As they make the rounds of barbecue joints and $10,000-a-plate dinners all over the country, presidential candidates Kamala Harris and Donald Trump often bring up restoring U.S. manufacturing and refer to the “good jobs” that it promises.
For instance, Harris name-checked “manufacturing” 13 times in a speech she gave in Pittsburgh and pitched the ideas of giving $50,000 grants to small businesses, expanding clean energy initiatives and giving tax incentives to employers who work closely with labor to provide good wages, benefits and working conditions as part of that agenda.
Trump, in his campaign speeches, has touted more tariffs and more corporate tax cuts as measures to goose the economy and “steal jobs” from other countries.
But how much do presidential platforms really shape manufacturing? And how much does the policy a president pushes forward while in office resonate through all levels of the economy and affect manufacturing businesses in a meaningful way?
As the U.S. election approaches, IndustryWeek asked policy experts for their take on the extent of presidential impact on the manufacturing economy and how much manufacturing policy at the federal level drives positive change in the industry.
The experts are:
- Sameeksha Desai, director of the Manufacturing Policy Initiative at Indiana State University.
- Jeff Ferry, chief economist of Coalition for a Prosperous America, a national non-profit representing domestic producers.
- Scott Paul, president of the Alliance for American Manufacturing, a partnership between U.S. manufacturers and the steelworkers union.
Here are themes that surfaced repeatedly in conversation:
Presidents (and presidential candidates) have changed messaging around manufacturing
From roughly 1990 to 2015, free trade and globalization were the economic refrains. Manufacturing, considered lower-skill and capital-intense, was to be outsourced to lower-cost countries to make room for more professional, white-collar jobs in the service and technology sectors.
But beginning around 2016 with Trump’s successful presidential campaign, the U.S. public’s perception of manufacturing began an important shift, says Ferry. Trump and just a few economists at the time were saying, “We can’t outsource and offshore everything.”
The message gained traction as wages in other industries remained stagnant and manufacturing wages rose. According to a study by Ferry’s organization, income in leading manufacturing sectors—primary metals, automotive, chemicals, aerospace, automotive and computer/electronics—is 39% higher than income in leading service industries.
Messaging is different than results
Desai says Americans now recognize “that it’s important to do something about American manufacturing competitiveness. But we’re still missing some parts of the story.”
The relationship between manufacturing and national security—that part of a national defense strategy should be innovating around technology and having state-of-the-art manufacturing capabilities in areas like defense and healthcare—is lost on the average citizen.
“It’s really important for the general public to understand that manufacturing is not just about making things,” says Desai. “And that when they’re evaluating a candidate’s platform, it’s important to ask, ‘How does this affect national security? Is this going to make it so that it’s going to be easier for new innovations in critical technologies or antibiotics?’ That link is not clear.”
Even where sentiment and policy have shifted, manufacturing output still remains roughly the same as it was in 2015: 10% of GDP, says Ferry. “The needle hasn’t moved.”
Paul says that while net output is critical, at this stage it’s entirely possible to be laying important groundwork for a manufacturing surge while at the same time individual companies and plants are moving to places like Mexico or Thailand.
“‘Made in America’—that idea is something that a lot of presidential candidates and presidents have, at least rhetorically, paid attention to for the past 40 years or so,” Paul says. “But, I do think from a policy perspective, certainly the last two administrations—Trump and Biden—have done an epic amount with respect to manufacturing. There’s been a sea change in terms of how we approach trade, how we look at the role of having an industrial policy and establishing new industries in the United States, or making our supply chains resilient.
“The good news is, there’s a competition of ideas about how to bring more manufacturing to the United States. And I think, instead of saying that’s not possible, it’s ‘here’s how I’m going to get it done’—and that’s what I love to hear.”
Policymakers often don’t “get” manufacturing
Ferry sees policymakers conflating Wall Street’s interests in optimizing profits and buying and selling companies.
“The problem is that the policies that have been tried, are not strongly focused on building the manufacturing sector,” says Ferry. “They have been diluted down for political gain.”
Manufacturing has its own set of needs and measurements for success, from optimizing production to managing a multitude of supply-chain players, to planning ahead for vast capital outlays and staffing a workforce with a broad skill spectrum.
