White House struggles to woo wary manufacturers

Neil Munro White House Correspondent
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The White House’s effort to aid and ally with the U.S. manufacturing sector is being stymied by its other political priorities and by its 2012 campaign plans.

In recent months and weeks, the administration has yanked pending regulation of companies’ factory boilers and power-companies’ emissions of carbon-dioxide.

President Barack Obama has appointed a few manufacturing-sector CEOs to his advisory council on jobs, and has made high-visibility trips to an auto-factory in Ohio, a lighting-factory in North Carolina, as well as a training center in Northern Virginia, where he lauded the sector’s contribution to the economy.

But the sector’s output is still stalled and its executives are mostly hostile to administration priorities.

Manufacturing lost 5,000 jobs in May because of the sour economy, three pending free-trade agreements are stalled by new White House objections, the manufacturers are facing higher bills for energy and raw materials, and the companies’ executives are worried about a wave of federal regulations, said Chad Moutray, the chief economist of the National Association of Manufacturers.

The Environmental Protection Agency and the Occupational Safety and Health Administration. “are busy turning out regulations left and right that are causing a lot of uncertainty and angst in this community,” he said.

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“There is a frustration that is growing within the business community,” said an industry advocate. “They’re saying ‘you’re killing us here,’” he said.

But the senior executives do not want to publicly criticize the administration, he added.

Overseas markets, however, are boosting manufacturers’ optimism, said Moutray. In a recent survey of members, 86 percent of respondents said the coming year will be somewhat or very favorable, he said.

“This is the highest it been in five years … we’re up to where we were in the mid 2000s,” he said, adding that the sector has added 243,000 jobs since December 2009. The dollar’s decline, and growth in overseas economies, is fueling this increase in exports.

That optimism is countered, however, by the sector’s job loses — down 2.3 million jobs from 2009 — and by other companies’ worries about the domestic U.S. market.

The National Federation of Independent Business runs its own survey members, and their confidence declined slight for the third month in a row.

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“Corporate profits may be at a record high, but businesses on Main Street are still scraping by,” said a statement by NFIB chief economist Bill Dunkelberg.

Only five percent of respondents believe it is good time to invest in expansion, said the NFIB survey.

That stalled economy has pushed Obama’s poll-ratings down and U.S. unemployment up to 9.1 percent. Many additional people are underemployed or have dropped out off the workforce, making it difficult for Obama to win swing-states, such as Ohio, in 2012.

But Obama can’t easily boost the manufacturing sector without hurting core members of his coalition. His meetings, trips and talks with industry leaders don’t provoke much opposition, and his multi-billion dollar aid program to General Motors and Chrysler has earned him much support from the auto-unions and many auto-workers.

But other actions have prompted complaints by his allies. For example, environmentalist have complained about the EPA’s decision to stay its pending regulation of companies’ energy-generating boilers, titled the Boiler Maximum Achievable Control Technology rule.

“The EPA’s indefinite stay is clearly meant to postpone completion of the Boiler MACT rule until after the 2012 election,” said Rena Steinzor, at leader of the D.C.-based Center for Progressive Reform. “It also provides yet another example of the Obama Administration throwing in the towel on an initiative to protect public health, safety, and the environment. With about 17 months left until the 2012 elections, it appears environmentalists had better brace themselves for a bumpy, disappointing ride ahead.”

The center recently issued a report saying that nine of 12 important pending environmental-regulation rules may be bottled up until the 2012 election by the administration’s delay and by GOP opposition. So far, however, the environmental movement has not rallied against Obama’s regulatory concessions.

Industry officials say those regulations will hurt companies by increasing their energy costs, by making them hire more compliance lawyers and by forcing them to change their manufacturing processes.

Union opposition to the three pending-free trade agreements is more politically important, partly because Obama needs the unions’ extensive get-out-the-vote capabilities to win in 2012.

The treaties with South Korea, Colombia and Panama are opposed by major unions. The administration has repeatedly promised to send the treaties to the Senate for final approval, but it has delayed sending the treaties to the Senate, and in mid-May, announced it would not send up the treaties until Congress had approved billions of dollars for the ‘Trade Adjustment Assistance’ program.

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The program is intended to aid workers who have lost jobs when companies react to free-trade deals, for example, by moving factories overseas.

“We think [the TAA] is part of the solution,” said Aric Newhouse, NAM’s senior vice president for policy and government relations. “We hope that the White House and Congress will come to a middle-ground soon,” he said.

That middle ground may not be easy to reach if the White House asks for too much TAA money, said a person involved in the dispute. In 2009, the TAA’s budget was just under $1 billion. But if the administration tries to boost the spending, the multi-year cost will balloon to $20 billion or $25 billion.

Then deficit-minded Republicans will balk, legislators will argue over possible matching cuts to other programs, and the trade pacts again will be sidelined while Washington grapples with the deficit after the August recess, said the person.

“We’ve had a number of great conversations with the administration [and] we’re hopeful that the jobs council will provide a good platform to encourage jobs and competitiveness,” said Newhouse.

But, he said, “we’re hopeful there will be a new-found understanding of what it will take to create jobs.”