The National Association of Manufacturers

The National Association of Manufacturers

Leading Innovation. Creating Opportunity. Pursuing Progress.

CONTENTS

5 CAPITAL CONNECTION

6 MANUFACTURING SUMMIT FOCUS

7 ECONOMIC ANALYSIS

8 MANUFACTURING SUMMIT FOCUS

10 MEMBER FOCUS

Elections in the Spotlight

Closing the Skills Gap

Slowing Exports Threaten to Zap Manufacturing Growth

Embracing an “All of the Above” Energy Strategy

Finding Skilled Workforce Crucial for Ryko Solutions

MEMBER FOCUS

CHAIR OF THE BOARD

VICE CHAIR OF THE BOARD

CHAIR, SMALL AND MEDIUM MANUFACTURERS

PRESIDENT AND CEO

SENIOR VICE PRESIDENT, MEMBER AND BOARD RELATIONS

SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER

SENIOR VICE PRESIDENT, EXTERNAL AFFAIRS

SENIOR VICE PRESIDENT, POLICY AND GOVERNMENT RELATIONS

SENIOR VICE PRESIDENT, STRATEGIC DEVELOPMENT

SENIOR VICE PRESIDENT, COMMUNICATIONS

VICE PRESIDENT, MEMBERSHIP MARKETING

DIRECTOR, PUBLICATIONS, AND MANAGING EDITOR

CREATIVE DIRECTOR

MANAGER, BRANDING AND MULTIMEDIA

Member Focus is published monthly by the National Association of Manufacturers.

© 2012 NAM. All rights reserved. Reproduction is prohibited except with the written permission of the NAM. Periodicals postage pending at Washington, D.C.

Postmaster: Send address changes to NAM Member Focus, attn: Marcie Cox, National Association of Manufacturers, 733 10th Street, NW, Suite 700, Washington, DC 20001. Phone: (202) 637-3000. Fax: (202) 637-3182. Website: www.nam.org.

Printed on Anthem ®, 80 lb. gloss cover and 70 lb. gloss text, from NewPage. Manufactured in North America.

Mary Andringa

Douglas R. Oberhelman

Kellie Johnson

Jay Timmons

Ann E. Heins

Rick Klein

Ned Monroe

Aric Newhouse

Jeff Pierce

Erin Streeter

J. Cliff Johnson, III

Clare James Johnson

Pam Lind

Ronni Hutchason

COPYEDITOR Kevin Mullooly

MANUFACTURING SUMMIT FOCUS:

Leading on Tax Reform (p.9)

MANUFACTURERS CONVERGE ON CAPITOL HILL:NAM’s Manufacturing Summit (p.2)

July 2012 1Connect with us on the web @ www.nam.org/ConnectWithUs

Trade and Exports Bring Rare Unity to WashingtonBy Jay Timmons, president and CEO, National Association of Manufacturers

In six months, the 112th Congress will conclude. It will not be remembered as a

productive legislative session.Of course, Congress has time to redeem

itself. It still needs to address the “fiscal abyss” approaching at year’s end. When the funding for government operations expires this fall, Congress will have to agree on a budget for fiscal year 2013, or else risk a government shutdown.

So there’s significant business ahead, but the general consensus is that the House and Senate have failed to meet the American people’s expectations. Polling confirms it. Four out of five Americans think Congress isn’t doing its job. Some commentators have even called it the “worst Congress ever”—but that’s going a bit far.

In fact, there have been legislative victories during the current Congress that directly benefit manufacturing. These breakthroughs have a common theme: they involve international trade.

For the first time in six years, Congress approved new free trade agreements. These pacts with Colombia, Panama and South Korea extend manufacturers’ reach into these markets and make Ameri-can-made products more affordable for consumers in those countries.

These agreements earned support from Republicans and Democrats alike. For all the talk of partisanship bogging down Washington, they cleared the House and Senate by wide margins. President Obama, who opposed the last successful free trade measure when he served in the Senate, enthusiastically supported these three agreements.

Then, just recently, broad majorities

renewed the charters of the Export-Import (Ex-Im) Bank, a vital tool manufacturers use to reach new markets—yet another bipartisan achievement.

At a time when even routine “good government” bills are languishing on Capitol Hill, measures to promote trade and exports are winning the support of both Republicans and Democrats.

Manufacturers have had a significant role in each of these victories. After all, trade is vitally important to our industry. Manufactured goods make up 60 percent of all U.S. exports of goods and services.

And exports are increasingly important

fifth of U.S. exports go to Europe, so an economic crisis there could have a sig-nificant impact on manufacturers in the United States. We can blunt some of that impact by providing manufacturers with access to new markets.