Desai sees the most vulnerable manufacturing businesses as “multi-generational, family-owned businesses that have made significant investments in the way that they do business and the way they do production, and then to have to sort of undertake a massive technological shift and a massive technical shift at the same time. That can be an existential change.”
These companies are often considered the backbone of American manufacturing because of their expertise and specialization. The federal government, working in tandem with economic development organizations, could take a more active interest in seeing them succeed, offering additional resources and opportunities for succession planning.
“For them to enter the new technological age,” says Desai, “it takes pivoting, product innovation, getting the new technology in place and the new knowledge workers they need to optimize the technology.”
Incentives that are more targeted, faster approvals for critical industries and better connectors between public agencies can move the needle.
Ferry recommends the federal government—and the Department of Defense specifically—take the lead to speed up approval of certain critical projects, such as mining and refining lithium, that can take decades as they wind through various local governments.
“The bias should be in favor of approving these projects,” he says. “Obviously, they are not in downtown New York. There are too many opportunities to slow things down, and not enough opportunities to speed them up when speed is essential. People have told me it can take 10-to-15 years to get a mine approved. Why on earth would you even start such a process?” There should be public comment and free discussion, “but know when it’s time to make a decision.”
Paul would like to more limits on gains global corporations can make by moving work, profits and tax burdens overseas. “There certainly need to be mechanisms in the tax code to prevent that kind of game-playing.”
Reward companies investing in workers, new facilities, production in the U.S. Penalize or limit those moving production overseas “with mechanisms in the tax code to prevent that kind of game-playing,” he advises. “There’s a lot at stake in tax reform, and you want to get the biggest bang for the buck out of it.”
Incentives favor the companies least likely to innovate, Ferry adds. “The clean-energy incentives tend to directly help larger companies, but the suppliers [who finance and supply the innovation] are “literally thousands of smaller companies. The problem is a lot of industrial policies are supporting companies past their prime.” He names Boeing and Intel as two examples of large companies that are currently struggling to deliver on promises.
A case can be made for continuity
“Donald Trump implemented a set of tariffs against Chinese imports, and President Biden actually continued some of those tariffs,” says Ferry. “And from everything Kamala Harris has said, she would do the same.”
“We should continue those tax credit programs, and we need to find a way to maintain the 100% tariffs against Chinese EVs” that Biden implemented this year.
Deciding which opposing-party policies to keep is a “tough call every incumbent has to make,” says Paul. “This is one of the paradoxes that whoever’s going to be president is going to face. Biden had to decide whether to keep some of the tariffs that the Trump administration had to put in. It would have been easy for him to say, ‘This is not my policy. I want a clean slate.’ He did not do that at all. He kept those tariffs.
“I think that will be a question more so for Trump than for Harris: What do I want to keep that my predecessor put into place? There’d be a danger for Trump to want to get rid of a lot of the stuff—in part because many of those investments being made are in a lot of different states. They’re all over the place. And so there will be local officials saying, ‘Hey, we need to keep these resources going.’”
“It’s kind of like the Affordable Care Act. [Republicans] didn’t do it, but they probably don’t have a better idea. And there would be a big downside for trying to get rid of it.”
Certain guidance is best from the top
Ferry would like to see a more holistic policy for nearshoring come from the top. “There is scope for U.S. companies to build more labor-intensive parts in Latin America that has to be coupled with manufacturing highly valued, more complex products in the U.S. parts in the U.S.”
The president should also be thinking about “how do we build a U.S.-owned battery industry in this country?” he says, as the technology for U.S. battery plants currently comes from Asia. “You have to invest in battery technology and battery production, and you’ve got to do it without relying on China.”
He would also like to see more incentive for solar-panel innovation to happen in the United States—China is dominating.
The president is where the buck stops. “I don’t put a lot of credence in creating a manufacturing czar or ambassador or such a job,” he says. “The secretary of Commerce is the logical person to get stuff done. And it should come from the top, from the White House.”
“I’m a policy wonk,” admits Ferry. I wish there were more detailed policies.”
