Assistant Secretary of Commerce Nicole Y. Lamb-Hale
Manufacturing and Services
Remarks to MEMA Legislative Summit Breakfast
Thursday, April 29, 2010
As prepared for delivery
Good morning everyone, and welcome to Washington. Thank you for the opportunity to speak this morning. During the period I practiced law in Detroit, many of my clients were automotive parts suppliers, so I am familiar with many of your issues, particularly those related to the challenges of restructuring. The downturn in both auto sales and the overall economy has obviously been extremely difficult for suppliers, their employees, and local communities. Fortunately, there have been some recent signs of gradual improvement in the economy, employment levels, and in auto sales. The theme of your summit, “Rebound, Recover, Reinvent” is in line with Commerce’s goals and services to help U.S. businesses, and I hope we can be a valuable resource to aid the automotive industry in these efforts.
I want to begin by assuring you that the Administration recognizes the contributions that the automotive supplier industry makes to the U.S. economy and to U.S. jobs. It is a critical time for innovation in the automotive industry, and we also realize the large role suppliers play in contributing to new automotive technologies and products. The recent study by the Center for Automotive Research (CAR) reconfirmed the automotive industry’s contributions to the U.S. economy and employment, as well as highlighted the industry’s significant R&D spending.
Today I would like to update you on some of the federal initiatives of interest to suppliers aimed at increasing U.S. export sales, finding new customers, improving U.S. competitiveness, introducing and protecting U.S. technology, and, most importantly, preserving U.S. jobs.
I am with the International Trade Administration, an agency within the Department of Commerce which strengthens U.S. industry’s competitiveness, promotes trade and investment, and ensures fair trade and compliance with trade laws and agreements. The area that I am responsible for is Manufacturing and Services, which serves as an interface between the U.S. government and private industry, and provides critical economic data, strategic research and policy analysis. Among our industry-specific offices, we have an Office of Transportation & Machinery, which covers the automotive industry.
As the newly appointed Assistant Secretary for Manufacturing and Services, I envision our primary functions being to convene, to collaborate, and to connect - - the “Three Cs.” We will convene experts both inside and outside of the federal government to develop solutions to the issues faced by U.S. industry. We will collaborate with Congress, with agencies across the federal government and with state and local governments to develop solutions to sustain and increase the global competitiveness of U.S. industry. Further, because of our industry expertise and contacts, we will connect industry to the resources and tools available in the federal government to forge a path to sustainable, highly-skilled jobs for the 21st century economy.
I understand MEMA and its members have been excellent, valued partners with our automotive team over the years providing input on issues such as trade agreements, U.S.-Japan auto trade, and, most recently, the impact on suppliers resulting from the downturn in domestic auto sales. Your continued support and feedback is greatly appreciated, and I look forward to collaborating with you.
Diversification has become a top priority for many suppliers. I would like to give you an overview of some programs we have to help manufacturers, particularly small and medium-sized companies, find new markets and new customers. Approximately 75 percent of worldwide auto sales are currently outside of North America. This means there are opportunities for our industry to benefit from increased exports as well as benefit from the increase in the U.S. jobs that support those exports. In 2009, the United States exported $42.8 billion worth of auto parts. Our top five markets were: Canada, Mexico, Germany, China, and Japan. Emerging auto and aftermarket markets, as well as emerging technologies, present new opportunities, for us to work together to increase automotive-related exports. The recent CAR study noted there are particularly strong opportunities for suppliers in the areas of safety, fuel efficiency, materials, and vehicle integration, as well as in the development of batteries and components for plug-in hybrid electric vehicles.
Through our Commercial Service’s Export Assistance Centers located in over 100 U.S. cities, suppliers can learn about how to sell their original equipment and aftermarket products overseas and find new customers. Our domestic offices work with our commercial officers in 77 countries who flag opportunities and assist U.S. companies in selling their products and services in those markets. If you are interesting in exporting for the first time or want to expand your international sales, I urge you to meet with one of our trade specialists at our U.S. Export Assistance Centers. You can find out their contact information by visiting www.export.gov or by calling 1-800-USA-TRADE.
For those of you exhibiting at AAPEX [pronounced “A-PEX”] in Las Vegas this November, I strongly encourage you to take advantage of the services offered through our Commercial Service’s International Buyer Program. This program helps U.S. exhibitors increase their international sales by promoting AAPEX through our global network of Commercial Service Offices around the world. Last year, our overseas staff recruited international buyers from 42 countries to the show. In addition to pre-arranged meetings with international buyers, this program offers U.S. exhibitors the chance to meet face-to-face with approximately 30 of our commercial specialists from around the world to determine their products’ market potential.
President Obama recognizes the importance of exports, and during his State of the Union Address in January, he announced the National Export Initiative. This initiative is a critical new effort that will lead to long-term, sustainable economic growth. The President’s goal is to double exports during the next 5 years to support 2 million new American jobs.
Exports support nearly 10 million jobs in America and almost seven million jobs in manufacturing—and manufacturing jobs pay on average 15 percent more than the average wage. And for every $1 billion in exports, 6,250 manufacturing jobs are created or supported. But while the U.S. is a major exporter, we are underperforming. Currently, less than one percent of America’s 30 million companies export so there is great potential for improvement.
The National Export Initiative will:
- Provide more funding for export promotion and more coordination between government agencies.
- Ensure that commercial advocacy objectives obtain government-wide support and that we advocate more effectively for U.S. products.
- Create an Export Promotion Cabinet reporting to the President that will consist of top leaders from the Departments of Commerce, State, Agriculture, Export-Import Bank, United States Trade Representative, and the Small Business Administration.