In the short term, Congress needs to take advantage of the bipartisan support for trade and exports by passing a miscellaneous tariff bill and approving permanent normal trade relations with Russia. The Administration should also conclude its negotiations on the Trans-Pacific Partnership.

Longer term, the United States needs to

for small and medium-sized manufactur-ers, who played a key role in our advocacy efforts on the Ex-Im Bank. When smaller manufacturers highlighted the importance of the Ex-Im Bank to their businesses, members of Congress got the message loud and clear.

My hope is that the recent victories on trade and exports signify a larger trend. On Capitol Hill, there’s a growing realization that the United States has no choice but to extend its reach into global markets. The vast majority of the world’s consumers—95 percent—lives outside this country, so reaching these potential buyers is critical to any compa-ny’s growth strategy. Moreover, economic turmoil across the globe requires a strong, pro-growth export strategy. Roughly one-

negotiate new trade agreements. We are already exceptionally open to trade; many other countries are not. Bringing down trade barriers works to our advantage, and doing so will make the United States a more competitive place to manufacture.

MANUFACTURING MATTERS

At a time when even routine ‘good government’ bills are languishing on Capitol Hill, measures to promote trade and exports are winning the support of both Republicans and Democrats.”

2 MEMBERFOCUS

Manufacturers Converge on Capitol Hill at the NAM’s Manufacturing SummitLast month, manufacturers from across the United States came to Washington ready to fight the policy battles that grip our industry during the National Association of Manufacturers’ (NAM) 2012 Manufacturing Summit. Hundreds of manufacturers converged on Capitol Hill for a two-day, action-packed fly-in to meet with lawmakers and call for policies that will ensure job creation, boost the economy and enable global competitiveness.

This year’s Summit centered on energy regulations, tax reform and skills gap issues. Proposed energy regulations are overreaching, which would cause com-panies to lose vital capital, close their doors and shed hundreds of thousands of jobs in the process. Proposed high tax rates, set to take effect in the beginning of next year, would constrain productivity and stifle economic growth. And despite high unemployment rates, 600,000 manu-facturing jobs remain unfilled because of a skills gap in the workforce. The skills manufacturers need are misaligned to the skills that prospective employees possess.

According to June’s NAM/Industry Week Survey of Manufacturers, 64 per-cent of manufacturers cite an unfavorable business climate as their number-one business challenge. Nearly 46 percent of respondents said attracting and retaining a quality workforce was a problem for them.

All these issues hit close to home for manufacturers, and in more than 200 meetings with lawmakers, manufacturers called for the approval of the Keystone XL pipeline, progress on shale gas devel-opment, lower corporate and individual tax rates and other key priorities. (This month’s Member Focus takes an in-depth look at energy regulations, tax reform and the skills gap.)

Before dispatching manufacturers to Capitol Hill, NAM President and CEO Jay Timmons told attendees that their presence is a testament to their commit-ment to the future of manufacturing. “You can make a difference in determining whether this country continues to tread water or whether we move forward with bold, pro-growth agendas,” he said. “You are the face of an industry that everyone is talking about.”

NAM Board Chair Mary Andringa,

president and CEO of Vermeer Corpora-tion; NAM Board Vice Chair Doug Ober-helman, chairman and CEO of Caterpillar Inc.; SMM Group Chair Kellie Johnson, president of Ace Clearwater Enterprises; and SMM Group Vice Chair Al Lubrano, president of Materion Technical Materi-als, each gave personal experiences of the importance of advocating for manufactur-ing and that every manufacturer’s voice makes a difference.

“Making our voices heard loud and clear is the way we’re going to advance our agenda,” said Johnson.

House Majority Whip Kevin McCarthy (R-CA) and Minority Whip Steny Hoyer (D-MD) addressed manufacturers. Rep. McCarthy stressed the importance of the oil industry to our country’s future, adding that the United States holds more than half of the world’s oil shale resources. He also emphasized the importance of an “all of the above” energy policy focused on the exploration of shale gas resources and building the Keystone XL pipeline.

Rep. Hoyer spoke to manufacturers on the Democrats’ “Make It in America” agenda, a plan to encourage businesses to make products and innovate in the United States, lower taxes, strengthen our infrastructure and invest in education and job training programs. “‘Make It in America’ is a bold plan; it will lay the groundwork for U.S. manufacturing to remain strong for years to come,” said Rep. Hoyer. “Manufacturing is a bright spot in our recovery. We must continue to add jobs. Our best strategy for job creation is investing in the manufacturing sector.”

Sen. Bob Corker (R-TN) also spoke to Summit attendees, saying that manufac-turing is vital to the overall economy. He has firsthand experience in the manufac-turing sector. Before starting a career in

politics, Sen. Corker worked for several years as a construction superintendent and started his own construction com-pany with $8,000. “The most prized area of business activity in this country is manufacturing,” he said.

