. The organization currently has a 100 percent job placement rate for its students. These veterans have earned 129 certificates (multiple certificates are available to each veteran.) The cost of tuition and all necessary classroom materials is free.

Because San Diego is a Navy/Marine region, the majority of the veterans that have applied to the program have been Marines (48 percent) and Navy (26 percent.). One percent served in the United States Air Force, and 13 percent were from other services such as National Guard and Coast Guard. Nearly all, 98 percent were enlisted men.

WFW welcomes companies interested in supporting our service members and their families and is looking forward to partnering with industry leaders, companies, and local businesses in order to provide training and employment opportunities for our veterans. If you would like to give back to our veterans, you can help by donating money or equipment to WFW. WFW is especially interested in fabrication, welding, and industrial companies that would like to assist in furnishing equipment, training, expertise, lessons learned, or supplies.

Workshops for Warriors has confidence that the young men and women exiting military service, once given the proper training and experience, will be able to re-integrate seamlessly into the civilian workforce.  Your support will help WFW facilitate access to good jobs for these Americans who have served their country and help them easily transition their commercially viable work experience to the manufacturing industry.