The Manufacturing Council
June 15, 2004 Meeting
Minutes
The Manufacturing Council Chairman, Don Wainwright, called the meeting to order at 2:02p.m. He welcomed everyone to the meeting and thanked the Council and members of the public for their attendance.
Chairman Wainwright immediately established a rule of order. He noted this meeting, as all future Council meetings, would be public, and following each stage of the meeting he would open the Floor for comments from members of the Council. Following their comments, he would then ask if anyone from the public would like to make any remarks, asking that members of the public keep their comments to 1 minute.
Mr. Wainwright emphasized the composition of the Council as being representative of the geographic, industry, and business size diversity within the manufacturing sector. He stated his confidence that the group of individuals on the Council will, without a doubt, have the expertise necessary to advise the Secretary and the Department of Commerce on what can best help the Manufacturing sector.
Mr. Wainwright noted, from his perspective, the economy was roaring. Indicators were rising all over, including job growth.
Mr. Wainwright stated the main goals of the Council are to bring together the government and manufacturing sector, and to look at and make recommendations on the “Manufacturing in America” Report. The Chairman then introduced Joe Bogosian, Deputy Assistant Secretary for Transportation and Machinery, to brief the Council on the manufacturing report and the state of manufacturing from the point-of-view of the Department of Commerce.
Deputy Assistant Secretary Joe Bogosian thanked Chairman Wainwright, Vice Chair Karen Wright and the members of the Council for their service. Mr. Bogosian then reviewed the economic background of the past few years, mentioning the stock market tech bubble burst, September 11 th attacks, corporate accounting scandals, and SARS. He affirmed the Administration’s response with the 2001 Tax Relief Bill, 2002 Economic Stimulus Bill, and 2003 Jobs and Growth Bill. He stated the economy is growing at a rate of 5% during the past four quarters; productivity growth in 2000-2003 is the fastest in 50 years; homeownership is at 68.6% -- the highest ever; and exports have grown 22% at an annual rate over the past six months. He also noted nine consecutive months of job gains – 1.4 million new jobs, and 4 months of manufacturing job growth. Unemployment is down to 5.6% -- below the average of the 1990s, 80s and 70s.
Mr. Bogosian stated the “Manufacturing in America” Report, released in January 2004, coincided with the President’s Six Point Plan for the Economy, which calls for: making health care costs more affordable and predictable, reducing the lawsuit burden on our economy, ensuring an affordable, reliable energy supply, streamlining regulations and reporting requirements, opening new markets for American products, and enabling families and businesses to plan for the future. Mr. Bogosian cited the impetus for the manufacturing report began when Secretary Evans launched the Manufacturing Initiative on March 5, 2003. Following that announcement the Department of Commerce held roughly 25 outreach events and roundtables. Mr. Bogosian mentioned to the Council the “Manufacturing in America” Report contained 57-policy recommendations, categorized as issues of trade, non-direct costs, innovation and research and development, tax reform, education and workforce, and structural.
Chairman Wainwright asked if any members of the Council had questions for the Deputy Assistant Secretary. There were none. The Chairman then fielded questions from the public.
A member of the public, speaking over the phone asked, “how is the Council going to address regulation?” Deputy Assistant Secretary Bogosian answered that currently the Office of Management and Budget is addressing the issue. The Council will also take a look at the regulation issue, as leaders from the field. Upon presentation to Secretary Evans, the Secretary has promised to raise the issue with the appropriate members of the Administration from the Cabinet level down.
A member of the public asked about the increased level of employment, but countered that the jobs are lower wage and lead to a lower standard of living. Deputy Assistant Secretary Bogosian said he had not seen the statistics, but in his discussions and roundtables with industry leaders, all seem to indicate they are hiring the same jobs back, and the new jobs being created are high wage technological jobs not equaled by developing countries.
A member of the public asked if the longevity of the manufacturing initiative is dependent on the reelection of President Bush and the continued service of Secretary Evans? Deputy Assistant Secretary Bogosian stated the goal of these structural reforms, including the creation of the Council, was to institutionalize the manufacturing sectors role in government, permanently and beyond politics.
Chairman Wainwright thanked Deputy Assistant Secretary Bogosian. He then asked the members of the Council to formally introduce themselves, brief the Council on their business and the state of manufacturing from their perspective. Mr. Wainwright began by stating he was Chairman and CEO of Wainwright Industries just outside of St. Louis, Missouri. He was the former President of the National Association of Manufacturers. After nearly 4 years of recession, his company is experiencing big time economic growth, the key month being March 2004.
Mr. James Padilla, Chief Operating Officer of Ford Motor Company, headquartered in Detroit, Michigan, noted that the Ford Company continues to follow Henry Ford’s tradition of manufacturing. He added Ford was doing great with four years of sales of 17 million units.
Mr. D. Harding Stowe, President and CEO of R.L. Stowe Mills, described Stowe Mills as a family business headquartered in North Carolina. He said the past few years had been a little rough, but his plants are now operating at capacity and he is optimistic for the future.
Mr. Markos Tambakeras, President and CEO of Kennametal, located in Latrobe, Pennsylvania with locations worldwide, commented that his current environment is the best in 4 ½ years, with only the aerospace division lagging. Mr. Tambakeras said, Kennematal is in the best position it has ever been in and he foresees robust growth.