He called for a pro-growth tax reform linked to entitlement reform. He said Congress must simplify the tax code and eliminate the $1.2 trillion in tax expenditures. He also mentioned that frustration levels are running high on both sides of the aisle and said Congress needs to come together and work on policies that will grow the economy and break the gridlock that persists in Wash-ington. While he’s optimistic that both sides can come together on issues, work still needs to be done.

Timmons agreed. “Too often, policy debates get mired in petty partisanship and political gamesmanship. Our nation is facing serious challenges. It’s no wonder Americans are fed up with Washington.”

Our government choosing politics over policy is only part of the problem for manufacturing in this country. Sen. Corker and Reps. McCarthy and Hoyer encouraged manufacturers to talk with members of Congress about the budget deficit. “When on Capitol Hill, please convey the sense of urgency to Congress on getting a handle of their finances,” said Rep. Hoyer. Added Sen. Corker, “We need to put to bed the fiscal issue.”

Manufacturers played a significant role in telling members of Congress to imple-ment pro-jobs, pro-growth policies. But our work is far from over. In this election year, action is more critical than ever, and Congress needs to act on a number of key pieces of legislation. Congress needs to reduce the corporate tax rate to 25 percent or lower and place the United States on a

Photos by: David Bohrer/NAM

July 2012 3Learn more on the web @ www.nam.org/summit

level playing field with its competition; extend the current tax rates on dividends, capital gains and small and medium-sized manufacturers; and renew and strengthen the R&D tax credit. Congress must strike down the EPA’s overreaching proposals, such as the New Source Performance Standards for greenhouse gas emissions and the Utility MACT rule. And it’s imperative that Congress passes the AMERICA Works Act, which will improve and strengthen federal training programs for people looking for a career in manufacturing.

By working with our members of Congress on these and other key issues that affect manufacturers the most, we can spur the economic growth and prosperity that will lead us to a manufacturing renaissance.

Tiffany N. Adams is vice president for public affairs

Sen. Scott Brown (R-MA) met with manufacturers at the NAM’s Manufacturing Summit to talk about energy regulations, tax reform and the skills gap. More than 400 manufacturers came to Washington to advocate for pro-growth, pro-business policies.

House Minority Whip Steny Hoyer (D-MD) said, “Manufacturing is a bright spot in our recovery. We must continue to add jobs. Our best strategy for job creation is investing in the manufacturing sector.”

4 MEMBERFOCUS

During the Summit, House Budget Committee Chairman Paul Ryan (R-WI) sat down with the NAM’s Executive Committee to discuss the looming corporate and individual tax increases slated for the end of the year.

House Majority Whip Kevin McCarthy (R-CA) emphasized the importance of an “all of the above” energy strategy that allows manufacturers to remain competitive in the global marketplace.

Sen. Bob Corker (R-TN) asked Summit attendees to call for pro-growth tax reform in their meetings with lawmakers and agreed that Congress must simplify the tax code.

2012 Manufacturing Summit Highlights

Photos by: David Bohrer/NAM

July 2012 5Learn more on the web @ www.namelectioncenter.org

Elections in the Spotlight

With only a few months until the November elections, the national

spotlight is shining squarely on manu-facturing. And why not? Manufacturing continues to outpace every other sector in terms of economic growth.

Policymakers and candidates run-ning for office are all talking about manufacturing. The President mentioned

Unless Congress acts, proposed tax increases slated for the end of the year will cripple manufacturers’ competitiveness and economic growth.”

manufacturing policy 15 times in his State of the Union Address to Congress and con-tinues to highlight our industry as he seeks re-election. And at the recent National Association of Manufacturers’ (NAM) Manufacturing Summit, House Majority Whip Kevin McCarthy (R-CA), Minority Whip Steny Hoyer (D-MD) and Sen. Bob Corker (R-TN) all agreed that a healthy and robust manufacturing sector is vital in continuing to lead the United States out of the recession.

There is much at stake this election year. Unless Congress acts, proposed tax increases slated for the end of the year will cripple manufacturers’ competi-tiveness and economic growth. Energy overregulation will prevent manufacturers from utilizing all of our nation’s energy resources and increase energy costs. While manufacturers are working to close the skills gap, many manufacturing jobs continue to go unfilled due to a lack of skilled talent. If manufacturing is going to continue to lead the economic recovery, we need pro-growth, pro-busi-ness policies.

The 2012 Democratic and Republican National Conventions are right around the corner, where the presidential nominees will lay out their respective policy frame-works. In addition, voters will elect 435 U.S. representatives, 33 U.S. senators, 11 governors and countless state and local leaders. As these candidates hit the cam-paign trail, there’s no doubt about it—

manufacturing will be front and center of their proposed agendas.

