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National Association of Manufacturers (NAM) 3/23/89 [OA 6347] [1]
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National Association of Manufacturers (NAM) 3/23/89 [OA 6347] [1]
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Folder Title:
National Association of Manufacturers (NAM) 3/23/89 [OA 6347] [1]
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26
18
7
3
Cherstin FILE
COALITION of
AMERICANS to
PROTECT
SPORTS
CAPS
March 16, 1989
1-800-338-8678
Andrew Card
JOHN D. RIDDLE
President
Deputy Chief of Staff to the President
RICHARD J. FELDMAN
White House
Executive Director
West Wing
CINDE A. EVERETT
Washington, DC 20500
Communications Director
Dear Andy,
HEADQUARTERS
200 Castlewood Drive
North Palm Beach, FL
Enclosed are several copies of last month's
33408-5696
Sports Inc. magazine. Knowing the President
(407) 842-4225
Telex: 494-7413-AMSPTS
will be addressing the National Association of
Fax: (407) 863-8984
Manufacturers Annual Congress next Thursday the
23rd, his speech writers may find some of this
material useful as there will be a high
JAN KINNEY
Director-Federal Operations
percentage of sporting good manufacturers in the
LEGISLATIVE OFFICES
audience. I am also enclosing the card of Dave
1625 K Street NW, Suite 900
Washington, D.C.
Granger, senior editior for Sports Inc. If
20006-1604
it's possible, could you arrange to get an
(202) 775-1764
OK
Fax (202) 296.7462
autopen
autographed copy of the magazine sent to him?
ALBANY NY
ANNAPOLIS MD
I will be in town Tuesday, Wednesday, Thursday,
ATLANTA GA
AUGUSTA ME
Friday and Saturday of next week and if there is
AUSTIN, TX
BATON ROUGE LA
any possibility of us getting together for 15
BISMARCK ND
BOISE ID
minutes I would certainly appreciate it. I can
BOSTON MA
CARSON CITY, NV
be reached either through my Palm Beach office
CHARLESTON WV
CHEYENNE WY
(407) 842-4225 or my Washington office (202)
COLUMBIA, SC
CONCORD, NH
Aennison
775-1764.
COLUMBUS, OH
DENVER. CO
DES MOINES IA
DOVER, DE
On a side note, I would like you to be aware
FRANKFORT KY
HARRISBURG PA
that Bill Bennett has named his top advisor - a
HARTFORD CT
HELENA MT
guy by the name of Chuck Wexler - he is from
HONOLULU. HI
INDIANAPOLIS,IN
Newton, Massacushetts, worked for the Boston PD
JACKSON. MS
JEFFERSON CITY MO
and has come from the International Association
JUNEAU AK
LANSING, MI
of Chiefs of Police (IACP). The folks over at
LINCOLN NE
LITTLE ROCK AR
NRA are going off the roof about it. Heads up
MADISON WI
MONTGOMERY AL
on this one - he is going to cause you more
MONTPELIER VT
NASHVILLE TN
grief than you folks really need. I am an old
OKLAHOMA CITY OK
OLYMPIA WA
friend of Chuck's, Bill's and of course still
PIERRE SD
PHOENIX AZ
maintain my contacts at NRA. So, if there is
PROVIDEN F
RALEIGH NO
any mediating role I can play you have my
RICHMOND VA
SACRAMENTO CA
services at you're disposal.
SALEM OR
SALT LAKE CITY UT
SAN JUAN PR
SANTA NM
SPRINGFIELD IL
ST PAUL MN
TALLAHASSEE FL
TOPEKA KS
TRENTON NJ
Sports for Tort Reform
Page 2
Andy Card
Needless to say, I am extremely proud of what
you have accomplished and the position you now
hold. As always if there is anything we at the
Coaltion of Americans to Protect Sports (CAPS)
can do to further the cause of our President and
that of our friend, the Deputy Chief of Staff,
don't fail to call upon us. My very best
regards to you and your family - look forward to
seeing you.
In sports freedom,
Richard /cal
Richard J. Feldman, Esq.
Executive Director
Enclosure
RJF/mnr
1730 K Street, NW
Washington, DC 20006
(202) 822-9300
Barry K. Rogstad
President
American
Business
Conference
March 24, 1989
Mr. Jeff Vogt
Office of Public Liaison
The White House
Washington, DC 20500
Dear Jeff:
Here is a letter for Bobbie that conveys some additional information that might
be useful to the President's speechwriters.
Regards,
Barry Barry K. Rogstad
BKR:mcp
encs.
A Coalition of Growth Companies
1730 K Street, NW
Washington, DC 20006
(202) 822-9300
Barry K. Rogstad
President
American
Business
Conference
March 24, 1989
The Honorable Bobbie Kilberg
Deputy Assistant to the President
The White House
Washington, DC 20500
Dear Bobbie:
We are honored that President Bush has consented to speak to the members of the
American Business Conference at our meeting here in Washington early next month.
I am enclosing a paper describing the nature and mission of ABC. In addition, for
purposes of preparing the President's presentation, you may find the following
background information helpful.
0
President Bush is a long-standing and valued friend of ABC. As Vice President,
he met with our members in October 1981 (at which time he hosted a reception at
the Vice Presidential residence), March 1983, and October 1985. Last January,
shortly before the inauguration, he and Vice President Quayle hosted a session
with some of America's leading entrepreneurs including one of our members, Tom
Wathen, President of Pinkerton's Inc. The President has a number of personal
acquaintances and friends among our membership; indeed, Secretary of Commerce
Bob Mosbacher is a former vice chairman of ABC.
ABC enthusiastically supports the President's budget initiative, especially its
focus on capital formation and growth.
o
We share as well the President's emphasis upon education as a key ingredient for
increasing labor productivity and, therefore, the nation's international
competitiveness. A number of our members are very active at the state and local
level in programs to promote educational excellence.
A Coalition of Growth Companies
The Honorable Bobbie Kilberg
March 24, 1989
Page 2
0 ABC, perhaps more than any other business organization in Washington, has con-
sistently endorsed a pragmatic free trade and investment policy as the only
reasonable response to an interdependent global marketplace.
The members of the ABC feel that the President closely embodies the ideals and goals
of our organization. For that reason, we will not only support his short-term
economic goals, but want to contribute to the achievement of his long-term
priorities for the nation and the world. I trust that the meeting with the
President next month will be the beginning of a long and constructive partnership to
that end.
Sincerely,
Barry Barry K. Rogstad
BKR:mcp
enc.
American
Business
Conference
A Coalition of Growth Companies
THE AMERICAN BUSINESS CONFERENCE
Founded in 1981 and comprising one hundred chief executives of
fast-growing, mid-size companies, the American Business Conference
(ABC) is the non-partisan voice of the high-growth, entrepreneurial
sector of the economy.
Mission
The mission of the American Business Conference is the promotion
of public policies to encourage growth, job creation, and a higher
standard of living for all Americans. ABC executives believe their
own business success carries with it a responsibility to help expand
economic opportunity throughout the economy.
accountabily
Membership
To qualify for membership in ABC, a company must have annual
revenues of at least $25 million and must be growing in revenues or
earnings at a minimum annual rate of three times the growth of the
economy plus inflation. Member firms who can no longer maintain the
growth criterion leave the organization and are replaced with other
qualified companies.
ABC maintains a distribution of manufacturing, service, financial
service and real estate firms in its membership roughly proportional
to the configuration of the economy as a whole. Membership in ABC is
limited to one hundred.
Agenda
Just as it keeps its membership limited and select, so too ABC
focuses on a few, very important issues directly related to economic
growth.
