When Congressman Trey Gowdy, representing South Carolina’s 4th District, was tied up in committee meetings and missed an opportunity to welcome members of the Association of Equipment Manufacturers (AEM) during their annual meeting in Washington, D.C., he made a special trip to visit the Calder Brothers Corporation manufacturing plant in Greenville.
Gowdy’s commitment impressed Glen Calder, vice president of operations of Calder Brothers Corporation, which manufacturers Mauldin Paving Products. Serving on the Small Enterprise Committee of AEM, Calder said his group scheduled “Hill visits to inform our representatives about the plight of equipment manufacturers” while they were in the nation’s capital, but he believes even more impact was made on Gowdy because of his trek to the plant, which included a tour, introductions to employees and an informal question and answer session.
“He was straight-forward and direct,” Calder assessed. “He’s a strong supporter of equipment manufacturers. We were preaching to the choir.”
By the Numbers
Established a year ago, AEM developed a campaign called “I Make America” to promote the importance of American manufacturing and to attract the attention of Washington lawmakers in the face of what Calder calls “economic mayhem.”
“The automotive industry didn’t see anything like the construction industry did,” Calder said. “During the economic collapse of the past three years, the construction equipment industry [including manufacturing, distribution and repair stations] lost 37 percent of its workforce. The automotive industry [including manufacturing and dealerships] declined by 16 percent.”
AEM reports that 4.7 million manufacturing jobs were lost between February 2001 and February 2009. A recent study conducted by the organization indicates that eight percent of all jobs lost during the recession (two out of 25) can be traced to the construction downturn. Unemployment in the construction industry continues to run nearly twice as high as the national average, with a rate of 18.8 percent at the end of 2010.
“Sales for construction manufacturing plummeted 50 percent,” Calder added.
Equipment markets, like the economy, have begun to show modest signs of recovery, but AEM still predicts difficult times ahead given the federal government’s inability thus far to enact pending trade agreements beneficial to American manufacturing, the continued instability in the housing market and the lack of a long-term commitment by Congress to fully fund and rebuild the country’s infrastructure.
“Thoroughly impressed” by Calder Brothers and I Make America, Rep. Gowdy cited the need to “turn the economy around” and the “interconnectivity of the various industry sectors and how they impact one another. Housing, commercial development, grading, road construction, banking and raw materials are all so interconnected.”
Small Manufacturers Make America
“A lot of people don’t realize that small family businesses are still manufacturing in this country. There are big names like Caterpillar and Case,” Calder listed “but 90 to 95 percent of equipment manufacturers are small enterprises. The small guys need a hand.
“Small- and medium-sized equipment manufacturers need three things in order to compete globally,” Calder continued, “free trade, infrastructure and export finance assistance.”
According to Dennis Slater, AEM president, until Congress and the Administration agree to make America’s farmers and manufacturers a national priority by passing free trade agreements and investing in critical infrastructure — both of which are proven drivers of economic growth — unemployment will remain unacceptably high and the economy will continue to stagnate.
Citing figures from the International Trade Administration, Calder estimates the total export of U.S. goods and services in 2010 at $1.83 trillion, but said that of 30 million American companies, less than one percent export. AEM believes that trade barriers prevent more from exporting American-made goods.
An example AEM provides as support is the Colombian Free Trade Agreement, which would allow 98 percent of U.S.-made construction equipment to be exported to the South American country — the ninth largest market — duty-free. Currently, although 90 percent of Colombian goods enter the United States duty-free, a tariff of 10.4 percent (average) is levied on U.S. construction equipment being exported to Colombia. AEM contends that this puts American manufacturers at a disadvantage and claims that the three pending free trade agreements with Colombia, Korea and Panama once enacted will increase exports by up to $10 billion.
Even with a trade agreement in place, however, goods can’t be exported unless they can reach ports quickly and inexpensively. But America is spending half what it did 50 years ago on infrastructure, according to a U.S. government report — less than half of what Europe spends and less than a third of what China spends. In fact, Reuter’s claims that the United States fell to sixth in the World Economic Forum’s 2007-2008 ranking of national infrastructure systems and is expected to drop to 16th in the 2011-2012 report .
A World Bank LPI survey ranked the United States seventh behind Germany, Singapore and Japan in terms of efficient infrastructure. The Texas Transportation Institute estimates that 3.9 billion gallons of fuel are wasted due to 4.8 billion extra hours spent on roadways caused by congestion. The high rate of congestion results in the loss of 4.2 billion working hours per year, claims the National Association of Manufacturers.
With less money being funneled to improve or add to the country’s aging infrastructure, it’s more difficult for American manufacturers to compete with foreign markets. According to Calder, the U.S. Chamber of Commerce’s Transportation Performance Index has determined that starting in 2015 the United States will lose 0.3 GDP every year due to its insufficient transportation network. That translates to $336 billion a year, based on the 2008 GDP.
With almost 30 percent of the nation’s economic output totally dependent on international trade, Calder believes something must be done to address infrastructure. Lawmakers are discussing a bill to fund highway and rail spending, but he’s worried.
“There’s no long-term highway bill in effect and Congress can’t agree on the terms of a new one,” he said. “Worse, the investment from the American Recovery and Recovery Act has not trickled down, leaving the construction industry feeling ignored and abused. Less than eight percent of the stimulus package was for infrastructure.”
One beneficial federal entity that needs additional funding: the U.S. Export-Import Bank, which provides financing such as capital guarantees, export credit insurance and direct loans to small- and medium-sized manufacturing companies.
According to the Wall Street Journal, President Barack Obama is urging Congress to create another kind of bank: an infrastructure bank that would finance highway and rail construction, creating jobs and jump-starting the economy through loans to support public works projects with private funding. The idea is meeting with resistance in Congress.
Congressional Visit
In order to convey the extent of the devastating impact the recession has had on the construction industry, Calder and AEM have been reaching out to legislators, which is why Gowdy’s visit was so important.
“His visit made him a stronger advocate,”?Calder stated.
That’s important, because Calder considers himself a “greenhorn” in politics.
“We’re a small family business and that’s what we’re focused on, not Washington,” he added.
Rep. Gowdy, who also serves on the Committee on Education and Workforce, confirmed Calder’s hopes when he said, “Mauldin Paving Products and other plant tours in August have confirmed my commitment to a level playing field from a tax, regulatory, litigation and trade perspective so our companies can compete with foreign companies who are not subject to the same requirements. If the trade playing field is level, our workers can compete with anyone in the world.” CEG
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