The Manufacturing Council
September 21, 2004 Meeting
Minutes
The Manufacturing Council Chairman, Don Wainwright, called the meeting to order at 1:40p.m. He welcomed everyone to the meeting and thanked Secretary Don Evans, Assistant Secretary Al Frink, Congresswoman Melissa Hart, Under Secretary of the Treasury for International Affairs John Taylor, the Council and members of the public for their attendance.
Chairman Wainwright introduced Secretary of Commerce Donald L. Evans, whom he described as a man committed to manufacturing and the free enterprise system.
Secretary Evans thanked the Council for serving and introduced Congresswoman Melissa Hart from the 4th District of Pennsylvania.
Congresswoman Hart thanked the Secretary and the Council for their important work to keep manufacturing competitive and workers employed.
Secretary Evans continued, thanking Under Secretary John Taylor for attending. The Secretary stated the “Manufacturing in America” report the Administration produced, called for a one-stop shop for manufacturers. He noted that manufacturers now have a one-stop destination in the office of the Assistant Secretary for Manufacturing and Services. He noted the future is in a global economy, asking, do we want to open markets or be protectionist? Free and fair trade is fundamental; a retreat from free and fair trade would effect the jobs 22 million Americans whose work depends on exports, imports and foreign investments.
The Secretary remarked on the need for the reform of structural cost challenges. He thanked Jim Padilla, Wayne Murdy and the Subcommittee on U.S. Competitiveness for addressing the issue of tort reform. He thanked Fred Keller and the Subcommittee on the U.S. Workforce for addressing the issue of health care costs. He acknowledged the importance of the subcommittee plan to address the issues of education and retraining in the future. He thanked Markos Tambakeras for hosting the meeting in Western Pennsylvania, mentioning the great model the Bidwell Training Center offered in the field of education and retraining. He also thanked Mr. Tambakeras and the Subcommittee on Advocacy and International Trade for dealing with the issues of market access and ensuring a level playing field for manufacturers.
The Secretary concluded with comments on the health of the American economy. He noted the unemployment rate of 5.4% is lower than the averages of the 1970s, 80s, and 90s and includes over 100,000 new manufacturing jobs created this year. He remarked that there is always work to be done, including in Western Pennsylvania. The Secretary touted the opportunity zone model as important because it brings together the resources at every level of government. The Secretary again thanked the Council and looked forward to the Council’s growth.
Chairman Wainwright then introduced Assistant Secretary for Manufacturing and Services, Albert A. Frink.
Assistant Secretary Frink stated he was honored to be there, not only as the Assistant Secretary for Manufacturing and Services, but as the Executive Director of the Manufacturing Council. He noted he looked forward to working with the members of the Council and the manufacturing community to do anything and everything possible to improve the conditions for manufacturing in the United States. He plans to aggressively reach out to manufacturers and inform them of the resources government can provide from advocacy to grants to industry analysis. Reviewing the roles of his office, Assistant Secretary Frink remarked that the manufacturing office oversees eleven manufacturing industry sector offices to develop domestic and international policy strategies on issues impacting manufacturing competitiveness.
Assistant Secretary Frink noted that manufacturers now have a voice at the table not only through the Manufacturing Council, the Secretary’s primary advisory body concerning manufacturing, but also through the Industry Trade Advisory Committees. Manufacturers also have a great resource in the Office of Industry Analysis that pulls together international trade data and deciphers trade trends and areas of opportunity so we can tell manufacturers – you produce a great product and our data shows there is an emerging market perfect for it.
Assistant Secretary Frink concluded that he looks forward to the challenge of promoting and helping manufacturing in this country and thanked the Council for doing the same.
Chairman Wainwright then introduced Under Secretary of the Treasury for International Affairs, Dr. John Taylor.
Under Secretary Taylor thanked the Chairman and Secretary Evan. Dr. Taylor stressed his focus is on the global economy, observing that growth worldwide is increasing, interest rates and inflation are low, and the U.S. is benefiting from President Bush’s tax policies. Concerning China, Dr. Taylor stated he was working to get China to be more flexible with their exchange rate, which would be good for the U.S., China and the world. President Bush, Secretary Snow and Secretary Evans have all engaged China about this issue. He stated his belief that China is moving toward a flexible exchange rate and they are putting together the steps to begin that process -- like establishing a futures market and a competitive banking system.
Assistant Secretary Frink asked about the concern that if China drops its fixed rate, the value will plummet near 40%.
Under Secretary Taylor responded that the market would determine that amount. The value would depreciate, but China would likely move gradually invoking a basket or larger peg.
Chairman Wainwright thanked Secretary Evans for coming and informed the Council he needed to depart.
Chairman Wainwright 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.
Chairman Wainwright then introduced Fred Keller, Chairman of the Subcommittee on the U.S. Workforce.
Mr. Keller introduced the Subcommittee’s Position Paper on Health Care Costs. He mentioned health care costs were the Subcommittee’s first emphasis because it has become the Achilles heel in manufacturing with costs rising at an alarming rate. Drawing from the report, Mr. Keller noted costs among the Council members have risen as much as 46%. On the solution side, he stated that most proposals simply shift the burden of “who pays” from one source to another. The real solution needs to identify and eliminate wasteful practices and needs to create the appropriate forms of national competition and to create consumer incentives to make choices based on quality and cost.