O Fiscal Policy: ABC regards the stimulation of national
savings and the continued reduction of the federal deficit
as the nation's leading economic priorities. ABC believes
that deficit reduction is primarily a matter of reducing
the rate of increase in federal spending. To that end,
ABC urges a bipartisan scrutiny of all federal spending
programs in an effort to bring the budget into balance
without new taxes. ABC does not accept the proposition
that higher taxes are a substitute for a disciplined,
accountable federal budget.
In the event that future, unforeseen economic circum-
stances call for new taxes in order to keep the budget in
balance, ABC would support such taxes only if the new
revenues are dedicated explicitly and without exception to
deficit reduction. The burden of any new levies should
fall on consumption rather than savings. In the longer
term, ABC believes that an examination of the merits of a
transition to a consumption-based income tax is in order.
International Trade and Finance: ABC is committed to free
and fair trade as well as the unhindered international
flow of investment capital. The American economy has
demonstrably benefitted from both. The United States must
be on guard to insure that the vigorous enforcement of its
trade laws -- which is a legitimate response to a world
trading system still marked by barriers to trade and
investment -- does not result in furthering the sort of
protectionism the laws were designed to counteract.
Human Capital: By their very nature, ABC companies depend
upon human skills for imaginative business concepts and
innovative technology. Over time the more advanced
countries of the world can be expected to grow in indus-
tries that are more technology and knowledge intensive,
that provide higher value-added goods and services, and
that are increasingly dependent on human skills. The
long-range competitiveness of ABC companies and of
American business generally, depends upon the maintenance
of a world-class work force. To that end, ABC strongly
supports new initiatives to promote educational excellence
at all levels.
Activities
ABC in all of its activities depends upon the participation and
initiative of its executives. That fact gives ABC's perspective
special credibility. Throughout the year ABC executives are prepared
to offer their perspective, in a number of forums on both short- and
long-term critical economic issues.
o Membership Meetings: To advance their economic ideas, ABC
executives regularly meet the nation's most important
policymakers. Twice each year, all ABC members come to
Washington for three days of policy meetings. The number
of people participating in each meeting is kept small:
perhaps two or three senators or administration officials
with an equal number of executives. The discussion agenda
typically reflects ABC executives' interests.
ABC executives also meet in plenary session to hear from
the president of the United States, the vice president,
the chairman of the Federal Reserve, and other distin-
guished speakers. In the plenary sessions as well as the
small sessions, the atmosphere is sufficiently informal to
allow a healthy exchange of views.
Other Policy Meeings: Beyond the twice-yearly membership
meetings, ABC executives often visit Washington individ-
ually and in small groups to discuss the views of the
membership before committees of Congress. A number of ABC
executives serve on various trade and advisory committees
to the president, and three ABC members are directors of
Federal Reserve Banks.
o Publications: Together with direct advocacy, ABC
executives place great emphasis upon the study of entrepre-
neurship and management practice. ABC is well-known for
its monographs topics such as on capital costs, saving and
consumption, the contribution of entrepreneurship to the
economy, and the elements for success in the world market-
place. These and other ABC publications are drawn
directly from the experiences of ABC member companies.
Seminars: ABC also co-sponsors seminars and other
programs to allow further public debate on economic policy
issues, and frequently ABC executives are asked to speak
to meetings of business leaders and policymakers.
Through personal advocacy and publications, ABC executives
attempt to bring a fresh, informed, and neutral outlook on economic
policy-making.
The American Business Conference sees itself as a "laboratory of
excellence," dedicated to communicating the outlook and practices of
the sort of firms that are on the leading edge of the American
economy as the nation moves into the next century.
(Lange/Martin)
March 21, 1989
7:15 p.m.
PRESIDENTIAL REMARKS:
NATIONAL ASSOCIATION OF MANUFACTURERS
Time
WASHINGTON D.C.
THURSDAY, MARCH 23, 1989
Thank you, [Dick]. You know, after one tough football game,
somebody asked Knute Rockne why Notre Dame had lost. He
answered, "I won't know until my barber tells me on Monday."
Well, nobody's second-guessing American manufacturing
anymore. Clearly, you're playing a winning game.
I'm here today to tell you that "de-industrialization" is a
myth. Manufacturing, as a share of our national output, is as
strong today as it has ever been.
Thanks to the hard work of the men and women in this room --
who are the brains and muscle of America's basic industries -- we
are producing more products with a smaller percentage of our
population than ever before.
That, my friends, is productivity. That is why since 1982,
our manufacturing output has gone up twice as fast as Western
Europe and has kept pace with Japan.
You are the producers who are building a better America
every day. Your presence here today demonstrates that you are
2
fighting to win the international struggle for continued growth.
You have demonstrated that you can make America more competitive
-- and that you can keep America more competitive.
Now, I'm not saying you're going to have to do it alone.
There is a role for government. Sometimes political leadership
is needed -- for example, to keep international trade free and
fair. However, I will tell you that this government will not
confuse involvement with interference.
There's a lot of talk about competitiveness going around
these days. But competitiveness is more than just the latest
trade figures, or the latest quarterly earnings -- or the latest
poll or the latest election, for that matter.
Surely our success can be measured by better methods than
these. In your industry, as in mine, this may be a good time for
us to look toward a longer horizon.
We stand at a special moment in American history. We are
prosperous
and we are at peace.
At such a point, we must set our sights higher. We must
look farther ahead. The 21st Century is less than a dozen years
away now.
3
You've called this conference "The New Leadership Summit."
Leadership is many things: vision, the power to inspire, the
undership
capacity to define an agenda for future action It is certainly
like you
found in those who keep the great engines of American industry
turning. In creating jobs, building businesses and meeting that will needs,
our Nation's manufacturers have shown the qualities we will 100
2
carry no into the fature, And make no mastake, the challenges we face
will test your vision and your capacity to define an agender foxaction.
Leadership means understanding where an organization finds
itself, right now; seeing where it wants to go; and knowing how
to get there. Above all, it's playing the long game, whatever
the odds -- and playing for keeps.
address that very point by outliming
So today, I'd like to outline my agenda for the next
American century.
To build a better America, one of the most important
priorities for this government will be to encourage savings and
long-term investment -- and get our fiscal house in order. This
means bringing down the deficit.
Last month, I submitted a budget to Congress with a clear
agenda to cut the Federal deficit, and enhance business' ability
to plan, expand, and build.
My friends, next year, under current law, the economic
growth we are enjoying will increase federal revenues by more
4
than $80 billion without increasing tax rates. Our plan will
hold the line on spending, using that revenue to slash the
deficit by more than 40 percent -- and bring it down below the
mandated Gramm-Rudman-Hollings targets.
To encourage long-range investment and entrepreneurship in
businesses of all sizes, it's time we restored the capital gains
differential. This is a case where less means more. More
revenue to the Federal government -- $4.8 billion more in 1990,
according to Treasury estimates. More savings, and more
investment. More competitive, flexible businesses. More
opportunities for innovation.
And more jobs for all Americans -- including those who have
been left behind, and who need a chance to work for their share
of the American dream. This is no tax break for the rich. It's
a fair shake for America.
Competitiveness, opportunity, saving, and investing for the
long term -- this is why we need a capital gains tax rate cut.
It's why we need one now.
To spur investment in basic research, we've proposed a
permanent research and experimentation tax credit. A 13 percent
increase for science and technology programs.
5
And we have created a new post at the Commerce Department --
Undersecretary for Technology -- that embodies our commitment to
guaranteeing that American technology is number one. We also
intend to double the National Science Foundation's budget by
1993.
A strong economy needs a safe and secure banking system.
