Regulations, Corporate Taxes 'Strangling' U.S. Manufacturing

A forthcoming national manufacturing strategy developed by the Council on Competitiveness will urge Washington to address policies that 'are very unfriendly to 21st-century manufacturing in America,' council CEO says.

By Josh Cable 


Nov. 13, 2011

At a time when China, Brazil and other nations are emerging as economic superpowers, the United States has slipped into a dangerous "malaise," asserts Deborah Wince-Smith, president and CEO of the Council on Competitiveness.

"We're not believing in ourselves as a nation," says Wince-Smith. "And our political gridlock and our leaders are not encouraging us to say we are an exceptional nation and we can do great things."

On top of that, America's high corporate-tax rate and onerous regulatory system "are just strangling the investment and growth in our economy," Wince-Smith says.

 

Wince-Smith: 'We're not believing in ourselves as a nation.'

"And our companies are taking more and more [investments offshore] because of our high corporate-tax rate and the penalties on bringing their profits back to the United States," Wince-Smith says. "So we have this capital-cost structure that's basically saying: 'Take everything away. Earn great wealth and invest it in China, India and everywhere but in your own country.'"
 
As the Council on Competitiveness gears up for its
25th-anniversary celebration and National Manufacturing Competitiveness Summit next month in Washington, D.C., the nonpartisan organization aims to address these and other key issues affecting U.S. manufacturing competitiveness.

As part of the summit on Dec. 8, the council will unveil its national manufacturing strategy, which the council's website promises to be "a realistic and comprehensive solutions roadmap ... that will energize a vibrant, diversified and technologically advanced manufacturing value chain, resulting in American jobs, economic growth and energy and national security."

The strategy will acknowledge that U.S. manufacturers are "at a tremendous disadvantage" because the nation's "capital-cost, tax and regulatory system is very unfriendly to 21st-century manufacturing in America," Wince-Smith says.

"We're going to be recommending that we're much more in line with the rest of the OECD [Organization for Economic Cooperation and Development] countries," Wince-Smith says of America's corporate tax code.

The strategy also will call for eliminating "the double taxation on repatriation of earnings from U.S. affiliates" outside the United States, she adds.

"One of the things that came out of our last competitiveness index is that in 2009, the revenue produced by U.S. companies outside the United States was three times more than the value of all exports," Wince-Smith says. "U.S. companies during the recession have continued to be very profitable and have increased their productivity, and they're sitting on trillions of dollars.

"The issue is are they going to invest it here? Are they going to invest it around the world? Are they going to do a mix? And what are the tools that incentivize [investing in the United States]?"

The Age of the Global Enterprise 

The strategy will touch on a number of other key issues affecting U.S. manufacturing, ranging from the need for a "a very resilient, flexible, highly skilled workforce" to "the intersection of the digital, genetic and nanotechnology revolutions that are all at the heart of manufacturing," Wince-Smith says.

"We're also going to be building on our work around making sure that we unleash the creativity and risk-taking and entrepreneurship that have made this country the greatest in the world," she adds.

The architects of the council's national manufacturing strategy include Sam Allen (who has served as the council's chairman since January 2010); Applied Materials CEO Michael Splinter; MIT President Susan Hockfield; United Association of Pipe Fitters and Plumbers President William Hite; and Wince-Smith.

The council will unveil its national manufacturing strategy at 9 a.m. EST during the National Manufacturing Competitiveness Summit, followed by sessions such as "Winning the Future With Innovation and Manufacturing" and "Building the Next Generation of Highly Skilled American Workers."

"The fundamental imperative that we're going to be presenting at our summit is that we're operating in a very interconnected global economy," Wince-Smith explains. "[Companies are] no longer multinational entities -- they're global enterprises. They're optimizing where the talent, the innovation, the markets and the demand are. They can move capital wherever.

"There are many nations that are doing everything they can to attract and retain this high-value-manufacturing emerging enterprise. We in the United States need to ensure that we have the smartest people, that we're developing and using the most advanced technology, that we have an investment climate that stimulates and rewards production and savings and doesn't penalize U.S companies that want to put high-value 21st-century infrastructure here."

National Manufacturing Competitiveness Summit
"A New Century of American Manufacturing Competitiveness"
Thursday, Dec. 8
Ronald Reagan Center, Washington, D.C.

Agenda 

8 a.m. -- Welcome and networking breakfast

8:30 a.m -- Call to order

8:40 a.m. -- Welcome

8:50 a.m. -- Official recognition of the U.S. Manufacturing Competitiveness Initiative Steering Committee

9 a.m. -- "Ignite American Manufacturing: The Council's National Strategy for U.S. Manufacturing Competitiveness"

9:30 a.m. -- "Taking Action Now to Preserve and Grow U.S. Manufacturing"

10:15 a.m. -- "Winning the Future with Innovation and Manufacturing"

10:45 a.m. -- Networking break

11:00 a.m. -- "Creating Long-Term Value: Attracting Investment and Opening Markets"

11:45 a.m. -- "Building the Next Generation of Highly-Skilled American Workers"

12:30 p.m. -- Keynote lunch: "The Power of Modeling and Simulation to Drive Long-Term Productivity"

1:30 p.m. -- "Unleashing Creativity and Risk Taking: Breakthrough Innovators and Entrepreneurs"

2:15 p.m. -- "Accelerating the Transformation to Smart Manufacturing: the Nexus of Science, Technology and Production"

3:00 p.m. -- Networking break

3:15 p.m. -- "Deploying Next-Generation Smart, Sustainable and Resilient Energy and Manufacturing Infrastructures"

4:15 p.m. -- "Ignite American Manufacturing: Implementing the National Strategy"

4:30 p.m. -- Summit concludes