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MANUFACTURING POLICY
STATUS
Companies based in the
U.S., and particularly those of small and medium-size, have
seen an unwelcome shift in their fortunes since the
millennium, with some slight rebound in 2004. In many
U.S.-based manufacturing segments, as much as 30 percent of
the companies have gone out of business; many more are hanging
on by a thread. Employment in manufacturing has plummeted.
America has had as many as 365,000 manufacturing companies at
the peak in the 1990's, and all but 15,000 of them fall within
the Small Business
Administration's definition of a small business.
FIVE PRINCIPLES:
1. The SBLC
believes in the free enterprise system of organization,
whether it is in the United States, the Americas or anywhere
in the world. That belief leads us to the conclusion that
competition should be open…but fair.
2. The SBLC is
in favor of open markets and is against trade barriers
and tariffs. SBLC has, therefore, generally
supported free trade initiatives as long as there was a
prospect for fairness over time. Within the North
America Free Trade Agreement (NAFTA), trade barriers, for the most part, have come down, and
fairness is increasing in the relationships, although the
Mexican economy remains an underdeveloped economy.
3. The SBLC
believes, however, that the U.S. faces an unfair
trading system on the global front. SBLC believes that the
inappropriate involvement of governments in the trading
system, while necessary for some functions, has been corrupted
by political objectives in more cases than not. Whether it is
the European Union, China, Taiwan, South Korea or Japan, in
order to accomplish domestic political objectives, those
governments' entities have interfered with free enterprise and
distorted the competitive advantage in favor of their domestic
competitors.
4. The SBLC
believes that the China market represents both an opportunity
and a threat. It is an opportunity because of its population
and potential market for product. It is a threat because of
its underdeveloped status and its governments inappropriate
involvement to make it a global manufacturing base.
5. The SBLC
believes that the response to China and other trading nations
with inappropriate government involvement in the trading
system is to have those governments reduce their role
and to have the U.S. government addresses the problem of the
small and medium-sized manufacturers in a pro active manner.
THREE PART ACTION PLAN:
SBLC proposes that the
involvement of the U.S. Government to address the problem of
the small and medium-sized manufacturers include the following
policies:
First: The SBLC believes that the mission of the
U.S. Department of Commerce needs to change. It has
become a trade assistance department for transnational
companies that use the U.S. as a base for their global
operations. It should be providing extensive extension
services to small manufacturers to help them compete,
particularly against competitors in countries where their
governments are helping them. For example, to sell an
airplane in Europe or Asia, U.S. aerospace companies
have to agree to manufacture a minimum of 50 percent of the
plane in the purchasing country or region; this has an
immediate negative impact on the many small business,
U.S.-based subcontractors and suppliers. In contrast,
there is no such requirement when the U.S. Coast Guard buys
all of its helicopters from the European Union.
The
newly created Assistant Secretary for Manufacturing and
Services needs to focus on helping small and medium- sized
manufacturers. This is only a start to the change of
direction the Department has to take.
Second: SBLC believes that the U.S.
trade negotiators at future World Trade Organization
(WTO)
ministerial meetings need instruction to accomplish three
objectives.
A) Do not
negotiate away existing U.S. trade laws without the
establishment of true mutual free and fair trade agreement,
B) Insist on
uniform and complete enforcement of the WTO regulations and
rules on all countries, and
C) Provide for
the acceptance of international environmental and labor
standards in trade and tariff deliberations.
SBLC recognizes that there is an inclination on the
part of the Administration to use U.S. trade concessions and
limited sanction of the WTO rules to achieve geo-political
goals. These compromises hurt the small and medium-sized
manufacturer in the U.S. and must stop.
Third: The SBLC believes that the U.S. government
must insist that the pegging of currencies to the U.S. dollar
must stop. This represents the most egregious form of
government intervention in the trading system and a country
such as China uses it with impunity to give their
domestic manufacturing base a 30-40 percent price advantage in
the global market. Japan, Taiwan, and South Korea are also
guilty of this type of currency manipulation.
OBSERVATIONS:
SBLC will weigh all of these factors as it considers:
-
whether to continue support of the Administration’s Trade
Promotion Authority for the future, and
-
whether to support individual and group trade agreements
made by the Administration.
With this three-part action plan accomplished, this
country would make substantial progress toward a world
trading system that is fairer and closer to the ultimate free
enterprise model in which we all wish to work. SBLC
urges the White House, the Trade Representative, Treasury,
Commerce and the Congress to work aggressively on all of these
points.
Congress has to understand that America cannot survive and
thrive as a service economy. Manufacturers are big consumers
of all services; and, if manufacturing leaves for foreign
countries, all the service providers will follow.
Manufacturing generates wealth, and without that function you
cannot buy services.
Manufacturing provides not only economic growth but also
national security for the U.S. Where would this country be if
Congress continues to outsource the country's defense work or
the components used to make weapon systems?
In
addition, Congress must be conscious of the cost it continues
to impose on manufacturing operations in the United States
through well-intended yet burdensome legislation and
regulations. Whether it is the cost of insurance of all
kinds, increased regulation, increased taxes at the state
level, inaccessibility of capital, inaccessibility of defense
and government contracts, tariffs on consumables needed by
small and medium sized manufacturers or other trade barriers,
industry needs relief.
Manufacturing is known for its innovations, its use of
technology and its persistent pursuit of more efficient
productivity to increase competitiveness. A well-trained and
highly skilled workforce is a key part of that equation, but
manufacturing needs to change its negative perception to
attract the worker of tomorrow into an
environmentally-friendly, high technology workplace with real
career opportunities.
The same marketing awareness should be part of the program to
build upon manufacturing's position as the major (62 percent)
contributor of the nation's innovation and R&D, not exporting
that vital component offshore.
One
of the most protracted problems that manufacturers face is the
lack of new skilled workers to operate their facilities.
Despite the recent economic growth, a shortage of qualified
job candidates in manufacturing for both large and small
companies still exists, and not just for engineers and IT
workers. Now the more pervasive problem is the need for
production workers, machinists and craft workers, who are
skilled enough to work in the manufacturing jobs of the 21st
century.
SUMMARY
SBLC wants the U.S. government to stop giving away our
competitive advantage. We are not asking for protection, only
a fair trading system. Stop letting less developed countries
off the hook on the international trading rules; stop allowing
other governments to peg their currencies; and stop imposing
costs on small and medium-sized companies through taxes and
regulations without any help on financial or procurement
set-asides that are ignored by government agencies.
The
nation needs to preserve a manufacturing infrastructure
so future generations can have high value-added jobs in
the United States.
I24100807
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