Are Regulations Harming Manufacturing?

In May 2014, the U.S. manufacturing sector's production index rose to 61, nearly 6 points higher than April's 55.7 figure. Provided by the Institute for Supply Management, the production index delivers a quantifiable way to measure the output of manufacturing organizations. The increase in number indicates growth within the manufacturing industry. Whether or not this number continues to increase, however, is contingent upon how well the industry adapts to new climate regulations in manufacturing.

The Environmental Protection Agency has created new regulations for the manufacturing industry that are designed to help protect the environment. These regulations may provide a large stumbling block for current manufacturing plants, as they limit carbon dioxide emissions and may reduce the number of plants that can function under the new regulations.

The new regulations limit the amount of fossil fuels that can be used to power plants. These fuels traditionally provide electricity and heat for plants. Retrofitting old plants and conducting the research and development studies needed to build new plants to adhere to new U.S. manufacturing regulations may unintentionally harm the industry, as these improvements come at a high cost.

Currently, the U.S. manufacturing industry provides much-needed jobs and allows for products to be produced and sold on U.S. soil, something that helps build the economy. The new climate regulations may help reduce the amount of environmental impact by the U.S. manufacturing industry. However, some economists question whether the reduction in carbon dioxide emissions is enough to account for the funds required to retrofit plants, as well as if the potential job loss could force manufacturers to move production elsewhere.

Though the manufacturing industry fluctuates according to consumer demand, it still accounts for numerous jobs and a large amount of consumer spending as consumers become more aware of U.S. products available in local stores.

If the cost of manufacturing rises due to the new climate regulations, the manufacturing industry could suffer, namely in the scenario where competitor products from other countries hit shelves at a lower price point.

The potential pitfalls of these regulations make it necessary for the U.S. manufacturing industry to find a cost-effective way to meet the government-imposed regulations and consumer demands, all while making sure there is still a profit margin for the company and investors.

Part of the success of the climate regulations on energy hinge on the willingness of the EPA to find a workable solution to the cost-effective transition of manufacturing plants. The success of the U.S. manufacturing industry and its continued growth may rely heavily on the ability to find a way to work within the confines of the new EPA regulations, protect the environment and maintain cost-effective production on U.S. soil, thus benefiting the economy.

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