CPAC hits Washington but little talk of manufacturing

An analysis of the Conservative Political Action Conference (CPAC) from Alliance for American Manufacturing (AAM) Media Director Steven Capozzola…

I’ve talked with many domestic U.S. manufacturers over the past decade or so– mostly small and mid-sized manufacturers (the backbone of America’s industrial base). 

One particular manufacturer whom I knew well was the president of a family-owned company that produced printed circuit boards.  His firm had been around since the dawn of the computer age, manufacturing circuit boards for both commercial and military applications.

He used to tell me all the time that his workers and his factory were incredibly efficient and productive.  He would say, “I can compete with anybody in the world…But what’s killing me is China’s currency peg.”

What he meant was that, because China deliberately undervalues its currency (in violation of world trade law), its manufacturers can export goods at an artificially reduced price.  Essentially, my friend’s firm was competing against the full resources of the government of China.

Eventually, my friend had to close his factory.  He was one of the last printed circuit board manufacturers left in the U.S.  Losing his factory meant that the U.S. was now more reliant than ever on obtaining printed circuit boards from China.

I think back to my conversations with him now, after having attended the Conservative Political Action Conference (CPAC) in Washington, DC this week.

Specifically, I’m thinking of Newt Gingrich’s speech yesterday.  In the midst of an address about “changing the trajectory” of the “Republican establishment,” Gingrich started to lay out his vision for transforming the United States.  After a quick aside about the pitfalls of unemployment insurance (“Never again shall we pay somebody 99 weeks for doing nothing”), the former Speaker of the House turned to manufacturing.

Here was his solution for manufacturing:

“Now if we’re serious about manufacturing, we have to eliminate the Environmental Protection Agency, which is a job killing agency.”

When I heard that, I thought back to my friend who manufactured printed circuit boards.  He happens to be a Republican, and a retired Marine officer.  I’d never heard him complain about the EPA.  But I did recall his frequent frustration about China.  He said he believed in free trade, and what China was doing was protectionist.  It was not acceptable, and Congress needed to act.

This is why I find Gingrich’s assertion disheartening.  What he should be saying is: “If we want to get serious about manufacturing, let’s start standing up to China when they violate our trade agreements.  When they illegally dump product, when they illegally subsidize their steel and glass and paper exports with tens of billions of dollars, when they illegally undervalue their currency, let’s enforce the laws we have on the books and say NO MORE.  Rules are rules.  Let’s preserve the free market.”

To be fair, Gingrich did mention China once, at the top of his speech:

“This is not about being revenue neutral, this is about maximizing economic growth to put Americans back to work and to create the most dynamic economy on the planet and to rebuild our manufacturing base, so we can pull away from China and we become once again the dominant country on the planet.”

Along those lines, Gingrich did float one idea that could be helpful to manufacturers, a suggestion about revising U.S. tax law:

“You go to 100 percent expensing, so all new equipment at every level, farmer factory, doctor, business, all of that gets written off in one year.  The goal is to make the American system the most modern, most productive in the world.”

Revisions to tax policy are one of a number of important steps that the Alliance for American Manufacturing (AAM) has outlined in a plan to save U.S. manufacturing.

The only other speech I saw was that of Mitt Romney.  Interestingly, Romney has been talking tough on the campaign trail when it comes to China, threatening to designate them as a “currency manipulator” on day one of his presidency.  However, he only made two passing mentions of China:

“I will approach every spending decision by asking a few important questions: Can we afford it? And, if not, is it worth borrowing money from China to pay for it?… I will cut off funding for the United Nations Population Fund, which supports China’s barbaric One Child Policy.”

Romney never mentioned manufacturing in his speech, an unfortunate omission.  And while it’s timely to cite the issue of U.S. indebtedness to China, it’s ironic that Beijing is mentioned so prominently.  In actual fact, China only owns about 8% of publicly held U.S. debt, which means Beijing possesses far less leverage than is commonly believed.

All in all, it would have been helpful to hear both Gingrich and Romney focus more on manufacturing’s outsized contributions to the U.S. economy, and why (for example) they would push for Buy America policy and much-needed infarstructure investment after taking office as president.

There’s much this country urgently needs to do, and rebuilding U.S. manufacturing should be at the top of the list.

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