Executive Outlook 2013: Review U.S. Trade Policy And Level The Playing Field

As to what’s holding up our long-awaited economic recovery, it all begins with prioritizing how to spend money. And that means from the perspective of state and local governments, as well as the perspective of commercial companies.

Spending on public works projects is down 25% from where it was in 2010—all across the country. If our government representatives recognized that investing in public works projects puts people to work, broadens the tax base, improves and repairs infrastructure and circulates dollars back into local economies, real economic growth would be achieved.

On the private/commercial side, our customers in the electric motor industry are hesitant (really hesitant) to make major investments at this time. Many tell me that they would rather take a “band-aid” approach to a problem than engage in a major overhaul. Why?

In one word, “uncertainty”—uncertainty about the possibility of more government regulations coming down the pike, higher taxes and how the Affordable Care Act is going to impact their businesses.

I’m also concerned about the Federal Reserve Policy of Quantitative Easing: Is it a good strategy? It’s had a positive impact on the stock market, but what happens when the Fed begins to pull back on it?

We continue to hear reports about consumer spending getting better, but from my vantage point, I’m just not seeing the pull-through. For example, I’ve noticed that for the second quarter, the three-month moving average for things like industrial machinery and iron and steel products is down from the same quarter a year ago.  

Other things hindering a robust recovery in the U.S. include Europe’s well-documented economic issues; there’s no real end in sight there. Plus, even though the economic growth rate is higher in China than it is in the U.S., we’re seeing a slowdown there.

Regarding what can be done to break up the “logjam,” I’ll circle back to my first paragraph: I feel that it’s critical for state and local governments to invest in public works and infrastructure projects, like water and wastewater systems. We need to see infrastructure projects prioritized.

We can all participate by being active in and supporting our respective professional and/or industry trade associations. Nearly all of them have Governmental Affairs departments or groups that help shape policies and legislation.

U.S. trade policy is another area that needs to be reviewed.  Just from an electric-motors point of view, we need to level the playing field with Brazil and China in terms of taxes and tariffs. It continues to be much easier for manufacturers in Brazil and China to sell here than it is for us to sell there.

One final thought: I think it would be a huge positive to repatriate cash held by U.S. companies outside the United States. Bring the cash back here, where it can help all of us, and our communities.MT

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