United We Stand

I think its safe to say that precision parts manufacturers are not afraid of competition, domestic or foreign, that is based on innovation and quality. The economy of the United States has been built on manufacturing. Making stuff is what we do, and the business of making stuff is in large part responsible for the standard of living we enjoy.

But in the name of free trade, U.S. manufacturing has been taking it on the chin lately. The crux of the issue isn’t about imposing trade barriers or protectionism—it’s about fair trade. Ironically, some of the most egregious burdens imposed on domestic manufacturers originate not in Asia or Europe but right here at home.

For too many years, elected officials and the public have largely taken the incredible contribution manufacturing makes to the economic health of our country for granted. Instead, many of these folks have gone to manufacturing for funding to a point where indirect structural costs imposed on the sector are having a detrimental effect on its global competitiveness.

I recently attended a “fly-in” to Washington, D.C., sponsored by the National Association of Manufacturers (NAM). The idea behind this visit was to put real, flesh and blood manufacturing people in front of members of Congress—which was no doubt scary for both parties. The mission was to help these manufacturing people lobby for the government’s attention regarding the structural costs on manufacturing and the impact these costs are having on domestic workers and competitiveness.

The case presented to the legislators was based on a report published in December 2003 by NAM and the Manufacturers Alliance/MAPI. The report’s introduction states: “While manufacturers have many challenges in the current global environment, it is the finding of this report that domestically imposed costs—by omission or commission of federal, state and local governments—are damaging manufacturing more than any foreign competitor and adding at least 22.4 percent to the cost of doing business from the United States. Such internal costs impose a larger burden on U.S. manufacturers than the strong dollar.”

The report goes on to delineate these structural costs as falling roughly under five headings:

• Excessive corporate taxation
• Escalating costs of health and pension benefits
• Escalating costs resulting from actual or threatened tort litigation
• Escalating compliance costs for regulatory mandates, particularly those related to workplace safety, pollution abatement and corporate governance
• Rising energy costs, and the cost of natural gas in particular

These costs should not be much of a surprise to most of us involved in metalworking and specifically in the manufacturing of precision parts. But manufacturing can no longer absorb these structural cost increases because of pricing pressures created by global competition. We cannot raise prices. As a result, something has to give, and unfortunately, that something has been 2 million-plus manufacturing jobs.

Although NAM is the “big daddy” of manufacturing trade associations, with roster of 14,000 member companies, many other industrial trade associations’ members also participated in the fly-in.

While in Washington, I had a conversation with Mike Duffin of the Precision Machined Products Association (PMPA). He made it clear that although PMPA doesn’t agree with everything on NAM’s agenda, it is more important for manufacturing to present a united front than a divided one. I thought that was an enlightened view, and it reflects the regocnition that the real competion is changing. There is a report by David Burch on page 15 that details the PMPA’s take on the Washington visit.

To learn more about the NAM/Manufacturers Alliance report, go to www.nam.org/institute.