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<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:0in;line-height:15.0pt'><em><i><font size=2
color=navy face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS";
color:navy'>Owen E. Herrnstadt is Director of Trade and Globalization for the
International Association of Machinists and Aerospace Workers, and gave four
suggestions in December to help make sure the stimulus is . . . stimulating.
As the debate moves forward concerning foreign components inserted into the
green economy, this piece is a good touchstone . . . . </span></font></i></em><font
size=2 color=navy face="Trebuchet MS"><span style='font-size:10.0pt;font-family:
"Trebuchet MS";color:navy'><o:p></o:p></span></font></p>
<p class=MsoNormal><b><font size=4 color="#981d3d" face="Trebuchet MS"><span
style='font-size:14.0pt;font-family:"Trebuchet MS";color:#981D3D;font-weight:
bold'>Green jobs, with strings attached</span></font></b><font size=2
color="#981d3d" face="Trebuchet MS"><span style='font-size:10.0pt;font-family:
"Trebuchet MS";color:#981D3D'><br>
<a href="http://www.epi.org/authors/bio/herrnstadt_owen_e/"><font
color="#981d3d"><span style='color:#981D3D'>Owen E. Herrnstadt</span></font></a>
<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#981d3d" face="Trebuchet MS"><span
style='font-size:10.0pt;font-family:"Trebuchet MS";color:#981D3D'>http://www.epi.org/analysis_and_opinion/entry/green_jobs_with_strings_attached/
<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>After
General Electric announced this year that it would close its aviation facility
in <st1:City w:st="on">Albuquerque</st1:City> and terminate 400 long-time
employees, the union representing them, along with <st1:State w:st="on">New Mexico</st1:State>’s
governor, the state’s congressional delegation, and the city of <st1:place
w:st="on"><st1:City w:st="on">Albuquerque</st1:City></st1:place>, proposed a
solution. Why not consider alternative uses for the facility, such as the
development of clean energy machinery like wind turbines? After all, a priority
of the American Recovery and Reinvestment Act (ARRA) is investment in domestic
renewable energy production, and millions in stimulus dollars are available.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>GE
demurred. “This is a challenging time for these businesses," GE
Aviation President and CEO David Joyce wrote to the Congressional delegation,
citing the “difficult economic climate and lack of policy
initiatives such as a national RES (renewable energy standard)." In
other words, we need more specific energy policies. He might have added that GE
is already in the game: Among other things, it is involved in a program that
would use wind turbines manufactured in <st1:place w:st="on"><st1:country-region
w:st="on">China</st1:country-region></st1:place>.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
Recovery Act passed by Congress and signed by President Obama in February 2009
was intended to jump-start demand in the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> economy and create American
jobs. An innovative feature of the act was its attention to investment in
renewable energy projects, such as a joint venture in <st1:place w:st="on"><st1:State
w:st="on">Texas</st1:State></st1:place> to develop a giant wind farm. The fact
that the turbines from the project will be supplied by A-Power Energy Generation
Systems of China, and that A-Power has partnered with GE Drivetrain
Technologies to produce wind turbine gearboxes in <st1:place w:st="on"><st1:City
w:st="on">Shenyang</st1:City></st1:place>, does not, apparently, violate
domestic sourcing requirements provided for in various sections of the act. The
Treasury Department, explained, “There are no restrictions on the use of
the funds.”<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
<st1:State w:st="on">Texas</st1:State> joint venture is only one of many
projects directed toward clean energy that could potentially use <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
taxpayer money to create manufacturing jobs overseas. Recently, the
Investigative Reporting Workshop (IRW) at <st1:PlaceName w:st="on">American</st1:PlaceName>
<st1:PlaceType w:st="on">University</st1:PlaceType> reviewed 11 wind farm
projects funded with stimulus money and found that they are dominated by
foreign manufacturers, most of whose production capacity is outside the <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>That
stimulus money could support manufacturing jobs in other countries, at a time
when manufacturing job losses in the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> are accelerating and the
unemployment rate has surged to 10.2 percent, is not surprising. The
stimulus grants in question are not directly tied to <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> manufacturing employment. As
reported by IRW, Dan Tangherlini, an assistant secretary for management at the
Treasury Department, explained, “There are no restrictions on the use of
the funds.” <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
absence of a strong domestic sourcing requirement for all clean energy programs
in the stimulus is indicative of how government procurement in general and
stimulus money in particular fails to fully utilize taxpayer funds to create
manufacturing jobs in the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
For example, the provisions in the ARRA adopting Buy American requirements have
been significantly diluted. The Recovery Act does contain domestic sourcing
requirements (with some exceptions): “None of the funds appropriated or
otherwise made available by this Act may be used for a project for the construction,
alteration, maintenance, or repair of a public building or public work unless
all of the iron, steel, and manufactured goods used in the project are produced