Rarely does an industry have center stage on its top issues the way manufac-turing does right now. This is an historic opportunity for NAM members, as 12 million men and women who work in manufacturing will see candidates for government office all across the country debate our top priorities. We must capital-ize on this focus to promote our legislative platform. As manufacturers, we are on the verge of a manufacturing renaissance, but changes in government policies, regu-lations and proposed legislation that hinder job growth, economic prosperity and global competitiveness must be made. That’s why we need your help—now.

With all the positive momentum and only a few months until the elections, it is critical to begin engaging with your employees and implementing educational efforts and programs so that they are well informed when they cast their ballots.

Visit the NAM’s Election Center at www.namelectioncenter.org to find useful resources and information to help you get

started. Three non-partisan activities can help you get your employees ready for Election Day.

First, members of Congress will be home in August for recess and in full cam-paign mode. This is a great opportunity to invite elected officials and candidates to your facility for a tour, give them the chance to meet your employees and

CAPITAL CONNECTIONwith Ned Monroe, senior vice president, external affairs

discuss the issues that are at the forefront of policy debates.

Second, provide easy-to-find election resources for your employees. Set up a page on your company’s intranet or employee-only website to promote voter participation and organize voter registra-tion drives. Provide your employees links to websites, such as the NAM’s Election Center, for information on voter regis-tration, absentee ballots and locations of polling places.

Third, publish articles in company and plant publications explaining the company’s priority legislative issues. Let employees know how these issues affect the company’s future. Include all candidates’ positions, as well as the incum-bents’ records on these issues.

The debates are heating up, and much is at stake for manufacturers in Amer-ica. Are you ready? More importantly, are your employees ready? Time is running out. Visit www.namelection-center.org and increase your employee participation today.

6 MEMBERFOCUS

Manufacturing Summit Focus: Closing the Skills Gap

Despite high unemployment, 600,000 skilled positions remain unfilled. How can this be the case? The skills gap.

There is a significant gap between the talent manufacturers need to grow and develop their business and the skills their prospective employees possess. Many potential employees do not have the train-ing and education manufacturers require to do a job. A lack of skilled workers makes it nearly impossible for companies to develop new products, implement new processes, hit productivity targets, keep up with customer demand, satisfy cus-tomers, or grow both domestically and internally. With manufacturing driv-ing the nation’s economy, the skills gap threatens to derail our recovery.

In late 2011, the Manufacturing Institute and Deloitte released Boiling Point? The Skills Gap in U.S. Manufacturing. The report showed that 67 percent of manufac-turers have moderate to severe shortages of available, qualified workers, with 56 percent anticipating the shortages to grow worse.

That’s why manufacturers took to Capitol Hill during the NAM’s Manufac-turing Summit last month to advocate for policies and resources to support industry-recognized certifications. With produc-tion lines becoming more streamlined and processes more automated, manufacturers

need to be more technology savvy than in the past. Technicians and opera-tors are simply not up to speed on the latest innovations in machinery and equipment. Entry-level positions go unfilled because applicants do not have the proper technical training and lack adequate problem-solving, math, reading and writing skills. As more and more employees reach retirement age, find-ing younger talent to replace them is increasingly difficult.

“Manufacturing will never run at full capacity if we don’t have skilled work-ers,” said NAM President and CEO Jay Timmons.

The Manufacturing Institute, an affiliate of the NAM, recognized the need for a standard certification program that addresses the deficits in manufacturing education and training. The Institute created the NAM-Endorsed Manufactur-ing Skills Certification System—a set of credentials that identifies and validates the skills manufacturers deem necessary to enter, be productive and to succeed in the manufacturing sector. The Institute works with high schools, community colleges and manufacturing companies to create education programs that deliver these certifications and provide hands-on experience that will better prepare applicants looking for a career in

manufacturing. In 2011, the Institute set a five-year goal to award 500,000 industry-based credentials to individuals; so far, almost 85,000 certifications have been earned.

NAM Board Chair Mary Andringa, president and CEO of Vermeer Corpo-ration, sees the struggles of a skills gap firsthand at her company. Sometimes she pushes back on her human resources department if she feels HR is being too picky in forwarding qualified candidates’ resumes, but in fact, finding qualified candidates is akin to looking for a needle in a haystack.

“Today’s manufacturing is not your dad’s manufacturing,” Andringa said in comments addressing manufacturers at the Manufacturing Summit. “We need different skills.”

