What Will it Take for US Manufacturing to be Successful?

The American manufacturing renaissance continues to expand. Industry growth in May 2015 was the best witnessed in over the previous six months, as manufacturers hired more workers and sold more goods. But for the industry to sustain this growth, government policies must continue to support manufacturing.

Although Congress has always supported American manufacturing, more policy changes can occur to give companies more competitive advantages over foreign companies. Bryan Iams, Vice President of PPG Industries in Pittsburgh, feels several government policies provide benefits to manufacturers. Iams includes tax reform and free trade as some of the largest government regulation issues facing manufacturers in 2015.

Congress must reduce the corporate tax rate so companies can reinvest more money in employees, innovation and new products. Lower taxes spur growth in American manufacturing by giving companies more money to spend on raw materials, better machines and even robotic technology. Reinvestments from larger companies expand economic activity for suppliers, transport companies and sales.

Trade policies remain key principles that affect import and export deficits. American manufacturing companies sell $60 billion in goods to free-trade partners overseas, but countries that lack free-trade agreements with the United States run a $500 billion trade surplus with the United States. Congress should permanently fund the Import-Export Bank, Trade Promotion Authority and immigration reform so companies can easily access foreign sources of income potential. Free trade agreements can include language that ensures fair wages for overseas workers so US manufacturers find less cheap labor outside American soil.

In 2015, American manufacturing expects to grow approximately 5.6 percent in revenues, with a 3.7 percent increase in capital expenditures. As many as 68 percent of chief financial officers surveyed by the Institute of Supply Management expect increased sales in 2015, while 46 percent foresee increased profits.

Rising labor costs in China and Mexico make American manufacturers less likely to move operations overseas. Some companies have returned their production to American soil because cheap labor no longer represents such a good deal. Energy prices may remain low thanks to the shale oil boom, and easy transportation infrastructure, quicker access to suppliers and lower labor costs combine to put American-made products on store shelves faster for American consumers to purchase. American workers represent a stable, high-quality workforce with a willingness to learn new skills as technology changes. All these factors mean more companies see the value of maintaining plants in the United States rather than Asia.

Manufacturers create their own stimulus package by hiring more workers, who then have more money to purchase goods. In addition, lower fuel costs give American consumers more disposable income to spend on manufactured goods such as appliances, automobiles and consumer electronics.

The outlook for American manufacturing continues to be positive, even though Congress can do more to foster pro-growth policies. The economic downturn hurt manufacturers; however, the recovery moves forward thanks to a better economic climate, technological innovations and an expanding job market.

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