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77–920 2013

H.R. 4692, THE NATIONAL MANUFACTURING 

STRATEGY ACT OF 2010 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 14, 2010 

Serial No. 111–143 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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(II) 

COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

BOBBY L. RUSH, Illinois 

Chairman 

JANICE D. SCHAKOWSKY, Illinois 

Vice Chair 

JOHN SARBANES, Maryland 

BETTY SUTTON, Ohio 

FRANK PALLONE, JR., NEW JERSEY

BART GORDON, Tennessee 

BART STUPAK, Michigan 

GENE GREEN, Texas 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

ZACHARY T. SPACE, Ohio 

BRUCE L. BRALEY, Iowa 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan (ex officio) 

CLIFF STEARNS, Florida 

Ranking Member 

RALPH M. HALL, Texas 

ED WHITFIELD, Kentucky 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 6 

Prepared statement .......................................................................................... 8 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 11 

Prepared statement .......................................................................................... 12 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 14 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 14 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 15 

Hon. Betty Sutton, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 16 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 16 

Hon. Bruce L. Braley, a Representative in Congress from the State of Iowa, 

opening statement ................................................................................................ 17 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 18 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 19 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 20 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 21 

Hon. Daniel Lipinski, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 21 

Prepared statement .......................................................................................... 23 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 101 

WITNESSES

Aneesh Chopra, Associate Director for Technology & Chief Technology Officer, 

Office of Science and Technology Policy ............................................................. 29 

Prepared statement .......................................................................................... 32 

Answers to submitted questions ...................................................................... 143 

Scott N. Paul, Executive Director, Alliance for American Manufacturing ......... 41 

Prepared statement .......................................................................................... 43 

Answers to submitted questions ...................................................................... 150 

Mark A Gordon, Director, Defense Research Programs, National Center for 

Advanced Technologies ........................................................................................ 52 

Prepared statement .......................................................................................... 54 

Answers to submitted questions ...................................................................... 154 

William M. Hickey, Jr., President/CEO, Lapham-Hickey Steel Corp. ................ 62 

Prepared statement .......................................................................................... 64 

Answers to submitted questions ...................................................................... 162 

Owen E. Herrnstadt, Director of Trade and Globalization, International Association of Machinists & Aerospace Workers ...................................................... 69 

Prepared statement .......................................................................................... 71 

Answers to submitted questions ...................................................................... 168 


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VI 

Kevin A. Hassett, Senior Fellow and Director of Economic Policy Studies, 

The American Enterprise Institute .................................................................... 75 

Prepared statement .......................................................................................... 78 

SUBMITTED MATERIAL

National Manufacturers Association, Manufacturing Strategy, June 2010, 

submitted by Mr. Whitfield ................................................................................. 106 

Letters of support from various organizations to Mr. Lipinski ........................... 120 

American Iron and Steel Institute .................................................................. 120 

The Association for Manufacturing Technology ............................................. 122 

National Tooling & Machining Association/Precision Metalforming Association ............................................................................................................ 123 

Aerospace Industries Association .................................................................... 124 

National Defense Industrial Association ........................................................ 125 

Coalition for a Prosperous America ................................................................ 133 

American Manufacturing Trade Action Coalition .......................................... 134 

Motorola, Inc. .................................................................................................... 135 

United States Business and Industry Council ............................................... 136 

Statement of National Association of Manufacturers, submitted by Mr. Rush .. 140 


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H.R. 4692, THE NATIONAL MANUFACTURING 

STRATEGY ACT OF 2010 

WEDNESDAY, JULY 14, 2010 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:04 p.m., in Room 

2322 of the Rayburn House Office Building, Hon. Bobby Rush 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Rush, Schakowsky, Sutton, 

Green, Gonzalez, Barrow, Braley, Dingell, Whitfield, Stearns, 

Terry, Murphy, Gingrey, Scalise and Latta. 

Also present: Representative Lipinski. 

Staff present: Michelle Ash, Chief Counsel; Angelle Kwemo, 

Counsel; Tim Robinson, Counsel; Peter Ketcham-Colwill, Special 

Assistant; Will Wallace, Special Assistant; Brian McCullough, Senior Professional Staff; Shannon Weinberg, Counsel; Robert Frisby, 

Detailee; Sam Costello, Legislative Assistant; and Ike Brannon, 

Committee Economist. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. The subcommittee will come to order. I want to thank 

the members of the subcommittee who have joined us today for 

participating in this legislative hearing. This afternoon, we will examine a very important bill introduced in February by my dear 

friend from Illinois, Congressman Dan Lipinski, and I want to commend him for his leadership on this issue. And at this point, I want 

to ask unanimous consent that Congressman Lipinski be allowed 

to join us on the dais, be allowed to make an opening statement, 

and be allowed to ask questions for 5- minutes at the conclusion 

of the opening statements and also the questioning by members of 

the committee. Hearing no objections, so ordered. 

The Chair recognizes himself for 5 minutes for the purposes of 

an opening statement. H.R. 4692, the National Manufacturing 

Strategy Act of 2010, has bipartisan support from members of Congress, including many who serve on this subcommittee. Addressing 

manufacturing issues is not new to this subcommittee. Last year, 

we highlighted the need to make the exportation of manufactured 

goods a national priority for the simple fact that America’s manufacturing sector is an essential foundation of our Nation’s economy. 


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Consider the fact that in 2009 the manufacturing sector employed 

more than 11.5 million people. 

Ladies and gentlemen, that number, though significant, is not as 

good as it could be when you consider that 10 years ago America’s 

manufacturing sector employed 17.3 million people, meaning that 

our Nation actually lost 5.8 million jobs between 1999 and 2009. 

The bill we are considering today seeks to make a significant difference in helping to restore and reposition our Nation’s manufacturing capacity so that American workers can better compete in today’s global economy. Today, we are still fighting our way through 

a global financial crisis, and we are facing aggressive competition 

from other industrialized nations as well as emerging countries. 

Some of our manufacturing competitors have designed and implemented 5 or 10-year strategic plans to allow their economies to not 

only compete globally, but also to export their goods to our market 

here at home. The sad fact of the matter is that these international 

markets are not reciprocating by welcoming U.S. goods to their 

marketplace. 

In recent years, the U.S. has actually lost market share to growing export countries like China, Southeast Asia and India. If we do 

not act now, this steady decline will increase. We simply cannot 

allow that to happen and, thankfully, President Obama agrees. I 

commend the President for the significant steps he has already 

taken to strengthen our manufacturing sector. The President’s 

Council of Advisors on Science and Technology continues its assessment of the state of our Nation’s manufacturing sector, its policies 

and its initiatives. Their efforts are moving steadily toward a set 

of recommendations designed to strengthen our Nation’s manufacturing sector. 

With H.R. 4692, the bill we are considering today, we take a 

major step toward this shared goal. This bill requires the President 

to undertake a deep and broad analysis of the Nation’s manufacturing sector, including the international economic environment, 

related technological developments, workforce elements, the impact 

of governmental policies and other relevant issues affecting domestic manufacturers. Based on this analysis, the President, in collaboration with key cabinet officials within his Administration as well 

as governors, state and local elected officials and other key stakeholders in the public and private sectors will develop a 4-year national strategy that identifies goals and makes recommendations to 

improve our Nation’s economic growth. Key provisions of this legislation include a provision requiring that the proposed national 

strategy be delivered to Congress and that it be published on a web 

site to allow the American people to be able to monitor for themselves our efforts to change course as we work to return the American workforce to the front line in terms of manufacturing skills 

and innovation. 

With that, I look forward to hearing from my colleagues on this 

subcommittee as well as our invited guests. Thank you, and I yield 

back the balance of my time. The Chair now recognizes the ranking 

member, Mr. Whitfield, for 5 minutes for the purposes of an opening statement. 

[The prepared statement of Mr. Rush follows:] 


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FOR IMMEDIATE RELEASE 

July 14,2010 

CONTACT: Sharon Jenkins 

(202) 225-4372 otc.; (202) 431-8191 mobile 

Sharon.Jenkins@mail.house.gov 

- orStephanie Gadlin 

(773) 224-6500 otc.; (202) 286-9829 mobile 

Stephanie. Gadlin@mail.house.gov 

Statement by the Honorable Bobby L. Rush, Chairman 

Energy and Commerce Committee Subcommittee on 

Commerce, Trade and Consumer Protection 

Hearing: H.R. 4692, the "National Manufacturing Strategy Act" 

Wednesday, July 14,2010 

W ASHlNGTON - "The subcommittee will come to order. I want to thank the members of 

the subcommittee who have joined us, today, for participating in this legislative hearing. 

"This afternoon, we will examine a very important bill introduced, in Fehruary, by my dear 

friend from Illinois, Congressman Dan Lipinski. r commend him for his leadership on this issue. 

"H.R. 4692, the National Manufacturing Strategy Act of 20 I 0, has bipartisan support from 

Members of Congress, including many who serve on this subcommittee. 

"Addressing manufacturing issues is not new to this subcommittee. Last year, we highlighted 

the need to make the exportation of manufactured goods a national priority for the simple fact that 

America's manufacturing sector is an essential foundation of our nation's economy. Consider the fact 

that in 2009, the manufacturing sector employed more than 11.5 million people. 

"Ladies and gentlemen, that number, though significant is not as good as it could be when you 

consider that, 10 years ago America's manufacturing sector employed 17.3 million people-meaning 

that our nation actually lost 5.8 million jobs between 1999 and 2009. 

-more-
4 


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2-

"The bill we're considering, today, seeks to make a significant difference in helping to restore 

and reposition our nation's manufacturing capacity so that American workers can better compete in 

today's global economy. 

"Today, we are still fighting our way through a global financial crisis, and we are facing 

aggressive competition from other industrialized nations as well as emerging countries. Some of our 

manufacturing competitors have designed and implemented five- or lO-year strategic plans to allow 

their economies to not only complete globally but, also, to export their goods to our market here at 

home. The sad fact of the matter is that these international markets are not reciprocating by 

welcoming U.S. goods to their marketplace. 

"In recent years the U.S. has actually lost market share to growing export countries like China, 

Southeast Asia and India. 

"lfwe do not act now, this steady decline will persist. We simply cannot allow that to happen 

and, thankfully, President Obama agrees. 

"I commend the President for the significant steps he has already taken to strengthen our 

manufacturing sector. 

"The President's Council of Advisors on Science and Technology continues its assessment of 

the state of our nation's manufacturing sector, its policies and initiatives. Their efforts are moving 

steadily toward a set of recommendations designed to strengthen our nation's manufacturing sector. 

"With H.R. 4692, the bill we are considering today, we take a major step forward toward this 

shared goal. This bill requires the President to undertake a deep and broad analysis of the nation's 

manufacturing sector, including the international economic environment, related technological 

developments, workforce elements, the impact of governmental policies and other relevant issues 

affecting domestic manufacturers. 

"Based on this analysis, the President, in collaboration with key cabinet officials within his 

Administration as well as governors, state and local elected officials and other key stakeholders in the 

public and private sectors, will develop afour- year national strategy that identifies goals and makes 

recommendations to improve our nation's economic growth. 

"Key provisions of this legislation include a provision requiring that the proposed national 

strategy be delivered to Congress and that it also be published on a website to allow the American 

-more-
5 


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3 

people to be able to monitor, for themselves, our efforts to change course as we work to return the 

American workforce to the front of the line in terms of manufacturing skills and innovation. 

"It is my sincere hope that this legislation, combined with concerted efforts by the public and 

private sectors, will mark a sea change in our culture that will help our manufacturing sector become 

bigger, bolder and better than it was in the past. 

"The good news is, ladies and gentlemen, that I am convinced that those of us who are 

assembled here, today, share the same passion on this subject that I do. 

"And with that, I look forward to hearing from my colleagues on this subcommittee as well as 

our invited guests. 

"Thank you very much and I yield the balance of my time." 

### 
6 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. Mr. Chairman, thank you very much, and I certainly want to thank Mr. Lipinski for this legislation, and I know 

that we have people on our side of the aisle that support it. I do 

want to give some constructive criticism of this legislation. I think 

when we criticize, we also need to try to come up with suggestions 

to improve it because all of us are concerned about manufacturing. 

But I read through this bill three times, and I was quite concerned 

about it. First of all, we have a sense of Congress on 18 issues of 

concern regarding manufacturing, which is fine, and things like 

creating high quality jobs and increasing productivity, those types 

of issues. And then we have a task force that would be appointed 

by the President, and on that task force everyone on the task force 

are government employees. And then after the appointment of the 

task force, it says at a minimum they must consider the following 

issues, and there are 22, 23 of those issues. 

Now the task force is to make recommendations. In addition to 

the task force, the President is supposed to appoint a National 

Manufacturing Strategy Board and there were 21 people that belonged to that board, and they should make recommendations to 

the task force. Now I noticed that the first report is due on February 28, 2011, and that is not very far from now. And when you 

consider all the things that have to be considered and you look at 

all the guidelines there also must be goals set and they spell out 

the specific goals that must be looked at, and then they make recommendations to fulfill those goals. Then you have the Strategy 

Board itself, and, as I said, it has 21 members, and of course after 

the first report is made the Government Accounting Office 3 years 

following that first report is supposed to do a review to determine 

whether or not there has been any success in fulfilling the recommendations made by the task force. 

In addition to that, in developing each National Manufacturing 

Strategy the President acting through the Office of Science and 

Technology and Policy, which I believe will be on the panel today, 

must enter into an agreement with the National Academy of 

Sciences, and I am not sure if they are with us today or not. But 

the legislation points out what things they must consider, and then 

it talks about when the first report is due. And then in addition 

to that there are further required studies in order to inform future 

national manufacturing strategies not later than 60 days after enactment of this act the President shall enter into an agreement 

with the National Academy of Sciences to develop three more reports, one not later than 14 months after entering into the agreement, two not later than 20 months after entering into the agreement, and three not later than 24 months after entering into the 

agreement. 

And while I have not had the opportunity to look at this in great 

depth, it would appear to me that there may be some ways to make 

this legislation more effective than it would be by maybe merging 

the Strategy Board and the task force and bringing in the private 

sector people along with the government people on the same board. 

So as I read through this, like I said, I think it is a wonderful idea. 


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We are all concerned about manufacturing but this bill is really 

complex and there are so many reports due in this bill that I am 

quite concerned really about the overall effectiveness of it. Having 

said that, I am open to being swayed by our distinguished panel 

here, and I would like to also, Mr. Chairman, just ask unanimous 

consent to place into the record a manufacturing strategy for jobs 

in a competitive America that was developed June, 2010, by the 

National Manufacturers Association in which they set out a number of recommendations and policies that they think would be helpful to reinvigorate the manufacturing industry in our county. And 

if there is no objection, I would just like to enter that into the 

record. 

Mr. RUSH. Hearing no objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. And with that, I yield back the balance of my 

time although you were kind enough. I still see I have 5 minutes 

left. 

[The prepared statement of Mr. Whitfield follows:] 


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Statement of the Honorable Ed Whitfield 

Ranking member, Subcommittee on commerce, Trade, and Consumer Protection 

Hearing on H.R. 4692, the Manufacturing Strategy Act 

July 14,2010 

• Thank you Mr. Chairman. Today's hearing is relevant as we discuss 

ways to improve our economy's output and improve long term 

prospects that provide jobs. Without significant changes to the 

manner we approach regulation of business, we cannot expect to 

improve our high unemployment or expect the economy to prosper in 

the long tenn. 

• When we evaluate our current manufacturing sectors, we cannot 

overlook the fact productivity gains have made and their effect on the 

manufacturing and agricultural sectors. We require fewer workers to 

produce a greater number of goods, leading to some of the losses in 

manufacturing employment since their peak in the 1970's. But we but 

we still have approximately the same number of workers in 

manufacturing that we had a century ago. The difference is now we 

have grown the employment base by 100 million workers in other 

sectors that have flourished and we have achieved a much higher 

standard of living across the globe because of it. 

• While H.R. 4692 targets the manufacturing sector with studies to 

focus on ways of improving their prospects, I am unconvinced we 

need to enact a law to require another study, and question the value 

one more study. 

o As described in the majority's hearing memo, there are a 

number of existing studies that have been conducted, including 

the President's own Economic Council that produced a study 

in December title "A Framework for American Manufacturing" 

o Additionally, Commerce Department has its own Interagency 

Working Group on Manufacturing Competitiveness, as does the 

National Science and Technology run the Interagency Working 

group on Manufacturing Research and Development 
9 


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• We all agree we want to see our manufacturers remain globally 

competitive. But there are many other tools at our disposal that could 

improve manufacturers' prospects and grow jobs without a study. We 

have pending Free Trade Agreements with South Korea, Panama, and 

Columbia that could instantly increase our exports to those countries 

and boost our manufacturing sector if Congress were to pass them. 

Those agreements will instantly eliminate tariffs and restrictions to 

our goods that will increase our exports and increase jobs for those 

industries. And the benefits will accrue to more than just 

manufacturers: our agricultural sector could see substantial growth in 

meat exports to South Korea that some experts estimate will generate 

an additional $2 billion in annual revenue. 

• Rather than follow such known policies that will benefit our economy, 

I am concerned the legislation sets the table for another managed trade 

policy and industrial policy that directs taxpayer resources towards 

preferred sectors and businesses. Subsidizing businesses is not a 

policy Congress should endorse, lest we want to intentionally 

disadvantage all other businesses that are left on the outside because 

they are not "favored" industries. 

• It does not help our manufacturers face a very high corporate tax rate 

here in the United States. Where other OECD countries have lowered 

their rates over the past two decades, our corporate tax rates have 

remained largely unchanged. If we can't provide good reasons for 

businesses to stay here, it is only wishful thinking they will remain. 

• I want our companies to prosper, grow, and create employment 

opportunities in the United States. But I am also concerned the 

approach Congress is too often taking lately is to subsidize industries 

and seek to protect them from competition. As the WTO recently 

ruled, EU aid to Airbus was an illegal export subsidy that harmed 

Boeing. We should do well to avoid similar mistakes. And this 

legislation looks like it is a blueprint for channeling taxpayer 

resources to a particular industry. 

• It is also noteworthy this Subcommittee considered a bill last month 

that is posing serous concerns not only for foreign manufacturers, but 
10 


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also for our own companies that export. If we want to ensure our 

companies have access to foreign markets, we have to make sure we 

don't give our trade partners reason to enact retaliatory barriers. 

Protectionism fails and we should learn from past mistakes not to 

erect such barriers. 

• I appreciate the witnesses' participation and I look forward to their 

testimony so we can make informed decisions whether this 

Committee needs to enact legislation to acquire the information this 

legislation would generate. 
11 

OPENING STATEMENT OF HON. ROBERT E. LATTA, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. LATTA. Thank you, Mr. Chairman, and Ranking Member 

Whitfield. Thank you for holding the hearing today on H.R. 4692, 

which relates to a subject that is very near and dear to my heart 

in the 5th Congressional District which is manufacturing. As many 

of you are aware, the heart of the Midwest is dependent on manufacturing and agriculture to maintain a viable and strong economy. 

In these tough economic times, it is important that Congress protect these dedicated, hard-working Americans. Ohio employs roughly 629,500 individuals in the manufacturing sector, and my congressional district is the largest manufacturing district in Ohio and 

the 20th largest in Congress. I do have some concerns, as Mr. 

Whitfield pointed out, with the legislation, and other pieces of legislation that have gone through the committee as we continue to 

see an expansion in federal bureaucracy and the creation of new 

studies in other federal programs as well as the creation of new 

commissions. 

When it comes to a National Manufacturing Strategy to strengthen our manufacturing sector and help create jobs and business, we 

do need a common sense approach. Many companies and organizations are instituting their own National Manufacturing Strategy 

and one that does not need the taxpayer dollars and studies to accomplish it. Congress needs to create better tax policies and extend 

current tax reductions for businesses, small and large, who keep 

Americans employed and create jobs for the unemployed, not to 

burden businesses and the American people with job preventing 

legislation such as cap and trade and the health care legislation 

but pass the pending free trade agreements to create a level playing field with other countries and not impose harmful rules and 

regulations that burden or hinder industries, hinder economic 

growth and create much uncertainty that keep dedicated, hardworking Americans from retaining jobs. 

With that, Mr. Chairman, I look forward to today’s witnesses and 

working with the committee on manufacturing issues that face our 

country today. Thank you, and I yield back. 

[The prepared statement of Mr. Latta follows:] 


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Congressman Robert E. Latta 

Subcommittee On Commerce, Trade and Consumer Protection 

July 14, 2010 

Hearing on H.R. 4692, the National Manufacturing Strategy Act of 

2010. 

Good afternoon Chairman Rush and Ranking Member 

Whitfield. Thank you for holding this hearing on H.R. 4692, which 

relates to a subject that is very important to the Fifth Congressional 

District of Ohio, manufacturing. 

As you may be aware, the heart ofthe Midwest is dependent on 

manufacturing and agriculture to retain a viable and strong economy. 

In these tough economic times, it is important that Congress protect 

these dedicated hard-working Americans. Ohio employs roughly 

629,500 in the manufacturing sector, and my Congressional district is 

the largest manufacturing district in Ohio and the 20th largest in 

Congress. 

I am concerned that with legislation such as H.R. 4692, and 

many others that have gone though this Subcommittee, we continue 

to see an expanse in government bureaucracy, creation of new 

"studies" and other federal programs, as well as the creation of new 
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commissions. When it comes to a national manufacturing strategy to 

strengthen our manufacturing sector and help create jobs and 

business, we need a common sense approach. It is my understanding 

that many companies and organizations are instituting their own 

national manufacturing strategy, one that does not need taxpayers' 

dollars and new studies or commissions to accomplish it. 

Congress needs to create better tax policies and extend current 

tax cuts to small businesses and corporations who keep our 

Americans employed and send the unemployed back to work; not 

burden business and the American people with job-killing legislation 

such as cap-and-trade or the health-care bill; pass the pending free 

trade agreements to create level playing fields with other countries; 

and not impose harmful rules and regulations that burden all 

industries, hinder economic growth, and create much uncertainty that 

keep dedicated hardworking Americans from obtaining jobs. 

With that being said, I look forward to hearing from today's 

witnesses and working with the Committee on manufacturing issues. 

Thank you and I yield back. 
14 

Mr. RUSH. The chair recognizes Dr. Gingrey for 2 minutes. 

OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. GINGREY. Mr. Chairman, thank you. And I want to thank 

you for calling today’s hearing on H.R. 4692, the National Manufacturing and Strategy Act of 2010. Improving manufacturing needs 

to be a major focus for us to get people back to work and to grow 

our economy. Mr. Chairman, I appreciate your willingness to have 

the subcommittee receive testimony on this important issue. Over 

the past decade, we have seen a once robust sector of the economy 

in decline. As the majority memo for this hearing indicates, we 

have lost 5.8 million manufacturing jobs since 1999. Given the success of this industry in the past, this statistic is decidedly negative. 

Furthermore, manufacturing continues to represent a smaller portion of the overall economy given that we have lost market share 

to our foreign competitors. Mr. Chairman, two to three times a 

year, I convene a meeting of leaders from across the industry, I call 

it my manufacturing and advisory committee, to advise me on how 

policy coming from Washington affects their ability to run their 

businesses. This is, of course, in my 11th Congressional District of 

Georgia. 

I held one of the meetings on Monday, just this past Monday, at 

Dow Chemical in Marietta, Georgia, and during that round table 

session the message I received from them was overwhelmingly 

clear, current Washington policies are not helping create jobs or 

lower the cost of doing business. Instead, proposals like cap and 

trade and the newly enacted health care law, Patient Protection 

and Affordable Care Act of 2010, are only adding to regulatory burden placed on these companies. Additionally, we have not helped 

these companies expand their markets by enacting existing free 

trade agreements, Panama, Colombia, South Korea. We have not 

provided incentives to foreign companies to invest in United States 

by lowering our corporate tax rate. 

One of the largest manufacturers in my district even told me 

that foreign manufacturing companies, his company, and I won’t 

mention the name of the company but it is a Japanese company, 

they want to bring jobs to hard-working Americans. They will hold 

off on making those investments because of the current policies 

being pursued by this Administration and Congress, and, more importantly, the uncertainty of really not knowing how to deal with 

what is coming next. So, Mr. Chairman, I do applaud my colleague 

and good friend from Illinois, Mr. Lipinski, for raising awareness 

of these important manufacturing issues. I look forward to hearing 

from our panel of witnesses on how to grow manufacturing in the 

United States. Indeed, we look forward to that. And I yield back 

my time. 

Mr. RUSH. The chair recognizes Mr. Green for 2 minutes. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, for holding the hearing. 

I want to thank our colleague, Mr. Lipinski, for introducing this 

important piece of legislation, which I am a co-sponsor. It is imporVerDate Mar 14 2013 01:01 Mar 20, 2013 Jkt 077920 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HR\OC\A920.XXX A920

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tant that we closely examine the issue of domestic manufacturing 

and how we can bolster our economy by supporting our domestic 

manufacturing capabilities. I am a co-sponsor of this bill because 

I believe it takes the right approach toward analyzing our country’s 

capabilities. This bill directs the President to develop a long-term 

plan for supporting our domestic manufacturing and ensuring that 

it includes the input of an array of private sector participants. Currently, there are many federal programs aimed at increasing our 

manufacturing sector, and I am concerned that these programs 

lack coordination, efficiency and are reactive to events and may 

leave our workers and companies unprepared for a challenge that 

will present them in the future. It is important that we put Americans back to work, and one of the ways we can accomplish this is 

by improving our capacity of manufacturing. 

Our district in Houston has a great deal of manufacturing related to the oil and gas production, refinery, and chemical industry, 

but we have capacity to do more. This is the story across the country. While our unemployment has fallen from its peak, we must remain focused on job creation in short term and long term. I believe 

this bill represents a long-term remedy and will give Congress, the 

President, and private sector stakeholders the tools necessary to 

spur growth in manufacturing. Again, Mr. Chairman, thank you for 

your leadership on calling the hearing, and I yield back my time. 

Mr. RUSH. The chair recognizes Mr. Gonzalez for 2 minutes. 

Mr. GONZALEZ. I waive opening. 

Mr. RUSH. The chair recognizes Mr. Terry for 2 minutes. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. Thank you, Mr. Chairman, and I am anxious to hear 

from our esteemed panel here, the breadth of what this bill will 

allow with the new committees to look into this. I would like to 

know if we are working under a premise that the Administration’s 

report that they put out is incomplete and therefore necessary to 

duplicate it in some manner with this bill. I wonder and would like 

to have input whether or not these panels will look at, as Mr. 

Gingrey said, look at cap and trade. Will it look and say, oK, if we 

are going to raise electric rates, natural gas rates, and transportation fuel whether that will impact decision making by manufacturers to stay in the United States or move overseas. Look at the 

health bill where now we have a health bill, most manufacturers 

are over 50 employees, even the smaller ones that are around my 

district, and all make more than 25,000, so they will have more bureaucratic responsibilities with none of the benefits from this 

health care bill. They will even go far as if they buy pizza for their 

employees on Fridays that they will have to 1099 Pizza Hut now. 

Are those the type of bureaucratic things that you will look at 

to determine if that provides a lack of incentive to manufacturers 

to stay within the United States. Also, look at OSHA. And I have 

a letter here from one of our manufacturers in Nebraska who has 

one of the best proven safety programs, so what do they get instead 

of congratulations? They get a letter saying your establishment was 

selected from a list of low rate establishment and high rate industries. Congratulations. You get an additional audit. And we wonder 


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why our manufacturers are moving to China. There is less government interference in China than there is in the United States now. 

And, by the way, this was so intrusive that they personally 

pulled all of the employees off the line for interviews. They walked 

into every doctor’s office and hospitals in the area asking for employee records. Why? Because they had a successful safety program. Our bureaucracy is chasing our jobs overseas. It is not a secret. I yield back. 

Mr. RUSH. The chair recognizes the gentlelady from Ohio, Ms. 

Sutton, for 2 minutes. 

OPENING STATEMENT OF HON. BETTY SUTTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Ms. SUTTON. Thank you, Chairman Rush, for holding this important hearing on the National Manufacturing Strategy Act. Manufacturing is the backbone of our economy, our national security, 

and our country, and it is long past the time but we must stand 

up for U.S. manufacturing. Now I am proud to say that I am a 

product of a manufacturing household. When I grew up it was the 

time when people could count on a good manufacturing job to put 

food on the table and cover health care costs and supply a pension. 

But, unfortunately, our Nation has witnessed the loss of millions 

of good manufacturing jobs due to unfair trade practices and policies that put our companies and our workers at a disadvantage. 

Over the last decade, the U.S. has lost roughly six million manufacturing jobs. In Ohio since 2000, we have lost more than one in 

three manufacturing jobs. Many of these jobs have gone to China. 

According to a recent Economic Policy Institute report unfair trade 

with China has cost our Nation 2.4 million jobs between 2001 and 

2008, and that is unacceptable. 

Ohio has lost nearly 92,000 jobs because of China alone. In my 

congressional district, 5,700 jobs have been lost as a result of China’s current fee manipulation and other illegal subsidies and unfair 

trade barriers. These are good-paying jobs that pay families supporting wages, and they have a multiplier effect. Each manufacturing job can generate at least four other jobs in the private sector. So I am proud to be an original co-sponsor of this bill and there 

must be coordination among the various agencies to develop a cohesive strategy. We just focus on replacing policies that reward businesses for outsourcing jobs with incentives and sensible tax policies 

that will help businesses and workers make it right here in America. We must develop a trade model that puts an end, an enforceable end, to current fee manipulation, illegal subsidies, and product 

dumping, one that requires reciprocity of market access, and one 

that ensures that products produced elsewhere will be safe for consumption here in the United States. With that, Mr. Chairman, I 

thank you again for holding this hearing, and I yield back. 

Mr. RUSH. Mr. Stearns is recognized for 2 minutes. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Thank you, Mr. Chairman. I want to welcome our 

witnesses and also thank you for having this hearing. I would say 

to Ms. Sutton and others who have sponsored the bill that you 


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should be aware that there is a report by the Executive Office of 

the President, December, 2009, entitled A Framework for Revitalizing American Manufacturing. And a lot of the things that you 

have mentioned are already in this report. So I think like others 

I am a little concerned that by passing this bill, we will duplicate 

what has already been done and we are going to create a brand 

new commission, like entities. Of course, that means all new government employees and all that goes with it when we actually have 

a report here that is outlining what should be done to the President, and, frankly, Mr. Chairman, I think the President has the 

power and responsibility to call up any manufacturing CEO in this 

country and ask them what should be done. He could canvas them 

every 6 months, every 3 months, whenever he wants, and, lo and 

behold, he could find out all this information without passing H.R. 

4692. 

The other thing I have concern about is people talk about the 

loss of manufacturing jobs, and I think that is true, but I think one 

of the reasons is because the corporate tax rate is too high in the 

United States. I got a graph here in 1981 the United States was 

over 40 percent corporate tax and most of the OECD countries 

were at 45 percent. Do you know what it is today? The United 

States is at 35 percent and the OECD countries on average are less 

than 25 percent. So right there is something that immediately, Mr. 

Chairman, do we lower the tax rate for corporations? That would 

be a big incentive for corporations to continue manufacturing. 

Also, I think, as mentioned, signing free and fair trade agreements to open up new markets is a good idea for American products, obviously, providing regulatory relief and creating investment 

tax credit for new manufacturing investment. I bet you if we went 

to the Manufacturing Association and asked them which approach 

they would rather have is the corporate tax relief, investment tax 

credits, free markets, I think they would all approve of that perhaps better than setting up new commissions and new entities and 

new government employees. So I think we should caution ourselves 

as we move forward but I certainly welcome the panel and am interested in their comments. Thank you, Mr. Chairman. 

Mr. RUSH. Mr. Braley is recognized for 2 minutes. 

OPENING STATEMENT OF HON. BRUCE L. BRALEY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA 

Mr. BRALEY. Thank you, Mr. Chairman, and thank everyone for 

the time and attention they give to this very important topic. It is 

true that the President has talked about a National Manufacturing 

Strategy but it is incumbent upon us to take the underlying cause 

of why we have slipped so far in our country’s strong history of 

manufacturing as a model for what we need to do to right the ship 

and go forward. My friend from Nebraska made the comment that 

there is less government intrusion in China than in the United 

States. Many of the Chinese manufacturers are, in fact, arms of the 

Chinese government so I fail to see how that is relevant to the conversation we are having here. 

The reality is that in states like Iowa, which has a long history 

of being a part of the Midwestern Rust Belt, we have seen some 

of our most reliable employers like Maytag, Amana, and companies 


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like John Deere, Caterpillar, other companies that have been a 

part of the fabric of our state for over a century start to ship jobs 

overseas because of the failure of this country to have a coherent 

National Manufacturing Strategy. That is why this bill is important. That is why this hearing is important. And I look forward to 

hearing the testimony of our witnesses as we move forward. Thank 

you, Mr. Chairman. 

Mr. RUSH. Mr. Murphy is recognized for 2 minutes. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. MURPHY. Thank you, Mr. Chairman. For more than 100 

years the U.S. has ranked number one in the world of manufacturing output. Next year for the first time since we overtook at the 

turn of the 20th century, the U.S. is going to give up that title to 

China, which displaced more than 2.3 million U.S. manufacturing 

jobs in the last decade often selling defective products like toxic 

drywall and poisonous pacifiers, which we have had hearings on 

before. While unemployment has remained above 9–1/2 to 10 percent in this country, we have passed bills that have been by all accounts measure to actually lose jobs in America, cap and trade, 

health care, and others. And although we certainly want to see jobs 

come out as in the green energy issue such as wind and solar and 

also insulating buildings, I would much rather see us also employing thousands of workers to build clean coal power plants, nuclear 

power plants, and rebuilding America’s energy infrastructure which 

is hopelessly outdated. 

Our country does need a comprehensive manufacturing strategy, 

and, quite frankly, I would like to see our committee playing a key 

role in this rather than necessarily relinquishing it to someone 

else. Part of that is to make sure that we are pushing to hold 

China and other countries accountable for unfair and illegal trade 

practices like the Currency Reform Act that Congressman Tim 

Ryan and I have put forth ensuring American dollars intended to 

create American jobs are invested in American steel and American 

equipment, provide American manufacturers with tax relief, tax 

credits, loan guarantees, job training, and other financial incentives all to create American jobs, not create federal agencies and 

there is more intrusiveness. 

One of the questions I want this panel to be prepared with, I 

want to know how many of you have signed the front of a paycheck, how many of you have created manufacturing jobs, and if we 

create some other panel in the federal government, I want those 

people who have actually done this for a living, not people who 

talked about it, read about it, or stayed at a Holiday Inn last night. 

Thank you. 

Mr. RUSH. The chair recognizes the Chairman Emeritus of the 

full committee, my friend from Michigan, Mr. Dingell, for 5 minutes. 


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OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. DINGELL. Mr. Chairman, thank you, and I commend you for 

holding a hearing on H.R. 4692, the National Manufacturing Strategy Act of 2010, of which I am an original co-sponsor with my good 

friend from Illinois, Mr. Lipinski, who is the principal author. I 

commend him and I thank him. I would also like to extend a warm 

welcome to all of our witnesses today. I very much regret that Ron 

Bloom, who played a key and greatly appreciated role in diverting 

the disaster in the domestic automobile industry, cannot be with us 

today to express his views on the bill. I strongly disagree with the 

views of those who consider manufacturing an anathema to advance economies. Rather, it is an essential component of these 

economies. Right to the contrary. Several of our most prominent 

trading partners employ national strategies to support domestic, 

economic growth in manufacturing. China and Germany, most notably, use these strategies to aid their continued global leadership 

in, manufactured goods. 

