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. 


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.


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.


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. 


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.



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