U.S. Manufacturing Seen At 31.7% Cost Disadvantage

Compared with their major foreign competitors, U.S. manufacturers operate at 31.7% structural cost disadvantage, up from a 22.4% disadvantage three years ago, according to a study released September 27 by the National Association of Manufacturers (NAM), its Manufacturing Institute subsidiary, and the Manufacturers Alliance/MAPI.

The study takes five elements into account: corporate tax rates, employee benefits, tort costs, natural gas prices and pollution abatement.

The manufacturing cost study was done by Jeremy Leonard of the Manufacturers Alliance, the same economist did a similar study in 2003.

"In the short term, Congress can aid manufacturers by sending to the President as soon as possible legislation that extends and strengthens the research and development (R&D) tax credit," says John Engle, president of the NAM. The credit expired at the end of 2005, adding about 9% to the tax burden of U.S. manufacturers, figures Engler.

The latest study is entitled "The Escalating Cost Crisis." The previous study was called "How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness."

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