Indeed, as is particularly the case with Germany, these manufacturing exports need not be low value added but are rather technologically advanced goods of consistently high quality produced by 

very skilled workers. For example, as the global demand for clean 

energy technology continues to grow the strategy mandated under 

H.R. 4692 would help the United States develop and maintain a 

competitive position in this very important market which is so essential to our continued world leadership and economic strength. In 

brief, I view this legislation as part and parcel of the federal government’s ongoing effort to create much-needed jobs and to adapt 

the country’s economy to the future. I am quite gratified to see that 

H.R. 4692 rightly directs that the manufacturing strategy mandates include an examination of the detrimental effect of unfair 

trade practices on domestic manufacturing, a very much-needed activity by the federal government. 

I firmly believe that the federal government must do all it can 

to ensure that our trading partners play by the rules in order to 

foster sustainable employment growth here as a part of a shared 

advantage to all countries from this kind of practice. I note this bill 

comes at a time when my home state of Michigan continues to endure record unemployment levels largely due to the hemorrhaging 

of manufacturing jobs caused by a decade of unfair trade practices 

and policies. I believe H.R. 4692 will serve in good part to right 

past failed policies, and as such I passionately support its expedited consideration and adoption. I look forward to a frank discussion with our witnesses today about their views on H.R. 4692. I 

thank you for your courtesy, Mr. Chairman, and I yield back the 

balance of my time. 

Mr. RUSH. The chair recognizes the gentleman from Louisiana, 

Mr. Scalise, for 2 minutes. 


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OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. I am pleased that our 

subcommittee is examining the manufacturing industry and the 

need for a National Manufacturing Strategy. I applaud my colleagues for bringing attention to this issue. As all my colleagues 

know, manufacturing is a major economic driver of our state’s 

economies. In Louisiana alone, manufacturing employs over 

140,000 people and accounts for over $40 billion in economic output. I would also like to point out that the chemical and petroleum 

industries are tops among the manufacturing sectors in my state 

although I question whether these industries will continue to lead 

the manufacturing sector in Louisiana, given the reckless policies 

being pursued by this Administration such as the cap and trade energy tax and the moratorium on energy exploration in the Gulf of 

Mexico. 

The United States must continue to lead the world on manufacturing. Congress must enact policies that ensure we do. The legislation before us today seeks to do. The legislation before us today 

seeks to undertake a broad analysis of the manufacturing sector 

and develop a National Manufacturing Strategy. I support the intent of this bill. We should look at strategies to help promote the 

manufacturing industry so we can determine what policies will 

help manufacturers compete in the global marketplace. But the industry does not need another study. It needs sound policies. If a 

manufacturing strategy is the goal all we have to do is look to the 

National Association of Manufacturers, the voice of manufacturing 

in the U.S., the very association that advocates for manufacturers, 

and they have developed a strategy, the manufacturing strategy for 

jobs in a competitive America. 

It is a comprehensive approach for making manufacturing in the 

United States more competitive and productive. And what does the 

national voice of manufacturing say should be our strategy? It calls 

for lower taxes, less government regulation, and free access to foreign markets. It calls for effective policies that spur innovation, 

promote job growth and provide immediate results. Unfortunately, 

we have been getting the opposite from this Administration who 

has given us higher taxes, out of control government spending, and 

reckless policies like the President’s moratorium on domestic energy production that is costing us thousands of jobs and reducing 

America’s energy independence. It is no wonder that this reckless 

agenda has cost our Nation millions of jobs at a time when we 

should be sharply focused on creating jobs. I look forward to hearing from our panelists today on the merits of H.R. 4692, and on 

manufacturing strategies that have already been proposed. Thank 

you, and I yield back. 

Mr. RUSH. The chair recognizes the vice chair of the subcommittee, the gentlelady from Illinois, Ms. Schakowsky, for 2 minutes. 


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OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I am really excited 

that we are having this hearing today. I think it is probably one 

of the most important questions that we can deal with in our country. The manufacturing sector has taken an enormous hit in recent 

years, over 10 years from 1999 to 2009 nearly 6 million manufacturing jobs, more than a third of the entire sector, were lost. There 

have been many factors which I am sure a lot of people have talked 

about including tax incentives for companies that move jobs overseas. The House has passed a number of bills to rein in those tax 

advantages, but I think more should be done. Under the bill before 

us, every 4 years the President would have to issue a manufacturing strategy that considers federal policies including tax policy 

and how they promote or harm domestic manufacturing. 

I think a critical component is the promotion of domestic manufacturing, and I will continue to advocate for rewards for businesses that create a real partnership with American workers, engage in good corporate practices, and improve our standing in the 

global marketplace. I have introduced a bill called the Patriot Corporations of America Act, which would reward companies that are 

good corporate actors by moving them to the front of the line for 

government contracts and giving them a 5 percent reduction in 

their taxable income. To qualify, those businesses would have to 

produce at least 90 percent of their goods and services in the 

United States and spend at least 50 percent of their research and 

development budgets in the United States. 

There is no good reason that the trend of job loss in the manufacturing sector can’t be reversed. There is great potential in our 

American companies. In Illinois, academic researchers in private 

labs are doing amazing things with nano technology while smart 

thoughtful individuals are transforming educational systems to 

educate our children in ways that will prepare them for advance 

manufacturing careers. I am optimistic about the future of manufacturing in America, and I hope this hearing will help us better 

understand what our next steps should be. I thank you again, 

Chairman, and I yield back the balance of my time. 

Mr. RUSH. The chair recognizes now the author of the legislation 

that we are considering, the gentlemen from Illinois, Mr. Lipinski, 

for 2 minutes for the purpose of opening statement. 

OPENING STATEMENT OF DANIEL LIPINSKI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. LIPINSKI. Thank you, Mr. Chairman. I would like to request 

unanimous consent that my written statement be put in the record. 

Mr. RUSH. Hearing no objection, so ordered. 

Mr. LIPINSKI. I would like to thank my good friend, Chairman 

Rush, as well as Ranking Member Whitfield and the subcommittee 

for scheduling today’s hearing. The Strategy Act has over 50 bipartisan co-sponsors in the House in support of a wide-ranging organization. At this time, I would like to request unanimous consent to 

enter into the record letters of support for this bill from some of 

these organizations. 


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Mr. RUSH. Hearing no objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. LIPINSKI. I would also like to request unanimous consent for 

the record to remain open for 3 days to allow other pending letters 

of support to be entered. 

Mr. RUSH. Hearing no objection, so ordered. 

Mr. LIPINSKI. Thank you, Mr. Chairman. I look forward to hearing testimony from our witnesses. I would especially like to welcome Bill Hickey, President of Lapham-Hickey Steel, a familyowned steel manufacturer located in my district. Almost 1/3 of domestic manufacturing jobs have disappeared in the past decade 

and manufacturing share of GDP is roughly half of what it was in 

1980. It is clear that allowing this trend to continue will further 

undermine the American economy and the middle class and also 

undermine our defense capability leaving us strategically vulnerable. To help avoid this, I introduced the Strategy Act. Although 

we currently have numerous federal programs and policies designed to support American manufacturing, they are generally disjointed, ad hoc, and reactive diminishing their impact. The goal of 

the strategy is to harmonize manufacturing policy and make a 

more unified, coherent, forward looking and result oriented. 

It is important to point out that this is not an industrial policy 

or command market approach. Instead, it is a way to coordinate 

policy to better support American entrepreneurship and job creation. This bill was developed over many months with input and 

feedback from large and small businesses, academic trade associations and labor groups. I look forward to hearing from the witnesses and working with the members of the committee and others 

to examine ways we can improve upon this bill. I have heard some 

recommendations for changes we may make to this bill and I am 

looking forward to working with members of the committee and 

others, as I said, and incorporate some of these changes and make 

this a better bill because that in the end is a goal to make manufacturing stronger in America because it is certainly something we 

need for our economy and for our national defense. I yield back. 

[The prepared statement of Mr. Lipinski follows:] 


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Opening Statement 

Energy and Commerce Committee 

Subcommittee on Commerce, Trade and Consumer 

Protection 

July 14,2010, Hearing on HR 4692, the National 

Manufacturing Strategy Act 

I would like to thank my good friend from Chicago, 

Chairman Rush, as well as Chairman Waxman, Ranking 

Member Whitfield, and the members of the 

subcommittee for scheduling today's hearing on this bill, 

which I introduced earlier this year. The Strategy Act 

has over 50 bipartisan cosponsors in the House and the 

support of a wide-ranging group of organizations. At 

this time I would like to request unanimous consent to 

enter into the record letters of support for this bill from 

some of these organizations. I would also like to request 

unanimous consent for the record to remain open for a 

few days to allow other pending letters of support to be 

entered. 

I look forward to hearing testimony from our 

distinguished witnesses, and I would especially like to 

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welcome Mr. Bill Hickey, President of Lapham-Hickey 

Steel, an 84 year old, family-owned steel manufacturer 

located in my district. 

As Bill knows, and all the members of this committee 

know, manufacturing has been a pillar of our economy 

for generations and today employs 11.6 million 

Americans. Because manufacturing accounts for nearly 

two-thirds of U.S. exports, its expansion is critical to 

lowering our trade deficit and helping lead the country 

out of recession. Manufacturing is also vital for our 

national security, ensuring we remain self-sufficient in 

producing the goods necessary for our defense. 

Unfortunately, almost one-third of domestic 

manufacturing jobs have disappeared in the past decade 

and manufacturing's share of GDP is roughly half of 

what it was in 1980. It is clear that allowing this trend to 

continue will further undermine the American economy 

and the middle class, while also leaving us strategically 

vulnerable. 

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To help avoid this, I introduced the National 

Manufacturing Strategy Act. Although we currently 

have numerous federal programs and policies designed 

to support American manufacturing - such as export 

assistance, research and development funding, and 

workforce training programs - these are generally 

disjointed, ad hoc, and reactive, diminishing their 

impact. The goal of the strategy is to harmonize 

manufacturing policy and make it more unified, 

coherent, forward-looking, and results-oriented. 

HR 4692 first requires the President to conduct a 

comprehensive analysis of the Nation's manufacturing 

sector, including everything from workforce issues to the 

availability of financial capital. 

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Then the President will convene a Manufacturing 

Strategy Task Force comprised of federal officials and 

two Governors to examine this analysis, solicit public 

views, and support the President's development of a 

Manufacturing Strategy. This strategy must include 

short- and long-term goals and recommendations related 

to improving domestic production, investment, 

international competitiveness, and assuring an adequate 

defense industrial base, among other areas. 

The President is required to consider the input of a 

Manufacturing Strategy Board, a 21-person advisory 

group of private-sector leaders in manufacturing and 

related supply chain management, workforce, finance, 

and R&D. 

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The first Strategy would be due by February 2011, and 

subsequent Strategies will have to be submitted every 

four years by the end of February in the second year of 

each presidential term. This four year process is 

modeled after the Quadrennial Defense Review, allowing 

policies to be updated and refined based on changing 

conditions and lessons learned. To aid policymakers in 

their review, the Government Accountability Office 

would review the development and implementation of 

the strategy. 

It is important to point out that this is not an industrial 

policy or a command market approach. Instead, it is a 

way to coordinate policies in order to better support 

American entrepreneurship and job creation. The 

National Manufacturing Strategy will help level the 

playing field with other countries, including not only 

China and India, but also the U.K., Brazil, and Canada, 

all of which benefit from more focused policymaking. 

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I would like to once again thank Chairman Rush and the 

subcommittee for holding this hearing. This bill was 

developed over many months, with input and feedback 

from large and small businesses, academics, trade 

associations, and labor groups. I look forward to 

hearing from the witnesses, and working with the 

committee and others to examine suggestions that may 

improve upon what is now in the bill. 

6 
29 

Mr. RUSH. It is now my privilege to officially welcome the witnesses who have sacrificed their enormous and important time to 

be with us this afternoon for the purposes of this hearing. On my 

left, the Honorable Aneesh Chopra. He is the Associate Director for 

Technology and he is the Chief Technology Officer for the Office of 

Science and Technology Policy. Seated next to him is Mr. Scott N. 

Paul. He is the Executive Director of the Alliance for American 

Manufacturing. Seated next to Mr. Paul is Mr. Mark A. Gordon, 

who is the Director, Defense Research Programs for the National 

Center for Advanced Technologies. And seated next to Mr. Gordon 

is Mr. William M. Hickey, Jr., President and CEO of Lapham-Hickey Steel Corporation, and an outstanding citizen of the State of Illinois, I might add. And next to Mr. Hickey is Mr. Owen E. 

Herrnstadt. He is the Director of Trade and Globalization for the 

International Association of Machinists and Aerospace Workers. 

And seated next to Mr. Herrnstadt is Mr. Kevin A. Hassett. He is 

the Senior Fellow and Director of Economic Policy Studies for the 

American Enterprise Institute. I want to welcome each and every 

one of you here and welcome all to this subcommittee. It is the 

practice of this subcommittee to swear in witnesses. So I will ask 

that you please stand and raise your right hand. 

[Witnesses sworn.] 

Mr. RUSH. Please let the record reflect that the witnesses have 

all answered in the affirmative. And now I want to recognize the 

witnesses for their opening statement to be followed by questions 

from the subcommittee. Mr. Chopra, we will begin with you, and 

you have 5 minutes for your opening statement. 

TESTIMONY OF ANEESH CHOPRA, ASSOCIATE DIRECTOR FOR 

TECHNOLOGY & CHIEF TECHNOLOGY OFFICER, OFFICE OF 

SCIENCE AND TECHNOLOGY POLICY; SCOTT N. PAUL, EXECUTIVE DIRECTOR, ALLIANCE FOR AMERICAN MANUFACTURING; MARK A. GORDON, DIRECTOR, DEFENSE RESEARCH 

PROGRAMS, NATIONAL CENTER FOR ADVANCED TECHNOLOGIES; WILLIAM M. HICKEY, JR., PRESIDENT/CEO, 

LAPHAM–HICKEY STEEL CORP.; OWEN E. HERRNSTADT, DIRECTOR OF TRADE AND GLOBALIZATION, INTERNATIONAL 

ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS; 

AND KEVIN A. HASSETT, SENIOR FELLOW AND DIRECTOR OF 

ECONOMIC POLICY STUDIES, THE AMERICAN ENTERPRISE 

INSTITUTE 

TESTIMONY OF ANEESH CHOPRA 

Mr. CHOPRA. Thank you, Mr. Chairman, and Ranking Member 

Whitfield and other members of the subcommittee. It is indeed my 

distinct pleasure to be with you today to discuss the Obama Administration’s strategy for revitalizing American Manufacturing 

with particular focus on advanced manufacturing. With your permission, I have submitted a more formal statement for the record 

but I would like to share a few remarks in advance of your questions. This is background. My mission and my responsibility in the 

Administration is to harness the power and potential of technology, 

data, and innovation to transform the Nation’s economy and to improve the lives of every day Americans. Now building on the PresiVerDate Mar 14 2013 01:01 Mar 20, 2013 Jkt 077920 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 E:\HR\OC\A920.XXX A920

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dent’s strategy for American innovation which was released last 

September and its framework for revitalizing American manufacturing, which was released in December, I would like to summarize 

my remarks on how we are investing in the creation of new technologies and business practices with emphasis on three key areas. 

Number one, manufacturing research and development. The Administration is committed to doubling the basic research budgets of 

3 key science agencies, the National Institutes of Standards and 

Technology, the National Science Foundation, and the Office of 

Basic Science within the Department of Energy. In my capacity as 

the co-chair of the National Science and Technology Committee on 

Technology, I am particularly focused on improving coordination 

across our agencies with a goal of establishing U.S. leadership in 

advanced manufacturing technologies. For example, the Defense 

Advance Research Projects Agency, DARPA, is currently investing 

approximately $200 million a year or roughly $1 billion over the 

next 5 years to synthesize and integrate high value manufacturing 

efforts. The goal is to shorten by five-fold the delivery time from 

concept to first production unit for complex electro mechanical defense systems by development of system designs, tooling, materials, 

and democratized design that enables the advantages of large scale 

manufacturing in quantities of one. 

Second, I would like to highlight computational modeling and 

simulation. One technological capability that we believe holds great 

promise for enhancing manufacturing competitiveness is computational modeling and simulation. These tools impact several key elements of manufacturing competitiveness, quality, cost, flexibility, 

and time to market. Yet, they are not exploited by small and medium size manufacturing organizations who constitute over 90 percent of the U.S. manufacturing enterprises and contribute nearly 

half of the value added jobs. They lack access to this fundamental 

innovation. 

As the co-chair of the National Science and Technology Council’s 

Committee on Technology, I stood up a fast track inner agency subcommittee to identify gaps and challenges in computational modeling and simulation and to make recommendations within 90 

days. The committee’s report was posted on line for public input on 

June 24. I obviously welcome your feedback. By the way, for those 

interested, the web site is opennstc.ideascale.com. Input we have 

received thus far suggests among other instruments that establishing regional innovation centers that focus on bringing small 

and medium-sized enterprises into the digital manufacturing age 

through collaboration efforts or through their supply chains and 

software vendors is an immediate and near term opportunity. 

Third, I would like to highlight one particular sector that I believe 

holds great promise for the manufacturing economy in the United 

States, and that is to highlight catalyzing breakthroughs in the Nation’s smart grid. 

This particular area, we believe, is poised for growth. By the 

way, a topic that happened to have occupied my morning at a hearing we held at the Brookings Institution a full day seminar on how 

we might take full advantage of the economic opportunities both in 

terms of manufacturing as well as the efficiencies that will be 

gained by the American people as we modernize the Nation’s elecVerDate Mar 14 2013 01:01 Mar 20, 2013 Jkt 077920 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HR\OC\A920.XXX A920

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trical grid. As you may recall, the Recovery Act did include $4.5 billion of investment. In a sense, that investment will help to expand 

our manufacturing base of companies that can produce the smart 

meters, the smart appliances, the smart transformers, and other 

components for smart grid systems that service both the United 

States and we believe could be potential for export around the 

world representing a significant and growing export opportunity for 

our country and new jobs for the American people. 

In conclusion, we do believe that the United States still remains 

a land of tremendous opportunity and has a wonderful future. We 

retain that honor because of America’s scientists, engineers, entrepreneurs and public officials understood the importance of applying 

the power of American curiosity and ingenuity to the biggest economic and societal challenges. I certainly would welcome any questions the committee may have. Thank you. 

[The prepared statement of Mr. Chopra follows:] 


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Statement of Aneesh Chopra 

Chief Technology Officer and Associate Director, Office of Science and Technology Policy 

Executive Office of the President of the United States 

to the 

Committee on Energy and Commerce 

Subcommittee on Commerce, Trade and Consumer Protection 

United States House of Representatives 

on 

Advanced Manufacturing 

July 14, 2010 

Chainnan Rush, Ranking Member Whitfield, and Members of the Subcommittee, it is my distinct 

privilege to be here with you today to discuss the Obama Administration's Strategy for Revitalizing 

American Manufacturing. 

President Obama understands the importance of innovation for sustainable growth and quality 

jobs. On September 21 st, 2009, he released his Strategy for American Innovation that identified three 

critical roles for the Federal Government: to invest in the building blocks of innovation; to create the right 

environment for private sector investment and competitive markets; and to serve as a catalyst for 

breakthroughs related to national priorities such as clean energy, high-quality health care, and other 

"grand challenges" of the 21st century. The strategy recognizes that a strong U.S. manufacturing sector is 

needed to make progress toward all three goals. On December 19th, 2009, the President released "A 

Framework for Revitalizing American Manufacturing" that identified seven principles to strengthen our 

manufacturing sector. 

In my capacity as Assistant to the President, Chief Technology Officer, and Associate Director 

for Technology in the Office of Science and Technology Policy, my mission is to harness the power and 

potential of technology, data, and innovation to transfonn the Nation's economy and to improve the lives 

of everyday Americans. The Administration envisions an economy in which jobs are more plentiful, 

American finns are more competitive, American manufacturing is robust and exports of high tech 

products and services far exceed imports. 

For the record, I will not be commenting on H.R. 4692, but rather my testimony will provide a 

perspective on the challenges the United States faces in manufacturing, the important role that innovation 

and Advanced Manufacturing play in meeting these challenges, and the Obama Administration's strong 

commitment to implement appropriate Federal policies to promote a strong, innovative U.S. 

manufacturing sector. 

Manufacturing Challenges 

The United States continues to lead the world in the production of manufactured goods, 

accounting for nearly 20 percent of global manufacturing output. The National Association of 

Manufacturers estimates that an increase in manufacturing creates more economic activity than a similar 

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increase in any other sector every $1.00 in manufactured goods generates an additional $1.37 of 

economic activity. Manufactured goods represent 69 percent of our exports and manufacturing firms 

perform almost two-thirds of private sector R&D, the highest R&D intensity as a percentage of sales of 

any major industrial sector. 

Manufacturing jobs have long been seen as the foundation of the "American dream" and an 

entryway into the middle class. Total hourly compensation in the manufacturing sector averages more 

than $32.00, approximately 20 percent higher than average compensation in service industries. The 

manufacturing sector also boasts high and fast-growing productivity. Between 1987 and 2009, 

manufacturing productivity increased at a rate of 3.4 percent annually, as compared to only 2.3 percent 

for non-farm business as a whole. 

In recent years, the size of U.S. manufacturing has declined - in its share ofGDP, employment 

numbers, relative R&D spending, and innovation performance. Employment in the U.S. manufacturing 

sector has gone from 17.6 million jobs in 1998 to just 11.7 million currently. Even the trade balance in 

high-technology products - historically a bastion of U.S strength -shifted from surplus to deficit for the 

first time in 2002 and has remained in deficit since then. At the same time, China's trade position in hightechnology products shifted to surplus beginning in 2001, and increased from less than $13 billion in 

2003 to almost $130 billion in 2008. 

The situation facing American manufacturing has become an issue in the current economic crisis. 

Existing manufacturing enterprises are under severe competitive pressure from both outsourcing and 

global competition. While innovation is clearly seen as the driver of economic prosperity, creating new 

products and processes from these innovations is crucial if the economic value of innovation is to be 

realized. 

A recent benchmarking exercise by the Information Technology and Innovation Foundation 

(ITIF) measured U.S. and European nations' innovation capacity against the rest of the world; the U.S 

economy ranked sixth of 40 economies. But the exercise found that the U.S. ranked last in terms of 

"improvements in innovation capacity," meaning the U.S. is relying on historical strengths and is in 

danger of sliding down future rankings. A recent Hollings Manufacturing Extension Partnership (MEP) 

Advisory Board report innovation and Product Development in the 21st Century from the Department of 

Commerce contains similar findings. 

These shifts are as important to the evolution of existing manufacturing enterprises as to 

emerging fields, such as nano-manufacturing, bio-manufacturing and next generation semiconductors. 

They also are critical for the nation's educational institutions, which must prepare tomorrow's workforce 

at a new and technologically sophisticated level. 

The Need for Innovation 

Innovation typically begins from scientific research that creates new opportunities for 

technological change. That basic research lays the foundatiun fOf the development of new products, 

services, or processes. But it does not end there. To create value, a new idea must be implemented 

through translational research and eventual incorporation into innovative products and services. 

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Successful innovations will diffuse throughout an economy and across the world, impacting various 

sectors and sometimes even creating new ones. And if the innovation is successful, then it can scale up to 

create new markets. 

Ideas often fail before they make it through the full chain. But those that do succeed can create 

value and jobs while improving people's lives. For societies to prosper-both as producers of goods and 

services as well as consumers of them-innovations need to flourish and progress along this chain. And 

here, government has a fundamental role to play. 

The government should: 

• Remove barriers that inhibit the rapid movement of U.S. industry toward advanced 

manufacturing; 

• Accelerate R&D, innovation, and commercialization in the U.s. manufacturing sector; and 

• Better equip the U.S. workforce with the new knowledge and skills necessary to work at worldclass levels of advanced manufacturing. 

Administration's Policies and Initiatives to support Mauufacturing 

The Obama Administration's December 19th, 2009 report on "A Framework for Revitalizing 

American Manufacturing" identified key facts and assumptions that form the basis of a sound and 

comprehensive manufacturing policy. These include cost drivers that influence manufacturing location 

choices, environment impact, and productivity. 

In order to understand the appropriate role for government to support manufacturing and capture 

its positive social impacts, we must first identifY each cost driver in the manufacturing process beginning 

with raw materials and ending at the point of sale of finished goods. These cost drivers include labor, 

technology and business practices, equipment, location, transportation, access to markets, regulation and 

taxation. 

The manufacturing sector is undergoing transformative change. We can help foster and facilitate 

this change and ensure that workers and communities thrive in the midst of this change if we take certain 

critical actions. Past manufacturing strategies have largely failed. Two different views have dominated 

these past approaches. One view was that manufacturing industries needed to be protected and insulated. 

Not only was this approach ineffective but it was also counterproductive. An alternative view was laissezfaire, cutting critical research and support programs and hoping the market will take care of problems. 

This approach has contributed to the steep job losses over tbe last decade but more importantly threatens 

to rob us of tbe potential for greater innovation over future decades. An alternative to these two poles is a 

strategy that recognizes that change is inherent in the economy and necessary for productivity growth. 

Evidence-based policy can help foster and channel this change and ensure that workers and communities 

can thrive in the midst of it. 

The key to success lies in American workers, businesses and entrepreneurs - but the federal 

government can playa supporting role in providing a new foundation for American manufacturing. The 

right role for government is to optimize its own interaction with each key cost driver of the manufacturing 

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process. 

The Obama Administration's policies and initiatives that support manufacturing can be broken 

into seven parts that draw on the lessons from analyzing the manufacturing process and government's role 

in each cost driver. We must: 

1. Provide workers with the opportunity to obtain the skills necessary to be highly productive. 

2. Invest in the creation of new technologies and business practices. 

3. Develop stable and efficient capital markets for business investment. 

4. Help communities and workers transition to a better future. 

S. Invest in an advanced transportation infrastructure. 

6. Ensure market access and a level playing field 

7. Improve the general business climate, especially for manufacturing. 

Some of these principles directly address the President's Innovation Strategy released in 

September 2009 "A Strategy for American Innovation: Driving Towards Sustainable Growth and Quality 

Jobs". I would like to highlight Administration efforts in two of these areas. 

Investing in the Creation of New Technologies and Business Practices 

The key manufacturing growth areas in the 21 st century will be driven by new technologies and 

new areas of consumer demand. The most successful areas will be combinations of the two, such as using 

new technologies to satisfy the increasing demand for clean energy. In other areas, a new innovation like 

nanotechnology has the promise to transform production processes and consumer product.~ for everything 

from traditionally high-tech products like computers to less obvious sources of innovation and growth 

like sunscreen and paint. New business practices and expertise will also be key drivers of competitiveness 

going forward. 

There is often a debate about the right type of government support for advanced technologies. 

The iaissez1'aire approach is premised on the belief that private industry will simply develop the best 

innovations and technologies. This, however, ignores three critical facts. First, it is well established that 

the private sector often under-invests in the most basic research since it cannot capture all the benefits 

from such research. Second, spillovers exist between sub-industries. For instance, innovations in 

nanotechnologies are being applied to a wide range of areas. Third, coordination failures exist in which no 

individual makes an investment because it will not be profitable unless a number of others make similar 

investments. This is a problem that the United States is addressing in the electric car industry, for 

example, with a wide range of initiatives. Inventions from the telegraph to the jet engine, the microwave 

oven and the.Internet did not happen simply because of private sector incentives. 

On the other hand, policymakers must recognize that government has a poor track record in 

picking winners and losers. This is in part due to the limited ability of the government to predict the 

future, but it is also because such exercises are inevitably distorted by the political process. The new 

approach to manufacturing policy gets around these twin problems by recognizing that the government 

has a vital role to play in basic research, that it can help address the coordination problems and that it can 

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use innovative techniques to encourage economic development while avoiding picking winners and losers 

- for example, the relatively new policy tools of prizes and reverse auctions could be used to jump start 

technological advances andlor production in new manufacturing industries. 

The Obama Administration is supporting new technologies in several key ways. 

Basic research is fundamental to the economic growth of any society. The United States devotes 

less than three percent of GDP to research and development - a ratio that is exceeded by a number of 

countries including Japan, Sweden, Switzerland, South Korea, Iceland and Israel. The American 

Recovery and Reinvestment Act already included the largest increase in research and development in our 

history, a total of more than $18 billion. Increases must be sustained and linked to America's 

manufacturing success. The Obama Administration will: 

Double the R&D budgets of key scieuce agencies. President Obama has proposed to double the 

research'budgets of three key science agencies (the National Science Foundation, the Department of 

Energy's Office of Science and the National Institute of Standards and Technology's laboratory 

programs). 

Improve coordination of manufacturing-related R&D. The National Science and 

Technology Council will develop a strategy for coordinating the federal government's investments in 

research with the goal of establishing U.S. leadership in advanced manufacturing technologies. Some of 

the examples of this research include: 

Nanomanufacturing and the application of nanotechnology to traditional manufacturing 

industries; 

Creating the foundation for a "bio-economy" that uses biotechnology to make "green" chemicals; 

• Developing advanced robotics technologies that allows the U.S. to retain manufacturing and 

respond rapidly to new products and changes in consumer demand; 

Integrating manufactured goods and information technology to create "cyberphysical systems" 

that have greater adaptability, autonomy, efficiency, functionality, reliability, safety and usability. 

Explore new options to stimulate innovations aud technological breakthroughs. The 

Administration will explore the possibility of using prizes and reverse auctions as a complement to grants, 

tax credits and other mechanisms currently used to spur innovative technologies. The advantages of using 

prizes and reverse auctions are that success is rewarded directly on an objective, demonstrated basis, and 

federal money is used to leverage private sector resources in a targeted manner. These approaches could 

target many key areas identified as likely manufacturing-related wealth and job creators of the future, 

including batteries, nanotechnology, clean energy and bioengineering. The prizes and reverse auctions 

could work together, with prizes incentivizing the necessary breakthroughs in basic research and reverse 

auctions supporting early stage of commercialization and production. 

Make the research & experimentation tax credit permanent. T" give companies the certainty 

they need to make long-term research and experimentation investments in the U.S., the Administration's 

2011 budget includes the full cost of making the R&E credit permanent in future years. Making this tax 

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credit pennanent will provide businesses with the greater confidence they need to initiate new research 

projects that will improve productivity, raise standards of living, and increase our competitiveness. 

Spur innovation in manufacturing by Increasing the Technology Innovation Program 

(TIP). The TIP supports, promotes and accelerates innovation in the United States through high-risk, 

high-reward research in areas of critical national need. One current area of focus is research on advanced 

manufacturing processes and materials. Awards in this area have the potential to spur new and muchneeded capabilities in the manufacturing sector - whether in production techniques, material sciences or 

cutting edge design options. The Obama Administration is committed to the success of the program and 

the catalyzing of innovation. 

Pursue structural reforms that support innovation and production. Various sttuctural and 

regulatory refonns have the potential to support innovation and increase production. The Obama 

Administration will explore a range of such refonns, including: 

Public-private partnerships that can generate mutually beneficial arrangements between major 

businesses and localities. Manufacturing Infrastructure and other similar projects are good 

examples of such partnerships. 

• Use of the federal government's coordinating abilities to overcome infonnation problems and 

match innovators and markets. A manufacturer's competitiveness is often dependent on the speed 

with which the company finds new markets and adopts new technologies, innovative product 

concepts, and improved operational and management practices. There are often infonnation 

failures in the market that prevent some learning and exchange of ideas that would help 

manufacturers grow. The government can help overcome such infonnation failures and help to 

spread new and innovative business practices. 

Protect intellectual property rights. Intellectual property is crucial for developing new 

technologies. We must ensure that intellectual property is protected in foreign markets and promote 

greater cooperation on international standards that allow our technologies to compete everywhere. The 

Administration is committed to ensuring that the United States Patent and Trademark Office has the 

resources, authority and flexibility to administer the patent system effectively and issue high-quality 

patents on innovative intellectual property, while rejecting claims that do not merit patent protection. 

Developing stable and efficient capital markets for business investment 

In addition to stabilizing the broader financial system and providing capital assistance to small 

businesses and companies that compete globally, the Obama Administration is committed to expanding 

access to financing for manufacturers facing these tough economic conditions. Most notably, the 

Administration's combination of loans, grants, and tax credits for renewable energy manufacturing will 

help the United States regain its position as the world leader in manufacturing clean energy equipment. 

Programs inc! ude: 

1603 cash grants in lieu of tax credits: When the Recovery Act passed, many renewable energy 

projects had been halted as few developers had the ability to utilize the Production Tax Credit (PTe). 

Some forecasts expected the industry to shrink 25 to 50 percent. ARRA allows renewable energy 

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generation projects to receive a 30 percent cash grant in lieu of the Production Tax Credit. The program 

has already supported over lOW of renewable energy projects. 

DOE 1703 and 1705 loan guarantees: DOE loan guarantees can back financing for factories 

that make wind turbines, solar panels, energy efficient windows, and other clean energy equipment. 

Section 48C mannfacturing tax credit: The Section 48C Advanced Energy Manufacturing Tax 

Credit supports the building and equipping of new, expanded, or retooled factories that manufacture the 

products needed to power the green economy. The program covers a wide array of clean energy 

technologies, including renewable energy, energy efficiency, advanced transportation, and advanced 

transmission. The Recovery Act included $2.3 billion in tax credits that will support over $7.5 billion in 

total capital investment. This program has generated far more interest than anticipated. On December 16 

2009, the Administration announced its support for expanding the program by up to $5 billion. This 

funding will go to shovel ready projects that will create tens of thousands of new construction and 

manufacturing jobs and continue America's emerging leadership in manufacturing the clean energy 

products of the future. 

Other Innovation-based Manufacturing Initiatives 

Recognizing the need for long-term and sustained investments in R&D, President Obama has 

pledged to double the funding for three key science agencies: the National Science Foundation (NSF), the 

laboratories ofthe National Institute of Standards and Technology (NIST), and the Department of 

Energy's (DOE) Office of Science. 

The Obama Administration is working to increase the impact of this investment by providing 

greater support for university commercialization efforts, for potentially transformative research, for 

multidisciplinary research, and for scientists and engineers at the beginning of their careers. For example, 

NSF's 2011 budget proposes to double support for the Partnerships for Innovation program, which will 

help universities move ideas from the lab to the marketplace. 

Other innovation-based manufacturing initiatives proposed in the President's 20 II budget include: 

NSF Cyber-physical Systems: Additional $1.6M to better integrate information technology into 

manufactured goods. This is part of a $20M increase for Advanced Manufacturing to fund a new 

"bio-economy" effort aimed at building the basic research foundations for future biotechnology 

industries in areas such as "green" chemicals and other new biologically based materials. 

NSF Nano Manufacturing: Additional $IOM targeted at NSF grant support for nano-manufacturing 

and the application of nano-scale science and engineering to traditional manufacturing industries. 

• Additional funding was recommended for the Commerce department to support NIST's Technology 

Innovation Program (TIP) and Hollings Manufacturing Extension Partnership (MEP) program. 

Recovery Act 

I would like to take this opportunity to note the impact the Recovery Act is having on U.S. 

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manufacturing. American Recovery and Reinvestment Act (ARRA) investments not only lay the 

foundation for the clean energy economy of the future, but some could have a significant impact on the 

domestic manufacturing infrastructure. Examples include: 

• Over $2 billion to support domestic manufacturing of advanced batteries and other components of 

Advanced Vehicles and Fuels Technologies. 

$4.5 billion investment for Smart Grid technologies will help expand our manufacturing base of 

companies that can produce the smart meters, smart appliances, syncbrophasors, smart 

transformersand other components for smart grid systems in the United States and around the world -

representing a significant and growing export opportunity for our country and new jobs for American 

workers. 

• $2.3 billion in 48C Advanced Energy Manufacturing tax credits that will partner with private 

investment to increase our capacity to manufacture wind turbines, solar panels, electric vehicles, and 

other clean energy components domestically. 

