Tonawanda News

Bob Confer

April 17, 2012

CONFER: Obama policies promote outsourcing

As a manufacturer, I’ve been interested in President Barack Obama’s insourcing kick. By “insourcing,” the President refers to a reversal of the outsourcing trend by American companies; some of them — very little in number — are bringing jobs back to the U.S. Obama has been quick to take credit, citing his economic policies while ignoring the true reasons, which range from European woes to ongoing productivity lapses in developing nations.

Actually, the administration has continued to drive production away from America and outsourcing far exceeds insourcing. Most of my manufacturing peers agree that Obama’s policies are dangerous and have inhibited the growth of their companies. While the White House points out 334,000 manufacturing jobs have been created in the United States over the past 2 years, the reality is that sector supports 2.2 million fewer jobs than it did in November 2007, just prior to the recession. Production employment remains at its lowest levels in 70 years.

Proof that America has become increasingly unattractive to manufacturers under Obama’s watch can be found by analyzing statistics provided by the Manufacturing Institute and the Manufacturers Alliance for Productivity and Innovation (MAPI). They produce reports which look at the structural costs of doing business in the US, including factors influenced by government intervention in the free markets.

In their 2008 report, produced the year Obama was elected, it was discovered that American businesses faced a 17.6 percent cost disadvantage versus nine industrialized countries featured in the study (among them Mexico and China). Fast forward to late 2011 and the study shows that the cost disadvantage grew to 20 percent. That ongoing collapse is certainly no incentive to insource. What accounts for such destructive structural costs?

One factor outlined in the study is corporate taxes. While the combined federal and state tax rate has remained unchanged in America since 1997, the rest of the industrial super powers have seen theirs drop in that same period. The tax advantage for foreign locales is now 8.6 percent more beneficial than that of the U.S. When the study was first launched in 2003, the foreign advantage was “only” 5.6 percent.

Obama has done nothing to correct this. He openly strives to tax everyone and everything. Oh, he has alluded to promoting insourcing by extending tax breaks to businesses that bring jobs back to America, but that speaks volumes about his lack of even an elementary understanding of capitalism. By failing to address the destructive nature of our tax structure, he would reward insourcing but still maintain the incentive for outsourcing. If he were to decrease our overall tax rate (rather than playing favorites) he would make outsourcing/insourcing a non-issue by preventing the exodus of jobs in the first place.

The report also shows a continued loss in the area of employee benefits. It’s 5.7 percent more economical to do business elsewhere when it comes to them. The greatest influence comes from escalating health insurance costs (to put this into perspective, Confer Plastics has faced increases of 8 percent to 11 percent for our health care costs in each of the past three years). The President claimed he would save the day with ObamaCare, but as more astute observers of government know, it will only drive up the cost. We’ve already seen some price increases attributed to it (pharmaceutical and equipment levies), however, the greatest ones will come in 2014 when, among other things, the government slaps a huge fee on all insurers (which will be passed on to the insured).

The Obama administration is just as much to blame for other factors noted in the report, all of which, when combined, paint a miserable picture for the competitiveness of America. The President — as wielder of the veto pen and head of the Executive Branch and all its agencies — possesses the power to fix this. But he chooses not to. Instead, he has added — and will add — to the size and cost of government as well as the countless hurdles to the private sector.

He is no insourcer: When you look at what he’s done, he’s a net outsourcer and his legacy will carry that dismal trend far into the future.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.

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Bob Confer