President Obama took his State of the Union proposals on the road Wednesday, beginning a three-day tour in Asheville, N.C., by positioning himself as the champion of a U.S. manufacturing revival.
Speaking at an auto parts plant reinvigorated by a Canadian investor, Obama argued policies he announced Tuesday would help the U.S. maintain its status as the world’s largest manufacturer while accelerating an economic recovery for the middle class.
“I believe in manufacturing,” Obama said at a campaign-style event, appearing without a jacket and with his sleeves rolled up. “I believe it makes our country stronger.”
The president also said he wanted to impose a tax on foreign profits to remove the incentive for companies to ship jobs overseas.
In a separate move important to U.S. manufacturers, the president announced his administration would begin negotiations with the European Union on a free-trade deal that would reduce tariffs on manufactured goods and remove regulatory barriers to trade.
Business leaders on Wednesday broadly applauded the president’s manufacturing and trade proposals, while simultaneously expressing doubt Obama would be successful in his campaign to lobby Congress to fund some of his proposals.
In a speech at the Detroit Economic Club on Wednesday, Jay Timmons, the president of the National Association of Manufacturers, said that manufacturing has made the country strong “and it will make us stronger if Washington can start taking competitiveness seriously.”
“Unfortunately, manufacturing is not where it needs to be,” Timmons said. “We have been treading water.”
The hope among Obama allies is that his barnstorming trip — which includes stops in Atlanta and Chicago later in the week that will also focus on the economy — will create political momentum and a favorable political narrative for his manufacturing push.
Obama can fund three of the manufacturing centers on his own with funds under his control, but would need Congress to act to fund the other 12 he proposes creating.
If Congress does not act, Obama will position himself to argue that Republicans in Congress are holding up his effort to backstop U.S. manufacturers.
Manufacturing in the U.S. has been in a long decline. The nation lost about 6 million manufacturing jobs in the decade before Obama took office, and 1.1 million more in his first year in office. Manufacturing employment fell to a low of 11,460,000 at the beginning of 2010, and has rebounded to 11,950,000 since then, according to the Bureau of Labor Statistics.
Obama’s manufacturing institutes are based on the Fraunhofer Society in Germany, which partners government services, private industries and academic researchers under one roof to work collaboratively on joint projects. Fraunhofer projects include the creation of the MP3 algorithm, a solar cell awarded a world record for energy conversion and the video compression format used as a standard for Blu-ray discs and Internet sources like YouTube and iTunes.
Henry Cialone, the CEO of EWI, a manufacturing technology company, said last year that American manufacturers have “Fraunhofer envy” when competing against their European counterparts. A pilot institute that paired companies like Boeing and IBM, research universities like Carnegie Mellon and Case Western and government agencies like NASA and the Defense Department was established in 2012 to develop 3D printing technologies.
The push for some of the proposals, including the 15 manufacturing institutes, is not new; the president also recommended funding in his 2013 budget. But the White House said this year the president will more aggressively divert budget resources already available to foster manufacturing growth. That includes an executive order that will create at least three more of the institutes immediately, soliciting bids from partnerships including some of the nation’s top universities and corporations.
Republicans argue Obama’s regulatory policies and support for higher individual taxes has hurt the manufacturing sector.
And while manufacturing groups are pleased with Obama’s focus, a top industry source said there is concern about tax increases that could affect small-business owners. Other business leaders feared that the president’s proposal to raise the minimum wage to $9 per hour could ripple throughout the economy.
“A minimum wage hike right now would be one more factor driving up costs for employers and creating headwinds for job creation, especially among the small businesses that create most of our nation’s new jobs,” David French, the National Retail Federation’s senior vice president for government relations, said in a statement.
William Galston, a senior fellow of governance studies at the Brookings Institution, said basic ideological obstacles stand in the way for Obama.
“Anything that smacks of big government is going to cause instant resistance,” Galston said. “He may be able to overcome the negative propensity in some respects, but I doubt in all respects. He’ll get some of his agenda but certainly not all of it.”
Galston also warned the real-world implications of Obama’s executive actions were likely to be minimal.
“I hope the White House doesn’t overplay its hand here,” he said. “You can only do relatively modest actions through executive action.”
Moreover, Galston cautioned, there remains a risk to aligning the White House too closely with efforts to fast-track business growth.
“The ideological obstacle is namely that many of the president’s opponents see this as one more example of superfluous and harmful government involvement. If this debate ever heats up, you’ll see the president’s opponents say he’ll do what he did for Solyndra,” Galston said.