CPA Releases Competitiveness Strategy for the United States

For several years, organizations and elected representatives in Congress have proposed developing a national manufacturing strategy. For example, the Information Technology & Innovation Foundation (ITIF) released a report, “The Case for a National Manufacturing Strategy,” in April 2011 and the Alliance for American Manufacturing has repeatedly put forward a "Plan to Save Manufacturing," calling for a national manufacturing strategy to reverse the decline in U.S. manufacturing and the good jobs that come with it. Bills sponsored by Rep. Dan Lipinski, D, Ill., have even passed the House of Representatives, but have died in the Senate.

On November 11^th, the Coalition for a Prosperous America (CPA) released “A Competitiveness Strategy for the United States - America at a Crossroads,” which addresses other sectors of our economy in addition to manufacturing.

"America needs to start winning again," said Michael Stumo, CEO of CPA. “That is why the mission of the Competitiveness Strategy is to:

‘Win the international competition for good jobs, sustained real economic growth and prosperity with a national strategy to counter foreign mercantilism, balance trade and grow strong domestic supply chains.’”

“Across the USA, localities and states employ plans to attract jobs,” said Brian O’Shaughnessy, CPA chief co-chair and chairman of Revere Copper Products. “Other countries have sophisticated national strategies to acquire industries and bring good paying jobs to their countries. The USA has no comprehensive national strategy for domestic production and good paying jobs to guide trade negotiators and administration officials.”

CPA’s competitiveness strategy argues that:

The United States is losing an economic competition against other nations whose mercantilist strategies are destroying our manufacturing jobs, critical industries, our standard of living, our national security, the security of our food supply, and our children’s futures.

The threat to the U. S. economy and national security is grave. Other trading nations are using comprehensive strategies to import jobs across all economic sectors, but are particularly focused on strategically significant technologies and industries. American companies in these sectors face not only wide-ranging mercantilist practices and non-tariff trade barriers such as currency manipulation, tariffs and subsidies, but also much more sophisticated and specific strategies aimed at identifying, acquiring, or otherwise controlling critical technologies.

CPA’s strategy holds out the promise that the U. S. is in control of its own destiny and can re-assert itself as a great manufacturing and producing nation with a rising standard of living for all. We can develop and implement a comprehensive strategy that retains and reinforces our leadership in innovation, locates investment and production in the United States, and raises employment by creating good paying jobs.

[M]erely exporting raw materials is insufficient. American must grow and retain a diverse array of industries that add value to our products and create good jobs, with special attention paid to advanced and critical industry supply chains."
—Michael Stumo

The ultimate mission of the strategy is to win the international competition for good jobs and sustained economic growth. The mission recognizes we are in competition with other countries. The competitiveness strategy includes 19 action steps focused upon three interrelated goals:

1. Identifying and countering foreign mercantilist strategies that grow their economies at the expense of other countries through achieving a persistent trade surplus
2. Balancing the national trade deficit
3. Growing domestic supply chains

“All three goals are interrelated and must be pursued together,” continued Stumo. “The president rightfully created the National Network for Manufacturing Innovation to grow domestic supply chains, but the effort cannot succeed unless we combat powerful foreign tactics to take those industries away. Further, a new effort to counter foreign mercantilism and trade cheating is essential, but must have the goal of balancing trade to be fully effective.”

“Additionally, balancing trade is essential, but merely exporting raw materials is insufficient. American must grow and retain a diverse array of industries that add value to our products and create good jobs, with special attention paid to advanced and critical industry supply chains,” Stumo concluded.

CPA's competitiveness strategy shown below is succinct, yet comprehensive:

"Identify and counter foreign mercantilist strategies that grow their economies at the expense of other countries through achieving a persistent trade surplus

1. End both currency exchange rate imbalances and the accumulation of excessive US dollar holdings by non-U.S. public and private entities.
2. Impose offsetting tariffs to neutralize foreign government subsidies to industries and supply chains that compete with ours.
3. Counter foreign government policies that force offshoring by conditioning access to their markets on transfers of technology, research facilities and/or production to their countries, as well as compliance with export performance and domestic content requirements, while their exporters have access to U.S. markets without these conditions.
4. Ensure that foreign greenfield investments in the U.S. and acquisitions of existing U.S. companies provide a clear “net benefit” to the U.S. with special scrutiny in cases of state influenced foreign entities.
5. Protect U.S. food security from foreign government tactics to seize markets.

