The Comeback Player of the Year: Manufacturing

Anne Goyer of the Chemical Coaters Association International explains why now is the time to sustain the momentum.

This year politicians started noticing something that manufacturers have known for more than a year: U.S. manufacturing is making an unprecedented comeback. The challenge facing our industry and our policymakers is now, “How do we sustain this comeback and grow the sector?”

The year started with President Barack Obama mentioning “manufacturing” or “manufacturer” 15 times in his State of the Union address when those terms had only been mentioned twice in the previous five years. After declaring U.S. manufacturing dead only a few years ago, both political parties are now focusing on the manufacturing sector like a laser beam. Pick up the newspaper on almost any day and see how manufacturing is now front and center both on the presidential campaign trail and in policy debates among economists. Republicans and Democrats have introduced 184 legislative bills during the current Congress related to manufacturing.

While plenty of challenges remain, manufacturing continues to be a bright spot in the U.S. economy. Manufacturing growth has slowed recently after 34 straight months of expansion, but experts predict the sector will continue to grow at a faster pace than the general economy in 2012. With a national unemployment rate that is still just below eight percent, there are an estimated 600,000 job openings for skilled manufacturing workers.

Also, manufacturing that was previously offshored to China continues to return to the U.S. The “onshoring” trend is due to a number of factors, including transportation costs, a narrowing of labor costs, intellectual property and quality concerns and a desire by large manufacturers to source products closer to their facilities.

We can see the comeback of U.S. manufacturing at our trade shows, too. FABTECH, the largest metal forming, fabricating, welding and finishing show in North America, witnessed a spike in both attendance and in exhibitors for its Chicago show in 2011 and expects record attendance at its Las Vegas show this year, with dozens of new technologies on display and attendees from all over the world interested in sourcing products and new technologies from the U.S.

The challenge for our sector and our policymakers is sustaining the comeback to prevent this growth from becoming a blip in the long term. Some of the ideas that we heard from participants in FABTECH shows and seminars are:

• The U.S. needs a manufacturing strategy. Our nation is one of the only industrialized countries in the world that doesn’t have an industrial strategy to build upon and grow a sustainable U.S. manufacturing sector.  Such a strategy is essential to protect our national security and strengthen our economy in the long run.

• End the uncertainty over taxes. On December 31, 2012, 101 tax deductions and credits will expire or will have already expired, costing manufacturers billions in tax increases. As reported by the Precision Metalforming Association (PMA; Independence, OH), “Many of these expired or expiring provisions are critical to incentivizing manufacturing.” Manufacturers, like many other businesses, need certainty regarding taxation policy so that companies can plan their investments in labor and capital. If manufacturers aren’t certain what their effective tax rate will be three months from now, how can we expect them to grow?