Industry Market Trends

Obama Announces Manufacturing and Job Growth Agenda, Industry Responds

Feb 13, 2013

In his State of the Union Address on Tuesday night, President Barack Obama outlined several key initiatives that will help the nation create new jobs and expand manufacturing. The president called for bipartisan support to form a network of new manufacturing hubs and revealed education reforms that will equip students with the skills they need to fill jobs.

During his opening remarks, the president conveyed optimism, noting that despite the recession, over the past several years American businesses have created over 6 million new jobs. The Washington Post noted that while 6 million jobs were created since three years ago, the number of jobs in the economy is about 3.2 million lower than during the start of the recession in 2007.

Credit: REUTERS, Jason Reed Credit: REUTERS, Jason Reed

Meanwhile, the manufacturing sector has added nearly 500,000 jobs over the past three years. According to the president, the administration's first priority is to make America a magnet for additional manufacturing and new jobs.

To accomplish the comprehensive goals, there are several new reforms and proposals in progress dedicated to job growth, highlighted here, along with industry responses.


Obama's Pledge to Manufacturers

The address cited several companies that are bringing manufacturing jobs back to the U.S., and emphasized the crucial need to continue the reshoring trend. The speech included Ford, which is bringing back jobs from Mexico, and Apple, which will produce their signature Macintosh computer products in the U.S. again.

The president's examples of companies that are helping the reshoring trend, namely Apple, has garnered some skeptical feedback. Scott Paul, president of the Alliance for American Manufacturing remarked through social media: "Fact check on Apple bringing jobs back to US cited (in the speech): Tim Cook is investing only a ROUNDING ERROR of Apple's market cap in the U.S.," according to Reuters, which also noted that the tech company has not specified the amount of products that are slated to return to U.S. production.

One proposed solution for driving competitiveness is creating new manufacturing innovation centers, such as the pilot National Additive Manufacturing Innovation Institute NAMII that was launched in Youngstown, Ohio, last year. The institute serves as an additive manufacturing center that will drive advancements in the industry.

"A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3-D printing that has the potential to revolutionize the way we make almost anything," the president said of the institute.

The administration will launch three additional manufacturing hubs, for which businesses will partner with the Departments of Defense and Energy to ultimately create high-tech jobs that are imperative for improving the nation's competitiveness. The president also called on Congress to help launch a network of 15 of such hubs which will help strengthen American manufacturing.


Improvements in Education Include STEM

One of the key challenges in preparing the workforce for high-skilled jobs is educating students the right way. In addition to launching high-quality preschools across America, Obama announced a challenge to "redesign" the nation's high schools so they can prepare students for the demands of a high-tech economy.

According to this proposal, schools that partner with colleges and employers will be rewarded. More classes will be specifically developed for science, technology, engineering and mathematics (STEM) fields-"the skills today's employers are looking for to fill jobs right now and in the future," the president remarked.

As previously reported, there is currently an education and talent gap in the STEM fields, despite high wages for new graduates in related fields.


Tax Reforms for Small Businesses

The president called for a bipartisan comprehensive tax reform that will spur job creation and cut the deficit. He emphasized that rejecting the reform will cost jobs and hurt the economy.

"The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring; a tax code that ensures billionaires with high-powered accountants can't pay a lower rate than their hard-working secretaries; a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that create jobs right here in America."

Despite pledges to help small business growth, the manufacturing sector expressed disappointment in being overlooked.

"While tonight's speech had a familiar focus on economic growth and recovery, we unfortunately didn't hear a call for action on comprehensive tax reform that will benefit manufacturers," according to National Association of Manufacturers (NAM) President and CEO Jay Timmons in a response.

"A manufacturing resurgence won't come from limiting the global power of manufacturers. Tax reform is essential because it is our uncompetitive system that is hurting manufacturers both at home and in the global marketplace."


Immigration Reforms and High Tech

In addition to establishing a pathway to earned citizenship, learning English and giving preference to immigrants in the U.S. legally, the president noted that immigration reform will attract the "highly-skilled entrepreneurs and engineers that will help create jobs and grow our economy."

Last October, the Kauffman Foundation released a report revealing that immigrant-founded companies and immigrant-tech businesses are on the decline nationwide. The report also found that immigrants collectively created a large percentage of businesses in the U.S.

"Manufacturers welcomed the president's remarks on immigration reform and STEM education, which show a true commitment to developing the skilled workforce desperately needed," according to NAM.


New, Higher Paying Jobs for Americans

Obama's pledge to raise the federal minimum wage from $7.25 to $9 per hour would create more income for millions of families nationwide, but leaders in the small business sector argue that the rise in wages would increase costs for the multitude of struggling businesses, Reuters reports.

Even so, the president offered a comprehensive proposal would solve two problems at once: A "Fix-It-First" program would help put American people to work as soon as possible on the nation's "most urgent repairs," including the 70,000 structurally deficient bridges across the country.

The president added that the Partnership to Rebuild America, which would attract private capital for upgrades would ensure that tax payers would not carry the burden of all related costs.

"It is encouraging to see a promise of infrastructure investment that will serve as a foundation of future manufacturing," Timmons responded.

"Americans have been waiting for years for a real, sustained recovery. Manufacturers have been doing their part despite policies that stand directly in the way of growth. Previous State of the Union addresses provided strong rhetorical support. Now it's time for the president and Congress to act and implement the Growth Agenda that manufacturers have laid out. If he does so, we will not simply be talking about recovery-we will be living it."