Employers, like Andringa, need to know they are hiring the right people with the right skills for the right jobs; however, that’s easier said than done. The Institute’s Manufacturing Skills Certification Pro-gram goes a long way to help close the skills gap and ensure graduates applying for entry-level manufacturing jobs are qualified to do the work, but we need Con-gress’s help. Sen. Kay Hagan (D-NC) and Reps. Joe Donnelly (D-IN) and Todd Platts (R-PA) created the AMERICA Works Act to help improve and strengthen existing federal funds and training programs to prioritize nationally portable, industry-recognized certifications. We need Con-gress to pass the legislation to ensure our country continues to close the skills gap and fill job openings.

A skills gap can and will cripple the manufacturing sector in the United States. Ensuring our graduates have the skill set they need to succeed in manufacturing will be the key to have the workforce that the 21st century requires.

Joe Trauger is vice president for human resources policy

POLICY FOCUS

With unemployment hovering between 8 and 9 percent, it seems unfathomable that hundreds of thousands of jobs could go vacant in any sector of our economy. However, that’s exactly what’s happening in manufacturing.

July 2012 7Learn more on the web @ www.shopfloor.org

with Chad Moutray, chief economist

Slowing Exports Threaten to Zap Manufacturing Growth

Exports have been a significant source of growth for manufacturers and

the economy. Overall manufactured goods exports continue to grow, fueling expansion and additional employment for our businesses. According to the Interna-tional Trade Administration, 5,080 jobs are supported by every $1 billion in exports. In 2012, the United States is poised to surpass $1.3 trillion in manufactured goods exports, assuming current trends hold. This would be a record level, and it is a testament to American competitiveness.

Yet, the pace of export growth has slowed considerably this year. The ongoing crisis in Europe has weakened our second-largest trading partner, which purchased more than $285 billion in manufactured exports in 2011. (Exports to our largest market, North America, were $428 billion last year.) Recent data show that other economies beyond Europe are also slowing, including important trading partners in both Asia and South America. This threatens to zap our economic growth, with exports expanding at a much slower rate. In the first quarter of this year, net exports provided a slight drag on real GDP, with U.S. demand for imports outstripping the demand for our products overseas.

Indeed, the latest international trade data show declining goods exports glob-ally, with decreases not limited to Europe. Year-to-date export data for 2012 are also instructive. The table on this page shows data on the growth rates of manufac-tured goods exports for our top 10 trading partners. Looking at year-to-date data, exports in the first quarter of 2012 are up 10.6 percent over the level seen in the first three months of 2011, with nearly $330 billion in manufactured goods exports. This is below the rates observed in the past two years, something that is consistent in

almost all of the countries listed, with the exception of Germany.

Digging deeper into the data, dura-ble goods exports grew by 11.8 per-cent in the first quarter, totaling $216.9 billion. Nondurables were up 8.5 percent to $113.1 billion, with the pace of growth for nondurable goods exports outpacing durables in Canada, China and the Neth-erlands. Worldwide, the sectors with the greatest exports include transportation equipment ($59.7 billion), computer and electronic products ($50.1 billion), chemi-cals ($49.2 billion), machinery ($41.1 billion), petroleum and coal products ($26.2 billion) and primary metals ($20.5 billion). It is not a coincidence that these same sectors have also seen the greatest growth in U.S. employment in the past couple of years, with international trade helping to drive growth for many of these companies.

Yet, comparing the growth rates between the first quarters of 2011 and 2012, export growth has slowed in most of the top manufacturing sectors. There

are some exceptions, most notably in transportation equipment and petroleum and coal products.

U.S. manufacturers need for the global economy to strengthen so that they can continue to be a source of optimism in the current and future environment. With exports representing a significant oppor-tunity for businesses to grow, leaders in the manufacturing community will be looking for the current trends to reverse in order to make their growth targets. Europe’s struggles are a large source of the current anxieties, but other headwinds are also slowing growth. It will be important for policymakers worldwide to do what they can to reduce these uncertainties and provide new impetuses for global GDP to expand. Manufacturers and their employ-ees are counting on it.

ECONOMIC ANALYSIS

GROWTH RATES OF TOP MANUFACTURED GOODS AND EXPORTS TRADING PARTNERSYEAR-TO-DATE 2010 to YEAR-TO-DATE 2012

(Total Manufactured Goods Exports in Calendar Year 2011 in Parentheses)

Source: International Trade Administration, with year-to-date through the first quarter of 2012 and comparable years

World ($1.28 trillion)

Canada ($250.88 billion)

Mexico ($177.13 billion)

China ($71.28 billion)

Japan ($52.28 billion)

United Kingdom ($48.88 billion)

Germany ($44.07 billion)

Brazil ($39.20 billion)

Netherlands ($37.68 billion)

South Korea ($34.33 billion)

Hong Kong ($33.05 billion)

% YTD 2010 % YTD 2011 % YTD 2012

19.92

24.07

28.33

51.63

14.97

4.82

1.87

30.49

-5.68

67.58

28.20

16.81

16.53

22.72

14.32

8.36

4.17

2.47

22.74

25.88

2.54

43.79

10.62

7.21

16.18

4.31

11.73

19.24

4.71

8.20

2.41

16.49

12.52

8 MEMBERFOCUS

Manufacturing Summit Focus: Embracing an “All of the Above” Energy Strategy

This leaves manufacturers scratching their heads as to why President Obama rejected the Keystone XL project back in January, especially after the Administra-tion reviewed the environmental impact of the pipeline for more than three years and concluded that no major risks stand in the way of building it.