Computational Modeling and Simulation 

I would also like to highlight our efforts in a specific area of advanced manufacturing: 

computational modeling and simulation. Quality, cost, flexibility and time to market are key elements of 

manufacturing competitiveness. It has been widely recognized that Computational Modeling and 

Simulation tools could significantly reduce the need for physical prototype testing thereby reducing the 

product development time, costs and improve quality. These tools also accelerate discovery and 

innovation thereby allowing designers, manufacturers, and regulators to make better decisions in shorter 

time frames. However, modeling and simulation tools are not exploited as routinely as they should in 

industrial product or process design, innovation and manufacturing, and the technology has not penetrated 

far beyond the top of the supply chain. The reasons behind limited adoption of these tools include lack of 

understanding of value proposition by SMEs, affordability of software and hardware, availability of 

technical experts, verification, standards, certification and reliability of software tools including their 

ability to capture realism of the physical world. As the Co-chair of the National Science and Technology 

Council's (NSTC) Committee on Technology, I recently stood up a Fast Track interagency subcommittee 

to identify gaps and challenges in computational modeling and simulation and make recommendations. 

The Way Forward 

Thanks to President Obama's leadership, the Administration has taken large strides in developing 

and implementing an ambitious innovation agenda. The President has appointed Mr. Ron Bloom as the 

Senior Counselor for Manufacturing Policy within the White House, signaling the high priority placed on 

manufacturing and leadership needed to develop a coherent, overarching advanced manufacturing 

strategy and to oversee its implementation across the Federal Government. 

For the United States to maintain leadership in advanced manufacturing, the Federal government 

needs an ability to formulate policies and develop programs across the Federal Government in a coherent 

effective manner. Established mechanisms in the Executive Branch, such as the National Science and 

Technology Council (NSTC), can provide coordination and even elements of overall strategy. With 

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current Federal manufacturing R&D programs highly diffused and totaling less than $500 million, there 

appears to be a need for focused and concerted Federal support to providing such investments in 

manufacturing R&D to fully materialize the benefits of emerging technologies. OSTP has been actively 

convening multiple interagency meetings to discuss gaps in Federal programs in advanced manufacturing 

and opportunities to strengthen existing industries and creation of new industries. OSTP is fully 

committed to continue such activities in support of the President's Innovation Strategy and the principles 

outlined in the Administration's Framework for Revitalizing American Manufacturing. 

The Administration is working with a wide range of stakeholders to identify the most promising 

ideas for implementing and further refining the Administration's innovation strategy. There are active 

inter-agency working groups on issues such as prizes and challenges, regional innovation clusters, 

research commercialization, spectrum reform, broadband, open government, and standards. The National 

Science and Technology Council is leading multi-agency research initiatives in dozens of critical areas 

such as aeronautics, green buildings, nanotechnology, robotics, and information technology. 

Through the President's Council of Advisors on Science and Technology (PCAST), the 

Administration is able to gain invaluable insight from the Nation's leading scientists, engineers and 

innovators on Advanced Manufacturing. The PCAST subcommittee on Advanced Manufacturing plans to 

release a report in the coming months outlining their findings and recommendations. 

In order to revitalize our manufacturing sector we must continue our focus on building blocks of 

innovation - basic research, translational research, pUblic-private partnerships, tools that enhance 

manufacturing competitiveness and productivity. 

The United States is still the land of the future. We have held that honor since this continent was 

discovered by a daring act of exploration more than 500 years ago. We have earned it anew with each 

passing generation because America's scientists, entrepreneurs and public officials have understood the 

importance of applying the power of American curiosity and ingenuity to the biggest economic and 

societal challenges. 

I welcome any questions that the Committee may have. 

9 
41 

Mr. RUSH. Mr. Paul, you are recognized for 5 minutes. 

TESTIMONY OF SCOTT N. PAUL 

Mr. PAUL. Thank you very much, Mr. Chairman. I want to thank 

you, Mr. Whitfield, members of the subcommittee, and Mr. Lipinski 

for inviting us here today to testify. We want to comment Representative Lipinski for his authorship of the National Manufacturing Strategy Act, and assuming that you can agree on some improvements, we urge you to pass it into law. There is no question 

that America needs a manufacturing strategy to revitalize this sector as there is simply no department of manufacturing, and I am 

not arguing that there should be, but it makes perfect sense to harness the best minds as well as to coordinate among the appropriate 

agencies to focus on a government wide strategy to advance manufacturing in both employment and output terms. Like most issues 

that come before you every day, there is no simple solution to 

strengthen the manufacturing sector but passage of this legislation 

would compliment ongoing and anticipated efforts that I will detail 

later in my testimony. 

Now the idea of a manufacturing strategy is hardly a radical concept. Alexander Hamilton constructed America’s first manufacturing strategy in 1791. Setbacks during the War of 1812 due to 

a lack of domestic capacity to build naval vessels and military 

equipment cemented the determination of the federal government 

to grow manufacturing, a policy that continued until the end of 

World War II. Globalization and economic approaches such as a 

strong dollar policy favoring domestic consumption have helped to 

steadily erode manufacturing as a percentage of gross domestic 

product, private sector employment and by other key measures. 

The idea of a manufacturing strategy is also not a partisan one. 

President Reagan, spurred on by Democratic congress, adopted a 

flurry of measures to counter a grossly imbalanced trade relationship with Europe and Japan in the 1980’s. The Plaza Accords, 

which raised the value of currencies in Japan and Europe relative 

to the dollar in a managed way, had a positive effect on lowering 

our trade deficit. Key government investments in the semiconductor industry and other technologies spurred their development 

and commercialization. President Reagan signed into law enhanced 

Buy America requirements for certain infrastructure projects to 

boost domestic employment. His administration implemented the 

Market Oriented Sector Specific, or MOSS talks, with Japan that 

focused on market access with measurable results. 

Most recently, and has been mentioned by several members here, 

the Obama Administration released its framework for revitalizing 

American manufacturing. The document recognizes the importance 

of manufacturing to America’s economic future and talks about a 

number of important issues, including access to credit, skills and 

training, creating new markets for manufacturing, and improving 

the efficiency of the industry. But it is not a substitute for a strategic plan and for harnessing the best minds within the federal 

government to focus on this issue day after day. You have pointed 

out in excellent briefing materials the significance of manufacturing, and I am not going to repeat those statistics and the crisis 


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that it faces, but I do want to mention and add a few new thoughts 

to this. 

The crisis we have seen in manufacturing has really been turbo 

charged over the last decade, and I attribute it to 2 fundamental 

things. First is the emergence of China as a key competitor and the 

way that we approach that by passing PNTR in 2000, and, second, 

and most acutely, is the collapse of the auto and housing markets 

that we have seen recently. We have seen problems with manufacturing in the Bush administration. While the U.S. economy expanded 17 percent from 2002 to 2007, manufacturing expanded 

only by 5 percent. We have also seen 50,000 manufacturing facilities close down over the last decade, which is an extraordinary 

rate, and according to Richard McCormick, who is the editor of 

Manufacturing News, there are only a thousand facilities in the 

United States that employed more than a thousand people now. 

Consider that in our manufacturing history. 

The trade deficit in manufactured goods has quadrupled since 

1997, and we already have significant and growing trade deficits in 

both high technology and green technology products. Now there are 

a lot of issues on which we could focus, and we submitted a letter 

today that I am happy to submit to the record to the Speaker of 

the House detailing a number of steps that we think would be advantageous to supporting manufacturing that would compliment 

some of the ideas that had been suggested by the National Association for Manufacturing. I also would submit to you that we issued 

a book and gave it to every member of Congress last July called 

Manufacturing, a Better Future for America, which was written by 

a number of key industry experts, including a former Reagan administration official with more than 300 pages of suggestions on 

how to improve the manufacturing sector. I commend that to your 

attention as well. 

I want to close by saying that this is an issue, if for no other reason, for not economic reason or policy reason, is simply a matter 

of what your constituents want. We commissioned a poll, which 

was conducted recently, on a bipartisan basis by Mark Mellman 

and Whit Ayres. It found overwhelming support for the idea of a 

National Manufacturing Strategy. Seventy-eight percent of the 

American people supported it, want to help manufacturing. The 

support is broad and deep. It is Tea Party members. It is union 

households. It is in the south. It is the Midwest. So we commend 

that to your attention as well. We thank you for having the hearing 

today. 

[The prepared statement of Mr. Paul follows:] 


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TESTIMONY OF 

SCOTT N. PAUL 

EXECUTIVE DIRECTOR 

ALLIANCE FOR AMERICAN MANUFACTURING 

BEFORE THE 

SUBCOMMITTEE ON COMMERCE, TRADE AND CONSUMER PROTECTION 

COMMITTEE ON ENERGY AND COMMERCE 

UNITED STATES HOUSE OF REPRESENTATIVES 

HEARING ON 

"H.R. 4692, THE NATIONAL MANUFACTURING STRATEGY ACT" 

JULY 14,2010 

Mr. Chairman and members of the Subcommittee, I want to thank you for taking the time 

to examine the National Manufacturing Strategy Act and for inviting me to testify on 

behalf of the Alliance for American Manufacturing. 

First, I would like to introduce the Alliance for American Manufacturing to you. We are 

a partnership formed in 2007 by some of America's leading manufacturers and America's 

largest industrial union-the United Steelworkers-to work in a cooperative, nonpartisan way for one goal: strengthening American manufacturing and therefore our 

nation's economic and national security. Our mission is to provide policymakers like you 

with useful analysis of the issues, as well as innovative policy ideas to move us toward 

effective solutions. 

We commend Representative Dan Lipinski for his authorship ofH.R. 4692, the National 

Manufacturing Strategy Act, and respectfully urge you to pass it into law. There is no 

question that America needs a manufacturing strategy to revitalize the sector that drives 

the rest of the economy. As there is no "Department of Manufacturing," it makes perfect 
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sense to harness the best minds, as well as to coordinate among the appropriate agencies, 

to focus on a government-widc strategy to advance manufacturing in both employmcnt 

and output terms, Like most issues that come before you every day, there is no simple 

solution to strengthening the manufacturing sector, but passage of H.R. 4692 would 

complement ongoing and anticipated efforts that I will detail later in my testimony. 

The idea of a manufacturing strategy is hardly a radical concept. Alexander Hamilton 

constructed America's first industrial policy in 1791. Setbacks during the War of 1812 

due to a lack of domestic capacity to build naval vessels and military equipment 

cemented the determination of the federal government to grow manufacturing, a policy 

that continued until the end of World War II. Globalization and economic approaches 

such as a strong dollar policy favoring domestic consumption have helped to steadily 

erode manufacturing as a percentage of Gross Domestic Product, private sector 

employment, and other key measures. 

The idea of a manufacturing strategy is also not a partisan one. President Reaganspurred on by a Democratic Congress-adopted a flurry of measures to counter a grossly 

imbalanced trade relationship with Europe and Japan in the 1980s. The Plaza Accords, 

which raised the value of currencies in Japan and Europe relative to the dollar in a 

managed way. had a positive effect in lowering our trade deficit. Key government 

investments in the semiconductor industry and other technologies spurred their 

development and commercialization. President Reagan signed into law enhanced Buy 

America requirements for certain infrastructure projects to boost domestic employment. 

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His Administration implemented the Market Oriented Sector Specific - or MOSS talks -

with Japan that focused on market access with measurable results. 

Most recently, the Obama Administration rcleased its "Framework for Revitalizing 

American Manufacturing" in December of last year. The document recognizes the 

importance of manufacturing to America's economic future and lays out a path forward 

on a number of important issues, including access to credit, skills and training, creating 

new markets for manufacturing, and improving the efficiency of the industry. But the 

plan has yet to be implemented, and it was not designed to be a strategic planning 

document. 

The case for a permanent capacity for strategic planning on our manufacturing base, 

evolving and innovating to make use of our workers' skills and the latest technology as 

well as to respond to global trends, could not be stronger when one examines key facts 

about manufacturing: 

More R&D. American manufacturers arc responsible for 70% of research and 

development investment in the United States; nearly 90 percent of all patents filed 

come from the manufacturing scctor. 

More Technology. American manufacturers are the leading buycrs of new 

technology in the United States. 

More Jobs. American manufacturing directly employs nearly 12 million 

Americans and creates 8 million additional jobs in other sectors. 

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More Growth. American manufacturing has a higher multiplier effect and pays 

better wages (22% on average) than other sectors of the economy. 

Still significant. Manufacturing is the largest sector of economy in 10 states and 

represents 12% of our Gross Domestic Product. 

Powers Exports. Manufactured goods represent 60% of U.S. exports. 

Productivity. Manufacturing productivity exceeds rest of private sector by 60%. 

Number Nine. U.S. manufacturing would be the 9th largest economy in the 

world. 

While those are significant-and to many Americans surprising-achievements, the 

challenges that face manufacturing are even more shocking: 

5.5 million manufacturing jobs have been eliminated since 2000; that represents 

one-third of all manufacturing jobs. 

While the U.S. economy expanded 17% from 2002-2007; manufacturing 

expanded only 5%. 

50,000 manufacturing facilities have closed over last ten years. 

Industrial production dropped last decade-it had risen every decade before that, 

even during the Great Depression. 

The trade deficit in manufacturing goods has quadrupled since 1997. 

We already have growing high technology and green technology trade deficits. 

Contrary to a widely held belief, manufacturing employment actually held steady from 

1982 to 1999, hovering around 17.2 million jobs, with ebbs and flows in downturns and 

recoveries. There were a number of reasons for this stability, including more aggressive 

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trade enforcement and currency policies in the 19805 and more domestic investment in 

the 1990s. But manufacturing employment has dropped precipitously since China 

entered the World Trade Organization in 2001 and our bilateral trade deficit has 

exploded. We have concluded that-outside of the collapse of the auto and housing 

markets in 2008-the single most detrimental factor to manufacturing employment in the 

United States has been the expansion of our one-sided trade relationship with China. 

China is certainly not our only competitor engaged in unfair, predatory and protectionist 

policies, but the scale of their activities swamps that of many of our other trading partners 

and is in need of immediate attcntion. 

Other explanations for manufacturing's decline, while conforming to orthodox economic 

vicws, are not satisfying. The decline of manufacturing employment and 

manufacturing'S share of GDP is not inevitable, desirable, nor can it be explained solely 

through theories of churning capitalism, advances in productivity and technology, 

compensation costs or inefficiency. For instance, Germany's global shares of 

manufacturing output and exports have held steady over the past decade, while America's 

have declined and China's have risen sharply. Yet, Germany is not a low-cost nation for 

manufacturing. But, Germany has an integrated strategy for boosting manufacturing, 

focusing on skills, technology, investment, labor-business-government collaboration, and 

aggressive trade policies, which allow it to successfully compete. 

The final reason why I believe America needs a national manufacturing strategy is quite 

simply this: it is what your constituents want. A new bipartisan poll conducted by Mark 

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Mellman and Whit Ayres shows that going into the 2010 election cycle, both Democrats 

and Republicans face a deeply unhappy electorate who are unified in their concern over 

the loss of American manufacturing jobs and the lack of work being done on the issue by 

Congress. When asked about prospective economic solutions, pro-manufacturing 

policies won overwhelming support across demographics including non-union 

houscholds, independents, union households and Tea Party supporters. The responses in 

the poll echo a June 21, 2010 article in the Financial Times, which quotes a projection 

that in 2011 the United States will lose its status as top nation in factory production to 

China, "thus ending a 110 year run as the number one country." 

In the poll of 1000 likely general election voters, "We have lost too many manufacturing 

jobs" is the top concern among independents and working class voters, even compared to 

government debt, loss of life in Iraq and Afghanistan, the high cost of health care, illegal 

immigration or terrorism. I will highlight some key findings: 

• A majority believe the U.S. no longer has the world's strongest economy-a title 

they want to regain. 

• 86% of voters want Washington to focus on manufacturing, and 63% feel 

working people who make things are being forgotten while Wall Street and banks 

get bailouts. 

• Support for a national manufacturing strategy is overwhelming: 78% of voters 

across all demographics support such a strategy. 

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• Two-thirds of voters believe manufacturing is central to our economic strcngth, 

and 57% believe manufacturing is more central to our economic strength than 

high-tech, knowledge or financial service sectors. 

• Across all demographics, voters' economic solutions center on trade enforcement, 

clean energy, tax credits for U.S. manufacturing and rcplacing aging 

infrastructure using American materials, a surprising overlap between Tea Party 

supporters, independents, non-union households and union households. 

Support for a national manufacturing strategy is growing among serious economists, 

business leaders. as well as labor leaders. Andy Grove. the former CEO of Intel, wrote a 

BusinessWeek cover story on this very topic in its July 5 issue. Leaders of Fortune 500 

companies such as Bill Ford of Ford Motor Company and Dan DiMicco of Nucor have 

argued that manufacturing should be boosted to 20 percent of our Gross Domestic 

Product. Jeff Immelt of General Electric has acknowledged that his company-and 

America-have simply outsourced too much production and should refocus on making 

things here again. 

We believe that passage of H.R. 4692 would give a significant boost to getting the 

government back on the side of America's manufacturing workers and companies; we 

also believe that concrete steps could be taken right now to create manufacturing jobs. 

The Federal Reserve, Department of the Treasury and other public entities must take 

aggressive steps to open up avenues for funding at rates that will help increase 

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investments in plant, equipment and people. In addition, specific support should bc 

given to cnsurc that we are able to address the goal of energy indcpendence by expanding 

funding for programs that will accelerate development of the manufacturing of alternative 

and renewable energy production equipment and components. Rapidly expanding 

funding for Section 48(c), dramatically expanding support for industrial energy efficiency 

efforts and other programs and policies directed at the similar goals are key steps in that 

effort. 

The first cycle of stimulus funding helped to accelerate infrastructure spending but that 

cycle is slowing and has not helped foster long-term demand. Long-term demand 

requires more sustained spending and must be coupled with policies that ensure that our 

funds are focused on promoting use of domestic supply chains. Expanding infrastructure 

spending and creating a national infrastructure bank that will ensure a long-term, 

sustained funding effort for restoring and updating our nation's infrastructure is key to 

that effort. And, as part of this effort, we must ensure that, to the maximum extent 

practicable, public funding be coupled with adherence to Buy America requirements. 

This can provide important support to our manufacturing sector while also complying 

with our international obligations. 

Many of our key competitors have continued their protectionist and predatory approaches 

to promote their own economic interests at the expense of others. We must focus our 

trade policies on achieving real results that not only open markets to our products, but 

that also ensure that unfair trade is not allowed to continue to decimate our economy. 

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Congress must act to address currency manipulation by China and other countries. Not 

only must it do this on a country-to-country basis, but must also ensure that industries be 

able to utilize our trade laws to respond to currency manipulation when our government 

refuses to act. In addition, efforts like China's indigenous innovation effort must be 

aggressively confronted. Enforcing our laws more aggressively is key to not only 

restoring economic growth and our manufacturing sector, but also to restoration of public 

confidence and trust in their elected leaders that when they work hard and play by the 

rules, that their government will stand up for their rights and interests. 

America has the best and most innovative workers. But the challenges of a global 

marketplace require that skills and training be constantly upgraded. In conjunction with 

enhancing access to capital, increasing demand and taking other steps to revitalize our 

manufacturing sector, we must make investments in our people to ensure that they are 

equipped to meet the ever increasing demand for talented workers. Congress should 

cxamine ways to increase access to training funds for people who are out of work as well 

as those seeking to enhance their skills. 

Mr. Chairman, we look forward to working with you and members of the subcommittee 

on strategies to revitalize this important sector of our economy. 

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Mr. RUSH. The chair recognizes Mr. Gordon for 5 minutes. 

TESTIMONY OF MARK A GORDON 

Mr. GORDON. Good afternoon. Chairman Rush, and members of 

the committee, I am Mark Gordon, Director of Defense Programs 

at National Center for Advanced Technologies, and a member of 

the Executive Committee of the Manufacturing Division at the National Defense Industrial Association. On behalf of our 1,700 corporate members, including 83,000 individual members, I am 

pleased to appear before the House Subcommittee on Commerce, 

Trade, and Consumer Protection to emphasize the importance of 

manufacturing and to support H.R. 4692 in calling for a National 

Manufacturing Strategy. Based upon your request to discuss topics 

of import in consideration of the Bill, I would like to address three 

questions, is manufacturing important to our country, do we need 

a National Manufacturing Strategy at all, and are there modifications to the bill which may strengthen the process and the resultant strategy. 

First, we have already heard a lot of numbers about the importance of manufacturing. I won’t add to those, but I will say that 

one of the critical elements about manufacturing is that it creates 

wealth within the U.S. by producing something of value from common components or materials. This is critically important in comparison to wealth transfer or other service sectors. The jobs produced by the manufacturing activities are generally high paying 

and represent an entree into the middle class for a number, a large 

portion, of the workforce. Also, manufacturing multiplies each dollar spent in that sector into an additional $1.37 in economic activity, higher than any other sector. 

In terms of national security, we depend heavily upon our domestic manufacturing capabilities. The Defense Department relies 

upon domestic manufacturing to equip our war fighters, and our 

national security is supported by economic strength and viability. 

So, obviously, we need active support from Congress to support 

manufacturing. Do we need a manufacturing strategy? Absolutely. 

There are many groups from government, for industry, and academia which are chartered to further domestic manufacturing 

agenda. They are not sufficient or strategic enough to deliver the 

goals of H.R. 4692, a national strategy for manufacturing in the 

U.S. Government bodies continue to work on policy technology and 

other concerns but there are the implementation path of a strategy 

and not setting that strategy. Industry groups like NGIA and a 

host of others propose investment changes, policies, incentives, and 

a level playing field which are vital issues but they do not represent that comprehensive strategy, and academia pursues activities that furthers the body of knowledge in manufacturing but does 

not have that strategic division. 

We need to have these existing groups work together, and I believe that that over arching strategy from this bill will fit that 

need. A Quadrennial Manufacturing Strategy, as proposed by 4692, 

would also provide a stable, well-planned national vision for aligning public-private academia investment opportunities at the highest level. And we have heard about the dangers of uncertainty. I 

believe that private industry responds to certainty and stability 


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with investment, and so the existence of a strategy could lower a 

greater corporate investment domestically. There are also structural problems that are talked about in papers by George Tassey, 

a senior economist at the National Institute of Standards and Technology, that talks about the flaws in classic neoclassical economic 

theory to the high tech industry where the Law of Comparable Advantage and reactions to that law do not hold up in terms of the 

data that we are seeing in our last three recessions. 

In addition, in a March, 2010 letter to Secretary Locke, the Department of Commerce’s Manufacturing Council also addressed this 

structural change in our economy which has led to a high degree 

of uncertainty and will require a comprehensive set of solutions to 

resolve. Finally, I note that the President has recently set an ambitious goal of increasing the exports of the U.S. by three times. Considering this goal, especially in the context of manufacturing being 

the largest export sector, it is quite obviously that a manufacturing 

strategy would be a major enabler of this effort. Modifications to 

the bill would strengthen the process and the strategy, I believe. 

While the overall content and the intention of the bill is excellent, 

there are some changes during the markup of 4692 that can 

strengthen the purpose, process, and eventual strategy. 

First and foremost, its relationship between the President, the 

task force, and advisory bodies. I would propose that the Manufacturing Strategy Task Force make recommendations to the President of a draft strategy instead of simply recommendations based 

upon analysis. Additionally, I would further suggest that the listing 

of Subsections 1 to 23 of analysis in Section 3b be changed to allow 

the President and the task force the latitude to define and 

prioritize the scope of that analysis without requiring duplicate and 

detailed analysis of all 23 areas. And, finally, the modification that 

may be necessary is a schedule taking into account the initial 

stand up period of the President’ cabinet and advisors. NDIA and 

its members strongly endorse H.R. 4692 requiring the President to 

conduct a Quadrennial Manufacturing Strategy. I look forward to 

your questions. 

[The prepared statement of Mr. Gordon follows:] 


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Testimony 

Of 

Mark A Gordon 

Member of the Manufacturing Division of the 

National Defense Industrial Association 

House Committee on Energy and Commerce, 

Subcommittee on Commerce, Trade, and Consumer Protection 

July 14, 2010 
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Chainnan Rush, and members of the Committee, I am Mark Gordon, Director of Defense 

Programs at the National Center For Advanced Technologies and a member of the Executive 

Committee of the Manufacturing Division at the National Defense Industrial Association 

(NDIA). On behalf of my company and the 1704 corporate members of NDIA including 

83,000 individual members , I'm pleased to appear before the House Subcommittee on 

Commerce, Trade, and Consumer Protection today to emphasize the importance of 

Manufacturing to our nation and to support HR 4692 in calling for a National Manufacturing 

Strategy. 

Based upon your request to discuss topics of import in consideration of this Bill, I would like to 

address three issues: 

- Is Manufacturing important to our country? 

- Do we need a National Manufacturing Strategy? 

- Are there modifications to the Bill which strengthen the process and strategy? 

Is Manufacturing important to our country? 

Yes, Manufacturing is of vital importance to our country, due to its enormous impact 

across all aspects of our nation, including economic, employment, and security. While 

manufacturing has been declining as a percent of our GDP since the 1950s, manufacturing still 

remains the largest productive sector in the overall US economy at 13%, and the U.S. produces 

more goods than any other country - $1.6 trillion worth, according to the Federal Bureau of 

Economic Analysis. The most critical benefit of manufacturing is not simply the size of the sector, 

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but tbat manufacturing CREATES wealtb within tbe US by producing sometbing of higher value 

from materials or common components. It is not a service sector which simply transfers wealth 

between entities, it creates sometbing of value. And unlike other wealth creating sectors, such as 

mining or agriculture, tbe jobs produced by manufacturing activities are generally high paying and 

represent an entry into tbe middle class for a large portion of tbe workforce. Manufacturing 

multiplies each dollar spent into an additional $1.37 of economic activity, higher than any other 

sector. 

Our National Security depends heavily upon our domestic manufacturing capabilities: tbe Defense 

Department relies upon the US defense industrial base to equip our warfighters; our national 

security is supported by our economic strength and viability, which in tum requires an industrial 

base tbat generates wealth based upon manufacturing goods. National security requires a 

manufacturing sector based on assured sources to safeguard our economy and national defense and 

to provide trusted sources of supply to meet the demands of our citizens and warfighters. For all 

these reasons and more, Manufacturing has and must continue to represent the foundation of a 

strong economy, and thus needs active support by Congress. 

Do we need a National Manufacturing Strategy? 

Yes. In a recent survey by the Manufacturing Institute and Deloitte, 81 % of respondents believe that 

America's manufacturing base is either important or very important to their standard ofliving and to 

economic prosperity, and 77% think tbe U.S. needs a more strategic approach to tbe development of 

its manufacturing base. 

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The question of whether a national Manufacturing Strategy is needed is crucial, but also simple to 

answer: absolutely! There are many groups from government, industry, and academia which are 

chartered to further the domestic manufacturing agenda, but they are not strategic, senior, or 

sufficient enough to deliver the goal ofH.R. 4692: a National Strategy for Manufacturing within the 

United States. Government bodies continue to work on policy, technology, and economic concerns 

for the domestic manufacturing industrial base, but they are supporting the implementation path of a 

strategy, not setting one. Industry groups like the NDIA Manufacturing Division, AMT, NeMS, 

and a host of others propose investment roadmaps, changes to regulations, incentives, and a level 

playing field for global competition. These are vital issues, but do not represent a comprehensive 

strategy. Academic teams investigate process improvements, supply chain and economic models, 

and propose R&D programs to advance the understanding of manufacturing. Again, furthering the 

body of manufacturing knowledge, but not with a strategic vision. None of these existing groups 

have the charter or sufficient stature to establish a National Manufacturing Strategy. An 

overarching strategy needs to be provided in order for these groups to be aligned, working 

cooperatively towards strategic goals, and most critically, to more efficiently deliver results by 

leveraging public/private investments within core priorities. 

A Quadrennial Manufacturing Strategy, as proposed by HJ.R. 4692, could provide a stable, well 

planned national framework for aligning public-private-academic investment opportunities at the 

highest leveL Private industry, which currently provides the majority of investment in 

manufacturing R&D and facilities, demands a long term, stable plan in order to make these 

investments. Thus, a National Manufacturing Strategy should be able to level the playing field for 

these types of investments, and increase both the amount of domestic investment and the leverage 

for public /private ventures. The existence of such a strategy could also lure greater corporate 

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investment domestically, as decision making in the boardroom is shifted in favor of clear, stable 

national priorities. 

Above all else, Manufacturing requires a senior leader in the Administration, at a level sufficient to 

drive a national campaign advocating the govermnent's strategy and implementation plans. It is 

hoped that the Chairman of the Manufacturing Strategy Task Force could serve in this role. 

>- Finally, I note that the President has recently set an ambitious goal of increasing the exports 

of the US by three times. Considering this goal, especially in the context of manufacturing 

being the largest export sector, it's quite obvious that a Manufacturing Strategy would be a 

major enabler of this effort. Of particular interest within the manufacturing strategy should 

be small businesses, since they represent more than 99 percent of all employers including 51 

percent of private-sector workers, employ 40 percent of high tech workers, and make up 

97.3 percent of all identified exporters. 

In an excellent new paper by Dr. George Tassey, Senior Economist at ( spell out) NIST, the 

multiple flaws in applying neoclassical economic theory to the high tech industry are exposed, with 

a strong call to change the current government policies, (or lack thereof) towards R&D. Current 

economics apply the Law of Comparable Advantage, combined with a Schumpeterian-type reaction 

to assume that new technologies will magically and reliably appear from advances in basic science 

and drive re-allocation of labor and capital into higher-tech, higher-productivity industries. One 

problem with this theory is the relative small size of the high tech, R&D sector for manufacturing 

vice the large size of the off-shored manufacturing sector. Another problem is that the global 

system is increasingly absorbing the output of US-based research, well before providing the gains 

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domestically. This paper concludes by recommending three strategic policy objectives: 1) Increase 

manufacturing R&D intensities; 2) Adjust manufacturing R&D to emphasize long term growth and 

competition; and 3) Improve the efficiency of manufacturing R&D through public I private 

technology clusters. These objectives are even more crucial when considering the fact that 70% of 

industrial R&D is funded by manufacturing firms, which only accounts for 13% of GDP. Each of 

these objectives could be part of a National Manufacturing Strategy, but would only be actionable 

and valuable in the context of an overall strategy. 

Are there modifications to the Bill which strengthen the process and strategy? 

Yes. The overall content of the Bill is excellent and calls for the comprehensive analysis of many 

complex issues. However, I will observe that during the markup of HR 4692, some modifications 

can be made to strengthen the purpose, process, and eventual strategy. 

First and foremost is the relationship between the President, Task Force and advisory bodies. I 

would propose that instead of the Manufacturing Strategy Task Force making recommendations to 

the President for incorporation into the strategy (Section 3, c, 5 ), the Task Force be made 

responsible for submitting a draft strategy to the President. I also believe that the President's 

Manufacturing Strategy Board be tasked with informing the Task Force on key issues, and then 

making recommendations to the President regarding the draft strategy from the Task Force (Section 

3, e). Finally, it appears that in Section 3 (a & b) that the President is responsible for conducting a 

multitude of comprehensive analyses prior to developing the National Manufacturing Strategy. I 

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believe that it should be the role of the Task Force to conduct these comprehensive analyses, which 

will influence the development of the draft strategy. 

As an aside, I believe that the Task Force should include representatives from both Homeland 

Security and the National Science Foundation. 

Further, I would suggest that the Section 3, b (1-23) be changed to require "comprehensive analysis 

of any factors affecting the manufacturing competitiveness, growth, stability and sustainability, and 

may consider issues such as the following:" followed by sub-sections 1-22. This modification 

would allow the President and the Task Force the latitude to define and prioritize the scope of the 

comprehensive analyses, without forcing the massive duplication of effective studies already 

available. Without this change, I am afraid that the time span for these 22+ comprehensive analyses 

may last longer than the Presidential term. 

I strongly endorse the General Accountability Office (GAO) review of the effectiveness of the 

strategy (Section 4) and the National Research Council Quadrennial Report (Section 6,a) as 

necessary for the development and assessment of the strategy, but the additional studies specified in 

Section 6, c are extraneous and not necessary for establishment of the strategy. 

Another modification that may be necessary is a change in the timing of the Strategy for release in 

February of the President's second year. If all the activities required by by H.R 4692, including 

public meetings, 90 day notifications, recommendation review and response, analysis, strategy 

development and the stand up of the Manufacturing Strategy Task Force were to be totaled, it 

appears that the final report may not be available before the start of the President's third year, which 

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also corresponds to a new Congress. I urge the Subcommittee to consider a longer schedule for 

delivery that takes into account the initial stand-up period of the President's cabinet and advisors. 

NDIA and its members strongly endorse HR 4692, requiring the President to conduct a quadrennial 

National Manufacturing Strategy, with particular emphasis on: 

• Allowing flexibility for the Manufactnring Strategy Task Force to conduct its own 

comprehensive analyses of those considerations deemed vital by its members and the 

President. 

• Setting clear roles for Task Force and Strategy Board, which requires the 

Manufactnring Strategy Task Force to submit a draft strategy to the President and the 

President's Manufactnring Strategy Board to assess the draft strategy and make 

recommendations to the President. 

• Establishing goals and recommendations (Section 3,d) as part of the Manufactnring 

Strategy which focus on Federal manufactnring programs which effect the Nation's 

Manufactnring Sector, and not simply goals for the sector itself. 

Chairman Rush and Members of Subcommittee, I'm honored to have had this opportunity to 

provide you an industry perspective on the critical natnre of Manufactnring to our nation, and hope 

that you embrace the opportnnity to strengthen our country's ability to compete in the global 

economy by supporting this Bill. 

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Mr. RUSH. The chair now recognizes Mr. Hickey for 5 minutes for 

purposes of an opening statement. 

TESTIMONY OF WILLIAM M. HICKEY, JR. 

Mr. HICKEY. Thank you, Congressman. Thank you for the kind 

words before. I want to thank Mr. Whitfield for his comments 

about manufacturing. I am Bill Hickey, President of Lapham-Hickey Steel Corporation of Chicago. Lapham-Hickey Steel is a family 

owned and managed steel service center founded in Chicago in 

1926. Today we have several locations in the States of Illinois, Wisconsin, Ohio, Minnesota, Connecticut, and Alabama. We currently 

employ about 550 people. The steel service center industry is at the 

heart of the manufacturing economy of the United States. We, as 

an industry and a company, purchase large quantities of steel products from producing mills and either distribute those products in 

smaller quantities or process that steel through specialized machinery to allow our customers lower cost in the manufacturing of their 

products. 

Our company processes steel and sells that processed product to 

customers across North America. We have thousands of customers 

in transportation, construction, metal fabrication, HVAC, machine 

tool, power generation, wind energy, just to name a few of the industries in which our customers produce manufactured products. 

We are also in a very strategic position as a company to view the 

full spectrum of the manufacturing economy in the United States. 

I say this since our major suppliers are the steel companies that 

manufacture steel in the United States and the vast majority of our 

customers are consuming the products we sell to them in the 

United States. 

Now that I have given you some background on my 35 years of 

working in the U.S. economy and what economic function the firm 

I lead performs, I have to tell the subcommittee that I believe we, 

as a country, have to grow, mine, and manufacture for our economy 

to create the wealth needed by our citizens and our government. 

We, as a country, have experienced much economic and social pain 

in the last several years. I believe this economic pain was caused 

by the massive imbalances that have occurred in our economy. Part 

of these economic imbalances have been the large scale destruction 

of the manufacturing economy in the United States in the past 10 

years. Here are some of the facts which we have already mentioned, but these are the facts that I live—these are our customers 

that have been devastated over the last 19 years. The U.S. manufacturing workforce has declined from 17,250,000 in 2000 to 

11,549,000 in 2010. This is a reduction of 1/3 of the manufacturing 

employment in 10 years. What happened? Why do we have this 

huge drop in jobs in just 10 years? 

