News and Analysis
Obama Administration Unveils Manufacturing Policy
At its White House meeting with manufacturers Wednesday, the Obama Administration released its much-anticipated manufacturing policy report.
The report, titled “A Framework for Revitalizing American Manufacturing,” contains a key (and welcome) fundamental assumption: “Overall costs drive manufacturers’ location decisions. In today’s increasingly competitive global marketplace, manufacturing activities will be undertaken by private actors who will locate factories where total all-in cost is lowest.”
The report presents an identification of “cost drivers at each step in the manufacturing process” and “government’s role in each cost driver.” Examined cost drivers are: labor, technology and business practices, equipment, location, transportation, access to markets, and regulation and taxation. A series of corrective actions are proposed for each cost driver.
“Past manufacturing strategies have largely failed,” the report finds. “Two different views have dominated these past approaches. One view was that manufacturing industries needed to be protected and insulated. Not only was this approach ineffective but it also was counterproductive. An alternative view was laissez-faire, cutting critical research and support programs and hoping the market will take care of problems. This approach…threatens to rob us of the potential for greater innovation over future decades.”
The report proposes a middle strategy in which government “must help to create a competitive business climate,” “provide funds to make important investments that increase America’s competitiveness…investments that the private sector is unlikely to make on its own,” and provide “regulatory certainty.”
“What’s important now is that we closely study the report, have a sense of urgency in taking appropriate actions, and hold government accountable for results,” said McGregor.
Ohio Auto Support Council Reports Progress
At a meeting in Columbus this week, the Ohio Auto Support Council, created by executive order of Governor Strickland and co-chaired by OMA President Eric Burkland, presented reports by four work groups within the initiative. The council was established to determine ways to protect and grow the automotive industry and its large, networked supply chain.
Next up in the council’s work is a meeting of its technology work group which will take place at The Ohio State University on Monday, December 21. The technology work group will organize its work in four sub-groups: (1) Cataloging Ohio Technical Assets, (2) Creating an Ohio Technical Network, (3) Global Benchmarking, and (4) Innovation Ideas. The groups will be composed of participants from manufacturing, academia and government-supported labs and intermediaries.
For more information, or to participate in the technology initiative, contact Eric Burkland.
Finally … A Focus on Manufacturing
Finally, a serious national conversation about American manufacturing is taking place, stimulated by industry leaders such as Robert A. McDonald, President and CEO of Procter & Gamble.
In a letter to the White House he writes: “We applaud the Administration’s support of innovation and the investment in basic applied research. Innovation is P&G’s lifeblood… In addition to fostering a favorable innovation environment, we need the right mix of competitive corporate tax policies, trade policies, health care reform, and sensible, science-based regulations that will continue to attract investment and allow us to compete on an equal footing in the U.S. and across the globe with our foreign competitors.”
Reacting to the Obama manufacturing report, Governor Ted Strickland stated in a press release: “The very foundation of America was built by manufacturers and manufacturing workers, and this industry is still the backbone of our national economy.” Strickland called out the need for access to working capital: “Our manufacturers need working capital to meet existing orders and to pay for the retooling and retrofitting necessary to innovate and compete by pursuing new markets, technologies and products.”
U.S. Senator Sherrod Brown in his press release stated: “Manufacturing is critical to the strength of our nation and the future of our middle class. After numerous conversations with President Obama, Vice President Biden, and Senior Counselor on Manufacturing Policy Ron Bloom, I am encouraged that the administration is invested in the future of American manufacturing.”
“We Need Americans to Help Americans”
“America is in trouble today, and we need Americans to help Americans,” said OMA Chairman Jim McGregor, vice chairman of McGregor Metalworking in Springfield at a White House forum on manufacturing on December 16.
McGregor was one of a dozen manufacturing leaders participating in the forum led by Vice President Joe Biden, and moderated by Commerce Secretary Gary Locke, Labor Secretary Hilda Solis, and National Economic Council Director Larry Summers.
The purpose of the meeting was for the Vice President and his team to hear from some of the nation’s leading CEOs, small and medium enterprise owners, labor leaders, and academics about ideas for revitalizing American manufacturing.
McGregor was invited to represent small- and medium-sized manufacturers. He said, “”I am very proud to be here and congratulate the Obama Administration on releasing its Manufacturing Agenda. The proposals we are discussing today must ensure that small manufacturers become more cost-competitive with our overseas competition. We can compete with anyone in the world if we are on a level playing field.”
