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Remarks to New Policy Institute/NDN

Thursday, May 10, 2012

Commerce Deputy Secretary Rebecca Blank
Remarks to New Policy Institute/NDN

Thank you all, and thanks to Simon (Rosenberg) and Rob (Shapiro) for inviting me here today. The work that NDN does to advance our understanding of everything from mobile technology to global economics is crucial.

Manufacturing, of course, has been a powerful part of America’s economy since the Industrial Revolution. In fact, one of the reasons I’m standing here today is because—over a century ago—America’s manufacturers petitioned Congress to create a Cabinet agency to promote U.S. businesses and their products.

Fast forward to today. Over the past two years, we have seen the resurgence of a national discussion on American manufacturing. And there’s good reason for that.

After a decade of losing manufacturing jobs, manufacturing has been growing since the end of the recent deep recession. We’ve gained nearly half a million manufacturing jobs in the last two years. Manufacturing growth is playing a strong role in driving our economic recovery.

Manufacturing is a key sector. It is the source of good jobs. The Commerce Department just released a report called, The Benefits of Manufacturing Jobs, showing that manufacturing workers earn pay and benefits about 17 percent higher than other workers.

And don’t forget the other strengths of manufacturing: The manufacturing industry is at the center of innovation and research, responsible for 70 percent of our private sector R&D and 90 percent of our patents; manufacturing also add to economic growth by selling American goods abroad. 6Sixty percent of our exports come from manufacturing.  

So consensus is forming around the fact that there is an inextricable link between our ability to produce and our ability to innovate, compete and create jobs.

We all know that the private sector has to be smart and innovative for U.S. manufacturing to do well. And the government can help create an environment in which American manufacturers can compete and grow. I’d like to outline a few of the smart steps that are important to support manufacturing in America today.
1.  Tax Code Incentives: First, as the President emphasized yesterday, our manufacturers deserve tax policies that work for them. We need to give our best job creators—small businesses—a tax credit when they hire workers or increase wages. We also need to renew tax breaks that help our clean energy firms stay on the cutting-edge – and help prevent those firms from having to lay off workers. And, of course, we need to build on the momentum we are seeing with insourcing. For a variety of reasons— from increased productivity of U.S. workers to higher labor costs abroad—we’re seeing more and more CEOs choose to build their next plant and hire workers here at home. To accelerate that, the president called on Congress to stop rewarding companies that ship jobs overseas—and start rewarding those who bring jobs back with a 20 percent tax credit for moving expenses.

Just as important, in the long term, it’s clearly time to reform our corporate tax code overall.

The president has laid out a plan that would drop our tax rate from 35 percent to 28 percent with an effective rate of 25 percent for manufacturers.

2.  U.S. Investment and Insourcing: Making our corporate tax rates more competitive would help the U.S. attract more foreign direct investment, which is a top priority for the Commerce Department. That’s why we are building a new initiative called SelectUSA, which puts the Federal government to work attracting investment in the U.S. Among other things, our Commerce foreign commercial service officers in 25 fast-growing overseas markets are providing foreign investors with more information and tools they need to invest in the U.S.

In sum, we can’t leave any jobs on the table. We want American manufacturers to keep jobs here. And we want to help American workers prove that they can be a strong part of any international manufacturing team.

3.  Exports: After we’ve built it here, we need to sell it everywhere. May is World Trade Month, and it’s never been more important for us to empower manufacturers to start, sustain or increase exports. As you may know, the Commerce Department plays a key role in helping exporters through trade missions, advocacy, and more.  

In 2009, the president announced the National Export Initiative, with a goal of doubling our exports in five years, by 2014.  In 2011, we had a record of $2.1 trillion in U.S. exports. Nearly $1.3 trillion of that was manufactured goods.

The new U.S.-Korea trade agreement helps this effort. Nearly 80 percent of our goods to Korea now enter that country duty-free. That’s important because Korea imports $250 billion worth of goods each year. And next Tuesday, the new Colombia trade agreement goes into effect.  More than 80 percent of our tariffs on goods to Colombia will be eliminated, helping create thousands more jobs.

