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U.S. Commerce Secretary Gary Locke Delivers Keynote Address to Metropolitan Milwaukee Association of Commerce and Tours Local Manufacturer

Tuesday, April 12, 2011

*Remarks below*

U.S. Commerce Secretary Gary Locke traveled to Milwaukee, Wisc., today and delivered the keynote address to the Metropolitan Milwaukee Association of Commerce, discussing the Obama administration’s strategy to spur job creation, promote innovation and energy independence, help businesses succeed, and position America to win the future by out-innovating, out-educating and out-building our global competition.

Earlier in the day, Locke toured Rexnord Industries, a leading manufacturer of process and motion control and water management products with operations and associates worldwide, and highlighted the importance of exports to strengthening the economic recovery.  He also hosted a roundtable discussion with local small- and medium-sized businesses to hear directly from them about the challenges they are facing and their ideas to encourage the recovery.  Milwaukee Mayor Tom Barrett joined Locke at today’s events.

Locke’s visit to Milwaukee is part of the White House Business Council’s “Winning the Future” outreach effort to local business leaders across the country. He previously addressed the Columbus Chamber of Commerce on February 23, while Under Secretary for International Trade Francisco Sanchez addressed the Dallas Regional Chamber of Commerce on March 8.

See Locke’s remarks from today’s keynote address to the Metropolitan Milwaukee Association of Commerce


Hello, everybody, it’s great to be here today. Thanks to Mayor Tom Barrett, the Metropolitan Milwaukee Association of Commerce and the rest of the chambers who are serving as our hosts.

This time last week I wasn't sure I'd be here, on account of the budget situation in Washington.  But Congress came together.  In the process, they prevented 800,000 Americans from being thrown out of work this week.

That’s critical because it would've been the height of irresponsibility to shut down the government at a time when our economy is showing the most strength since the recession hit over two years ago.

National retail sales just had their strongest quarterly gain since 2001.

Manufacturing activity just hit its highest level since 2004.

Finally, the jobs picture is improving. Since February 2010, the U.S. economy has added private sector jobs every single month, with private employment increasing by 1.8 million jobs.

And this past month's increase of more than 200,000 private sector jobs for the second consecutive month represents the largest such bump since April of last year.

But 8.5 percent unemployment in Wisconsin and 8.8 percent unemployment nationally is no reason to celebrate – not with millions of families still struggling to:

  • Keep a roof over their head;
  • Put food on the table; and
  • Pay the college tuition of their children.

That's why helping American businesses grow and create jobs remains a singular priority of the Obama administration.

At his State of the Union address earlier this year, you heard President Obama explain why.

He said the most important contest our nation faces is not between Democrats and Republicans, but between America and countries around the world that are competing like never before for the jobs and industries of the future.

To win that competition, the president said we’d have to:

  • Out-educate;
  • Out-innovate; and
  • Out-build the rest of the world.

So today, I'd like to talk about how we do it – and how the president's economic agenda will support the ambitious economic development efforts already underway in the Milwaukee region.

This city helped teach America how to make and build things.  Milwaukee innovators helped develop everything from a more-efficient steam boiler to the snowmobile – and those goods were sold around the world through the teeming port on the west shore of Lake Michigan.

Milwaukee has built on this foundation to become a state-of-the-art manufacturing epicenter and a hub of entrepreneurship and innovation.

Today the Milwaukee region is home to a high-tech industry that is among the Midwest’s best, with $2.3 billion in combined payroll from local technology industries. It also ranks among the top five cities in the number of Fortune 500 company headquarters, as a share of the population.

These companies are supported by a thriving research base led by public-private research organizations like the Milwaukee Institute and numerous colleges and universities.

You’re also capitalizing on your natural resources.  Under the leadership of Senator Herb Kohl, Mayor Barrett and countless local partners, you are working to turn Milwaukee into a world-class water research hub and a thriving regional innovation cluster.

The Milwaukee Water Council estimates that this region already generates $10 billion in revenue from freshwater technologies and products like meters, sensors and filters.

You have recognized the cluster’s value, and the Department of Commerce – through its Economic Development Administration – is supporting those efforts with grants to help understand how to create jobs and private investment in this important field.

Milwaukee is also aggressively courting industries of the future, like clean energy.

A few weeks ago, President Obama spoke of the urgency of breaking America’s oil addiction and moving towards cleaner, more efficient domestic sources of energy.

In the last two years we've made huge steps toward that goal with:

  • ground-breaking fuel efficiency standards for cars and trucks;
  • historic investments in electric vehicles and the advanced batteries that power them; and
  • major new investments in next-generation clean energy sources like wind, solar and biofuels; and a national smart grid that can deliver that energy to homes and businesses across America.