Mr. Keller declared that “frivolous” law suits add non-value added costs and need to be eliminated through Tort reform. Other suggestions the report mentioned included providing opportunities for small firms to band together to reduce risk and lower costs. Mr. Keller stated that manufacturers with their knowledge of ‘Lean Manufacturing’ and waste reduction efforts are willing and able to connect with health care providers in their local areas to help eliminate waste and reduce costs together. He suggested offering tax credits for employers who spend resources to participate in this form of “grass roots” health care quality improvement process.
Mr. Harding Stowe noted the need to define the contribution side of health care versus the cost side.
Mr. Jim McGregor stated his concern about members of his company’s workforce, which in seeing the costs of health care coverage opt not to participate, adding to the nation’s uninsured.
Chairman Wainwright asked if there were any further questions from the Council or the public. Being none, the Council approved the Subcommittee on the U.S. Workforce Position Paper.
Chairman Wainwright then introduced Wayne Murdy, member of the Subcommittee on U.S. Competitiveness who would present the Subcommittee’s report in place of Subcommittee Chairman Jim Padilla, who could not be present.
Mr. Murdy introduced the Subcommittee’s Report on Tort Reform. Drawing from the Subcommittee’s report, he noted in the current civil justice system only 22 cents on the dollar are actually returned to consumers to recover economic losses. He stated total 2002 legal costs were $233 billion, or $809 per citizen and tort costs are roughly 2 percent of Gross Domestic Product. Mr. Murdy noted state tort liability systems have been shown to slow economic growth and reduce jobs citing a Manufacturing Institute report that stated, "tort costs reduce manufacturing cost competitiveness by at least 3.2 percent". He remarked the costs of medical liability coverage are a major burden on business and that changes in medical malpractice litigation, such as caps on non-economic damages, could reduce total medical costs by 5 to 9 percent per year.
Mr. Murdy reviewed the main policy recommendations mentioned in the Subcommittee’s report: (1) the passage of the Class Action Fairness Act in Congress -- restoring fairness and efficiency to our civil justice system; (2) the implementation of medical liability reforms, including caps on medical malpractice awards to reduce rapidly rising costs and improve accessibility to health care for all Americans; (3) the establishment a national asbestos litigation solution through development of a closed-end trust fund to address legitimate claimants with fair and timely fund disbursement; and, (4) the encouragement of cooperative public/private sector efforts to increase American’s participation on juries, working to better ensure a fair trial by jury in our court system.
Chairman Wainwright asked if there were any comments. There were none. Chairman Wainwright then offered an amendment for the Department of Commerce to review any technical changes that needed to occur, so that the recommendations abided by the charter and purview of the Council. The Council agreed. The Council then approved the Subcommittee on U.S. Competitiveness report.
Chairman Wainwright then introduced Markos Tambakeras, Chairman of the Subcommittee on Advocacy and International Trade.
Mr. Tambakeras introduced the Subcommittee’s Report on Market Access. Drawing from the report, he mentioned the basic tenants of a successful U.S. manufacturing environment: it is the responsibility of American manufacturers to produce a competitive product; common ethics and standards are key to success in global fair trade and market access; and fair access to foreign capital markets is vital to trade access. Elaborating on his final point, Mr. Tambakeras noted a U.S. firm should abide by the same rules and regulations when investing in a foreign nation as do the nationals with whom they might compete. Once invested in a country, that country should treat a U.S. manufacturer just as they would treat a national investor.
Mr. Tambakeras reviewed the issues that are most pressing to manufacturers concerning international trade: (1)A resolution to the Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) dispute; (2) continuation of the Doha WTO negotiations; (3) continued negotiations and passage of Bilateral Free Trade Agreements (FTAs) and the Free Trade Area of the Americas (FTAA); (4)strict and thorough examination on any proposed U.S. protectionist actions and there effect on manufacturing jobs; (5) enforcement of existing trade agreements; (6) examination and negotiation for the elimination of non-tariff barriers; (7) support the control of currency manipulation; (8) the repeal of the “Byrd Amendment” as recommended in a WTO dispute settlement; and (9) the examination of U.S. unilateral economic sanctions and recommend economic engagement featuring an investment-driven, pro-business policy as encompassed in a bill pending in the U.S. Senate (S. 1861), the “Sanctions Policy Reform Act.”
Mr. Stowe recommended changing the figure of “30%” in the section of the Subcommittee’s report on currency manipulation to “40%,” a figure cited by Under Secretary Taylor during his remarks. The Council concurred.
Vice Chair Karen Wright asked that the Council note that the top priority should be a FSC/ETI solution. The Council concurred. The Council then approved the Subcommittee on Advocacy and International Trade report, as amended.
Chairman Wainwright asked Assistant Secretary Frink if he has some parting comments.
Assistant Secretary Frink noted that with this meeting, progress is being made. He commended the Council for their sound, businesslike approach. He concluded by remarking there is no ‘silver bullet,’ but the Council’s work will always be appreciated, however never done.
Chairman Wainwright concluded the meeting.
