Cutting Edge Newsletter™ Special Edition: Public Policy Fly-In 2006
Washington D.C. Events
WMMA Features Dave McCurdy at All-Committee DinnerPublic Policy BriefingWMMA hosted an All-Committee Dinner at the Mayflower Hotel the evening of Monday, February 6, 2006. WMMA members gathered for an evening of food, fun and networking. Members were treated to an overview of the current United States political environment by Dave McCurdy, President, Electronic Industries Alliance, and former U.S. Congressman. Mr. McCurdy addressed current Congressional approval ratings, upcoming Congressional seat openings and 2008 Presidential contenders.
NAM Manufacturer's Fly-In: An OverviewOver an informal lunch on Tuesday, February 7th, WMMA Legislative Counsel John Satagaj briefed members of WMMA and guest association AWFS on the key issues being taken to Capitol Hill the following day. The issues included:
- Research and Development Credit
- Statute of Repose
- Estate Tax Repeal
- Depreciation Bonus
John Satagaj set the tone for member visits to Capitol Hill, which was best summarized in his January 2006 Cutting Edge article, where he stated, "Lets convince Congress they can go home as winners at the end of the second session, if they embrace an action plan that is good for U.S. manufacturers and good for the U.S. economy."
The National Association of Manufacturer's (NAM) held their annual Manufacturer's Fly-In February 7-8, 2006. Manufacturer's representing 17 Council members met with members of Congress and their staff as part of the Fly-In. More than 150 participants attended the two-day event. Before going to Capitol Hill, attendees received a briefing on a variety of issues by NAM President John Engler and members of the NAM's policy staff.
A reception followed, as well as the NAM Manufacturing Alliance Dinner, co-sponsored by WMMA, which featured noted economist Larry Chimerine as the guest speaker. Mr. Chimerine provided NAM and WMMA guests with his 2006 economic outlook.
Legislative Visits
Small Business Gains on Washington, D.C.,by Todd Herzog, therzog@blomand.net
A Report From Capitol HillThe following article was submitted by the author to the CEO Roundtable Column of the Southern Standard, a Tennessee county paper.
On February 6th, I arose at 3 AM to make my fourth annual trip to Washington, DC to call on our three Tennessee Congressmen. My three day trip was part of the Wood Machinery Manufacturers of America (WMMA) Annual DC Fly-In, which coincides (by design) with the annual NAM (National Association of Manufacturers) DC Fly-In program. WMMA and NAM had approximately 150 manufacturing members present, including our firm, Accu-Router, Inc.
The pace in Washington when Congress is in session is hectic, fast paced, almost a "rat race." Everyone is in a hurry to get to the next rendezvous. Aside from calling on the three Congressional offices, I also participated in a WMMA Executive Committee meeting, a WMMA Board meeting, a Monday night dinner with a key NAM executive presentation, a WMMA Education & Scholarship Committee meeting (which I chair), and a joint dinner meeting with NAM Tuesday night with the chief economist for NAM. On February 6th, President Bush introduced the new 2007 fiscal year budget, which received immediate scrutiny and quickly dovetailed into our planned lobbying efforts with our Congressmen meetings.
First, an overview: In the four consecutive annual trips, I had not observed the groundswell of support being favorably directed at U.S. small businesses (firms with 500 or less employees). This has certainly been a lobbying focus for trade associations such as WMMA & NAM. The President's new budget shows significant increases for defense and homeland security spending, while most else was pared. A closer view, however, notes the following:
- A proposed increase in direct expensing for new capital goods spending for small business from $100,000 per year to $200,000 per year. This is not perfect, but a very meaningful start.
- A proposed increase in the R & D tax credit for small business doubling the prior maximum.
- Increased funding for SBIR's - Small Business Innovative Research grants to help small business develop desired new technology.