And going forward, President Obama has set an ambitious goal of reducing our foreign oil imports by a third over the next decade.

Wisconsin is helping move us in that direction.

Wisconsin’s solar and wind industries are booming, with the number of solar installers in Milwaukee up 250 percent since early 2009. Nearly 90 percent of Wisconsin’s wind capacity has come online since mid-2008, which means a lot of great work has been done in a short period of time.

Wisconsin is also leading the way on biofuels.  In Madison, the Great Lakes Bioenergy Research Center is figuring out new ways to bring down the costs of making these advanced renewable fuels.

All these efforts will do more than simply change our energy consumption. As we recover from this recession, the shift to clean energy has the potential to create scores of new businesses and new jobs – but only if we seize the opportunity.

Wisconsin, to be sure, is doing its part.

But for all its commitment to innovation, Milwaukee has not been immune from the upheaval in the global economy these last few years.

Jobs have been lost.  Factories shut down.

You can point to a lot of reasons why the U.S. economy failed catastrophically in 2008.

But fundamentally, the problem is that America lost sight of our true economic strength:

Innovation.  Technology.  Scientific progress.

America didn't invest enough or invest effectively in research, education, or infrastructure.

We funneled too much capital and too much talent to speculation instead of innovation.

In fact, a 2009 study found that no advanced industrialized economy had done LESS over the last decade to improve its economic competitiveness than the United States.

The upshot was that national job growth in the 2000s was the lowest of any decade stretching back to the 1940s.  That's true even if you stopped measuring BEFORE the recession started.

To rebuild our economy, we can’t rely on the same debt-fueled economic schemes that failed catastrophically in 2008.

Instead, we need to build businesses that create long-lasting economic value.

We need businesses like GE Healthcare Technologies pioneering new medical innovations.

We need companies like:

  • Marshall and Ilsley Corporation financing entrepreneurs; and
  • Businesses like Rockwell Automation developing ideas for breakthrough sustainable energy and integrated systems technologies.

The role of the Obama administration, and of the Commerce Department, is to help increase the odds of these things happening to provide smart incentives, targeted investments and assistance to allow all of you to succeed.

When President Obama says that America needs to win the future, that's a national imperative.

But it won’t be achieved with a single national solution.

Instead, it will be hundreds of regions across America, just like this one, charting their own paths.

Here are just four ways the Obama administration is making that path smoother and more successful.

First, investments in critical infrastructure, because Milwaukee businesses need quality roads, bridges, airports and electric grids to efficiently speed their goods and service across the globe.

Early in the administration, we made the largest new investment in America’s infrastructure since Eisenhower built the interstate highway system in the 1950s.  In Wisconsin alone, the Recovery Act funded:

  • 475 different transportation projects worth $670 million;
  • The creation or improvement of more than 3,800 miles of Wisconsin roads; and
  • Enhancing or replacing 175 bridges statewide.

We made a long-overdue down payment to upgrade old infrastructure, but also to build the infrastructure of the future.

The Recovery Act included funds to help America reach the president’s goal of connecting 98 percent of Americans to high-speed Internet by 2015.

It’s a goal we need to meet if we want:

  • Our kids – no matter where they live – to be able to take online courses from the best universities in the world, or simply courses not available in their high schools and middle schools; and
  • Rural businesses to have the same access to global markets as their counterparts in the cities.

In Wisconsin, the Commerce Department has already awarded grants that will enable local Wisconsin organizations to build about 850 miles of new broadband networks in areas where the private sector was either unwilling or unable to invest.

Just as the federal government might fund a highway that enables local entities to build new roads branching off of it, these Commerce department grants are funding the basic high-speed Internet infrastructure that local Internet service providers will tap into to run lines directly into homes or businesses.

So these federal dollars are bringing millions in additional private capital off the sidelines to expand high-speed Internet in Wisconsin.

Our second effort to smooth your path: Research and Development.

The President’s 2012 budget would increase the nation’s R&D investments as a share of GDP to its highest levels since President Kennedy’s administration.

But the president is also taking steps to get our fiscal house in order.

He has called for a 5-year discretionary domestic spending freeze, saving more than $400 billion and reducing that spending to its lowest level as a share of the economy since President Eisenhower sat in the Oval Office.

And I think it's important to contrast the president’s vision with the one we saw released by the Republican House Budget Committee last week.

Most of the attention last week was given to cuts to Medicare and Medicaid in the budget committee's proposal, and we’ll have plenty of time to debate those.

But what concerns me most as America’s Commerce Secretary is what this proposal does to investments in education, infrastructure and research that are critical to America's economic competitiveness.

