We live in a sound-bite era. Condensing a message into a few seconds means more to the media and many of their consumers than a full understanding of what is often a far more complex subject.
Case in point: When jobs are transferred outside the U.S., the easy sound-bite is that the company is ``just greedy'' by moving American jobs to low-cost-manufacturing countries. This is a knee-jerk reaction, a false rallying cry, a convenient appeal to emotion. But sound-bites fall short of the true matter at hand.
I believe smart and determined manufacturers find a balance between U.S. manufacturing and low-cost emerging country manufacturing. That is where we can begin uncovering the answer to this complex question.
When jobs in the U.S. are being transferred elsewhere, we owe it to ourselves and our industry to paint a comprehensive picture of the situation.
As the chairman of the Rubber Manufacturers Association (RMA), vice chairman of the Manufacturers Alliance/MAPI, and CEO of Cooper Tire & Rubber Co., I am in a position to speak out-and maybe help keep things in perspective. For example, these are some of the hot issues right now:
Outsourcing is important to U.S. companies that want to remain competitive in the world market. The costs of doing business in the U.S have escalated dramatically. Regulation, taxes and lawsuits are threatening the competitiveness of U.S. manufacturing.
China's growth is going to happen. We need to affirm that China's success is important to the world economy and then participate, shape and capitalize on its growth. The alternative is to stand idly by and hope our business is not harmed.
The U.S. is the best place in the world to live. Its borders should be open for legal immigration to grow international business development.
Tariffs do more harm than good (take a look at the steel shortage, for example). Free trade is an economically sound policy. A trade imbalance is usually a short-term phenomenon.
Corporate tax rates in the U.S. are higher than those of our major trading partners, which creates an uneven playing field, encourages migration of U.S. manufacturing facilities to countries with lower taxes and discourages foreign investment in the U.S.
Escalating benefit costs impact every home and every employer. More than 90 percent of Americans under age 65 obtain health care benefits through their employers.
The combined costs of health care and pension for U.S. manufacturers result in a 5.5-percent cost disadvantage in comparison with our foreign competitors.
The estimated tort cost of frivolous lawsuits adds a 3.2-percent cost disadvantage to U.S. manufactured goods. Tort reform and class-action lawsuit reform are industrial and national issues that require our attention and support.
Regulatory compliance costs are yet another challenge to maintaining a level playing field for U.S. manufacturers. The burden of regulatory compliance is equivalent to a 12-percent excise tax on manufacturing-before the Sarbanes-Oxley Act.
If you do some quick math on these issues, between taxes, regulatory and tort costs, U.S. tire manufacturers have to sell a lot of tires just to get us even with foreign manufacturers. One recent study estimates these overhead costs (taxes, regulation, etc.) add nearly $5 per hour worked in the U.S. relative to our major foreign competitors.
You don't have to agree with my assessment of these issues, but they are the issues that have to be addressed in our efforts to create prosperity. It's not just my job as CEO, it's everyone's job-because these are factors outside the direct control of any one person, company or government.
Manufacturing in the U.S. was at the top of its game in the late 1990s, following two decades of renewal, innovation, deepening capital investment and improved management. Productivity increased, employment increased and manufacturing was again a driving force in U.S. economic growth.
Nearly 20 years of hard-earned progress is being undone by factors including those I have outlined in this article. At the same time, the U.S. is facing increased international competition from Canada, China, France, Germany, Japan, Mexico, South Korea, Taiwan and the United Kingdom.
To maintain its competitive edge, the U.S. needs to take decisive action on the issues affecting its competitive position in the world.
Our tax policy needs to be reformed to encourage work, investment and entrepreneurial activity. We all need to take responsibility for our health to reduce preventable chronic diseases such as hypertension and diabetes.
We must ask our government at all levels to work to reduce the number of frivolous lawsuits. Let's change the way we look at regulation and think of it in terms of results that allow manufacturers to develop cost-effective solutions.
There is still more that we can do, including pension reform and controlling energy costs. But we have to pick a place to put our stake in the ground. These are the issues that must be faced. Our stewardship of them will determine the course of manufacturing in the U.S. for the next 20 years.
There is no sound-bite to address the rising costs imposed on manufacturing in the U.S. There must be thoughtful discourse and decisive actions taken.
Anything less is a disservice to us all.
Thomas A. Dattilo is the chairman, president and chief executive officer of Cooper Tire & Rubber Co., which is based in Findlay, Ohio.