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The Cutting Edge™October 2004

Public Policy

On October 5, 2004, WMMA® President Peter Perez was among 20 Grand Rapids businesspeople who had a lunch meeting with Department of Commerce Assistant Secretary of Manufacturing, Al Frink. Secretary Frink met with members of the Manufacturing Council of The Right Place Program, an organization affiliated with the Grand Rapids Chamber of Commerce. The meeting was productive and enlightening for both sides, and WMMA® stands to have a voice within the Department of Commerce (DOC) due to our new relationship.

In order to give Sec. Frink some background information on WMMA®, Mr. Perez prepared the following letter and enclosed WMMA®'s position papers on the legislative issues that matter to members - Association Health Insurance Plans; Chinese Currency Devaluation; Cost of Health Care; Depreciation Bonus; Direct Expensing; Estate Tax Repeal; High Productivity Investment Act; Legal Liability Reform; The Corporate & Individual Alternative Minimum Tax (AMT); Statute of Repose; FSC/ETI Bill & EU Retaliatory Tariff; and MEP.

Dear Secretary Frink: I am writing you as the volunteer President of the Wood Machinery Manufacturers of America (WMMA®), a group of 229 member companies with operations in almost every state. All 229 member companies also belong to the National Association of Manufacturers (NAM). I also am President and owner of a small manufacturing business, Carter Products Co., located in Grand Rapids for 75 years. WMMA® is pleased that President Bush and this administration have recognized the importance of manufacturing to the U.S. economy by creating this new office and appointing you. There is much work to be done. Enclosed are brief position papers on issues of importance to our organization. All of these items relate to allowing U.S. manufacturing to survive and thrive. We ask that you and the Manufacturing Council actively support the positions outlined in each of these documents. There are two matters of immediate importance. First, we seek passage of the FSC/ETI bill. The EU retaliatory tariffs now stand at 12% due to the inaction of Congress. Our member companies have told us how these tariffs have hurt their export business. The inaction of our elected officials on this matter is inexcusable. The second matter is the need to expand, not just restore, MEP funding. This is one of the few government programs that actually benefit small and mid-sized businesses. All at WMMA® wish you well as you begin your important work representing U.S. manufacturers. We stand ready to assist you in any way we can. Cordially yours, Peter M. Perez President, Wood Machinery Manufacturers of America Cc: Fred Keller, Chairman and CEO, Cascade Engineering

Mr. Perez prepared the following summary of his meeting with the Grand Rapids group and Secretary Frink. This report will be beneficial to all WMMA® members in knowing the position of the DOC at this time:

Sec. Frink has been on the job three weeks. His background is diverse. Most recently, he headed a carpet manufacturing company in California. He has a degree in tool and die, is an avid amateur woodworker who knows his tools, and a person who aspires to learn more about cooking when he retires. He started his company with an SBA loan. As he said, in the carpet business, either you are the low price producer (and eventually go out of business or are bought) or you create value and differentiate your company. He selected the latter approach and his company won an SBA award last year.

Some brief observations/comments:

1. He referenced NAM several times, admitting that without their help (and the help of other associations) he probably would not have been sworn in as a recess appointment. He cited the NAM study that U.S. manufacturers face structural costs 22% higher than competitors outside the U.S.
2. He admitted the task is formidable, but it was so when he started his business. He created a unique marketing brand for his company and believes he can apply his marketing skills to this job to make government more aware of the needs of manufacturing. While some wanted this position at the cabinet level, he feels he can accomplish more as assistant secretary as he is a bit "under the radar" and not on call to represent the administration position on all matters. His job will be to get manufacturing related legislation moving when it stalls (he cited energy policy) and create more visibility for our agenda.
3. His department has 300 people. I was impressed that he spent 5 hours personally writing each employee as a way to ensure they knew that a new man was on the job.
4. He is beginning to realize that our educational system is broken. The perception is "don't go into manufacturing -it's a dead-end career". In fact, today manufacturing requires very specialized skills which our high schools and colleges are not providing. He now sees that the future of education is vital to successful U.S. manufacturing.
5. Secretary Evans went around the country holding 20 roundtables. The result of this effort was a report on Manufacturing that outlined the issues. (Click here to view). It is Sec. Frink's job to work on these issues and get changes implemented. The Department of Commerce Manufacturing Council (an advisory group, not an advocacy group) will assist him in developing the solutions and prioritizing the issues. My good friend and CEO of Cascade Engineering, Fred Keller, is one of 13 on the Council. Others include the CEO of Caterpillar, COO of Ford Motor, CEO of Kennametal and others from smaller companies. Encouragingly, they met in Grand Rapids in June, again in Pittsburgh September 21, and three subcommittees have issued reports already. These reports were e-mailed to all above earlier. Sec. Evans attended both the June and September meetings.
6. As he travels and speaks, he will champion "best practices", hoping to be a conduit between successful companies and those needing help.
7. On the issue of the election and the potential of change of administration, he hopes it will not happen as he believes the message on manufacturing is starting to "get through". He also speculated that the second four years of a Presidency can be very productive and if Bush is re-elected, he intends to deliver on the manufacturing agenda. But if the administration does change, he believes this new manufacturing initiative has staying power. He plans to stay through January to help his successor and bring him up to speed.
8. When I spoke with Sec. Frink, I told him WMMA® welcomed his appointment and our organization stood ready to assist him in any way we could.

To learn more about The Department of Commerce's other initiatives in the manufacturing sector, click here.

Table of Contents
Sales Forecasting Statistics - Q3 2004 - Members Only
Recap of Association Meetings, October 18 - 20, 2004
More on the U.S. Job Market
Health Savings Accounts
WMMA®: Establishes Relationship with Department of Commerce Assistant Secretary of Manufacturing & Services
Foreign Buyers Program on a Roll
WMMA® Member Companies Continue to Benefit from University Students
CE Certification News for WMMA® Members
Sales Leads for Your Business - Members Only
WIC 2005 Hotel Safe after Hurricanes
Get to Know the WMMA® Management Team Working for You