Everywhere I've traveled in the world these last few years, I see our competitors like China and India making unprecedented investments in their people, and in the roads, bridges and electric grids that underpin a modern economy.

Go to China and you’ll see them spending 9 percent of their GDP on infrastructure.  In Europe, it’s about 5 percent.  In America, it's 2 percent.

And then you look at a Republican budget that by 2016, would cut the president’s proposed education funding by 36 percent.

It cuts the transportation budget by 41 percent.

Meanwhile, it calls for drastic cuts in energy research at a time when our economic competitors are increasing that research.

And the thing is, these drastic cuts won’t be used to trim the deficit in the next decade.  According to the Congressional Budget Office, most of Republican's proposed spending cuts would go to pay for more tax cuts -- primarily for the wealthy.

It just does not make sense.  We can’t get to fiscal responsibility by shortchanging the very things that lay the foundation our businesses need to innovate and to create jobs.

Consider that much of President Obama’s R&D investments – which the Republicans want to cut – are in areas that are often too risky or expensive for the private sector to take on.

Just since the 1960s, Defense Department and NASA-sponsored research has helped launch or revolutionize:

  • The Semiconductor Industry;
  • Chip design; and
  • The Internet.

So, we’ve simply got to preserve these critical federal investments that ultimately lead to private sector innovation and jobs.

And tomorrow, you're going to hear President Obama give a major speech on how he plans to balance America's books, while preserving the investments that are so necessary to our global economic competitiveness.

Of course, one of the biggest barriers to American competitiveness and innovation in America is our tax system, and that’s the third area the administration is focusing on.

Look at the tax cut package the president signed at the end of last year.

As you’re all aware, that package prevented a big tax increase on middle-class families.

But it also had two significant provisions – insisted on by the president – that will directly help Wisconsin companies and their customers.

Take the new expensing benefit, which will allow companies to write off 100 percent of their machinery and equipment purchases made in 2011 – the largest temporary investment incentive for manufacturers in the history of the United States.

The December tax cut package contained a payroll tax cut that will put even more money in the pockets of millions of Wisconsin workers to drive new business at local companies, stores and restaurants.

For a married couple making $75,000, this cut will mean as much as an additional $1,100 over the taxes they paid last year.

Of course, the measures I’ve described are temporary, and they’re temporary because we need to keep one eye on the long-term deficit as we work to kick-start the recovery.

To make sure we’re in a better position to create the industries and jobs of the future, we need comprehensive reform of our business tax system.

As the President said in the State of the Union, he wants to work with Congress to get rid of the loopholes, level the playing field and use those savings to lower the corporate tax rate for the first time in 25 years without adding to our deficit.

As the administration takes these steps to create a favorable business environment here in America, we’re also working to keep American business competitive all around the world.

Expanding our exports is the fourth and final item I’d like to discuss today.

In a global economy where 95 percent of the world's consumers live outside U.S. borders, you've got to go where the customers are.

The simple fact is that the more American and Wisconsin companies export, the more they produce. The more they produce, the more workers they need. And that means jobs. Good paying jobs here at home.

Consider that exports directly support nearly 10 million U.S. jobs and about 200,000 here in Wisconsin.

And these are good-paying jobs that pay 15 percent more than the typical wage in America, exactly the type of jobs we need a lot more of.

That’s why early last year President Obama announced his National Export Initiative, which mobilizes departments throughout the federal government to help double U.S. exports by 2015 and support millions of jobs.

Although the United States overall is a strong exporter, only one percent of our companies export and of those that do, 58 percent only sell to one market.  We can and must do better.

The Commerce Department has trade specialists here in Milwaukee and in 77 countries around the world, whose sole job is to find buyers and customers for your Made-in-the-USA goods and services.

And agencies like the Export-Import bank can provide you the working capital to produce the goods you want to sell abroad, or guarantee that your foreign buyer will pay you, so you can sleep at night.

So I hope you’ll take advantage of those services.

The Obama administration has been very aggressive in opening up markets for US companies over the last two years, and exports have been a key driver of America's economic recovery.

In 2010, national exports:

  • Grew nearly 17 percent;
  • Reached the second-highest annual total on record; and
  • Contributed to nearly half of all U.S. economic growth.

In Wisconsin, exports of manufactured goods were up 17 percent, to nearly $20 billion.

Now, I know I’ve mentioned a number of different initiatives.  But there's a thread that holds them all together:

They are all designed to empower our businesses to innovate and to hire.

We know government can’t solve all the problems facing our country. What we can do is create smart incentives so that businesses in the Milwaukee area – and all around America – can build something special.

That's how we ensure that U.S. companies compete and win in the global economy.  And that’s what the administration will be focused on like a laser in the year ahead.

Good luck and keep up the great work!