Industry Market Trends

Obama Addresses Manufacturing Challenges, Fiscal Cliff at Rodon Facility

Nov 30, 2012

American manufacturing and small business landed front and center on President Barack Obama's public push for a congressional deal that would prevent higher taxes and budget cuts from automatically kicking in at the end of the year, a scenario known as the "fiscal cliff."

The president stopped today in Hatfield, Penn., to tour the manufacturing facilities of the Rodon Group, an injection molding company that makes toys for the popular K'NEX brand, as well as components for the medical, food and beverage, pharmaceutical and construction industries, among others, before giving his remarks.

With just a month to go before the fiscal cliff deadline, Obama has embarked on a series of public appearances in support of his plan to avert the cliff. His stop at Rodon was a full-court press on House Republicans to settle on a deal. "The reason I'm here is because I want the American people to urge Congress in the next two weeks to begin the work we all agreed on... [that] both parties agreed to extend the middle class taxes," the president said.

Speaking on Rodon's plant floor, flanked by rows of the manufacturer's K'NEX toys and injection molding and part-handling equipment, Obama was intent on delivering a message to Congress and House Republicans to save the middle class and small businesses from tax increases. He urged Republicans in Congress not to "hold middle-class taxes hostage just because they don't want tax rates on upper income folks to go up.

"I believe America is only strong when we have a thriving middle class," the president continued. "That's what the founders of this company [Rodon] believe as well. I want to reward manufacturers like this one and small businesses that create jobs here in the United States, not overseas."

The White House and Republicans in Congress remain at an impasse after the GOP reportedly dismissed an initial economic package by the Obama administration that would raise an additional $1.6 trillion in tax revenue -- part of it from raising taxes on those making more than $250,000 per year -- along with extending unemployment insurance benefits and payroll tax cuts.

Obama is sticking to his election promise of preserving the tax rates for the middle class while ending tax breaks on upper incomes. Republicans remain committed to preserving the Bush-era tax cuts across the board and raising revenues by closing tax loopholes and capping deductions. The White House's package does include provisions to close loopholes and limit deductions, as well, but Republicans are said to have balked at the plan's call for an additional $50 billion in economic stimulus spending.

Obama noted that small and mid-sized manufacturers such as Rodon, which employs about 200 people, depend on middle-class consumers during the holiday season and beyond, and if the Bush-era tax cuts were allowed to terminate at the end of the year, businesses would suffer the devastating consequences of lower consumer confidence and reduced spending. This poses a severe threat for Rodon and other manufacturers whose businesses rely on moving high-volume consumer goods.

A recently released White House report says that the fiscal cliff could cost a middle-class family of four $2,200 in added taxes in 2013. "A typical middle class family of four will see their income taxes go up by $2,000; that's plenty families can't afford to lose," Obama said.

He then elaborated further. "Just the other day, Congress said if income taxes go up on the middle class, people will spend nearly $200 billion less in stores and online," he said. "That's not good for our businesses. Congress can pass a law that would prevent a tax hike for 98 percent of Americans, and 97 percent of small businesses wouldn't see their taxes go up by a single dime, because 97 percent of small businesses make $250,000 or less [annually]."

Obama took time to praise Rodon and U.S. industry. "We need champions for American industry," the president said.

Before the president's speech, Michael Araten, president and CEO of Rodon and K'NEX Brands, gave opening remarks to an energetic audience of special guests and national and local media.

"We are a third-generation American family business," Araten said. "We build the [things] kids love right here in the U.S.A.," he said, before noting that Rodon has been an instrumental part of reshoring manufacturing jobs back to the U.S. from countries like China. "We have reshored over $100 million in manufacturing [since the recession began in 2008]."

Araten noted that manufacturing is an important part of the country's productivity and innovation, and that those principles are what drives Rodon and enables it to compete with much larger companies worldwide.

"We have the best workers in the world," Obama later noted. "I want to give more Americans the chance to learn the skills that businesses are looking for right now.

"And I believe both parties can and will work together in the coming weeks. I'm hopeful members of Congress in both parties are willing to do that," the president added. "The clock is ticking right now on middle class taxes. It's too important not to get done. Let's keep the economy on the right track."