That is why we proposed a comprehensive plan to solve the
difficulties of our savings and loans. Our plan has been well-
received on both sides of the aisle on Capitol Hill -- and I've
asked for action within 45 days.
We want to ease the pressures now building on the most
important organization in America -- the family -- by promoting
choice on issues like child care. So last week I sent
legislation to Congress that puts money and options in the hands
of parents, rather than bureaucracies.
But the most powerful key to long-term competitiveness is
education. A strengthened education system is the essential
ingredient for America's prosperity into the next decade and the
next century. Let no one suggest that education is a minor
matter on the national agenda. It is vital to everything we are,
and can become.
6
But there are no quick fixes here, either. Like most of the
long-term issues on the national agenda, American education won't
be fixed with a bolt of lightning here, a puff of smoke there.
It will take collective effort at all levels, public and private,
to get it right. Those businesses that are involved with local
schools -- developing the workforce at its source -- are making
fail-safe investments. And they stand to reap the greatest
rewards.
For those workers already on the line, we must build new
skills and flexibility as jobs change, through training and re-
training. The NAM policy position you adopted last year said
that "investment in human resources is at least as important as
investment in equipment and technology." And you're absolutely
right. Machinery and technology alone don't improve
productivity. People do.
Another issue where we plan to play for keeps: We're
determined to get drugs out of the workplace. Drug and alcohol
abuse in the workplace costs $60 billion every year, putting
productivity and lives at risk.
Drug abuse in America must stop -- and we are off to a fast
start. Last month I spoke to Congress about four decisive
issues: education, treatment, interdiction, and enforcement.
And I asked for an increase of $1 billion in budget outlays -- to
7
nearly $6 billion in 1990 -- to escalate our effort. But we will
also be looking to you to set effective, well-reasoned drug
policies in your businesses.
Employers can teach their people to recognize the signs of
substance abuse in their co-workers -- and understand how drug
abuse hurts the non-users on the line.
Any long-term agenda must also ask how we can leave the
earth we've inherited a little better than when we found it. We
must devise answers to the problems of ozone depletion, global
warming, and acid rain. We've already joined with other nations
to call for the elimination of CFCs and the development of
environmentally safe substitutes -- as well as adopting a tough
new policy on the export of hazardous waste.
The time has come to set aside partisan approaches to these
and other enormous environmental questions. We must ensure that
our grandchildren can fish on the same lakes we've enjoyed.
In this agenda for a new American century, I've asked you to
consider a broad vision: a vision that relies on the dynamic
spirit that is America. The spirit that says: Buildings should
not stand empty, while people lack shelter. Jobs should not go
unfilled, while young men and women stand idle on street corners.
No one should go hungry, in the richest nation on earth.
8
We must promote local efforts to assure that every American
can seize a share of prosperity -- and help to create more of it.
Whether through the constellation of local community groups
already at work -- or through new ideas, like our program to
encourage our nation's youth to become involved in community
service: we will rely less on the collective wallet, and more on
collective will.
But this does not mean lowering our sights, or our
expectations. Just the opposite. In an era of tight budgets, we
are not going to simply "make do with less." We're going to
learn how to do more with less -- and do it better. In the
factory, that's called productivity. Across our country, that's
called national spirit.
Yes, we are prosperous. And we are at peace. But such
quiet moments often become pivotal in a nation's history.
My friends, the choices we make now will determine whether
the door to the next American century is closing -- or opening
wide, for all who dare to dream.
Thank you. God bless you. And God bless America.
EXECUTIVE OFFICE OF THE PRESIDENT
Interest Rates
AMERICAN THAT TIMITED
OFFICE OF MANAGEMENT AND BUDGET
Q4 GNP
WASHINGTON. D.C. 20503
Housing Finance
Bean Counting
March 24, 1989
MEMORANDUM FOR THE DIRECTOR
FROM:
John C. Weicher
SUBJECT:
Friday Economic and Financial Report
Interest Rates Stabilize After Recent Jump
This week, interest rates stabilized and even fell slightly on
long maturities. That's a welcome change from the prior week's
increase of 20 basis points. February's Consumer Price Index,
released this week, was a bit better than the market expected,
with about a 5 percent annual rate rise overall and also exclud-
ing volatile food and energy items. Despite this good news, the
underlying rate of inflation this year has averaged 5.3 percent,
up about 1/2 percentage point from last year.
Consumer Price Index
(% change, annual rate)
December to December
Jan
Feb
1985
1986
1987
1988
1989
Total
3.8
1.1
4.4
4.4
7.2
5.1
Food
2.7
3.8
3.5
5.2
9.3
5.0
Energy
1.9
-19.5
8.2
0.5
9.8
6.9
Ex. Food & Energy
4.3
3.8
4.2
4.7
5.9
4.8
Fed Chairman Alan Greenspan and Vice-Chairman Manuel Johnson, in
separate remarks on Wednesday, made clear that the Fed has
stopped raising the federal funds rate for the time being while
they wait for the effects of their previous tightening moves to
appear. They stressed the long lags in monetary policy and their
desire to avoid overkill and reduce the possibility of a re-
cession. This is a clear sign that the FOMC, which meets next
week, is unlikely to change policy.
- 2 -
The bond market bounced up a bit after the Fed officials' re-
marks, but the stock market headed down. In the past week,
technology stocks have been hit on reports of lower earnings.
IBM and Digital Equipment dropped by over 8 percent. Weakness
at these major computer manufacturers is a signal of a slowdown
in investment spending.
Nominal interest rates are now about 1/2 percentage point higher
on long maturities and 1-1/4 percentage point higher on short
maturities than projected in the budget. While this increases
outlays and the deficit, the effects will be almost entirely
offset by higher-than-expected inflation. Tax receipts increase
proportionately to the rise in prices, while noninterest program
outlays are slower to adjust in the short run. Eventually,
outlays are likely to be adjusted for higher inflation, so that
receipts and outlays change about equally.
Of course, higher inflation is bad news for the economy and
threatens the continuation of the expansion, but it has a roughly
neutral effect on the deficit in the long run. What really
matters for the budget is real interest rates and real growth
rates. This year's rise in nominal interest rates has been
fairly closely matched by rising inflation, with little average
change in real rates. Real growth was slightly higher than the
Administration's projection for the fourth quarter of 1988. The
budget assumes a decline in real interest rates and healthy
growth over the next year and a half, a more favorable outcome
than most private sector forecasts. But so far, overall economic
performance is consistent with the economic projections that
matter most for the budget.
Fourth Quarter GNP
Now that all the data are in for the final quarter of last year,
it is clear that the economy was somewhat stronger than initially
reported. The Bureau of Economic Analysis places real GNP growth
at a 2.4 percent annual rate, up 0.4 percentage points from the
prior reading. A change of this magnitude is not exceptional, in
fact, it is equal to the average revision during the past dozen
years. Excluding the drought, which cut 1.1 percentage points
off the growth rate, real GNP rose at a 3.5 percent annual rate.
Over the four quarter of the year, GNP also rose 3.5 percent
excluding the drought's effects.
The fourth quarter inflation estimates were not revised. The GNP
implicit price deflator was up at a 5.3 percent annual rate and
the GNP fixed-weighted price index, which is based on a constant
composition of output, was up at a 4.2 percent rate. (See
attachment for details of fourth quarter GNP.)
The Administration has assumed that rising interest rates over
the past year will put a damper on nonfarm growth this year, but
not enough to cause unemployment to rise. The year is still
young, but there are signs that this is already happening. The
- 3 -
sectors that were at the forefront of the expansion last year are
moderating. Manufacturing production and employment slowed dur-
ing the first two months of this year. In part, this reflects
diminished competitiveness because of the dollar's appreciation.