Other announced plans include Senator Frist's initiatives to encourage tort reform to address the problems with medical malpractice litigation. WMMA & NAM would hope and expect that this basic tort reform would also be relevant to product liability litigation, which also desperately needs reform. There, again, is receptiveness to this, especially for small business. Another announcement is the plan that Senator Frist has to call for a vote in the Senate before summer recess on the permanent repeal of estate tax (due to come back in 2011). There are allegedly not enough votes in the Senate currently for the repeal to be successful, but this vote would be very visible in an important Senate election year where one third of the Senators are up for reelection or replacement. Congress seems very receptive to approving trade associations and other group entities, for example the Chamber of Commerce) to be able to offer group medical insurance plans, a breakthrough especially needed for small businesses with less than 25 employees. We are awaiting a bill to pass to allow this option going forward. Our members were lobbying for this as a high priority. Last, there is a new receptiveness within Congress on the theme of U.S. "competitiveness." There is sensitivity to the need for U.S. competitiveness, including at the small business level.
Another new awareness on my part is the close relationship that Senator Frist and Senator Alexander enjoy on issue collaboration. As Lamar put it, "Senator Frist has the power, but no time, while I have a lot of time." They do collaborate closely. I would believe that would be beneficial for Tennesseans.
I asked a key aide to Senator Frist, "I have not seen the receptivity in favor of small business ever before as I have seen this year. Do you agree that this is reality, and if so, why?" She fully agreed and gave credit to the new NAM President, John Engler, a recent three term governor of Michigan. John Engler has been visible and active in promoting the needs of U.S. manufacturers, particularly small business. She also said that opposing voices were not being heard in D.C.
Is visiting our Tennessee Congressmen difficult? The answer is no. An intended visit must be arranged by appointment in advance with a personal bio presented, along with a listing of what the visitor wants to talk about. The Congressman's scheduler will then most likely assign the most relevant staff person to meet with the visitor. Most of the work is done by the staffers. These are exceptionally bright and talented folks, generally from Tennessee. The process is not difficult.
This year I attended the Tuesday morning Tennessee Delegation breakfast from 8 am to 8:45 am in the Dirksen Senate Building. Senator Frist did not make the breakfast due to the Coretta King funeral in Atlanta, but Senator Alexander did come. He made a series of comments and then did photo-ops with all interested visitors. I took advantage of that as I did last year. Anyone visiting from Tennessee should definitely register for the Delegation breakfast.
My meetings were with John Grant, Legislative Assistant for Senator Alexander, in the Hart Senate Building; Meredith Davis, Legislative Assistant for Senator Frist, also in the Hart Senate Building; and Justin Walling, Legislative Assistant for U.S. Representative Lincoln Davis, in the Cannon House Building. Each meeting involved adequate time to allow for a handout presentation our firm prepared along with questions and dialogue. Senator Alexander and U.S. Representative Lincoln Davis are especially interested in the pending Foreign Trade Zone project for Warren County expected to be approved and ready to go sometime this June. They are particularly interested to see if this action will boost our economic outlook in the short or longer term. I believe it will.
It seems like most of my inner circle ask if this effort is worth it. It was hard going to bed at 8 PM with the Super Bowl on TV. I believe that the effort and resultant potential benefits are additive. I saw Bill Sinclair from Senator Alexander's office, who I had called on in a prior year. He is an extremely bright staff member who remembered my name, company name and where I was from. Accu-Router joined NAM in 2004 through WMMA, and directly joined NAM in 2005. They are an organization on the move. I believe that WMMA and NAM can make a difference in D.C. happenings. It behooves manufacturing owners to get away from the office desk and be heard. Individuals do make a difference in D.C., particularly with a group of equally motivated peers. I say, let's stand up and be counted.
by Peter Perez, perez@carterproducts.com
A First-Timer's ReportWMMA President Peter Perez and WMMA Public Policy Committee Chair Mark Chappell visited Capitol Hill together on Wednesday, February 8, 2006, representing their companies, Carter Products and Alexander Dodds, respectively, as well as the Western Michigan manufacturing contingent. The results of their meetings are outlined below.
