Share |

Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

- May 19, 2015 -

Supply Chain News: PPG Executive on Policies to Help US Manufacturing to Succeed

High US Corporate Tax Rates are an Issue, Bryan Iams Says, but Trade Ageements, Immigration Reform and More Also Need

SCDigest Editorial Staff

US manufacturing is certainly holding its own, even if the most optimistic hopes for so-called "reshoring" of manufacturing work here are not being realized.

According to the Institute for Supply Management's monthly Purchasing Managers Index, the US manufacturing sector expanded in April for the 28th consecutive month, though of late there are clear signs that the rate of growth is slowing.

SCDigest Says:

"America has the highest corporate tax rate on Earth," Iams says. "Meaningful tax reform must begin by implementing a pro-growth tax plan with lower tax rates for the manufacturers who lead our economy.

What Do You Say?

Click Here to Send Us Your Comments

Click Here to See Reader Feedback

Last July, US manufacturing output at last hit 2007 baseline and peak levels, six-plus long years after the start of the great recession, in one of the slowest economic recoveries on record, though certainly starting with a very deep hole. The Federal Reserve's manufacturing output index dropped all the way down to just above 80% in June, 2009, from which it took a stready but slow recovery until pre-recession levels were eventually reach again.

The index has stayed above that 100 mark since last July, but has largely flatlined ever since, coming in in April at a level of 101.5, the same as in March, meaning production was 1.5% above that 2007 baseline.

In a sense, however, manufacturing has remained a bright spot in the overall US recovery. And as most know, growth in manufacturing has a multiplicative effect, with every manufacturing dollar in America adding $1.37 to the economy, according to the National Association of Manufacturers.

So what's needed to push US manufacturing forward, to higher and more sustained levels of growth?

Bryan Iams, vice president of corporate and government affairs for Pittsburgh-based paint and coatings manufacturer, PPG Industries, offered his thoughts this week in a guest column for financial web site CNBC.com.

Iams's proposals are very similar to the policy positions of NAM itself, but worth pondering nevertheless, maybe even because of the consistency of opinion across NAM and executives at many manufacturers.

"Manufacturing faces a disproportionate share of the burden of government regulations," Iams says. "Business is inhibited when our policies don't match principles, including free enterprise and competitiveness."

A frequent point of contention for NAM and others is the high corporate tax rate in the US.

(Manufacturing Article Continued Below)

CATEGORY SPONSOR: SOFTEON

Immigration reform is also near the top of Iams' list.

"US manufacturers must also be able to attract talent from anywhere in the world," he says. "We need to improve the employment-based green-card system to keep talent in the US, streamline and simplify procedures for temporary or non-immigrant visas, and allow for temporary workers and immigrants to meet the needs of employers without displacing American workers."

Iams also believes in expanding trade agreements between the US and other countries.

"It doesn't matter what we make if we can't sell it domestically and internationally," he writes.

The proposed Trade Promotion Authority (TPA) being debated in Congress currently, "would lead to greater access to the foreign markets we need, and in turn create jobs," Iams believes, adding that "TPA is critical to provide US companies with access to markets outside the country, which make up 80% of the world's purchasing power, to maintain and grow their businesses."

Iams is also a believer in the US Export-Import Bank, which floats loans to US companies to help finance international contracts - though many conservatives argue it is largely unncessary today and an unneeded federal subsidy to business. But Iams says that "Permanently reauthorizing the Export-Import Bank is a necessary step. The bank is a vital tool in helping manufacturers compete on a level playing field and secure new customers in emerging markets."

Iams also says that it is also critical that Congress to act something called the Miscellaneous Tariff Bill (MTB). This legislation would allow Congress to correct distortions in the US. tariff code and create a transparent process for Congressional consideration of MTB.

"We can't continue to watch from the sidelines as the rest of the world is busy negotiating free-trade agreements," Iams argues. "Every year U.S. manufacturers sell so much more in manufactured goods to free-trade partner countries than we buy from them - $60 billion more. But for countries with which the U.S. doesn't have free-trade agreements, we're running a trade deficit exceeding $500 billion."

So there's the list from PPG's Iams. How much would all of these steps really help? One thing we do know is that the high corporate US tax rates generally, combined with being one of the few countries that allows taxes double overseas profits, once for the taxes in the country where the profit is earned and another when the money is brought back to the US, has led US companies to park some $2 trillion in these other countries - money most believe could be a shot in the arm to the US economy if changes were made that allowed US companies to repatriate the cash at a more reasonable tax cost.

Any reaction to PPG's Iams on manufacturing policy recommendations? Let us know your thoughts at the Feedback section below.

Recent Feedback

No Feedback on this article yet