The following blog is a cross-post from The Grand Rapids Press:
Most Michiganders are familiar with one of the major challenges of our global economy: preserving good manufacturing jobs here at home at a time when some companies are tempted to outsource production abroad.
Today, however, I visited a manufacturing plant operated by an American company that is helping to pioneer a new trend of bringing good jobs back home. We call this “in-sourcing.”
Falcon Waterfree Technologies is a clean energy company with a global footprint. But effective this month, it will begin making product components previously made in Shanghai in Grand Rapids as Michigan becomes the company’s manufacturing hub for the entire Western Hemisphere.
If Congress embraces President Obama’s plan, we will see a lot more of this in-sourcing in America’s future.
As the nation’s Secretary of Labor, I work in an administration whose policies have helped add back more than a half-million U.S. manufacturing jobs since January 2010. This represents the sector’s strongest job growth in 17 years. President Obama and I believe we can accelerate this growth by reforming our tax code.
When I travel around the Midwest and tell workers about how our current federal tax policies actually reward companies that ship our jobs away, the reaction I hear most often is disbelief.
When I tell workers that President Obama has been trying to fix this inequity but can’t find bipartisan support in Congress to do so, that disbelief quickly turns to anger.
But it’s true. And now is the time to fix it.
Don’t get me wrong. Companies that want to outsource jobs have a right to do so, but they shouldn’t get a tax deduction for doing it.
As countries grow and develop middle classes of their own, global companies are going to pursue those markets, employ their workers and make investments all over the world. But right now, as our economy recovers, we have a unique opportunity to bring some of our good manufacturing jobs back.
International shipping costs and foreign labor costs are currently on the rise. Therefore, it’s getting more expensive for companies to house their production facilities halfway around the world and then ship their products back across the ocean for U.S. consumers to buy.
Plus, American workers have never been more productive, so even when we can’t make products cheaper than the Chinese can, we sure can make them better.
Right now, companies that off-shore can deduct their moving expenses and significantly reduce their tax burden to Uncle Sam. The result is fewer jobs here at home and less revenue to pay down our national debt.
I’ll give you an example: Say a company decides to shutter a factory here in Michigan and move it overseas. This might require them to break down assembly lines and production equipment and transport it abroad. If this process costs the firm $15 million, the company can write off moving expenses totaling $5.25 million.
Under President Obama’s proposal, companies would no longer be able to write off a penny of their moving costs for sending American jobs to other countries.
Instead, we want to provide incentives for companies like Falcon that choose to in-source jobs—and pay for those incentives by eliminating the very tax breaks that now reward companies for outsourcing abroad.
This administration is betting on the “made in the USA” label. We don’t believe that providing special tax benefits for off-shoring will somehow trickle down and help American job-seekers.
We have the best-trained, most capable workers in the world. It’s time for our political leaders to reward companies like Falcon that are committed to helping the next generation of manufacturing jobs take root in the United States.
Solis is the U.S. Secretary of Labor.