First Up: Saving American Manufacturing

Sept. 15, 2010
Michele Nash-Hoff's crusade to save American manufacturing and the middle class.

"If you want something said, ask a man; if you want something done, ask a woman." I couldn't help reflecting on that quote of Margaret Thatcher recently as I read Michele Nash-Hoff's 2009 book, "Can American Manufacturing Be Saved? Why We Should and How We Can," while considering the backdrop of largely male politicians locked in ideological squabbling rather than rolling up their sleeves and working to solve our deadly serious economic crisis. I can't recall a sorrier time for American politics.

In contrast to the stalemate in Washington, Nash-Hoff, president of ElectroFab Sales, a manufacturers' sales rep firm based in San Diego, has chosen to be an activist. In that vein, she wrote: "The American people have a choice to make. We can either accept the continued destruction of America's industrial base and allow all the gains achieved by America's industrial workers to be wiped out to compete with Third-World labor. Or, we can choose to secure a future for American industry and our industrial workers."

If this statement from the book sounds overly dramatic, consider her vantage point when she was writing it. Nash-Hoff saw 20% of her company's manufacturing database disappear during the six years prior to her starting the book. Nationally, tens of thousands of manufacturing facilities closed during that period and employment fell by 3 million. The picture has only worsened since she published the book.

When I caught up with her recently, Nash-Hoff reiterated her concerns that a weakened manufacturing sector will result in both fundamental economic and national security problems for the United States. She says without a vigorous manufacturing sector, the country risks losing its middle class and becoming a "Third-World nation exporting commodities while materials are turned into finished products in another country. We will become a nation of haves and have-nots."

She says China openly aspires to become the dominant superpower in the world and that it is practicing "predatory mercantilism" as an economic strategy for doing just that. "China is not a democracy. It is a communist country that practices a version of capitalism as part of its plan to become the No. 1 economy in the world," she warns.

Nash-Hoff also ponders what will happen if we lose more of our manufacturing base and "we can't produce the products we need to defend our country." Could a conflict with Chinese interests result in cutting off the U.S. military from Chinese-produced components needed for military equipment?

Asked how the country was faring under the Obama administration, Nash-Hoff says both the health care reform legislation and the impending rescission of the Bush tax cuts would increase costs for manufacturers and add to the uncertainty about the business climate. Regarding the tax cuts, she says, "That is really serious because 99% of all manufacturers are small businesses and many are not incorporated. It is going to affect people's personal incomes, not just corporate taxes. That is a big thing keeping people from hiring."

In her book, Nash-Hoff recounts a steady stream of recommendations from various organizations for promoting U.S. manufacturing. She says the problem has been that these reports come and go, but don't result in policies with traction. Nash-Hoff offers her own immediate and long-term remedies. At the top of her immediate list are tax issues: Cut the capital gains tax to 15%, reduce corporate taxes to 28% or 31%, increase and make permanent the R&D tax credit, and eliminate the estate tax. Right after that, she urges action to address foreign currency manipulation.

What would U.S. manufacturing look like in five years or so if her recommendations were followed? Nash-Hoff says the country could recoup half to two-thirds of the 5.5 million manufacturing jobs lost in the last 10 years. She says this recovery would be fueled in part by
innovators and entrepreneurs who can "regenerate and rejuvenate our American manufacturing."

As Nash-Hoff wrote, we have a choice to make if we are to save manufacturing. The November elections will be a good place to start.

Steve Minter
[email protected]

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