1. Senator Carl Levin:
We met with Alison Pascale, Legislative Assistant. We have never been successful in meeting with Senator Levin in his office. Last year we sat at his table at the Michigan Manufacturers' Luncheon and did have a good exchange. Alison is the best legislative assistant we have contacted so far in his office. She was more mature than former aides we have met in Levin's office and was knowledgeable on most issues. She indicated he will support pro-business legislation. She felt the R & D tax credit would be passed. We asked her to explore a simplified flat tax for small business in line with our position papers. She understood the other three issues. I will follow up with her and send along the recent Popkin Innovation Study.2. Senator Debbie Stabenow:
Keith Malmstadt joined us for this and our last meeting. He employs 175 in two plants in Holland, Michigan, manufacturing kitchen cabinet products. He was voted the 2005 "Small Businessman of the Year". Senator Stabenow has a new legislative specialist, Amanda Renteria. Like her predecessor, Darren Elliott (who left to finish his law degree), she came from Senator Dianne Feinstein's office. On the issues, this is the first time we got specific commitments from Senator Stabenow:
- Direct Expensing - Senator Stabenow will vote to extend or increase.
- Death Tax Repeal - Senator Stabenow will not vote for repeal, but she will support an increase in the exemption to $10M. Her comment was that the Democrats have been willing to deal with this issue for awhile, but the Republicans have insisted on full repeal which the Democrats will not agree to.
- R & D Tax Credit - Senator Stabenow thought there already was a bill passed. Senator Stabenow asked us and Amanda to advise if this bill addressed our request for simplification. In any event, Sen. Stabenow said that she will support renewal. We spoke at length about orienting the credit to a simple, annual amount that small business can take advantage of without all the accounting required in the former credit. She said our position made sense and asked Amanda to check into this more thoroughly.
- Statute of Repose - She will support anything reasonable introduced in the Senate. We asked her to sponsor or co-sponsor a Chabot-type bill. She said she was not on that committee and there were others more knowledgeable than she. She also said that she felt the way to enact such legislation was as a part of another bill, rather than as a stand-alone bill.
3. Representative Vernon Ehlers:
We met with Ben Gielow, an attorney who joined Rep. Ehlers' office about six months ago. Normally Rep. Ehlers sees us, but he was only in the office one day due to a conference or caucus elsewhere on Thursday and Friday. It appears Representative Ehlers supports our positions. I will remind him of our direct expensing initiative which we discussed.
br Samantha Hedrick, advertising@baker-online.com
A Fresh Perspective: My First Trip to the HillAt my meetings, in short, everyone was interested in health care. The Senators are currently working on a plan called Associated Health Care. This would enable smaller businesses to group together when getting group insurance to help lower costs. They were all interested in the Statute of Repose and said they would check into it further to see where it is at. Bond's office asked if 12 years was enough or if we would want them to push for more.
None of them seemed aware that smaller businesses are unable to use the R&D credit. They all seemed in favor of it and will hopefully pursue it now. They were in favor of the death tax repeal and for trying to get the depreciation bonus moving. Other topics I discussed were increasing steel prices and foreign companies copying our equipment and selling it back into the states cheaper. They would like me to keep them informed as changes in these situations occur.
I was able to meet with Representative Emerson in person. While my discussions were with Senator Talent's staff member, the Senator made a point to come in before I left and shake my hand and take a picture. I also met with Senator Bond's staff, but did not get to meet him. It is nice to have made contacts within the offices for when situations come up that we would like to see addressed.
by Molly Pappas, mpappas@fernley.com
I am not a long time friend of the Speaker of the House. I do not have a personal relationship with the Democratic Minority Leader. What I do have is the ability to pick up a phone and call my legislator's office, to request some time for my voice to be heard. This was the first action I took when I was encouraged to meet with my legislators, as part of the WMMA Public Policy Fly-In. After all, why would WMMA staff expect anything from our members that we aren't willing to do ourselves?Quite frankly, that was all it took. While I did not have the opportunity to meet with Senator Santorum or Senator Specter directly, my colleague, Bill Norton, and I met with a staff member from each of their offices. Although at 26, I had some years on the legislative aide from Senator Specter's office, we were able to convey the issues confronting our members. We explained why we need their help in bettering U.S. small business, and more specifically, manufacturing.
And you know what? It was a great experience. I do not consider myself an expert on any of the issues WMMA and its members took to the Hill. But knowing I was making a contribution, that I was adding to the manufacturing voice that was being heard that week...it made me proud to work for WMMA.
