Manufacturing Strength Starts at Home
By working to strengthen domestic competitiveness, the Department of Commerce is helping America’s manufacturers succeed in the global marketplace.
by Al Frink
The changing global economy constantly affects the way we conduct business. Our focus at the Manufacturing and Services unit of the International Trade Administration (ITA) is to create a business environment that will enable U.S. industries to win in the global marketplace. This mission starts at home, and it starts with competitiveness.
(Story continues below.)
| Assistant Secretary of Commerce for Manufacturing and Servces Al Frink speaking at Purdue University on May 23, 2006.
U.S. Manufacturing: Profitable and Productive
There is good reason for optimism about the U.S. economy. It is the strongest economy in the world, and it continues to grow faster than the economies of other industrial nations. During the first quarter of 2006, U.S. gross domestic product grew at an annual rate of 5.3 percent, which built on the stable 3.5 percent growth of 2005. Since August 2003, 5.3 million jobs have been created. The unemployment rate is now 4.6 percent—well below the average of the four previous decades.
Just like the economy as a whole, the manufacturing sector has rebounded from significant challenges, including burdensome regulations, high energy prices, and escalating health care costs. In fact, the U.S. manufacturing sector is performing well. According to the Department of Commerce’s Bureau of Economic Analysis, profits are increasing faster for manufacturers as a whole, quadrupling since 2001. Profits in this sector now exceed the level reached during the economic boom of the 1990s.
American manufacturing remains strong because our workers are the most productive in the world. During the past year, manufacturing production grew at a rate of 5.5 percent. According to the Bureau of Labor Statistics, productivity growth exceeded 4.0 percent in 2005, outpacing the 3.7 percent average annual growth rate of the 1990s.
The American Competitiveness Initiative
American manufacturing lies at the foundation of our economy. As the chief manufacturing advocate for the administration, and a former manufacturer myself, I believe that the public and private sectors should work together to strengthen that foundation. What are those of us in the public sector doing to accomplish this goal? Foremost, we are working to ensure that our manufacturers prosper domestically. In this respect, the United States has an advantage over its competitors. We are blessed with the most innovative and talented workforce in the world. But we should not grow complacent. Rather, we must enforce America’s economic strength by maintaining a healthy business environment and a highly skilled workforce.
To this end, President Bush, earlier this year, announced the American Competitiveness Initiative (ACI). The ACI is an ambitious strategy that is designed
• To encourage aggressive investment in research and development (R&D)
• To increase the number of workers receiving job training
• To raise student achievement in math, science, engineering, and technology
The ACI is backed by a historic amount of funding: $5.9 billion in fiscal year 2007 and more than $136 billion during the next 10 years. This unprecedented level of support highlights the administration’s commitment to competitiveness and the future of U.S. businesses.
The Manufacturing Council
The Department of Commerce has been supporting competitiveness in cooperation with U.S. manufacturers through the Manufacturing Council. The council, established in June 2004, is comprised of 15 manufacturing executives from across the country and from different industries. It meets quarterly to advise the secretary of commerce on government policies and programs that affect U.S. manufacturing, as well as to provide a forum for proposing solutions to industry-related challenges.
On June 16, 2006, Deputy Secretary of Commerce David Sampson hosted the sixth meeting of the council, which was held at the National Institute for Science and Technology in Gaithersburg, Maryland. At this meeting, senior officials of the department listened to the concerns and recommendations of council members and outlined for the council what the administration is doing to improve manufacturing.
One of the council’s recommendations is that the R&D tax credit be made permanent. According to the council, “Government support of R&D is vital to sustain and encourage manufacturing in the United States. Fostering innovation not only enables U.S. manufacturers to remain competitive, but also is a key to improving productivity and enabling start-up companies.”
R&D projects require a lot of time, resources, and expenses for manufacturers. They also require hiring and extensive training of employees. Permanent extension of the R&D tax credit will help ensure that American manufacturers stay ahead of the competition.
America’s economy and its manufacturing sector have benefited from President Bush’s pro-growth, pro-business economic policies. But there is always more work to do. And the Manufacturing and Services unit is committed to effectively advocating for U.S. manufacturers within the federal government.
Al Frink is the assistant secretary for manufacturing and services in the International Trade Administration.
For More Information
To find out more about the Manufacturing Council, including links to its reports and announcements of its activities, visit www.manufacturing.gov.
Information about ACI, including a report published by the White House Domestic Policy Council in February 2006 titled American Competitiveness Initiative: Leading the World in Innovation, can be found on the White House Web site .