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Home / I=
ssues=20
- =
Competitiveness / U.S.=20
Manufacturers Face a Global Crisis |
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U.S.=20
Manufacturers Face a Global Crisis =
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Written=20
On: October 06, 2006 |
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There's an old =
saying=20
about "fighting with one hand tied =
behind your=20
back." It means that you=92re at an =
unfair=20
disadvantage. What makes it even worse =
is when=20
people in your own corner keep =
tightening the=20
knot rather than loosening it so you =
have a=20
chance to survive and =
win.
Nowhere is=20
that more true than with America's=20
manufacturers. Once the backbone of the =
American=20
economy, today they are under increasing =
pressure from foreign competitors who =
pay lower=20
wages and have fewer costly regulations. =
Yet in=20
the United States, the amount of money =
it takes=20
to make products keeps rising. =
U.S.=20
manufacturers are doing everything they =
can to=20
cut their costs and become more =
efficient, but=20
today the problem is "external costs," =
meaning=20
costs over which employers have no =
control.=20
Those are things like taxes, mandated =
employee=20
benefits, liability insurance and =
lawsuits,=20
energy prices, and regulatory=20
costs.
According to the National=20
Association of Manufacturers (NAM), the=20
situation is bad and getting =
worse.
In a=20
2003 study, NAM found that external =
costs added=20
22.4 percent to U.S. manufacturers=92 =
production=20
costs compared to their nine global =
competitors;=20
countries such as Canada, Japan, China, =
South=20
Korea and Mexico.
The most recent =
study=20
shows that those costs have escalated=20
dramatically and now add 31.7 percent to =
U.S.=20
manufacturers. That=92s a whopping 42 =
percent=20
increase!
Everyone, especially =
our=20
elected officials and government =
bureaucrats,=20
must realize manufacturing today is =
competitive=20
worldwide. It is virtually impossible =
for U.S.=20
producers to pass that increase along =
through=20
higher prices. In fact, prices in the =
global=20
marketplace are virtually flat. For =
example, in=20
the last decade, manufacturing prices =
have=20
increased only 4 percent, while prices =
in=20
construction, health care, education and =
other=20
non-manufacturing sectors increased =
nearly 60=20
percent.
The stakes are enormous. =
Manufacturing in the U.S. generates =
about $1.4=20
trillion a year, or about 12 percent of =
our=20
gross domestic product, and supports 20 =
million=20
family-wage jobs with good benefits. It =
accounts=20
for 75 percent of our industrial R&D =
(research and development) and =
two-thirds of=20
U.S. exports of goods and=20
services.
Washington is a leading =
manufacturing and exporting state. We =
make and=20
send abroad everything from airplanes to =
18-wheelers, irrigation systems to =
digital=20
voltage surge relays, and bottled apple =
juice to=20
frozen french fries. Our state also is a =
high=20
cost state when it comes to state and =
local=20
regulations, taxes, unemployment =
insurance,=20
wages and the minimum wage. In the past, =
our low=20
and reliable electric rates gave us an=20
offsetting advantage. Today electricity =
is no=20
longer cheap, and the supply is in =
question.=20
If we do not reverse the trend, =
those=20
jobs for our children and grandchildren, =
as well=20
as the American-made products we prefer, =
will be=20
lost to foreign competitors.
So, =
what=20
should we do?
The first step is a =
comprehensive energy policy for our =
state and=20
nation which develops all sources of =
energy=20
which encourages domestic exploration =
for gas=20
and oil, development of clean coal and =
safe=20
nuclear power, and continues to promote=20
production of wind and solar power. =
In=20
addition to a comprehensive energy =
policy, NAM=20
has outlined a series of actions =
Congress must=20
take if U.S. manufacturers are to regain =
their=20
competitive edge:
* Invest in =
basic=20
and cutting edge research
* Promote =
science=20
and math education
* Focus skilled =
worker=20
training in critical areas
* =
Reauthorize the=20
R&D tax credit
* Repeal the death =
tax
* Make current tax cuts =
permanent
*=20
Expand health savings accounts
* End =
frivolous lawsuits
* Support fair =
trade=20
policy for U.S. exporters
* Bring=20
environmental costs in line with global=20
competitors
U.S. =
manufacturers are=20
already doing their part to remain =
competitive=20
through innovation, worker training, and =
new=20
equipment. Now it is time for elected =
officials=20
to do their part to lower the costs so =
American=20
employers can fight back with both =
fists. It=92s=20
the only way manufacturing =
survives.
To=20
review the new NAM report, log on to=20
www.nam.org/costs. =
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