The pipeline would transport crude oil from Canada’s oil sands and U.S. domes-tic crude oil from the Bakken formation in North Dakota and Montana to U.S. refiner-ies on the Gulf Coast. The pipeline would give manufacturers the access to afford-able energy supplies that will provide the United States with the energy security we need. Keystone XL would create 20,000 manufacturing and construction jobs and 118,000 related jobs.

The Keystone project isn’t the only place where the Obama Administration has embraced a “some of the above” ener-gy strategy. The proposed Environmental Protection Agency (EPA) Utility MACT regulation—the most expensive regula-tion the EPA ever imposed—would place strict limits on emissions from power plants and require power plants to be shut down,

modified or replaced, causing electricity prices to skyrocket and costing hundreds of thousands of jobs. In addition, the EPA’s New Source Performance Standards for greenhouse gas emissions would require new coal-fueled power plants to be built with technology that is not yet commer-cially available and will be very expensive to deploy.

The Administration also has proposed new regulations on shale gas development, even though the states already effectively oversee and regulate the drilling process. This takes an “all of the above” energy supply off the table.

An affordable and plentiful energy supply means jobs and economic growth. In an op-ed in the Capitol Hill newspa-per Roll Call, NAM Board Chair Mary Andringa, president and CEO of Vermeer Corporation, and NAM Board Vice Chair Doug Oberhelman, chairman and CEO of Caterpillar Inc., echoed this sentiment. “Without reliable energy, manufacturers, who use one-third of the energy produced in the United States, will face obstacles in competing with our rivals abroad.”

A “some of the above” energy policy is not going to get us where we need to be. On their visits to Capitol Hill with members of Congress during the Sum-mit, manufacturers told lawmakers that overregulation hurts their ability to boost economic growth and ensure our energy security. The President needs to sign legislation to begin construction of the Keystone XL pipeline, the EPA needs to stop proposing overly stringent regulations that stifle energy produc-tion and growth, and Congress needs to enact policies that ensure our global competitiveness.

Ross Eisenberg is vice president for public affairs

POLICY FOCUS

On March 15, President Obama delivered remarks on energy at Prince Georges Community College in Largo, Md. “We can’t have an energy strategy for the last century that traps us in the past,” he said.

“We need an energy strategy for the future—an ‘all of the above’ strategy for the 21st century that develops every source of American-made energy.”

Manufacturers across the United States couldn’t agree more. But actions speak louder than words, and so far, the Obama Administration has come up short.

“Manufacturers use one-third of the energy produced in the United States,” said National Association of Manufac-turers (NAM) President and CEO Jay Timmons in opening remarks at the NAM’s 2012 Manufacturing Summit. “Affordable and reliable energy supplies are critical to our nation’s competitiveness.”

Energy was a hot topic at the Manufac-turing Summit. Sen. Bob Corker (R-TN) spoke on the critical need to embrace all forms of U.S. energy and free enterprise.

House Majority Whip Kevin McCar-thy (R-CA) stressed the importance of exploring domestically available resourc-es as well as increasing the amount of oil that comes to the United States from Canada. “The United States has six times the amount of oil than Saudi Arabia,” Rep. McCarthy said.

July 2012 9Learn more on the web @ www.nam.org/tax

Manufacturing Summit Focus: Leading on Tax Reform

That’s why tax policy was a hot topic and at the forefront of discussions at last month’s National Association of Manufac-turers’ (NAM) Manufacturing Summit.

The numbers are alarming. As of Janu-ary 1, absent congressional action, about $500 billion in tax increases will hit the U.S. economy. As part of this “fiscal abyss” the top tax rate on dividends will almost triple from 15 percent to more than 43 percent, and the top tax rate on capi-tal gains will increase from 15 percent to nearly 24 percent. In addition, many small and medium-sized manufacturers will see their top marginal tax rate climb to more than 40 percent. Because nearly 70 percent of manufacturers file taxes at individual rates, tax increases will have a disproportionate impact on these small businesses and their ability to hire, invest and compete.