in the United States. While these domestic sourcing provisions are clear in the
statute, their implementation was greatly weakened by the Office of Management
and Budget (OMB). It issued interim regulations that narrow the definition of
“manufactured goods used in the project” to those related to
“construction materials incorporated into the ‘building or
work.” The result is that one of the largest opportunities to support <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
manufacturing workers – the domestic production of equipment, including
tools, used in conjunction with the Recovery Act – has been lost.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
practical result of the OMB interim regulation is that, although the cement
being used in construction under the Recovery Act may have to be domestically
produced, the cement mixer and trowel do not. This narrow interpretation
eliminates incentives for the domestic manufacture of goods and equipment used
under the act. If you are a manufacturer who has outsourced your production
overseas, why produce at home when you can maintain your offshore production
and still obtain stimulus funding? With the lack of incentives for domestic sourcing
go the much-needed opportunities to create manufacturing jobs.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Even
the Buy American program that serves as a model for a portion of the Recovery
Act contains so many loopholes that it fails to fully realize its potential to
support manufacturing jobs. The purpose of the Buy American Act, passed in 1933
during the Great Depression, is to create demand for domestically produced
goods and, in doing so, utilize government procurement to foster employment. It
has been maligned by those on the right who argue that Buy American provisions
limit government from procuring the cheapest goods available. But with millions
of manufacturing workers unemployed, the real question is not whether Buy
American costs the government too much money, as they argue; It is whether
<a
href="http://www.epi.org/analysis_and_opinion/entry/buy_american_and_the_recovery_program_now_what/"><font
color="#981d3d"><span style='color:#981D3D'>Buy American</span></font></a> is
effectively being implemented to support <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> jobs.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>To
begin, the general domestic content requirements of the Buy American Act are
satisfied if just 51% of content is attributed to the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> Many <st1:country-region
w:st="on">U.S.</st1:country-region> taxpayers would probably be startled to
learn that a product that has only 51% <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> content is considered to be
made domestically. This begs the question, how is <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place> content defined and how is it
calculated? Surprisingly, there is no easy answer. Are intangible items such as
patent rights and research and development included in the calculation? How are
materials valued? Is the origin of components and subcomponents considered, and
if so how? Are executive salaries and benefits included? Is there a uniform
policy on implementing domestic content requirements throughout the federal
government? If not, why?<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>In
addition to questions regarding content, Buy American provisions also contain
waivers that are available when the use of foreign-sourced goods is in the
“public interest,” when domestic end products are not reasonably
available in sufficient commercial quantities, or when the cost of the domestic
end product is unreasonable. At no time in the waiver process is consideration
given to the number of domestic jobs that could be impacted if the waiver is
granted.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Given
the nation’s startling manufacturing job losses and its historic high
unemployment, the administration is rightfully searching for a manufacturing
policy that will restore good and sustainable jobs at home, since restoring
these jobs is critical for economic recovery. Here are four proposals that can advance
that policy:<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'> 1)<strong><b><font
face="Trebuchet MS"><span style='font-family:"Trebuchet MS"'> <u>Require
employment impact statements</u></span></font></b></strong><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
Administration should adopt a simple, common-sense policy that directly links
domestic employment with certain government activities. One way to accomplish
this is to require detailed employment impact statements (EIS) as part of the
decision-making process for government procurement contracts, assistance
grants, and awards. The results reflected by the EIS should be a significant
factor in the final determination concerning the project or transaction under
consideration.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>The
EIS would contain information pertaining to employment that would be
maintained, created, or lost if the program in question were approved; as much
as possible it would detail the duration, wage, location, and category (e.g.,
production, maintenance, etc.) of the jobs. Verification could be conducted
through payroll records, furnished, on a proprietary basis, to the government
agency responsible for approval of the proposed program. Since many of the
companies receiving federal money are already required to keep and maintain
payroll records under federal wage and hours laws, this requirement would not
force them to duplicate their efforts.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>To
assure that employment impact statements and reliance upon them are fully and
