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The Cutting Edge^™ April 2005

Public Policy

Domestic Manufacturers
By John Satagaj, WMMA Legislative Counsel
email@jsatlaw.com

WMMA has worked actively with the National Association of Manufacturers (NAM) to identify a game plan to help domestic manufacturers survive and prosper. An important early step in that process was to identify why domestic manufacturers are having difficulty competing in the world marketplace. The NAM produced a study that demonstrated that external, non-production costs add approximately 22 percent to unit labor costs of U.S. manufacturers (nearly $5 per hour worked) relative to their major foreign competitors, and are the primary competitive challenge facing manufacturers and their workers. The report, "How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness," comprehensively documented these extra costs--corporate tax rates, employee benefits, tort litigation, regulatory compliance and energy--and estimated them at approximately 22 percent of the price of production for U.S. firms relative to our nine most important trade competitors. The external costs are twice the size of the average direct labor costs of U.S. manufacturers, and are a major factor in our loss of trade and jobs.

The next stage in the process was the publication of report by the Department of Commerce that made 63 recommendations for helping U.S. manufacturers. Among the recommendations was the creation of a manufacturing policy "czar." Al Frink, the Assistant Secretary for Manufacturing and Services, has met with WMMA.

Congress, at our behest, passed legislation at the end of last year that provides relief specifically targeted at domestic manufacturing. The more you produce in the U.S., the more tax relief you get. That was a big win for us.

The Administration has now taken another step to bring down that 22 percent differential. The Office of Management and Budget (OMB) has announced that Federal agencies will be taking practical steps to reduce the cost burden on manufacturing firms operating in the United States by acting on 76 public nominations to reform Federal regulations.

" Manufacturers incur a larger share of regulatory costs than other sectors of the economy, and these reforms can be undertaken while retaining the benefits of regulation to consumers, workers and the environment. By reducing the costs of operating businesses in the United States, these reforms help make businesses more productive while protecting American jobs," said Office of Information and Regulatory Affairs (OIRA) Administrator John D. Graham

In February 2004, OMB requested public nominations of rules and guidance documents that could be reformed to reduce the regulatory burden on the manufacturing sector. In December 2004, OMB released for agency review the 189 reform nominations that were submitted by 41 industry and non-profit groups. Of the 189 nominations, 76 were selected by OMB for priority consideration and action by the Bush Administration. The Federal agencies involved are the Departments of Treasury, Agriculture, Commerce, Labor, Health and Human Services, Transportation, and Homeland Security, as well as the Environmental Protection Agency and the Federal Communications Commission. Future actions on these reform nominations range from performing a priority investigation and reporting to OMB in order to determine appropriate next steps, to issuing modernized regulations. The report gives us, in the manufacturing sector, a way to monitor and measure progress.

Among the recommendations is reform of the rules of the Family and Medical Leave Act (FMLA). As more and more employees attempt to take advantage of the law, it has turned into an administrative nightmare. The OMB report recommends reform of almost every aspect of FMLA. Recommendations included: requiring employees to take intermittent leave in one-hour increments; allowing employers to disqualify employees for perfect attendance awards because of FMLA leave; allowing employers 5 days to designate a request as FMLA leave; modifying the definition of "serious health condition"; harmonizing HIPAA, FMLA, and the Americans with Disabilities Act privacy requirements; allowing employers to directly contact health care providers for FMLA determinations; clarifying that employers may substitute paid leave for FMLA leave; modifying penalty provisions specified in the FMLA regulations; and allowing employers to substitute "light duty" for FMLA leave.

Another proposal is to make improvements to the Hazard Communication/Material Safety Data Sheets (MSDS) program. Material Safety Data Sheets should be prepared in a consistent format by chemical suppliers throughout the U.S. A consistent format would allow the regulated community to find information on MSDSs more quickly and therefore save time and money. Additionally, quality of the information provided should be improved to reduce the risk of unintended employee exposure. The plan is for proposed guidance for preparation of MSDSs and an enforcement initiative will be posted on OSHA's website in 2005 and final guidance to be issued in February 2006.

Several of the recommendations are included in the project as the direct result of efforts by some of our customers in the furniture manufacturing industry.

It is amazing how there has been such a "sea of change" in Washington's attitude towards manufacturing. Now if we can convince Congress to give us some relief in the courtroom, we will really be on our way.

Table of Contents
What's Happening in the Secondary Wood Products Industry?
Domestic Manufacturers
International Buyer Program: Reminder: 1st Deadline is April 19!
2005 International Trade Opportunities
May 2005 Continuous Improvement Workshops - Deadline April 20th!