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Remarks at the 2011 Columbus Chamber of Commerce Annual Meeting, Columbus, Ohio

Wednesday, February 23, 2011

Commerce Secretary Gary Locke
Remarks at the 2011 Columbus Chamber of Commerce Annual Meeting, Columbus, Ohio

Jack, thank you for the invitation to address your Chamber membership.

We're fortunate to meet here today with the American and Central Ohio economy showing strength unseen since the recession hit over two years ago. 

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

And private sector employment grew every single month in 2010 – over one million jobs total – with the manufacturing sector posting its first increase in annual employment since 1997.  

Here in central Ohio, unemployment actually fell to 7.7 percent in December 2010, down from 9.3 percent from the year before. 

So  suspect there's a bit more optimism in this audience then there was at this gathering last year.

But eight percent unemployment in central Ohio and 9-plus 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 a few weeks ago, 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

Today, I'd like to talk about how we do it – and how the president's economic agenda will help support the ambitious economic development effort already underway in the Columbus region. 

Of course, many leaders of that effort are here today. 

The Columbus Chamber, the Columbus Partnership, Ohio State and hundreds of other community leaders have come together to launch Columbus 2020 – a decade long plan to identify and capitalize on central Ohio's unique strengths.

Those strengths are considerable.

15 Fortune 1000 companies call Central Ohio home, as do 26 colleges and universities and the Battelle Memorial Institute, the world's largest private research organization.

All the potential is here for Columbus to be an international hub of innovation and entrepreneurship. 

But it hasn't happened, not yet.

The last decade has seen a lot of old industries and the jobs they supported wither:

  • In Columbus;
  • In Ohio; and
  • Throughout America.

In fact, 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.

You can point to a lot of reasons why this happened, but fundamentally, the problem is that America lost sight of our true economic strength: innovation, technology, scientific progress.

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

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

In fact, a much-cited study out in the last few years, found that no advanced industrialized economy had done less over the last decade to improve its economic competitiveness than the United States. 

To rebuild our economy, we can’t just bring back the same debt-fueled economic engine that failed catastrophically in 2008. 

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

We need businesses like Cardinal Health pioneering new biotechnologies.

We need Huntington financing entrepreneurs with ideas for breakthrough energy or information technologies.

We need Mettler helping businesses and research labs of every shape and size become more efficient, more productive and more precise.

We need Ohio State and Batelle churning out research that entrepreneurs can turn into viable business, products and ultimately jobs.

The role of the Obama administration, 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 path. 

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

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

At the outset of this administration, we made the largest new investment in America’s infrastructure since Eisenhower built an interstate highway system in the 1950s.  In Ohio alone, these investments funded:

  • The improvement of 977 miles of Ohio roads and bridges; and
  • 336 different wastewater improvement projects

492 different transportation projects, worth over $1.1 billion, were funded in Ohio thanks to Recovery Act investments.

This was a long overdue down payment to upgrade old infrastructure, and to build the infrastructure of the future. 

The Recovery Act included funds to help America eventually 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 to be able to take online courses from the best universities in the world; and
  • Rural businesses to have the same access to global markets as their counterparts in the cities.

In Ohio, the Commerce Department has already awarded grants that will enable local Ohio organizations to build over 3,700 miles of new high-speed Internet infrastructure and upgrade 4,700 miles more. 

This funding will directly connect some 2,300 community anchor institutions like libraries, public safety facilities and universities.

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

So these federal dollars are bringing millions in additional private capital off the sidelines.

Our second effort to smooth your path: research and development. 

Under the Obama administration, there is more funding, with a stronger focus on the R&D’s commercial potential.

And we are working to develop a better system for getting these innovations into the marketplace.

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.

It's important to note that even as we make these investments in critical priorities like infrastructure and R&D, the president is also taking steps to get our fiscal house in order. 

He has called for a 5-year non-security discretionary 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.

But as we make these cuts, we have to ensure we’re not cutting the things that spur the creation of new jobs and businesses.

For example, much of our R&D investments 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;
  • Aeronautics,
  • The Internet; and
  • Satellite communications like GPS.

Much of that research has been conducted through universities and private research labs like Ohio State and Batelle.