effectively implemented, federal agencies would need to submit annual reports
to Congress summarizing the procedures used and the results. The reports would
furnish Congress and the administration with valuable information about how
government programs are assisting with the creation and maintenance of jobs.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'> 2)
<strong><b><u><font face="Trebuchet MS"><span style='font-family:"Trebuchet MS"'>Review
current domestic content requirements</span></font></u></b></strong><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Domestic
content requirements currently in effect are a mess, and the administration
should move quickly to make them simple, effective, and transparent. Domestic
sourcing requirements for stimulus programs should be adopted, and government
programs that do require some degree of domestic sourcing (e.g., Buy American,
the Recovery Act, and the U.S. Export-Impact Bank) should be reviewed to ensure
that the requirements are being taken seriously by contracting agencies and are
effectively implemented. Troubling questions concerning how domestic content is
measured and applied must be addressed. What factors do agencies include in
determining content? Is the calculation limited to raw materials, production,
assembly, and maintenance, or are intangible items like the value of research
and development and intellectual property rights, which can be used to inflate
domestic content, included? How is the origin of components and subcomponents
considered?<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Further,
the OMB should reconsider its interim regulations that artificially narrow the
definition of manufactured goods. And waiver applications to Buy American
requirements should be reviewed with domestic employment in mind.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>3) <strong><b><u><font
face="Trebuchet MS"><span style='font-family:"Trebuchet MS"'>Establish new
opportunities for fostering domestic production</span></font></u></b></strong><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Many
small manufacturers are facing difficulty because they cannot obtain credit
from commercial banks. A U.S. Jobs Development Bank could target assistance to key
manufacturing industries. The bank would operate much like the U.S.
Export-Import Bank but, instead of supporting businesses that export goods, it
would support a broader array of companies that cannot obtain commercial
credit. The credit would be tied to the creation or maintenance of
manufacturing jobs in the U.S. Credit would also be available to support the
renovation, modernization, and retooling of facilities to expand manufacturing
capacity.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>4) <strong><b><u><font
face="Trebuchet MS"><span style='font-family:"Trebuchet MS"'>Create a
President’s Council on Manufacturing Policy</span></font></u></b></strong><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Other
countries have well-developed manufacturing policies aimed at employment,
growth in exports, and enhancements to strengthen their economy. An
example is <a href="http://www.epi.org/publications/entry/bp201/"><font
color="#981d3d"><span style='color:#981D3D'>offsets</span></font></a>, that
mandate the transfer of technology and production to a country in return for
defense purchases.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>In
contrast, the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
has no national manufacturing policy and no mechanism for developing one. Even
if <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
manufacturing weren’t in free fall, the president should create a permanent
Council on Manufacturing. It would consist of senior government officials as
well as private sector representatives who would advise the administration and
Congress on manufacturing policies aimed at restoring domestic manufacturing
and high-quality domestic manufacturing jobs. One of its responsibilities would
be to assist the administration and Congress in ensuring that policies
throughout the government contribute to domestic manufacturing. The council
would also advise the administration on manufacturing industries that are
essential to national security and make recommendations for creating a positive
environment for spurring start-up companies.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>We
can no longer be complacent with the hope that manufacturing is cyclical and
will recover given a little patience. The changes we are witnessing in the
sector are structural, and retaining a robust manufacturing industry and good
jobs that strengthen communities and the nation requires a direct and
structural response, not the least of which is spending U.S. government
stimulus money here when the products and workers are right here waiting.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'>Until
we restore the respect due manufacturing and the thousands of domestic jobs it
creates, the industry will continue to fade, and along with it our hope for a
healthy, sustainable economy. The actions proposed here might be too late to
help the 400 workers at the GE facility in <st1:place w:st="on"><st1:City
w:st="on">Albuquerque</st1:City></st1:place>, but they can close the book on
future sad stories by reviving a robust domestic manufacturing industry.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:9.75pt;margin-right:0in;
margin-bottom:9.75pt;margin-left:13.5pt;line-height:15.0pt'><font size=2
face="Trebuchet MS"><span style='font-size:10.0pt;font-family:"Trebuchet MS"'><br
clear=all>
<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face="Trebuchet MS"><span
style='font-size:10.0pt;font-family:"Trebuchet MS";color:navy'><o:p> </o:p></span></font></p>
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