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President Obama highlights economic proposals

BY CHASTITY DILLARD | JANUARY 26, 2012 7:20 AM

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CEDAR RAPIDS — President Barack Obama said he is looking to the manufacturing sector to spur U.S. job growth, but some say his plans may do more harm than good.

The president's speech Wednesday mirrored much of what appeared in Tuesday night's State of the Union Address, which revealed plans to help keep jobs from moving overseas — dubbed the Blueprint for an America Built to Last.

"We need to make it easier for American businesses to do business here in America, and we also need to make it easier for American businesses to sell our products other places in the world," Obama told a crowd of roughly 400 at Conveyor Engineering and Manufacturing in Cedar Rapids. "I don't want to export our jobs; I want to export our goods and our services."

Obama's plan calls for tax incentives to keep jobs in the U.S.: Companies would forfeit tax cuts if they move positions overseas and earn tax cuts if they keep jobs here.

According to the National Association of Manufacturers, in 2010, 88 percent of Iowa exports come from manufacturers. At the same time, U.S. manufacturers sold $70 billion more in manufactured goods to free trade agreement partners than it recieved.

But an executive at one Iowa manufacturer said, while the plan is intriguing, it might not be feasible.

David Martin, the vice president and general manager of Sig Manufacturing in Montezuma, Iowa, said the company's overseas work won't be coming back to the United States, primarily because of cost. The company employs 30 people and manufactures a variety of products, including model airplane kits and craft wood.

"We do manufacturing in China with almost-ready-to-fly airplane kits," Martin said. "You could never do this in the U.S.A. No one would work for the wage. If we worked in Montezuma, the price would be so high the consumer wouldn't buy it."

The airplane kits would jump from $200 to as high as $500, he estimated.

Still, Obama stressed the importance of American products on Wednesday.

"It's an economy built on American manufacturing, with more good jobs and more products made right here in the United States of America," Obama said.

But Martin remained skeptical.

"Unless [other countries] would be removed from the market, it would be suicide for us to do this," Martin said. "You couldn't do any sort of tax deduction that would appeal because the American consumer would not buy it."

John Solow, University of Iowa associate professor of economics, said the president's plans are likely to be positive for some and negative for others.

"We could make it very expensive to manufacture overseas by putting very high tariffs overseas … That would bring jobs home," he said. "It would increase the advantage of producing domestically but it will also make the products more expensive and then you have to weigh the costs."

Still, Solow said, the plan could provide benefits.

"This is not a trivial thing to do. You need to know a lot of details before you can say this is a good idea or a bad idea," Solow said.


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