On the domestic front, businesses' orders for new equipment have
not risen since the third quarter of last year, which will curb
capital spending in the coming months. Finally, consumer spend-
ing also waned in January and February as auto sales slumped. At
the same time, unemployment has actually fallen.
A slackening pace does not necessarily signal an end to the
expansion. In fact, the composite index of leading indicators
rose 0.7 percent in December and 0.6 percent in January, the most
recent months available. That's the best back-to-back showing
since last June and is consistent with the Administration's
forecast for continued growth in the nonfarm economy, albeit at a
slower pace than during 1988.
The Evolution of Home Finance: Part I
The problems of the Federal Savings and Loan Insurance Corpora-
tion have simultaneously focused public attention on the American
housing finance system and obscured the nature of the fundamental
changes that have occurred over the last decade. This story is
the first in a series on the housing finance system. It
describes the evolution of the system. Subsequent stories will
discuss the changes in the mortgage instrument itself, in origi-
nation and servicing, and in the sources of funds for mortgages.
A Flawed Foundation
The "traditional housing finance system," dating back to the
Depression, was in reality two essentially competing systems of
home finance, each with Federal support: the thrift industry,
and the separate system of FHA/VA insurance and secondary market
development designed to attract commercial banks, life insurance
companies, pension funds and other investors to mortgages.
o Federal support for thrifts was initiated by President
Hoover. The Federal Home Loan Bank System was created in
1932 to charter and regulate Federal savings and loan insti-
tutions, and to provide advances (loans) to all S&Ls. This
was supplemented in 1934 by the creation of the Federal
Savings and Loan Insurance Corporation to insure thrifts'
deposits. The thrifts originated, serviced, and held
mortgages in their own portfolios.
President Roosevelt started the Federal Housing Administra-
tion in 1934 to insure mortgages, hoping to encourage commer-
cial banks and other institutions to originate and hold them.
The Federal National Mortgage Association (Fannie Mae) was
established in 1938 to create a secondary market for FHA
insured mortgages. In the immediate postwar period, the
- 4 -
Veterans Administration joined the FHA as a mortgage insurer.
In this system, there was a split between origination and
investing: mortgage bankers typically originated and
serviced mortgages, but sold them directly or through Fannie
Mae to other institutions which were the ultimate investors.
The S&Ls were heavily regulated, in return for deposit insurance
and preferential access to capital markets, and the regulations
eventually hamstrung the system. S&Ls were required to hold most
of their assets in mortgages. They were permitted to originate
mortgages only within 50 miles of their home office. These
holdings were financed primarily by local savings deposits.
Restricting thrifts to mortgages, primarily local, ignored the
wisdom of portfolio diversification. Moreover, financing port-
folios of long-term, fixed-rate mortgages by short-term savings
deposits exposed thrifts to interest rate risk. So long as
interest rates were relatively stable, such lending was profit-
able. But when interest rates rose, shocked by inflation, this
term mismatch led to tremendous losses.
Accelerating Inflation
As inflation ratcheted upward in the mid-1960s, the early 1970s,
and again in the late 1970s, these flaws became evident. In
1966, Regulation Q, which restricted the interest rates that
commercial banks could pay on deposits, was extended to S&LS in
the hope of holding down their cost of funds. Instead, it
resulted in disintermediation -- a reduction in the growth of
deposits available for mortgage lending. On the second ratchet
in the early 1970s, money market mutual funds were created; they
invested in relatively short-term, high-quality assets, and were
free of the restrictions on insured depository institutions. In
the third cycle, MMMFs skyrocketed from $3.5 billion in 1977 to
$180 billion in 1981; there was a net decline in thrift deposits.
The first effect of inflation was to limit and destabilize the
funds thrifts had available for home finance.
The second, closely related, effect was to reduce thrifts'
profits and the value of their portfolios. On a market value
basis, by 1980 the industry as a whole had a negative net worth
of about 12.5% of assets. Although this industry-wide figure
improved as interest rates came down in the 1980s, a substantial
and growing fraction of the industry was insolvent. In any other
industry, they would have gone out of business. But insolvent
depository institutions can only go out of business when the
Federal Government closes or merges them. Instead, the FSLIC
exercised forbearance. Many thrifts with little or no net worth
continued in business, competing for funds, increasing the volume
of originations, and seeking higher returns. Their decisions
were subject to moral hazard; they might profit, but with no
equity, they could lose no more.
- 5 -
The nature of the mortgage instrument was also affected by the
continuing inflation. As rising home prices and higher interest
rates reduced the affordability of homes, potential buyers sought
both lower down payment requirements and easier monthly terms.
On the lenders' side, high and variable inflation created a
desire for variable or adjustable rate mortgages, which would
shift some of the interest rate risk to the borrower.
Bundles and Packages
Another major force restructuring the mortgage market in the
1970s was the increasing power and diminishing cost of computers
and telecommunications. New information technology made it
possible to "unbundle" different mortgage services so that
different firms could handle origination, insurance, servicing,
and holding. It also made possible the securitization of mort-
gages. This financial innovation "packaged" the cash flows on a
pool of mortgages into a variety of securities. These
securities, with quite different characteristics than the
underlying mortgages, were designed to appeal to a variety of
investors. They were sold in the secondary market, and were more
liquid than the underlying mortgages. Securitization will be
discussed more fully in a forthcoming article in this series.
The establishment of the Government National Mortgage Association
(Ginnie Mae) in 1968 accelerated the development of the secondary
market. Ginnie Mae bought FHA and VA insured mortgages, and
created pass-through securities on which it guaranteed timely
payment of principal and interest. In 1970, the Federal National
Mortgage Corporation (Freddie Mac) was chartered and charged with
creating a secondary market in conventional (uninsured) mortgages
to increase the liquidity of thrifts, and Fannie Mae was permit-
ted to buy conventional loans as well. As a result, mortgage
qualifying and underwriting standards became more uniform to
facilitate sale to the secondary market.
The Culmination
By the end of the 1970s, these forces created massive pressures
for changes in the housing finance system. To permit thrifts to
compete for funds and smooth the flow of financing for mortgages,
the Depository Institutions Deregulation and Monetary Control Act
of 1980 set up a schedule for the elimination of deposit rate
ceilings and the Garn-St Germain Act of 1982 authorized a deposit
account similar to money market fund accounts. The DIDMCA also
permited thrifts to hold up to 20% of assets in consumer loans,
commercial paper, and long-term corporate debt; Garn-St Germain
permitted investment in corporate and government securities with
no geographic limitation and increased the allowable limit for
these non-mortgage investments to 40% by 1984. For mortgages,
geographic limits on origination had been widened in several
stages, and by 1983 were eliminated throughout the nation. And
in 1981, thrifts were permitted to originate and hold any kind of
adjustable rate mortgage.
- 6 -
The result of these changes is that the housing finance system of
1989 is much removed from the system of 1979, and vastly differ-
ent from that of 1969. Twenty years ago, nearly all mortgages
carried fixed rates for terms of 25 to 30 years; more than half
were originated by S&LS, and more than half were held by them in
their own portfolios; few were sold in the secondary market; and
mortgage securities were unknown. Moreover, interest rates then
were much lower. Before the 1970s, S&Ls lived in a friendly
environment, one that enabled them to grow and prosper. High
inflation and new information technologies have changed all that:
today's environment is a hostile one for S&Ls. It is no wonder
that they have to struggle to survive.
