What Should the Trump Administration’s Manufacturing Strategy Look Like?
Tuesday, January 31, 2017 | Capitol Visitors Center | Room 268
By Samantha Fijacko, ASME Government Relations Representative
On Tuesday, January 31, the Information Technology and Innovation Foundation, ITIF, hosted a Congressional Briefing entitled, “What Should the Trump Administration’s Manufacturing Strategy Look Like?” Congressman Tom Reed (R-NY) delivered opening remarks at the briefing and shared his commitment and passion for U.S. manufacturing. As part of President Trump’s transition team, he also spoke to the administration’s commitment to tax reform and infrastructure investment. Congressman Reed is also one of the Co-chairs of the House Manufacturing Caucus along with Congressman Tim Ryan (D-OH). Congressman Ryan was unable to attend but passed along a few remarks demonstrating his support for continued advancement and investment in the America’s manufacturing sector.
ITIF President Robert Atkinson moderated a panel of three speakers.
- Sree Ramaswamy – Partner at McKinsey Global Institute;
- Cliff Waldman – Chief Economist at the Manufacturers Alliance for Productivity and Innovation Foundation; and
- Kelly Marchese – Principal Supply Chain Strategy Leader for Deloitte Consulting
Robert Atkinson (ITIF) began by saying to the audience that if you read any major paper today, the image you see is that the United States has lost manufacturing jobs due to automation. However, that isn’t quite the case. Instead, he argued that it’s our nation’s decreasing competitiveness that is the great contributor job loss. Mr. Atkinson specifically pointed to “aggressive mercantilism” from countries like China along with the high U.S. corporate tax rate, limited Federal investment in industrial R&D, poor workforce training, and limited exports as key contributing factors to the decline of U.S. competitiveness.
Mr. Atkinson asked the question, “How much manufacturing should the U.S. have?” His answer: there needs to be enough manufacturing in the U.S. to pay for its imports. Currently the U.S. is running its highest manufactured goods deficit in history. The U.S. needs to address this problem now by investing in complex, high-value-added jobs; not low-skilled receptive work. He outlined the following ten principles to achieve this.
- Focus on traded sectors, not just manufacturing.
- Services like software and movies… things that the U.S. excels at.
- Focus on high-value-added, defensible sectors and segments.
- Assemblers (unskilled labor) vs. Operators (skilled labor). The U.S. should invest in skilled labor.
- Focus on the trade deficit, not jobs per se.
- Eliminating U.S. trade debt will allow American workers to produce 2% more. More productivity leads to better quality of life, which in turn leads to jobs.
- Recognize what should stay and what shouldn’t.
- For electronics, the U.S. should focus on design, but not assembly. For emerging fields like biotech where design and production are interdependent, the U.S. should invest heavily.
- Understand that when U.S. companies succeed in overseas markets it can help U.S. employment.
- Focus on attraction rather than compulsion.
- The government can help make America the world’s most attractive market for manufacturing.
- Move beyond one-off deals and a low-cost business climate.
- The government needs to offer better manufacturing support infrastructure, like what is being done through the MEP and Manufacturing USA programs.
- Change the playing field through technology.
- America should continue being the world leader in innovation, making it difficult for other countries to catch up.
- Support the defense industrial base.
- The U.S. cannot win wars with services, instead it requires domestic investment in nanotechnology, sensors, advanced batteries, and autonomy.
- Pay attention to where advanced production is located in the United States.
- Perhaps a reshoring tax credit that focuses on communities that have seen long-term, high unemployment. Also through continued investment in the MEP program.
Sree Ramaswamy (McKinsey Global Institute) focused on the job loss that has occurred in the manufacturing sector from 2000-2010, saying that it was due to market trends that had been in the works for years and not to one single occurrence in 2000. He also made the case that manufacturing is important for much more than just jobs and that manufacturing improves American productivity and creates national wealth. He suggested that small- and medium-sized businesses are lagging behind in today’s economy, and there needs to be government incentives to encourage investment in areas such as manufacturing that would otherwise be too costly and risky without it.
Cliff Waldman (Manufacturers Alliance for Productivity and Innovation Foundation) agreed with Mr. Ramaswamy saying that entrepreneurship in this country is way down from where it was in the 1990s. Policy needs to change in order to encourage the creation of manufacturing firms and by doing so there will be a great return on investment.
Mr. Waldman listed entrepreneurship as the first of four areas that America needs to focus on to rebuild the manufacturing sector. The second is increased capital investment in improved investment; third is global supply chain optimization; and fourth is the formation and promotion of clusters. The idea of clusters of academics, industry, and government programs to promote manufacturing innovation is a topic that was discussed previously at ASME’s Congressional Briefing on Advanced Manufacturing Communities, which you can read about here: http://bit.ly/2kk8zY3
Kelly Marchese (Deloitte Consulting) is an industrial engineer by trade and has seen all aspects of the manufacturing supply chain in action. Recently, Deloitte was commissioned to do a report on the design and progress of the Manufacturing USA institutes. Ms. Marchese lead the project and shared a positive outlook for the future of manufacturing in the U.S. thanks to government initiatives like Manufacturing USA. Ms. Marchese commented that American innovation is dependent on our advanced manufacturing capabilities and that the Manufacturing USA program plays a key role in the future of the nation’s manufacturing base. In speaking with Institute Directors and members while researching this report, Ms. Marchese discovered that they were pleased with the progress made, but would like to see even more collaboration between the institutes to tackle crosscutting technology challenges in the future.
A recording of this event is available here.