During the same period the United States had 42,400 factories 

that closed. This included 36 percent of all the factories that employed more than 1,000 workers. And I can tell you when these 

large factories close the communities where they are located are 

devastated. Why are we losing these factories? I have seen these 

factories close in Ohio, Indiana, Pennsylvania, Michigan, Minnesota, Illinois, across the Midwest. The case for H.R. 4692. These 

two facts about plant closings and having 1/3 of manufacturing jobs 


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63 

or almost 6 million disappear in just 10 years, in my judgment, is 

justification to enact H.R. 4692. How do we create sustainable economic growth and increase employment? This is the first point in 

the policies that this Congress should promote and will be required 

once this Act is passed into law. 

A focus of this Act that I believe is needed today is the Manufacturing Strategy Task Force. I am a member of the Department of 

Commerce Industry Trade Advisory Committee-12. This committee 

advises the Department of Commerce and the USTR on trade policy. Even with this insight, I find it very difficult at times to understand what our Nation’s strategy is on manufacturing. I actually 

think the strategy today is policy of reacting to a crisis instead of 

planning for the future. A recent example of this lack of focus on 

national economic goals was the Import-Export Bank refusing to finance mining equipment for Bucyrus International, a Wisconsin 

based company, for reasons that seem to be the whim of the appointed official. If we had a National Manufacturing Strategy in 

place in the last 10 years, would we have lost or greatly diminished 

our manufacturing capacity in television, auto parts, bicycles, cell 

phones, furniture, toys, computers, textiles, and a large cross section of industries that I won’t have time to go into to talk about. 

I keep wondering if the theory about outsourcing our manufacturing and having our economy become based on financial services 

has finally shown the imbalances that were created. With the National Manufacturing Strategy, we, as a country, will now have the 

opportunity to have a real debate on how we help Main Street provide jobs to our citizens versus having Wall Street bailed out by 

our taxpayers. I want to thank Congressman Dan Lipinski for his 

leadership. This National Manufacturing Strategy Act is put a 

small sample of the commitment Congressman Lipinski has to the 

Third District of Illinois and the American people. Thank you, Congressman. 

[The prepared statement of Mr. Hickey follows:] 


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TESTIMONY OF 

WILLIAM M. HICKEY, JR. 

PRESIDENT 

LAPHAM-HICKEY STEEL CORP. 

CHICAGO,IL 

ON H.R. 4692 "NATIONAL MANUFACTURING 

STRATEGY ACT" 

BEFORE 

U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON ENERGY AND COMMERCE 

SUBCOMMITTEE ON COMMERCE, TRADE 

AND CONSUMER PROTECTION 

WEDNESDAY, JULY 14, 2010 

2:00 P.M. 

2322 RAYBURN HOUSE OFFICE BUILDING 
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Good afternoon. 

I want to thank Congressman Rush for the invitation to testifY on H.R. 

4692. 

I am Bill Hickey, President of Lapham-Hickey Steel Corp. of 

Chicago. Lapham-Hickey Steel is a family owned and managed steel service 

center founded in Chicago in 1926. Today we have seven locations in the 

states of Illinois, Wisconsin, Ohio, Minnesota, Connecticut, and Alabama. 

We currently employ approximately 550 people. 

The steel service center industry is at the heart of the manufacturing 

economy of the United States. We, as an industry and a company, purchase 

large quantities of steel products from producing mills and either distribute 

that product in smaller quantities or process that steel through specialized 

machinery to allow our customers lower costs in the manufacturing of their 

product. 

Our company processes steel and sells that processed product to 

customers across North America. We have thousands of customers in 

transportation, construction, metal fabrication, HV AC, machine tool, power 

generation, wind energy, just to name a few of the industries in which our 

customers produce manufactured products. 

We are also in avery strategic position as a company to view the full 

spectrum of the manufacturing economy in the United States. I say this 
66 


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since our major suppliers are steel companies that manufacture steel in the 

United States and the vast majority of our customers are consuming the 

products we sell to them in the United States. 

Now that I have given you some background on my 35 years of 

working in the U.S. economy and what economic function the firm I lead 

performs. I have to tell this subcommittee that I believe we, as a country, 

have to grow, mine, and'manufacture for our economy to create the wealth 

needed by our citizens and government. 

We, as a country, have experienced much economic and social pain in 

the last several years. I believe this economic pain was caused by the 

massive imbalances that have occurred in our economy. Part of these 

economic imbalances has been the large scale destruction of the 

manufacturing economy in the United States in the past 10 years. 

Here are some of the facts on what has occurred in the manufacturing 

economy in the last decade. 

The U.S. manufacturing workforce has declined from 17,250,000 in 

2000 to 11,549,000 in January of2010. This is a reduction of 1/3 of our 

manufacturing employment in 10 years! What happened? Why did we have 

this huge employment reduction in just 10 years? 

During this same period the United States had 42,400 factories that 

closed. This included 36% of all factories that employed more than 1,000 

2 
67 


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workers. I can tell you that when these large factories close the communities 

where they are located are devastated. Why are we losing all these 

factories? 

The Case for H.R. 4692 

These two facts about plant closings and having 1/3 of manufacturing 

jobs or almost 6 million disappear in just 10 years, in my judgment, is 

justification to enact H.R. 4692. 

How do we create sustainable economic growth and increase 

employment? This isthe first point in the policies that this Congress should 

promote and will.be required once this Act is passed into Law. 

A focus of this Act, that I believe is needed today, is the 

manufacturing strategy task force. I am a member of the Department of 

Commerce Industry Trade Advisory Committee-12. This committee advises 

the Department of Commerce and the USTR on trade policy. Even with this 

insight, I find it very difficult at times, to understand what our nation's 

strategy is on manufacturing. I actually think the strategy today is a policy 

of reacting to a crisis instead of planning for the future. A recent. example of 

this lack offocus on national economic goals was the Import-Export Bank 

refusing to finance mining equipment for Bucyrus International, a Wisconsin 

based company, for reasons that seem to be the whim of the appointed 

official. 

3 
68 


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Ifwe had had a National Manufacturing Strategy in place the last 10 

years would we have lost or greatly diminished our manufacturing capacity 

in television, auto parts, bicycles, cell phones, furniture, toys, computers, 

textiles, and a large cross section of industries I will not list? 

I keep wondering if the theory about outsourcing our manufacturing 

and having our economy become based on financial services has finally 

shown the imbalances that were created. With the National Manufacturing 

Strategy we, as a country, will now have the opportunity to have a real 

debate on how to help Main Street provide jobs to our citizens versus having 

Wall Street bailed out by our taxpayers. 

I want to thank Congressman Dan Lipinski for his leadership. This 

National Manufacturing Strategy Act is but a small sample of the 

commitment Congressman Lipinski has to the Third District of Illinois and 

the American people. 

I thank you for your time and would welcome questions. 

Sincerely, 

Bill Hickey 

4 
69 

Mr. RUSH. The chair now recognizes Mr. Herrnstadt for 5 minutes. 

TESTIMONY OF OWEN E. HERRNSTADT 

Mr. HERRNSTADT. Thank you, Mr. Chair, and members of the 

committee for the invitation to be here today, and thank you, Congressman Lipinski, for introducing the bill which is the subject of 

today’s hearing. IAM members, that is, the International Association of Machinists & Aerospace Workers members, work in a variety of manufacturing industries, including aerospace, electronics, 

defense, shipbuilding, transportation, and woodworking. We believe 

that a strong, domestic industrial base is one of the essential elements needed to restore our economy and build a prosperous and 

sustainable future. As has already been said, U.S. manufacturing 

serves as the bedrock for our Nation’s economy. That said, it is no 

secret that U.S. workers and their communities are in a crisis. 

Over 8–1/2 million jobs have been lost since December, 2007, and 

the unemployment rate remains exceedingly high. Despite the importance of manufacturing to our Nation’s economy and our defense 

capacity millions of U.S. manufacturing workers have lost their 

jobs contributing to our high unemployment. As has also been said 

and has been pointed out in the fact sheet provided by the committee nearly 6 million manufacturing jobs have been lost since 

1999. 

Some industries that were once great contributors to our economy like auto, shipbuilding, and machine tools are barely shadows 

of what they once were. Jobs in other leading edge industries like 

aerospace are being outsourced to other countries. Renewable energy products that are considered to represent the future of manufacturing here at home also are to a great extent being manufactured abroad. While there are many reasons for the decline in manufacturing one of the fundamental reasons is that the U.S. does not 

have a National Manufacturing Strategy and has not established 

a framework for creating one. A National Manufacturing Strategy 

could establish general and specific programs for coordinating policies as well, policies related to tax incentives that reward corporations to move jobs overseas, research and development, trade, employment, currency evaluation, export initiatives, domestic procurement, and many, many others. 

Other countries have embraced manufacturing strategies as has 

also been discussed. A few years ago the European commission presented its new industrial policy noting ‘‘A flourishing manufacturing industry is key to fully exploiting the European Union’s potential for growth and sustaining its economic and technological 

leadership.’’ Separately, over 20 European countries have adopted 

sophisticated offset policies. Offsets occur when one country demands a transfer of technology and/or production in return for a 

sale. Countries like Germany have sophisticated manufacturing 

policies that have helped the country weather the current economic 

crisis and, oh, yes, there is China who has also engaged in very 

comprehensive strategic and targeted industrial and manufacturing 

policies which are credited with that country’s economic growth far 

too often at the expense of our own manufacturing industry and far 

too often at the expense of our U.S. workers. 


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70 

We simply can’t be complacent with the hope that manufacturing 

is cyclical and will recover with the passage of time. The changes 

we are witnessing in H.R. 4692, the National Manufacturing Strategy Act of 2010, requires the President to prepare a Quadrennial 

National Manufacturing Strategy, and it certainly represents a 

much-needed and key step forward in developing a response to the 

current economic crisis and the current state of manufacturing 

today. We have submitted, of course, some recommendations to 

strengthen that bill, and we have also submitted recommendations 

that constitute more steps to be taken. These steps must be urgently taken given the crisis that manufacturing workers are certainly facing today as particularly have been pointed out by my colleague on this panel, Mr. Hickey. In addition to that, we also recommend very simple fixes such as requiring Congress and the Administration to adopt simple common sense policies that link certain government activities immediately to their effect or impact on 

U.S. employment making sure that domestic sourcing requirements 

are closely examined to make certain that they do indeed result in 

the most number of domestic jobs being created and supported as 

possible. 

Manufacturing workers are in a crisis. They have witnessed millions of their jobs disappear over the past few years. Their pain is 

real. As their desperation increases and their hopes fade, it is critical that we develop a comprehensive National Manufacturing 

Strategy that will in reality make a difference in their lives and in 

doing so ensure a vibrant and sustainable economy. Thank you for 

the opportunity to share our views with you today, and I look forward to your questions. 

[The prepared statement of Mr. Herrnstadt follows:] 


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Testimony of Owen E. Herrnstadt, Director of Trade and Globalization 

International Association of Machinists and Aerospace Workers 

before the 

Subcommittee on Commerce, Trade and Consumer Protection 

"Hearing on the National Manufacturing Strategy Act of 2010" 

July 14, 2010 

The International Association of Machinists and Aerospace Workers, (lAM) AFL-CIO, represents 

several hundred thousand active and retired members throughout North America. Our members 

work in a variety of manufacturing industries including aerospace, electronics, defense, 

shipbuilding, transportation, and woodworking. Given the nature of these industries and the lAM's 

membership, the lAM truly understands the importance of manufacturing to our nation's economic 

and physical security. We believe that a strong domestic industrial base is one of the essential 

elements needed to restore our economy and build a prosperous and sustainable future. 

Accordingly, we welcome the opportunity to appear before you today to share with you our views 

on legislative efforts seeking to establish a national manufacturing strategy. 

U.S. manufacturing serves as the bedrock for our nation's economy. According to the Economic 

Policy Institute (EPI), "manufacturing employs one-tenth of all U.S. workers and is responsible for 

over 12% of our nation's total growth domestic product".1 EPI also notes, "For non-college 

educated workers manufacturing is a crucial source of good, often highly skilled jobs at above 

average wages".2 Investment in manufacturing research and development has contributed 

significantly to new industries and innovations that have employed generations of U.S. workers. 

Support for domestic manufacturing is essential both to restore our nation's economic health and to 

preserving our national security. Without strong and robust manufacturing and defense industries, 

our nation becomes more vulnerable to present and future dangers. As jobs and the skills needed 

to perform them disappear and as our defense production capacity is reduced, we will become less 

able to defend ourselves should the need arise. Moreover, as suppliers spread around the globe, 

access to crucial parts and components may become limited. 

It is no secret that U.S. workers and their communities are in a crisis. Over 8.5 million jobs have 

been lost since December 2007, and the unemployment rate remains above 9 percent. If all of 

those who are unemployed but have become too discouraged to look for work are included, the 

unemployment rate is in the double-digits. According to EPI, 15 million people are officially 

unemployed while another 11 million are involuntarily working part-time or have dropped out of the 

labor force, 

Despite the importance of manufacturing to our nation's economy and defense capacity, millions of 

U.S. manufacturing workers have lost their jobs, contributing to our high unemployment. The 

Bureau of Labor Statistics reports that manufacturing employment has declined by over 5.5 million 

jobs since the year 2000. Some industries that were once great contributors to our economy, like 

1 Manufacturing, Agenda for Shared Prosperity, Economic Policy Institute; Robert Scott, The Importance of 

Manufacturing: Key to recovery in the states and the nation, EPI Briefing paper, 2/13/2008, 

2jQ, 
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auto, shipbuilding and machine tools, are barely shadows of what they once were.3 Jobs in other 

leading edge industries like aerospace are being outsourced to other countries. The production of 

the Boeing 787 involves suppliers in Japan, Italy and other countries 4 Renewable energy products 

that are considered to represent the future of manufacturing also are, to a great extent, 

manufactured abroad. 

While there are many reasons for the decline in manufacturing, one of the fundamental reasons is 

that the U.S. does not have a national manufacturing strategy and has not established a framework 

for creating one. A national manufacturing strategy could establish general and specific programs 

for coordinating related policies as well. Policies related to tax and investment, research and 

development, trade, employment, currency valuation, export initiatives, domestic procurement, and 

others must be integrated to produce a cohesive and effective strategy to restore our 

manufacturing sector and ensure the growth of jobs with good wages. 

Other countries have embraced manufacturing strategies. A few years ago, the European 

Commission presented its new industrial policy noting, "A flourishing manufacturing industry is key 

to fully exploiting the European Union's potential for growth and sustaining its economic and 

technological leadership." 5 Separately, over 20 European countries have adopted sophisticated 

offset policies.6 Offsets occur when one country demands a transfer of technology and/or 

production in return for a sale. As explained by one of the federal agencies that reviewed U.S. 

aircraft manufacturers and suppliers: 

Major manufacturers develop agreements with foreign suppliers to produce major 

segments of their aircraft in exchange for large aircraft orders from the country's 

carriers. These agreements can amount to billions of dollars in sales for the 

manufacturer. For example, in order for Boeing to sell Boeing 747s to Air China, 

at least part of the final product (no matter how small) must be manufactured or 

assembled in China. 7 

Countries like Germany have sophisticated manufacturing policies that have helped the country 

weather the current economic crisis. China's industrial and manufacturing polices are credited with 

that countries economic growth. As the U.S.-China Economic and Security Review Commission 

reported, "China's industrial policy targets and supports strategic industries identified as important 

to its economy in the 11th Five-Year Plan".8 The Commission annually reports on industrial policies 

implemented by China focusing on specific industries including renewable energy, automobiles and 

auto parts, steel, aerospace, communications, computing and software industries. 

3 See, Manufacturing A Better Future For America, Ed. Richard McCormack, Alliance for American Manufacturing, 

2009. 

4 See, Boeing 787 delays cast hard light on outsourcing, Reuters, 9/2212009. 

5 Communication from the Commission, 10/5/2005; 

http://europa.eunegislationsummaries/enterprise/industry/n26109en.htm (extracted 7/1212010). 

6 For further discussion on offsets, see Herrnstadt, Offsets and the Lack of a Comprehensive U. S. Policy, Economic 

Policy Institute, 04/17/2008. 

7 FAA, Assessment of FAA's Risk-Based System Overseeing Aircraft Manufacturers' Suppliers, Report Nurnber: AV2008-026; issued February 26,2008 at pg. 2. 

82009 Report to Congress of the U.S.-China Economic and Security Review Commission. 

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In comparison to the European Commission, and countries like Germany and China, the U.S. has 

no national manufacturing policy and no mechanism for developing one. We simply cannot be 

complacent and hope that manufacturing is cyclical and will recover with the passage of time. The 

changes we are witnessing in the sector are structural and retaining a robust manufacturing 

industry and the good jobs that go with it requires a direct and structural response from Congress. 

H.R. 4692, the National Manufacturing Strategy Act of 2010, requires the President to prepare a 

quadrennial national manufacturing strategy represents a key step forward in developing this 

response. Among other things, the bill proposes the creation of a manufacturing strategy taskforce 

that would review and make recommendations to the President on domestic sourcing and 

government poliCies. H.R. 4692 is intended to assist the manufacturing sector in reviewing and 

building coordination between government agencies to integrate federal policies that affect 

manufacturing and the manufacturing related workforce. In addition, the bill would create a 

Presidential manufacturing strategy board consisting of representatives from labor, industry, and 

academia. The strategy board would provide information and recommendations on the needs of 

the nation's manufacturing sector to the President. 

The International Association of Machinists has proposed the creation of a permanent President's 

Council on Manufacturing Policy to provide Congress and the President with recommendations for 

restoring and growing the domestic manufacturing industry and creating high-quality domestic 

manufacturing jobs.9 We fully support the National Manufacturing Strategy Act of 2010, and its 

proposal to create an advisory body on the manufacturing industry. In particular, we support the 

breadth of the responsibilities assigned to the task force and the private sector board in the 

legislation. 

While we are supportive of the bill, we do have some recommendations to strengthen it, including: 

• Under the current proposal, none of the chairs of the advisory committees that will co-chair 

the private sector board represent labor. In order to ensure the balance of the board, a 

representative from labor should also be designated as a co-chair. 

• The State Department, United States Trade Representative, and U.S. Export-Import Bank 

should be added to the Manufacturing Strategy Task Force, so that all relevant 

government agencies are included in the task force's deliberations. 

• Given that the proposal states that the President's Manufacturing Strategy Board will be 

appointed "after consultations with industrial organizations," it is essential that the definition 

of industrial organizations extend to labor unions representing workers in the 

manufacturing industry. Excluding labor representatives from this consultative role would 

deprive the Administration of labor's expertise in these matters. 

The lAM supports the National Manufacturing Strategy Act of 2010 as one component for 

creating a manufacturing strategy. However, we also believe that more steps are urgently 

needed to support the creation of manufacturing jobs. These and other additional steps are key, 

including: 

9 See, Owen Herrnstadt, Green jobs, with strings attached, Economic Policy Institute, 12/2/2009. 

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• Adjust currency valuations for countries like China, 

• Fair trade agreements, 

• Efforts to curtail offsets and other forms of outsourcing to other countries, and 

• Mechanisms to create a flow of credit for manufacturers. 

In addition, employment impact statements should be incorporated into a variety of govemment 

programs. Congress and the Administration should adopt a simple, common sense policy that links 

certain govemment activities to their effect on U.S. employment. One way to accomplish this is to 

require detailed employment impact statements as part of the decision-making process for 

govemment procurement contracts, assistance, grants, or awards.1o 

Domestic sourcing requirements should also be closely examined to make certain that they are 

interpreted and implemented in a manner that provides the greatest domestic employment 

opportunities as possible. 11 Domestic content requirements should be based on a simple and 

common sense review of domestic manufacturing costs, which include direct costs like materials 

and production. Intangible and indirect costs like those attributed to marketing or intellectual 

property rights should be excluded. Furthermore, the methods used to calculate domestic content 

should be transparent and uniform throughout government. 

Manufacturing workers are in a crisis. They have witnessed millions of their jobs disappear over 

the past few years. Their pain is real. As their desperation increases and their hope fades, it is 

critical that we develop a comprehensive national manufacturing strategy that will make a 

difference in their lives and, in doing so, ensure a vibrant and sustainable economy. 

Thank you for the opportunity to share our views with you today. I would be happy to take any 

questions. 

10 lQ. 

11lQ. 

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75 

Mr. RUSH. Mr. Hassett is recognized for 5 minutes. 

TESTIMONY OF KEVIN A. HASSETT 

Mr. HASSETT. Thank you, Chairman Rush, and Ranking Member 

Whitfield. In my view the economic science supporting this Act is 

essentially nonexistent. Accordingly, passing it into law would be 

a policy error. Whether the policy error is major or minor would depend on whether the Strategy Task Force and Strategy Board are, 

like most such entities in Washington, irrelevant. If they are not, 

then the Act could significantly harm the business environment in 

the United States. In the front of my testimony, I talk about the 

decline in manufacturing and wonder whether it isn’t parallel to a 

decline in agriculture that we have seen that stretches even further 

back and is just a natural tendency for the economies to experience 

as they mature. Now I don’t know what the right share of GDP for 

manufacturing is, and I would submit that the members of the 

committee don’t either, and so pursuing a strategy that focuses specifically on manufacturing as opposed to trying to make the overall 

economy healthy would seem to me to be in error. 

Ever since the seminal work of Diamond and Mirrlees in 1971, 

economists have known that optimal economic policy should not tax 

intermediate goods or distort productive efficiency. This means that 

the allocation of capital that emerges in response to market forces 

should not be disrupted by special treatment for some inputs but 

not others. The Diamond and Mirrlees result indicates that an optimal policy will not favor production in one area at the expense of 

another. The Act we are discussing today appears to insist that 

manufacturing receive special treatment that advantages manufacturing relative to everything else. Such a focus of policy is not defensible on economic grounds. If business activity is viewed by Congress to be disappointingly low, and with today’s retail sales information I think it is even worse than we thought, then it is wholly 

inappropriate to consider measures that would stimulate it across 

the board. 

But when politicians pick winners and losers, they interfere in 

the natural economic process and inevitably cause harm. In my 

many years in Washington, I have acquired the opinion that we 

tend to appoint task forces and commissions when we know what 

the right thing to do is but are unwilling to do it. Commissions and 

task forces make for nice speechifying but almost always have a 

negative policy impact because they allow elected officials to appear 

to be addressing key problems without actually doing anything. 

Business activity in our Nation is indisputably disappointing at the 

present time. It is urgent that policy changes be enacted before it 

is too late, but we do not need a commission or task force to study 

the issue. We know why the business climate in the United States 

is so terrible. 

The biggest problem is our corporate tax system. Figure 3 in my 

testimony plots the U.S. corporate tax rate from 1981 to 2010 and 

compares it to the average tax rate of our OECD partners. Currently, the U.S. tax rate is 35 percent and the average for the 

OECD is 23.9 percent. I should note that this chart understates our 

disadvantage because it excludes state and local taxation. So if you 

are wondering why the U.S. is hemorrhaging business, why people 


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76 

are locating plants overseas, that corporate tax is a big part of the 

story. I would remind the members of the committee that many of 

these plants that are being located overseas are heavily capital intensive. It is not differences only in labor costs that is driving this 

force. 

Now some notes on the specific legislation. On the abstract, it is 

impossible to oppose having a strategy or performing a study. I am 

concerned about what that strategy might entail. The development 

of a strategy and performance of the task force could well be beneficial, but the bill as written looks to be an invitation for destructive meddling. In particular, the biggest cause for concern is the 

possibility that the Act be used as an excuse to increase protectionism. The language of the Act seems to invite anti-trade actions 

and to glorify central planning. Many of the catch words used by 

protectionists are present in the wording of the bill, including 

charges to monitor specific industries that face ‘‘critical’’ challenges 

and the ‘‘identification of emerging or evolving markets, technologies and products that the Nation’s manufacturers could compete for.’’ Those were quotes. 

Is the government to pick winners and losers within the manufacturing sector? While it is clear that at some point a manufacturing capability has national defense implications, even this angle 

is subject to abuse by protectionists. It would be easy to envision 

that a strategy to enhance manufacturing in the U.S. might bear 

a striking resemblance to the policy sought by Bastiat’s candlemakers, who argued that the government should pass a law requiring individuals to keep their window shades down during the day 

because of unfair competition from the sun. Such a policy would, 

of course, increase the demand for candles, but would it make us 

better off? The pernicious government meddling that this Act may 

invite is perhaps best illustrated by the emphasis that policies 

should promote sustainable growth. As Nobel winning economist 

Robert Solow has written, the notion of sustainability is extraordinarily elusive. 

I am now quoting. ‘‘It is very hard to be against sustainability,’’ 

Solow wrote, ‘‘the less you know about it, the better it sounds.’’ To 

carry sustainability out literally, Solow writes, would be to ‘‘make 

no use of mineral resources; it would mean to do no permanent 

construction or semi-permanent construction; build no roads, build 

no dams, build no piers.’’ While the notion of leaving the world the 

same way we leave a campsite, without a trace of our presence, 

seems romantically attractive, open quote again from Solow, ‘‘I 

doubt that I would feel myself better off if I had found the world 

exactly as the Iroquois left it.’’ Solow struggles in his piece, and develops a definition of sustainability that is, to an economist, quite 

sensible, but it seems quite far removed from the nebulous notion 

that those who invoke the word have in mind. But the key point 

I raise is that the Act seems to place a high priority on creating 

a strategy for sustainable growth, even though, again quoting 

Solow, ‘‘sustainability is an essentially vague concept, and it would 

be wrong to think of it as being precise, or even capable of being 

made precise. It is therefore probably not in any clear way an exact 

guide to policy.’’ 


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77 

Now it is hard to conceive of what good would be accomplished 

by the elevation of this notion to a place at the center of U.S. manufacturing policy, but easy to conceive of bads that might follow. 

Mr. RUSH. Mr. Hassett, would you bring your—— 

Mr. HASSETT. Yes, I have got one sentence left, sir. The clock is 

so far away, I can’t quite see it. On balance, the same can be said 

for the entire Act. Thank you for your attention. 

[The prepared statement of Mr. Hassett follows:] 


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A ~ 

--1 American Enterprise Institute 

/or Public Policy Research 

Testimony before the House Committee on Energy and Commerce Subcommittee on 

Commerce, Trade, and Consumer Protection regarding the National Manufacturing 

Strategy Act 

Kevin A. Hassett 

Director of Economic Policy Studies 

American Enterprise Institute 

July 14,2010 

The views expressed in this testimony are those of the author alone and do not 

necessarily represent the views of the American Enterprise Institute. 
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Chainnan Rush, Ranking Member Whitfield, and members of the subcommittee, it is an 

honor to appear before you to discuss the National Manufacturing Strategy Act. 

In my view, the economic science supporting this Act is essentially nonexistent. 

Accordingly, passing it into law would be a policy error. Whether the policy error is 

major or minor would depend on whether the Strategy Task Force and Strategy 

Board are, like most such entities in Washington, irrelevant. lfthey are not, then the 

Act could significantly harm the business environment in the United States. 

This testimony will discuss why I have reached this conclusion. I will begin by 

discussing historic trends in manufacturing in the United States. I will then discuss 

the economic forces, including current policy, that are driving these trends. Finally I 

will relate these forces to the Act, and indicate why it is misguided. 

The Decline in Manufacturing 

The decline of the u.s. manufacturing sector has been well documented. Figure 1 

plots the share of manufacturing in total GOP for the U.S. from 1947 through 2009. 

As can be seen in the chart, manufacturing's share has dropped precipitously, from 

about 28 percent of GOP to about 11 percent of GOP. 

Looking at the aggregate picture, this decline is not necessarily a cause for concern. 

Over the past few decades, our economy has transformed dramatically, and the 

importance of innovation and new ideas has increased sharply. 

A recent study by the Federal Reserve indicates just how rapidly.1 The study 

highlights that companies invest in tangible capital, the buildings and machines of 

heavy industry, and intangible capital, like the many patents that go into making an 

iPhone possible. The study concludes that investment in intangible capital is more 

important today in the aggregate than investment in tangible capital. 

Such an evolution is not necessarily a force that one would wish to oppose. Indeed, 

one might view this transformation as a natural and positive force of economic 

evolution. Figure 2, by way of comparison, plots the share of agriculture in GOP. It 

too has declined sharply over the past decades. If we ran the chart back another 50 

to 100 years, then we would see that agriculture has declined from about 90 percent 

of GOP to where it is today, less than 1 percent of GOP. 

Should Congress address the decline in agriculture with a law that mirrors the 

current proposal? Such a policy, clearly, would seek to reverse a trend that should 

not be reversed; to reverse progress itself. The same may be true for 

manufacturing. 

1 Corrado, et a!., 2006 
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It is true, however, that a change in the composition of GDP that reflects progress is 

highly relevant for those affected. There are regions in the United States that 

historically have been centers of manufacturing, just as there are regions that have 

been centers of agriculture. As the composition of our activity changes, those 

regions bear a disproportionate share of the harm, and provide us with a special 

policy imperative to ease the pain of transition. In these instances, it may be 

beneficial for Congress to intercede and provide education that better prepares 

workers for the new economy. 

The optimality of neutral economic policy 

Ever since the seminal work of Diamond and Mirrlees in 1971, economists have 

known that optimal economic policy should not tax intermediate goods or distort 

productive efficiency2. This means that the allocation of capital that emerges in 

response to market forces should not be disrupted by special treatment for some 

inputs but not others. 

The Diamond and Mirrlees result indicates that an optimal policy will not favor 

production in one area at the expense of another. The Act we are discussing today 

appears to insist that manufacturing receive special treatment that advantages 

manufacturing relative to everything else. Such a focus of policy is not defensible on 

economic grounds. 

!fbusiness activity is viewed by Congress to be disappointingly low, then it is wholly 

appropriate to consider measures that would stimulate it across the board. But 

when politicians pick winners and losers, they interfere in the natural economic 

process, and inevitably cause harm. If the members of this committee believe that 

they know better than the market where profitable opportunities lie, then they 

should retire from Congress, start businesses, and grow rich. 

What can increase business activity in the U.S.? 

In my many years in Washington, I have acquired the opinion that we tend to 

appoint task forces and commissions when we know what the right thing to do is, 

but are unwilling to do it. Commissions and task forces make for nice speechifying, 

but almost always have a negative policy impact because they allow elected officials 

to appear to be addressing key problems without actually doing anything. 

Business activity in our nation is indisputably disappointing at the present time. It 

is urgent that policy changes be enacted before it is too late. But we do not need a 

commission or task force to study the issue. We know why the business climate in 

the United States is so terrible. The biggest problem is our corporate tax system. 

2 Diamond and Mirrlees, 1971. 
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Figure 3 plots the U.S. corporate tax rate from 1981 to 2010, and compares it to the 

average tax rate of our OECD trading partners. Currently, the U.S. tax rate is 35 

percent, and the average for the OECD is 23.9 percent. I should note that this chart 

understates our disadvantage because it excludes state and local taxation. 

Suppose you were a businessman planning to locate a new business in one of two 

U.S. states. Suppose also that one state had a corporate tax rate of 35 percent, while 

the other had a rate of 23.9 percent. Where would you be most likely to locate? The 

same force operates on an international level, and is bleeding our manufacturing 

sector and the rest of our economy dry. 

While the manufacturing tax in the u.s. is slightly lower, it is still well above the 

OECD average. 

Ifwe did reduce the corporate tax, it would not favor manufacturing per se, but it 

would significantly improve our manufacturing climate, and benefit hard hit U.s. 

workers. A recent study of the impact of corporate taxes on the manufacturing 

sector that I coauthored with Aparna Mathur looked at the impact of corporate tax 

rates on the wages of blue collar workers in a sample that covered 72 countries for 

22 years. We found that countries that reduce their corporate tax rate saw large 

and statistically significant increases in manufacturing wages. 3 

Even though the policy is neutral in the sense of Diamond and Mirrlees, lower taxes 

may disproportionately benefit manufacturing because they reduce a harm that is 

disproportionate. The harm may be disproportionate because goods production is 

easier than service provision to move to a lower tax environment. 

Ifwe want to revive manufacturing in the U.S., it is obvious what needs to be done. 

We need to give firms a reason to locate here, and a reason to stay here rather than 

relocate abroad. Ifwe don't, we can appoint all the task forces and devise all the 

strategies we want, and they will not make a bit of difference. 

Notes on the specific legislation 

While, in the abstract, it is impossible to oppose having a strategy or performing a 

study, I am concerned about what that strategy might entail. The development of a 

strategy and performance of the Task Force could well be beneficial, but the bill as 

written looks to be an invitation for destructive meddling. In particular, the biggest 

cause for concern is the possibility that the Act be used as an excuse to increase 

protectionism. 

The language of the Act seems to invite anti-trade actions and to glorify central 

planning. Many of the catch words used by protectionists are present in the 

wording of the bill, including charges to monitor specific industries that face 

3 Hassett and Mathur, 2006. 
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"critical" challenges and the "identification of emerging or evolving markets, 

technologies and products that the Nation's manufacturers could compete for." Is 

the government to pick winners and losers within the manufacturing sector? While 

it is clear that at some point a manufacturing capability has national defense 

implications, even this angle is subject to abuse by protectionists. Are we to make 

sure that we have a vibrant clothing manufacturing industry for fear our troops 

might be forced to fight without uniforms? 

It would be easy to envision that a strategy to enhance manufacturing in the U.S. 

might bear a striking resemblance to the policy sought by Bastiat's candlemakers, 

who argued that the government should pass a law requiring individuals to keep 

their window shades down during the day because of the unfair competition from 

the sun. Such a policy would, of course, increase the demand for candles, but would 

it make us better off? 

The pernicious government meddling that this Act may invite is perhaps best 

illustrated by the emphasis that policies should promote "sustainable" growth. As 

Nobel winning economist Robert Solow has written, the notion of sustainability is 

extraordinarilyelusive.4 

"It is very hard to be against sustainability," Solow wrote, "the less you know about 

it, the better it sounds." To carry sustainability out literally, Solow writes, would be 

to "make no use of mineral resources; it would mean to do no permanent 

construction or semi-permanent construction; build no roads; build no dams; build 

no piers." While the notion of leaving the world the same way we leave a campsite, 

without a trace of our presence, seems romantically attractive, "I doubt," Solow 

writes, "that I would feel myself better off if I had found the world exactly as the 

Iroquois left it." 

Solow struggles in his piece, and develops a definition of sustainability that is, to an 

economist, sensible, but seems quite far removed from the nebulous notion that 

those who invoke the word have in mind. But the key point is that the Act seems to 

place a high priority on creating a strategy for sustainable growth, even though, 

again quoting Solow, "sustainability is an essentially vague concept, and it would be 

wrong think of it as being precise, or even capable of being made precise. It is 

therefore probably not in any clear wayan exact guide to policy." 

It is hard to conceive of what good would be accomplished by the elevation of this 

notion to a place at the center of U.S. manufacturing policy, but easy to conceive of 

bads that might follow. On balance, the same can be said for the entire Act. 

4 Solow, 1993. 
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Figure 1: 

0.4 

0.35 

0.3 

0.25 

0.2 

0.15 

0.1 

0.05 

o 

Manufacturing Value Added as a Share of U.S. 

1947-2009 

~ -~ -

'"""--.. 