Today, we announced that exports in the first quarter were up over 8 percent from the same period in 2011.

However, it’s clear that American exports are facing difficult economic conditions abroad, particularly Europe, so it’s critical that we spread the news about opportunities in fast-growing markets like Korea and Columbia, but also Brazil, India and China.  We’re doing just that at the Commerce Department.  

4.  Research: Manufacturing is an engine for innovation. This industry sector employs the majority of our scientists and engineers and holds the majority of our patents.  

Every industrialized country in the world provides major public support to research and development, helping Universities and labs create the basic ideas that will drive applied research forward.  

In the U.S., our support for R&D has lagged. The president has set a goal of doubling the budgets for programs that support basic research, including our labs in Commerce at the National Institute of Standards and Technology.

Also, his 2013 budget includes $2.2 billion (a 19 percent increase) in R&D for advanced manufacturing, the sector of manufacturing that utilizes the latest technology in productions and product development.

At Commerce, this will support NIST scientists and engineers who work in cutting-edge fields like flexible electronics, robotics, and biomanufacturing. We need to make sure that NIST continues to make discoveries that bolster our manufacturing sector and improve our daily lives.

5.  Education: To complement investments in research, we also need strong education and training for the next generation of workers who will take those innovations and put them to work in the economy. More than ever, we need the right people with the right skills to fill the thousands of good jobs that are open—right now—in areas such as advanced manufacturing.

STEM education—overall—is particularly important. However, in recent years, only about 13 percent of U.S. college graduates got STEM degrees. That is much lower than the 25 percent receiving STEM degrees in other countries like Korea and Germany. The president’s new budget requests an increase of about 3 percent to roughly $3 billion in support STEM programs nationwide.  

In particular, I think we need to focus on three things: We need to ensure that women and minorities have stronger paths to STEM degrees. We need to “staple” green cards to the STEM degrees of foreign students who have job offers here and who can help us drive innovation. And—as the president has said repeatedly—we must do everything possible to ensure that student loan interest rates don’t double for 7.5 million students on July 1.

Finally, it’s becoming clearer each day that regional growth and innovation strategies are crucial to increasing our competitiveness.

Already, our Manufacturing Extension Partnership helps small manufacturers find partners and customers, integrate into supply chains, and connect with scientists and engineers who can help solve their technology challenges. For every dollar of federal investment, the MEP generates $30 in new sales growth. Promoting industry clusters is an important regional strategy. Over the past few years, we’ve focused on assisting different regions of the country build on their unique strengths and assets.

Next week, we will announce a call for proposals to support regional industry clusters specifically in advanced manufacturing—through a competition called the Jobs and Innovation Accelerator Challenge. Importantly, these funds are not targeted to create clusters, per se. Instead, we want to give a boost to existing clusters that have already formed organically in their community and which show potential to drive innovation and create good jobs. Stay tuned.

In closing, manufacturing is—and must continue to be—one of the pillars of America’s long-term competitiveness. Earlier this year, the Commerce Department released a report on American competitiveness.  It analyzed our country’s overall competitiveness. One of the key findings was that a flourishing manufacturing sector would be crucial to our nation’s continued growth and prosperity. That report noted that America still dominates the world economy, but that there are some warning signs about our long-term competitive position. We need smart and good policy in place to assure that America remains a world leader in a global economy.

The good news is that we have a moment, particularly in manufacturing, where we can reestablish our lead. A growing number of studies from across the business spectrum that say that America looks more and more like the best place  to invest, the future of U.S. manufacturing is indeed getting even brighter.

This is clearly the right time to think about how we foster an environment that will allow manufacturing communities across the country step up their growth and their job creation.

Together—as the president has said—we can ensure that hardworking Americans can find work making things and selling them all over the world—stamped with three proud words: Made in America.