Harming Manufacturing

Sen. Joe Lieberman (D-Conn.) recently opined that, “George Bush has had his head in the sand like an ostrich on [the manufacturing recession] and millions of people are losing their jobs. We need to get back to supporting manufacturing in America.” True? A good place to find the answer is with the National Association of Manufacturers (NAM), which has 14,000 members, including 350 member associations, serving manufacturers and employees in all 50 states and in every industrial sector.

On September 8, NAM announced its support for the President’s Clear Skies initiative. “The Clear Skies Act represents the most rational and realistic multi-emissions proposal introduced in more than a decade,” NAM said. “In general, the Clear Skies Act balances the various needs we have detailed above [regulatory certainty, affordable power, etc.] in a more effective manner than other multi-emissions proposals and the current Clean Air Act.”

By contrast, the Clean Air Planning Act, sponsored by Sen. Lieberman, was deemed “unacceptable” by NAM because “it would result in the loss of more valuable manufacturing jobs in the United States.” NAM also opposes S. 139, the Climate Stewardship Act, introduced by Sen. John McCain (R-Ariz.) and sponsored by Sen. Lieberman. NAM’s position is understandable, considering that S. 139, according to the Energy Information Administration, would inflict serious harm on U.S. manufacturers:

  • Manufacturers use about 40 percent of the nation’s natural gas. S. 139 would cause natural gas prices to increase 16 percent in 2010 and 46 percent in 2025 compared to the reference case.
  • The chemical, steel, and aluminum industries would be especially hard hit. “These three industries,” EIA found, “participate in highly competitive international markets and would be expected to lose markets if domestic energy prices increase relative to foreign energy prices.”
  • The value of shipments for manufacturers overall declines by 1.5 percent. In particular, bulk chemicals would decrease by 2.6 percent, steel by 2.8 percent, and aluminum by 3 percent.
  • Also, under S. 139, “energy expenditures in 2025 are projected to be $86 billion (45 percent higher) in the S.139 case.” The increased industrial energy expenditures equates to 60 percent of the manufacturing sector’s capital expenditures of $144 billion in 2001.

As NAM put it so well, “Enacting carbon dioxide (CO2) control amendments of any kind will increase the price of natural gas, which is a critical feedstock to many industries, as well as a fuel needed by industry, homeowners, farmers and many electric generators. CO2 controls will have a doubly harsh impact on the economy because not only will natural gas use and natural gas products such as fertilizer and plastics be more expensive, but also because electricity prices will be much higher since natural gas is already a substantial component in electricity generation.”