On Friday, I had the privilege to meet President Trump and Vice President Pence in the White House's Oval Office. A handful of Small and Medium Sized Manufacturers were invited to the people's house to share with the President the stunning results of a quarterly poll of factories by the National Association of Manufacturers. These factories reported that 93% were optimistic (only 56% were optimistic before the election). These are the highest optimism results since inception of the study over twenty years ago.
When one watches/reads the main stream media now, one would think our nation is in despair. Job creators in Manufacturing are over the moon with optimism. Why the disconnect?
Manufacturers believe that the new President's economic agenda will create a boon to USA Manufacturing which will create massive job growth. Manufacturers have been mired in anemic growth for a decade and they are a coiled spring ready to surge. Think President Reagan's outstanding growth rates of 4-5% annually - he actually had a quarter over 7%! Our nation will perform at that pace soon. Big economic growth means many well-paying jobs in factories (we pay $83,000+/year on average including benefits).
I told the President that "we are at an inflection point - the American Manufacturing Renaissance starts right now." The policies he is poised to launch will accelerate the manufacturing ascent. Here are eleven policy prescriptions that will unleash our nascent economy:
Energy Independence - For decades, the USA purchased energy from countries that hated us and literally funded terrorists to harm our country. The manufacturers are particularly impressed that the President has quickly tallied so many energy wins: resuming the Dakota Pipeline, approving the Keystone Pipeline and freeing up the coal industry from over regulation. Fracking and the shale revolution are making the USA the "Saudi Arabia" of natural gas and petroleum. It is a blessing that the money generated will stay in the USA (Texas, Oklahoma, North Dakota, Pennsylvania, Ohio etc.) with American workers welding and building the infrastructure of these national security industries.
Regulation Reforms - The President has vowed to cut regulations 75%. Manufacturers are burdened with over 296,000 regulations (that is NOT a typo). Small and Medium sized manufacturers spend over $34,000 per employee to comply with these over the top rules. By making the rules rational, we can redeploy critical members of our team to productive activities.
Tax Reform - Simplifying the tax codes is a no brainer. Our tax system was last reformed in 1986 and is wildly out of date and complex spinning the wheels of factories sorting out all the tax compliance. My firm, Marlin Steel pays as much as a welder each year for tax preparation because the forms are so obtuse.
Cutting Taxes - US Manufacturers pay the highest rate of our 35 industrial competitors. We need a tax rate that enables us to quote jobs so we can win them - now we lose them. Factories love a new 15% rate (not 39+%) vs our competitors - unemployed steel workers will get hired as we win more jobs under a less oppressive tax code.
Instant Expensing - When a manufacturers purchases a tool to enable his employee to be more productive, under the Trump Tax plan, the equipment will be written off in the first year of purchase and not spread over five or ten years (39 years for a building). This will encourage USA factories to belly up to the bar and purchase the most productive equipment in the world so our workers will be more effective and make their jobs indispensable. Our employee's productivity will soar, which will encourage USA factories to open faster and invest aggressively.
Repatriation of $3 Trillion of Cash - USA companies are taxed on profits overseas and are loathe to bring the cash home because we are the only major industrialized country that double taxes overseas profits. Since 2004, our nation has encouraged our companies to keep the cash overseas in foreign investments. By returning this cash, our nation will experience a sugar rush of new investments and factories to spur massive job creation.
$1 Trillion of Infrastructure - Last month, the American Society of Civil Engineers gave our nation a D+ in infrastructure in our roads, ports, bridges, airports and energy grid. President Trump has proposed a massive rebuilding of our infrastructure to rebuild our crumbling systems. We sorely need this investment because our bridges are falling and roads are in disrepair.
Health Insurance Reform - Our companies are hamstrung with a broken health care system - forced to buy from cartels in our own state. Our rates go up double digits each year which makes our teams less competitive in the global economic rat race. As a consenting adult, I should be able to buy health insurance from any state in the Union but our country forces Americans to purchase from local monopolies that have no incentive to improve their procedures and cater to what we want. The President's plan will free us up to purchase insurance from any provider in the nation with a plan tailored to our needs.
Rebuild Military our nation's military has been depleted despite rising threats. Manufacturers provide the Ships, Airplanes, spare parts and material to rejuvenate our Armed Forces so they can protect our nation with suitable equipment.
Protect Intellectual Property - USA Manufacturing's secret sauce is innovation from our amazing engineers and scientists. Oversea competitors frequently poach our intellectual property without penalty and the new administration has committed to shutting down theft our nation's innovations so that we can continue hiring factory workers making these clever ideas.
Freshened Up Trade Deals - NAFTA is a trade deal that was created to foster a stronger alliance with our two primary trading partners, Mexico and Canada. However now the NAFTA deal is 23 years old. They need to be freshened up to address topics that did not exist when created (think internet, etc) which will be crafted to improve our domestic factories and their employees are well positioned.
As Vice President assured Manufacturers in DC right after the election, "America is positioned for huge growth, so buckle your seat belts."