Reposted from the Duluth News Tribune
Joseph A. Carrabba | August 12, 2012 | Duluth News Tribune
Creating jobs is necessary to fuel America’s economic recovery, and policymakers are realizing that to do that, the U.S. must have a healthy manufacturing sector.
Integral to the success of the American manufacturing sector is our ability to cost-effectively produce iron and steel in North America from raw materials, such as the bountiful iron ore supply on Minnesota’s Iron Range.
Each steel job supports seven jobs in other economic sectors, sustaining more than 1 million U.S. jobs; and the industry contributes more than $101 billion to the economy, making the iron and steel sector an indispensable component of America’s continued economic recovery.
However, the steel industry — like U.S. manufacturing as a whole — cannot perform its role in the overall economy without the cooperation of government. Some lawmakers clearly understand this. Minnesota’s U.S. Rep. Chip Cravaack earlier this year succeeded in adding a “Buy America” amendment to the recently passed surface transportation reauthorization bill, ensuring American steel will be used in federal transportation construction projects and that Minnesota’s nation-leading iron ore operations will continue to thrive. The measure closed loopholes that would have allowed the use of steel from heavily subsidized foreign manufacturers, endangering more than 40,000 Minnesota steel-industry jobs.
It is critical for Congress and the White House to embrace a pro-manufacturing agenda that will keep the nation on the path to economic recovery.
They must address three things to accomplish this.
The first is tax reform that promotes increased investment in manufacturing plants and equipment. Reforms that will lower — not increase — the tax rate will strengthen the U.S. industrial base and the overall economy. The president’s recently released Framework for Business Tax Reform would reduce from 35 percent to 28 percent what currently is the highest federal corporate tax rate among industrialized nations. Other likeminded proposals are in the offing.
However, many of these proposals would pay for that rate cut by ending some corporate credits and deductions that are key to promoting investment and creating U.S. jobs. Ill-conceived schemes to swap credits and deductions for a lower rate could result in a net tax increase for manufacturers.
One plan would commit the gross error of paying for the lower corporate tax rate by sacrificing accelerated depreciation, which is a key incentive for manufacturers to pursue new investment. Removing this inducement would discourage new investment and the jobs that investment brings.
Second, the administration must make a critical examination of how existing and proposed regulations affect the competitive position of U.S. manufacturers in global markets, recognizing that regulations introducing uncertainty about costs hobble investment, industrial expansion and job creation.
Energy in particular is subject to certain regulations that may hinder industrial expansion while producing little environmental benefit.
For example, many states in which America’s vast shale natural gas resources are being developed have had strong regulatory programs in place for years, and some others are updating their regulations. However, policymakers must be careful not to put in place burdensome regulations that introduce cost uncertainty and threaten the ability of manufacturers to make key spending decisions in unsteady economic times.
And third is global trade. Manufacturers can keep our industrial machine running at full speed only if the U.S. strictly enforces trade agreements and aggressively fights protectionist policies of foreign governments. Such policies have a damaging effect in today’s uncertain global economy.
China’s failure to adhere to its World Trade Organization commitments, for example, continues to undermine U.S. domestic economic growth and job creation. It is critical for the U.S. to maintain and strengthen trade-remedy laws that guard against dumping, subsidies and other unfair and illegal practices.
We are at a tipping point. Congress and the White House must join together now to create and preserve policies that help American manufacturers in their efforts to rebuild the economy and restore jobs.
The risks of inaction are far too high.
Joseph A. Carrabba is chairman, president and chief executive officer of Cliffs Natural Resources in Cleveland. The company is the largest producer of iron ore pellets in North America and a major supplier of metallurgical coal to the steel industry. He also is chairman of the American Iron and Steel Institute. He wrote this for the News Tribune.