In fact, Battelle has worked with Commerce’s National Oceanic and Atmospheric Administration to develop an instrument to measure carbon dioxide in the ocean. 

Businesses, fishermen and the oil and gas industry are now using the technology to monitor the changing chemistry of our seas.

Despite this success, I know the Columbus 2020 team has identified technology commercialization as an area that needs improvement.

We agree!

This is a nationwide problem. 

That’s why over the past year, the Commerce Department has been convening business and university leaders from around the country to develop best practices for commercialization. 

One critical part of that process is improving the U.S. patent system. 

When I joined the Commerce Department, our U.S. Patent and Trade Office had an 800,000-application backlog and an average three-year waiting period for evaluations.

That was simply unacceptable, and aggressive reforms are underway.

Our Patent Office has developed a new, more flexible process for approving patents that responds to the different timelines of different innovators.

Applicants can now seek a fast-tracked 12-month examination for a cost-recovery-based fee. 

So, a technology entrepreneur with a product ready to go to market who needs VC funding can get her patent within 12 months, while an entrepreneur who has a more embryonic idea can opt for a slower and cheaper approval track.   

Overall, this new system will bring the most valuable patents – as determined by inventors – to market faster, and will help shrink the backlog by catering to the business needs of innovators.

Of course, one of the biggest incentives and disincentives for innovation in America is our tax system, and that’s the third area where I think the administration is making solid progress.

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 significant provisions that will directly help Columbus companies, and others across America.

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

I was in Cleveland yesterday speaking to small business owners at an event with the president, and the CEO of a company called Great Lakes Towing – a tugboat maker – was just one of the executives who said he’ll be immediately taking advantage of this new provision.  

The expensing measure will do more than just help companies like Great Lakes Towing.

It will create demand for new equipment, and that will mean new factory orders for companies in Ohio and across the country. And new factory orders mean companies will need to hire more workers to meet new demand.

In the same way, the December tax cut package contained a payroll tax cut that will put even more money in the pockets of five million Ohio workers.

For a family married couple making $75,000, this cut will mean as much as an additional $1,100 over the tax relief they already received last year from the middle-class tax cuts we passed at the outset of the administration.  

As Ohio families bring home a little more in their paychecks every month, they’ll be able to spend a little more on the things they’ve maybe had to put off during the recession. And that will drive more business to local restaurants and stores, and soon, some of them will need to hire more people to keep up with the new business.

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.

But 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, Congress must act 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 more favorable business environment here in America, we’re working to help American businesses compete all around the world.

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

Of course it's important to sell more within the United States.  But 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 Ohio 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 over 350,000 jobs here in Ohio.

Or that one in three manufacturing jobs and almost one in five agricultural jobs are tied directly to exports. 

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.

Now, whether we reach that goal will be determined by businesses just like the ones in this room.  These are your goods and services being sold – the best in the world -- and the quality will speak for itself in the global marketplace. 

But plenty of U.S. businesses need assistance:

  • Getting working capital to produce the goods you want to sell abroad; or
  • Making the necessary contacts in foreign countries

The Commerce Department has trade specialists here in Columbus, across the country, 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 I hope you will take advantage of those services.

Meanwhile, the Obama administration is moving forward aggressively to open up new markets.

We are very excited about the imminent free-trade agreement between South Korea and the United States, which gives our companies freer access to the 12th largest economy in the world. 

Our team over at the U.S. Trade Representative drove a tough bargain, and the deal is expected to increase annual exports of American goods and services to Korea by up to $11 billion a year.

In Ohio, companies making everything from machinery and chemicals to computer products and transportation equipment will benefit with tariffs lowered or even eliminated in many areas.

Remember that in the wake of the free trade agreement with Chile, Ohio's exports to that country grew by 142 percent.  The Singapore free trade agreement led to a 84 percent increase.

We are hoping to see similar success with the Korea deal.

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, Exports:

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

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 grow and to hire.

We know government can’t solve all the problems facing our country. What we can do is help lay a foundation for growth and create smart incentives for businesses in Columbus and around America to build something special on top of that foundation.

That's how we ensure that US 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.

Thank you again for having me.