Manufacturing association leaders unimpressed by President Obama’s State of the Union address

Manufacturing Association leaders were generally unimpressed with President Obama's State of the Union address given on Tuesday, Jan. 28. Scott Paul, the outspoken president of the Alliance for American Manufacturing (AAM), based in Washington, D.C., released a statement following the address: "This is the third consecutive State of the Union in which there has been a strong rhetorical focus on manufacturing, and that's welcome. But the progress, despite the rosy picture painted by the President has been painfully flow. And in some cases such as the trade deficit with China, we've seen backsliding."

"The President in many ways absolved past public policies as a reason why there is more economic insecurity and a decline in good, middle-class jobs. He shouldn't have," he said. AAM is a non-profit, non-partisan partnership found in 2007 by some of America's leading manufacturers and the United Steelworkers union, with a goal of strengthening American manufacturing and creating new private-sector jobs through smart public policies.        

The National Federation of Independent Business (NFIB) released a statement on the President's address, noting: "Once again, the President declared the importance of small business during the State of the Union, but quickly followed with proposals that demonstrate he does not understand, or simply disregards, the segment of the economy that historically has generated two-thirds of net new jobs."

William Dunkelberg, chief economist for the NFIB, also commented on the President's address. "The State of the Union address was a chance for President Obama to propose initiatives that would benefit the real engine of the U.S. economy - small business," Dunkelberg said. "Unfortunately, the President again chose to champion big business, special interests, and partisan causes. Small businesses are still climbing out of this recession, and any hope for a steady resumption of solid growth depends on improving the health of this half of the economy."

Dunkelberg stated that failures of President Obama's administration including "championing and corporate-only tax reform scheme (which misses two-thirds of small businesses), a failed health care rollout, and a promise to raise the minimum wage that would escalate unemployment" are hurting the small business sector. "As some point we hope that the President stops stacking the deck against the segment he claims to support," Dunkelberg said.

Jobs are a huge concern, along with skills gap that appears to be impeding hiring for the many jobs that are going unfilled, and something that the AAM is working with its members to address. "Skills and training are crucial to the future success of American manufacturing," said Scott Paul commenting on President Obama's plan to ask Vice President Biden "to lead an across the board reform of America's training programs to make sure they train American's with the skills employers need, and match them to good jobs that need to be filled" immediately. "But a perceived skills gap isn't the reason why American manufacturing is falling behind. It's a jobs gap driven by our expanded trade deficit with China, that's the primary challenge."

Paul noted that on the 29th, President Obama will speak at a U.S. Steel Plant in West Mifflin, PA. U.S. Steel is an AAM stakeholder, and the visit follows last November's presidential tour of Arcelor-Mittal in Cleveland, another of AAM's members. "The nation's steel manufacturers continue to face unfairly subsidized competition from overseas," and Paul commented that he "hopes the visit to U.S. Steel will remind the president of the importance of enforcing antidumping and countervailing duty orders." 

A recent article in the Wall Street Journal reported on the huge amount of steel that is being imported into the U.S. at much lower prices that U.S. Steel and other American steelmakers can manufacture it. Many distributors are choosing to buy from China, even though it takes several months to get the steel in, because "the price makes it worth it," according to the WSJ article. The WSJ also noted that several East Coast steel mills have closed or are in bankruptcy, making it difficult for distributors to get steel from U.S. manufacturers.

Reshoring isn't happening at the rate that Paul believes it could were economic conditions in the U.S. more favorable. "Yes, half of CEOs may be considering reshoring, but few have actually moved their jobs back. Our trade flows provide the evidence," Paul commented. "Yes, the U.S. may be named as the top country in which to invest by executives, surpassing China, but FDI into China still blows away FDI coming into the U.S., according to OECD figures. And yes, the U.S. is creating manufacturing jobs consistently for the first time since the 1990s, but we haven't even come close to reclaiming the jobs that were shed during the recession."