Obama Administration report points to opportunities, challenges in changing manufacturing landscape

Bob Vavra

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The Obama administration's new framework for improving manufacturing was released this week. It outlines both the traditional issues facing manufacturing, but also points to new initiatives that the education and business sector must undertake to change the direction of U.S. manufacturing.
"Many sectors of American manufacturing have the potential to enjoy significant growth and success. With the right policies, America can foster successful industries like biotechnology, wind power, nanotechnology, aerospace, next generation automobiles, and perhaps more importantly the industries of the future that we do not even know about today," the report states. "Although the talent and hard work of America's entrepreneurs, innovators, and workers will drive these businesses, there is a critical role for sound government policy."
The report outlines several tax and policy initiatives that will be undertaken to support the move to a more diverse manufacturing landscape. Quoting from the report, here is a summary of those initiatives:
1. Provide workers with the opportunity to obtain the skills necessary to be highly productive. It is crucial that these skills be relevant. Our education system must provide access to the skills that are needed for the jobs and the industries where we can compete.
2. Invest in the creation of new technologies and business practices. Our efforts in this area should focus on advanced research without immediate commercial application, where private actors are likely to under-invest. We must defend the rights of those who create intellectual property from those who would use it without properly compensating them. Finally, the government has a role to play in helping to bring to scale emerging technologies as well as facilitating the diffusion of business practice innovations that can help American manufacturers compete.
3. Develop stable and efficient capital markets for business investment. We need to structure our capital markets in such a way that those who wish to invest in the equipment and facilities necessary to make labor productive can access the credit to do so.
4. Help communities and workers transition to a better future. We must recognize that just as manufacturing has traditionally provided a significant employment base for many communities, it is particularly painful for these communities when factories and industries can no longer employ large numbers of workers. In these situations, the government should help both the affected workers and the community transition to activities that can sustain them in the future.
5. Invest in an advanced transportation infrastructure. The competitiveness of American manufacturers depends critically on a modern, reliable and efficient infrastructure so that goods, energy, people and information can move cost-effectively from one place to another.
6. Ensure market access and a level playing field. We must be sure that those who wish to sell the goods that they make in the U.S. into other countries have the market access they need and that those who sell domestically do not face unfair competition from advantaged foreign producers.
7. Improve the business climate, especially for manufacturing. Consistent with our desire for clean air, water and reducing the release of greenhouse gases as well as the need for fiscal responsibility, we need legal, tax and regulatory regimes that promote American manufacturing and do not place an undue burden on those who wish to manufacture products in America.

The report has earned generally high marks from key industry segments.

"We are extremely heartened to see the Administration not only recognize the importance of domestic manufacturing to the overall economy but to also go on record and acknowledge that certain government policies can help to revitalize the sector," said Scott Paul, executive director of the Alliance for American Manufacturing.
"As obvious as it would seem, the Administration's recognition of unfair foreign trade practices and the need for substantial investment in infrastructure and research and development represents an important step in breaking from the failed approaches of the past."
"It is encouraging that President Obama recognizes that a strong manufacturing sector is critical to America's future. It is also important that the President recognizes the challenges manufacturers face to effectively compete in the global marketplace," said Association For Manufacturing Technology president Douglas K. Woods. "Now it is time to expand upon those ideas and turn ideas into action."