Mr. Scott Thiss, Chairman and CEO of S&W Plastics, located in Eden Prairie, Minnesota, noted he is also head of the Minnesota Chamber of Commerce. He mentioned for his business and manufacturing in Minnesota, the future is looking good.
Vice Chair Karen Buchwald Wright, President and CEO of Ariel Corporation, located in Mount Vernon, Ohio, noted that 2001 was her company’s biggest year, which was followed by a huge downturn in 2002. She sees 2004 as a modestly booming year, mentioning Ariel is on a hiring binge. Her biggest concern was the training and education lag in the workforce.
Mr. Fred Keller, Chairman and CEO of Cascade Engineering. Mr. Keller thanked the members for visiting his factory and headquarters. He noted slowing production growth with pressure on the margins, but definite growth. He noted the future of his company is based on innovation.
Mr. Jim McGregor, President of Morgal Machine Tool and also has a leadership role in three other family-owned companies based in Ohio. He noted the aggressive role he has taken on training and education and the need for the Council to look at those issues. He also stated the three areas he is most concerned about are steel issues, pricing and availability of goods.
Mr. Wayne Murdy, Chairman and CEO of Newmont Mining Company, located in Denver, Colorado, noted Newmont is the largest gold mining company in the world. He needs a skilled workforce, half of whom are in the developed and half in the developing world that garner high wages. He mentioned he is in a unique position because his competition and pricing operate as a globally traded commodity. He also cited education as a major concern.
Mr. Michael Nowak, President and CEO of Coating Excellence International, located in Wrightstown, Wisconsin, conveyed to the Council that most people have likely used his product without knowing it—such items as sugar substitute packets and the plastic wraps around frozen pizza. He noted he has experienced 40-50% growth over the past 7 years and believes firmly in innovation.
Mr. Jim Owens, Chairman and CEO of Caterpillar, located in Peoria, Illinois, noted manufacturing was the core of his company’s business, which is international in scope. He stated the company felt the recession from 1997 until 2002, but 2003 looked to be the strongest in years and they have hired 1000 new employees in the past 6 months.
Chairman Wainwright thanked all the members and noted the balance of members on the Council. Mr. Wainwright then introduced Brett Palmer, Acting Assistant Secretary for Legislative and Intergovernmental Affairs, to talk about the legislative agenda of “Manufacturing in America” Report.
Mr. Palmer mentioned the creation of Assistant Secretary for Manufacturing and Services position. He also mentioned many of the other legislative items that require fundamental changes. He referred to the intellectual property rights issue and the move to rework the fees and reinvestment system. He reviewed the action on the Export Administration Act, which deals with dual-use products. He noted the law expired and is working under emergency order from the President, but the law is an out-of-date act and hopes Congress will pursue and conclude action on a new PTO system soon. Mr. Palmer noted the House of Representatives has been working aggressively on the competitiveness front, with many bills stuck in the Senate. Among those are the Energy Bill, making the tax-cuts permanent, medical liability reform and class action reform.
Chairman Wainwright thanked Acting Assistant Secretary Palmer and asked if the Council members had any questions. Mr. Keller asked about the Manufacturing Extension Partnership (MEP). Mr. Palmer stated Congress had restored funding to the program.
Chairman Wainwright asked if any members of the public had any questions. A member of the public asked about Congressman Ehlers’ bill. Mr. Palmer stated the bill was in mark-up, which was a good and positive step; his only concern was the limited legislative calendar time ahead.
Chairman Wainwright introduced Rebecca Bernier, Director of the Office of Advisory Committees, to discuss the structure of the Council and its subcommittees.
Ms. Bernier thanked Cascade Engineering for hosting the day’s events. She briefed the Council on the need to establish subcommittees for The Manufacturing Council. She reviewed the recommendations of Under Secretary for International Trade Grant Aldonas on the three subcommittees: 1) U.S. Workforce, 2) U.S. Competitiveness, and
3) Advocacy and International Trade.
Chairman Wainwright invited the Council to discuss their thoughts regarding the proposed Subcommittees. An active discussion ensued. The Council tentatively agreed on the aforementioned three subcommittees, however, requested the Council Executive Secretariat place the recommendations offered in the “Manufacturing in America” Report, notably the health care, regulatory, tort reform and energy issues, and the aspects of the President’s Six Point Plan for the Economy into the three recommended subcommittees for review. Upon seeing that breakdown, the Council would determine the subcommittees. Chairman Wainwright offered that course of action for the Council’s approval. Mr. Tambakeras seconded. The Council unanimously approved.
Chairman Wainwright asked if any members of the public had any further questions. An individual addressed his concern for a consensus on numbers, asking if we truly and universally are in a recovery and what the true figures are on jobs, pricing power, wages, and health care benefits. Another member of the public expressed his hope the Council would not be a voice of the Administration, but a voice for manufacturers.
Acting Assistant Secretary Palmer responded by noting the Secretary has specifically expressed his desire that the Council be an independent voice.
Mr. McGregor asked the Chairman about the timetable for the next meeting. Mr. Wainwright responded that once the subcommittee issue is resolved, the timetable for future meetings will be determined.
Chairman Wainwright moved for the meeting to be adjourned. The Council unanimously seconded and approved. The meeting was adjourned at 3:38 p.m.
