Six months ago the American Recovery and Reinvestment Act, the federal “stimulus” package, was expected to jump-start a virtually stalled economy. The estimated $787-billion outlay was meant to invigorate manufacturing and construction by delivering the capital needed to proceed with “shovel ready” programs. Then, these projects were to revive demand for materials, components, and services, which would boost industrial activity overall, support employment, and encourage consumers to resume spending.
It hasn’t worked. Government is a booming business, but manufacturing remains stalled.
The president of AMT - The Association for Manufacturing Technology, Douglas K. Woods, in July told a U.S. House panel that the stimulus has had little or no effect on manufacturers. He said the Act’s business tax provisions are too narrow to encourage new equipment investment, to offset some companies’ losses, or to induce the confidence that manufacturers need for short-, medium-, and long-range planning.
Expressing a concern common to all manufacturers, the AMT president further testified that “without a strong manufacturing technology base in America, the United States will end up trading our dependency on foreign oil for a new dependency on foreign technology.”
Woods is right on the facts and he may be right in his prediction, but he’ll never convince government officials (federal, state, or local) to adopt his concern about the future of manufacturing. Their expectations, and their agendas, are different than his.
It isn’t just the AMT, a group that represents many machine shops. Trade and labor organizations have been making similar points for years, raising concerns about the long-term disadvantage created by the government’s failure to “support,” “promote,” or “strengthen” the domestic manufacturing segment. Ad hoc groups like the Alliance for American Manufacturing and the U.S. Business and Industry Council routinely criticize federal policies that they say devalue the efforts and output of domestic industries.
Domestic products are undercut by imports, and domestic workers are unfairly challenged by off-shore laborers.
The argument is that manufactured products are better exports than services, consumables, or other domestic offerings, because they hold value. As such, they represent a stronger global presence. Thus, manufacturing should be a larger component of our economy overall. Last month, General Electric Corp. chairman Jeffrey Immelt declared that the U.S. should aim to have 20% of all employment based in manufacturing companies. It’s a strategic issue, argue these advocates, but obviously it’s also a personal (and personnel) concern.
Testifying to Congress is fine, but that same audience failed to grasp why their disbursal of federal money would not stimulate industrial activity. They don’t see that “manufacturing” is a complex of actions and reactions driven by millions of decisions, risks, and innovations. It’s not a project that they can start or stop.
Federal and state officials see manufacturing as a means, not an end. It’s a method of employment for their constituents, a mechanism for generating income in their districts and an election-season reminder of their service. Government officials view manufacturing as an issue they can “fix” with policies and programs, in order to create a reliable source of tax revenue: payroll taxes, sales taxes, income taxes, and now, in the minds of certain federal officials, carbon taxes. Manufacturers are tools for them to use to execute their own agendas.
They have their goals, and manufacturers should, too. Immelt’s idea is fine, but high employment is no indication of success or progress. Legislators could mandate hiring on that scale, just as they propose to cap industrial carbon emissions, just as they aimed to stimulate industrial activity with federal spending. Their mandates would not ensure performance. It’s just as likely they would impede expansion or innovation.
Manufacturing’s advocates should continue stating their case, but relying on state and federal officials to act in support of manufacturing is counterproductive. It invites officials to get involved in manufacturers’ decisions. It encourages them to take positions they don’t understand, or to make choices they don’t appreciate. Worse, it invites them to co-opt the manufacturing agenda.