~ 

r--. 0 CV1 ID cr- N If) co ,... '<!' r--. 0 CV1 ID cr- N If) co ,... '<!' r--. '<!' If) If) If) If) ID ID ID r--. r--. r--. co co co co cr- cr- cr- 0 0 0 cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- cr- 0 0 0 ~~~rl~\"""'IMMMMM~'I""""i'l""""i'l""""i'l""""ir""l'l""""iNNN 

SOURCE: Bureau of Economic Analysis 

Figure 2: 

Agriculture, Forestry, Fishing, and Hunting Value Added as 

a Share of U.S. GDP, 1947-2009 

0.4 

0.35 

0.3 

0.25 

0.2 

0.15 

0.1 ~ 

I 0.0: Ii! I i j II i ! j 

l r--. 0 CV1 ID cr- N If) co ,... '<!' r--. 0 CV1 ID cr- N If) co M '<!' r--. '<!' If) If) If) If) ID ID ID r--. r--. r--. co co co co cr- cr- cr- 0 0 0 cr- cr- cr- cr- Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' Cl' 0 0 0 M 'I""""i M 'I""""i 'I""""i 'I""""i 'I""""i 'I""""i 'I""""i rl rl rl 'I""""i rl rl rl rl rl N N N 

SOURCE: Bureau of Economic Analysis 
84 


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Figure 3: 

Central Government Corporate Income Tax Rate, 1981-2010 

50.0 ,-----

45.0 ~~~r------------

40.0 -j------lIi"lo:--.---

35.0 30.0 t==~=~:::~~;;:==== 25.0 +--------.----

20.0 +------- ----. 

15.0 +---------.-.--.------

10.0 +--------_.---------

5.0 +-------.. -------------

0.0 n-,--r"-,-,--,--,rr-rr-"-".,--,--,-,"r-r,,,-,--,--,,,-,-, 

SOURCE: OECD 

-United States 

-DECO Average 
85 


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References 

Corrado, c., Hulten, c., and D. Sichel (2006), "The Contribution of Intangible 

Investments to US Economic Growth: A Sources-of-growth Analysis", NBER Working 

Paper 11948. 

Diamond, Peter A., and James A. Mirrlees. "Optimal Taxation and Public 

Production II: Tax Rules." The American Economic Review 61.3, Part 1 (1971): 261-

78. <http://proxy.lib.duke.edu:2192 Istable/1813425>. 

Hassett, Kevin, and Apama Mathur. 2006. "Taxes and Wages," American 

Enterprise Institute Working Paper #128. 

http://www.aeLorg/docLib 120060602 HassettMathur.pdf 

Solow R. 1993. Sustainability: an economist's perspective. In Selected 

Readings in Environmental Economics, ed. R Dorfman, NS Dorfman, pp. 179- 87. 

New York: Norton. 517 pp. 

http://www.isites.harvard.ed u Ifs Id ocs /icb. topic2 0 35 69 Jil es ISol ow.sustaina bili ty 

An Economists Perspective. 1993.pdf 
86 

Mr. RUSH. Thank you so very much. A vote now occurs on the 

floor so we are going to have to recess until—there are three votes. 

It should take us approximately a half an hour. It will only take 

a few minutes. Can the witnesses remain until after we reconvene 

for a series of questions? Thank you so very much. The hearing 

now stands in recess until 10 minutes after the last vote occurs. 

[Recess.] 

Mr. RUSH. The subcommittee will now reconvene for the purposes of asking the questions of the witnesses. I must announce to 

the committee and to all other who are gathered here that Mr. 

Chopra had to leave. He could not remain beyond the 3:30 hour so 

he was excused from the witness table, and any questions that the 

subcommittee members might want to direct to him can be forwarded to him via staff in writing. That said, the chair recognizes 

himself for 5 minutes for the purpose of questioning. One of the 

main objectives of the National Manufacturing Strategy Act is to 

create jobs. Mr. Hassett, some time ago, I think in March of this 

year, you wrote in an article that what was considered a great recession for white Americans has been actually a depression for 

black Americans. This is an issue that I think we all can agree on. 

In addition to the disproportionate impact on minority communities 

in hard times, we also know that there can be a disproportionate 

impact on jobs based on differences within the manufacturing industry. 

Manufacturers may require large or small facilities that may be 

located in urban or suburban areas and so on and so on. Mr. 

Herrnstadt, do you agree that the President should develop a manufacturing strategy to include regional and industrial areas with 

specific employment needs? 

Mr. HERRNSTADT. I think it would be helpful, but once again I 

think it also has to be part of a coordinated national strategy to 

make sure that we move forward as a country in terms of manufacturing. A variety of manufacturing industries have suffered. Aerospace, for example, over 500,000 workers have lost their jobs over 

the past 20 years, so, you know, there needs to be some concentration on that. 

Mr. RUSH. Can you expound on your conclusions? Take about a 

minute and a half. I don’t have but a small amount of time. 

Mr. HASSETT. Thank you so much, Mr. Rush, for the question. 

That specific article that you mentioned, in fact, was discussed in 

the proposal that is sort of an unusual bipartisan one that has 

been put forward by myself and Dean Baker, who is a well-known 

economist, where we discussed job creation policy that would, we 

think, disproportionately benefit minorities who have been hardest 

hit and would be quite a bit different from the subject of this hearing. But the basic idea is that right now when you lay a worker 

off, then if you lay the whole worker off then they get unemployment insurance, and what we would like to do is make the unemployment insurance, economists call it like fractional, so that you 

could lay someone off 20 percent during a recession and then they 

could get 20 percent of their unemployment insurance. This would 

encourage employers to maybe reduce hours and wages of five guys 

20 percent rather than one whole guy. 


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Mr. RUSH. I get the picture. Thank you so very much. OK. I come 

from the south, as you know, and I have seen the devastation in 

all communities that I represent for the most part, Inglewood, 

Chatham, Woodlawn, all those communities. The downturn could 

be traced back to when U.S. Steel closed down, and the steel industry, not your company and I congratulate you for it and I commend 

you for it, but most of them kind of moved offshore or moved into 

the sun belt without jobs, without the jobs, entry into the middle 

class. Can you expound on that historical picture just for a moment, if you would, and as briefly as you can? Am I correct that 

the—— 

Mr. HICKEY. We are, Congressman. As a matter of fact, my 

grandfather, who was one of the founders of the company I worked 

for was Consen steel which was another south side steel mill, and 

he left that company in 1926 to start the company I work for. But 

what has happened is that certainly the economies of scale 

changed. The cost of the production—the South Works, the last 

thing that was being produced at South Works was structural steel 

and they couldn’t compete against the electric furnace producers 

that could do—or they re-melt scrap, and what has happened is 

that the technology evolution and steel production, when South 

Works closed probably 30 percent of the steel in the United States 

was made through electric furnace. Today it is 60 percent, so what 

has happened is the technology has changed and those old facilities 

became obsolete. Now they didn’t relocate them there, and I don’t 

know if that is an issue with the city because all those steel mills 

that were located in Indiana and the southern states, all of them 

have incentives from local states. 

All of them do. I mean there is such massive incentives. Kentucky has got some—and I am not making a judgment one way or 

the other but that is the reality of it. You got to bring jobs back 

to the cities. You got to bring jobs. You got all kinds of land in the 

south side of Chicago that would be great for manufacturing and 

some of it has to do with there is pollution issues on the property, 

et cetera. Congressman, why they don’t develop the old South 

Works, it is what, 200 acres sitting on Lake Michigan? It is a gorgeous piece of property. 

Mr. RUSH. Thank you. I yield back the balance of my time. I recognize the ranking member, Mr. Whitfield. 

Mr. WHITFIELD. Thank you. And thank you all very much for 

your testimony. And, Mr. Hickey, I certainly would like to congratulate you. Any family that can keep a business going for 84 

years deserves a big pat on the back, so thank you. Mr. Paul, you 

and Mr. Gordon both in your comments made some reference that 

you thought this bill could be improved and some amendments 

could be made to it. Is that correct? 

Mr. PAUL. Yes. Having worked on Capitol Hill, I know that a bill 

rarely ends up in the form that it started, and I think many of the 

suggestions that Mr. Gordon made are appropriate ones, but I will 

emphasize that I do think that the thrust of Mr. Lipinski’s bill is 

sound and is very necessary in part simply because there simply 

is no department of manufacturing. The Department of Commerce 

has some responsibility for manufacturing but the Secretary of 

Commerce is also responsible for oceans and fish and weather and 


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a lot of other things, and so you need that coordinated voice to 

have a sound strategy. 

Mr. WHITFIELD. Well, I think we all agree that this is a good 

piece of legislation. At least its purpose is. And although I do also 

agree with Mr. Hassett that I can think of a lot of industries that 

need some particular attention like the coal industry in Kentucky, 

and like agriculture and so forth. But how many of you—I know 

Mr. Hassett’s position, but the other four—Mr. Herrnstadt, do you 

think this bill needs any changes or do you feel pretty good about 

the way it is right now? 

Mr. HERRNSTADT. You know, I would associate myself with Mr. 

Paul’s comments. I think it is an important bill, as I testified to, 

I think that the thrust of it is excellent and much needed. I have 

supplied in my written testimony, I think, two or three what I 

would consider to be minor recommendations I think that would 

strengthen it. 

Mr. WHITFIELD. I know Mr. Hickey in his testimony talked about 

36 percent of all factories that employed more than 1,000 employees had closed down in some period of time. Now to me 1,000 employees or more is a pretty large manufacturing facility. This legislation makes reference to small manufacturers, exclusively. I know 

on page 6, line 14, it talks about small manufacturers. On the 

Strategy Board, page 16, line 1, coming from small manufacturers. 

And it seems to me that if you are going to deal with manufacturing you should not be excluding a large group versus a small 

group. That was one comment I would make. And then second of 

all when I read this legislation you look at this Manufacturing 

Strategy Board versus the task force, the task force is all government employees. The chairman is going to be a government employee. The strategic board, 21 people, some labor union, some 

manufacturers, whoever, but the co-chair is going to be government 

employees also. 

And then it says that both of them, the task force and the strategic board, will make recommendations to the President. And I 

sort of got the sense that the strategic board was to branch out in 

areas other than government which I think is good because we 

need testimony from people outside of government as well, but 

within the task force it talks about sub groupings which would also 

include people outside of government. And then when you consider 

all of the studies and all of the reports, I mean the GAO report, 

the second year of the President, the first year was a 4-year term. 

The reports by the Academy of Sciences, 14 months, 20 months, 

whatever, after. It just seems to me, and I may be wrong, that it 

would have made more sense to try to combine the strategic board 

and the task force to eliminate a whole layer of activities, but do 

any of you have any thoughts on that? 

Mr. PAUL. Mr. Whitfield, I would submit that I think there is a 

role for both, and the reason I say that is that I know from my experience who speaks for the voice of manufacturing within a particular administration. It is difficult. We have had manufacturing 

czars. We have had assistant secretaries. There has been a lack of 

coordination. I will say frankly that at the end of the day when it 

comes to a strategy dealing with a topic like China, for example, 

that the recommendations of the State Department or the Treasury 


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Department often times trump the recommendations that an agency representing manufacturing might. And for that reason, I think 

it makes sense to have more coordination. I also see a fundamental 

role, and I agree with you, for outside involvement in informing the 

policy. And I don’t pretend to be an expert on boards and commissions, so if there is a way to perfect it, I would be happy to look 

at that, but I do see a distinct role for both. 

Mr. WHITFIELD. And you don’t feel that large manufacturers 

should be excluded? 

Mr. PAUL. I read the legislation. I don’t think there is any exclusion of large manufacturers in particular. 

Mr. WHITFIELD. It specifically says small manufacturers. 

Mr. PAUL. Well, I think that, you know, that often makes sense 

because large manufacturers have a large voice, and I represent a 

number of large manufacturers as well. I think often times just as 

the Congress and the federal government does very eager to look 

out for the interest of small businesses, and I think that goes within the spirit of what that goal tries to accomplish. 

Mr. RUSH. The gentleman’s time has expired. Ms. Sutton is recognized for 5 minutes. 

Ms. SUTTON. Thank you, Mr. Chairman. Thank you all for your 

testimony. Let me begin, I think, Mr. Hickey, it was you who spoke 

directly on the point of making things and the creation of value 

and why that is so important as opposed to, for example, other sectors perhaps we saw before the recession hit in this go round. We 

saw a lot of people making money by moving money around. Can 

you just amplify a little bit about why manufacturing is essential 

to creating real value? 

Mr. HICKEY. Well, Congresswoman, when you hear the opportunity to take inputs and take the intellectual capital of your employees and their efforts and turn it into a value product that is 

a higher value than the inputs, you are always going to create 

wealth. Sometimes you will make mistakes and you will make stuff 

that people won’t buy, et cetera, et cetera, but the reality is that 

the way to wealth is through creation of taking—you grow it, you 

mine it. Congressman Whitfield talked about the mining in Kentucky and the corn farmers. This is how you create wealth. And 

manufacturing is creating wealth. Every country in the world 

wants to manufacture products and ship them to the United 

States. The trade deficit came out yesterday. What was it, $42 billion, 20 plus billion with the Chinese? They aren’t selling us paper. 

The point is what we are doing is we have to have—the reason I 

came back in support of the Congressman’s effort, under the last 

administration there was a study by the Department of Commerce 

by Grant Aldonas, who was the Undersecretary of Commerce. I 

don’t know if anybody—I actually had an opportunity to talk to the 

undersecretary several times on this program, very complex, very 

comprehensive study. The last item was about currency manipulation by our training partners. 

And I talked to at the time Undersecretary Aldonas and said you 

told me this was going to be highlighted. He said I lost to the 

Treasury. Well, if we don’t have the whole government looking at 

why we are losing 6 million manufacturing jobs in 10 years why 

we have had 42,000 manufacturing plants close. Somebody has got 


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to stand up and say these are the reasons. This is why I think Congressman Lipinski’s bill makes so much sense because we have got 

to look at all of them. One of the other things that we probably 

should have is the Department of State because we do trade agreements with people because the Department of State says this is 

how things are going to work. 

Ms. SUTTON. Thank you, Mr. Hickey. I concur with your assessment. That was a very powerful answer, and I appreciate you 

bringing that up. I would like to just, if I could, Mr. Hassett, just 

ask you a couple of questions about the free market. Do you think 

that we are operating in some sort of global free market economy 

where free market principles exist across the globe? 

Mr. HASSETT. To a varying degree, yes. Obviously, there is a lot 

of variation across countries and how free the markets are. 

Ms. SUTTON. Right. So you would agree that countries manipulate their markets and entities manipulate their markets? 

Mr. HASSETT. Some do, yes. 

Ms. SUTTON. OK. Do you think that China under values its currency and manipulates its currency? 

Mr. HASSETT. I can’t answer that. I don’t know what the right 

level of the currency for China is. Yes, I am not a currency expert. 

I can’t tell you. 

Ms. SUTTON. Does AEI have a position on that? 

Mr. HASSETT. AEI doesn’t take positions on anything. But I have 

colleagues that I would be happy to forward your question to. 

Ms. SUTTON. OK. I would certainly be interested—— 

Mr. HASSETT. In fact, if you asked me the question what do people at AEI say about this, then I would be happy to give you a 

lengthy answer. 

Ms. SUTTON. OK. Well, since we don’t have time for a lengthy answer right now, I think your answer will suffice. Your answer is 

that you don’t know if China manipulates their currency. OK. And, 

you know, we saw, and I know a lot of you will be well aware of 

this, and probably all of you, in the last year we saw a decision 

come through the ITC regarding oil country tubular goods that 

were being unfairly subsidized by the Chinese dumped into our 

market. And, Mr. Hassett, I would want to hear your opinion on 

this. Now the ITC eventually after months of going through the 

hearing process determined that indeed this was taking place and 

the President moved ahead with the recommendations to place 

anti-dumping and countervailing duties in that instance. 

Is that the way that you think we can—you talked about there 

not being economic science behind all this. I also know that AEI 

is about dealing with problems, right, where they arise, so is that 

a sufficient answer or do you agree that there is some need to have 

a more proactive, you know, forward thinking manufacturing strategy that might deal with these problems before they happen and 

people in Ohio are out of a job for 9 months, 12 months before we 

get these duties in place? 

Mr. HASSETT. I think that there are certainly cases where there 

are abuses, and that is why we have the systems that we do. The 

problem that I have is that if you were to ask what is the impact 

of trade on the welfare of Americans, I think that it is indisputably 

that it improves it. What is the impact of trade on the welfare of 


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specific workers, then it is more of an open question. Maybe Ohio 

is an area that has particular challenges because there are foreign 

competitors that for whatever reason, maybe abuse, can out compete them. I think that my position is that there are things that 

there is not really a dispute about. 

The fact that right now our companies, including Mr. Hickey’s 

company, has to pay a higher tax than his competitors. It is obvious that that is harmful. And so my concern is that we have got 

this sort of elephant in the room of a really big disadvantage for 

everybody, and then we don’t like some of the effects of that like 

maybe there is not enough R&D so we have an R&D creditor. The 

manufacturing may be disproportionately hurt because it is easier 

to locate manufacturing offshore and then we want to do special 

subsidies for manufacturing. I think the better solution is to just 

fix the problem in the first place. 

Ms. SUTTON. And, if I could, I know that my time is up, but I 

appreciate that your shift back to the issue of the tax structuring. 

Certainly, I want our tax structure to make sense, but that really 

doesn’t answer the other question. I think you would have to agree 

that perhaps the efficiency in the approach that we have where we 

have our U.S. manufacturing and the workers subjected to a process that takes a year where they are sitting out of a job because 

somebody is cheating that perhaps we can do better. 

Mr. RUSH. The witness can answer the question, but I just want 

you to know that—do you want to answer the question? 

Mr. HASSETT. I agree. I agree. I said, yes, we should do better. 

Mr. RUSH. The chair recognizes Mr. Murphy. 

Mr. MURPHY. Thank you, Mr. Chairman. Thank you, panel. You 

have heard my comments before. I think it is important on an issue 

so important. I do appreciate all of your passion about helping to 

build up America’s manufacturing particularly because of what I 

mentioned before about China is about to overtake us, and I don’t 

think there is a person in this room that wants to sit back and let 

that happen. But I also think it is important, two elements in the 

legislation. One is that I want to make sure we are not abdicating 

our role as members of Congress. Certainly among 435 members of 

Congress, none of us are experts on everything but all of us are experts on something, and that is why we look to panels like you and 

other groups to provide that information to use to make sure we 

are passing legislation that works for the best interest of this Nation. 

So along those lines, I wanted to ask you. How many of you own 

a company? All right. And now, as I understand, sir, in your company, your steel products distribution, but I think in your testimony you also said you are a supplier also for manufacturers as 

well as purchasing for manufacturers? 

Mr. HICKEY. Our supply base would be U.S. Steel, New Core. 

Mr. MURPHY. OK. Now so that is important for all of us to know 

that because I think also we would think if we knew our child was 

being taught by a teacher who had no teaching certificate or even 

the principal knew nothing about education, we would be concerned. I doubt if any of us would go to a hospital to be treated 

by a doctor who never practiced medicine. But I still want to hear 

your opinions, I think, so I am going to run through this panel, this 


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board that is supposed to—Manufacturing Strategy Task Force. I 

wonder if any of you know, do any of these following people have 

any manufacturing experience. Secretary of Defense, Robert Gates. 

Fine man. All these people are great people. As far as I can tell, 

he doesn’t. Treasury Secretary Tim Geithner. Does anybody know? 

Good man. I don’t think he does either. Gary Locke, Secretary of 

Commerce. One of our colleagues, Hilda Solis, Secretary of Labor. 

Steven Chu, Energy. The head of the National Economic Council, 

Lawrence Summers, anybody know if he has any manufacturing 

experience? National Economic Advisors head Christina Romer. I 

don’t know either. 

Head of OMB, Peter Orszag. How about the Office of Science and 

Technology Policy, does the head of that have any manufacturing 

experience, John Holdren? I don’t know if he does. Director of Domestic Policy Council, Melody Barnes. Now I believe that Karen 

Mills, the head of the Small Business Administration, has worked 

for General Foods and also a company that manufactured hardwood flooring, refrigerator motors, and plastic injection molding. 

But how about the head of the NSC, does anybody know who the 

head of the NSC is and does this person have any manufacturing 

experience? Does anybody know who the head of NSC is? 

Mr. PAUL. I believe it is Admiral Jones. 

Mr. MURPHY. It is actually the President of the United States. 

Mr. PAUL. The head of the—oh, I am sorry. The head of the National Security—— 

Mr. MURPHY. The head of the National Security Council. I believe that is one listed here. 

Mr. PAUL. I am sorry. I thought you meant the National Security 

Advisor. 

Mr. MURPHY. OK. But my point is in this that the two things 

that I want to make sure that we have is—now this is leading up 

to my question. I would like all the panelists to answer quickly. 

Who do you think should be on a panel to really give us based upon 

a wealth of experience information on manufacturing, they should 

actually be on a decision panel, who can we look to who really 

knows this and give us—we want expertise here. This committee 

wants expertise. I will just run by it. Where should we look? Mr. 

Paul. 

Mr. PAUL. I think fundamentally there is a role for government 

to be on the side of manufacturing. I think that process should 

be—— 

Mr. MURPHY. I understand but so far we haven’t come up with 

anybody who knows about it. 

Mr. PAUL. But I think that process should be informed by people 

who are in manufacturing. I would argue that if you look in past 

administrations, I would include the Clinton administration, both 

Bush administrations, there has been a paucity of people who have 

a familiarity with manufacturing. That has been one of the challenges. 

Mr. MURPHY. OK, next person. I need some answers. 

Mr. GORDON. I believe people that understand manufacturing but 

because of the structural problems and the fact that they are strategic, I would say you need people with economic backgrounds as 

well as policy background. 


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Mr. MURPHY. OK. 

Mr. HICKEY. Mr. Murphy, there is a National Manufacturing 

Strategy group now or a national manufacturing group. I know 

there is a company in Ohio that is in the machine tool business. 

I believe Dan Damico from New Core is on it, so that is a group 

that would be a good core to make part of this group. 

Mr. MURPHY. All right. 

Mr. HERRNSTADT. I think it would also be helpful to include 

workers who actually make the manufactured goods and have the 

experience from all levels. 

Mr. MURPHY. Good. Thank you. Mr. Hassett. 

Mr. HASSETT. And I disagree strongly with your point. I think 

that you don’t have to own a theater to know Shakespeare, and I 

think that what we need if we are going to have this commission, 

which I hope we don’t, is people who understand the importance 

of the neutrality of government policy, and that is probably not 

people who have a lot of manufacturing experience. 

Mr. MURPHY. I don’t have to own a theater to know Shakespeare 

but if you are going to own a theater you ought to know about owning a theater. So I would just look upon this and make a recommendation, Mr. Chairman, that perhaps there are some folks we 

could also have before us at some point as we are looking at legislation to look at some other people working this. I think they could 

help us strengthen this and improve upon some aspects of that bill. 

I think some good ideas came out of this panel. Thank you, Mr. 

Chairman. 

Mr. RUSH. Thank you. Mr. Gonzalez for questions for 5 minutes. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. I am going 

to commend Mr. Lipinski in his effort and I am going to make some 

assumptions that the Board, the task force will be in consultation, 

will include many sources and resources as they proceed but they 

will have a charge, and I think this whole effort here is to identify 

the need, have the structure, and then bring in all the necessary 

resources and it is going to be up to this committee and others to 

make sure that we have the oversight and that they do their job. 

Mr. Hassett, my observation with my staffer was I have never seen 

anybody enjoy testifying as much as Mr. Hassett, and that is a 

good thing because you have enthusiasm. 

Now I am not going to agree with you. You made a statement 

that the only way this would work would be if the board and the 

task force would be irrelevant because you see that if they are relevant they can only do harm because they are going to meddle, is 

that correct? 

Mr. HASSETT. That is, I guess, the most likely outcome, I would 

think, yes. 

Mr. GONZALEZ. So I doubt if we are going to agree on a whole 

lot, and I know that you said that Mr. Hickey can’t be competitive 

because he pays more taxes. I mean that is the whole reason that 

he can’t be competitive because he pays more taxes. 

Mr. HASSETT. That is not what I said. What I said is that that 

is a really big disadvantage that he faces relative to his trading 

partners, and that on that we know in the United States that everybody has that disadvantage in manufacturing and in other industries as well. So my point is there is an elephant in the room. 


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Mr. GONZALEZ. And we could have a really good discussion as to 

where we are in economic development in our point in history and 

why and lessons learned that requires what we do today. Now we 

are going to have a difference of opinion to the degree but there 

are many things out there, and I think it is interesting, and I am 

going to quote from Harold Myerson in the Washington Post, December 15, 2009. ‘‘America’s production of goods no longer receive 

the level of investment that had made it the engine of our economic 

growth from the mid-19th century through the 1970s. The change 

began at the outset of the Reagan years when the percentage of 

corporate profits retained for new investment dropped sharply. In 

the prosperity years of 1946 to 1979 dividends constituted 23 percent of profits. From 1980 to 2008, the constituted 46 percent.’’ 

And it is something that my colleague, Ms. Sutton, pointed out. 

How we make money, how we invest money in this country has 

been a way from manufacturing into something that maybe we 

make money out of money, and we know what happened in the financial sector. Let us go back to regulation, which I think you have 

a certain disdain for. Had we had that regulation, had we had that 

oversight, we would have noticed what was going on in the financial sector that led to the economic meltdown. So regulation is necessary in all aspects, but I would hope that this task force and this 

board will be able to identify what is going on out there. Where is 

the investment being made in America and why is it an easier dollar to be made away from a solid investment in manufacturing. 

Those are the questions that I think will be pointed out. And the 

fact that maybe we encourage not investing in a manufacturing 

base. 

I will ask you this because I know Mr. Hickey is in competition 

with foreign companies and such. Do you believe in the minimum 

wage? Should we have a minimum wage? Do you believe in OSHA? 

Mr. HASSETT. Yes. 

Mr. GONZALEZ. Why? Shouldn’t the employer just rise to the responsibility of taking care of an employee and have safe working 

conditions? Why wouldn’t you just trust the situation? 

Mr. HASSETT. In part because not all employers are necessarily 

going to work to the benefit of their workers. 

Mr. GONZALEZ. Do you believe in the Clean Water Act? 

Mr. HASSETT. Absolutely. 

Mr. GONZALEZ. Do you believe in the Clean Air Act? 

Mr. HASSETT. Yes. 

Mr. GONZALEZ. Do all those other countries that are competitors 

have anything similar to what I just described? 

Mr. HASSETT. Some do, some don’t. 

Mr. GONZALEZ. Mostly don’t, wouldn’t you agree, seriously? 

Mr. HASSETT. In the developed world, they do. The air and the 

water is clean—— 

Mr. GONZALEZ. Well, the developed world. You know, Germany, 

gee, we compete with those German made vehicles and such, but 

do they have any advantage over maybe a domestic manufacturer? 

Mr. HASSETT. They have a tax advantage for sure. 

Mr. GONZALEZ. Any other advantages other countries may enjoy? 

Health care paid for by the government. 


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Mr. HASSETT. But they are taxed to pay for that, so it is not clear 

if it is a more efficient method. 

Mr. GONZALEZ. But there are advantages out there—— 

Mr. HASSETT. But, again, the thrust of my testimony is that if 

we make money because someone in the U.S., because somebody 

invents a very cool piece of software that helps people do something 

better or because someone makes a great movie that they make 

millions of dollars in revenue from having people all around that 

will go to it, that that is good too, but what we need to do is make 

policy—not have policy decide what we are going to do in the future but make it a vibrant place to do anything that is productive. 

Mr. GONZALEZ. Well, then you would say basically have no policy, 

no regulation, no law because, don’t worry, markets will take care 

of themselves and everybody is going to do the right thing by their 

investor and so on. I mean we have example after example of that 

recently. Everyone did the right thing. But, no, that is not true, 

and I think what you espouse—and I understand you may feel very 

strongly about it, but I think it is exaggerated. You are not entirely 

wrong. I think it is a question of degree. But what I think the other 

witnesses were testifying to is the attention and the energy that is 

required of this government to examine the loss of manufacturing 

jobs in America and to determine whether we have policies that 

work against it, can we have policies that will encourage it. 

Mr. RUSH. The gentleman’s time is up. The chair recognizes Mr. 

Lipinski for 5 minutes. 

Mr. LIPINSKI. Thank you, Mr. Chairman. I want to thank the 

witnesses for their testimony and for their recommendations for 

improving this bill and thank the members of this committee for 

their recommendations. I think that there certainly is always room 

for making things better, and I appreciate the suggestions when I 

work with you as we move forward on this. A couple things I did 

want to raise though, Ranking Member Whitfield had raised the 

only talking about small manufacturers. It really is just talking 

about in particular by small and medium size manufacturers and 

because the problem is often faced by these small and medium size 

manufacturers relative to large manufacturers and unfortunately I 

think a lot of times the large manufacturers are the ones that get 

the most focused, but it is not exclusive to them. 

And Mr. Murphy had raised the issue about everyone on the task 

force being from the government and heads of departments and 

agencies, and also it says in the bill that there will be subgroups 

to advise the task force including members from the private sector. 

And I certainly agree, and I think that is why all these recommendations have been very constructive that we do need to 

make sure we are listening to those who are on the front line, people like Mr. Hickey who have been working for years in manufacturing. A couple things I wanted to talk about and ask a couple 

questions if I have time is, first of all, I certainly feel and I think 

most of us, maybe not everyone here agrees that manufacturing is 

something that is especially important for our country. Many other 

countries certainly believe that it is important for their country, it 

is not only China, India that we are talking about, United Kingdom, Brazil, Canada all have manufacturing strategies. Mr. Dingell 

mentioned Germany also. 


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And the reason for this is, I think, what Mr. Hickey spoke about 

is that manufacturing actually produces wealth, and I think that 

is something that the American people after we saw the financial 

crisis and said what are we doing in our country that actually produces wealth. And I think that is why there are a lot of concerns 

out there, and certainly the polling shows that people would like 

to see promotion of manufacturing. I think it is important for our 

country. But I want to ask a question of Mr. Gordon because the 

other part of manufacturing that I think makes it particularly critical for our Nation is for defense. I just want to ask Mr. Gordon, 

have you seen what you believe the diminution of our defense capabilities or potential diminution in the future with what has happened with manufacturing in our country. 

Mr. GORDON. Absolutely. Every month our manufacturers that 

may be secondary suppliers or may be a primary supplier for a defense system and they are going out of business, there are multiple 

reasons for that, and that does weaken our national security for a 

couple different reasons. One is when you go off shore with a manufacturer, you don’t have an assured source of supply that is free 

of any political or other issues. And also you need a trusted source 

of supply so there is many—there are about 50 or 60 suppliers that 

go out of business for the Defense Department every month, and 

these are listed in the DMSMS working group, which is a small 

area. 

Mr. LIPINSKI. Thank you. I wanted to ask Mr. Hickey, as a member of a Commerce Department advisory committee, do you see 

that it is especially important from your experience there, especially important that we have a National Manufacturing Strategy 

that is coordinated from the top level from the President in order 

to make sure that we actually are having some kind of coordinated 

policy rather than a lot of disjointed policies and program that may 

not really work well together and promote manufacturing. 

Mr. HICKEY. Congressman, this is exactly my frustration on this. 

I have been on this committee for about 10 years. We advise the 

USTR and the Department of Commerce on trade policies that has 

to do with the steel industry. We get a lot of discussion but there 

never seems to be a coordination. I will come back to the best study 

I saw in a long time done by the Commerce Department under Mr. 

Aldonas back in, oh, I don’t know, it was probably ’94 or ’95, and 

he basically said, you know, this is the best I could do because 

there is way too many different people who don’t really have a 

value for manufacturing. You know, and it may be an assistant secretary here or whatever. You have to have the President of the 

United States say this is a priority for our country. The Defense 

Department is even the—we don’t have enough steel today to make 

certain plates that we need for the military applications we have 

going on today. We are importing them from other countries. 

Mr. LIPINSKI. Thank you. I yield back. Thank you, Mr. Chairman. 

Mr. RUSH. The chair will entertain one additional question from 

any member who desires. Is there any member who desires an additional question? Ms. Sutton, would you like to ask an additional 

question? 


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Ms. SUTTON. Sure, Mr. Chairman. Thank you very much. Mr. 

Paul, you mentioned that Germany has an integrated strategy on 

manufacturing, and, Mr. Herrnstadt, your testimony also referred 

to China and the European Union. And I would just like for you 

to expand upon that a little bit because this isn’t something that 

we are just doing in a vacuum but others are obviously taking action so if you could elaborate on how those countries’ strategies 

compare to the National Manufacturing Strategy that we are contemplating in this bill and whether there are additional countries 

with the National Manufacturing Strategy and whether you believe 

those strategies have placed them at an advantage. 

Mr. HERRNSTADT. I would be happy to respond briefly, and I 

think it is a terrific question. First, there are strategies we don’t 

want to pursue like China’s which is heavily mercantilist. I don’t 

think anyone wants to see our factory workers working for $250 a 

month. That is not a tenable manufacturing strategy for the United 

States. Germany, on the other hand, which in many cases has 

higher compensation cost for workers, faces an extraordinary high 

level of regulation, is able to succeed. In fact, Germany has held 

its share of production and of exports as the U.S. shares of these 

have dropped over the past decade and China’s have dramatically 

risen. The reason is because manufacturing strategy is important 

to the German government. It is important across party lines. 

And I would add it represents a lot of labor management, academic, and governmental cooperation working together on research 

production, skills and training, a very aggressive trade policy, and 

a policy that is designed to keep innovations in Germany. I mean, 

for instance, German is one of the world leaders in wind and solar 

production, but Germany is not a windy place. It is not a sunny 

place. But they make the stuff because they have a manufacturing 

strategy and they want to sell to the rest of the world. 

Mr. RUSH. The chair now recognizes Mr. Dingell of Michigan for 

5 minutes. 

Mr. DINGELL. Mr. Chairman, you are most courteous and kind. 

Thank you. This is to Mr. Paul, Gordon, and Herrnstadt. H.R. 

4692, as currently written, requires the President to draft a National Manufacturing Strategy based on the input of a Manufacturing Strategy Task Force and Manufacturing Strategy Board. Do 

you believe that these two agencies should collaborate to draft the 

National Manufacturing Strategy instead of the President? Yes or 

no. 

Mr. PAUL. I think at the highest level the President needs to 

take ownership for the strategy. 

Mr. DINGELL. Yes or no. Should they do it instead of the President? We will come to that point then. 

Mr. PAUL. They should certainly submit the recommendations. I 

think the President should make the ultimate call. 

Mr. DINGELL. All right. And now Mr. Gordon. 

Mr. GORDON. I would say yes. I think that in my testimony I said 

that the task force should draft a strategy and the board should inform it. 

Mr. DINGELL. Thank you. Mr. Herrnstadt. 

Mr. HERRNSTADT. I will agree with that has already been said. 

Mr. DINGELL. You do or don’t? 


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Mr. HERRNSTADT. I think they should make recommendations to 

the President. That is ultimately where it rests. 

Mr. DINGELL. All right. So you think that they should make recommendations that the President should submit the policy to us, 

to the Congress, is that right, that statement that you are making, 

gentlemen? All right. All except, I guess, Mr. Gordon, but I don’t 

see you are too much out of pace. All right, gentlemen, thank you. 

Now, again, to Mr. Paul Gordon and Mr. Herrnstadt. Further, 

should the membership of the Manufacturing Strategy Task Force 

be expanded to include the Department of State, the United States 

Trade Representative and U.S. Import-Export Bank? Yes or no, 

starting with Mr. Paul. 

Mr. PAUL. Only if they say the right thing. 

Mr. DINGELL. I am sorry? 

Mr. PAUL. Only if they say the right thing. I think they should 

be included but they are often particularly unhelpful. 

Mr. DINGELL. I am not sure we can censor at best what they had 

to say. If you would please, Mr. Gordon. 

Mr. GORDON. I would say the state absolutely. I would also suggest Homeland Security and National Science Foundation. 

