Deputy Secretary's Speech

Deputy Secretary of Commerce David A. Sampson
Minnesota Manufacturing Summit
St. Paul, Minnesota

Thank you for that kind introduction. I’m delighted to be with you today on behalf of Secretary Gutierrez. He had wanted to be here, but a change in his schedule prevented him from coming.

A top priority for President Bush and the Commerce Department is working with industry leaders, educators, and state and local officials on revitalizing American manufacturing. We’ve worked with members of the coalition before. And I’m certain some of you have worked with our Export Assistance Center next door in Minneapolis. So, I look forward to our discussions today.

Manufacturing is the backbone of America’s industrial might. Today it represents about 14 percent of our GDP. Manufacturers around the world account for nearly a quarter of the global economy; remarkably, that hasn’t changed much in 30 years.

But as we all know the world is changing. Things are different. Competition is tougher. The pace of innovation has never been faster. And you can’t think about starting or growing a business without considering where and how you fit into a global economy. These are the realities in this first decade of the 21st century. And it doesn’t matter if you’re a small business or a giant multinational.

President Bush responded to these challenges by giving manufacturers their own advocate in the government. He hired Commerce Assistant Secretary Al Frink to work with you to develop polices that cut the red tape and make it easier for your companies to grow. He’s been to Minnesota to meet with manufacturers; some of you might know him.

We also have a new Manufacturing Council that held its fifth meeting in Peoria late last month. I was at the meeting and can tell you it’s a very active organization that has had an impact on government policy-making. And its members include small, family-owned businesses as well as companies with world-wide reach.

With guidance from the council, we’ve put into effect 32 of 57 recommendations that companies told us they needed. (These were included in a report we put together last year: “Manufacturing in America”).

What you need more than anything is a high-performance economy. By just about any measure, we continue to have the most resilient and dynamic economy in the world. Obviously, the lion’s share of the credit goes to you in the private sector. But sound economic policies set the tone and create the environment for businesses, entrepreneurs, and innovators in which to thrive.

First, we’re fortunate that the U.S. economy remains strong … stronger than any other industrial nation … and this despite the historic challenges of the past five years, including:

1. The technology stock bubble burst…that was one major shock.

2. Terrorists attacked us on 9/11, which deepened the recession that President Bush inherited.

3. Corporate scandals drove down public confidence.

4. Last year, four of the most destructive and expensive hurricanes in history struck the United States. Insured losses alone topped $25 billion. Now we have Hurricanes Katrina, Rita and Wilma.

5. And the global war on terrorism remains a major factor, contributing to economic uncertainty both here and around the world.

But the President has put in place policies that promote entrepreneurship, innovation, risk-taking, and job creation. And growth has been solid ever since.

The economy grew 3.3 percent in the 2nd quarter. By contrast, growth in the European Union is averaging only 1.2 percent a year. Underlying employment trends remain positive, despite the job losses caused by this year’s hurricanes. Over 4 million new jobs have been created since May 2003.

The manufacturing sector continues to grow. September marked the 28th consecutive month of growth. That’s the longest period of growth in over 16 years. And it’s the best monthly gain since 1991 — a sign of economic strength … despite September’s hurricanes.

Energy prices continue to be a concern, as we all know. The higher prices caused by strong demand and hurricane-related supply disruptions are having an impact on the economy. People are worried about inflation.

But the macro-economic impact of higher energy prices is not as significant as it was 20 or 30 years ago. Why? Because we’re innovators. We’re way more fuel-efficient today than we were during the 1970s energy crisis.

Overall energy efficiency in the U.S. increased nearly 50 percent over the past 30 years (as measured by btu per dollar of GDP). While economic growth averaged 3.2 percent a year over the past decade, energy consumption grew only 1.2 percent.

Still, even with a strong economy, we have to keep an eye on the road ahead. We have to look for ways to stay competitive in an increasingly competitive global economy.

Burdensome regulation, for example, remains a problem. President Bush ordered a broad assessment to identify unnecessary regulations. We are now applying common sense to regulatory changes. We know that every dollar spent on compliance cannot be invested in ways that boost our competitiveness, or create jobs.

Energy prices are affecting everyone’s bottom line. As the President said again a few days ago, he remains dedicated to ensuring we have affordable, reliable, and secure sources of energy. This summer he signed into law a new energy policy that long-term will reduce our dependence on foreign supplies, and encourage conservation.

Class-action legal reform was another key victory that should make us more competitive as time goes on. And we must devise market-based reforms to help bring down the cost of health care.

Another key part of the President’s agenda is leveling the global playing field for American traders.

We’ve also made great strides with our other partners in the western hemisphere over the last decade. Right now, U.S. two-way trade with Canada and Mexico exceeds U.S. trade with the European Union and Japan, combined.

And we’ve continued to strengthen our regional trading relationship with the new Central American Free Trade Agreement, or CAFTA.

There’s a long-term benefit to this agreement. It has the potential to further integrate the hemisphere, creating an even bigger free trade market in our own neighborhood. And that will help us compete in other markets around the world.

Secretary Gutierrez was in Central America last week leading a trade delegation of 20 American companies. They found willing partners ready to take advantage of the new trade deal.

Other major trade priorities include:

• Completing the Doha Round. We are looking for real results that support free trade, especially in services.
• Reducing tariffs wherever we can. Trade negotiations to date have taken an $8.3 billion cost disadvantage off the backs of American workers and American farmers.
• Ensuring competition takes place on fair terms. We will take appropriate action when trading partners cheat the system, as we’re doing in China and other nations that fail to crack down on intellectual property theft. This is a serious crime that costs our businesses $250 billion a year in lost sales, and our workers three-quarters of million in jobs.

President Bush’s competitiveness agenda is very full. There is much to be done. In some ways, however, you have the toughest job of all: working out the best policies that will help Minnesotans.

How do you do this? Well, it’s a complex process. But it begins with assessing and then building on the region’s competitive strengths.

The most important competitive strength is your knowledge base. So you look at workforce skills, you look at regional universities, at existing industry clusters, at local tax and regulatory policies that reward risk-taking and attract capital.

Then you innovate by adopting market-based, results-oriented public policies. You collaborate by working as a region … not city versus city, or state versus state. And you educate to create a world-class workforce.

This is a formula that works. I’ve seen it work in regions across the country. It’s the best way to compete today and tomorrow.

And if you look at history, this is the blueprint America always uses. It’s what makes Americans the great problem solvers of the world. When we see a problem, we don’t step away. We rise to the challenge. We innovate. We find solutions. We move forward.

This is how America weathered the challenges of the past few years, the terrorist attacks and the economic shocks. And by remaining steadfast to our beliefs and true to our legacy, we will solve the problems on the road ahead.

We’ll fix the looming energy problem. We’ll rebuild after the worst hurricanes in our history. We’ll overcome the terrorists. We will prevail.

Thank you very much.