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Policy changes essential for U.S. industry [Dayton Daily News, Ohio](Dayton Daily News (OH) Via Acquire Media NewsEdge) April 14--A growing national consensus that American industrial power and innovation has slipped to an unacceptable level has powerful implications for the Miami Valley, a region pummeled by the loss of manufacturing. A coalition of 18 groups representing industry, professional, economic development and labor unions signed a charter urging President Obama and Congress to commit to policy changes that will grow manufacturing or risk presiding over steep industrial decline. The charter, bolstered by alarming new research, supports local economic development goals like reindustrializing 1 million square feet of vacant factory space in Moraine. Decline has battered signature Ohio industries with one study showing domestic manufacturers being squeezed out of home markets by foreign imports, including state staples such as cutting tools, mold building, machine tools and auto parts. "The pendulum has swung too far," said Gary Conley, president of TechSolve, a state-supported manufacturing development nonprofit in Cincinnati and Dayton. "People have woken up to the fact." Steve Budd, president of CityWide Development, the city of Dayton's economic development arm, agrees. "There seems to be a real movement here," he said. "Folks are coming around to not just the need, but the necessity, for the U.S. to stay strong." On March 27, the Second Annual Conference on the Renaissance of American Manufacturing held in Washington featured representatives from the Obama administration, Mitt Romney and Rick Santorum campaigns, U.S. Sen. Rob Portman, R-Ohio, chief executives, and representatives from labor, think tanks and trade associations. Richard McCormack, editor of specialty newsletter Manufacturing & Technology News, said all agreed "the renewal of American manufacturing should be a top economic priority." New discussion The biggest question is whether a policy shift is truly brewing or presidential election year ploys are in play to win votes in the industrial heartland. McCormack, who has covered the impact of industrial and technological offshoring since 1987, fears the worst. At the same time, he said, the weight of new, detailed economic studies has altered the discussion. "It's beyond a crisis and we are living on borrowed time," he said. "If we don't get our trade deficit under control and create good industrial jobs and make what we are consuming, the gig is up." The "Charter for Revitalizing Manufacturing in America" was organized by the bipartisan Information Technology & Innovation Foundation. The advanced tech and economic policy-focused think tank called the charter a way to combat "a dangerous sense of complacency" in top federal policy making circles and was signed by representatives from the Council on Competitiveness, International Economic Development Council, Association for Manufacturing Technology, AFL-CIO, National Council for Advanced Manufacturing and the Manufacturers' Alliance, among others. Signatories agreed that the U.S. should become a net exporter of manufactured goods again, rather than a net importer which stifles job creation, and promote tax, trade, and technology reform that support technology development--from R&D, invention, and innovation, to scale-up. The House Subcommittee on Commerce Manufacturing and Trade plans a hearing Thursday. "We are doing everything we can not only to grow new jobs but protect the ones we have," said Ken Johnson, spokesman for committee chairwoman Rep. Mary Bono Mack, R-Palm Springs. Rick Little, president of Starwin Industries, a Kettering aerospace and defense contract manufacturer, is pleased by the national attention. "Manufacturing is trying to pull the economy back up, but they have gutted us so much it's tough to do when you have only 12 percent of the economy. Manufacturing is essential to the economy and finally the government is starting to see it," he said. Aric Newhouse, top lobbyist with the 12,000-member National Association of Manufacturers and a former staffer of former U.S. Sen. George Voinovich, R-Ohio, sees promise. "Manufacturers feel like we are on the verge of a renaissance," he said. "We need a lot of good decisions coming out of Washington to make that renaissance become a reality." Widely published manufacturing expert Jerry Jasinowski, who served for 14 year's as NAM's president, said this time appears to be different with the public recognition that manufacturing has led the slow recovery. "There is more support for manufacturing in terms of its importance to the economy," he said, with open support from the president and top GOP challengers. Long, slow decline The ITIF concluded the U.S. is not in a boom-and-bust cycle as in the past but a structural decline similar to Britain's in the 1960s and 1970s when it lost industrial leadership. It said the U.S. has been out-foxed by foreign competitors who receive heavy underwriting by their own governments and successfully employ aggressive trade tactics that are not countered. Dayton has retained defense and medical device manufacturing -- industry in part because of national security is unlikely to move abroad. That could be the foundation for rebirth. Wright-Patterson Air Force Base, as well, is a national center for defense research and development and is a hub of Air Force procurement and logistics. In one recent example, imports can endanger troops, a March U.S. Government Accountability Office report said, adding that a dozen counterfeit military equipment parts were bought from Chinese vendors by government investigators. Foreign counterfeits also slip in with lower-grade steel purchased to armor military equipment, an issue prompting U.S. Sen. Sherrod Brown, D-Ohio, to propose legislation requiring steel purchased by the U.S. military be entirely U.S. made. "What we discovered flies in the face of nearly all the reporting and commentary on manufacturing and reveals a disturbing truth," ITIF President Robert D. Atkinson said. "U.S. manufacturing jobs have been lost not simply because the sector is more productive. It is producing less. And unlike some high-wage nations, America is not replacing low-value-added manufacturing with high-valued-added manufacturing or opening new plants to replace closed ones. There is difference between restructuring and decline. American manufacturing is in decline." ITIF said that from 2000 to 2010, flawed data overstated U.S. manufacturing labor productivity growth by 122 percent. Moreover, manufacturing output, instead of increasing, fell by 11 percent over the period. Technology-intensive U.S. manufacturing, and the high-wage jobs it generates, is becoming as vulnerable to foreign competition as labor-intensive industries like garments, shoes, and toys that have largely gone abroad, said Alan Tonelson of the U.S. Business and Industry Council. Tonelson, using U.S. Census industrial data, found that in 2010 imports controlled an all-time high 38 percent of the $1.63 trillion American market for advanced manufactured goods. That was 8.6 percent higher than the 35 percent taken by imports in 2009 -- the second fastest annual rate of increase on record. U.S. manufacturing markets in 2010 with 50 percent or greater import penetration included semiconductor production equipment; electricity measuring and test equipment (critical for producing information technology hardware); turbines and turbine generator sets; metal-cutting machine tools; and mining machinery and equipment. In 1997, the first year for which these import penetration rates can be calculated, foreign-made goods controlled only 24.49 percent of these markets, Tonelson said. "Industries with falling shares of their own home market are industries in serious trouble," Tonelson said. "That goes double when their home market is the world's largest and most competitive. The sales they have lost go far toward explaining why America's growth and hiring recoveries continue lagging." Scott Paul, executive director of the business-labor supported Alliance for American Manufacturing, cites figures showing manufacturing employment gained 472,000 jobs since the start of 2010 -- 120,000 of them gained in 2012. "It's clear from this jobs report that manufacturing is playing an outsized role in driving the economic recovery in America. The policy lesson should be clear: investing in manufacturing will pay off with more and better jobs for American workers." ___ (c)2012 the Dayton Daily News (Dayton, Ohio) Visit the Dayton Daily News (Dayton, Ohio) at www.daytondailynews.com Distributed by MCT Information Services |