Mr. DINGELL. Thank you. Mr. Herrnstadt. 

Mr. HERRNSTADT. Yes. I think they should be included. 

Mr. DINGELL. Do you have some brief words of explanation as to 

why you feel this way, gentlemen? 

Mr. GORDON. I would say the state has a great deal to do with 

export control and manufacturing and trade. I believe that Homeland Security also has a rather large role in terms of making sure 

that you have assured sources for Homeland Security, and the National Science Foundation makes a lot of the R&D policy and investment in our next generation manufacturing technologies. 

Mr. DINGELL. Of course, I have got to admit that the Department 

of State has at least to me been a tremendous disappointment with 

regard to trade matters. I sometimes wonder whether they represent us or somebody else. Now, gentlemen, again, Mr. Herrnstadt 

notes in his written testimony that the Manufacturing Strategy 

Board established pursuant to H.R. 4692 would not be chaired by 

a representative of organized labor. You have brought to my attention a concern I think we may share. Do you believe a representative of organized labor should be denied the opportunity to co-chair 

such a board? Yes or no. 

Mr. HERRNSTADT. Absolutely not. I think they should be a member of the co-chair. 

Mr. DINGELL. OK. Thank you. Do you have a reason that you 

would like to give us for that? Is there a reason you would like to 

say that that should be done that way, that they should have an 

opportunity to co-chair? 

Mr. HERRNSTADT. Sure. Keeping in framework of the way the 

task force has been formed it looks like it is trying to attempt some 

sort of well balance to bring divergent views to the forefront, and 

if you only leave chairs of folks that don’t represent workers, particularly workers in the manufacturing era, you deny that opportunity to bring that. 

Mr. DINGELL. Again, to Mr. Paul, Gordon and Herrnstadt. Gentlemen, H.R. 4692 requires the President to appoint members of 


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the Manufacturing Strategy Board after consultation with industrial organizations. Do you believe that such industrial organizations should include labor unions? Yes or no, starting with Mr. 

Paul. 

Mr. PAUL. Speaking as someone who represents both labor and 

business, I do, yes. 

Mr. DINGELL. OK. Mr. Gordon. 

Mr. GORDON. Yes, I do, because I believe that they have a great 

stake in that. 

Mr. HERRNSTADT. Yes. 

Mr. DINGELL. Gentlemen, the same three witnesses, if you 

please. H.R. 4692 requires the President to release the National 

Manufacturing Strategy by the end of the second year in office. 

Now the calendar here may give us pause. Should this be modified 

in light of the fact that the current President’s second year is halfway done? What are your comments on that, if you please, starting 

with Mr. Paul. 

Mr. PAUL. I think, quite honestly, if we want a robust document, 

I think there is a reasonable possibility it should be put back to 

give them a little more time. 

Mr. DINGELL. Give them enough time to do the job, is that what 

you are saying? 

Mr. PAUL. Absolutely. 

Mr. GORDON. I would agree with that, absolutely. 

Mr. DINGELL. And you, Mr. Herrnstadt? 

Mr. HERRNSTADT. Yes, I agree there needs to be adequate time, 

but I also think that this urgently has to be done. 

Mr. DINGELL. I think your counsel as to how we do it urgently 

and at the same time give them enough time will be earnestly 

sought for the record. I note, Mr. Chairman, you have courteously 

given me more time than I am entitled to. Thank you. Thank you, 

gentlemen. 

Mr. RUSH. The chair now recognizes Mr. Lipinski. 

Mr. LIPINSKI. Thank you, Mr. Chairman. I just want to ask Mr. 

Herrnstadt, are there things that you believe would be especially 

important for a manufacturing strategy from what you have seen 

in manufacturing? 

Mr. HERRNSTADT. I think one of the hopes of the task force and 

the board the way you formulated it is that all the stakeholders 

will be at the table to give some give and take to develop the strategy, and I think it will address this issue in the long term and also 

I think it is important that this will be a permanent and institutionalized task force, so it is not just a one-shot deal where it just 

issues a report and then everything goes away. And I think the 

thrust of that is very important, but in the meantime I think there 

is a lot that has to be done. As Congresswoman Sutton and others 

have talked about, and as my members are experiencing, they are 

losing their jobs every day, every week, every month. And some 

sort of strategy, at least short term, needs to be implemented as 

soon as possible to help alleviate this and to help rebuild our economy. 

Mr. LIPINSKI. Thank you. And I want to thank Chairman Dingell 

and Ms. Sutton and Mr. Whitfield, and especially Chairman Rush 

for the opportunity to discuss this bill, and thank you for your recVerDate Mar 14 2013 01:01 Mar 20, 2013 Jkt 077920 PO 00000 Frm 00105 Fmt 6633 Sfmt 6602 E:\HR\OC\A920.XXX A920

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ommendations and especially thank the witnesses for your testimony. 

Mr. RUSH. The chair thanks all the witnesses for appearing 

today. You have been more than gracious with your time, and you 

provided us some wonderful insight into this whole area of discussion and you have empowered this subcommittee with your grasp 

of the issue. Thank you so very much. Before we adjourn, I do have 

a unanimous consent request that a statement of the National Association of Manufacturers on the National Manufacturing Strategy 

Act, H.R. 4962, be submitted for the record, and hearing no objection, so ordered. 

[The information follows:] 


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Statement of the Honorable Joe Barton 

Ranking Member, Committee on Energy and Commerce 

Hearing on H.R 4692, The National Manufacturing Strategy Act of 20 10 

July 14, 2010 

Thank you, Mr. Chairman. 

We all want to see the u.s. economy restored to previous levels of output so 

people can get back to work. How we try to do that will be dictated by what 

we believe. Some people believe we don't have enough government, and 

they have a bill to show us how to have some more. I think we don't have 

enough freedom. I believe in freedom from the job-killing regulations and 

tax policies that of constitute a roadblock to economic expansion. 

Our majority friends are not the first to try their hands at central planning 

and top-down economic directives, and that's how we know for sure that 

those ideas actually retard prosperity and expand poverty. 

The specific idea that we need some kind of intense study to discern why 

manufacturing employment has fallen and to show the federal government 

how to make things right again is absurd. Manufacturing employment in the 

U.S. is down because of the following: bad tax policy. 

It isn't fashionable to notice this out loud in some circles, but America has 

the second highest corporate tax rate in the developed world; and will soon 
102 


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move into the top spot once Japan's government follows through on its 

pledge to reduce its corporate tax rate. In the last 20 years, every single 

OECD (Organization for Economic Cooperation and Development) country 

has reduced its corporate tax rate save for one: the United States. 

Companies create real jobs, while govermnent sapping taxpayer funds zaps 

real jobs. The more we tax employers, the less we should expect them to 

produce goods, services, and jobs. 

The facile answer to this problem, according to the leadership of organized 

labor, is to convince other countries to follow our mistakes and tax their 

employers until they scream. Taxation on corporate investment costs the 

economy more than any other tax in terms of foregone investment, income, 

and jobs. 

Manufacturing employment also has fallen for the same reason agricultural 

employment has fallen over the last century--phenomenal advances in 

productivity that have dramatically increased living standards across the 

world over that time span. Manufacturing employment today is 

approximately the same as it was at the beginning of the twentieth 

century. Over that period the United States has created nearly 100 million 

additional jobs, and living standards have increased by an order of 
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magnitude. Efficiency in manufacturing has freed up millions of workers to 

enter new sectors of the economy--think of the millions of people who are 

now employed producing software, or those working for the hundreds of 

cable and television networks that did not exist 30 years ago. 

A final note: we have before the Congress right now a simple way to help 

our manufacturing sector and increase our exports today, and that is to pass 

the Free Trade Agreements with Panama, South Korea, and Columbia. 

Caterpillar is poised to increase its sales by billions of dollars once it obtains 

unfettered access to these three markets: Harley-Davidson faces a tariff that 

keeps its motorcycles almost completely out of Columbia, but could see the 

value of its exports increase by hundreds of millions of dollars if the tariffs 

disappear. With South Korea, our farmers stand to see exports increase by 

billions of dollars a year. A recent estimate suggests that meat exports alone 

will increase by $2 billion a year if the Korean FTA passes. 

Now, back to the bill. There's no mystery what an administration-guided 

study is going to conclude: more "managed" trade, more subsidies for 

outmoded industries with political clout, and a growing role for government 

in the economy. When President Obama campaigned for office, he said 

Washington doesn't need another study or commission to understand our 
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problems; he said Washington needs to act. Calling a commission to study a 

problem "pass[ingJ the buck" and "the oldest Washington stunt in the book," 

President Obama told a Colorado audience "[wJhat we need now is 

leadership." I agree. Let's not waste millions of dollars so that the 

Administration can make another political statement and call it economic 

policy when we have real solutions in front of us right now. 
105 

Mr. RUSH. The committee now stands adjourned. 

[Whereupon, at 4:52 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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Manufacturing Strategy 

For Jobs and a Competitive America 

June 2010 

Manufacturing Means 
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A Manufacturing Strategy for Jobs 

America's prosperity and strength are built on a foundation of manufacturing. 

Manufacturers create, innovate and employ millions of Americans in some of the best 

jobs our country has to offer. 

The United States continues to stand strong as the No, 1 manufacturing economy in the 

world, producing 21 percent of globa! manufac:uring wealth. Nearly 12 million Americans 

work in the manufacturing sec:or, earning 22 percent more in wages and benefits than 

~he rest of the workforce. 

But U,S. leadership in manufacturing is under fire, facing its toughest competition in 

the nation's histol)', States used to battle each other to recrujt new factories and manufacturing jobs. Today, states go head-to~head against foreign governments that can use 

all the tools of government to support industry. Our states - and the United States -

are being outgunned. 

Yet we have no battle plan, no comprehensive approach for making manufacturing in the United States more competitive, more 

productive and creating even more high~paying jobs. The unprecedented challenge to U.S. manufacturing pr8~emjnence requires 

clear thinking, a globa! vision and a plan. 

The United States needs a manufacturing strategy - a Manufacturing Strategy for Jobs and a Competitive America. 

For years, Washington has tried to encourage industry with legislation, government initiatives and smat! fixes, Some produced 

benefits; others caused harm. And the reality is that the United States lost 2 million manufacturing jobs during the latest recession. 

A manufacturing strategy wi!! take a comprehensive view of what is needed for manufacturing in America to succeed in the 

face of global competition. Such a strategy should set high goals: 

• The United States will be the best countl)' in the world to headquarter a company. We want companies to be based in 

the United States. 

• The United States will be the best country in the world to innovate, performing the bulk of a company's global research 

and development 

• The United States will be a great place to manufacture, both to meet the needs of the American market and serve as an 

export platform for ;:he world. 

A strategy assesses the strengths of the competition. Through tax and trade policy, Europe's leaders foster their industries' investment and innovation, China's entire econornic program is based on the export of manufactured goods; the rising powers of India 

and Brazi! aggressively protect and promote their domestic manufacturing companies. Across the giobe - in Asia, Europe, South 

America, Canada, Australia - nations are negotiating trade agreements that expand their access to customers and markets to 

the disadvantage of manufacturers in the United States. These countries strategize for success. 

The U.S. response has fallen short of the challenge. Some in the United States have given up on manufacturing, believing, "We just 

don't make things anymore." Others react passively, assuming thrngs win work out. Others, claiming to promote the "right" manu~ 

facturing jobs, propose new taxes, regulations and government programs that make It harder for existing businesses ~o add 

new employees, 

In the following Manufacturing Strategy for Jobs and a Competitive America, we layout a comprehensive plan for supporting 

jobs and the U.S. manufacturing economy. 
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The strategy proposes policy changes that, taken as a whole, will allow manufacturers in the Umted States to compete effectively 

in the global marketplace. The strategy highlights the need for: 

• Tax policies to bring America more closely into alignment with major manufacturing competitors 

• Government investments in infrastructure and innovation 

• Trade initiatives to reduce barriers and open markets to U.S. exports 

The strategy calls for comprehensive action on critical priorities such as energy, education and regulation, while pointing out 

where misguided policies would undermine the strategy's proposals for positive change, 

The Manufacturers cal! on members of Congress, candidates for office and opinion leaders to join us in supporting and publicly 

endorsing this comprehensive strategy. Most importantly, once elected, advocates for manufacturing should seek to implement 

the strategy through their actions and votes. 

America's vitality, innovation, prosperity and jobs spring from manufacturing. To preserve and build on that greatness, it is time 

for our nation to embrace this Manufacturing Strategy for Jobs and a Competitive America. 

Sincerely, 

V 

II 

~~~ John Engler, President and CEO 

National Association of Manufacturers 
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The United States Will Be the Best Country in the World to Headquarter a Company. 

Manufactunng today is global and mobile. Companies often enjoy an array of attractive choices when deciding where to locate 

their readquarters, do their research or build new facilities. While the use of government incentives is commonplace today, a 

country's or state's business climate Itself ultimately determines where a company will be located. 

As a springboard for future economic growth, investment and jobs, manufacturers believe the United States must seek to be 

the best country in the world in which to locate a manufacturing company's headquarters, To do so, the National Association of 

Manufacturers (NAM) supports these policies and actions' 

t!' Create a national tax climate that does not place 

manufacturers in the United States at a competitive 

disadvantage in the global marketplace. A pro-manufacturing tax policy must first acknowledge that when 

Congress raises taxes, it makes manufacturers in 

the U.S. less competitive: 

• Reduce the corporate tax rate to 25 percent or lower 

without imposing offsetting ,ax increases. 

The Uni:ed States now has the second highest statutory corporate tax rate among the major industria! 

countries in the Organization for Economic Cooperation and Development (OECD), trailing only Japan. 

Ocher countnes have been regularly lowering their tax 

rates to encourage economic growth. A recent analysis 

by the Milken Institute, ~ Jobs for Amenca," concluded 

that reducing U.S. corporate Income tax rates ~o the 

current average of OECD countnes would stimulate 

growth in the manufacturing sector and create more 

~han 2 million jobs by 2019. 

~~---"-"--""- -"--"-"---"- "-~" 

Statutory Corporate Income Tax Rates 

OECD Average vs. United States 

(IMpact 011 employment "Jobs for P,rnenca" Study) 

• Promote fair rules for taxation of active foreign income of U.S. based businesses. 

The United States is unique among major industrial nations In taxing a company's global income - as opposed to a 

~erritorial tax system. This feature of the U.S. tax code poses special cilalienges when it comes to global Investment 

decisions and the return of foreign profits to the United States 

• Instltu~e permanent lower tax rates for individuals and small businesses 

- Small businesses are responsible for the bulk of new Jobs created in the United States, and tax policy should support the 

capital formation that encourages new businesses and expansion. Capital gains, accelerated depreciation and expensing 

and estate taxes are also areas where long-term lower tax ra:es strenglilen manufacturing and Job creation 

t! Encourage the dynamic labor market that is one of America's great competitive advantages. Companies must 

move quickly to meet the demands of a rapidly changing marketplace, and the continuing expansion of federal 

mandates and labor regulations undermines employer flexibility. In addition. increasing costs discourage the hiring 

of new employees. To encourage competitiveness, the United States should: 

• Reject new federal regulations that dic:atc rigid work rules, wages and benefits and that introduce conflict into employeremployee relations. 

- Oppose the Employee Free Choice Act in any form, including ,ndividuai provisions such as forced arbitration and snap 

elections. 

Resist National Labor Rela~ions Board (NLRB) ru!emaking that overturns the long-established balance in managementlabor relations. 
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- Support Initiatives at the Occupational Safety and Health Administration (OSHA) and other oversight agencies that 

encourage employers and employees to join in cooperative efforts for safer working environments. 

- Recognize and promote the voluntary efforts of employers to meet the needs of individual employees through flexible 

work schedules and benefit arrangements . 

./ Implement a common~sense, fair approach to legal reform. Direct tort costs account for almost 2 percent of GDP in 

the United States - the highest in the world - and our system of "jackpot justice" injects damaging risk and uncertainty 

into the business climate. A manufacturing strategy will bring legal costs under control to end that disadvantage: 

• Restore fairness in our legal system. Provide clear 

standards for liability and justice for all parties, including 

specific statutes of limitations, sanc:ions on fnvolous 

claims and limits on punitive damages. 

- Preserve federal pre-emption for federally approved 

products In national commerce, preventing use of 

litigation In 50 state courts to function as de fac:o 

regulators. 

- Oppose speCial-interest legislation that incentivizes 

and subsidizes litigation against manufac:urers, 

such as tax deduction for contingency laWSUits 

- Maintain tile force of the Class Action Fairness Act. 

tI Create a regulatory environment that promotes economic growth. For laws that affect manufacturers, 

there are often scores of regulations that impose 

substantial compliance costs - burdens often never 

anticipated by the lawmakers who passed the legis~ 

lation, The Small Business Administration's Office of 

Advocacy has estimated that regulatory compliance 

costs amount to $1.1 trillion annually. A pro~growth 

regulatory environment should: 

• Balance costs and benefits of regulation, preventing 

the imposition of regulatory burdens that are counterproductIVe or force bUSinesses to close 

• Defend the policymaking roie of Congress by opposing 

Its clI·cumvention through regulatory rulemaklng, For 

example: 

Reject the EnVIronmental Protection Agency's (EPA) 

efforts to exceed its authority when It seeks to establish 

national economic policy through greenhouse gas 

regulations 

- Resist expansion of the Federal Trade Commission's 

(FTC) authority that would give the FTC broad new 

powers over near1y every sector of the U.S. economy 

Tort Costs Continue to Rise 

2004 Federal Regulatory Costs, $1.113 Trillion 
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The United States Will Be the Best Country in the World to Innovate, Performing the 

Bulk of a Company's Global Research and Development. 

Innovation has long helped manufacturing in the United States maintain its global leadership. Between 2000 and 2006, manufac:uring productivity increased annually by an average of 3.8 percent, primarily due to innovation and technoiogical advances 

spurred by research and development (R&D) 

A long~telm Manufacturrng Strategy for Jobs and 8 Competitive 

America WI!! further investment in The research, ideas and 

people who produce innovation. R&D is, as the Commerce 

Department's Manufacturing Council phrased )~, "the Single 

most important source of technological advancement leading 

to higher productivity" 

.I Enact tax provisions that will stimulate investment 

and recovery, including: 

• Strengthen and make permanent tl18 R&D tax credit. 

Manufacturers in the United States need the certainty 

and incentives provided by a permanent and robust 

research and deve!opmem tax credit 

The Milken Institute's "Jobs for America" analysis 

reported that increasing the R&D tax credit by 25 

percent and making It permanen: would enhance 

Arnencan innovation: By 2019, real GDPwould rise by 

1,2 percent (or 8206,3 billion) and 270,000 manuR&D Tax Credit Permanent and Increased 

facturing jobs would be created. President Obama has calied for a permanent R&D tax credit, and members of both 

parties of Congress support it. 

./' Encourage the federal government's continued critical role in basic R&D by: 

• A continued focus by the federal government on basic R&D that expands the knowledge base, spurring private-sector 

R&D as well as later commerCial development Innovation is served by robust funding for federal research agencies as 

well as financial support tor pubiic- and private-sector research. 

t! Recognize intellectual property (IP) as one of America's competitive strengths that must be defended at all levels, 

domestically and globally. U.S. IP is worth between $5 trillion and $5.5 trillion, yet the continuing trade in counterfeit 

products results in the loss of hundreds of thousands of jobs annually. The Strategy should: 

• Support enhanced efforts against counterfeiting through Executive Branch agencies, inciuding Treasury, Justice and 

Customs and Border Protection . 

./' Attract the best talent from here in the United States and from the entire world: 

• Support substantial increases in the number of employer-sponsored visas. 

- Between 1995 and 2005, immigrants founded or co-founded 25 percent of all U.S. high-tecll firms. Reform of U.S. 

Immigration law regarding legal immigrants is essential to the nation's competitiveness. Such reform must include increases 

in the numbers of employer-sponsored permanent visas, streamlined and simplified procedures for the temporary or 

non-immigrant visas, and other changes to enhance flexibility in responding to employer demands. 
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The United States Will Be a Great Place to Manufacture, Both to Meet the Needs of the 

American Market and Serve as an Export Platform for the World. 

Manufacturing shipped a record $5.8 tnllion in 2008 ($1 ,6 trillion in value added) and provided 11 percent of ~he nation's GOP. 

Exports of manufactured goods have driven the 2009~201 0 economic recovery An effectIVe manufacturing strategy will promote 

domestic manufacturing that serves the U.S. and the increasingly Integrated North American markets, while also supporting 

companies that export and expand abroad to serve foreign·markets. In both cases, maintaining a strong manufacturing base 

requires a comprehensive energy strategy, robust infrastructure investment and skilled employees 

./ Promote progressive international trade policy that 

opens global markets, reduces regulatory and tariff 

barriers and reduces distortions due to currency 

exchange rates, ownership restrictions and various 

"national champion strategies." Specifically, a progressive trade policy will: 

• Enact pending trade agreements and negotiate additional agreements in the Pacific area and elsewhere, 

Fifty-seven percent of all U.S. exports of goods and 

services are manufactured goods. Trade agreemems 

reduce the barriers to u.s. expor:s and are a proven 

benefit to manufacturers. Over the past two years, 

manufacturers in the U.S, sold nearly $50 billion more 

in manufactured goods to our free -::rade partners 

than we bought from them. 

• promote a World Trade Organization (WTO) Doha Round 

result that will slash tariffs and non-tariff barriers. 

The United States must become more engaged in 

Proportion of Manufacturing Production Exported 

(Index. United States - 1 00) 

negotiating and enacting trade agreements, while pursuing multilateral action (such as the INTO Doha Round negotiations) 

that comprehensively - and fairly - reduce trade barriers to manufacturing exports 

./ Modernize the United States' outdated export control system to encourage exports and strengthen national security; 

• The current export control system unnecessarily limits the development and sale of U.S. high-tech products commercially 

available elsewhere. 

- The Milken Institute's analysis, ''-Jobs for America," reoorts that modemizing export controls on commerCially available 

technology products could expand real exports of goods and services by 1.9 percent (or $56.6 billion) and create 

340,000 jobs by 2019 . 

./ Assist and energize exporting by small and medium-sized manufacturing through expanded export promotion 

programs as well as export credit assistance for both small and large firms: 

• The United States has Jllany effective but undenunded tools to help manufacturers export, such as trade fnlrs, marketing 

assistance and the Export-Import Bank 

'" Create a comprehensive energy strategy that embraces an "all of the above" approach to energy independence: 

• Encourage production of baseload electricity - the dependable power that is critical to manufacturing processes - including 

traditional (coal, hydropower and natural gas), nuclear and renewable and alternative fuels 

• Reduce dependence on foreign energy by increasing domestic supply: Expand production of Oil and natural gas by lifting 

the moratorium on Outer Continental Shelf developrnent, and encourage developmem of shale gas. 
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./ Promote policies that protect the environment, encourage additional investment and innovation, and recognize 

the global scope of many environmental issues; 

• Establish federal climate change pOlicies that reduce greenhouse gases while maintaining a competitive playing field 

A comprehensive approach toward reducing greenhouse gas emissions is criTical, A uniiateral, U.S.-only approach toward 

this global issue could have a severe, anti-competitive etfec~ on manufacturers in the U.S. and the entire economy. 

• Pursue legislation that pre-empts regulatory efforts, state and local laws, regional programs and related litigation, 

- Manufacturers need policies that remove market barriers to achieving energy efficiency and create incentives for emissions 

reduction at a net economic gain. EPA's regulation of greenhouse gas emissions under the Clean Air Act circumvents 

the policymaking branch of government and Congress and reflects an extreme approach that would damage the ability 

of manufacturers in ~Ile U S. ,0 create jobs and compete globally. 

• Support the deployment and development of new, energy-efficient and environmentally friendly technologies ~hat will 

add jobs while improving our environment. 

,f Invest in infrastructure to help manufacturers in the 

United States more efficiently move people, products 

and ideas: 

• Support innovations that include capital budgeting. 

private investment bonding, env;ronmental permit 

streamlining and flexibility to the states as part of a 

comprehensive infrastructure strategy. 

The long-term reau:horization of surface transportation 

funding should be a pnority for both imrnedia~e job 

creation and long-term competitiveness, 

- Authorize, Invest in 3ild accelerate the development 

of a satellite-based Next Generation Air Transportation 

System 

Encourage high-speed communications and innovation 

through broadband infrastructure investment . 

./ Encourage innovation through education reform, improvement and accountability: 

• Invest in science, technology, engineering and math (STEM) educa~ion> 

Manufacturing Increasingly requires a skilled workforce able to build on strong fundamentals in math, science and 

analytica! abilities to adap~ to new technologies Gnd rapidly changing manufacturing processes. Unfortunately, skills 

gap surveys consistently underscore how a majority of manufacturers in America are facing a serious shortage of 

qualified employees, 

• Improve the quality of education in early ctlildhood, primary. secondary and post secondary school systems, 

- ProMote a system of nationally portable, industry-recognized skiiis credentials ~ an approach that provides employers 

with the certainty that they are rliring a skilled technical workforce, at the same time providing expanded opportunities 

for workers regardless of whether they are new or transi~ioning to new careers. 
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v' Support health care reform that drives down costs: 

• Contain the cost of healtil care by building upon the 

existing employer-sponsored heai,h care system without 

jeopardizing or mandating plan design, 

- The health care law passed by Congress in 2010 

must be continualiy assessed for its effectiveness, 

cost and unintended consequences. 

Regulations to implement the law must be fully transparent and must not add new empioyer mandates 

and costs 

High Health Care Costs Hurt Competitiveness 
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The Future is Now 

Each of the priorities and policy recommendations included In this Manufacturing Strategy for Jobs and a Competitive America 

would improve the ability of manufacturers in the United States to compe~e In the globa! marketplace, But the power of the 

recommendations grovvs when considered and enacted as a whole - as a comprehensive strategy. 

The United States is the strongest, largest and most productive manufacturing economy in the world, But our competitors want 

~o take our place, and their national governments dedicate themselves to thiS goal with resources and strategic planning 

America must do better. 

We want the Unl~ed States to be the best place in the world to headquarter a business. The United States should be the best 

place to innovate and do the bulk of a company's global research and development And the United States should be a great 

place to manufacture for the North Amencan market and ~o serve as an exp0l< platform for the globa! market. 

The United States should be the greatest place in the world to be a manufacturer and to be a manufac~uring employee. If put 

in:o effect, -;he Manufacturing Strategy for Jobs and a Competitive America wi!1 help achieve this critical goal for our nation 
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The Facts About Manufacturing in the U.S. 

• The United States is the world's largest manufacturing economy, producing 

21 percent of global manufactured products. Japan is second at 13 percent 

and China is third at 12 percent. 

• U.S. manufacturing produces $1.6 trillion of value each year, or 11 percent 

of U.S. GOP. 

• Manufacturing supports an estimated 18.6 million jobs in the U.S. - about 

one in six private sector jobs. Nearly 12 million Americans (or 10 percent of 

the workforce) are employed directly in manufacturing. 

• In 2009, the average U.S. manufacturing worker earned $70,666 annually, 

including pay and benefits. The average non-manufacturing worker earned 

$57,993 annually. 

• U.S. manufacturers are the most productive workers in the world twice as 

productive as workers in the next 10 leading manufacturing economies. 

• U.S. manufacturers perform half of all R&D in the nation, driving more innovation 

than any other sector. 
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Manufacturing Policy Checklist: 

The United States Will Be the Best Country in the World to Headquarter a Company. 

J Create a pro-manufacturing tax climate: Reduce the corporate tax rate to 25 percent or lower, promote fair rules 

for taxation of active foreign income of U.S.-based businesses, institute permanent lower tax rates for individuals 

and small businesses 

:.l Encourage a dynamic labor market: Oppose new federal regulations that dictate rigid work rules, wages and 

benefits, reject regulations that introduce conflict into employer-employee relations 

..J Implement a common-sense, fair approach to legal reform: Provide clear standards for liability and justice 

for all parties, including specific statutes of limitations, sanctions on frivolous claims and limits on punitive damages 

..J Create a regulatory environment that promotes economic growth: Balance costs and benefits of regulation, 

preventing the imposition of regulatory burdens, defend the policymaking role of Congress by opposing its circumvention through regulatory rule making 

The United States Will Be the Best Country in the World to Innovate, Perfonming the Bulk of a Company's 

Global Research and Development. 

..J Enact tax provisions that will stimulate investment and recovery: Strengthen and make permanent the R&D 

tax credit 

,j Encourage the federal government's continued critical role in basic R&D 

:.l Recognize intellectual property as one of America's competitive strengths that must be defended at all levels, 

domestically and globally: Support enhanced efforts against counterfeiting through Executive Branch agenCies 

J Attract the best talent from here in the United States and from the entire world 

The United States Will Be a Great Place to Manufacture, Both to Meet the Needs of the American Market 

and Serve as an Export Platform for the World. 

J Promote progressive internationat trade policy that opens global markets and reduces regulatory and tariff 

barriers due to currency exchange rates, ownership restrictions and various "national champion strategies" 

J Modernize the outdated U.S. export control system to encourage exports and strengthen national security 

J Assist exporting by small and medium-sized manufacturing through expanded export promotion programs 

as well as export credit assistance for both small and large firms 

:.J Create a comprehensive energy strategy that embraces an "all of the above" approach to energy independence: 

Encourage the production of baseload electriCity, reduce dependence on foreign energy by increasing domestic supply 

.J Promote policies that protect the environment, encourage additional investment and innovation, and recognize 

the global scope of many environmental issues 

J Invest in infrastructure to help manufacturers in the United States more efficiently move people. products and ideas 

.J Encourage innovation through education reform, improvement and accountability 

J Support health care reform that drives down costs 
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American 

Iron and Steel 

Institute 

Representative Daniel Lipinski 

U.S. House of Representatives 

February 23. 2010 

1717 Longworth House Office Building 

Washington. DC 20515 

Dear Congressman Lipinski: 

1140 Connecticut Avenue, NW 

SUite 705 

Washington, DC 20036 

Phone 202.452.7146 

Fax 202.463.6573 

E·mail tgibson@steel.org 

www.stee!.org 

Thomas J. Gibson President and Chief Executive Officer 

I write today. on behalf of the members of the American Iron and Steel Institute (AlS!). 

to thank you for introducing legislation that would require the President to develop a 

quadrennial national manufacturing strategy. 

The domestic steel industry strongly supports implementation of a national promanufacturing strategy and your bill takes an important step towards achieving this goal. 

As you know. in the current global economy. overall cost factors playa decisive role in 

how and where companies choose to invest and locate their facilities. As such. it is 

critical that the U.S. government address these cost factors and provide industry with a 

level playing field on which to compete globally. This means minimizing burdensome 

regulations and taxes. investing in transportation and energy infrastructure and promoting 

exports while enforcing trade laws. trade agreements and Customs rules. 

Consequently. we appreciate that your bill creates a process for the U.S. government to 

develop a national manufacturing strategy and identifies key policy goals for such a 

strategy. We also support the creation of a Manufacturing Strategy Board consisting of 

individuals from the private sector. from a broad range of industries and regions. who are 

to provide the President with the nceds of and opportnnities for the nation's 

manufacturing sectors. The President will be well served in gaining advice and 

suggestions from industry experts who live and work in their respective fields each and 

every day. 

U.S. manufacturing is critical to the future of our economy and security and we 

appreciate your efforts on behalf of manufacturing with the introduction of this important 

Representing steel producers 

in Canada, Mexico and the United States 
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legislation. We look forward to working with you on this bill and on future efforts to put 

in place policies that promote a strong, vibrant national manufacturing base. 

Sincerely, 

~~.9J~ 

Thomas J. Gibson 
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CHAIRMAN: 

OallielD.Janka 

PresHient 

MAG InduWfaiAutoma1!On Systems Amencas Gm~p 

1st VICE CHAIRMAN: 

~~~~~;a~~JYfi;:; Assembty&TestWor1dwlde,lflC 

2nd VICE CHAIRMAN & 

TREASURER: 

TImotllyB.Ol.nlng 

President & CEO G'eeMr(! Pfe,s & Machlns Company Inc 

seCRETARY: 

K!mW.Beck 

Prllsldent&CEO 

Au!omalicFeedCo 

DIRECTORS: 

CllarlesN.Clark,Sr. 

O,~lslOn President Dukanecorp -LAS DiV1s,on 

EX-OFFICIO: 

RonaldF.Schlldg/l 

PrHldent 

E~el Presses. Illc 

STAFF: 

Douglas K. Woods President 

PatllFree(!enberg 

Vice Presldent·Govemment RelaUon. 

PatrickW.McGlbbcn 

Vice Pres,dent·Sj'stegi<.: Inlo/Tl1a1!On & Research 

Cl\ristlne T. Rasul V.eePres,denl·Meet!!1gs &Conlerences 

PilulR.Wamdorf 

V'cePres,dcnt.Tecitnology 

March 1, 2010 

The Honorable Daniel Lipinski 

U.S. House of Representatives 

Washington, DC 20515 

Dear Congressman Lipinski: 

I am writing on behalf of AMT - The Association For Manufacturing Technology to 

applaud your leadership in introducing the National Manufacturing Strategy Act 

(H.R. 4692). AMT supports your efforts to strengthcn America's manufacturing 

sector and ensure that its competitiveness remains a top priority of the U.S. 

government. 

AMT represents U.S.-based manufacturing technology companies. Our members 

provide the tools that enable production of all manufactured goods. The recession 

has hit capital intensive industries, like ours, particularly hard; but we remain 

committed to forging a strong and prosperous future. Our national security and 

economic growth depend on it. 

AMT welcomes the opportunity to work with you and your colleagues in advancing 

manufacturing to the top of our national agenda. We recognize that it will take a 

coordinated effort from all stakeholders - our government, business leaders and their 

workers, communities, and academia - to regain our competitive position. H.R. 4692 

takes the important step of calling for a formal strategy to address our short and long 

term challenges. American manufacturers need a cohesive public policy plan that 

will encourage and support our ventures in creating innovative products, diversifying 

into new industries and capturing emerging markets. That is the path to worldwide 

leadership. 

I have taken the liberty of letting AMT mcmbers in Illinois know of your efforts to 

rebuild and strengthen this critical sector of the U.S. economy. Thank you again for 

your support. 

Best regards, ~ 

(/) 1 fA ;Z ~u~.~Y~ ~r~ttK 

7901 WESTPARK DRIVE, McLEAN, VIRGINIA 22102·4206 PHONE 703·893·2900 F'AX 703·S9a·1151 

E.MAILAMr'"A:vtTonhlle.org· ~~II~T,Q.t.:g 
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PrecisIOn Metalforming Association, 

6363 Oak Tree Blvd, 

Independence, OH 44131, 

216,9{jj,SaOO 

The Honorable Daniel Lipinski 

1717 Longworth House Omce Building 

Washington, DC 20515 

Dear Congressman Lipinski: 

March 9, 2010 

On behalf of One Voice, the joint effort between the National Tonling and Machining 

Association (NTMA) and the Precision Metalforming Association (PMA), and our nearly 

3,000 metalworking member companies, thank you for your leadership and continued efforts 

to address the issues facing businesses manufacturing in America. Your introduction of H.R. 

4692, the National Manufacturing Strategy Act of 20 1 0, is an important step in developing a 

cohesive national manufacturing strategy to support the growth and improvement of 

manufacturers across the country. 

Manufacturing businesses employ nearly 12 million Americans and represent more 

than 10 percent of our entire economy, and is vita! for the future of our economic and national 

security. In order to revitalize American manufacturing, we need our own national pro~ 

manufacturing strategy to advance policies that will enhance U.S. industrial competitiveness. 

The National Manufacturing Strategy Act will put in place a process to promote policies to 

support a strong, vibrant national manufacturing base. It is a crucial first step to revitalize 

American manufacturing. 