- And, increase the government’s focus on barriers that prevent U.S. companies from getting free and fair access to foreign markets.
As part of the National Export Initiative, the President has called on the Export-Import Bank - - which provides critical financing to U.S. companies when private banks are unwilling or unable - - to increase its financing available for small and medium-size businesses from $4 billion to $6 billion over the next year.
In addition, the President’s 2011 Budget is requesting a 20-percent increase for the International Trade Administration—totaling $78 million. With that, ITA plans to bring on as many as 328 trade experts—mostly in foreign countries—to advocate and find customers for U.S. companies, allowing its Commercial Service to assist more than 23,000 clients to begin or grow their export sales in 2011.
The NEI will allow ITA to:
- Put a special focus on increasing the number of small- and medium-sized businesses exporting to more than one market by 50 percent over the next five years;
- Increase our presence in emerging high-growth markets like China, India and Brazil;
- And to develop a comprehensive strategy to identify market opportunities in fast-growing sectors like environmental goods and services, renewable energy, healthcare and biotechnology.
In addition to export promotion activities, my agency also plays a large role in developing and enforcing U.S. trade policy. We work to eliminate trade barriers, provide industry expertise to the Office of the U.S. Trade Representative in negotiating free trade agreements, and enforce laws and agreements to prevent unfairly traded imports and to safeguard jobs and U.S. competitiveness. The potential for U.S. exports can be limited by both tariff and non-tariff market barriers, so implementing free trade agreements and addressing impediments to trade and our competitiveness at home is essential.
Counterfeiting and intellectual property protection is another major concern for the U.S. automotive industry both abroad and here in the United States. I understand MEMA recently recommended that more resources be devoted to anti-counterfeiting regulation and intellectual property rights violations. As the industry becomes more globalized, it becomes increasingly important to protect our brands and innovations, as well as the safety of consumers. In addition to reforming the U.S. patent office at home to make determinations on patent applications faster and with higher quality, Secretary Locke and the Administration have made improving intellectual property protection worldwide a priority. I urge you to visit www.stopfakes.org to learn more about protecting your current and future products. The site includes toolkits for more country-specific information.
As you know, the supplier industry is under enormous pressure to lower costs, be lean, and develop new technologies, particularly fuel efficient and advanced technologies. And, as I mentioned before, there also has recently been increased interest in diversification. To assist small and medium-sized manufacturers in increasing their competitiveness, Commerce’s National Institute of Standards & Technology has the Hollings Manufacturing Extension Partnership (the MEP). The MEP focuses on five critical profitable growth areas: continuous improvement, technology acceleration, supplier development, sustainability and the workforce. They have centers throughout the country that offer training and one-one-one sessions in areas such as quality and environmental management systems, cost control, and market diversification. To locate your nearest center, please visit: www.nist.gov/mep I would also like to invite you to visit www.manufacturing.gov, which is a web-site devoted to U.S. manufacturing issues and it offers a number of resources to assist manufacturers.
In October 2009, Secretary Lock launched an initiative called CommerceConnect, which assists companies in navigating the various agencies within the Department of Commerce providing businesses assistance. This one-stop-shop integrates Commerce programs to help businesses at every point of their life cycle. A pilot office opened in Plymouth, Michigan, and we have already received positive feedback from Michigan companies.
Also, beginning this summer, I plan to lead a series of “Retooling Road Shows,” to help create and preserve jobs in some of the hardest hit communities around the country. The Road Shows will connect manufacturers with federal programs and services that can help manufacturers retool their facilities to take advantage of opportunities in sectors that are growing or emerging in the 21st century. In addition, we will help link manufacturers to global markets that provide export opportunities. I will keep MEMA posted on the dates and locations for these upcoming events.
Rising healthcare costs have certainly been a burden for the U.S. auto industry and placed our companies at a competitive disadvantage compared to global competitors. I realize there is some skepticism regarding the new healthcare reform. However, a Business Roundtable study last year estimated that if current cost trends continued through 2019, the total cost of employer and employee premiums and out-of-pocket expenses would be 166 percent higher than it is today. Without reform, many U.S. companies would have been forced to decrease or eliminate employee health insurance benefits or subject them to back-breaking costs that would make them less competitive in the global marketplace.
Other federal efforts to assist the industry include the Department of Energy’s loans for automakers, suppliers and startups to retool factories to develop and build more fuel efficient vehicles, as well as job training grants for workers to learn new skills. In addition, the Department of Labor has provided enhanced unemployment benefits as well as job training funds to help displaced workers gain new job skills. Approximately a year ago, Ed Montgomery was appointed as Director for Recovery for Auto Communities and Workers to ensure that the full resources of the federal government are leveraged to assist the workers, communities and regions that rely on our auto industry. This ongoing effort is crucial as many communities are struggling to rebuild and create new jobs.
I know access to credit has been very difficult for suppliers. I hope there have been some improvements since the automakers have made adjustments in their payment schedules and vehicle sales and production schedules have become more stable. Hopefully suppliers are also benefiting from the SBA’s loan programs, and will benefit from the increase in EXIM bank financing. We are currently reviewing recommendations made by our Manufacturing Council for additional financial assistance options and Congress is also considering options.
I would like to thank MEMA again for the opportunity to speak with you this morning. The Department of Commerce considers trade associations, such as MEMA, to be valuable partners. You greatly assist us in getting our message out, and MEMA members have been a valuable source of information regarding the current state and outlook of the parts industry.
I am confident the U.S. automotive industry has the talent and determination to move forward, innovate and remain globally competitive. I look forward to working closely with you in helping the domestic automotive industry and improving the future business environment.
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