Yes, Academia, There Really is a Skills Gap!

While politicians butt heads in Washington, it's important to remember that manufacturers are focused on keeping the economy moving, by running our businesses as best we can and addressing challenges to this growth such as the industry's skills shortage.

A couple of recent stories in the media highlight how seriously we at NTMA and our members around the country take these issues.  Matt Tyler of Vickers Engineering in New Troy, MI, appeared on CNBC to talk about the growth prospects for manufacturing in spite of the Washington political gamesmanship we're all enduring these days.  You can link to Matt's appearance here

Also, NTMA continues to stay focused on how to address the skills gap that is creating difficulty for manufacturers all around the country who seek qualified workers to fill high-skilled positions.  Recently in the media, a number of stories have been circulating suggesting that the skills gap does not really exist and that the problem instead relates to companies not paying enough to potential workers.

NTMA has been working hard to fight this misperception, put forward by academics like Peter Capelli at the Wharton School of Business.  As you can see in this story from a paper in Portland, Maine, the media is giving this narrative some attention -- and NTMA is fighting back.  We are reaching out to journalists to provide a more balanced view, and actively pushing for fresh stories that more fairly represent this issue.

There is a great deal of education to be done on this front both in Congress and in the media, but we think it's a fight worth having!

NTMA Member Roy Sweatman Warns of Damage to Manufacturing by Automatic Defense Cuts in Orlando Sentinel Op-Ed

Congrats to Roy Sweatman for his op-ed in today's Orlando Sentinel "Reckless Defense Cuts Would Hurt Small Firms and Military."

In the op-ed, Roy points out that a most specialized skills and technical expertise are found in the defense and aerospace supply chain made up of small and medium sized companies across the United States.  "Seventy cents out of each military purchasing dollar goes to such supply-chain firms, which are home to more than two-thirds of defense manufacturing jobs."

Because Congress and the President failed to reach a long term deal on spending, automatic spending cuts will start on January 2, 2013.  The automatic spending cuts would result in a $492 billion cut in defense spending and $171 billion in entitlement programs.  The process is known as "sequestration" where an amount of money equal to the difference between a cap set by a budget resolution and the amount appropriated is "sequestered" by the U.S. Treasury Dept.  In order to pressure themselves to make a deal, Congress authorized automatic spending cuts for both defense and entitlement programs if they could not reach an agreement on spending.  To date, no agreement has been reached.

Roy warns in the op-ed:

Such abrupt and indiscriminate cuts will wreak havoc on the aerospace defense chain of supply as they flow down from the large prime contractors to the small businesses that do so much of the actual work. Economists say more than 1 million defense-connected jobs could be lost in 2013. That means a proportional hit of 600,000 jobs at small and midsized manufacturing shops. Congress might have aimed for a few wealthy megafirms, but it's machine shops, tool and die presses, and family-owned businesses in every district in every state that will take the ultimate hit.

The cost in jobs is painful enough, but the loss of technical excellence and capabilities is an even greater concern. My company, for example, has the only water jet deburring system in the U.S. — basically a computer-controlled machine using a tiny stream of high-pressure water to remove metal imperfections in high-grade mechanical parts.

NTMA's One Voice team in Washington, DC is conveying this same message to Members of Congress and the Administration.

Congratulations Roy for describing the peril that manufacturing faces because of these cuts.  Read the article here.

One Voice Member Ralph Hardt Testifies on Manufacturing and Tax Reform at Congressional Hearing

We are proud that our colleague Ralph Hardt, President of Jagemann Stamping Company in Manitowoc, Wisconsin, was asked to represent small and medium-sized manufacturers at an important Congressional hearing on tax reform last week.  At a hearing of the House Committee on Ways and Means on “Tax Reform and the U.S. Manufacturing Sector," Ralph called on Congress to keep in mind the impact on small U.S. manufacturing businesses when undertaking tax reform, particularly concerning “S-Corps” and similarly structured companies.  Ralph is a member of NTMA and PMA.

Ralph told the Committee: “More than 70 percent of manufacturers are structured as S-Corporations or other pass-throughs paying taxes at the individual rate.  There is a lot of noise in Washington right now about only raising taxes on the ‘wealthy’ to pay for social programs and hopefully balance our federal budget. However, as a small business, we may report $250,000 or more in profit, but few manufacturers take those profits home – they are overwhelmingly reinvested in the business and our employees manufacturing in America. The less resources we have due to paying more taxes ties our hands and does not allow us to buy new million-dollar machines that need new employees to run.”

Ralph also emphasized the distinction between the perception of ‘wealthy’ taxpayers and the realities of small business owners: “What many policymakers in Washington do not understand is, unlike larger corporations, small manufacturers like us are required to provide a personal guarantee for most loans when purchasing capital equipment or expanding our facilities. I just recently signed a personal guarantee for [a] new $270,000 grinder. This means as a small business owner, I have to put my family’s home on the line, and take significant risks if I want to grow my business and compete globally.”

Changing banking terms have created additional burdens for small business owners, Ralph testified: “Banking and other lending requirements have toughened, forcing most owners to leave retained earnings in the business for the sole purpose of meeting collateral requirements. Profits left in the business are still subject to taxation even before distribution to the owner, creating a system which penalizes and taxes business owners who leave money in the business for reinvestment, resulting in reduced ability to secure loans. Therefore, increased tax liability means less money in the business,  restricting its ability to access timely and sufficient credit to purchase machines, expand facilities and hire new employees.”

Ralph called on Congress to work to speedily resolve potential changes to the tax code for the good of U.S. businesses: “How our businesses are organized and the way we pay taxes has the single greatest impact on our companies and how much we reinvest in the business … The uncertainty in the tax code and over what the future holds keeps many manufacturers from investing as much as they should or could to grow their businesses.”

Read the full version of Ralph’s testimony at http://www.metalworkingadvocate.org/pdf/Hardt-Testimony.pdf.

NTMA member Roy Sweatman interviewed by Plant Engineering Magazine

The June issue of Plant Engineering magazine will feature an interview with Roy Sweatman, President of Southern Manufacturing Technologies in Tampa, FL and an NTMA member.  Roy was recently appointed to the U.S. Department of Commerce's Manufacturing Council.  The interview is posted on the publication's website.  Read it here.

Congress Takes Note of NTMA's Reshoring Efforts

It's good to see Congress take notice of "reshoring" - U.S. manufacturers bringing work back the United States from overseas.  NTMA has been talking about this issue for more than two years when we started to see previously off-shored work start coming back to the U.S. and to our members.  In fact, our Purchasing Fairs have promoted reshoring, providing a forum for hundreds of companies to connect with highly competitive and skilled domestic small to medium sized manufacturers.  Earlier this week, the House of Representatives' Committee on Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies held a hearing on "American Manufacturing and Job Repatriation" focused on reshoring.  The head of the NTMA-sponsored reshoring initiative, Harry Moser, testified at the hearing.  Read his testimony here.   The next Purchasing Fair will take place on June 13-14 at the Suburban Collection Showplace in Novi, MI in conjunction with Amerimold Expo 2012.