Thank you for your consideration and your leadership on behalf of the metalworking 

industry. 

William E, Gaskin 

PMA President 

Sincerely, 

Robert Akers 

NTMA Chief Operating Officer 
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Congressman Daniel Lipinski 

1717 Longworth House Office Building 

Washington, DC 20515 

Dear Congressman Lipinski: 

March 15, 2010 

Thank you for the opportunity to provide the aerospace and defense industry's comments 

on the National Manufacturing Strategy Act of 2010. As you may know, the Aerospace Industries 

Association (AlA) represents nearly 300 manufacturing companies with over 644,200 high-wage, 

high skilled aerospace employees across the civil aviation, space systems, and national defense. 

Our member companies export nearly 40 percent of their total output, and we routinely post the 

nation's largest manufacturing trade surplus, $56 billion in 2009. Aerospace indirectly supports 2 

million middle class jobs and 30,000 suppliers from all 50 states. The aerospace industry 

continues to look to the future, investing heavily in R&D, spending well more than $100 billion 

over the last 15 years. 

The aerospace industry commends you for the hard work and interest you have shown to 

the nation's manufacturing capability. We share many of the same goals outlined by your 

legislation including the creation of high-quality jobs; increased productivity, exports, and global 

competitiveness; increased domestic manufacturing capacity; and expanded research and 

development activities to encourage innovation. The requirement for a detailed analYSis of the 

U.S. manufacturing base and creation of an interagency task force will certainly help improve the 

government's understanding of the challenges faced by this vital industry. 

We also appreCiate the requirement for a detailed review of tax, federal procurement, 

workforce development, and export control reform policies. AlA has issued a number of reports 

in these areas and would be pleased to work with the task force in an effort to share the 

perspective of the aerospace industry. With the creation of the Manufacturing Strategy Board, we 

hope that the President will also consider a strong representation from the aerospace sector 

given our role as one of the leading manufacturing industries. 

Thank you again for your interest, hard work, and efforts to address the needs of our 

nation's manufacturing sector. 

~;~ 

MCB:cs 

Marion C. Blakey / 
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NDI~ Promoting National Security Since 1919 

2111 WILSON BOULEVARD, SUITE 400 

ARLINGTON, VA 22201-3061 

(703) 522-1820' (703) 522-1885 FAX 

VVWW.NDIAORG 

The Honorable Daniel Lipinski 

1717 Longworth House Office Building 

Washington, DC 20515 

Dear Mr. Lipinski, 

March 16, 2010 

The National Defense Industrial Association (NOlA) offers its strong support for H.R. 

4692, the National Manufacturing Strategy Act of 2010. NOlA, with just over 1,700 

corporate members and nearly 80,000 individual members, is America's leading 

Defense Industry association promoting national security, As such, we understand the 

importance of a strong US. manufacturing base and the need for a national 

manufacturing strategy. 

A vibrant industrial base is critical to US. national security, for both economic and 

materiel supply reasons. The US, industrial base represents a critical element of the 

economic power of our country, Although about 12% of total US. CDP is generated 

directly by the industrial base, it is responsible for a much larger portion, as much as 

one third of total CDP, when considering the commodities and services that 

manufacturers consume. Further, over 60% of total US. exports are manufactured 

goods and about 10% of total employment is within the industrial base. 

The national security is also dependent upon the uninterrupted supply of critical 

materials, systems and logistics support. This is especially true for the needs of our 

armed forces and homeland security. To guarantee this supply we must ensure the 

continued viability of the production capabilities of the US. industrial base. We simply 

cannot rely on developing or potentially adversarial nations for these critical supplies. 

A national manufacturing strategy, such as proposed by H.R. 4692, provides the US. 

with an understanding of critical industrial base issues and their impact on our nation, 

It will also provide a common direction for future government, academia and industrial 

programs and a focus for these organizations to leverage each other's efforts for the 

common good. A national manufacturing strategy will also put the U.S. on an equal 

strategic footing with many other countries that have had national strategic plans in 

place for some time, 

"Publisher of National Defense Magazine" 
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Mr. Lipinski, NDlA strongly supports H.R. 4692, the National Manufacturing Strategy 

Act of 2010 and encourages all members of Congress to consider the significant 

contribution that such a strategy will have on the U.s. industrial base, we ask that they 

endorse the passage of this critical bilL 

Sincerely and Respectfully, 

~p~rt 

Lawrence P. Farrell, Jr 

Lieutenant General, USAF (Ret.) 

President and CEO, NDIA 
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NDI~ Promoting National Security Since 1919 

2111 WILSON BOULEVARD. SUITE 400 

ARLINGTON, VA 22201-3061 

(703) 522-1820' (703) 522-1885 FAX 

WWW.NDIA.ORG 

The Honorable Nancy Pelosi 

Speaker of the House 

United States House of Representatives 

Washington, DC 20515 

Dear lvladam Speaker, 

March 16, 2010 

The National Defense Industrial Association (NDIA) offers its strong support for H.R. 

4692, the National Manufacturing Strategy Act of 2010. NDIA, with just over 1,700 

corporate members and nearly 80,000 individual members, is America's leading 

Defense Industry association promoting national security. As such, we understand the 

importance of a strong U.s. manufacturing base and the need for a national 

manufacturing strategy. 

A vibrant industrial base is critical to u.s. national security, for both economic and 

materiel supply reasons. The U.s. industrial base represents a critical element of the 

economic power of our country, Although about 12% of total U.s. GDP is generated 

directly by the industrial base, it is responsible for a much larger portion, as much as 

one third of total GDP, when conSidering the commodities and services that 

manufacturers consume, Further, over 60% of total U.s. exports are manufactured 

goods and about 10% of total employment is within the industrial base. 

The national security is also dependent upon the uninterrupted supply of critical 

materials, systems and logistics support. This is especially true for the needs of our 

armed forces and homeland security, To guarantee this supply we must ensure the 

continued viability of the production capabilities of the U.s. industrial base. We simply 

cannot rely on developing or potentially adversarial nations for these critical supplies. 

A national manufacturing strategy, such as proposed by H.R. 4692, provides the U.s. 

with an understanding of critical industrial base issues and their impact on our nation. 

It will also provide a common direction for future government, academia and industrial 

programs and a focus for these organizations to leverage each other's efforts for the 

common good, A national manufacturing strategy will also put the U.s. on an equal 

strategic footing with many other countries that have had national strategic plans in 

place for some time. 

"Publisher of National Defense Magazine" 
128 


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Madam Speaker" NDIA strongly supports H.R. 4692, the National Manufacturing 

Strategy Act of 2010 and encourages all members of Congress to consider the significant 

contribution that such a strategy will have on the U.5. industrial base, we ask that they 

endorse the passage of this critical bill. 

Sincerely and Respectfully, 

~P~cl Lawrence P. Farrell, Jr 

Lieutenant General, USAF (Ret.) 

President and CEO, NDIA 
129 


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NDII\ Promoting National Security Since 1919 

2111 WILSON BOULEVARD, SUITE 400 

ARLINGTON, VA 22201-3061 

(703) 522-1820· (703) 522-1885 FAX 

WWW.NDIA.ORG 

The Honorable John M, Spratt, Jr, 

Chairman, House Committee on the Budget 

United States House of Representatives 

Wasrungton, DC 20515 

Dear Mr, Chairman, 

March 16, 2010 

The National Defense Industrial Association (NDIA) offers its strong support for H.R 

4692, the National Manufacturing Strategy Act of 2010. NDIA, with just over 1,700 

corporate members and nearly 80,000 individual members, is America's leading 

Defense Industry association promoting national security, As such, we understand the 

importance of a strong U.s. manufacturing base and the need for a national 

manufacturing strategy, 

A vibrant industrial base is critical to U.s, national security, for both economic and 

materiel supply reasons, The u.s. industrial base represents a critical element of the 

economic power of our country. Although about 12% of total US. GDP is generated 

directly by the industrial base, it is responsible for a much larger portion, as much as 

one trurd of total GDP, when considering the commodities and services that 

manufacturers consume. Further, over 60% of total US, exports are manufactured 

goods and about 10% of total employment is within the industrial base, 

The national security is also dependent upon the uninterrupted supply of critical 

materials, systems and logistics support. This is especially true for the needs of our 

armed forces and homeland security. To guarantee this supply we must ensure tlle 

continued viability of the production capabilities of the US. industrial base. We simply 

cannot rely on developing or potentially adversarial nations fOT these critical supplies. 

A national manufacturing strategy, such as proposed by RR. 4692, provides the U.s. 

with an understanding of critical industrial base issues and their impact on our nation. 

It will also provide a common direction for future government, academia and industrial 

programs and a focus for these organizations to leverage each other's efforts for the 

common good. A national manufacturing strategy will also put the U.5. on an equal 

strategic footing with many other countries that have had national strategic plans in 

place for some time. 

"Publisher of National Defense Magazine" 
130 


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Mr. Chairman, NDIA strongly supports H.R. 4692, the National Manufacturing Strategy 

Act of 2010 and encourages all members of Congress to consider the significant 

contribution that such a strategy will have on the U.5. industrial base, we ask that they 

endorse the passage of this critical bill. 

Sincerely and Respectfully, 

~P~cl Lawrence P. Farrell, Jr 

Lieutenant General, USAF (Ret.) 

President and CEO, NDIA 
131 


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NDI~ Promoting National Security Since 1919 

2111 WILSON BOULEVARD, SUITE 4D0 

ARLINGTON, VA 22201-3061 

(703) 522-1820' (703) 522-1885 FAX 

WWW.NDIA.ORG 

The Honorable Henry A. Waxman 

March 16, 2010 

Chairman, House Committee on Energy and Commerce 

United States House of Representatives 

Washington DC, 20515 

Dear Mr. Chairman, 

The National Defense Industrial Association (NDIA) offers its strong support for H.R. 

4692, the National Manufacturing Strategy Act of 2010, NDIA, with just over 1,700 

corporate members and nearly 80,000 individual members, is America's leading 

Defense Industry association promoting national security. As such, we understand the 

importance of a strong u.s. manufacturing base and the need for a national 

manufacturing strategy, 

A vibrant industrial base is critical to u.s. national security, for both economic and 

materiel supply reasons, The U.s. industrial base represents a critical element of the 

economic power of our country. Although about 12% of total u.s. GDP is generated 

directly by the industrial base, it is responsible for a much larger portion, as much as 

one third of total GDP, when considering the commodities and services that 

manufacturers consume. Further, over 60% of total U.s. exports are manufactured 

goods and about 10% of total employment is within the industrial base. 

The national security is also dependent upon the uninterrupted supply of critical 

materials, systems and logistics support. This is especially true for the needs of our 

armed forces and homeland security. To guarantee this supply we must ensure the 

continued viability of the production capabilities of the U.s. industrial base. We simply 

cannot rely on developing or potentially adversarial nations for these critical supplies. 

A national manufacturing strategy, such as proposed by H.R. 4692, provides the U.s, 

with an understanding of critical industrial base issues and their impact on our nation. 

It will also provide a common direction for future government, academia and industrial 

programs and a focus for these organizations to leverage each other's efforts for the 

common good. A national manufacturing strategy will also put the U.S. on an equal 

strategic footing with many other countries that have had national strategic plans in 

place for some time. 

"Publisher of National Defense Magazine" 
132 


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Mr. Chairman, NDL<\ strongly supports H.R. 4692, the National Manufacturing Strategy 

Act of 2010 and encourages all members of Congress to consider the significant 

contribution that such a strategy will have on the u.s. industrial base, we ask that they 

endorse the passage of this critical bill. 

Sincerely and Respectfully, 

~p~t 

Lawrence P. Farrell, Jr 

Lieutenant General, USAF (Ret.) 

President and CEO, NOlA 
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April 27, 2010 

The Honorable Daniel Lipinski 

1717 Long Worth House Office Building 

Washington, D.C. 20515 

Dear Congressman Lipinski: 

The Coalition for a Prosperous America is pleased to announce that we have 

endorsed your National Manufacturing Strategy Act H.R.4692. 

The United States is the only major country that does not have an industrial 

strategy. Everyone of our trading rivals has a plan that considers their 

industrial sector in terms of many factors includIng national security, economic 

growth, full employment, and geopolitical competition. The fact that the U.S. 

has no such plan is a key component in our economic problems. 

Your National Manufacturing Strategy Act requires the creation of a process to 

devise national manufacturing strategy. Such a plan will consider the role of 

manufacturing in national security, achieving full employment, increasing 

global competitiveness, and other important factors. We would suggest 

strengthening the bill with more action steps beyond procedural items already 

listed, and would be pleased to work with you accordingly. 

Today, too many disparate agencies lay claim to portions of what would 

otherwise be a national manufacturing strategy. Some in Washington call this 

the "silo" approach. We need government to break down these silos. Tax, 

trade. currency valuation, innovation, infrastructure, government procurement 

and other important topics should be considered in a cohesive plan. 

We retooled our country to successfully fight and win World War II. We need to 

be able to do this again today. CPA is pleased to offer our support and thanks 

for your efforts. 

Respectfully, 

Brian 0' Shaughnessy 

Chief Co-Chair, 

Manufacturing Co-Chair 

Joe Logan 

Agriculture Co-Chair 

Robert Baugh 

Labor Co-Chair 
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AMTAC 

American Manufacturing Trade Action Coalition 

910 16th ST NW STE 760 

Washington, DC 20006 

June 8, 2010 

Representative Daniel Lipinski 

www.amtacdc,org 

amtac@amtacdc,org 

1717 Longworth House Office Building 

Washington D.C. 20515 

Dear Representative Lipinski: 

(202) 452-0866 

(202) 452-0739 

I write on behalf of the American Manufacturing Trade Action Coalition (AMTAC) 

endorsing H.R. 4692, the National Manufacturing Strategy Act. We thank you for introducing 

H.R. 4692 in an effort to reinvigorate the manufacturing sector of the U.S. economy. 

Our first Secretary of Treasury, Alexander Hamilton, understood the need for a national 

manufacturing strategy. His "Report on Manufactures" provided President Washington, and all 

subsequent presidents and Congress's a blueprint for encouraging the development of a vibrant 

manufacturing sector in the United States. One of the great stories of the history of the United 

States during the 19th and 20th centuries was that of the rise of our manufacturing sector. 

Unfortunately, the story of U.S. based manufacturing during the last twenty or thirty years has 

been one of disinvestment, off-shoring and decline. And, of course, this has meant the loss of 

many jobs - usually good, high paying jobs. In fact, over the past ten years that United States has 

lost some 4 million manufacturing jobs. 

H.R. 4692 would help begin the reinvigoration of the domestic manufacturing sector by 

directing the President to conduct a comprehensive analysis of the nation's manufacturing sector. 

More importantly, H.R 4692 recognizes that analysis alone will do nothing to jump-start our 

manufacturing sector. Therefore, it directs that the President use the infonnation gleaned from 

that analysis and submit to Congress a national manufacturing strategy. 

These and other provisions of the bill are salutary refonns that, if implemented, can help 

ignite a rebirth of the American manufacturing sector and AMT AC welcomes and supports these 

changes. 

Sincerely, 

Auggie Tantillo 

Executive Director 

American Manufacturing 

Trade Action Coalition (AMTAC) 
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July 12,2010 

For more than 80 years Motorola has been committed to innovation in communications and electronics. 

We developed the first mobile police car radio, the first mobile backpack radio systems for World War II, 

the first cellular network and phone. The first words spoken from the moon were carried over Motorola 

equipment. We are a company born in America and now operating around the globe, drawing on the 

diversity of perspectives and talents from different parts of the globe. 

American manufacturers, like Motorola, have long spurred economic growth and technological 

advancement in America and abroad. That said, we wholeheartedly support the spirit H.R. 4692, the 

National Manufacturing Strategy Act, sponsored by Representative Daniel Lipinski that expresses a 

sense of Congress that the United States Government should promote policies related to the Nation's 

manufacturing sector that would foster economic growth, create jobs, improve the workforce, increase 

productivity, and maintain and improve national security, among other improvements. Specifically, H.R. 

4692 requires the President to conduct an analysis of factors affecting manufacturing competiveness, 

and devise a strategy to pursue policies and improve government coordination in support of domestic 

manufacturing. We believe that such an analysis will foster more innovation and competitiveness for 

U.S. manufacturers. 

We look forward to working with Representative Daniel Lipinski and his staff as this measure moves 

through the legislative process. 

Sincerely, 

~I~~lli+~ ~ Ki\1~k Senior Director 

Global Government Affairs 

Motorola. Inc., Global Government Affairs 

1455 Pennsvlvania Avenue. NW, SuIte 900, Washington, DC 20004 T: (202) 371 M6900 
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UNITED STATES BUSINESS AND INDUSTRY COUNCIL FIGHTING FORAMERlCANCOMPANIESANDAMERlC4N JOBS SINCE 1933 

Hon. Daniel Lipinski 

1717 Longworth House Office Building 

Washington, DC 20515 

Dear Rep. Lipinski: 

July 12,2010 

On behalf ofthe 2,000 domestic manufacturing companies comprising the u.s. Business and 

Industry Council, I am writing to thank you for introducing H.R. 4692, the National Manufacturing 

Strategy Act of 20 10, and to offer our strong support for this legislation. Your legislation will create the 

policy framework urgently nceded by the nation to revitalize its dramatically weakened domestic 

manufacturing sector, and thereby help achieve genuine recovery from the ongoing economic crisis. We 

strongly urge its prompt passage by Congress and enactment into law. 

Although most of Washington remains uneducated as to the centrality of domestic manufacturing 

for a strong cconomy, the paramount lesson of the current economic crisis is that the United States needs 

a completely new strategy to deal with the so-called globalization of our economy and to revitalize our 

industrial base. 

For decades, most of our political and multinational business establishment has promulgated the 

falsehood that American prosperity could be based on borrowing, spending, and importing. Creating real 

wealth - the historical foundation of national success - and creating the appropriate policy environment 

for it were totally ignored. The U.S. housing and financial sectors were coddled (with artificially low 

interest rates and the abandonment of successful oversight in laws like Glass-Steagall), while 

manufacturing which has been the dominant factor in domestic wealth creation since the nation 

industrialized was neglected and even scorned. Typical was fonner Federal Reserve Chairman Alan 

Greenspan's remark that manufacturing is "something we were terrific at fifty years ago .... cssentially a 

nineteenth- and twentieth-century technology." A worldwide financial meltdown, painful recession, and 

mammoth long-tern] U.S. debt burden have been the inevitable results. 

Your introduction of the National Manufacturing Strategy Act demonstrates convincingly that you 

and your cosponsors understand that restoring our nation's economic health requires produci/lg /lot 

cO/l.mmi/lg our way out of recession, and that expanding our industrial output is the biggest key to 

success. But without swift Congressional and presidential action, the U.S. economy may deteriorate past 

the point of no return. 

America's massive manufacturing job loss and taetory closings ovcr the past decade are well 

knovm. But even morc scrious signs of the sector's distress abound. Despite trillions of dollars of 

government stimulus spending, tax breaks, and industry bailouts, the U.S. economy has shrunk in real 

terms by 1.14 percent during the recession. But manufacturing output, though now higher than its 

recession trough, is still down 9.72 percent - and recent scholarly research indicates that even this figure 

UNITED STATES BUSINESS A'ID ['IDUSTRY COUNCIL' S12C ST. NE' WASHINGTON, DC 20002 

(202) 266-3980· (202) 266-3981 FAX' COUNCIL@USBUSINESS.ORG· WWW.AMERICANECONOMICALERT.ORG 
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2 

may significantly understate the devastation 

In addition, industrial capacity has fallen during this recession for only the second time since the 

end of World War II. A new report by the U.S. Business and Industry Council shows that, in 2008, 

imports captured 36.23 percent of America's domestic markets for advanced manufactured goods like 

semiconductors, aircraft, construction equipment, machine tools, and pharmaceuticals. In 1997, the figure 

was only 21.36 percent. 

To make matters worse, many in the political leadership class seem determined to recreate the 

borrowing, spending, and importing bubble that just burst so disastrously. For example, the same Wall 

Street firms whose crackpot lending and compensation policies, and especially their phony financial 

instruments, helped trigger the crisis received an enormous bailout, and the new financial regulation bill 

generally preserves their too-big-to-fail status and license to speculate recklessly. The Fed's loose-money 

policies have become free-money policies, and outright spending and lending subsidies. Finally, too 

much orthe economic stimulus package was simply unproductive spending. 

Meanwhile, here's the "help" that genuinely productive industries like manufacturing have gotten: 

A miserly auto rescue package that has helped reduce GM to its 1920s dimensions; 

Auto and appliance rebate programs that spurred the purchase of at least as many imports as 

domestically produced goods; 

- Buy American stimulus bill provisions shot through with loopholes; 

- Vague rhetoric about "green manufacturing" that ignores the need to ensure these industries remain 

onshore; 

- and the continued pursuit of outsourcing-focused trade agreements sure to send more productive 

American jobs abroad. 

Largely as a result of misguided policies, personal consumption is even higher today than at its 

dangerous pre-crisis levels, the trade deficit in the first quarter of this ycar grew more than 10 times fastcr 

than the economy, and the manufacturing trade deficit is up by more than 19 percent on an annual basis-

'.'lith manufacturing exports continuing to grow more slowly than total goods exports despite 15 years 

worth of free-trade agreements touted as foreign market-opening bonanzas. 

No wonder the unemployment rate remains sky high, and only the federal govemment and heavily 

subsidized sectors, like health care and education, are creating meaningful numbers of jobs. 

The National Manufacturing Strategy Act will help replace this failed binge-spending and 

borrowing approach with a strategy aimed at promoting the production- and eamings-based prosperity 

that only a much stronger manufacturing sector can create. 

bill: 

The U.S. Business and Industry Council is especially heartened by the following features of the 

UNITED STATES BUSINESS AND INDUSTRY COUNCIL· 512 CST. NE • WASHINGTON, DC 20002 

(202) 266-3980· (202) 266-3981 FAX· COUNCIL@USBUSlNESS.ORG·W\VW.USBUSlNESS.ORG 
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1. It would encourage a long overdue explicit acknowledgment by Congress of domestic manufacturing's 

central role in generating and preserving American prosperity, technological progress, and national 

security. 

2. It recognizes that a sweeping and concerted federal government-wide effort is instrumental for 

domestic manufacturing's revival. 

3. It would require several federal studies to assess domestic manufacturing's strengths and weaknesses 

rigorously and comprehensively. Similarly, it would foster detailed government study of manufacturing 

trade and off-shoring flows, and federal procurement of manufactures imports in the civilian and defense 

sectors. These provisions would fill much of the knowledge vacuum that currently hamstrings U.S. 

manufacturing policymaking. In the process, the legislation would end the monopoly currently enjoyed 

by outsourcing-happy multinational companies over too much crucial manufacturing and national 

security-related data. 

4. It recognizes the scale of the challenges facing domestic manufacturing by setting a deadline of 

February, 2011, for publication of the first annual White House National Manufacturing Strategy 

blueprint. 

5. It recognizes that expanding manufacturing employment requires expanding manufacturing production 

- that only healthy industries can create new jobs and preserve existing positions. 

6. It understands that active efforts are needed to ensure that more of America's wealth and investment 

capital gets channeled to productive activities like manufacturing. 

7. It would mandate that the Executive Branch and Congress examine the often make-or-break impact of 

the range of federal policies on manufacturing's fortunes. 

8. It recognizes the special importance of small and medium-sized manufacturing companies, which 

through their production of precision parts and components in particular generate so much of America's 

value-added and innovation. 

9. It gives these companies meaningful representation on the proposed President's Manufacturing 

Strategy Board. 

10. It promotes follow-through and accountability in domestic manufacturing policy by requiring a 

Comptroller General's evaluation of the President's manufacturing strategy blueprint - including progress 

in implementation - and a presidential report on "the consistency of the budget "'~th the goals and 

recommendations included in the blueprint. 

America's economic and industrial success has always resulted first and foremost from its frecenterprise system. But government has consistently played a major role, too, from the publication of 

Alexander Hamilton's Report on Manz!factures to the National Institutes of Health's support for 

pharmaceutical research to the Defense Department's nurturing of the aviation and information 

technology sectors. And this government role will surely expand as competition intensifies from foreign 

countries whose leaders vigorously support their industries in a host of overt and covert ways. 

UNITED STATES BUSINESS AND ItiDUSTRY COUNCIL· 512e ST. NE· W ASHltiGTON, DC 20002 

(202) 266-3980· (202) 266-3981 FAX· COUNCIL@USBCSltiESS.ORG· WWW.USBUSINESS.ORG 
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4 

Your National Manufacturing Strategy Act will boost the odds of America's getting 

manufacturing policy right. Thank you again for introducing this vital legislation. The U.S. Business and 

Industry Council looks forward to working with you to help it attract the strong support and quick passage 

it deserves. 

Sincerely, 

Kevin 1. Kearns 

President 

U.S. Business and Industry Council 

UNITED STATES BUSINESS AND INDUSTRY COUNCIL' SI2C ST. NE' WASHINGTON, DC 20002 

(202) 266-3980' (202) 266-3981 FAX' COUNCIL@USBUSIN'ESS.ORG·WWW.lJSBlJSINESS.ORG 
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Statement of the 

National Association of Manufacturers 

On 

the National Manufacturing Strategy Act (H.R. 4692) 

Before the 

House Energy and Commerce Subcommittee on Commerce, Trade, and Consumer 

Protection 

For the Hearing Record of 

July 14,2010 

The National Association of Manufacturers (NAM) welcomes the opportunity to submit a 

statement to the House Energy and Commerce Subcommittee on Commerce, Trade, and 

Consumer Protection for today's Subcommittee hearing on H.R. 4692, the National 

Manufacturing Strategy Act. The legislation makes a positive contribution to an important policy 

debate about the value of a comprehensive manufacturing strategy. The NAM believes such a 

strategy is necessary for manufacturers in the United States to succeed in the increasingly 

competitive global marketplace. 

The NAM is the nation's largest industrial trade association, representing small and large 

manufacturers in every industrial sector and in all 50 states. Today, the United States is the 

world's largest manufacturing economy, producing 21 percent of global manufactured products. 

Yet with Japan (13 percent) and China (12 percent) not far behind, we cannot take our leadership 

for granted. The recession has taken a toll on manufacturing, particularly in terms of employment 

and production. A recovery does appear to be under way, but has had minimal impact so far on 

jobs. During the first half of 20 1 0, manufacturing employment rose by 136,000 to its current 

level of 11.7 million, regaining a fraction of the 2.2 million jobs lost from December 2007 to 

December 2009. Similarly, manufacturing production started to recover last July, but as of May 

2010 remained 10 percent below the December 2007 level. 

The National Manufacturing Strategy Act 

NAM members appreciate the leadership of Reps. Lipinski and Manzullo,joined by cosponsors 

from both parties, in advancing legislation intended to improve the ability of manufacturers in 

the United States to compete in the 21st century global economy. 

The Manufacturing Strategy Board and Task Force established by the legislation could be 

helpful in coordinating governmental efforts and focusing more attention on manufacturing. 

While we support a regular analysis and the development of a strategy plan for manufacturing, 

experience tells us that the four-year window called for in the bill is too long. In 2006, few if any 
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policymakers could have anticipated the historic challenges that manufacturing and the broader 

U.S. economy would face in the subsequent four years. 

The NAM believes that an effective manufacturing strategy must embrace specific action items 

for policymakers, not just non-binding goals and recommendations. Indeed, such concrete policy 

proposals formed the heart of a new policy document and call to action released in June by the 

NAM, a "Manufacturing Strategy for Jobs and a Competitive America." 

Manufacturing Strategy for Jobs and a Competitive America 

Political and economic pressures often lead Congress to create manufacturing policy on an ad 

hoc basis, that is, passing legislation in response to specific problems that rise to a level of 

national concern. While understandable, this approach tends to produce inconsistent and 

conflicting policies that do too little to support U.S. manufacturing competitiveness. 

The NAM believes that the policymakers should take a comprehensive, strategic approach to 

make the manufacturing sector more competitive, more productive and able to create even more 

high-paying jobs. 

Such a strategy should set high goals, which we framed as: 

• The United States will be the best country in the world to headquarter a company. We 

want companies to be based in the United States. 

• The United States will be the best country in the world to innovate, performing the bulk 

of a company's global research and development. 

• The United States will be a great place to manufacture, both to meet the needs of the 

American market and serve as an export platform for the world. 

To achieve these goals, the NAM's Manufacturing Strategy then proposes specific policy 

changes that, taken as a whole, will allow manufacturers in the United States to compete 

effectively in the global marketplacc. The strategy highlights the need for: 

• Tax policies to bring America more closely into alignment with major manufacturing 

competitors 

• Government investments in infrastructure and innovation 

• Trade initiatives to reduce barriers and open markets to U.S. exports 

These have been identified by NAM-member companies as effective policies for improving U.S. 

competitiveness. But the point of the NAM Manufacturing Strategy is not to present a "take it or 

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leave it" list to Congress, but rather to make the case for a broader, more far-reaching and 

strategic approach toward manufacturing. 

Recommendation 

In that same spirit, the NAM believes sponsors ofH.R. 4692, the National Manufacturing 

Strategy Act, should consider provisions that encourage policy specifics as part of a 

comprehensive strategy. For example, Congress could create a high-level commission with 

Presidential appointments charged with preparing an annual list of manufacturing policy 

priorities, i.e., legislative proposals. Congress would consider and act on these proposals on an 

expedited basis. 

Such an approach would aid the public's understanding of the competitive challenges faced by 

manufacturing in the United States, and the kind of policies required (0 respond effectively to 

those challenges. More importantly, it would help Congress enact policies that reinforce one 

another to strengthen manufacturing and U.S. competitiveness. We believe that it will take this 

kind of comprehensive approach to maintain and improve U.S. competitive leadership in the 

decades ahead. 

Conclusion 

Manufacturing is the foundation upon which the U.S. economy is built. Nearly 12 million 

Americans work in the manufacturing sector, earning 22 percent more in wages and benefits than 

the rest of the workforce. 

But U.S. leadership in manufacturing is under fire, facing its toughest competition in the nation's 

history. States used to battle each other to recruit new factories and manufacturing jobs. Today, 

states go head-to-head against foreign governments that can use all the tools of government to 

support industry. Our states-and the United States- are being both outgunned and outstrategized. 

H.R. 4692, the National Manufacturing Strategy Act, is a laudable sign that Congress recognizes 

the stakes facing manufacturing in the United States. The National Association of Manufacturers 

looks forward to working with the sponsors to develop the legislation further to make an 

effective vehicle to support manufacturing in the United States. 

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Responses to OFRs from the Honorable Aneesh Chopra, Associate Director for Technology 

at the Office of Science and Technology Policy 

The Honorable Joe Barton 

1. Which do you think would be a bigger benefit to our manufacturing industry, more 

government spending in the industry, or lowering our corporate tax rate, which is currently 

the second highest in the developed world? 

According to the Manufacturing Institute Report [IJ published in November 2008, "The 

Tide is Turning - An Update on Structural Cost Pressures Facing U.S Manufacturers ", the 

statutory corporate tax rate in the United States is 0.7% lower relative to Japan and 1.6% 

higher relative to Germany. But because of credits, exemptions, and deductions in the U.s. 

tax code, including a domestic manufacturing tax credit that reduces the corporate rate for 

companies manufacturing in the U.s., the effective U.s. cOlporate tax rate is lower than the 

statutory rates. GECD data show that US corporate income tax REVENUE in 2006 was 

3.3% ofGDP, well below the GECD average of 3.9% ofGDP and below major GECD 

competitors such as Japan (4.7%) and South Korea (3.8%). [2J We have historically 

competed on innovation and we must stay focused on that path by investing in building 

blocks of innovation laid out by the President last September. That will be path forward to 

regain our competitiveness and innovation capacity. An investment in the infrastructure of 

innovation by the federal government would be of immense benefit to the manufacturing 

industry, but focus in this area has been largely ignored in the past decade. The U.S. still 

leads the world in scientific discoveries and engineering inventions. We need to invest in 

public-private partnerships to mature our technologies and manufacturing readiness to 

capitalize on ollr discoveries thereby promoting domestic production. Such efforts in 

Germany, through Fraunhofer institutes and the like, played a major role in its sustained and 

robust manufacturing sector. 

2. As we all know, the private sector can create jobs, produce products, innovate, and finance 

more efficiently and effectively than the Federal Government. The one thing that it can't do, 

however, is lower trade barriers and negotiate agreements for the free flow of goods between 

our trading partners. Given that this is the one responsibility that only Government can 

perform, shouldn't it be the Government's number one priority? 

The Administration's manufacturing policies are not intended to replace the private sector's 

role in creatingjobs and manufacturing products; the Federal government, however, can 

help U.s. manufacturers meet the challenges and barriers that stand in the way of job 

creation. The Administration's "A Frameworkfor American Manufacturing" of December 

2009 targets the cost drivers affecting businesses that the Federal government can impact: 

skills and education, development of new technology platforms, the structure of capital 

markets, assistance for economic transition, investments in inji'astructure, improvements in 

the business climate, and market access. These are all responsibilities that the government 

can and should perform. The Administration's Framev.'ork states that ensuring market access 

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and a level playingfieldfor u.s. manufacturers by lowering trade barriers in the global 

marketplace is one of the seven top priorities within the Framework. 

3. Our current corporate income tax rate is more than 10 points higher than that of the aBeD 

average. How do you think that affects the decision for manufacturers to locate their 

headquarters and factories here in the United States? 

Because much of the shift in U.S. manufacturing abroad has been to non-GECD countries, 

comparing the U.s. tax rate to the GECD average somewhat misplaces the real issue. Also, 

the corporate income tax RA TE does not tell the entire story because of the numerous credits, 

deductions, and exemptions in the tax code, including a domestic manufacturing tax credit 

that reduces the corporate rate for companies manufacturing in the U.s. Corporate income 

tax revenues total 3.3 percent ofGDP in the United States in 2006 based on GECD data, 

well below the 3.9 percent ofGDP GECD average.[2] By investing in infrastructure that 

supports and encourages innovation we can regain our strength in the manufacturing sector 

and continue to make the United States a desirable place to manufacture products. 

4. Do we need legislation or can the President implement a strategy on his own? Isn't a strategy 

only as effective as the implementation? 

I agree that a strategy is on~v as effective as its implementation. Since the December 2009 

release of the Framework, the President has been movingforward on implementing its policy 

proposals. In my testimony, I highlighted some of those policy proposals in the area of 

advanced manufacturing in which the Administration, through the National Science and 

Technology Council, has been implementing Federal policies to help U.s. manufacturers 

develop and adopt advanced manufacturing technologies and practices. 

For the United States to maintain leadership in advanced manufacturing, the Federal 

government needs an ability to formulate policies and develop programv across the Federal 

Government in a coherent effective manner. With current Federal manufacturing R&D 

programs highly diffused and totaling less than $500 million, there is a need for focused and 

concerted Federal ejjort to invest in manufacturing R&D so that the benefits of emerging 

technologies can be fully realized. 

The President named Mr. Ron Bloom as the Senior Counselor for Manufacturing Policy, 

signaling the high priority placed on manufacturing and leadership needed to develop a 

coherent, overarching advanced manufacturing strategy and to oversee its implementation 

across the Federal Government. Established mechanisms in the Executive Branch, such as 

the National Science and Technology Council (NSTC), can provide coordination and even 

elements of overall strategy. 

In addition, through the President's Council of Advisors on Science and Technology 

(PCAST), the Administration is able to gain invaluable insight from the Nation's leading 

scientists, engineers and innovators on Advanced Manufacturing. The PCAST subcommittee 

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on Advanced Manufacturing plans to release a report in the coming months outlining their 

findings and recommendations. 

