Secretary's Speech

U.S. Commerce Secretary Carlos M. Gutierrez Remarks To National Association of Manufacturers
Rosemont, Illinois

Thank you for that kind introduction. The National Association of Manufacturers (NAM) is a great ally in the Administration's efforts to enhance U.S. competitiveness. And manufacturing continues to be a vital contributor to America's economic strength. It's a pleasure to join you today. And I'm especially pleased to follow Jim Owens.

Before I discuss our economic strength, I want to encourage you to join me on our Gulf Coast Business Mission, May 4-5.

The private sector will be the engine for growth in Louisiana and Mississippi. The GO ZONE tax and investment incentives were put in place to spur business development and job creation. There is no better place in the country in which to invest and do business than New Orleans.

I hope you will consider joining me on our business mission. Call my office before April 11, or visit GulfCoastOpportunity.gov, and we'll work together to restore hope and opportunity to the Gulf States.

Today, I'd like to talk about how our willingness to engage in global competition makes our economy the greatest on earth. Any discussion of our economy should begin with an acknowledgment that we start from a position of strength.

Look at the numbers:

• Our GDP growth last year was 3.5 percent. Compare that to Italy (0.3%), Germany (0.9%) and France (1.5%). Euro-Zone (1.4%), Canada (2.9%), Japan (2.8%).
• Our unemployment rate is 4.8 percent. Below Canada (6.4%), Italy (7.5%), Germany (9.1%) and France (9.2%).
• Over the past two and one-half years, the economy has added nearly 5 million new jobs. That's more than Japan and the 25 nations of the European Union combined.
• Productivity is strong
• Inflation is contained
• Household net worth is at an all-time high
• And real after-tax income is up more than 8 percent per person since the beginning of 2001

Our economy is a testament to the power of free trade. The global environment is more competitive than anything we've seen before. This means billions of new customers. It also means billions of new competitors.

This creates uncertainty and allows protectionists on Capitol Hill to sound a retreat. There seems to be a theory that we can keep our high standard of living while walling off our economy and protecting ourselves from competition. History shows that we cannot.

Congress passed the Smoot-Hawley tariff in 1930 to try and protect American jobs by cutting imports in half. However, the Smoot-Hawley tariff also cut exports in half and unemployment skyrocketed up to 25 percent.

These trade barriers deepened and extended the Great Depression. A hard lesson was learned. We should never forget it. Economic policy choices should not be dictated by fear. Policy choices must be driven by steps that build and sustain our strengths.

Free trade is our best hope to raise living standards around the world. Studies have shown that removing world trade barriers would create economic growth equal to adding another Canada or another Switzerland to the global economy every single year.

Countries that trade grow faster than those that don't. Countries that trade build greater opportunity for their citizens. About 12 million Americans depend on exports for their jobs. One out of every five factory jobs in America is related to global trade. To maintain our leading position in the global economy, we need to reject protectionist policies. We can't take our ball and go home.

We believe that the role of government is to create the environment for business to succeed. An important part of creating that environment is ensuring that our trading partners are playing by the rules.

We will continue to speak candidly about the lack of IPR protections in the Chinese system; weak law enforcement; and Chinese government subsidies to state-owned enterprises--all of which conspire against U.S. companies trying to do business in China. We will also continue to push other countries to open their markets.

We're the world's largest exporter and we're the world's most competitive marketplace. Our strong manufacturing sector is one reason our economy is the envy of the world. Since 1985, U.S. manufacturers have doubled their output! We're well outpacing Mexico (77%); more than twice the rise in Germany (44%), and three times the rise in France (32%) and Japan (27%)--over that same period.

Since 2001, productivity in our economy is growing at the fastest rate in nearly four decades (3.3%). Manufacturing productivity is growing even faster! (5.0%) And the ISM index indicates continued manufacturing expansion.

Despite this growth we still hear the question, "Is there opportunity and a successful future for manufacturing in America?" The answer is, "Absolutely yes!"

