Editor's Page -- The Real Crisis In U.S. Manufacturing

The biggest crisis in U.S. manufacturing isn't the threat from China and other low-cost countries (in fact there's opportunity there, too). It isn't the threat that China and other countries are helping themselves to U.S. manufacturers' hard-earned intellectual property. It isn't currency manipulation. It isn't even the very serious homegrown problems, such as runaway product-liability awards, increasing government regulation or even the explosion in health-care costs that are crippling U.S. manufacturers' ability to compete. No. The real crisis is that our public policy leaders don't have a coherent plan to address the myriad problems that U.S. manufacturers face. Worse, what plans they've presented show they have either a very limited understanding of the plight of U.S. manufacturing and how a struggling manufacturing sector could swamp the economic recovery, or they don't care. The President's jobs-and-growth package is Exhibit One. While manufacturers welcome the indirect help they might get from a package designed to boost the general economy, this package offers little to manufacturers. Even the administration's hand-picked congressional budget director, using the administration's hand-picked (and much debated) dynamic scoring method of evaluating tax cuts, says the package will have little to no impact on the economy. The President's 2004 budget shows similar disregard for the manufacturing sector. For the second year, he cut funding for all but two Manufacturing Extension Partnership (MEP) programs. He slashed funding for the Advanced Technology Program (ATP) from a paltry $107 million to $27 million, effectively eliminating Federal support for the last remaining programs that most directly support industry. The administration's efforts to pacify an increasingly vocal manufacturing lobby add insult to budgetary injury. It gave the manufacturing community what amounts to a paternalistic pat on the head when in response to the National Manufacturers Association pleas for a blue ribbon congressional panel to study the crisis in U.S. manufacturing, it instead provided a study by a Department of Commerce undersecretary. Even when the administration takes "action," the result is profoundly disappointing. In the recently published Tooling Industry Whitepaper, the Commerce Department advises manufacturers to get help from, among other government entities, none other than the MEP and ATP, the two programs on the Administration chopping block. Perhaps the most convincing piece of evidence showing that President Bush is out of touch with the manufacturing sector is that he's desperately trying to turn the economy around to ensure his re-election. If he truly understood the importance of manufacturing to the economy, this decisive President would be doing something about it. So what happened to the optimism I expressed in my previous two columns? It's still there, though it's tempered by the realization that this ostensibly business-friendly administration is leaving manufacturing to fight alone against unprecedented -- and sometimes unfair -- foreign competition. But our top government officials are neglecting to enforce international laws that other countries are flouting with impunity. And they are failing to invest in the future of manufacturing through proven cost-effective programs and temporary tax changes. If this doesn't change, our manufacturing sector will still recover this time, but it won't reach its full potential, and its longer-term future will be placed in jeopardy. Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.