With U.S. President George W. Bush reelected for another four years, and unworried about campaigning, don't expect much attention to be given to manufacturing. You need look no further than the last few months of the election to see how quickly and completely manufacturers' concerns disappeared from the national stage -- and from Bush's stump speech -- once he tied up manufacturers' apparently unqualified support for his administration's manufacturing revitalization agenda. Instead, expect to see the President push broad-based business reform that may trickle down to assist some of the nation's hardest-hit manufacturers. No surprise there. Even as he was claiming to help manufacturing with the agenda, the plan was nothing more than broad-based business reform recast as a solution for manufacturers.
Perhaps that's not so bad. Indeed, fixing the big business issues seems to be the strategy endorsed by the most vocal politicos in the manufacturing sector, who seem to have abandoned the notion that manufacturers have concerns unique from the rest of the business community. That the administration and the general business community have already determined that manufacturing's role in the economy has diminished, and will continue to fall in the future, seems to be a tangential concern.
If there's any evidence that manufacturers will take what scraps they can get, while serving as the platform to enrich any other sector lucky enough to have a strong voice on the Hill, it is found in the details of the recently enacted "American Job Creation Act of 2004." This cornucopia of giveaways granted such struggling groups as U.S. recording artists, moviemakers and Starbucks franchisees status as "manufacturers" in the corporate tax code. The "manufacturing" deduction is so broadly defined and complicated that the IRS and the Treasury initially opined that it would be impossible to administer. Many still believe it will have to be scrapped entirely. Yes, manufacturers got something they desperately needed to survive; other stronger groups got what they wanted.
As for whether broad-based business reform will strengthen U.S. manufacturing or spur manufacturing jobs, the jury is still out, though most manufacturing watchers are optimistic. While it's true a president can do little to affect employment, the Bush administration makes no secret that its tax policy was designed to spur job growth, and asserts that the policy is working. But three job-growth-driving tax cuts starting in 2001 have barely got us back to where he started. And manufacturing jobs? Worse. After some growth earlier in the year, the manufacturing sector lost jobs in September and October, netting 69,000 this year. That brings the total number lost to 2.7 million since January 2000.
Of course manufacturing strength shouldn't be measured solely on the basis of the number of people it employs -- companies exist to increase profits, not employment. But the manufacturing sector's share of GDP has also dropped -- to 13% in '03 from 15% in '98 and '99. If anything, it's this number that emboldens public policy leaders to ignore the specific needs of the manufacturing sector.
Perhaps these bleak statistics, as many optimistic observers of the manufacturing sector assert, are relics of the past. In spite of some indications of slower growth, many see signs that manufacturing employment, share of GDP, industrial production and other vital statistics point to a manufacturing upturn.
I hope so. So far, the results are decidedly mixed for the broader manufacturing community and are downright bleak for certain industries. One thing is for sure, though: In the public policy arena, manufacturers must now grab the coattails of the broader business community and hang on for dear life.
Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.