Sweet Forecast Worth Hill of Beans
OMB is widely regarded as having the best bean counters in the
world, and the Office of Economic Policy has the best of the
best. This week, OEP's Jim Simpson won the NEOB cafeteria's
jellybean counting contest. His estimate of 539 beans was
closest to the actual count of 535, an error of less than 1
percent. The next closest was 619 beans. According to an
informed source, most estimates were in the low thousands, which
reinforces the view that OMBers believe in rosey scenarios. But
not OMB's economists: Jim has provided proof positive that
realism prevails in this office! "Forecasting is not an exact
science", but this forecast was right on the bean, er-- beam.
HAPPY EASTER!
FOURTH QUARTER GNP
The economy grew at a revised annual rate of 2.4 percent in the fourth quarter, up
0.4 percentage points from the previous estimate. Excluding the drought, fourth
quarter GNP was 1.1 percentage points higher. Inflation, as measured by both the
implicit price deflator and the fixed-weighted index, remained unchanged; therefore
all of the increase in nominal GNP was attributable to higher real growth.
1988
Q1
Q2
Q3
Q4
Q4
Prelim.
Final
(% change, saar)
Real GNP
3.4
3.0
2.5
2.0
2.4
Excluding Drought
3.4
3.9
3.0
3.1
3.5
GNP Price Deflator
1.7
5.5
4.7
5.3
5.3
GNP Fixed-Weighted Price Index
3.5
5.0
5.3
4.2
4.2
Nominal GNP
5.4
8.7
7.3
7.2
7.6
The boost to fourth quarter GNP came mostly from business fixed investment, which was
down less than initially measured, and from higher federal spending. Most of the
higher federal nondefense revision was due to transactions of the Commodity Credit
Corporation (CCC). Growth of consumption and residential investment was unchanged.
The upward revisions more than offset a deterioration in the net export balance.
Business Fixed Investment
7.6
15.0
4.0
-4.6
-2.9
Personal Consumption
4.5
3.0
3.9
3.5
3.5
Residential Investment
6.5
0.2
4.3
10.9
10.9
Federal Government
-21.0
4.7
-13.2
16.8
20.7
Defense
-5.3
-1.5
-10.5
7.5
9.9
Nondefense
-60.1
33.2
-22.5
60.5
71.5
Nondefense Excluding CCC
-1.9
1.5
-12.9
8.0
10.9
State and Local
3.5
3.2
1.1
5.1
6.0
The real net export deficit widened, mostly due to a downward revision in exports.
Imports were revised up slightly. Inventories remained essentially unchanged.
($82 billions)
Net Exports
-109.0
-92.6
-93.9
-103.3
-105.4
Exports
486.2
496.9
514.0
523.6
522.1
Imports
595.1
589.5
607.9
626.8
627.4
Inventory Change
66.0
35.3
39.5
29.3
29.1
Nonfarm
51.9
30.1
40.4
37.7
37.6
Farm
14.1
5.3
-0.8
-8.3
-8.5
Nominal and real disposable income were revised downward as a result of smaller gains
in wages, proprietors' income and interest income. Corporate profits in the fourth
quarter increased sharply. The quarterly pattern of profits last year was quite
volatile, but overall they rose 7.5 percent.
(% change, saar)
Nominal Disposable Income
7.4
5.6
10.4
9.4
8.8
Real Disposable Income
5.0
0.0
5.6
4.8
4.1
Saving Rate (%)
4.4
3.7
4.2
4.5
4.3
Corporate Profits
0.1
13.7
4.4
NA
12.6
RECENT ECONOMIC INDICATORS MARCH 24, 1989
(S.A. OR AS INDICATED)
Feb-88
Mar-88
Apr-88
May-88
Jun-88
Jul-88
Aug-88
Sep-88
Oct-88
Nov-88
Dec-88
Jan-89
Feb-89
GNP (QUARTERLY SERIES, % A.R.)
NOMINAL GNP
5.4
8.7
7.3
7.6
REAL GNP
3.4
3.0
2.5
2.4
IMPLICIT PRICE DEFLATOR
1.7
5.5
4.7
5.3
FIXED-WEIGHT PRICE INDEX
3.5
5.0
5.3
4.2
REAL DISP. PERS. INC.
5.0
0.0
5.6
4.1
OPERATING PROFITS
0.1
13.7
4.4
12.6
LEADING AND COINCIDENT INDICATORS
LEADING INDEX
140.3
140.8
141.5
141.5
143.9
142.7
144.1
143.7
143.9
143.9
144.9
145.7
NA
PERCENT
1.2
0.4
0.5
0.0
1.7
-0.8
1.0
-0.3
0.1
0.0
0.7
0.6
NA
COINCIDENT INDEX
126.5
127.3
127.3
127.6
128.5
128.9
129.3
129.3
130.6
130.7
131.6
132.9
NA
PERCENT
0.7
0.6
0.0
0.2
0.7
0.3
0.3
0.0
1.0
0.1
0.7
1.0
NA
INDUSTRIAL PRODUCTION
134.4
134.7
135.4
136.1
136.5
138.0
138.5
138.6
139.4
139.9
140.5
141.1
141.1
PERCENT
0.0
0.2
0.5
0.5
0.3
1.1
0.4
0.1
0.6
0.4
0.4
0.4
0.0
CAPACITY UTIL. MFG.
82.6
82.7
82.9
83.3
83.3
84.0
84.0
84.0
84.3
84.4
84.5
84.8
84.6
EMPLOYMENT INDICATORS
CIVILIAN EMPLOYMENT, MIL.
114.3
114.1
114.7
114.4
115.0
115.0
115.2
115.4
115.6
115.9
116.0
116.7
116.9
CIV. UNEMPLOYMENT RATE, PERCENT
5.7
5.6
5.5
5.6
5.4
5.4
5.6
5.4
5.3
5.4
5.3
5.4
5.1
NONFARM PAYROLL EMPLOYMENT, MIL.
104.7
105.0
105.3
105.5
106.1
106.3
106.4
106.7
107.0
107.4
107.6
108.1
108.3
AVG. WEEKLY HOURS, MFG.
41.0
40.9
41.2
41.0
41.1
41.1
41.0
41.2
41.2
41.2
40.8
41.0
41.0
INITIAL CLAIMS UNEMP. INS., THOUS.
321.6
308.0
304.5
310.8
304.1
325.4
305.1
292.8
295.4
300.5
309.0
292.5
308.8
CONSUMER SECTOR
RETAIL SALES, BIL. $
131.9
133.7
133.2
134.1
135.0
136.7
136.1
135.8
137.8
139.5
139.2
140.1
139.5
PERCENT
1.2
1.3
-0.3
0.7
0.7
1.2
-0.4
-0.2
1.5
1.2
-0.2
0.7
-0.4
TOTAL AUTO SALES, MIL. UNITS, A.R.
11.1
10.6
10.5
10.4
11.0
10.7
10.6
10.6
9.8
10.2
11.5
9.8
9.9
DOMESTIC
7.9
7.5
7.2
7.3
7.8
7.8
7.4
7.6
6.8
7.2
8.4
7.0
7.1
IMPORTED
3.2
3.1
3.3
3.0
3.1
3.0
3.2
3.1
3.0
2.9
3.1
2.7
2.8
PERSONAL INCOME, BIL. $, A.R.
3946.7
3985.9
4001.0
4021.4
4044.9
4075.3
4091.8
4114.7
4175.5
4165.2
4200.8
4272.9
4315.3
PERCENT
0.6
1.0
0.4
0.5
0.6
0.8
0.4
0.6
1.5
-0.2
0.9
1.7
1.0
DISP. PERS. INC., BIL. $, A.R.
