Government can play an important role in creating an environment that is supportive of U.S. Manufacturing companies. Unfortunately, too often policies and programs are developed by officials that have little or no business experience. They are motivated by their desire to get reelected and maintain power. That being said, there are several specific areas where programs offered by federal, state and local officials can make a difference.
Economic Development: The primary goal should be to help grow existing businesses and foster the creation of new jobs. Too often officials lavish large “new” companies with over-the-top incentives to attract them to their area, only to see them leave after a few years. This was evident in Western Pennsylvania, where both Volkswagen and Sony received economic windfalls, and then closed several years later. Ironically, it was the same building.
A model to consider would be the creation of an economic development board (EDB) that would be composed of local business leaders. Using “block grants”, they could work with companies to develop mutually agreed upon growth strategies. These grants would be multi-year and tied to the attainment of specific benchmarks, with an emphasis on job creation. Instead of rigid legislation, the EDB would work with business owners to design individualized programs that spur economic growth. One interesting example is Enterprise Ireland, an agency responsible for supporting the development of manufacturing and service companies. They also support college-based researchers in the development, protection and transfer of technologies into industry via licensing or spinout companies.
Tax Policy: An important step would be to lower corporate tax rates and provide tax incentives for R&D, capital investment and workforce training. These can be funded by eliminating a wide range of tax loopholes and politically based incentives (including subsidies for ethanol and sugar). As the CFO at USDA, I saw numerous areas where government agencies could both lower costs and generate revenue. Programs that help manufacturing, including accelerated depreciation and tax credits for capital equipment, will help spur economic growth.
Regulation: An important step would be to carefully examine regulations and eliminate those that are outdated and increase the cost of doing business. The call for across-the-board cuts is like using a chainsaw when a scalpel would be more appropriate. If politicians could ever put aside their partisan differences, they could work in collaboration with business leaders to identify and eliminate unnecessary regulations – and even suggest more appropriate rules in other areas. These should not be driven by large campaign and Super Pac donors seeking to improve their own bottom line. Designed and implemented appropriately, regulations play an important role in ensuring a level playing field and providing often-needed consumer protections.
Posted June 25, 2012
- NYU Stern Leadership Fellows
- "Preparing For Private Company Mergers & Acquisistions" PWC/Cohen Grigsby
- Goldman Sachs/New York
Presentation to Private Wealth Management
- The Business Growth Expo - Pittsburgh Business Times
- Institute for Entrepren.eurial Excellence (IEE)
- Association For Corporate Growth (ACG)
- Bloomberg: Taking Stock
- Business Talk Radio Network
- Inc. Magazine
- Business Finance Magazine