W&WP November 2003

One on One:

New Coalition Fights for Manufacturing's Future

The National Assn. of Manufacturers launches a far-reaching campaign to amass support for bolstering American manufacturing.

By Rich Christianson

The National Association of Manufacturers has embarked on what might be its most ambitious campaign yet to rally support for reversing the precipitous decline of U.S. manufacturing.

Having witnessed the loss of 2.8 million manufacturing jobs since July 2000, including nearly 35,000 in the furniture industry, the NAM Board of Directors officially established the Coalition for the Future of Manufacturing in September.

Bill Canis, executive director of NAM's Manufacturing Institute, describes the coalition as "the advocacy arm of NAM's Campaign for Growth and Manufacturing Renewal, a long-term initiative that seeks to create a more favorable climate for manufacturing."

The coalition's formation is in reaction to the white paper, "Securing America's Future: The Case for a Strong Manufacturing Base," that NAM released in June. In it, author Joel Popkin correlates the strong connections between manufacturing, innovation and maintaining the U.S. high standard of living. If manufacturing continues to slip away, Popkin argues, U.S. growth, prosperity and national security will suffer.

A major focus of the coalition is educating the public and elected officials about manufacturing's importance and impressing upon them the need to take actions that can make U.S. factories more globally competitive. Legislative actions recommended by the coalition include:

* "Level the international playing field by ensuring that foreign countries, particularly China and other major trading partners, reduce trade barriers, comply with international trade rules and allow markets to determine exchange rates.

* "Reduce the cost of producing in the United States, including containing health-care costs; enacting legal reforms; ensuring adequate and affordable energy supplies; and reforming the regulatory process to more effectively assess cost and benefits and the impact on industry.

* "Promote innovation, investment and productivity through tax reforms that encourage investment and R&D; domestic and international tax rules that keep U.S. manufacturers competitive and promote award investment; and strengthened government R&D programs.

* "Ensure an adequate supply of skilled workers through greater emphasis in our schools and technical education, including engineering and science; strengthened implementation of the Workforce Investment Act and expanded business-government partnerships; and a redirecting of federal programs to better assist displaced workers."

In the interview that follows, Canis discusses the coalition's formation, mission and efforts to successfully fulfill its stated goals.

 

Has NAM established any membership goals for the coalition? Are all members of NAM automatically included in the coalition? Who else is eligible for membership?

The coalition hopes to enroll thousands of manufacturers, manufacturing associations, allied businesses and nonprofit groups to rally elected officials for a more robust pro-manufacturing agenda. Hundreds of companies and associations have signed up so far and many more are adding their names every day. Right now, the coalition needs to be publicized far and wide. Just because an association signs up, that doesn't mean we don't want to list its member companies that support the coalition. We hope to have thousands of manufacturers and their allies, so we can publicize the size and breadth of the coalition in ads on Capitol Hill.

NAM members are not automatically included; companies have to give us their permission to be added.

We will definitely be looking for non-members and even non-manufacturers, to show that the concern for manufacturing goes well beyond our industry. For example, the International Economic Development Council has joined the coalition, because local economic development officials know that manufacturing is the anchor for any growth in a community. Similarly, we will welcome banks, wholesalers and others that want a strong manufacturing sector. We encourage NAM members to solicit membership from others in their community who share our goals.

 

The coalition has a very broad agenda. It stretches from a grass roots approach that urges manufacturers to raise the profile of manufacturing's importance on the local level through lobbying Congress for help. How does this campaign compare with other past NAM actions to save U.S. manufacturing and jobs?

NAM's mission is to speak loud and clear for U.S. manufacturing and it has done that since it was first founded in Cincinnati in 1895. With 14,000 corporate members, including 10,000 small and medium companies, and 350 associations such as the Illinois Manufacturers Assn., NAM's legislative agenda has always focused on pro-growth policies that enhance the competitiveness of manufacturers.

The coalition will give us a much broader voice, as I mentioned before, including organizations that are not now NAM members. When a congressman is visited by a manufacturer, a wholesaler and the local economic development official all at once, with the same message, he or she will take a stronger interest in our message. Moreover, with the aid of the Manufacturing Institute, the coalition's educational efforts will surpass anything we've accomplished in the past.

Americans must gain a better understanding of the important role manufacturing plays in raising our living standards.

 

The white paper strongly attributes the loss of manufacturing jobs in recent years to imported goods. This is not necessarily a new phenomenon. Other industries, such as, auto, textiles and consumer electronics have been stung in past decades by imports. Why is the coalition being formed now? Why wasn't this type of campaign mounted sooner?

NAM has not historically opposed imports into the United States; competition from foreign imports has long driven U.S. manufacturers to higher levels of innovation and productivity. Indeed, the American economy flourished in the 1990s as U.S. manufacturing exports to the world doubled.