3376.7
3406.4
3357.6
3441.5
3465.3
3491.1
3505.9
3525.5
3580.0
3567.9
3599.5
3659.9
3699.7
PERCENT
1.0
0.9
-1.4
2.5
0.7
0.7
0.4
0.6
1.5
-0.3
0.9
1.7
1.1
REAL DISP. PERS. INC., BIL. $, A.R.
2768.0
2779.2
2721.5
2776.5
2788.4
2797.0
2802.2
2802.0
2832.5
2818.5
2834.3
2863.4
2889.6
PERCENT
1.0
0.4
-2.1
2.0
0.4
0.3
0.2
0.0
1.1
-0.5
0.6
1.0
0.9
PERS. CONSUMP. EXP., BIL. $, A.R.
3125.4
3149.0
3161.3
3190.9
3231.5
3241.7
3271.7
3270.2
3307.7
3325.4
3346.0
3357.9
3375.7
PERCENT
0.5
0.8
0.4
0.9
1.3
0.3
0.9
0.0
1.1
0.5
0.6
0.4
0.5
REAL PERS. CONSUMP. EXP., BIL. $, A.R.
2562.0
2569.2
2562.5
2574.3
2600.3
2597.3
2615.0
2599.1
2617.1
2626.9
2634.6
2627.2
2636.6
PERCENT
0.5
0.3
-0.3
0.5
1.0
-0.1
0.7
-0.6
0.7
0.4
0.3
-0.3
0.4
HOUSING SECTOR
HOUSING STARTS, THOU. UNITS, A.R.
1511.0
1528.0
1576.0
1392.0
1463.0
1478.0
1459.0
1463.0
1532.0
1567.0
1577.0
1690.0
1498.0
SINGLE-FAMILY
1095.0
1169.0
1087.0
1001.0
1088.0
1067.0
1076.0
1039.0
1136.0
1138.0
1141.0
1202.0
1045.0
HOUSING PERMITS, THOU. UNITS, A.R.
1429.0
1476.0
1449.0
1436.0
1493.0
1420.0
1464.0
1394.0
1516.0
1516.0
1566.0
1507.0
1404.0
03. 15,89 06:55PM *LABOR SECRETARY DOLE
PO1
U.S. DEPARTMENT OF LABOR
118h
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
20210
Main 202/523-8271
Fax 202/523-9072
TO: MARK LANGE
WHITE HOUSE
FROM: E. KHACHIGIAN
NOTES:
NAM INFO
Enjoy!
03. 15. 89 06:55PM *LABOR SECRETARY DOLE
P02
NAM POLICY ON A COMPETITIVE WORKFORCE IN A GLOBAL ECONOMY
"
A skilled labor force is a basic requirement for economic growth and prosperity. To compete successfully in
a global economy. investment in human resources is at least as important as investment in equipment and
"
of.
technology. Flexibility is the key to that investment--that is. maintaining an approach that facilitates
cooperation between the public and private sectors that permits each to perform those roles for which they are
Navey
Johnson
best equipped.
factoid
Education and Training. Education and training play pivotal roles in the nation's ability to maintain a
skilled labor force.
0 If training/retraining programs are to be successful, they must be of mutual benefit to both employers and
employees. Business operates the most effective training program in the nation--its own. Companies spend
an estimated $30 to $50 billion a year formally educating and training employees. Informal training has
been estimated to run as much as $180 billion a year. In light of rapid changes in technology and
heightened global competition, businesses are encouraged to approach training and retraining
systematically and to fully integrate such programs into the ongoing planning and operation of a firm.
\
Public policy should promote continued business efforts and public programs should relate to private
sector endeavors.
1
0 To meet America's competitive challenge. a state-of-the-art public training and educational system is
required. Modernization of America's public education and training system. therefore, is essential. In
this process. greater business partnership In educational and training efforts at all levels should be
stimulated and incentives for increased cooperation explored.
0 The key to more relevant education and training programs is improved linkage between employers and
education and training institutions. For example, Private Industry Councils under the Job Training
Partnership Act, which require 51% business participation, provide an example for public-private
partnerships and could be used as a starting point for even more improved cooperative efforts. This
partnership is especially crucial for small businesses. which are often financially and logistically
unable to provide in-house training and retraining.
0 Any employment and retraining efforts should be based on future market demands for jobs and should be
directed towards private sector needs.
Dislocated Workers
Change is an integral part of the nation's efforts to promote and maintain strong. self-sustaining.
non-inflationary economic growth. To facilitate that change and minimize its adverse impacts. the nation's
workers. business and the economy as a whole would benefit from a competent, versatile. systematic and voluntary
approach to readjustment.
o In order to avoid displacement, business is encouraged. when feasible. to adopt policies such as use of
interplant transfers. reduced work weeks, job-sharing. and use of other-than-regular employees. If
displacement is unavoidable. business is encouraged as much as possible to ease the burden of dislocation
voluntarily through such activities as job counseling. job search assistance, retraining. outplacement
assistance and by providing as much advance notice as possible.
o Public education programs and private sector readjustment efforts can be more effective if coordinated and
should have the following characteristics: cost-effectiveness. broad coverage, easy access. simplicity,
limited red tape. individual choice. flexibility and linkages with existing programs.
0 The unemployment insurance system. which is funded by employers, should provide incentives for workers to
seek reemployment or retraining. Alternative approaches to disbursement of UI benefits should be explored
to accomplish employment incentive. UI funds should be used for benefits unless exploration clearly
indicates that alternative use would lead to more rapid employment. State tax treatment of UI should
reflect a sound experience-rating system.
Page 1
National Association of Manufacturers
03. 15. 89 06:55PM *LABOR SECRETARY DOLE
P03
o Employment service. Payroll taxes collected to operate an effective, efficient public employment service
should be used for their intended purpose and not held for other governmental purposes. An effective,
efficient ES could provide up-to-date labor market information; facilitate matching employer job
requirements with skilled employees; provide assessment, testing and counseling in coordination with loca
vocational, technical and training schools and employers.
Illiteracy, Drop-outs
Business has a vital interest in a literate, educated workforce in order to meet competitive challenges.
Training and retraining workers for new job skills is never an easy task, but without a foundation of basic
skills, It becomes a major and expensive task. Workers with low abilities in basics such as reading, writing and
arithmetic are a factor in lower productivity, workplace accidents, customer dissatisfaction and real problems in
using new technologies needed to meet world competition. Businesses can assist local communities with
educational efforts in a variety of ways, including serving on local university. vocational, technical and
secondary school boards; donating equipment; lending staff and assisting in school management where needed:
participating in teacher and counselor improvement programs, encouraging employee volunteer activity and
providing learning through work experience and volunteer activity sites. Businesses are encouraged to develop
cooperative relationships with technical schools and local community colleges to ensure that curriculae meets
present and future business needs.
Adopted February 5, 1987
Page 2
National Association of Manufacturers
THE WHITE HOUSE
WASHINGTON
FRINGE BENEFITS FOR AMERICAN WORKERS
Workers are Receiving More Fringe Benefits than Ever Before
According to Chamber of Commerce estimates, total
benefits reached $813.9 billion in 1987, up 163 percent
in a decade.
In 1987, total benefits reached a record 36.2 percent
of wages and salaries. That is more than twice the
share wages in the late 1950s.
Non-Cash Fringes, Especially Time Off, Is Rising Most Rapidly
Payment for Time Off amounted to 11 percent of payroll
in 1987, equivalent to 28.6 days off. Of this:
14.8 days (or 3 weeks) were paid vacation
8.6 days were paid holidays
3.6 days were paid sick days
1.6 days were for other reasons, including
parental leave
Twenty years ago, time off amounted to 20.5 days per
year. Ten years ago it was 25.5 days.
