Doubts exist as to need for U.S. manufacturing czar

Michael Barr and Greg Kaza have doubts about the ability of a U.S. manufacturing czar to bring innovation, efficiencies and sustainability to the domestic manufacturing industry.

Recent news reports indicate that Ron Bloom, who now leads President Barack Obama’s auto task force and was a former advisor to the United Steelworkers union, may soon be appointed by Obama as a national industrial policy adviser, aka, a manufacturing czar.

The postwar U.S. manufacturing employment peak was in June 1979 at 19,553,000. In June 2009, only 11,854,000 Americans were employed in manufacturing. The postwar Arkansas manufacturing employment peak was in February 1995 at 247,400. That figure has slipped more than 33% with only 164,400 Arkansans employed in manufacturing as of June 2009.

Milwaukee-based Rockwell Automation recently issued a statement to endorse creating the position — although such a czar existed under the administration of President George W. Bush — and encouraged Obama to provide “federal support to research and develop smarter, safer and more sustainable manufacturing.”

“American industry needs a transformation unlike any other in its history,” Keith Nosbusch, chairman and CEO of Rockwell Automation, said in the statement. “Innovation must be a high priority to maintain our nation’s current but very vulnerable leadership as the world’s largest manufacturer.”

Rockwell, which designs and manufactures industrial automation equipment, would stand to benefit from any federal incentives to upgrade manufacturing plants.

Nosbusch said federal policy is needed to encourage U.S. manufacturers to “embrace the latest generation of ‘smart’ technology that saves energy while allowing manufacturers to produce safer products with much greater efficiency.”

Barr, operations manager at Fort Smith-based Harry G. Barr Co., and president of the Fort Smith Area Manufacturing Executives Association, said more government programs — regardless of intent — are not the answer.

“Manufacturers must adapt their business models to create leaner, more innovative, and more flexible organizations that can effectively compete in a global marketplace. However, I do not feel like more government programs are the answer,” Barr noted.

He said proposed federal legislation to change health care, begin a cap and trade program and institute Card Check would, if approved, negate most benefits of more industrial automation.

Barr explained: “Pushing lean manufacturing and continual innovation in both product and process is imperative for manufacturers. Competition in the marketplace is forcing those transformations. If supporting manufacturing is the goal, the discussion needs to center on smaller government dedicated to creating an environment where businesses can thrive; better education, cost effective health care, stable energy prices, competitive tax structure, and economic and trade policies that enhance American competitiveness.”   

Greg Kaza, executive director of the Arkansas Policy Foundation, said most studies on the issue of improving U.S. manufacturing competitiveness point to the need for less government.

“Domestic manufacturing needs stable monetary policy, lower taxes, a non-arbitrary regulatory policy, and a 21st Century trade policy, not a government manufacturing czar,” Kaza told The City Wire. (Link here for recent Kaza comments on Arkansas’ manufacturing policy.)
 
Kaza made reference to a Milken Institute report that studied the recent decline of manufacturing in California. Milken researchers found that California manufacturing suffered from “a reputation for an unfriendly business climate, comparatively high tax rates, a restrictive regulatory climate and unsustainable government spending.”

Also, Kaza noted that the White House Office of Management and Budget reported in 2005 on a host of things the government can do to quickly improve the regulatory environment for manufacturers.

The OMB indeed reported in 2005 that it collected 189 “distinct reform nominations” from the U.S. manufacturing community, with 76 of the ideas having “potential merit.”

For example, one suggestion was to streamline the Equal Employment Opportunity Commission reporting procedure for companies that employ more than 100. Another suggestion was to amend the Resource Conservation and Recovery Act rules and remove the disincentive to recycle hazardous waste. According to the OMB report, changing the categorization of regulated waste streams “would increase recycling rates while reducing the costs of managing hazardous wastes.”