NAM President Jay Timmons discussed the need for a more favorable tax code, which plays a major role in the ability of manufacturers in the U.S. to compete, he said.
- “For example, a longstanding deduction for full and immediate expensing of research and development expenses is being phased out,” Timmons said. “Businesses will now have to amortize their R&D expenses over a number of years; that’s a huge disincentive that makes it costlier to conduct R&D within the U.S.—not to mention a potentially huge tax hike for small and medium-sized manufacturers at the end of the year.”
- China, meanwhile, allows manufacturers a 200% deduction for R&D expensing, giving that country a major advantage.
Workforce and immigration: Manufacturing is “in the middle of a workforce crisis,” Timmons said. Enacting new, better immigration policy and investing more in certain workforce programs can help solve it.
- Manufacturing has nearly 800,000 open jobs—and many of them could be filled if legislators would expand work-permit programs, Timmons said. “Clearly, we need border security, but we also need more avenues for people to come legally and to work.”
- There should be more federal investment in apprenticeship models, too, so that students can earn while they learn in manufacturing, he added.
All hands on deck: Congress must work to fix these issues “in a very bipartisan way,” Timmons said. “We hear all the time from elected officials, both Democrat and Republican, and even independent, that they want to be supportive of manufacturing.”
- “They understand that manufacturing is the lifeblood of any competitive economy … and we appreciate that. But we also need to make sure that in addition to saying good things about manufacturing, that elected officials are actually doing the things they need to do. That’s what [‘Competing to Win’] is all about.”
- Meanwhile, manufacturing production expanded at a stronger-than-expected 0.4% in September, increasing for the third straight month, with the index at its highest level since July 2008. In the third quarter, output in the sector grew 1.4%, rebounding from the decline of 0.6% in the second quarter and another sign of surprising resilience among manufacturers amid numerous challenges.
- The sector has continued to grapple with soaring costs, supply chain bottlenecks, workforce shortages and geopolitical and economic uncertainties. Despite those obstacles, manufacturing production has risen 4.7% year-over-year. In addition, manufacturing capacity utilization increased from 79.7% in August to 80.0% in September, returning to the rate in April, which was the highest since July 2000.