Is it any wonder about the wisdom of dropping my graduate work in political science while returning to manufacturing and technology?
Try these pieces of obfuscation this week from Washington.
The big tax cut and simplification bill turns out not to simplify anything. Manufacturing organizations sending information to me believe it offers financial rewards to companies who keep workers offshore. Many of us will see little or no tax cut. Do you ever wish like I do that people would mean what they say and say what they mean?
This from FACT. A letter to Congress persons.
On behalf of the Financial Accountability and Corporate Transparency Coalition (FACT) Coalition, we write to urge you to oppose H.R.1, the Tax Cuts and Jobs Act (TCJA). This bill would create significant new tax incentives to move U.S. jobs, profits, and operations overseas, while exploding the deficit. The bill’s complicated structure also creates multiple new loopholes to allow for expanded tax avoidance by large, multinational companies at the expense of small businesses and wholly domestic companies.
The FACT Coalition is a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.
The final conference bill would move the country to a territorial tax system. The primary goal of a territorial system is to permit offshore corporate profits to escape U.S. tax. Taxpayers already lose an estimated $100 billion every year to aggressive tax avoidance by multinational companies. These changes would further incentivize corporate profit shifting abroad — leaving regular taxpayers to pick up the tab.
This is an item from Sara Fischer writing in the Axios Media Trends Newsletter.
Why it matters: Multi-billion-dollar deals — along with regulatory changes such as the repeal of net neutrality rules — are often justified as ways to spur innovation and increase consumer choice, but consumer advocates argue the actions could actually make access to some popular content more expensive. The real question: Is choice at the expense of price really giving consumers what they want?
Those of us who have been around the block a few times know a couple of things. 1) Big companies don’t really innovate—they acquire smaller innovative companies to develop their portfolios. 2) Industry consolidation (mergers) occur during a period when innovation runs out of energy and companies are beginning to fail. What we’re waiting for is the new innovation area.
Climate, Environment, Business
As politicians debate political theory—most likely with an eye toward electoral votes—regarding environmental policy, businesses have long ago discovered that a sound environmental policy reduces costs and improves operations. Try this item from Axios Generate’s Ben Geman.
Coal and climate tussle: Mining giant BHP said Tuesday that it plans to abandon the World Coal Association, and may also leave the U.S. Chamber of Commerce over differences on climate policy, including the Chamber’s opposition to pricing carbon and its attacks on the Paris climate deal. BHP’s newly published review of its membership in trade associations is here. Quick take, via the Financial Times: “The move reflects the growing importance of environmental, social and governance standards within multinationals, which want to protect their brands and insulate themselves from threats posed by activists and consumer boycotts.”
Just for fun.
Here’s one Fun Thing gleaned from the latest Axios newsletter.
Listening to Mozart is said to raise your IQ. Does playing his music make you a better employee? AP’s David McHugh answers from Frankfurt:
- “Definitely so, say many global companies and their workers, above all in Germany and Asia, where accountants, engineers, sales reps and computer specialists bring violins, cellos, oboes and trombones and gather in their spare time to rehearse and perform lengthy, complex pieces of classical music.”
- “A conspicuous number of big German corporate names — along with a handful in Japan and Korea — have their own company-linked symphony orchestra.”
- Why it matters: “The orchestras serve as public relations tools, playing charity concerts and livening up corporate events. … [And] a symphony orchestra is an excellent model for the creative teamwork companies need to compete.”
Well, we have the people from Emerson Automation playing rock and roll at every Exchange these days. Time to pick up that guitar again.
Here is a bold manufacturing revival proposal from someone who has been deep in strategy. I worked with John A. Bernaden in his roles with Rockwell Automation and the Smart Manufacturing Leadership Coalition. Now retired, he evidently has time on his hands to think. I saw his blog post go up before he sent me his press release.
[Disclaimer: Bernaden is retired and no longer works for either organization nor speaks for them.]
Not one to be bashful, Bernaden begins, “Wall Street’s short-sighted leadership of U.S. Manufacturing has created a crisis!”
“They reap; but they do not sow. They restructure to take billions; but they do not reinvest to make trillions. They destroy industries; but they do not build new ones,” said John A. Bernaden, co-founder and past vice chairman of the Smart Manufacturing Leadership Coalition, Inc., a Washington DC nonprofit group.
Past bipartisan 20th Century U.S. industrial policies and Congressional programs have been complacent in creating this crisis, he continued.
“We need new leadership to create and construct a new era of revolutionary, highly-automated, IT-driven, super-productive, 21st Century Smart Manufacturing with a long-term vision to make America’s manufacturing great again,” Bernaden said.
Other nations have long-term policies and long-range programs to more smartly support their manufacturers at home and abroad, he said pointing to a new “Policy Makers Guide to Smart Manufacturing” published last week by the Information Technology and Information Foundation (ITIF), a Washington DC think-tank. The report provides a comprehensive summary of the long-term Smart Manufacturing policies and long-range programs established by other governments around the world, most notably by China, Germany, Japan and Korea.
“As a leader who values building things, President-elect Trump will soon have an opportunity to smartly lead our nation’s Manufacturing, to renovate the world’s oldest factories, as well as to start a construction wave of smart new factories and plants in every State in America,” said Bernaden.
