Are President Obama’s Manufacturing Efforts Working?

Dave Johnson

President Obama talked and took questions about manufacturing at TechShop Pittsburgh Tuesday. He touted his efforts to boost manufacturing and even showed off his DODOcase on his iPad because the DODOcase prototype was developed at a TechShop.

The president’s talk was delivered at “a community-based workshop and prototyping studio on a mission to democratize access to the tools of innovation.” TechShop gives space and tools for inventors and entrepreneurs to build prototypes to see if their ideas work. (Wednesday the President hosts the first White House “Maker Faire.”)

The president began by emphasizing ways that his administration has worked to boost manufacturing. “We’ve made enormous progress over the last several years in revitalizing American manufacturing.”

“We’ve got at this point 620,000 manufacturing jobs that have been created over the last several years,” he said. “Companies instead of outsourcing are now thinking about insourcing once again. We’ve seen entrepreneurship in manufacturing increase at the fastest pace in over 20 years.”

The president said that he wanted “more people to remember what it is that made us an economic superpower in the first place. It wasn’t just the financial sector and the parts of the economy that have become dominant today.”

The president talked about the administration’s efforts to create manufacturing hubs where the idea is to start building a local ecosystem where inventors, academics, investors, suppliers and other components “all of whom start focusing and becoming experts on developing industries of the future” are nurtured.

After a number of questions the president closed by saying that manufacturing is doing better than at any time in the last 20 years. There are more startups, and large manufacturers who had moved overseas are starting to bring manufacturing back, partly because energy costs are lower here than in many places in the world.

“Infrastructure didn’t used to be partisan.”

The president said that Republicans in Congress are holding up the country’s economy by refusing to pass even the most basic things the country needs to be doing, such as maintaining our infrastructure.

What is inhibiting us is we are not maximizing policies that would give manufacturing a boost. We have $2 trillion of deferred maintenance on roads, bridges, water systems, etc. All of that would be a huge boost and those jobs can’t be exported.

The fact that Congress has not been willing to take me up on my proposal to aggressively fund infrastructure right now makes no sense. It would boost jobs and the spinoffs would be enormous. There are steps we can be taking that would accelerate what we are doing. But this requires Congress breaking out of this mentality that says if I propose it, we aren’t going to do it.

Infrastructure didn’t used to be partisan. Research and development didn’t used to be partisan. We used to make sure we had the best university system in the world and that it was accessible, but kids these days come out with $25.000-$30,000 worth of debt. We can do something about that.

I want everybody to feel optimistic and hopeful about the future of manufacturing, entrepreneurship, the economy but I want everybody to pay attention to the debates taking place in Washington. We’ve got one party that just decides we want to just say no to things. They are looking at the next election instead of the next generation.

Innovative Materials Initiative

At the same time the administration announced an initiative to deliver $150 million to a public/private partnership to speed up the development of innovative materials with promising commercial applications. Five federal agencies – the
National Science Foundation, Department of Defense, Department of Energy, NASA, and
Commerce Department’s National Institute of Standards and Technology (NIST) – will spend $150 million supporting the Material Genome Initiative, a public/private partnership designed to speed up the development of innovative materials.

Just a few of the components of this materials initiative include:

  • NIST is forming a Center of Excellence on Advanced Materials.
  • The University of Wisconsin, Madison, and the Georgia Institute of Technology are creating new Institutes in materials innovation. The University of Michigan is investing an additional $20 million in existing MGI programs. The three universities are launching together a nationwide materials innovation accelerator network.
  • Harvard University and IBM are releasing a freely available and open database describing 2.3 million new materials for potential use in solar cells.

They also announced an effort to provide inventors and entrepreneurs with easier access to high-tech equipment at more than 700 research and development facilities like the Department of Energy’s Manufacturing Demonstration Facility at Oak Ridge National Laboratory in Tennessee.

Finally, the White House released a report, “Making in America: U.S. Manufacturing Entrepreneurship and Innovation,” that “demonstrates how new game-changing technologies are reducing the cost, increasing the speed, and making it easier for entrepreneurs and manufacturers to translate new ideas into products Made in America. These new technologies are already having an impact, with the growth rate in manufacturing entrepreneurship at its fastest pace in over 20 years.”

Has the President Really Boosted Manufacturing?

The President is to be commended for his focus on manufacturing. He displayed a clear understanding of the importance of manufacturing to the economy as well as a clear grasp of the issues involved in boosting manufacturing. His administration has made several proposals that, if passed, would boost manufacturing. He has used executive power to launch minor initiatives, like manufacturing hubs.

However, he stated that “620,000 manufacturing jobs … have been created over the last several years.” During the 2012 campaign he promised to create 1 million manufacturing jobs in his second term and the Alliance for American Manufacturing’s #AAMeter Jobs Tracker shows a total of 134,000 so far.

While the Obama administration has done a lot, it has not done the one most important thing: address currency manipulation. The Treasury department could do this at any time but is being kept from acting. This is likely because, first, the administration has an interest in not confronting China in order to gain cooperation over problems like North Korea, and second, on the other side of this are the giant multinational corporations that gain from the lower costs that currency manipulation gives items manufactured in China.

The stakes here are very high for our economy. The Economic Policy Institute (EPI) estimates that doing this one thing would restore “up to 5.8 million new jobs, reduce our trade deficits by up to $500 billion per year by 2015 and increase U.S. gross domestic product by up to $720 billion per year.” The Treasury Department could and should declare that China and other countries are manipulating their currencies, and this would trigger tariffs and other methods to address the damage this is doing.

Next we need to address trade issues. As a result of trade deals that favor the companies that want to reduce costs by moving jobs out of the country we are running an enormous, humongous trade deficit. This drains our economy of jobs and cash. We must create the political pressure that will cause elected officials to push efforts to bring trade into balance.

Next, a true national effort to boost American manufacturing requires the kind of national policy effort that can only be accomplished through Congress. Democrats have been pushing a comprehensive package of bills with their “Make It In America” plan. House Democrats just announced an additional 23 updated bills to address today’s realities. House Republican leaders have failed to allow “Make It In America” bills to even come to the floor for votes. Last October Senate Democrats introduced a package of 40 bills in their own “Manufacturing Jobs for America” Initiative.

AAM has a comprehensive “Blueprint for the Future” manufacturing plan that lays out what is needed to truly boost manufacturing inside the U.S. We must restore the manufacturing ecosystem of production, suppliers, expertise, R&D, investment, education, energy supplies, tax structure and the rest of what is needed to accomplish that, or we will continue to lose vital industries, and the jobs and wealth they bring us.

Of course, as President Obama said, just maintaining and modernizing our infrastructure – so badly needed – would provide a huge boost not only to jobs and manufacturing today but from now on. According to the American Society of Civil Engineers 2013 Infrastructure Report Card we have fallen more than $3.6 trillion behind in what is needed just to get our infrastructure back to normal. If we attached “Buy America” provisions to the supplies needed to do that, we would provide a significant boost to American manufacturing.

Get updates in your inbox

Comments