ITIF commends the U.S. House of Representatives for passing the Revitalizing American Manufacturing Innovation Act of 2013 and calls upon the U.S. Senate to follow suit in quick order.
Reshoring Optimism, But Not Much Else
While many news sources have reported that manufacturing jobs are returning to the United States, manufacturing employment and firm number data show that reshoring is a myth. To attract jobs back, the United States will need to concentrate on boosting R&D, improviWhile many news sources have reported that manufacturing jobs are returning to the United States, manufacturing employment and firm number data show that reshoring is a myth. To attract jobs back, the United States will need to concentrate on boosting R&D, improving productivity, and implementing corporate tax reforms.
How America’s Manufacturing Job Loss Outpaces Other Leading Industrialized Countries
The U.S. manufacturing sector is losing jobs at a faster rate than any other advanced industrial nation besides the United Kingdom. From 2000 to 2009, the U.S. lost over 5 million manufacturing jobs. Commentators like Marc Levinson at the Congressional Research Service underestimate the speed and significance of the decline. However, U.S. job losses since 2000 have been much more rapid than other countries and cannot be explained by growth in worker productivity. These statistics show that the U.S. is facing a serious challenge to its international competitiveness in advanced manufacturing industries.
Manufacturing Universities: A Catalytic Step Toward Revitalizing American Manufacturing
A key component for reviving American manufacturing should be the creation of a national system of “manufacturing universities.” This effort would incentivize post-secondary university programs to focus more on advanced manufacturing, while producing graduates better equipped with the knowledge and skills needed for careers in emerging, innovation-based industries.
The Export-Import Bank's Vital Role in Supporting U.S. Traded Sector Competitiveness
As the official export credit agency of the United States, the U.S. Export-Import (Ex-Im) Bank plays a vital role in fostering U.S. traded sector competitiveness and facilitating exports of innovative U.S. products and services to foreign markets. The bank provides financing for export transactions that might not otherwise occur when private commercial lenders are unable or unwilling to provide financing to foreign purchasers of U.S. exports and plays a key role in leveling the playing field for America’s exporters by matching the credit support that other nations provide, ensuring that U.S. exporters are able to compete based upon the price and performance features of their products. In 2013, the Ex-Im Bank supported over $37 billion in U.S. exports—many of which would not have been possible without Ex-Im assistance—which supported over 200,000 jobs at more than 33,000 firms or their suppliers.
Yet the Ex-Im Bank is under heavy attack from a variety of ideological and special interest critics who oppose the Banks’ very existence. Populist opponents, from both the left and right, oppose the Bank as mere big business “crony capitalism” and a manifestation of unnecessary government intervention into market forces. Other groups have made unsubstantiated claims that the bank’s export credit assistance distorts capacity in markets such as the global aviation industry. Yet there is scant evidence that the global aviation industry suffers from sustained structural overcapacity or that export credit finance contributes to overcapacity in any meaningful way. This report debunks the fallacious claims of both the Bank’s ideological and special interest opponents, which have been designed to obscure the instrumental role the Ex-Im Bank plays in supporting U.S. manufacturing and services exports.
The reality is that the export credit finance the U.S. Ex-Im Bank provides is needed now more than ever, especially as foreign export credit competition continues to intensify. For example, in 2013, China issued three times as much new medium- and long-term export credit than the United States did (China’s $45.5 billion compared to America’s $14.5 billion) and over the past five years China and Germany issued four and five times much export credit as a share of GDP, respectively. If the Ex-Im Bank were disbanded as critics desire, leaving the United States unable to provide export credit assistance to foreign purchasers of U.S. products and services in situations where private sector lenders are unable to do so, the simple reality is that U.S. exports of aircraft, locomotives, power-generation equipment, and thousands of other products and services would be replaced by those of Asian or European producers, whose still-operating export credit agencies would step in to fill the void.
In short, failure to reauthorize the Ex-Im Bank will have far reaching negative results, including fewer U.S. exports, fewer U.S. jobs, and higher U.S. trade deficits. Therefore:
- With Congressional authorization of the U.S. Export-Import Bank set to expire on September 30, 2014, Congress should move expeditiously to reauthorize the Ex-Im Bank for a new five-year term.
- Congress should raise the Ex-Im Bank’s current exposure limit (i.e., lending cap) of $140 billion to at least $160 billion by 2018, ensuring that American exporters don’t fall behind foreign competitors, whose countries are investing substantially more in export credit finance as a share of their GDP than the United States.
RAMI Legislation Poised to Revitalize American Manufacturing
The House Science Committee takes up important legislation this Friday in the Revitalize American Manufacturing Innovation (RAMI) Act which would provide Congressional authorization to establish at least fifteen Institutes of Manufacturing Innovation as part of a National Network for Manufacturing Innovation. Virtually every major American manufacturing competitor-including Canada, France, Germany, Japan, the United Kingdom, and the European Union-both operate and make substantial investments in similar public private partnerships designed to spur innovation in advanced manufacturing product and process technologies in their nations. The network of IMIs would play a vital role in enhancing U.S. industrial competitiveness by supporting development of technologies that will enable U.S. manufacturers to develop the cutting edge technologies needed to compete in the global marketplace. It's time America develop its own National Network for Ma nufacturing Innovation, and we urge the House to follow the Senate's lead in passing the RAMI legislation out of Committee.