Viewpoint -- Commerce's Manufacturing Report Is A Must Read

Dec. 21, 2004
The issues it raises deserve debate -- and ultimately political judgment.

Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers, puts the label "unprecedented" on the U.S. Commerce Department's long-awaited report on U.S. manufacturing. Manufacturing executives and others may differ on whether or not "Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers," an 88-page document released Jan. 16, is really unprecedented. Indeed, two decades ago a multivolume report from a commission chaired by Hewlett-Packard executive John Young looked with alarm and more depth at the then-challenges to American competitiveness in world markets, including foreign manufacturers' increasing penetration of the U.S. market. The Young report is now pretty much forgotten. Most copies have long since been cleared from bookcase shelves, along with hundreds of linear feet of similarly well-intended reports from dozens of other federal commissions. Should "Manufacturing in America" suffer a like fate? The answer is: No, it deserves a serious read -- and by more than manufacturing executives. Nearly one-third of the report is a recitation of issues that manufacturing executives must concern themselves with every day: economic growth, tax burdens, healthcare costs, energy costs, civil liability, innovation, education and skills training, and trade. The report devotes 25 pages to them. These are important -- even critical -- issues, ones that in various combinations determine the success or failure of individual manufacturers and the international competitiveness of U.S. manufacturing. However, these are issues often bigger than a single manufacturer or even all of U.S. manufacturing. These are issues whose priority and substance, for better or worse, are largely determined by government, to some extent at the state and local level, but particularly by the federal government and particularly by Congress. The difficulty is in sorting them out and determining who does what and how, a point that the report, perhaps unintentionally, underscores. The Bush administration's basic free-enterprise approach gets a restatement on the opening page of the report's 21 pages of recommendations. "These recommendations start from the premise that it is manufacturers and their actions in the marketplace that will define their success, spur economic growth, and create jobs. The government's role is not to interfere with that process, but rather to foster it." Yet, on the pages that follow, the report recommits the administration to creating a new assistant-secretary post for manufacturing and services within the Commerce Department, and says Congress should create an industry and government Manufacturing Council at Commerce, make permanent the 2003 tax cuts, adopt tax incentives to encourage savings, create association health plans, enact medical liability reform, enact class-action lawsuit reform, enact asbestos liability reform, enact a comprehensive energy plan, change pension funding rules, strengthen the U.S. Patent & Trademark Office, and establish a high school and technical education partnership. That's an ambitious list. Missing from the recommendations, however, are a sense of priority and estimates for funding, the latter especially critical as the federal budget deficit heads for an all-time record this fiscal year. There is a danger that "Manufacturing in America" will be dismissed as a political document, that Commerce Secretary Donald Evans went to Cleveland in the industrial Midwest to release the report more in hopes of improving President Bush's re-election prospects than really improving U.S. manufacturing. There's a danger that administration re-election strategists will now check off the manufacturing box on their list of electoral constituencies and ask, "Who's next?" "Manufacturing in America" is a political document, as well it should be -- in the broadest sense of that word. The manufacturing issues it raises and the recommendations it offers should be the subjects of political debate. Can an assistant secretary for manufacturing in the U.S. Commerce Department realistically be an effective policy advocate for a diverse sector of the U.S. economy that ranges from basic metal makers and benders to the most sophisticated producers of biotechnology? Why is the Bush administration now embracing the Manufacturing Extension Partnership, a program whose funding it previously tried to reduce? Should industry and government focus on long-term skills education or on specific job training? These are among the questions that need to be debated. These are among the questions that need to be put to candidates for office at local, state and federal levels. These questions are tied to critical public policy issues, and how they are answered should be part of making political judgments, not just by manufacturing executives, but by Americans generally. "Manufacturing in America" should not be shelved. John S. McClenahen is an IndustryWeek senior editor. He is based in Washington, D.C.

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