Total Cash Fringes are Rising But Declining as a Percent of
Payroll
Total Cash Fringes reached $652 billion in 1987, up 141
percent in a decade.
This was 19.3 percent of payroll, down from a peak of
20.6 percent in 1983, but still higher than the 18.4
percent of a decade ago. Possible reasons for this:
With lower tax rates, cash fringes are less
attractive relative to wages than they used
to be.
The rising stock market has meant that
companies need to contribute less new money
to fund their pension plans.
The Market, Not Government Is Responsible For Rising Fringes
79 percent of the growth in the fringe share of
compensation is due to voluntary action by employers.
Only 21 percent is due to government requirements.
BENEFITS AS A PERCENTAGE OF WAGES
ODD YEARS 1955 - 1987
36.0%
32.0%
28.0%
TOTAL
24.0%
Non-Cash Fringe Benefits
20.0%
16.0%
Cash Fringe Benefits
12.0%
8.0%
4.0%
Social Insurance Contribution
'55 '57 '59 '61 '63 '65 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87
MAR-29-89 WED 9:35 ABC
P.01
American
Business
Conference
A Conlition of Growth Companies
116
TELECOPIER TRANSMISSION
FROM
AMERICAN BUSINESS CONFERENCE
DATE: 3/29
TIME:
9:35
TO: MARK LANGE
TELECOPIER #
DEPARTMENT:
TELEPHONE #
COMPANY:
FROM: JOHN ENDEAN
TELECOPIER # (202) 467-4070
TELEPHONE / (202) 822-9300
NUMBER OF PAGES TO FOLLOW:
2
REMARKS: RE PRESIDENT BUSH $ REMARKS BEFORE
AMERICAN BUSINESS CONFERENCE
NOTE: IF THERE ARE ANY QUESTIONS REGARDING THIS DOCUMENT, PLEASE CALL
AT THE ABOVE NUMBER.
MAR-29-89 WED 9:36 ABC
P.02
American
Business
Conference
A Coalition of Growth Companies
MEMORANDUM
To:
Mark Lange
From: John Endean
Date: March 29, 1989
Attached are a few examples of ABC members' activities on
behalf of educational excellence. Quite candidly I have not
included the names of the executives in the examples I have
given because virtually all one hundred of our members are
involved in one way or another in this issue and we are
sensitive about singling out for special mention only half a
dozen or SO.
It is a cliche to say that business is "concerned" about
educational excellence. I think what distinguishes our CEOs is
their willingness to spend a remarkable amount of their own time
making good on that generalized concern.
MAR-29-89
WED
9:36
ABC
P.03
ABC members, the chief executives of high growth,
entrepreneurial firms, are directly and personally involved in
promoting better educational standards at all levels in their
local schools and colleges. Some examples:
A number of ABC executives have taken the lead in
their home cities in public-private partnerships to
explore what the appropriate role for business is in
improving K-12 education.
One ABC chief executive is sponsoring a geography and
political/economic class for 5th through 8th graders
in his local grade school. He is planning to give
about $5,000 to the program and will also do some of
the teaching because he believes that to be
competitive in the world "we had better understand
it." He plans to focus on science and math next.
Several ABC executives hold part-time teaching
positions in local colleges and universities.
An ABC executive has begun a continuing education
center for employees. At the company's expense, 65
men and women will take a 30-week course to improve
their reading skills. The program will be undertaken
in cooperation with the local community college.
A Minnesota-based chief executive has been very active
in promoting parental choice in selecting public
schools for children. so crucial is improved
education to this executive's company that he has
hired someone to work full-time on the issue.
An ABC chief executive's interest in education led him
to become involved in the establishment of several
Montessori Schools.
An ABC executive is Chairman of the Boston Museum of
Science and has in that capacity been instrumental in
promoting science education in the Boston schools.
Well over one third of ABC chief executives serve on
either a local school board, on the board of a private
secondary school, or on the board of a local college
or university.
sunday
633-3465 3465
I
LEXIS® NEXIS® LEXIS® NEXIS®
(Lange/Martin)
March 17, 1989
5:45 p.m.
PRESIDENTIAL REMARKS:
NATIONAL ASSOCIATION OF MANUFACTURERS
WASHINGTON, D.C.
THURSDAY, MARCH 23, 1989
Thank you, [Dick]. You know, I understand a few of you were
concerned about the 1984 Trade Report, heralding the arrival of
the "post-industrial" society. And I have to confess, that
whenever anyone talks to me about some "post-industrial" society,
I have doubts of my own.
Would such a place get along without plumbers, for instance.
And if such a society could exist, I wonder if either its pipes
or its theories would hold water.
For now, I'm willing to bet my last dollar on manufacturing
in America. At least until somebody can show me how to wear a
piece of information, or parallel-park a concept.
American manufacturing has been -- and continues to be --
the backbone of this economy. It's been estimated that every new
manufacturing job creates three other jobs here at home.
I've been a great admirer of the export-driven, rust-belt
renaissance you've kicked off. Last year, the merchandise trade
deficit dropped by a fifth. Exports surged to an all-time high.
And manufacturing productivity is also now at record levels. The
2
quality of American exports is arguably better than it has ever
been. And in terms of sheer output, American factories have
never done better.
Now, there's a lot of talk about competitiveness going
around these days -- and these facts and figures are all ways of
measuring it.
But competitiveness is more than just the latest trade
figures, the latest quarterly earnings -- or the latest poll, the
latest election, or the latest Nielson ratings, for that matter.
Surely our success can be measured by better methods than these.
In your industry, as in mine, this may be a good time for us to
look toward a longer horizon.
We stand at a special moment in American history. We are
prosperous
and we are at peace.
At such a point, we are empowered -- even required -- to set
our sights higher. To look farther ahead. It is a time to make
choices. A time to answer those questions that will have the
farthest-reaching impact on our success as a society.
The 21st century is less than a dozen years away now.
3
You've called this conference "The New Leadership Summit." Well,
whatever else you think about leadership -- or vision, for that
matter -- it's not lofty rhetoric, charisma, or clairvoyance.
No, it may be as simple as understanding where an
organization finds itself, right now; seeing where it wants to
go; and knowing how to get there. Above all, it's playing the
long game, whatever the odds -- and playing for keeps. So today
I'm like to outline my agenda for the next American century.
To build a better America, one of the most important
priorities for this government will be to build savings and long-
term investment -- and get our fiscal house in order. This
means, first off, bringing down the deficit.
Last month, I submitted a budget to Congress with a clear
agenda to cut the Federal deficit, and enhance business' ability
to plan, expand, and build. My friends, next year alone, Federal
tax revenues will rise by more than $80 billion -- and yes, here
I go again -- with No New Taxes. Our plan will hold the line on
spending, using that revenue to slash the deficit by more than 40
percent -- bringing it down below the mandated targets.
To encourage long-range investment and entrepreneurship in
businesses of all sizes, it's time we restored the capital gains
differential. This is another case where less means more. More
4
revenue to the Federal government -- $4.3 billion more, according
to Treasury estimates. More savings, and more investment. More
competitive, flexible businesses. More opportunities for
innovation. And more jobs for all Americans.
This is no tax break for the rich. It's a fair shake for
America.
To spur investment in basic research, we've proposed a
permanent extension of the research and experimentation tax
credit. A 13 percent increase for science and technology
programs. And we intend to stay on track in our effort to double
the National Science Foundation's budget by 1993.
