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Public Policy Agenda

MANUFACTURING IS VITAL TO NEW YORK  

Manufacturing is a crucial component of any economy’s success, particularly in New York. Much of this nation’s technological innovation is fueled by the research and development (R&D) stemming from the U.S. manufacturing sector. In addition, much of the service sector cannot survive without the goods produced by the manufacturing industry. As the United States becomes more heavily dominated by the service sector, it will be incumbent upon all levels of government to work toward an economic equilibrium that includes a sustained, flourishing manufacturing industry.

A recent study from the National Association of Manufacturers noted that, because of the escalating costs of doing business in the United States, “…this country’s manufacturing sector has become less competitive; more jobs were lost during the last recession; some of the external costs- especially healthcare- make every new job more expensive; profits are lower, spurring cutbacks in investments in R&D and worker training; and outsourcing production overseas has increased.”

With these obstacles in mind, New York’s per capita costs related to taxation, energy, workers’ compensation, healthcare, tort legislation, and compliance costs for regulatory mandates rank at the top of the nation, causing the “domestic burden” to be higher than in most of the United States. MACNY supports a public policy agenda that lowers the domestic burden for manufacturing in New York and the U.S. – lowering costs and easing unnecessary mandates that restrict optimal operation.

In more recent years, the United States’ manufacturing industry has faced its share of setbacks, including the recession earlier this decade. Despite these setbacks, manufacturing is still critical to the growth of the United States economy. This growth is due in large part to the dedication and innovation of manufacturers across New York and the entire country, proving that manufacturing matters:

* Between 2001 and 2005, manufacturing contributed more to GDP growth than any other sector, averaging 4 percent. The overall economy only grew at 3.5 percent during this same period. Because of technological innovations, the manufacturing sector continues to produce more with fewer people in highly skilled jobs, with productivity and process improvements being sustained by research and development. 

* The United States’ manufacturing output is greater than that of any other nation in the world, maintaining a steady share of global output since 1982. 

* Manufacturing jobs pay an average of $65,000 a year, including benefits. That’s 23 percent more than the average compensation for the rest of the United States workforce.

* In 2002, manufacturing accounted for roughly 71 percent of U.S. industrial R&D in the country. U.S. manufacturing engages in more R&D than total industrial R&D in Japan, South Korea, and Canada combined. 

* In 2005, approximately 580,000 New Yorkers were employed in manufacturing in every corner of the state. with nearly 350,000 people employed in Upstate New York alone. 

* Manufacturing contributed $59 billion to New York State’s economy in 2004, making it number nine nationally for income generation per state. 

BACKGROUND

MACNY surveys its members annually to identify its focus for advocacy at the state and federal levels. Members have the opportunity to rank the importance of state and federal issues separately. State issues for our members include: workers’ compensation; healthcare; dysfunction in Albany; energy supply; taxes; tort reform; job training; budget reform; the Safe Place to Work Law; and regulation reform. At the federal level, members ranked the importance of: healthcare; the U.S. national energy policy; investment in American manufacturing; tort reform; fair trade; technology policies; and the encouragement of domestic consumption.

At the state level, members indicated that workers’ compensation, healthcare costs, dysfunction in Albany, and New York’s energy supply are the most important issues, respectively. Among federal issues, healthcare costs, the U.S. national energy policy, investment in American manufacturing, and tort reform were respectively ranked as the most crucial issues.

What follows is a detailed description of the legislative issues given top priority status for the 2007-08 legislative year. MACNY has also identified other issues that are important to its membership and merit government action. 

NEW YORK STATE ISSUES: 

Reform the Workers Compensation System

Reduce Healthcare Costs

Stop Albany Dysfunction

Improve the Energy Supply

Cut Taxes

Ease the Medicaid Burden

Increase Job Training Resources 

OTHER STATE ISSUES OF INTEREST TO MACNY:

The following issues have been identified as issues that also need to be addressed by the state for manufacturers to thrive in New York State: 

Tort Reform- New York manufacturers pay more every year to support the lawsuit industry. These suits cost of doing business, taxes, healthcare, and construction. They also discourage innovation due to liability concerns. Manufacturers that invest in research and innovation to improve their products are often penalized when these improvements are used as evidence that old products were not safe. MACNY will continue to work with statewide partners for fair reforms that stem the rising costs of litigation.

