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Remarks to the Council on Competitiveness Executive Board

Tuesday, May 2, 2012

Commerce Deputy Secretary Rebecca Blank
Remarks to the Council on Competitiveness Executive Board

Thank you. I’m looking forward to our discussion.

As you might know, the Commerce Department, working with the National Economic Council, leads the administration’s efforts across the federal government in manufacturing. 

The president himself has been driving home the importance of a strong U.S. manufacturing base. In his State of the Union address, he said that an America Built to Last begins with manufacturing.

Strengthening this sector is essential to our long-term growth. Manufacturing accounts for 90 percent of our patents, 70 percent of private sector R&D, and 60 percent of our exports–including a record $1.3 trillion in goods exported last year.

We have seen strong growth in manufacturing over the past two years. In fact, the manufacturing sector has been leading the recovery.

  • After decades of losing manufacturing jobs, we’ve been adding manufacturing jobs for over two years as we’ve come out of the deep recession of 2008-09. In the past 25 months we added nearly a half million new jobs in manufacturing.
  • 120,000 of those came in the first 3 months of this year.
  • Importantly, these tend to be high-paying jobs with good benefits.  That’s good news for working families.

So the question is: How do we build on this momentum?

I want to thank you for your recent report that came out in December, called “Make: An American Manufacturing Movement.”  Many of the ideas you presented closely parallel the areas where we are focused.

Let me start by mentioning how the federal government can best support manufacturing. As you all know well, effective private sector leadership is very important…but there are a variety of ‘public goods’ that it is difficult for the private sector to provide and where government involvement is deeply important.  For manufacturing this includes:

  • Support for basic R&D;
  • Enforcement of intellectual property rights. We do this at the Department of Commerce through the Patent and Trademark Office;
  • Maintenance of an effective infrastructure, which means not only traditional roads, ports and rails, but also the new infrastructure of satellite communications, high-speed Internet, and modern electrical grids. Now is the time to make the investments needed to modernize America’s aging infrastructure;
  • Assuring an effective workforce. Among its many involvements in education, the Federal government supports graduate student training in the so-called ‘STEM’ fields;
  • Providing the connections and information to U.S.-based companies that allow them to develop an export network around the world. Of course, the International Trade Administration at the Department of Commerce is central to these efforts, with our Foreign Commercial Servce network;
  • Collecting and reporting the economic data that manufacturers use to evaluate markets, locate plants, and to decide on short-run and long-run business plans. Most of this information comes from Commerce, through the Census Bureau or the Bureau of Economic Analysis.

The Department of Commerce recently released a report, “The Competitiveness and Innovative Capacity of the United States,”  that discusses how important these issues are to U.S. competitiveness.

I’d be happy to come back and talk about any of these issues in the discussion. But let me highlight a few of the more recent and innovative things that we’re doing specifically at the Department of Commerce to support manufacturing:

  • We have been particularly concerned with the gaps in the technology transfer process, and how we can help fill them.
  • As many of your know, Commerce has long worked on this issue through its Manufacturing Extension Partnership at the National Institute of Standards and Technology, which supports centers in every state that consult with companies facing technological problems–and put them in touch with scientists and engineers who can help solve those problems. For every dollar of federal investment, the MEP generates around $30 in new sales growth. This translates into $3.6 billion in new sales annually.
  • A year ago, the president launched the Advanced Manufacturing Partnership. At Commerce, we have formed a National Program Office to support the president’s Advanced Manufacturing Partnership–which uses the government’s convening power to bring  together universities, research labs and manufacturers to figure out how to improve the tech transfer process, among other things.
  • Our Patent and Trademark Office is working hard to implement the America Invents Act, passed last September, which is aimed at modernizing the U.S. patent system over the next 2-3 years. This includes efforts to expand PTO resources to ensure that decisions are made more quickly, and to harmonize U.S. patent processes with those around the world.
  • Our International Trade Administration has worked to expand exports as part of the National Export Initiative. For instance, we are running a creative partnership program with UPS and Fed Ex, working with them to identify businesses that might be interested in expanding their exports.
  • Our Economic Development Administration has supported grants for regional clusters that maximize the specific manufacturing strengths in areas around the U.S.
  • And, to ensure that all these efforts are aligned for maximum synergy, the Secretary has created an in-house Manufacturing Policy Task Force.

On a broader scale, the president has called on Congress to reform the corporate tax code and lower the effective rate to 25 percent for manufacturers.

This is something that both Democrats and Republicans should be able to agree on.

In addition, the president’s FY13 budget reflects a substantial investment in U.S. manufacturing.

  • There is $860 million for new investments in advanced manufacturing and more R&D through NIST.
  • The budget also proposes $1 billion for a National Network for Manufacturing Innovation–a partnership between government, universities and the private sector. This will promote the development of breakthrough products and manufacturing technologies–helping ensure that the next generation of products is both invented and made here.

To sum up: The U.S. has not yet lost its economic dominance in the global economy, but there are disturbing signs that show the U.S. losing some of its comparative advantage in areas that are key to our long-term competitiveness. There are important policy actions that need to take place now, in order to assure the U.S. retains its competitive edge in the future.

The Commerce Department is particularly concerned with these issues, and we want to work in partnership with the private sector to make sure that we make the necessary investments in education, in infrastructure and in innovation that will assure our economic leadership. None of us has all the answers, but working together, we can help create the environment for stronger growth, innovation and competitiveness in U.S. manufacturing.

I welcome your questions, suggestions, and input.