Reuters has the story:

The pace of growth in U.S. manufacturing picked up last month, even as measures of new orders and exports eased, underscoring how the economy is recovering at a gradual clip.

Separate data on Monday showed construction spending suffered its biggest drop in seven months in February, prompting some economists to lower their sights for first-quarter growth.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.4 from 52.4 in February, topping economists’ expectations of 53.0.

Read the full story here.

– The Editors

Proposed eliminating tax incentives that make it more attractive for companies to ship jobs overseas. The proposal would require American companies to pay a minimum tax on their overseas profits in order to prevent other countries from attracting U.S. businesses with unusually low tax rates. Obama also wants to eliminate tax deductions companies receive for the cost of shutting down factories and moving production overseas. Instead, Obama wants to create a new tax credit to cover moving expenses for companies that close production overseas and bring jobs back to the U.S. He also wants to reduce tax rates for manufacturers and double the tax deduction for high-tech manufacturers in order to create more manufacturing jobs in the U.S.

What do you think? Will Obama’s proposed policies make American manufacturing more effective?

– The Editors

Dean Baker, writing at the Huffington Post, makes a version of this argument in his latest column. He writes

The value of the dollar really has to be front and central in any effort to restore U.S. competitiveness since it is by far the most important factor determining the relative cost of U.S. goods compared with goods produced elsewhere.

If the dollar is 20 percent above its proper value then it is equivalent to putting a 20 percent tariff on all of our exports. If the price of U.S. made goods are 20 percent higher for people living in other countries because of an over-valued dollar, we are not going to be able to export very much.

The opposite is true with imports. The over-valued dollar is equivalent to giving a 20 percent subsidy to people who import goods from other countries. This places U.S.-made products at an enormous disadvantage competing with imports. This explains the flood of imports coming into the country over the last 15 years.

What do you think? Let us know in the comments section.

– The Editors

From the White House Statement

To launch the AMP, the President today announced a number of key steps being taken by the federal government:

Building domestic manufacturing capabilities in critical national security industries: Starting this summer, the Departments of Defense, Homeland Security, Energy, Agriculture, Commerce and other agencies will coordinate a government-wide effort to leverage their existing funds and future budgets, with an initial goal of $300 million, to co-invest with industry in innovative technologies that will jumpstart domestic manufacturing capability essential to our national security and promote the long-term economic viability of critical U.S. industries. Initial investments include small high-powered batteries, advanced composites, metal fabrication, bio-manufacturing, and alternative energy, among others.

Reducing the time to develop and deploy advanced materials: The Materials Genome Initiative, would invest more than $100M in research, training and infrastructure to enable U.S. companies to discover, develop, manufacture, and deploy advanced materials at twice the speed than is possible today, at a fraction of the cost. In much the same way that advances in silicon technology helped create the modern information technology industry, advanced materials will fuel emerging multi-billion dollar industries aimed at addressing challenges in manufacturing, clean energy, and national security.

Investing in next-generation robotics: The National Science Foundation, National Aeronautics and Space Administration, National Institutes of Health and the Department of Agriculture are coming together to make available today $70 million to support research in next generation robots. These investments will help create the next generation of robots that will work closely with human operators – allowing new ability for factory workers, healthcare providers, soldiers, surgeons and astronauts to carry out key hard-to-do tasks.
Developing innovative energy-efficient manufacturing processes: The Department of Energy will launch an effort to leverage their existing funds and future budgets, with initial goal of $120 million to develop innovative manufacturing processes and materials to enable companies to cut the costs of manufacturing, while using less energy.

– The Editors

They write:

The most encouraging part of the president’s speech was the administration’s endorsement of a national infrastructure bank and in particular the Kerry-Hutchison BUILD Act. With a relatively small initial public capital investment, an infrastructure bank would allow the federal government to leverage a much larger amount of private investment and put it to work on productivity-enhancing infrastructure projects.

If anything, the administration should have committed itself to a bigger and longer term program of infrastructure investment. Infrastructure investment has a greater multiplier and job creation effect if it is part of a long-term program that would give companies confidence in future demand.

Of course, it will be argued that there are few “shovel ready” projects that can create jobs quickly. But that misdiagnoses the challenge we face: the problem is not a short-term slowdown that requires a short-term stimulus but a more serious longer term drag created by ongoing household deleveraging and the still very real threat of debt deflation caused by the huge private sector debt overhang.

At the current pace, it will take anywhere between five and ten years for households to repair their balance sheets and for the private sector to bring debt levels down to more manageable levels. Until then, private-sector debt deleveraging will be a drag on both consumption and private investment.

As such, we need a multi-year economic recovery program that reflects this reality and that seeks to offset this weakness with public investment-led growth and job creation–and that means first and foremost a robust program of public infrastructure investment.

– The Editors

Prestowitz points to a Booz & Company report on the Future of American Manufacturing. He writes

production from an American base can be quite competitive except in only a relatively small number of manufacturing industry sectors. It shows that in about half of such sectors, U.S. manufacturers are at present, fully competitive both in supplying the U.S. market and at supplying overseas markets. These are the areas such as aerospace, microprocessors, oil well drilling equipment, and medical instrumentation. In addition, however , it shows that in another 40 percent of industry sectors, U.S.-based producers are presently neck and neck with foreign producer for supplying the U.S. market and that with just a few tweaks, they could be dominant producers for their products in the U.S. market. That means that U.S. based manufacturing can compete in the U.S. market on a head to head basis with foreign producers in about 90 percent of industry sectors. Thus, instead of its present 10 percent of GDP, U.S. manufacturing should, like Germany’s, account for around 20 percent of GDP.

Read the full article here and the Booz report here.

– The Editors

Levison suggests that major international companies may reverse the trend of the last several decades and seek to minimize risks – even at the expense of short-term profits.

The article can be read here.

– The Editors

The article, entitled “A Company Grows, and Builds a Plant Back in the U.S.A.,” explains that Taphandles, which employes 33 people in Seattle and 450 in China, signed a lease this year on a nearly 42,000 foot factory in Woodinville factory that will result in hundreds of jobs coming back to the United States.

The article also references a Boston Consulting Group study, which explains how changes in currency prices and wages have made it more advantageous to “in-shore” jobs back to the United States.

You can read the full article here.

– The Editors

We hope you enjoy.

– The Editors

Here is the story in the Manufacturing Weekly.

– The Editors