The present situation is just as bleak. The U.S. corporate tax rate is now the highest in the developed world. While it has been stuck at 35 percent for the past 20 years, the distance between the United States and its trading partners has grown exponentially. It is 20 percent more expen-

sive to manufacture in our country than it is for our major trading partners. Why? Our trading partners have steadily low-ered their tax rates while the United States has stood still. This cost differential will continue to place a stranglehold on manu-facturers’ ability to compete globally.

Let’s not forget that Congress has dragged its feet on renewing the R&D tax credit, which expired for the 15th time at the end of 2011. The lack of this incentive dis-courages innovation, hampers new prod-uct development and decreases productiv-ity. Manufacturers support a strengthened and permanent R&D credit that will be available for an entire project, which is typically 5–10 years for manufacturers.

“Our tax system is uncompetitive,” said NAM President and CEO Jay Timmons at the Manufacturing Summit. “It’s time for Congress to approve pro-growth cor-porate tax reform, but it can’t stop there. Let’s also fix our broken individual tax system and stop the tax increases on small and medium-sized manufacturers that are coming at the stroke of midnight on December 31.”

In comments to manufacturers at the

Summit, Sen. Bob Corker (R-TN) stressed the need for pro-growth tax reform while restructuring entitlements like Social Security and Medicare. Eliminating the tax loopholes and lowering taxes in general will set the course for manufac-turing to prosper and continue to lead the country in its recovery. The challenge, however, is for both sides of the political aisle to come together.

Both sides need to stop the stubborn partisanship and personal agendas that are commonplace within our govern-ment and work on policies that will spur growth and prosperity in our economy. Extend the current tax rate on capital gains and dividends beyond 2012. Sup-port current legislation to make perma-nent the current lower tax rates for small and medium-sized manufacturers. Lower the corporate tax rate to 25 percent or less, putting us more in line with our competi-tors and allowing for greater investment in our country. Renew and strengthen the expired R&D tax credit to continue to foster innovation and growth in our economy.

It’s time for Congress to step up to the plate and play ball. Manufacturers need a home run on tax reform if manufacturing will, in fact, continue to lead our nation’s recovery.

Dorothy Coleman is vice president for public affairs

POLICY FOCUS

Our nation’s outdated tax policies, including a host of expired and expiring tax provisions, create massive uncertainty for manufacturers and make it very difficult for them to effectively compete in a global economy.

What can Congress do to address this problem?

What is the importance of manufac-turing to your local community?

I had several very productive meetings with folks on Capitol Hill. I can’t imagine how much time it would have taken on my part or my staff’s part to arrange those meetings if we didn’t have the help of the NAM. I met with Sen. Tom Harkin (D-IA) on the importance of finding and developing skilled workers to fill vacant positions and conquering the tax increases that loom at the end of the year. I also met with Reps. Leonard Boswell (D-IA) and Tom Latham (R-IA) to discuss tax, energy and workforce issues. It was important that lawmakers hear the story of how their policies affect me and my company—and for me to tell them how they can help ensure that manu-facturing continues to be a strong point in our economy.

10 MEMBERFOCUS

Finding Skilled Workforce Crucial for Ryko SolutionsSteven L’Heureux is CEO, president and board director at Ryko Solutions, Inc., in Grimes, Iowa. Ryko is the largest manufacturer of car wash equipment in North America.

MEMBER FOCUS (MF):

STEVE L’HEUREUX (SL):

You joined the National Association of Manufacturers (NAM) six months ago. What attracted you to the organization?

First, as a small company, we simply don’t have the resources to come to Washington, arrange meetings with lawmakers and have the impact we’d like to have on our own. The NAM helps us with the advocacy process. Second, one of our big objectives to grow our company is to move overseas. To be able to tap into the government’s resources to help us expand is invaluable. Moving to the Mid-dle East, Europe or the Pacific Rim would be a monumental task for us to even find the right people to talk to. The NAM is instrumental in making sure that we not only reach the right people, but that they hear our voice and help us.

MF: You attended your first Manufac-turing Summit last month. What were your thoughts?

SL:

MF: What is the one area affecting your day-to-day operations the most right now?

SL: Finding a skilled workforce. Even though we’re a small company, we’re growing very rapidly. In April 2011, we

MF:

SL: We’re looking for Congress to help us put the right programs in place so that we can attract young people who have the right skill sets to fill the needs we have in the manufacturing marketplace.

MF:

SL: In Iowa, a lot of people understand that agriculture is the number-one busi-ness here, but very few people understand that manufacturing ranks second. We represent about 20 percent of the state’s gross national product, so manufactur-ing is a huge employer and a big part of the economy in Iowa. There’s a renais-sance taking place in the United States. Manufacturing is back. We’re competi-tive, and with the help of Congress, we can make manufacturing a significant and much greater part of our nation’s growth in the future.

had 330 employees, and today we have more than 400. Sales are growing more than 20 percent this year, so we’re looking to continue to add to our organization. However, finding the right people with the right skills and the right commitment to building things and making a difference in the community is challenging as a small manufacturer. Today’s manufacturing operation is not your father’s manufactur-ing operation. Workers need to be more technology savvy. Today’s factories are very sophisticated—it takes very sophis-ticated skills to make a difference on the factory floor.

