IHS Chemical Week

CHEM IDEAS

Failure to pass MTB could mean billions in economic losses for US manufacturers

7:08 AM MDT | August 7, 2013 | By LAWRENCE D. SLOAN, SOCMA PRESIDENT AND CEO

Failure by Congress to pass the Miscellaneous Tariff Bill (MTB) is impacting the entire US manufacturing base, but for small chemical manufacturers, in particular, it is severely hindering their ability to do business and remain globally competitive. Without the MTB, companies are losing customers and potential contracts because they can’t compete with prices manufacturers in other countries can provide. And with US manufacturers already operating at a 20% structural cost premium versus our major trading partners, the longer this bill goes without passing, the more detrimental it will be for small business owners and the economy.

Our members are already operating at a disadvantage due to higher taxes, employee benefits, tort costs and pollution abatement compliance that manufacturers in other countries don’t face. Combine that with currency controls and subsidies given to exports from those countries, and it makes competing in the global market place a challenge.

In addition to remaining globally competitive, the MTB helps Socma members and other chemical producers invest in new facilities, train workers, invent new chemistries and preserve their manufacturing base.

One Socma member that manufactures organic pigments must purchase most of their raw materials outside the US because there are no domestic suppliers. The lower raw material costs provided as a result of duty suspensions are critical in maintaining their market share and remaining competitive against imports. The MTB keeps their plant operating and workers employed, and it helps keep a strategic industry—the organic pigments industry—producing products in the US.

Duty suspensions also allow US producers to reduce their pricing, which lowers downstream costs to consumers. This can translate into two to three jobs, especially for small chemical manufacturers who use the savings to reinvest in their businesses. And for a company that may only have about 25 employees—that can be a huge differential. As we all know, even a small addition to a manufacturer’s workforce has positive ripple effects in the local economy.

Just how big a hit will manufacturers take without passage of the MTB?—A $748 million tax on manufacturing and economic losses amounting to $1.86 billion over the next three years, according to the National Association of Manufacturers (NAM).

What’s more troubling is that for three decades Congress has approved, with bipartisan support, this legislation that eliminates or reduces hundreds of import duties on raw materials and intermediates not produced or available in the US—so these duty suspensions don’t come at the expense of other producers. And duty suspensions are not earmarks. They benefit the entire supply chain, not just the company applying for the duty suspension. So why now, when our economy is still fragile, would Congress continue to let the MTB go without action?

The MTB package Congress passed in 2010 was estimated to support 90,000 domestic manufacturing jobs, increase US production by $4.6 billion and expand the US GDP by $3.5 billion. And the 2010 numbers were based on fewer bills, which means the projected impact of these duty suspensions could be even higher.

We commend House Ways & Means Committee Chairman David Camp and Congressman Sander Levin for understanding the importance of the MTB and reintroducing a bill the previous Congress failed to pass due to the continued paralysis and partisan politics in Washington. But now it’s time for action! US manufacturers have gone seven months without the MTB, and they are struggling. We urge Congress to act quickly and pass this legislation. Give our specialty chemical makers and all manufacturers the assistance and resources they need to survive in an ever increasingly competitive global economy. 














 
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