In his latest State of the Union address, President Obama called for new manufacturing initiatives as a way to “bring jobs back home.” The president outlined, in general terms, the use of manufacturing hubs to coordinate efforts based on technological advances. He also asked Congress to allocate $1 billion for investment in a network of hubs.
This time, it appears that the country’s leaders are paying more than just “lip service” to the needs of domestic manufacturers. The president and Congressional members from both sides of the aisle have pledged support for new initiatives in this area. At the same time, the President has reiterated a previous call to reduce the corporate tax rate for manufacturers to 25 percent, as well as advocate expansion of permanent tax credits for research and development.
Here are some of the details in the plan to revitalize the U.S. manufacturing sector.
Partnerships with Businesses and Communities
To support competition and accelerate innovation in U.S. manufacturing, the Obama administration is proposing a one-time $1 billion investment to launch a network of 15 manufacturing hubs across the country. Leveraging the strengths of a particular region, each institute will bring together different factions – including companies, universities and community colleges, and the government – to develop cutting-edge manufacturing technology and capabilities for U.S manufacturers to use in production.
In addition, a pilot program launched in 2012 will help forge partnerships between community colleges and businesses to train two million workers for well-paying jobs in high-growth and high-demand industries, including advanced manufacturing. These investments will give more community colleges resources needed to become community career centers where people can learn skills that local manufacturers are looking for. They can also ensure that employers will find the skilled workers they need.
The president intends to take executive action to launch three new manufacturing innovation institutes in 2013.The initial focus will be on manufacturing technology that also addresses national security and energy issues.
Tax Code Revisions
The Obama administration has proposed cutting tax rates for manufacturers to 25 percent (from its current high of 35 percent), expanding and making permanent the Research and Development Tax Credit, implementing a new Minimum Tax on offshore earnings, and extending and enhancing tax incentives for investments in U.S. clean energy. This would result in a permanent, refundable Production Tax Credit and reauthorization of the Advanced Energy Manufacturing Tax Credit.
Manufacturing Supply Chains
Currently, the Department of Commerce’s Manufacturing Extension Partnership (MEP) provides a wide range of business services to small manufacturers, and is making improvements to help companies with technological transitions requiring deep supply chain expertise. The president’s budget proposal will earmark $25 million in additional funds to launch Manufacturing Technology Acceleration Centers (MTACs). MTACs are industry-specific centers that can serve as coordination points within key supply chains. The Obama administration also plans to pilot two new centers in 2013 with existing resources.
New steps have been announced to partner with and help strengthen community efforts. They include:
- Create a “Community College to Career Fund.” The goal is to create new partnerships between community colleges and businesses to help train two million workers for jobs in high-growth and high-demand industries, including advanced manufacturing. It is designed to help employers find skilled workers and help individuals starting their careers.
- Launch an “Investing in Manufacturing Communities Partnership.” The president is directing federal agencies to provide assistance to manufacturing communities through a new partnership designed to strengthen the ability to attract investments. To support the partnership, the president’s budget will include a $113 million proposal providing targeted financial assistance to about five manufacturing communities, while leveraging non-federal funds on a 2-to-1 matching basis to co-invest in state-of-the-art infrastructure projects and research facilities. These efforts are aimed at attracting manufacturers and their supply chain of local parts innovators, producers, and distributors, creating new jobs and strengthening the local economy.
- Expand federal efforts to attract investment to the U.S. In 2011, SelectUSA was launched, creating the first national effort to actively attract business investment within our borders. To help governors and mayors compete with foreign countries, the president’s proposed budget will significantly expand SelectUSA.
- Propose a Manufacturing Communities Tax Credit. Incentives are proposed for communities facing concentrated job losses – particularly hard-hit manufacturing communities – to help attract new investment and jobs.
Other parts of the plan focus on creating a “level-playing field” for American-made products by boosting U.S. exports, strengthening our capabilities to enforce trade laws and support American workers, and ensuring U.S. leadership in clean energy and advanced vehicle manufacturing.
It’s clear that U.S. manufacturers are now at a crossroads. Hopefully, the momentum created by the nation’s leaders and the public support of manufacturing initiatives will continue through the remainder of 2013.
Are Manufacturers Bouncing Back?
The news for manufacturers isn’t as dire as it was during the recession. In recent years, manufacturers have added half a million jobs. The industry now employs close to 12 million workers and employment is growing for the first time since the mid-1990s.
What’s more, a number of high-profile companies like Apple, Google, and Ford Motor Co. have been expanding operations at home.
Nevertheless, consider that almost six million U.S. jobs vanished from 2000 to 2010, when manufacturing employment nosedived from 17.3 million to 11.4 million. Many of those jobs ended up in China, India, and other countries with a high labor supply and low costs. The upshot: There’s still a long road to travel.
How One Company Brought Jobs Home
For decades, Sherrill Manufacturing Inc. made stainless steel flatware for Oneida Ltd. in its central New York state factory. But in 2010, Oneida moved its manufacturing operations from the United States to China.
Sherrill’s factory closed, and its employees were let go. The company filed for Chapter 11 bankruptcy protection. But in 2011, former company managers opened the plant up again after a large Internet-based company wanted flatware products made in the U.S.A.
Temporary workers were brought in to fill the order. Then, the company got more orders and hired permanent workers to make its “Liberty Tabletop” brand of knives, forks, spoons, serving pieces, and baby feeding utensils.
The company advertises that it is the only flatware company in the U.S.A.
The Sherrill factory is not back up to its former capacity, but business is strong with renewed interest from consumers wanting to buy American.
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– content reprinted with permission from BKR International.
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