In June, the National Association of Manufacturers (NAM), members of NAM’s Council of Manufacturing Associations, and the Conference of State Manufacturers Associations launched Manufacturers for Sensible Regulations, a coalition addressing the impact of the current regulatory onslaught coming from federal agencies, which the Flexible Packaging Association (FPA) joined shortly thereafter.
The coalition’s purpose is to encourage policymakers to help release the power of U.S. manufacturing by ridding job creators of overly burdensome regulations by meeting with key members of the Biden administration and Congress to highlight the impact of unbalanced regulations. NAM President and CEO Jay Timmons says the effort should and can be a bipartisan one.
“President Biden and Congress have prioritized strengthening the manufacturing sector in America through historic legislation like the Bipartisan Infrastructure Law, the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act, initial permitting reform actions in the Fiscal Responsibility Act, and even some energy provisions in the Inflation Reduction Act,” Timmons said in a NAM media release. “Unfortunately, the continued onslaught of regulations is having a chilling effect on investment, curtailing our ability to hire new workers and suppressing wage growth, especially for small and medium-sized manufacturers. The recently released regulatory agenda from the administration shows this barrage isn’t stopping.”
Burdensome Regulations
In a letter to White House Chief of Staff Jeff Zients, the coalition said, “The cost of complying with regulations can be enormous, particularly when it comes to regulations that impact hiring and retention. The most current data on the cost of regulations shows that the average U.S. company paid $9,991 per employee per year to comply with federal regulations, but the average manufacturer in the United States pays nearly double that amount: $19,564 per employee per year. Small manufacturers face an even higher and disproportionate regulatory cost of $34,671 per employee per year, which is more than three times the cost to the average U.S. company.”
The letter also states, “Regulations create tremendous uncertainty, which can stall or even prevent manufacturers from growing their workforce, purchasing equipment, conducting research and development, and investing in their communities. This puts manufacturers in the U.S. at a competitive disadvantage with countries such as China, threatening America’s global leadership.”
According to NAM’s recent Q2 2023 Manufacturers’ Outlook Survey, over 63% of manufacturers report spending more than 2,000 hours per year complying with federal regulations, while more than 17% of manufacturers report spending more than 10,000 hours. The survey illustrates manufacturers’ growing concerns over the onslaught of unbalanced federal regulations and the threat that poses to sustaining manufacturing investment, job creation, and wage growth. NAM conducted the survey from May 18 to June 1.
Increasing Concern
The manufacturing sentiment in Q2 2023 was the lowest it’s been since Q3 2020: 67% percent of respondents felt either somewhat or very positive about their company’s outlook, down from 74.7% in the first quarter. And it was the third consecutive reading below the historical average of 75%. The NAM Manufacturing Outlook Index measured 44.5 in the second quarter, down from 49.8 in the first quarter.
The survey also notes that manufacturers are increasingly mentioning the cumulative impact of federal regulations on their businesses. Concerns about an unfavorable business climate were the highest in six years (Q2 2017). Results from the survey note that 65% of manufacturers would purchase more capital equipment if the regulatory burden on manufacturers decreased, with 46.9% saying they would increase compensation, 43.2% hiring more workers, 40.1% investing in research, and 38.1% expanding their U.S. facilities.
Survey results indicate that increased tax burdens would hurt manufacturers: 88% of respondents said higher tax burdens on manufacturing activities would make it more difficult to expand their workforce, invest in new equipment, or expand facilities. In addition, those completing the survey were asked about recent tax law changes that have increased the after-tax cost of performing research, purchasing capital equipment, and taking out business loans. More than 78% of respondents said the higher tax burden has decreased funds available to grow core manufacturing activities in the United States.
Reaching Out
To support the coalition’s efforts, NAM is working on a series of public-facing and targeted communication opportunities to complement the lobbying efforts. They are soliciting stories from small and medium-sized manufacturers that help to illustrate the harm an overly aggressive regulatory regime can have on the manufacturing industry. They are also developing several other communication tools for their lobbying efforts, including an economic study, a public-facing video series, and collateral materials for policymakers. To date, NAM’s strategic communications team has secured several earned media placements in top news outlets highlighting the campaign, including Politico, Fox News, and Axios. The NAM digital communications team continues to update the online Regulatory Action Center at nam.org/competing-to-win/regulations/, where information, resources, and more relating to their efforts will be compiled regularly.
NAM is the largest manufacturing association in the U.S., representing small and large manufacturers in every industrial sector and all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.9 trillion to the U.S. economy annually, and accounts for 55% of private-sector research and development. NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or the coalition, please visit nam.org.
Dani Diehlmann is FPA vice president, communications.