To achieve the President’s huge vision to make American manufacturing great again, Bernaden drafted a bold $2 trillion to $3 trillion U.S. Manufacturing Stimulus Package with almost no cost to taxpayers for Congress to consider that he released today.
Here is the gist of his proposal. Comments welcome, but I’d suggest making them on John’s site. I did graduate studies in political science, but I have little appetite for politics anymore. The refreshing thing about this proposal, however, is that I find even “conservative” business leaders going to Washington or their state capitals with their collective hands out wanting a gift. This proposal supposedly eschews that.
Between $2 trillion to $3 trillion from repatriated corporate wealth stranded overseas could catalyze a construction wave of between 2,000 to 3,000 new factories — highly-automated, super-productive smart plants, via a stimulus package developed by Bernaden, co-founder and past vice chairman of the Smart Manufacturing Leadership Coalition, Inc., a five-year-old Washington DC non-profit group. Disclaimer, Bernaden is no longer affiliated with either Rockwell or SMLC. This is his proposal all by himself.
Corporations that repatriate past overseas earnings and purchase 20-year USA Industrial Bonds will annually receive 1/20th of their investment totally tax-free, although at a zero interest rate. USA Industrial Bond funds will then become 20-year interest-free loans for States to use in stimulating the construction of new smart factories, mainly by midsize manufacturers.
To avoid federal or state governments picking “winners and losers” which has been a historic failing of past U.S. industrial policies, according to Bernaden, each state’s Governor will appoint 15-member commissions, chiefly consisting of manufacturing and business leaders, to make loan decisions.
State commissions will make loans that range from $500 million to $5 billion to construct smart factories, with typical costs averaging $1 billion each. If multinational corporations repatriate $2 trillion tax-free by investing in these USA Industrial Bonds, a state like Alabama’s share will be $34 billion to loan to business leaders who could construct about 34 smart manufacturing plants, according to Bernaden.
American midsize manufacturers, in a “Mittelstand” movement, are expected to construct most of these new factories because of this unprecedented access to billion-dollar-size, long-term interest-free loans. In Germany, the “Mittelstand” or midsize manufacturers, are renown as the engine of their economy. The Trump-size stimulus plan is also expected to create millions of new jobs needed to operate as well as supply, support and service these newly constructed 21st Century smart factories
[Gary talking again] I find the interesting thing about this proposal to be reference to a highly successful strategy from Germany. The US seems to venerate hugeness. In the common business mind small to medium businesses exist for the purpose of acquisition to make larger companies even larger. But this inevitably stifles innovation and competition. Things grow stagnant.
Unfortunately, I doubt that a politician exists that has a clue about the German Mittelstand. Further, none seem to have any clues about manufacturing or technology. We elect lawyers and career politicians who in many cases never worked a day in their lives building things. Prove me wrong, I dare you. [Please note: in this entire conversation I’ve not said anything about the opinion spectrum or political parties.]
Further unfortunately, I don’t find Mr. Trump to be a manufacturing guy. He negotiates deals, buys properties, builds hotels and other buildings. However, he claims true religion on helping the manufacturing guy. Here’s hoping this proposal gets a little visibility and at the least spurs some conversations around the country.
Steven Nadel, Executive Director of the ACEEE: The American Council for an Energy-Efficient Economy sent an update about the work of the recent Congress relative to energy efficiency from his blog. Below is his report.
Over the weekend the 113th Congress largely wrapped up its work. It looks like this Congress will pass just over 200 bills, the lowest number since World War II. However, before leaving home for the holidays, Congress took action on several bills that will affect energy efficiency:
- Congress appropriated money for the rest of the 2015 fiscal year for most federal departments. Included was $1.93 billion for the Department of Energy’s Office of Energy Efficiency and Renewable Energy, an increase of nearly $25 million from the previous year. The advanced manufacturing office and weatherization assistance programs received increases of 11% and 9%, respectively, while the buildings, vehicles, and federal energy management programs received small cuts.
- Energy efficiency tax incentives will be extended for another year. The tax extenders package includes provisions on energy-efficient commercial buildings, new homes, and various residential energy-efficiency retrofits (e.g. heating, cooling and water heating systems, insulation, and windows). These provisions all expired in Dec. 31, 2013 and the provision extends through Dec. 31, 2014, allowing these credits to be claimed in 2014. The Senate proposed updating some of the qualification levels, but the House decided to keep the current qualification levels. The Senate is expected to accept the House bill. Information about these credits can be found at energytaxincentives.org. The new Congress will have to decide whether to extend these again to cover 2015.
- The Energy Efficiency Improvement Act of 2014 came close but was not enacted. This bill was introduced by Representatives Welch (D-VT) and McKinley (R-WV) and passed the House of Representatives earlier this year. The Senate version was sponsored by Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) and includes four provisions from their more comprehensive energy efficiency bill. The Senate sought unanimous consent to enact the bill but a few conservative senators objected and thus the bill will need to be reintroduced next year. The bill promotes energy efficiency in rental property, promotes commercial building energy-use benchmarking and disclosure, adjusts efficiency standards for “grid-connected” water heaters, and promotes energy efficiency in federal data centers. ACEEE led work on the benchmarking and disclosure provision and played a substantial role in several of the other provisions.
Overall, a disappointing two years for Congress. Hopefully, the 114th Congress that convenes in January can accomplish much more.