Competitive Intelligence

NAM Study Cites External Non-Production Costs As Primary Competitive Challenge Facing U.S. Manufacturers

The National Association of Manufacturers, or NAM, citing a new study sponsored by St. Louis-based Emerson Electric, and produced in partnership with Manufacturers Alliance/MAPI, said:

"External, non-production costs add approximately 22 percent to unit labor costs of U.S. manufacturers (nearly $5 per hour worked) relative to their major foreign competitors, and are the primary competitive challenge facing manufacturers and their workers," said Jerry Jasinowski, President of the National Association of Manufacturers.

"This report comprehensively documents these extra costs – corporate tax rates, employee benefits, tort litigation, regulatory compliance and energy – and estimates them at approximately 22 percent of the price of production for U.S. firms relative to our nine most important trade competitors," Jasinowski said. "These external costs are twice the size of the average direct labor costs of U.S. manufacturers, and are a major factor in our loss of trade and jobs."

"U.S. manufacturing has demonstrated the ability to overcome pure wage differentials with trading partners through innovation, capital investment and productivity," said James Berges, President of EMERSON. "But when the additional external costs described in this paper are piled on, the task becomes unmanageable, even in the best companies."

"There are many self-proclaimed friends of manufacturing expressing concern who are nowhere to be seen when these excessive non-production costs are on the table," said Jasinowski. "Taken together, external non-production costs have offset a large part of the 54 percent increase in productivity achieved since 1990. It is imperative that our elected representatives at all levels take a hard look at the costs created by their actions – and sometimes lack of action – and the impact on our economy. We simply must forge a more pro-worker, pro-manufacturing climate if our industrial leadership is to be maintained and strengthened."

Use the following link, if you'd care to read the original study, entitled How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness. It's interesting reading.

- Arik