published Friday, May 20th, 2011

Controls stifling us, execs declare

Businessman T. Boone Pickens  sits in the middle of the stage during Thursday's Manufacturing Summit. The national manufacturing conference was held at the Northwest Georgia Trade & Convention Center in Dalton, Ga., on Thursday. Leaders from the manufacturing and work force development fields attended the conference, which included Pickens as a keynote speaker.
Staff Photo by Jake Daniels, Chattanooga Times Free Press
Businessman T. Boone Pickens sits in the middle of the stage during Thursday's Manufacturing Summit. The national manufacturing conference was held at the Northwest Georgia Trade & Convention Center in Dalton, Ga., on Thursday. Leaders from the manufacturing and work force development fields attended the conference, which included Pickens as a keynote speaker. Staff Photo by Jake Daniels, Chattanooga Times Free Press

DALTON, Ga. — Rumors of the death of American manufacturing have been greatly exaggerated, officials said Thursday at the 2011 National Manufacturing Summit.

But as industry claws its way back from a crippling recession, government policies threaten to strangle the recovery in its infancy, they argued.

During five hours of talk here Thursday, political and business leaders blasted what many called dangerous levels of regulatory interference by the federal government while praising the resilience of the American factory and its workers.

“Between 2001 and 2010, the value of our manufactured exports grew by 95 percent,” Georgia Lt. Gov. Casey Cagle said. “A great country that makes nothing won’t be great for long.”

If energy use is any indication, manufacturing has managed to grow past pre-recession levels, power officials said, even if Georgia’s 9.9 percent jobless rate last month remains above the U.S. average.

Industrial electricity and gas sales plunged during the recession. But Southern Co., reported a 7.8 percent jump in industrial electricity sales last year and AGL Resources said it has more than recovered from a nearly 35 percent drop in industrial sales of natural gas at the trough of the recession.

Jobless recovery?

But productivity gains have allowed manufacturers to increase production in the latest economic cycle without bringing employees back to the shop floor. In metropolitan Dalton, for instance, about a third, or 23,000 of the area’s 66,000 employed workers, are engaged in manufacturing. That’s down by nearly 11,000 workers from the peak in 1999, although Dalton still has twice the share of its workers employed in manufacturing as the U.S .average.

U.S. Rep. Tom Graves, R-Ga., one of the sponsors of Thursday’s summit, argued that overregulation is costing the economy $1.75 trillion a year, which is equal to two stimulus packages such as the one Congress adopted in February 2009.

Graves proposed that any regulation that will cost businesses over $100 million must first be approved by Congress to “disable some overreaching government agencies.”

U.S. producers still make 21 percent of global manufactured products, or about $1.6 trillion of value, according to the National Association of Manufacturers. But that’s some $150 billion less than the totality of regulations cost the country, according to Graves.

Regulatory challenges

“When I talk to employers throughout this district and elsewhere, and I ask them what is the No. 1 area that inhibits job growth, it’s without exception overregulation and the uncertainty of the regulatory environment,” Graves said.

From the still-contentious national healthcare plan to the cap-and-trade proposal that stalled in Congress, many businessmen said they are afraid to make capital investments and hire employees until they know how much it is going to cost, he said.

Southern Co. CEO Tom Fanning said proposed new pollution controls on coal-fired power plants are likely to cost far more than the $10.9 billion annual expense estimated by the Environmental Protection Agency.

Electricity rates could rise by 20 percent because of the EPA rules over the next four years, hurting the competitiveness of U.S. industry, he said.

The price of installing natural gas pipelines has quadrupled over the past decade to an average of $4 million per mile for Southern Natural Gas, company President Norman Holmes said.

If legislators don’t take a hard look at which laws are harming businesses and hindering production, “our children and grandchildren will be challenged to achieve the standard of living we have enjoyed,” said Werner Braun, president of the Carpet and Rug Institute.

Environmental and consumer groups, however, claim that savings in health costs and saved lives more than justify the expense to implement the new rules.

But sometimes those regulations go too far, said Chip Howalt, president of Textile Rubber and Chemical Co.

Howalt said the estate tax could force his company to split in two, and he expects health care costs to rise from the health insurance reform package adopted by Congress in 2010.

“Roughly 50 percent of second-generation companies fail,” he said. “All the things chemical manufacturers have to do annually to comply with regulations and keep up with the new ones being brought on are staggering.”

As private companies have cut costs to comply with regulations, the government’s budget has ballooned, said economist Steve Moore, a member of the Wall Street Journal editorial board.

Government borrowing soars

If government borrowing for the next 10 years increases at its current pace, it will outpace all U.S. borrowing from 1776 to 2005, he said.

“If we don’t get this under control, we will face a national crisis,” Moore said.

But educators, who supply the skilled labor necessary to work in an increasingly technical environment, worried that cuts to technical institutions and K-12 schools could hurt manufacturing.

“From the work force side, we’ve relied on a number of federal programs to support our students,” said Ron Jackson, commissioner of the Technical College System of Georgia. “We need at least some of them to stay in place for our students.”

Energy and carpet leaders called for a national energy policy, which would help move the country away from foreign oil and toward domestic sources of energy.

“The talk of oil getting to $200 to $300 per barrel is a frightening prospect because it could literally price our product out of the market,” said Vance Bell, CEO of Shaw Industries, one of the nation’s biggest carpetmakers.

Business Editor Dave Flessner contributed to this report.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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