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Manufacturing Competitiveness: A Road Map for Strengthening U.S. Industry

Posted By Jeff Moad, December 12, 2011 at 12:07 PM, in Category: Next-Generation Leadership and the Changing Workforce

If politicians and policy-makers really want to know what they can do to support the revival of U.S. manufacturing and put their constituents back to work, they should start by reading “Make: An American Manufacturing Movement.”

Two years in the making, this 84-page document from the Council on Competitiveness advocates a series of specific policy changes that, taken together, represent the beginning of a national strategy with the potential to help large and small U.S. manufacturers compete in increasingly challenging global markets.

The document does have its blind spots. It tends to emphasize the perspective and interests of large, global enterprises, often neglecting the needs of small- and midsize manufacturers. And it focuses largely on policy recommendations at the federal level, downplaying steps that local, regional, and state agencies could and should be taking to support U.S. manufacturing.

These shortcomings are, perhaps, to be expected from a 25-year-old organization that is based in Washington, DC, and that is led by the CEOs of large companies such as Bank of America and Deere & Co. as well as leaders from large academic and labor organizations.

Still, the Council on Competitiveness manufacturing strategy statement is important because it aggregates into one document a wide range of important policy recommendations—many of which have been discussed on this Website and elsewhere—and because it focuses on many of the most important competitive issues facing American manufacturers today. (Manufacturing Executive’s Manufacturing Leadership Council will soon issue its own National Manufacturing Strategy statement covering many of the same issues. Stay tuned for that.)

The report’s recommendations are organized around five core challenges facing U.S. manufacturing. Here are the challenges identified by the Council on Competitiveness and some of the corresponding policy change recommendations:

1) Challenge: Fueling the Innovation and Production Economy From Start-Up to Scale-Up
Recommendations: A series of fiscal, tax, and regulatory reforms intended to bolster competitiveness by reducing structural costs. Included among the recommendations:
—Reducing taxes on corporate repatriated earnings to less than 5%;
—Reducing the corporate tax rate to 22%;
—Making the federal R&D tax credit permanent;
—Allowing 100% expensing for plant, property, and equipment purchases;
—Requiring federal agencies to assess and reduce the “unnecessary complexity, time, and costs” related to regulation;
—Exempt companies with market valuations below $500 million from Section 404 of the Sarbanes-Oxley Act.

2) Challenge: Expanding U.S. Exports and Reducing the Trade Deficit
Recommendations: A series of steps by the White House, regulators, and Congress intended to spur exports and improve IP protection, including:
—Liberalizing trade with countries including Brazil, India, China, and Japan;
—Expanding NAFTA;
—Increasing the use of anti-dumping measures;
—Increasing IP protection through the Anti-Counterfeiting Trade Agreement (ACTA);
—Completing the President’s Export Control Reform Initiative;
—Implementing a streamlined U.S. export control regime.

3) Challenge: Harnessing the Power and Potential of American Talent
Recommendations: A series of steps by industry, academia, and government to expand the pipeline of engineering talent, including:
—A Career and Technical Education that would “push for greater integration of community colleges in the innovation pipeline”;
—Immigration reform to attract the world’s brightest to the U.S.;
—Making it easier for foreign students who receive science and engineering graduate or post-graduate degrees to become citizens;
—Integrating STEM education programs into the workplace;
—Development of a state-of-the-art apprenticeship program by industry and labor leaders;
—Development of a “Veterans in Manufacturing” program to provide opportunities for America’s soldiers.

4) Challenge: Achieving Next-Generation Productivity Through Smart Innovation and Manufacturing
Recommendations: Several programs intended to prioritize R&D investments and technology transfer and to create national advanced manufacturing clusters, networks, and partnerships, including:
—Creating incentives for multi-user, advanced manufacturing facilities that provide broad access to cost-effective prototyping and testing of smart manufacturing tools and technologies;
—Establishing cross-sector research collaborations and public-private partnerships that develop and commercialize advanced manufacturing tools, processes, and applications;
—Shifting a greater percentage of national laboratory investments to end-use-inspired basic research;
—Creating open, virtual campuses where manufacturers can gain access to simplified design and engineering tools, visualization technologies, and modeling and simulation tools.

5) Challenge: Creating Competitive Advantage Through Next-Generation Supply Networks and Advanced Logistics
Recommendations: A series of steps aimed at developing next-generation energy, transportation, production, and cyber-security infrastructures, including:
—Providing incentives for the development of infrastructure benefiting U.S. manufacturing, including ports, railroads, roads, nuclear facilities, the electric grid, information technology, and cyber infrastructures;
—Developing a national strategy for reducing energy demand by rewarding efficiency and improving transmission;
—Developing smart-grid technology standards that allow smart meters to operate on any smart-grid infrastructure;
—Shifting federal funds to develop next-generation cyber-security protocols and portals.

These are just some of the recommendations proposed by the Council on Competitiveness document, which, in the end, comes across as an important statement on how the competitive constraints currently facing U.S. manufacturers can and should be removed.

But, of course, the document won’t mean much if it ends up sitting on a shelf, ignored by policy-makers in government, academia, and industry. That’s why it is important that manufacturing leaders take a few minutes to scan the document’s main points. If you find recommendations that you agree strongly with, take the next step and let your representatives know.

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit

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