The difference today is that not only is global competition more intense than ever, but structural changes in manufacturing are threatening the entire sector. When it was apparent that the 2001 downturn was structural and not cyclical, NAM established the Campaign for Growth and Manufacturing Renewal to begin raising awareness among elected officials everywhere. Much of the present global competition is, of course, based on foreign trade practices that violate international trade rules.

Just as important, while facing stiff global competition U.S. manufacturers are hamstrung by inordinately high costs of doing business in the U.S. In fact, we believe uncompetitive conditions at home are the number one reason manufacturing output is down and jobs are vanishing. For example, the cost of regulation is $8,000 per employee in manufacturing, twice as high for U.S. businesses as a whole. Overseas, such regulatory costs are often much lower. Similarly, costs of litigation, taxes and energy are often lower abroad than here. Our next study, due out next month, will give us all new ammunition on "How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness."

The coalition will focus on all of these concerns - lowering the cost of producing in the United States, leveling the international playing field, and promoting innovation and investment in this country.

 

China has drawn the greatest amount of attention for usurping domestic manufacturing, including in the furniture and wood products industry. What specific actions does the coalition recommend be taken to help U.S. manufacturers compete with goods imported from China?

The coalition will continue the strategy that NAM laid out earlier this year: To lobby administration officials and congressional leaders to put pressure on China to change the valuation of its currency and to comply with World Trade Organization rules. An issue that didn't exist in January has now become a top priority for the Bush Administration. In late October, Commerce Secretary John Snow went to Beijing to personally press the Chinese for a change in these important areas. At the same time, Congress is preparing to pass a resolution demanding similar changes on the part of China. On other actions dealing with China, the coalition's executive committee and members will shape its direction.

 

What one or two items on the coalition's agenda might have the greatest impact on helping improve U.S. manufacturing competitiveness and why? How "doable" are they?

The coalition's top policy items are based on two criteria: Which challenges most undermine our competitiveness, and which proposed policies are most achievable. Based on input from our members, we have identified four changes that would most immediately benefit our manufacturing sector, and which we believe are achievable in 2003-04.

The first concerns Chinese currency. By pegging their currency to the dollar and refusing to allow the market to determine its value, the Chinese have ensured that their goods are up to 40 percent cheaper than American goods. This has helped China build an unprecedented trade deficit of more than $100 billion with the United States and has given their products an unfair advantage in the global marketplace. Pressure from the Bush administration has already led to some progress, as the Chinese leadership has pledged to develop a committee to look into currency valuation.

The second and third issues are class action and more specifically asbestos reform. One of the biggest jumps in non-production costs over the past decade has been related to litigation. Reforming the legal system is clearly a top priority for manufacturers, and two bills, one that would help eliminate multi-million dollar class-action suits in state courts and the other that would end the asbestos litigation crisis that has bankrupted 65 companies, have a distinct chance for passage in 2004.

The fourth issue is regulatory reform. The regulatory burden on small- and medium-size manufacturers continues to grow, but there has been movement in this administration to reverse that trend. The new Office of Industry Analysis in the Commerce Department will monitor proposed regulations that affect manufacturers, and the Office of Management and Budget is considering implementing its own system to derail regulations that do not meet a cost-benefit test.

 

How will NAM be able to monitor the success or failure of the coalition's campaign? How soon does NAM hope to see forward progress?

If you consider that the first goal of this campaign is to educate Americans and their elected officials about the importance of manufacturing to our living standards as well as to the crisis that U.S. manufacturers face, we've made progress already. While the coalition wasn't formally launched until late September, many of its members have worked all year with the NAM to raise this level of awareness. The rapid movement in Congress and the administration over the past few months to address the manufacturing crisis demonstrates progress.

Our goal is to create a climate that allows the manufacturing process - from innovation to production to distribution - to thrive in this country. Success must be measured in both inches and yards. It begins with the recognition of manufacturing's importance by the public, the media, academia and government. It extends to the enactment of policies that reduce the cost of producing in this country, level the international playing field and promote innovation and investment in America. Finally, it results in a structural rebirth manifested in such areas as increased R&D investments, manufacturing jobs and manufacturing output.

 

How much hope is NAM pinning on its Future of Manufacturing campaign? What is the association's biggest hopes and fears of its outcome?

The NAM recognizes that this is a long-term campaign, with many hurdles to clear. The challenges that manufacturers face are greater than ever before. Even as we make progress this year and next, companies and industries will continue to experience setbacks. Still, the NAM is confident that, if manufacturers and their allies unite on these issues in a sustained effort, we will successfully improve the climate for business in this country.

 

How can interested parties that do not belong to NAM get involved in the coalition and at what cost? Is there a place for labor unions to participate in or with the coalition?

There is no charge for membership in the coalition and we encourage a wide membership beyond NAM members, as I mentioned earlier. The coalition has a specific set of principles and we welcome companies and other groups that are in agreement with the directions of the coalition. The complete list of principles is available online at www.nam.org/coalition.

Have something to say? Share your thoughts with us in the comments below.