Other participating manufacturing leaders with Ohio operations were: Robert McDonald, CEO, Procter & Gamble; Robert Keegan, CEO, Goodyear; Daniel DiMicco, CEO, Nucor; John Faraci, CEO, International Paper. Watch the meeting proceedings online here.
Making Your Board More Effective
The American corporate system had been viewed as outperforming the rest of the world in the 1980s and 1990s by being responsive to changing markets with quick decisions by strong CEO management that were overseen by independent directors. However, this structure is currently perceived as ineffective in determining long-term strategic direction, anticipating improbable but high impact events, providing stewardship for the future, and curbing the perceived greed of management. Read more. From OMA Connections Partner, Bricker & Eckler, LLP
OMA Board Elects Alcoa’s Roegner
This week the OMA board of directors elected Eric Roegner, president, Alcoa Forged and Extrusions business unit, Cleveland, Ohio, to a three-year board term.
Eric formerly was president of Alcoa’s Global Hard Allow Extrusions where he had responsibility for Alcoa’s hard alloy extrusion assets in North America, Europe, Korea and Russia. His new role combines continued responsibility for extrusion assets as well as for the company’s forging assets. Eric joined Alcoa in 2006.
Prior to joining Alcoa, Eric had a 12-year career with management consulting firm McKinsey & Company where he was a partner in its Cleveland office. Earlier in his career, Eric held engineering positions with Nordson Corporation and Schlumberger.
Eric has a BSE degree in mechanical and aerospace engineering with a minor in architecture from Princeton University and an MBA from Case Western Reserve.
He lives in Cleveland with his wife and three daughters.
OMA chairman, Jim McGregor, said that, “Eric brings exciting manufacturing experience to the OMA board as well as enthusiasm for working on behalf of the state’s manufacturers. He has hit the ground running. We are pleased and proud to have his service.”
Manufacturers Engage on Radical Labor Agenda
OMA member company Sutphen Corporation hosted a meeting of central Ohio manufacturing leaders to discuss the radical labor threat pending at the federal level. At this fifth employer meeting held to draw attention to Congresswoman Mary Jo Kilroy’s support for the “Employee Free Choice Act” (EFCA), employers learned more about the threat and how to engage to fight it.
Don Keller of Bricker and Eckler provided an update on EFCA and described how recent action by the National Labor Relations Board (NLRB) is particularly worrisome.
“We’re committed to getting health care done… and then we’ll get to the Employee Free Choice Act in the wake of that. I feel very confident that in the wake of health care, you’ll see that we’ll get the Employee Free Choice Act done,” AFL-CIO President Rich Trumka said recently.
New State Regulations of Interest to Food Manufacturers
Manufacturers of commercial livestock feed will be particularly interested in a new fee proposed to cover operating expenses of the board. The inspection fee paid by “first distributors of commercial feed” is increased from $.25 to $.40 (cents) per ton; companies currently exempt from this fee would remain exempt. Legislative approval of the proposal is expected to be fast-tracked.
Separately, food processing manufacturers will want to review the new rule proposed by the Ohio Department of Agriculture to impose a new registration requirement and fee on food manufacturers. Comments provided to the department by the OMA were incorporated into the rule-filing. The new requirement will go into effect by February.
The OMA will be host a webinar for manufacturers to get compliance tips from agriculture department regulators and to ask questions concerning both issues. Click here to make sure we contact you about this January learning event.
Third Frontier Reauthorization Still Under Discussion
The renewal of the Third Frontier Program, credited with a return of $6.6 billion in economic development based on $681 million invested since 2002 and the creation of 41,300 new jobs, is currently under discussion at the General Assembly.
House Democrats have discussed proposals to put a renewal initiative on the May primary ballot. A ballot action is necessary to continue the program.
However, Bill Harris (R-19, Ashland), president of the Ohio Senate, recently questioned the timing of the initiative characterizing the Democrats’ move as “a campaign talking point to the resumes of all who are up for election in 2010 or about pleasing the power elite.” President Harris went on to state that he will support a responsible ballot initiative that he is confident voters will support and that doing so will require more work.
Ohio Department of Development Trade Mission
The Global Markets Division of the Ohio Department of Development invites you to take part in a three-country trade mission to São Paulo, Brazil, Santiago, Chile, and Lima, Peru.
The mission is scheduled April 10-20, 2010. The purpose of this mission is to assist small- to medium-sized companies from states in the Great Lakes region to export their products and services to these rapidly-growing markets. If you are not already active in these markets, or if you are looking to increase your existing market share in this region, now is the time to get involved.