Industry Information
U.S. Manufacturing Innovation Leadership at RiskFive Clear Warning Signs' Point to Lower Economic Growth, Living Standards
WASHINGTON, D.C., Feb. 1, 2006 -- Downward trends in U.S. manufacturing innovation pose a serious threat to America's long-term economic growth and living standards, according to a new report released today by the Council of Manufacturing Associations (CMA) and The Manufacturing Institute of the National Association of Manufacturers (NAM).
"The manufacturing economy generates a large share of American prosperity," said NAM President John Engler. "America's continuing leadership in innovation and the production of high-value manufactured goods is essential to our nation's long-term economic growth, productivity gains and standard of living. By itself, U.S. manufacturing would be the eighth largest economy in the world, and our nation's manufacturing output is at an all-time high. But America's economic leadership will be at risk if current trends continue. The NAM is advancing pro-growth policies to promote innovation, investment and productivity and ensure a healthy manufacturing economy in the future."
"Our nation can not afford to lose its manufacturing innovation edge and the wealth that it generates throughout our economy," said Jerry Jasinowski, president of The Manufacturing Institute (the research and education arm of the NAM).
"One bright ray of light is U.S. manufacturing's tremendous productivity gains," Jasinowski continued. "U.S. manufacturing productivity has surged 24 percent since the last recession -- 70 percent faster than the average productivity growth following the last five recessions. Strong productivity growth helps America compete in the global economy and is the key to higher wages and better living standards for U.S. workers. Higher productivity growth also allows for lower interest rates as the economy grows faster without generating inflation," Jasinowski said.
The report's author, economist Joel Popkin, stated: "Though the U.S. accounts for 40 percent of all R&D spending in the industrial world, we can not become complacent about this leadership position." "The rapid growth in overseas manufacturing is creating new global centers with the critical mass necessary to build their own innovation machines," Popkin continued.
According to the new report, "five clear warning signs" show that America's innovation process is at risk:
- Manufacturing output since the last recession lags that of earlier economic recoveries - its 15% growth is only half the pace averaged in recoveries of the past half-century.
- Manufacturing capacity remains underutilized, slowing investment in new plants and equipment. Since the last recession, total plant and equipment investment has risen at half the pace averaged in recoveries of the past half-century. Manufacturing capacity has grown at less than 1 percent annually (compared with 5% in the 1990s).
- The U.S. share of global trade in manufactured products has shrunk, falling from 13 percent in the 1990s to 10 percent in 2004. The U.S. now runs a trade deficit in Advanced Technology Products, and the U.S. share of global trade in some of the highest value-added export industries such as machinery and equipment is falling.
- U.S. manufacturing offers rewarding and desirable careers for highly skilled workers. Yet the widespread perception that manufacturing employment is unstable and lacks job opportunities discourages new worker entry. While manufacturing continues to pay better than other industries, the sector is experiencing a broadening shortage of skilled workers.
- America's long-standing leadership in R&D is being challenged. While the U.S. continues to spend more than any other country on R&D investment, U.S. growth in R&D has averaged only about 1% per year in real terms since 2000.
"If the innovation process goes offshore, America will lose much of its capacity to generate wealth and a decline in long-term economic growth is assured," Dr. Popkin said.
"Developing human capital for a high performance workforce must be a top national priority if America is to remain the world's leader in innovation and productivity," Jasinowski went on to say. "The broadening shortage of skilled workers threatens our nation's ability to compete in today's fast-paced and increasingly demanding global economy and will only worsen as the baby boomers retire.
"We need a bold action agenda to develop human capital, revitalize fundamental research and encourage productivity-enhancing investments in order to maintain a critical mass of production and a viable innovation process in this country," he concluded.
WMMA members can view WMMA's Executive Vice President Ken Hutton's comments on the report here.
The new report,"U.S. Manufacturing Innovation at Risk," by Dr. Joel Popkin is available at www.nam.org/Popkinreport.
The Manufacturing Institute is the research and education arm of the NAM. The Council of Manufacturing Associations represents 225 manufacturing trade associations allied with the NAM.