Incentives to Invest in New York State- Given the high cost of business in New York State, companies need an incentive to locate and expand here. MACNY supports legislation that provides investment tax credits, energy tax credits, and especially property tax credits. Property tax credits in particular support creation of a refundable state credit for real property taxes that would apply statewide to manufacturers making significant capital investments.

Superfund Financing Amendments- In the fall of 2003, the state placed in statute new laws governing brownfield clean-up and Superfund financing. Unfortunately, new fees on manufacturers are included in the refinancing. MACNY will push for amendments that would finance this program through the state’s General Fund and not additional fees on manufacturers. 

FEDERAL ISSUES:

REDUCE HEALTHCARE COSTS
Congress can take actions to lower soaring healthcare costs for individuals and employers. Circumventing these costs requires innovative health plans, including associated health plans and health savings accounts. Associated health plans offer a new solution to the growing healthcare problem, allowing businesses to band together across state lines to find more affordable plans. Health savings accounts similarly limit the costs imposed on small businesses. MACNY will support these and other solutions to the nation’s healthcare crisis.

DEVELOP A NATIONAL ENERGY POLICY
Because energy is so crucial to the manufacturing process, Congress must adopt a comprehensive energy policy that ensures sustainable economic growth. This policy must stress a reliable energy supply, affordable prices, conservation, increased efficiency, strengthened infrastructure, and investments in new technologies. As the cost of energy rises, such a policy will be necessary to maintain economic growth, a healthy energy supply, and a safe environment.

ENCOURAGE INVESTMENT IN AMERICAN MANUFACTURING
Every dollar of American manufacturing generates $1.37 of revenue in additional economic activity, more than any other economic sector. Because this multiplier is so large, Congress needs to encourage stronger investment in American manufacturing through tax credits for those businesses creating jobs and funding capital projects. Such investment is vital to the prosperity of American manufacturing and the nation’s economy as a whole.

SUPPORT TORT REFORMS
Manufacturers pay more every year to support the lawsuit industry at the federal level. These lawsuits increase taxes and the costs of business, healthcare, and construction. They also discourage innovation because of liability concerns. MACNY particularly supports class action fairness legislation at the federal level. The organization is also concerned with the explosion of asbestos liability in recent years. This liability has bankrupted companies, cost workers their jobs, and threatened retirement savings with an accumulated present and future liability burden of $250 billion. This burden is acting as an anchor on manufacturing’s ability to recover.

DEFEND FAIR TRADE POLICIES
Experts agree that currency manipulation, coupled with issues of copyright infringement and dumping, is a serious risk to global economic stability and a major contributor to manufacturing job loss. Tying their currency to the U.S. dollar, nations that engage in currency manipulation enjoy a strong advantage over American currency. These nations may also accumulate large sums of American dollars to keep their currencies low. This has the result of making American products prohibitively expensive in that country while making foreign goods cheaper in the U.S. In addition, trade agreements created to protect the patents and copyrights of American manufacturers are often ignored by foreign businesses with little or no consequences. Congress must work to end currency manipulation and enforce existing trade agreements, or American manufacturing will continue to decline, costing thousands of jobs across the nation.

OTHER FEDERAL ISSUES OF INTEREST TO MACNY:

Research and Development- Through partnerships with academia, business, and various agencies, MACNY will continue to seek government funding for the research and development of projects that are beneficial to manufacturers. As manufacturing contributes to more than 70 percent of industrial R&D, this funding is not only necessary for manufacturers, but the entire economy as well.

A Tax Policy that Enhances Economic Growth- The Bush Administration and Congress need to work together to reform the tax system. This work should focus on a transition to a value-added tax system that favors the growth and prosperity of U.S.-based manufacturing. Congress needs to enact a tax policy that encourages productivity growth through incentives for investment and technology.

Cost-cutting Reforms- MACNY supports reforms that will permanently improve the legal, regulatory, healthcare, and retirement systems while lowering the anti-growth burdens they currently impose.

Technology Policy- The U.S. needs to continue to enhance research and development efforts to maintain and expand our lead over foreign nations.

Worker and Skills Enhancing Efforts- To ensure that manufacturers find enough quality employees to meet their needs, MACNY supports programs that build on the skills of present and future workers. MACNY also supports educational programs that showcase the benefits of jobs in modern manufacturing.

Encourage Americans to Buy Domestic Products- The federal government needs to strengthen product labeling requirements to show how much of a product is actually manufactured in the U.S. Additionally, MACNY supports measures that curb unnecessary offshore sourcing of critical defense technologies as well as other government contracts.