Balance trade

1. Offset cumulative trade deficits of recent decades and excessive accumulations of dollar reserves through sustained trade surplus to ultimately achieve a long term overall trade balance.
2. Insure that the composition of trade includes a substantial trade surplus in high value added and advanced manufactured goods.
3. Make the U.S. workforce more cost competitive by promoting fair pay, rising living standards and safe working conditions for workers everywhere.
4. Reduce U.S. producers’ trade disadvantage through tax reform which finances the reduction of payroll taxes and health insurance costs with a border adjustable consumption tax in a revenue and distribution neutral manner.
5. Lower corporate tax rates and end corporate inversion and profit shifting tax avoidance by taxing the income of unitary business groups, whether domestic or foreign, based upon proportion of global sales in the U.S.

Grow Domestic Supply Chains

1. Preserve and develop domestic manufacturing and agricultural supply chains to maximize value added production in the U.S.
2. Develop, build and maintain a world-class land, water, air, communications and energy infrastructure.
3. Safeguard our military strength and national security by insuring that critical technologies, weapons & IT components are developed and manufactured in America by American-controlled companies.
4. Develop, commercialize and retain strategic and economically significant advanced technology and grow their manufacturing supply chains in the U.S.
5. Increase public support for, and incentives for private investment in, basic and applied research, infra-technologies and new product and process technologies.
6. Continually raise the competitiveness of American workers by improving Science, Technology, Engineering and Math (STEM) education available at all levels, systematically enhance lifelong learning for existing workers, and fostering a national system of apprenticeship and paid internships through collaborative public-private endeavors that are connected to actual opportunities in the labor market.
7. Raise the competitiveness of small- and medium-sized domestic enterprises by increasing long-term private sector financing, the sharing of research on common issues and the diffusion of new technologies and production methods.
8. Preserve our right to adopt and enforce domestic policies that insure the quality of our food and goods, and protect the health, safety and general welfare of our citizens without restrictions from international trade agreements.
9. Ensure that domestic manufacturing and agriculture benefit fully from an expanded supply of low cost U.S. produced energy"

Anyone involved in efforts to revitalize American manufacturing already has a bookshelf full of books, studies and reports containing recommendations on a national manufacturing strategy. My book, Can American Manufacturing Be Saved? Why we should and how we can has a chapter on “How Can We Save American Manufacturing?” that contains a summary of the recommendations of many organizations as well as my own recommendations, which I incorporate into articles and presentations whenever possible. As chair of the California chapter of CPA, I plan to incorporate this competitiveness strategy into future articles and presentations whenever possible.

The brilliance of CPA's strategy is that it is not limited to manufacturing and is not a "to do list" of actions to take. The competitiveness strategy will work best when pursued as a whole. The three objectives are interrelated because, for example, we cannot balance trade without growing domestic supply chains to produce more, and add more value in the U. S. We cannot grow domestic supply chains unless we neutralize foreign mercantilism (trade cheating) that offshores otherwise competitive industries that we started and developed in the U. S. We cannot address foreign mercantilism without the guidance of a balanced trade objective.

Businesses must have a strategic plan to start and grow. This strategic plan guides the business with regard to product development, finance, marketing, production, procurement, etc. Many other countries have an economic strategy to grow their economy. A country's strategy guides their economic, fiscal, trade, innovation, finance and monetary policy, so that they all work together to enhance their competitiveness as a nation.

The United States has no comprehensive strategy ─ just a hodgepodge of laws and rules. Trade negotiators have had no strategic plan to guide them, and neither do the administrative agencies relevant to manufacturing, agricultural, and use of natural resources. The United States needs a comprehensive competitiveness strategy that clearly expresses exactly what we want to achieve for our country… not for an industry or special interest… but our country as a whole.

We do not have to “keep reinventing the wheel.” It is time for our leaders to “stop fiddling while Rome burns” and show some real leadership. Action, not lip service is what we need now!