Manufacturing makes us stronger.

• Exports of goods increased 14% in January 2006 over January 2005

Manufacturing raises wages and raises our standard of living.

• Manufacturing employees earn 24 percent more per week, on average, than other private sector workers
• Real pay and benefits is growing faster in manufacturing (2.8%), than in other businesses. And substantially above the growth rate during the 1990s (1.6%)

Manufacturing stimulates growth--spurring demand for everything from raw materials to components, to a whole range of services: software, financial, legal, health, transportation and more.

Put simply: Manufacturing makes America more competitive. And, on a level playing field, President Bush believes American workers can compete with anyone in the world. The President also believes that continuing to lead the global economy is the best way to shape our future.

That's why President Bush proposed his American Competitiveness Initiative:

• By improving math and science skills in our schools
• By tripling the number of workers getting job training
• By attracting and retaining the world's best and brightest through immigration reform
• And by doubling funding for basic Research & Development, and making permanent the private sector R&D tax credit--we will ensure America stays on top.

Think about the great inventions that have changed our lives: the light bulb, the telephone, the car and the airplane. Innovation is in the American DNA.

Two-thirds of all R&D spending is done in the private sector. A permanent tax credit helps companies plan their future with certainty. Basic research, done by the federal government, will help the private sector develop advanced measurement and manufacturing techniques. The private sector will use those techniques to create innovative products and components that consumers buy. (More efficient batteries, lighter-weight and higher performing materials for autos and aircraft, and smaller computer chips).

When the private sector creates products from this research, we need to protect them. That's why IPR enforcement is a top priority for this Administration.

The President knows that we need to encourage the inventors and entrepreneurs of tomorrow. However, foreign countries are outpacing us: Last year, China graduated over 600,000 engineers, India 350,000 and America, 70,000.

Education is the greatest indicator of future success and prosperity. The No Child Left Behind Act has helped raise test scores and close the achievement gap. We can build on this success with the President's plan to recruit 30,000 math and science professionals into classrooms. This is where we need your help. We need to get you and your employees into the classroom as volunteers.

We need to show our kids that math and science are cool--and can lead to exciting careers. This is a major calling, and I hope everyone in this audience will be part of it.

And we need to retain the talent that we help educate. Foreign students come to America to get the best education money can buy. Then they are forced to go home and compete against us. We need to increase the number of H-1B visas for temporary workers and raise the number of employment-based green cards.

Our focus on competitiveness goes hand in hand with the President's agenda for continued economic growth. We need to keep America as the best place in the world to do business.

• We need to pursue advanced energy technologies to develop an affordable and reliable energy supply
• We need to reform our tort system so that we don't spend more money suing ourselves than we do innovating. The current tort system costs America $240 billion each year)
• We need to reform our health care system by empowering consumers and making the marketplace more competitive
• We need to make sure proper safeguards are in place to protect the retirement savings of workers
• And we need to make the tax relief permanent

Starting in 2001, business investment was on the decline and stayed that way for over 2 years. The President lowered taxes on savings and investment. Since then, business investment has been growing for almost three years.

That means millions of small businesses have extra savings to invest in new equipment, expand facilities and hire additional workers.

At the core is a belief that individuals and businesses allocate capital more effectively than the federal government does. Yet, some in Congress resist making the tax cuts permanent. The problem is not that taxes are too low. The problem is that we need spending restraint. Congress needs to pass the President's budget--and give him the line-item veto.

I want to reaffirm the President's call for focus on our competitiveness. He knows we can succeed. This is not a time to second-guess a free enterprise system that has made us the world's leader. It is time for a relentless focus on creating our future. And we need you to get everyone involved!

Be a part of a national movement. Embrace free trade. Volunteer in the schools. Continue believing in free enterprise. And compete with confidence! This is the greatest economy in the greatest country on earth. It's your companies, and leaders like you, that make it that way.

Thank you very much.