By Neil R. Hise
New Mexico Manufacturer
"We have met the enemy," said the comic strip character Pogo, "and he is us."
Pogo could have been talking about the American economy in 2008— specifically the manufacturing companies like mine that are the engine of our economy, and yet are treated like an enemy by our government.
Manufacturing is where creative people transform raw materials into the finished products, both industrial machines and consumer products, which make modern life possible. U.S. manufacturers employ 14 million Americans directly and another five or six million indirectly. We pay our employees well and provide a full range of benefits. We provide our communities with a solid tax base that supports schools, roads and residential services.
During this difficult period when the housing market is in a swoon and autos are in retreat, manufacturers are exporting like crazy, providing a badly needed boost to our economy. You would think our government would appreciate the importance of manufacturing to the country and do what it can to help make us stronger, but the reverse is true.
At every turn, we encounter onerous taxes, burdensome regulations, soaring energy bills, rising benefit costs and frivolous lawsuits that undermine our competitiveness in the global marketplace and make it unnecessarily hard to survive, never mind prosper.
The National Association of Manufacturers commissioned a recent study that determined U.S. manufacturing bears a 31.7 percent added cost burden compared to our nine major trading partners for taxes, natural gas prices, employee benefits (mainly health care), pollution abatement and litigation. Amazingly, we somehow manage to remain competitive and are today actually expanding our exports at a rapid rate.
But I can't help thinking we would be much more competitive— and make a much greater contribution to our economy— if our government were working with us instead of against us.
My company, CEMCO Inc., employs 44 people in Belen. The main product is the Turbo vertical shaft impact crusher, which we have been producing since 1967. We also are designing and building machines for the farming and tank building industries, plus a new product for recycling. We are a creative group with several patents in hand. At the moment we are exporting to 21 foreign countries.
I really get tired of the critics who rant and rave about "off-shoring." It never seems to occur to them that it is our wrongheaded laws and policies that encourage domestic companies to relocate in other countries. For many of them, it's a choice between that and going out of business.
For example, manufacturing is highly dependent on natural gas and our country has plenty of it, but Congress repeatedly denies us access to it with bans on drilling right here in New Mexico along with Alaska and the Outer Continental Shelf. So we must pay sky-high energy prices.
We're paying one of the highest corporate tax rates in the world, second only to Japan. And as for the death tax, it will probably make it impossible to keep our 46-year old company in our family, which means it will likely disappear altogether.
Our legal system is out of control and business is the primary victim of its excesses. We spend more than 2 percent of our Gross Domestic Product on our legal system. No other industrial country comes close to that. Even the most frivolous lawsuits must be defended, often at great cost.
Here's an idea for the political candidates. Stop complaining about foreign trade and start doing something about the unnecessary costs we impose on ourselves.
Neil R. Hise is president of Belen-based CEMCO Inc.
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