The manufacturing industry is like the seat of a three-legged stool. One leg is manufacturers and what they can do to “save themselves.” The second leg is people and what they can do as entrepreneurs, business owners, employees, consumers, and voters. The third leg is what government at all levels can do by means of tax policies, regulation, incentives, and national trade policies. This stool has been toppled over because only manufacturers have been trying to “save themselves.” It will take the cooperative effort on the part of all three “legs” to save American manufacturing.
People are starting to wake up to the importance of manufacturing to the American economy. They have already woken up to the fact that we’ve lost too many manufacturing jobs and that is causing our unemployment rate to stay so high. They are waking up to the need to revitalize, rebuild, re-invent American manufacturing to “save” it.
On September 28, 2010, a Conference for the Renaissance of American Manufacturing was held in Washington D. C. attended by more than 200 manufacturing executives, legislators, union leaders, trade policy experts, and state and federal officials. At this conference, Sen. Don Riegle Jr. of Michigan warned that the U. S. economy is on a “downhill trajectory” and “going at a velocity that is very dangerous… The people are screaming to the elected officials that they think we are on the wrong path – because we are on the wrong path.”
Gilbert Kaplan, president of the Committee to Support U. S. Trade Laws, said, “The decline of American manufacturing happened not because of some inevitable shift to a post-manufacturing economy as some argue, but because the United States has picked the wrong policies and not paid attention to preserving and growing manufacturing. American urgently needs unequivocal and bi-partisan policies in support of reviving manufacturing, with clear performance goals and timelines for action.”
After the Conference, the Committee to Support U. S. Trade Laws, the Economic Strategy Institute, the New American’s Foundation’s U. S. Economy/Smart Globalization Initiative, and other groups released a Statement of Principles, recommendations for major reforms to the U. S. trade system, and recommendations for five specific legislative initiatives to revive American manufacturing.
The Statement of Principles included:
- Changing tax policies so that manufacturing in the United States is encouraged, not discouraged, and making sure that imports pay their fair share of taxes
- Creating tax policies that foster manufacturing investment by strengthening R&D and capital investment, and allowing for accelerated depreciation
- Providing grand and low-interest loans to companies that manufacture in the U. S. (as long as other countries’ governments are providing assistance to their industries)
- Encouraging a change in corporate culture so that manufacturing in the U. S. becomes a primary objective, and moving plants off-shore is discouraged.
Some of the recommendations for reforms to the U. S. trade system are:
- A “plus jobs and plus factories” requirement for all existing trade agreements and future agreements, in which it can be shown that the agreement on a net basis has created or will create jobs and factory builds in the U. S.
- A commitment to balance trade in the U. S. by a date certain in the future
- Stronger, sustained trade action against foreign subsidization of manufacturing
- Creation of an unfair trade strike force within the U. S. government
- Addressing the fact that many imported products are not bearing environmental and health care costs
The five specific legislative initiatives recommended are:
- Legislation to countervail currency undervaluations and enhance enforcement of trade case orders
- Rewriting U. S. trade laws in the next session to bring them up to date, deal with the realities of the 21st century, and make sure they are effective in preserving and reviving U. S. manufacturing
- Rewriting tax laws to encourage manufacturing in the U. S. to ensure that imports pay their fair share of taxes and encourage R&D and capital formation for manufacturing
- Altering the governmental policy apparatus to provide a voice for manufacturing at senior levels
- Passage of a Manufacturing Education Act that will develop target vocational and technical training programs at both the secondary and post-secondary level in order to strengthen manufacturing education, and funding programs and institutions to improve the skills of career-changing adults interested in manufacturing jobs.
The first thing needed to solve a problem is to recognize that you have a problem. Now that key leaders in industry and government recognize that we have a serious problem, we need to work together to solve it. As Andy Grove, senior advisor to Intel and CEO/Chairman from 1987 until 2005), said, “…the imperative for change is real and the choice is simple. If we want to remain a leading economy, we change on our own, or change will continue to be forced upon us.”
Intel has made their choice and announced it will build a new R&D wafer fab in Hillsboro, Oregon and upgrade other existing U. S. facilities for a total investment of between $6 billion and $8 billion. What will your choice be – reviving American manufacturing or enhancing China’s dominance?