Quality Magazine

Governors Challenged to Support Manufacturing

April 1, 2004

WASHINGTON, D.C.-"State governors have a critical role to play in advocating the interests of U.S. manufacturing," says Richard E. Dauch, co-founder, chairman and chief executive officer of American Axle & Manufacturing.

Dauch, who also serves as chairman of the National Association of Manufacturers, told the National Governors Association that manufacturing remains a critical component of the U.S. economy. "Manufacturing accounts for almost a fifth of GDP (gross domestic product), provides 15 million high-paying jobs and supports another eight million jobs in other sectors," he says. "Manufacturing is the seedbed of innovation in our economy, accounting for 62% of all R&D (research and development). It is far and away our pace setter in productivity gains, and accounts for the bulk of U.S. exports."

Dauch challenged the governors to become advocates of U.S. manufacturing. "We are facing relentless foreign competition like we have never faced before," he says. "Foreign competition makes it impossible for us to raise prices to keep pace with escalating domestic production costs. External overhead costs of taxes, health and pension benefits, tort litigation, regulation and rising energy prices add 22.4% to the price of U.S. production relative to our foreign competitors."

Dauch says U.S. manufacturers could compete with anyone on a level playing field. "But some of our trading partners impose legal barriers to U.S. products," he says. "Some of them engage in rampant piracy of our patents and copyrights. And some of them keep their currencies undervalued to make their exports cheaper and ours more expensive. Our government must do a better job of enforcing trade agreements."

Dauch praised Michigan Governor Jennifer Granholm and Ohio Governor Bob Taft for hosting manufacturing summits to identify challenges to manufacturing and propose solutions, and asked other governors to do the same. "I challenge the policy makers in this room to take similar actions in their states. Develop solutions to abolish the 22.4% disadvantage that U.S. manufacturers are burdened with, and help us achieve a level playing field. Working together, we can keep

manufacturing-and manufacturing jobs-in America," he says.