27 September 2012 10:53 [Source: ICB]
With investment in US manufacturing on the verge of an upturn, the recent blueprint for economic growth from the National Association of Manufacturers (NAM), looks well timed. The blueprint, "Manufacturing Renaissance: Four Goals for Economic Growth", was rolled out in late 2011, says Jay Timmons, CEO and president of the Washington, DC-based organisation since early 2011.
"Shale is a game changer - unless Washington gets in the way"
Succinctly, the four goals are:
According to NAM, the US is the world's largest manufacturing economy, producing 22% of the world's manufactured products, employing nearly 12m workers and contributing more than $1.60 trillion (€1.27 trillion) to the US economy annually.
But "employment growth is nowhere near where it should be", says Timmons, who has been with NAM since 2005. "The recent 1.5% growth in GDP, and the 13m Americans that remain out of work, are yet more indicators that our economy is bogged down," he adds.
FOCUS ON MANUFACTURING
The November presidential election raises concerns for the association: "Both [Obama and Romney] have been talking a lot about manufacturing. They both recognise the role manufacturing plays in our larger economy," says Timmons.
However, he adds: "It is 20% more expensive to manufacture in the US compared with our major trading partners. Both candidates need to offer solutions for reducing that cost differential. That means working to lower the corporate tax rate, reduce regulations, increase free-trade opportunities and increase domestic energy production."
Meanwhile, for many chemical manufacturers, the shale gas boom has been a tremendous boon, Timmons notes. "It's important for states to remain the primary regulators of shale gas development. Shale is a game-changer - unless Washington gets in the way," he adds.
"NAM urges both candidates to support the policies for manufacturing growth laid out in blueprint to ensure that government advances policies that will help manufacturers create jobs," says Timmons.
A number of regulatory issues continue to vex NAM. "Manufacturers support a balanced regulatory system, but the agenda being driven by the US Environmental Protection Agency (EPA) is anything but." Timmons points to regulations such as the EPA's Utility Maximum Achievable Control Technology (MACT) standards, Boiler MACT, New Source Performance Standards (NSPS) for air quality management, Cement MACT, and coal ash and greenhouse gas regulations as "causing uncertainty for our nation's job creators and making this country less competitive."
Additionally, says NAM, developing North American energy resources is vital to US energy independence and economic growth. "Manufacturers are leading the way in energy efficiency and developing new energy sources," says Timmons. "Only by supporting an 'all-of-the-above' energy strategy can we meet future energy demands."
Another manufacturing issue heating up in this election year is the high corporate tax rates in the US. "We now have the highest corporate tax rate in the world. It's difficult to compete globally when you're faced with this large tax burden," says the NAM CEO.
He refers to the looming 1 January fiscal changes - where taxes will rise and spending will be cut if Congress and the president do not act - as a "fiscal abyss," adding, "about two-thirds of manufacturers operate as S-corporations, meaning they pay taxes at individual rates.
"On January 1, these businesses will be hit by a top marginal tax rate of nearly 40%. This uncertainty means that manufacturers are waiting to see what Washington will do before making any investments or hiring new employees. Unless Washington lives up to its responsibility and extends current tax rates and averts devastating defence cuts, the economy will likely continue to stall."
While manufacturing has remained a bright spot in the US economy with strong production in durable sectors, Timmons notes "the uncertainty [makes] them nervous. In order to drive our economic growth, manufacturers need to be able to make investments in their operations and workforce - something they cannot do unless Washington addresses our major fiscal issues."
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