However, there are certain important elements of the President's manufacturing agenda that 

require congressional action. For example, the Clean Energy Manufacturing Tax Credit 

(48C) is a highly successful Recovery Act program to help businesses that make the 

components of renewable energy systems expand their facilities. The Recovery Act allocated 

$2.3 billion for 48C but we had applications from qualified companies for three times that 

amount. The President has proposed that the funding for this program be expanded to meet 

this additional demand, spurring private investment and creating jobs; this proposal is 

currently awaiting Congressional action. 

5. Can the President assemble a Manufacturing Strategy Board without legislation? 

Yes, it my understanding that the President can assemble a Manufacturing Strategy Board or 

similar bodies without legislation. For example, President Obama designated his President's 

Council of Advisors on Science and Technology (PCAST), a group of non-government 

advisors from the private sector, to advise him on advanced manufacturing. President 

George W Bush created the Manufacturing Council in the Department of Commerce. 

6. How would a Manufacturing Strategy Board differ from the interagency working groups 

already assembled and chaired by the Department of Commerce? 

I am not familiar enough with the Department of Commerce :v interagency working groups to 

provide a definitive comparison between them and the Board envisioned by the proposed 

legislation. But 1 am aware that the Department administers the Manufacturing Council 

composed of not more than 25 private-sector members, and that Commerce also administers 

sectoral advisory committees composed of industry representatives to advise the Federal 

government. The Secretary of the TreasUlY, the Secretary ()f Labor, and the SecretOl)' of 

Energy are ex ()/ficio members of the Council. 

7. You listed "ensuring a level playing field" as one of the Obama Administration's key 

initiatives for improving the competitiveness of American manufacturers. Does this mean 

that the administration would support leveling the U.S. corporate tax with those of its OECD 

competitors? As I'm sure you are aware, the OECD average corporate tax is 10 points below 

that of the United States. 

Ensuring a level playing field does not mean that the United States should be level with the 

OECD average in taxation and other policy matters. The United States, for example, is well 

below the OECD average in government taxation as a percentage of Gross Domestic 

Product, so leveling overall Us. taxation to the OECD average would require raising Us. 

taxes Significantly, which the Administration opposes. But the Administration is committed to 

ensuring that Us. manufacturers are not at a disadvantage against other nations' companies 

in gaining access to foreign markets, so the Framework outlines policies to: open markets 

abroad, enforce our existing trade agreements, promote our exports especially of small and 

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medium enterprises, encourage trade financing, support small business investments in 

emerging markets, and review our export control regulations. Our commitment to a level 

playing field is exemplified by the President's National Export Initiative, which encompasses 

a broad set of coordinated policies with the goal of doubling u.s. exports within five years. 

8. You state in your testimony, "policymakers must recognize that government has a poor track 

record in picking winners and losers," Drawing on that knowledge, would you oppose 

legislation requiring the President to pick "particular industries" for special examination, as 

this bill does? 

The Innovation Policy of the Obama Administration includes infi'astructural investments that 

spur economy-wide growth, rather thanjocusing on specific sectors and companies. We have 

significant opportunities to strengthen our manufacturing base and create jobs by 

establishing the infrastructure needed to scale emerging technologies. 

The promising resultsfrom our basic research are typically not mature enough for 

manufacturing and commercialization and are therefore considered too ris"y for further 

investment by private investors (the so-called "valley of death "). Advanced manufacturing 

R&D requires investments in development of mate rials, equipment, test procedures, 

manufacturing processes and standards to mature a generic technology. The results of this 

research provide the technology platforms not specific products - that facilitate higher 

rates of innovation. 

The role of the Federal government should include investing in promisingplatform 

technologies that neither a company nor an industry is willing to invest on its own due to 

technical and market risks. Rather than government doing it alone and absorbing all the 

costs, it is critical to engage industry in a pUblic-private partnership. For instance, the tenyear history of u.s. investment and leadership injill1damental nanotechnology research has 

laid the crucial groundwork. There are several promising technologies emergingfi'om our 

universities and government labs which need further investments in process scale-up to 

create new industries as well as to revitalize traditional industries. 

9. What tangible benefits has the $18 billion in R&D spending in the stimulus brought that can 

justify further Govenunent spending of money we don't have? 

Federal agencies have many impressive stories to fell about the tangible impacts Recovery 

Act R&D spending is having on the u.s. economy and the u.s. capacity to respond to the 

challenges weface. Forjust one example, J would like to refer to http://recovel)!.nih.govfor 

their excellent documentation of the impacts the $10 billion National Institutes of Health 

(NIH) Recovery Act investment is having onjobs, economic growth, new cures, new 

technology, and expanded opportunities for combating disease. 

10. You recommend doubling the R&D budget of three key agencies; does the administration 

have a recommendation for how such a massive increase in spending should be paid for? 

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The President's Plan for Science and Innovation proposes to double the budgets of three key 

science agencies (the National Science Foundation, the Department of Energy qffice of 

Science, and the National Institute of Standards and Technology laboratories) within a 

fiscally responsible federal budget. The 20 II Budget currently before the Congress proposes 

significant increases for these agencies along a doubling trajectOlY, but these proposals fit 

within an overall President's budget that would hold nonsecurity discretionary spending flat 

for the next three years and would dramatical{v reduce projected deficits. 

11. You said that government has a poor track record in picking winners and losers; is that track 

record any different in Government controlled R&D? How many benefits have come out of 

the $18 billion spent in the stimulus? 

Government spending on R&D is not a matter of the government picking winners and losers. 

The majority of stimulus R&D spending, for example, has been allocated competitively 

through peer review to the most promising, creative, and potentially trans formative scientific 

and technical proposals. Rigorous peer review by the science and engineering community of 

the best ideas ensures that scientific and technical excellence is the key selection criterion, 

rather than government support of specific companies. 

12. In your testimony you highlighted the Administration's continued support for expanding cash 

grants, tax credits, and loan guarantees for a variety of clean energy production technologies. 

Are you aware of any clean energy technologies that the Administration expects to be 

financially viable without taxpayer assistance within the next two years? 

Financial viability is as much a product of a given technology's potential as of the private 

sector's prevailing attitude towards risk and credit availability. Given the private sector's 

current aversion to investment risk, we have chosen to invest in the clean energy 

technologies highlighted in this testimony to fully capture the benefits of American scientific 

discoveries. Without government's intervention, many technologies would be considered 

technically "too rislcy" by the private sector, and our foreign competitors, being eager to 

scale our technological breakthroughs, would continue to reap benefits of our scientific 

discoveries. There are several technologies on the horizon that, if properly nurtured, would 

mature in the next three to jive years to a point where the private sector would be willing to 

invest in scaling up manufacturing and commercialization. For example, a recent ARPA-E 

solicitation challenged the scientific and engineering communities to develop new battery 

chemistries with several times the energy and power densities of present day Lithium-ion 

batteries. These batteries are also amenable to new ways of manufacturing that could enable 

u.s manufacturers to leap frogforeign competitors. 

13. As I'm sure you know, the Federal government already has at least four working groups or 

programs created for the specific purpose of figuring out how to grow our Nation's 

manufacturing industry. How much benefit have these working groups had in improving our 

manufacturing capabilities, and do you expect that more working groups or panels would 

lead to more success? 

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As noted earlier, we don't necessarily need more working groups or panels but we need a 

coherent strategy to coordinate and direct irifrastructural investments that close the 

innovation gap. 

14. You testify we need to identify the cost drivers for manufacturing, including the regulation 

and taxation of those activities. How do we stack up to other OECD countries in those areas? 

How will regulatory policy related to the environment and energy affect our manufacturing 

base - such as cap and trade legislation? Is cost-effective manufacturing that attracts capital 

at odds with such policies? 

The Pollution Abatement and Control (PA C) burden in the United States has come down 

considerably relative to a 2003 study done by the Mamifacturing Institutel The U.S burden 

is only 0.7% higher than Japan's and is 0.2% higher than in Germany. The PAC burdenfor 

Asian manufacturers is steadily rising. 

Although most major industry sectors spend less than 1 % of sales on energy, certain energyintense industry sectors like chemicals, paper and pulp, metal, glass and non-metallic 

mineral products spend as much as 5% or more. Technological advances such as data-driven 

manufacturing, and real-time process controls through advanced modeling and simulation 

have much to offer in enabling energy efficient manufacturing. By investing in such 

technological solutions through public-private partnerships I am optimistic that we can 

unleash smart, sustainable and cost-effective manufacturing methods in the U.S. This is 

another example of a public-private partnership (federal, state, local governments, industry, 

academia, and NGGs) to mature cross-cutting technologies to unleash innovation-based 

domestic manufacturing. 

Most important, policies that leverage private-sector investment in environment and energy 

and result in cost-effective technologies will give U.s. firms a competitive advantage in 

global markets and thereby create profits andjobs in the domestic economy. 

15. How do the corporate tax levels of China, our largest global competitor, compare to the 

corporate tax levels imposed on manufacturers here in the U.S.? 

Although the U.S corporate tax rate is about 15 percentage points higher than that of China, and 

the issue is being addressed by the Administration, focusing only on tax rates misses the overall 

tax revenue structure but more importantly misses the big picture of the essential ingredients of a 

robust manufacturing sector. According to the Mamifacturing Institute Report [lJ published in 

November 2008, "The Tide is Turning - An Update on Structural Cost Pressures Facing U.S 

Mamifacturers ", the U.s. manufacturing cost burden, i.e., the sln/ctural non-production costs, 

dropped steadily./Tom 31.7% in 2006 to 17.6% in 2008[1). This narrowing of the gap is due to 

rising costs abroad such as wage increases in Mexico, rise in healthcare costs in Canada, and 

escalating tort costs in some European countries. Additionally, rising pollution control costs in 

China are narrowing the gap on regulatory costs relative to that country. The foreign raw cost 

index essentialZy the trade-weighted difference ()f unit wage costs relative to the U.s. has also 

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narrowed considerably from 22% in 2006 to 7.3% in 2008. This is due to a rise in manufacturing 

productivity in the U.S as well as strong wage growth in emerging markets. According to the 

2008 Manufacturing Institute report. U.S commercial tort costs leveled oif in 2005 and declined 

by 8% in 2006. Also, the overall foreign cost advantage with regard to pollution abatement has 

narrowed considerably. 

Without adequate manufacturing inji'astructure, cutting taxes alone will not reinvigorate 

manufacturing nor would it enable us to develop innovative next-generation products. 

Infrastructural investments that promote manufacturing innovation are essential to a robust 

manufacturing sector and countries like Germany and Japan. with tax rates comparable to ours, 

are clear examples of sustained manufacturing leadership through such investments. American 

manufacturers have historicalZv retained a competitive edge through innovation - by investing in 

R&D to create products and processes firstJastest, and of higher quality than their competitors. 

References 

1. Jeremy A. Leonard, "The Tide is Turning - An Update on Structural Cost Pressures 

Facing U.S. Manufacturers," Manufacturers Alliance/MAPI and the Manufacturing 

Institute, November 2008. 

2. OECD, Revenue Statistics, 1965-2007,2008 Edition Table B. 

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Responses for the record by Scott N. Paul, Executive Director, Alliance for American 

Manufacturing for the hearing in the Subcommittee on Commerce, Trade, and Consumer 

Protection on July 14,2010, entitled "H.R. 4692, the National Manufacturing Strategy Act of 

2010." 

The Honorable Joe Barton 

I. Which do you think would be a bigger benefit to our manufacturing industry, more 

government spending in the industry, or lowering our corporate tax rate, which is currently 

the second highest in the developed world? 

Mr. Barton, I think it will take a combination of government policies, including tax adjustments, 

wise public investment, more effective enforcement of our trade laws, and afocus on skills and 

training to truly benefit manl1facturing. An acljustment to the corporate tax rate could have a 

positive effect, provided that it is geared towards encouraging domestic employment and 

production. 

2. As we all know, the private sector can create jobs, produce products, innovate, and finance 

more efficiently and effectively than the Federal Government. The one thing that it can't do, 

however, is lower trade barriers and negotiate agreements for the free flow of goods between 

our trading partners. Given that this is the one responsibility that only Government can 

perform, shouldn't it be the Govermnent's number one priority? 

Mr. Barton, I agree that the federal government should focus more on trade policy, with the 

primary goal of balancing our enormous trade d~ficit, which will create jobs in America. We 

should encourage the Administration to actively remove barriers to competing with China in 

particular. because it accounts for 80 percent of the U.S. non-oil trade deficit in goods. We must 

stop China's currency manipulation, end its violations of intellectual property, its subsidies, and 

its harmful practice of dumping products in our market. Our trade deficit with China has cost 

America 2.4 million jobs. So, trade is definitely important, and the most important focus within 

trade must be to correct our relationship with China. 

3. Our current corporate income tax rate is more than 10 points higher than that of the OECD 

average. How do you think that affects the decision for manufacturers to locate their 

headquarters and factories here in the United States? 

Mr. Barton, tax rates are obviously one factor that manufacturers take into consideration when 

making decisions on production and headquarters locations. There are many other factors, 

including subsidies provided. wage rates, access to markets, access to efficient transportation 

and suppliers, access to skilled labor. and opportunities for return on investment. Simply 

adjusting the U. S. tax rate without making other critical changes would not be effective in 

revitalizing manufacturing in our nation. 

4. Do we need legislation or can the President implement a strategy on his own? Isn't a strategy 

only as effective as the implementation? 
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Mr. Barton, I believe that the legislation under consideration by the House of Representatives 

would provide the Administration with a neededfocus, much like the mandated quadrennial 

review drives strategic decisions within the Department of Defense. This would ensure that the 

Executive and Legislative branches are providing the thought and guidance necessary towards 

shaping a robust policy that will boost mamifacturing in our nation. 

5. Can the President assemble a Manufacturing Strategy Board without legislation? 

Mr. Barton, I am not an expert onfederal authority to assemble various boards and 

commissions. but 1 know of the existence ()f a Manufacturing Council at the Commerce 

Department. for instance. HOlvever, I think that HR. 469 represents much-needed legislative 

interest in the effective coordination of manufacturing strategy within the ftderal bureaucracy, 

where it is spread over a multitude of agencies, departments, and programs. 

6. How would a Manufacturing Strategy Board differ from the interagency working groups 

already assembled and chaired by the Department of Commerce? 

Mr. Barton, I believe that the proposed Board would certainly share some ()f the same 

characteristics with existing advisory boards, but I think what makes the Board important is that 

it includes members from the private sector, whose voices I believe are necessary to construct a 

sound manufacturing strategy. 

7. Do you believe that reductions in our corporate tax rate, which is the second highest in the 

developed world, should be integral to any policy changes addressing our manufacturing 

base? 

ivfr. Barton, I think it will take a combination of government policies, including tax adjustments, 

wise public investment, more effective enforcement of our trade laws, and a focus on skills and 

training to truly benefit manufacturing. An adjustment to the corporate tax rate could have a 

positive effect, provided that it is geared towards encouraging domestic employment and 

production. 

8. In your testimony, you highlighted your support for more government spending, especially in 

renewables now that stimulus funds are running out. Do feel that your members need 

government subsidies in order to compete? How much longer do they need subsidies? 

Mr. Barton, I do believe that focused investments in clean energy manufacturing make sense. 

These public investments leverage private sector investment and job creation. There are 

numerous subsidies currently on the books through loans, preferential tax treatment. tax credits. 

grants, and other mechanisms designed 10 support an array of job-creating activities in America, 

including within the oil and gas industry, agriculture, and financial services. There are many 

private sector companies operating in Texas today, for example, creating jobs by utilizing clean 

energy manufacturing tax credits, loan guarantees, and other support. The United States needs 

a diverse, independent, and sustainable supply of energy from a variety of sources, including 

fossil fuels, nuclear, and renewables. fou willfind a variety offtderal mechanisms within each 

of these sectors designed to promote employment and enhanced energy generation. 
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In your testimony, you argue for both government subsidies and preferences for domestic 

industries, yet at the same time support reducing trade barriers abroad. Trade barriers often 

include domestic purchasing mandates and government subsidies. Ifwe arc increasing trade 

barriers in America, how are we, the U.S., to convince foreign nations to reduce theirs? 

Mr. Barton. I am not arguingfor any domestic subsidies and preferences that are inconsistent 

with our international trade obligations. We would not be increasing barriers to trade. Infact. 

some of the preference programs. such as "Buy America" laws. are fully consistent with WTO 

obligations and have been implemented-and in fact enhanced-by the Reagan Administration 

and many others. 

9. What would provide a greater benefit to your members: An increase in government subsidies 

and protections, or the removal of trade barriers abroad? Please explain. 

Mr. Barton, I think that a smart combination of opening markets abroad to ensure trade that is 

trulyfree andfair, aggressively enforcing our trade laws, and using public investments to spur 

private capital and private sector jobs is the right way to go. 

10. How important is opening new markets to expanding our manufacturing capacity':? How 

would the implementation of the current pending trade agreements with South Korea, 

Panama, and Columbia affect your members? 

Mr. Barton, in our view, the trade challenges we have with China trump the value of any 

potential gains through trade with South Korea. Panama, and Colombia. China accounts for 80 

percent of our non-oil trade deficit in goods. and has more potential consumers than those three 

examples combined. We should aggressively work to balance trade with China. Some 

manufacturers have objected to the current terms of the US.-Korea agreement, and not to such 

an agreement in principal. If Korea can guarantee true reciprocity on tariffS and non-tariff 

barriers, and we can secure a mechanism to prevent currency manipulation by Korea. then I do 

think the Korean middle class makes an attractive potential marketfor American goods. 

11. You mentioned in your testimony, the "Framework for Revitalizing American 

Manufacturing" released by the Obama Administration late last year: Since the 

administration already has the capacity to complete such a similar study, and has, then do we 

need a bill telling the administration how to do something it can already do? 

Mr. Barton, I did mention the Framework, but I also said that it was not a robust blueprint for 

how to proceed with a manufacturing strategy. It was a helpfid step forward. but it is not a 

substitute for a critical. government-wide focus on how we can make our manufacturing sector 

more competitive. 

12, Do you believe that the financial role of the Federal Government in our manufacturing sector 

should be expanded, and if so, do you think that this bill could function as a step towards 

that? 
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Mr, Barton. it may be more a matier of shifting priorities than dramatically increasing 

government spending, but the Federal Government certainly needs to give more attention to 

regrowing our manufacturing sector, which just suffered its worst decade on record, even worse 

than the Great Depression. However, the legislation under consideration today makes no 

substantive changes asfar as I can tell infederal expenditures, 

13, Should the government be able to ehoose - through a National Manufacturing Strategywhich industries are productive enough to merit investment, or do you believe it would be 

better to let free markets decide? Please explain your answer. 

Mr, Barton, this is a very good question. I believe that markets are good things, but I do not 

believe they are infallible, Nor do I believe that we are primarily competing against market 

economies, We already pick winners and losers through federal policies-oil and gas is heavily 

subsidized, for instance, while other forms of energy are not as generously endowed-so I do not 

believe it is possible, or desirable, jiJr us to be "pure" on this point, A national manufacturing 

strategy should consider what industries are likely to flourish in America, Ultimately, capital is 

going to be attracted to such industries, 

14, If the future path of American manufacturing is to be set by the Federal government, how is 

that different from centrally planning a significant portion of our economy? 

Mr, Barton, I do not believe that this bill, or any of these efforts, contemplate the Federal 

Government managing the manufacturing sector, I believe that an appropriate array of policies, 

focused on trade, taxes, infrastructure, skills and training, and access to capital, vvill be critical 

as we move forward, and I believe that is what voters-right, left, and center-' ,want Congress to 

do, 
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\ 
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[1. 
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h. 
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\1r. llillllickcy 

Prcs;dent""Cl;O 

Lapham-Hickey Sled C,," 

5501) W 73rt! Street 

Chicago. 11" 60638 

Dear 1vlL flickc:: 

August 5, 2010 

I hank YOLI ror appearing bdi)re 1h!.! SubcOm1111tke on Commerce. Trw .. };:. and Consumer 

Protection on .Iuly l~. 2010, at the hearing entitled "'fLR" -1692. the :\at;onal \,januf)ICtllring 

Strategy ,\cr or 201 0."" 

Pursuant to tbe Committec's Ruh..·s, attached arc \\fiHcn questions tor th~ record directed 

to you from certain rVkmbers of the Committee, In preparing your anS\\ers. please address youI' 

response to the \kmber \\ho submitted the questions. 

Pll.!asl..' pnn-ide your responses by August J 9.20 I O. to Earley Gr~~l1. Chicf Clerk, ria \.:-

mail to Please contact Ear1~y Green or Jennifer Bcrcnho1z at 

(202) 225-2927 

Sincerely. 

Chairman 

Attucl1men! 
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H.R.4692 

August 16, 2010 

Congressman Barton: 

I am answering your questions to the best of my ability. Many of the questions you ask 

are looking for simple responses. I have tired to keep my answers as simple as possible. 

1. Which do you think would be a bigger benefit to our manufacturing industry, 

more government spending in the industry, or lowering our corporate tax rate, 

which is currently the second highest in the developed world? 

Answer: 

I am not sure what the question "more government spending in the industry" has 

as a reference. I believe we, as a nation, need to rebuild our national 

infrastructure. How and when that is accomplished will help all parts of our 

economy. Tax rates have to be competitivc, but lowcr taxes will not generate 

revenue. Economic activity is what is needed. 

2. As we all know, the private sector can create jobs, produce products, innovate, 

and finance more cfficiently and effectively from the Federal Government. The 

one thing that it can't do, however, is lower trade barriers and negotiate 

agreements for the free flow of goods bctween our trading partners. Given that 

this is the one responsibility that only Government can perform; shouldn't it be 

the Government's number one priority? 

Answer: 

I have for eight years been trying to have the Federal Goverument enforce our 

existing trade laws. We have these massive economic imbalances with the world 

because the Federal Government does not enforce existing trade agreements or 

trade laws we have today. When will we enforce the existing trade laws to 

eliminate the mercantilist's policies of the Peoples Republic of China? 

3. Our current corporate income tax rate is more than 10 points higher than that of 

the OECD average. How do you think that affects the decision for manufacturers 

to locate their headquarters and factories here in the United States? 

Answer: 

Higher U.S. Corporate tax rates, I am sure, playa role in the location of factories 

and headquarters in this country. These tax rates will be one reason not to base 

production in our country. There are other reasons such as value addcd taxes and 

transportation costs that may be much more of a factor to thc placement of a 

manufacturing plant in the United States. 

Responses from William M. Hickey, Jf. lor 5 
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H.R.4692 

4. Do we need legislation or can the President implement a strategy on his own? 

Isn't a strategy only as effective as the implementation? 

Answer: 

I testified on HR4692 because I have watched the destruction of the 

manufacturing economy over the last 15 years. I believe that HR4692 will allow 

a real debate on the manufacturing sector of our economy. Over this and the last 

two administrations we have had a strategy of neglect. 

5. You advocate that we (U.S.) should "grow, mine, and manufacture" to create 

wealth necessary for our citizens. 

a. How would the energy "cap and trade" legislation passed by the House 

last year affect such capabilities if enacted into law? Would it affect your 

business? How? 

Answer: 

The "cap & trade" law passed in the House last year, if turned into law, would 

destroy the manufacturing economy in this country. 

b. How will the new healthcare law affect your business? 

Answer: 

The healthcare law will raise our company cost to provide medical coverage 

to our employees. These cost increases at some point will be borne by our 

employees in fewer benefits. higher co pay on less choice. 

6. Do you have confidence the government has the capabilities to develop a strategy 

that will be more effective than a strategy developed by stakeholders? 

Answer: 

I am sure that stakeholder strategy is much different than a macro economic 

overview of a national manufacturing agenda. 

Responses from William M. Hickey, Jr. 2 or 5 
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H.R.4692 

7. In your testimony, you mentioned an example of an appointed ofiicial who held 

back Government resources at what seemed to be a whim. Drawing on that, do 

you have any concerns that placing resources for manufacturing expansion in 

Government hands, instead of those of the free market? 

Answer: 

As I understand the National Manufacturing Strategy Act the government will 

develop a strategy on manufacturing policy. The policy is intended to help 

manufacturing in this country. I do not think the act is intended to have the 

government take ownership of manufacturing assets. 

8. As I'm sure you know, the US has the second highest corporate tax rate in the 

developed world. How would lowering the corporate tax rate affect your ability 

to expand and pursue new markets? 

Answer: 

Lower tax rates allow for greater capital formation. More capital would allow for 

all industries to create new employment opportunities. 

9. You noted imbalances resulting from the outsourcing of manufacturing; are there 

any government tax, regulatory, or trade policies that you believe have 

contributed to this outsourcing. 

Answer: 

The number one issue on outsourcing of manufacturing goods is the lack of 

enforcement of current trade laws by our government. Our government structure 

for trade enforcement is a patchwork of different departments and agencies that 

have no concentrated focus or direction. China has used their currency as an 

export subsidy and an import tax for almost 20 years. We have trade laws that the 

USTR, Commerce, Treasury and the President do not enforce. Why? 

10. Do you believe this our taxes rates on corporate profits and capital gains has 

discouraged or impeded investment in manufacturing in the United States? 

Answer: 

Congressman, this question is very similar to question three. The reply to 

question three is also appropriate to this question, however, I will expand one 

point, the value added tax. Most, if not all the countries we have trade with have 

a VAT system. The V A T system is designed to subsidize exports and tax 

imports. The example I use is the $100,000 Mercedes-Benz that is put on a boat 

to be shipped to the USA - Daimler receives the V AT as a rebate. Today in 

Germany the V AT is about 20% so the auto production company in Germany gets 

Responses from William M. Hickey, Jr. 3 or 5 
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H.R.4692 

a check for $20,000 to export a car that sells for $ J 00,000 in Gennany. When 

Ford ships a $30,000 Taurus to Gennany they have to pay a 20% imports VAT. 

So the V AT has a very large effect on where you produce and how much you can 

export. 

11. Do you believe the government's inability to pass effective trade agreements with 

other countries and remove trade barriers impedes the growth of U.S. 

manufactures? 

Answer: 

Yes, we must enforce trade laws. 

12. Are there any excessive or unreasonable environmental or other regulations that 

have increased manufacturing costs in the United States, thereby placing our 

business at a disadvantage? 

Answer: 

The recent EPA action of emissions has many manufactures concerned about 

what direction that agency will go during this administration. 

13. What impact do you believe labor union demands have had on the ability of U.S. 

manufacturers to stay competitive? 

Answer: 

Labor unions are designed to get the highest possible wage and benefit for their 

members. When these cost place the employer at a competitive disadvantage at 

some point the company will close or restructure. 

14. Do you believe we need to study these problems for several more years before 

taking action? 

Answer: 

No. We can enforce our trade laws today. 

15. What aspects of manufacturing does the government already study? Would the 

cfforts mandated in this bill duplicate any of these aspects? 

Answer: 

I do not know the answer to this question. 

Responses from William M. Hickey, Jr. 4or5 
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H.R.4692 

16. What elements do you believe a National Manufacturing Strategy should include? 

Answer: 

I believe the National Manufacturing Strategy has to have an overview on why we 

have lost 113 of our manufacturing jobs in the last 10 years. How have the 

imbalances in our economy been created over the last decade? 

17. Do you have any concerns that a National Manufacturing Strategy might include 

the government picking specific industries or firms to subsidize? Could taxing 

industry as a whole to subsidize a politically-cOlmected few hurt U.S. 

manufacturing as a whole? 

Answer: 

Congressman, as 1 read this question about the government picking specific 

industries to subsidize and the second part about specific subsidy for politicallyconnected industries, I think we already have this occurring in this country. We 

have specific subsidies for farming, ranchers, energy production and exploration, 

and housing, just to name a fcw. 

18. If the Strategy included specific preferences or protection for domestic industry, 

do you have any concerns that this could prompt other countries to retaliate 

against U.S. exports, or increase their own protectionist subsidies? 

Answer: 

If the strategy included preferences or protection for domestic industries and, we 

as a country, decided that was in the best interest of our nation then we will have 

had a debate on the issue. Once that decision is made how other countries rcact 

will be a part of the reality of the world economic order today. 

Bill Hickey 

Responses from William M. Hickey, Jr. 5 or 5 
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CAt 

CriA!f\J\'lAN 

ONE HUNDRED ELEVENTH CONGRESS 

August 5, 2010 

\IL Owen L lkrrnstadt 

Director oflrade "ud Globalil.(nion 

International Associatiun of iVla..:hinists & Acrospac(' 'Workers 

9000 \ lachinists Place 

Cpper ll'larlooro, ,m :)1772 

Dear \lL Ilcrrnstadt: 

11mnk you for appearing bdbre the Subcommittee on COll1l11~rCe, Trade. and Consumer 

Protecli()!) on July 14.20 I O. at 1he hearing entitled "H.R. 4692. the :\utional ~\'ianl1lllCluring 

Strat,'gy !\d 01'2010." 

Pursuant 10 the ConuniH('('~s Rules. attached arc written lJtlc~tit.m$ fur the record directed 

to you from certain fvlemncfs of the Committc~. In preparing your answers. please addr~:)s your 

n.:sponse to the ~1cmber \\ ho submitted the qUl.!stions. 

Please pro\ide your responses by August 19,2010, to Earley Greco, ChiefCkrk. via cmail to 1".arky.GI't:(,ln·i·maiLhou~..:.~()~'. Please contact Earley Green 01 Jcnnikr B12l"cnholz [11 

(202) 225~2917 if you ha\"t.~ any questions. 

Sincerdy. 

Alinchl11ent 
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The Honorable Joe Barton 

1. Which do you think would be a bigger benefit to our manufacturing industry, more 

government spending in the industry. or lowering our corporate tax rate, which is currently 

the second highest in the developed world? 

You would have to be more specific about what kinds of government spending in the 

industry you are referencing. I am not an expert on corporate taxation nor on taxation of 

corporation's in other countries. 

2. As we all know, the private sector can create jobs, produce products, innovate, and finance 

more efficiently and effectively than the Federal Government. The one thing that it can't do, 

however, is lower trade barriers and negotiate agreements for the free flow of goods bctween 

our trading partners. Given tllat this is the one responsibility that only Government can 

perform, shouldn't it be the Government's number one priority? 

I believe that we can have several priorities. 

3. Our current corporate income tax rate is more than 10 points higher than that of the OECD 

average. How do you think that affects the decision for manufacturers to locate their 

headquarters and factories here in the United States? 

That would depend, I suppose, on the corporation, as well other factors, which would 

influence their decision. 

4. Do we need legislation or can the President implement a strategy on his own? Isn't a strategy 

only as effective as the implementation? 

It depends on what strategy is for adoption and how it is implemented. 

5. Can the President assemble a Manufacturing Strategy Board without legislation? 

Not certain, given the objectives included in the Lipinski proposal, but that may be best 

answered by the Congressman. 

6. How would a Manufacturing Strategy Board differ from the interagency working groups 

already assembled and chaired by the Dcpartment of Commerce? 

It appears that under the proposed legislation, it would take on a more institutionalized 

form, among other things. It would also, I believe, focus on a more comprehensive 

examination of manufacturing. 

7. You testified, "While there are many reasons for the decline in manufacturing, one of the 

fundamental reasons is that the U.S. does not have a national manufacturing strategy and has 

not established a framework for creating one." Do you have any evidence to support this 

assertion? 

Well, one might simply look at the decline in manufacturing, especially in such industries 

as shipbuilding today. 

8. You cite approvingly the manufacturing strategies of China and European countries. Can't 

China's success in export manufacturing be attributed more to other causes, such as its 

relatively low labor costs and currency practices? 
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I never meant to imply in any way that I approved their actual strategies, especially in 

terms of China's labor rights and currency manipulation, only to note that other countries 

that we compete with have adopted manufacturing strategies. The U.S. should develop its 

own strategy. 

9. You stated your support for the national manufacturing strategies of China and Europe. 

Would you still support such policies ifit meant Chinese like labor conditions, and European 

levels of unemployment? 

Again, I do not believe that I stated support for all of the strategies of other countries 

especially China, particularly concerning its refusal to honor basic fundamental human 

rights (including labor rights) like the right to freedom of association and its unacceptable 

labor conditions. It would be helpful if you directed me to my testimony that gave you 

any other impression of my position so that I can even better clarify. As stated above, the 

U.S. should develop its own strategy. 

1 o. Your testimony implies that succcssful manufacturing strategies include the use of 

sophisticated offset policics to increase exports, yet you also testify that the United States 

should attempt to curtail the use of offsets by other countries. How can we implement ofrset 

policies in the here while simultaneously trying to curtail their use by abroad? 

I meant that other countries use them as an example of how they have developed overall 

strategies-not that we should necessarily adopt them as well. 

11. You appear to support singling out some manufacturing industries or firms for government 

subsidies, protectionism, or other assistance not available to others. What kind of track record 

does the Government have picking winners and losers? 

I think we need to examine our overall manufacturing sector and then strategically 

determine in working with all of the stakeholders how we can best serve U.S. workers 

and our national interest. 

12. Do you see any downside to government picking specific industries or firms to assist? 

Could taxing industry generally to assist politically-connected industries or firms actually 

make U.S. industry as a whole less competitive? 

I am not certain as to what you are specifically referencing. I believe the Lipinsky proposal 

would bring together stakeholders to discuss specific manufacturing strategies. 

13. If the goal is to bolster manufacturing industries, why not focus on improving the business 

climate for all industries? What steps should the government take to improve the business 

climate, other than those you mention in your testimony? 

I think these are the types of issues that could be contemplated in the Lipinsky proposal if it 

is implemented. 

14. Has uncertainty regarding future tax and regulatory policy contributed to the poor business 

climate for manufacturers and others? If so, how should we address this? 

Again, I am not an expert in corporate taxation nor am I certain as to what you mean by 
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15. Dr. Hassett testified that our corporate tax system is the biggest problem contributing to the 

terrible business climate in the United States. Do you agree? Why or why not? Should any 

new strategy include lowering corporate income taxes? 

Again, I am not an expert on corporate taxation. I refer you to the work of many other 

groups, such as the Economic Policy Institute which, I believe, will provide greater insight. 

16. As you may know, the House of Representatives passed, and the Senate is considering, 

legislation that would create extensive new regulations relating to energy. Has the prospect 

of this legislation becoming law worsened the business climate? What effect would it have 

on manufacturers in particular? How should we address this? 

I am not familiar in detail with this legislation. 

17. Has the government's failure to negotiate and ratify trade agreements with other countries to 

remove barriers to U.S. exports discouraged or impeded manufacturing in the United States? 

Why or why not? 

You would have to be more specific in terms of the exports, trade agreements, and countries 

you reference. I believe the AFL-CIO has submitted comments on all ofthe pending trade 

agreements and their potential impact on U. S. workers. The U A Wand others have also 

voiced their concerns over the impact that the currently proposed KORUS would have on the 

U.S. auto industry. 

18. Your testimony advocates fair trade agreements. How do these "fair" trade agreements differ 

from free trade agreements, and can you list any successful examples of such agreements. 

They differ significantly and I believe that Congressman Michaud's trade reform bill 

indicates these differences, including reform of the investor to state dispute mechanism, 

inclusion ofILO core labor standards, enforcement, etc. 

19. Are there any excessive or unreasonable er-O"nmental or other regulations that have 

increased manufacturing costs in the Unite ltes, therefore placing our business at a 

disadvantage? 

I am not an expert on environmental regulations. 

20. What impact do you believe labor union demands have had on the ability of U.S. 

manufacturers to stay competitive? 

Please be more specific. 

21. How has regulatory and taxation uncertainty contributed to the poor business climate for 

manufacturing? What can be done to address this? 

Please see my response to Question 14-it appears to be a similar question. 

22. How has the recently enacted health care reform legislation affected the business climate, in 

particular the manufacturing industry? 

I am not an expert on the health care reform legislation and its impact on the manufacturing 

industry. 

o