MEMBER FOCUS

Photo by: David Bohrer/NAM

with Steven L’Heureux, CEO, president and board director

Senate Fails to Save Jobs and Help Manufacturers Invest in the Future

Manufacturers across the United States were disappointed when the Senate failed to stop the Environmental Protection Agency (EPA) from implementing its costly and burdensome Utility MACT regulation last month. Despite bipartisan support, Sen. James Inhofe’s (R-OK) joint resolution of disapproval to overturn the EPA’s regulations for coal-fueled power plants failed. The Utility MACT rule is one of the most expensive regulations ever issued by the EPA. The NAM key voted Sen. Inhofe’s proposal, which would have repealed the rule so that the EPA could propose a more reasonable plan.

“The Senate missed an opportunity to protect manufacturing jobs and promote growth,” said NAM Senior Vice Presi-dent of Policy and Government Relations Aric Newhouse. “Manufacturers will be burdened with the cost of one of the most expensive rules ever issued by the EPA at

The NAM continues to urge Congress and the EPA to write a more sensible regu-lation without increasing energy prices and costing manufacturers jobs. The NAM also will be closely watching wheth-er the Utility MACT regulation is over-turned in federal court and will continue to advocate against the EPA’s broader regu-latory agenda that jeopardizes affordable energy. If manufacturing is to continue to lead the recovery, Congress must stop regulations such as Utility MACT from stifling job creation and economic growth.

a time when they need to be investing in the future and creating jobs.”

The final Utility MACT rule, issued in December, requires many power plants to install emission control technologies in a short compliance time frame. Many power plants will have to shut down, significantly modify or replace opera-tions, threatening electric reliability for manufacturers and costing hundreds of thousands of jobs. When combined with other power plant regulations, 1.65 million jobs across the country will be lost by 2020, and electricity prices for manufacturers in the United States will skyrocket. The rule is expected to cost a total of around $95 billion, 40 percent more than the total cost of all existing EPA Clean Air Act regulations on power plants. These costs will be passed down to both manufacturers and residential consumers.

EVERY VOTE COUNTS.CHECK OUT THE NAM ELECTION CENTER TODAY!

www.nam.org

12 MILLION MANUFACTURING WORKERS

FOR MANUFACTURERS

Learn more on the web @ www.namelectioncenter.org July 2012 11

12 MEMBERFOCUS

From left to right: NAM SMM Group Chair Kellie Johnson, NAM Board Vice Chair Doug Oberhelman, NAM Board Chair Mary Andringa and NAM President and CEO Jay Timmons lead the ribbon-cutting ceremony at the NAM’s new headquarters.

Rep. Ron Kind (D-WI) spoke with members of the NAM’s Tax Forum in June. Rep. Kind sits on the House Ways and Means Committee and led a frank discussion on needed tax reforms.

The NAM has been out in front educating policymakers and the public about the effect of proposed defense cuts. Through the help of NAM Board member Della Williams, president and CEO of Williams-Pyro, Inc., along with the NAM’s Virginia state association partners, numerous national press outlets have highlighted the impact on employment and GDP. The NAM also explained the importance of the defense supply chain to members of Congress and their staffs on Capitol Hill.

NAM in Action

MEMBER FOCUS

Connect With Us

nam.org/facebook

nam.org/twitter

nam.org/linkedin

nam.org/shopfloor

Photos by: David Bohrer/NAM

Howard SosoffPartner414-287-1115hsosoff@bdo.com

John TucciPartner732-750-0900jtucci@bdo.com

Daniel SheaManaging Director310-557-8205 dshea@bdocap.com

© 2012 BDO USA, LLP. All rights reserved. www.bdo.com

The Manufacturing Practice at BDO.One of the United States’ largest industries is supported by BDO’s largest industry group. The Manufacturing & Distribution practice combines accounting, tax, and business advisory with industry prowess. Whether you’re looking to leverage international operations, grow through acquisition, or optimize inventory management systems, BDO stands ready with proactive information and guidance wherever in the world you do business.

“Turns out we’d been under-forecasting.”People who know Manufacturing, know BDO.

Fred RozelleManufacturing & DistributionPractice Leader248-244-6544frozelle@bdo.com

Accountants and Consultantswww.bdo.com/manufacturing

MEMBER SERVICES

Manufacturing is 12.2% of GDP and Adds $1.8 Trillion in Value to the U.S. Economy.