The Hill - A Call to Action on Manufacturing

Op-Ed

By Michael Honda

This past Friday was National Manufacturing Day, a time to reflect on how an American manufacturing renaissance is essential for a full and sustainable economic recovery. As my Silicon Valley district shows day in and day out, manufacturing is the foundation of innovation and economic progress.

Manufacturing generates 70 percent of exports in major manufacturing economies -- both advanced and emerging -- and up to 90 percent of business research and development spending. Just in my home state of California, there are more than 40,000 manufacturers that account for over 1.2 million jobs and $230 billion of output. Manufacturing output is almost 12 percent of our gross state product in California and accounts for 87 percent of our exports.

In my district it's not just the large semiconductor industry that defines this sector, but also small contract manufacturers like Cal Weld in Fremont that play a critical role in the global supply chain. These manufacturers and the jobs they create are high-paying multipliers; a manufacturing job creates four to seven additional nonmanufacturing jobs in areas such as transportation, logistics and technical support. A robust manufacturing sector fuels broad economic prosperity.
Manufacturing continues to be the platform for building a solid middle class across the United States and abroad. For this and other reasons, manufacturing has become of great strategic significance across the globe.

In the last 30 years, domestic manufacturing has changed in significant ways. We've adopted various efficiencies as the science of production has evolved, and some labor-intensive industries have been moved out of reach through poorly designed free trade agreements. Despite this, American manufacturing can compete again, and can build on positive trends to leverage our inherent advantages, such as with energy-intensive industries.

A comprehensive manufacturing strategy will make it easier and more affordable to obtain financing for plants, equipment and infrastructure; facilitate sophisticated, integrated worker training; enact a competitive immigration policy that helps us re-shore jobs; drive down energy costs for domestic manufacturers; and renew our commitment to the transportation infrastructure that supports our domestic supply chain.

We are already on the right track, and the momentum for manufacturing growth is building. Last month, the manufacturing sector grew at the fastest pace in the last 2 1/2 years -- we can and must continue to build manufacturing ability and leadership in the United States.

Congress has important work left to do to ensure that we provide appropriate funding for innovation, and research and development. Funding for the president's National Network for Manufacturing Innovation should be a key priority to encourage the development of new processes and products, and I'm proud to help lead the effort to ensure a proper launch for these manufacturing innovation institutes.
We must also develop strategies and budgets to rebuild and educate a skilled workforce so that our workers are prepared to take tomorrow's high-paying jobs.

Finally, we must provide appropriate and targeted tax incentives on manufacturing jobs, plants and equipment to increase domestic purchasing, as well as advance new technologies, such as lightweight metals and 3-D printing, in order to maintain a strong jobs and defense sector.

We can begin implementing these proposals to help startups and expanding businesses launch a manufacturing presence here, and use the most effective tools in our tax code to support domestic expansion for more established firms, bringing manufacturers, researchers and academics together to build a world-class workforce. These tax incentives will rebuild the manufacturing supply chain that has been decimated over a 30-year period of offshoring that we must now take the initiative to reverse.

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