MARCH 2004

NAM Releases Manufacturing Report

The National Association of Manufacturers recently published a new study - "How Structural Costs Imposed on US Manufacturers Harm Workers and Threaten Competitiveness." It concluded that manufacturers' biggest problem is the rapidly escalating cost of doing business at home.

Among the key findings in the report:

• External costs from taxes, health care, tort litigation, regulation and rising natural gas prices add about 22% to US manufacturers' labor costs, relative to major foreign competitors;
• External costs are a much greater impediment to US competitiveness from average direct labor costs in manufacturing;
• The value of the excess cost burden on US manufacturers from these rising costs alone is almost as large as the total cost index for China;
• These costs, imposed by the federal or state governments, have offset a large part of the 54% increase in productivity since 1990;
• The US taxes corporate income at a higher rate than nearly all major trading partners; and
• European economies spend a smaller share of GDP on pollution abatement then we do.

Based on these results, NAM is recommending the following:

• Reduce the corporate tax burden and reform the treatment of foreign-source income.
• Reduce the burden of rising health coverage costs and encourage greater consumer responsibility for health status and coverage costs.
• Reform rules for funding pension plans to avoid devastating cyclical swings in funding requirements.
• Undertake serious legal reform by curtailing frivolous lawsuits, placing large, nationwide class-action lawsuits in federal court, and negotiating fair and equitable compensation to legitimate asbestos claims.
• Establish a more objective cost-benefit review process for proposed and existing regulations that takes full account of adverse business impacts.
• Adopt changes to land-use regulations to allow access to undeveloped domestic natural gas reserves.

You can access the full report at www.nam.org/costs.

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