What I am Telling Congress Today about Regulations and How they Stifle Small Business

February 28, 2013 | Robotic Manufacturing, American Manufacturing

Marlin Steel President Drew Greenblatt testifyI am testifying this morning on the impact of regulation on small business and manufacturing on behalf of the National Association of Manufacturers before the House Judiciary Committee's Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

Here is a portion of my prepared remarks this morning:

For many manufacturers in the United States, the economy is showing definite signs of improvement. Manufacturing has added about 500,000 jobs since the end of 2009, but there is still a long way to go. More than 2 million manufacturing jobs were lost in the last recession and output remains well below the 2007 peak, indicating how serious the recent manufacturing recession really was. To compete on a global stage, manufacturing in the United States needs policies that enable companies to thrive and create jobs. Growing manufacturing jobs will strengthen the U.S. middle class and continue to fuel America’s economic recovery.

High price of a missed signature

I can attest that poorly designed regulations and duplicative or unnecessary paperwork requirements create real costs that affect the bottom line of manufacturers. In 2010, Marlin Steel Wire received a letter from the Department of Treasury imposing a fine of $15,000 for inadvertently omitting a third signature on a 20-page form when we created a 401(k) plan for our employees. This simple oversight led to several weeks of unnecessary anxiety and communications unrelated to operating a business. Though we paid a smaller penalty for the missed signature, valuable resources were diverted away from our business activities because of a missed signature on a form.

The 20-minute form

Marlin Steel’s success as a U.S. manufacturer relies on our ability to reach the 95 percent of consumers outside of our borders. But unnecessary paperwork burdens imposed on us by the federal government harm our productivity. For example, we spend three minutes filling out a form when we ship products to Canada or Mexico. But if we ship products to a non-NAFTA country, we spend 20 minutes filling out forms. The longer form does not seem necessary and only harms our productivity relative to foreign competitors looking to serve the same markets.

Employers across the U.S., especially manufacturers, face considerable uncertainty that stifles economic growth and discourages hiring. The cost disadvantage confronting domestic manufacturers is a result of decisions made here in Washington, not by those outside of our borders. Our competitors in Europe, Asia and South America aggressively seek new customers, markets and opportunity. Countries know that a strong manufacturing sector is a key to jobs, innovation and prosperity. They are strategizing for success in manufacturing and to improve their global competitive positions. Government policies should support our global competitiveness and not impose increasing burdens. In the U.S., manufacturers are forced to face challenges that our global competitors do not have.