To support capital formation, we will encourage personal
savings, and restore the integrity of our nation's savings and
loans institutions. Our plan has been well-received on both
sides of the aisle on Capitol Hill -- and I've asked for action
within 45 days.
We want to ease the pressures now building on the most
important organization in America -- the family -- by promoting
choice on issues like child care. So last week I sent
legislation to Congress that puts money and options in the hands
of parents, rather than bureaucracies. Our plan empowers all
families: dual earners, single parents, those who choose to
5
remain at home; those who prefer informal, neighborhood
arrangements; and especially those on low incomes, struggling to
be self-sufficient.
Lasting self-sufficiency, of course, means quality
education. And I see education as long-range planning at its
best -- a solution for the next century, for problems we haven't
even begun to recognize yet. It is an essential key to our
competitive future. Let no one suggest that education is a minor
matter on the national agenda. It is vital to everything we are,
and can become.
But there are no quick fixes here, either. No stop-gap
solutions. Like most of the long-term issues on the national
agenda, American education won't be fixed with a bolt of
lightning here, a puff of smoke there. It will take collective
effort at all levels, public and private, to get it right. Those
businesses that are involved with local schools -- developing the
workforce at its source -- are making fail-safe investments. And
they stand to reap the greatest rewards.
For those workers already on the line, we must build new
skills and flexibility as jobs change. By one estimate, 75
percent of all people now working will need some kind of
retraining before this century is over. The NAM policy position
you adopted last year said that "investment in human resources is
- 6
at least as important as investment in equipment and technology."
And you're absolutely right.
The astounding gains in productivity you've already achieved
can be pushed still higher -- but we'll have to look beyond
upgrades to plant and equipment. Ever since the 1930s, machine
capital has contributed only about 20 percent to productivity.
Most of this country's productivity improvements -- and most of
our growth in national income -- have been directly linked to
labor quality: and that means training, and retraining.
I'm reminding you of something you already know: machinery
and technology alone don't improve productivity. People do.
Another issue where we plan to play for keeps: We're
determined to get drugs out of the workplace. Drug abuse in the
workplace costs $00 billion every year, putting productivity and
lives at risk. Bill Bennett is off to a fast start. But we will
also be looking to you to set effective, well-reasoned drug
policies in your businesses.
Employers can teach their people to recognize the signs of
substance abuse in their co-workers -- and understand how drug
abuse hurts the non-users on the line.
7
Any long-term agenda must ask how we can leave the earth
we've inherited a little better than when we found it. And, you
know, this is no political litmus test. I think of Teddy
Roosevelt as one of the great conservationists -- one of the
great environmentalists. Our grandchildren should be able to
fish on the same lakes we've enjoyed.
The time has come to set aside the partisan approach to
these enormous environmental questions. We must devise a global
answer to the problem of ozone depletion and global warming. We
intend to make rapid progress on acid rain, and see that a new
clean air bill is produced. And we've already broken ground in
joining with other nations to call for the elimination of CFCs --
as well as adopting a tough new policy on the export of hazardous
waste.
In this agenda for a new American century, I've asked you to
consider a broad vision: long-term savings and investment;
support for the family; education and retraining; stopping drugs;
and cleaning up the environment. But we must rely on more than
legislation.
We must rely on the dynamic spirit that is America. The
spirit that says: Houses should not stand empty, while people
lack shelter. Jobs should not go unfilled, while young men and
8
women stand idle on street corners. No one should go hungry, in
the richest nation on earth.
We must promote local efforts to assure that every American
can seize a share of prosperity -- and help to create more of it.
Whether through the constellation of local community groups
already at work -- or through new ideas, like our program for
Youth Engaged in Service -- we will rely less on the collective
wallet, and more on collective will.
But this does not mean lowering our sights, or our
expectations. Just the opposite. In an era of tight budgets, we
are not going to simply "make do with less." We're going to
learn how to do more with less -- and do it better.
Yes, we are prosperous. And we are at peace. But such
quiet moments often become pivotal in a nation's history.
My friends, the choices we make now will determine whether
the door to the next American century is closing -- or opening
wide, for all who dare to dream.
Thank you. God bless you. And God bless America.
(Lange/Martin)
March 17, 1989
11:00 a.m.
PRESIDENTIAL REMARKS:
NATIONAL ASSOCIATION OF MANUFACTURERS
WASHINGTON, D.C.
THURSDAY, MARCH 23, 1989
Thank you, [Dick]. [ acknowl. X, y, z... ] [ poss. line
on "mountain elevators"; Dick Heckert likes to fish
]
My friends, I have to confess, whenever anyone talks to me
about the "post-industrial" society, I have doubts. I wonder if
it has plumbers, for instance. And if such a society does exist,
I wonder if either its pipes or its theories can hold water.
For now, I'm willing to bet my last dollar on manufacturing
in America. At least until somebody can show me how to wear a
piece of information, or parallel-park a concept.
American manufacturing has been -- and continues to be --
the backbone of this economy. It's been estimated that every new
manufacturing job creates three other jobs here at home.
U.S. industry is strong, and it's getting stronger. I've
been a great admirer of the export-driven, rust-belt renaissance
you've kicked off:
Last year, the merchandise trade deficit dropped by a fifth.
Exports surged 27 percent, to an all-time high.
And manufacturing productivity is up by over one-third since
1981, to its highest level ever. In head-to-head
competition, American workers still outperform their
Japanese counterparts in terms of productivity.
From just about every angle, the quality of American exports
is arguably better than it has ever been.
And finally, the sheer output of American factories is also
at record levels. Over the course of this ongoing business
expansion, manufacturing output has increased by more than
46 percent.
Now, there's a lot of talk about competitiveness going
around these days -- and these facts and figures are all ways of
measuring it.
But competitiveness is more than just the latest trade
figures, the latest quarterly earnings -- or the latest poll, the
latest election, or the latest Nielson ratings, for that matter.
Surely our success can be measured by greater means than
these.
In your industry, as in mine, this may be a good time for us
to look toward a longer horizon.
We stand at a special moment in American history. We are
prosperous
and we are at peace.
At such a point, we are empowered -- even required -- to set
our sights higher. To look farther ahead. It is a time to make
choices. A time to answer those questions that will have the
farthest-reaching impact on our success as a society.
The 21st century is less than a dozen years away now.
You've called this conference "The New Leadership Summit."
Leadership takes many forms. It appears in unexpected places.
Throughout history, some of our best leaders have been those who
served.
And vision, well, it's more than charisma, clairvoyance, or
lofty rhetoric. It may be as simple as understanding where an
organization finds itself, right now. Seeing where it wants to
go. And knowing how to get there.
Above all, it's playing the long game, whatever the odds --
and playing for keeps.
If I were writing the history books, I'd hope to be
remembered as a President who worked to prepare this country
for the 21st century.
So today let me outline an agenda for the next American
century. This administration is determined to:
-- encourage long-term investment and savings
-- preserve and support the most fundamental institution of
American life, the family
-- prepare a generation of young people who'll have to be
better educated than any before them, and retrain workers as
jobs change
-- stop the scourge of drugs
-- clean up the environment
-- and promote a new kind of volunteerism, for widespread
progress on a human scale.
These issues may never make for great sound bites. And they
defy quick, easy solutions.
Maybe they even make me sound a little like the Mad Hatter
-- you know, trying to imagine seven impossible things before
breakfast. But in keeping with my view to the long-term, I think
of a great old Cole Porter tune: "The difficult, we'll do right
now. The impossible will take a little while."
We cannot continue as we have in the past. We won't solve
these problems by imitating the competition. We must forge our
strategy carefully, deliberately -- and together hammer out our
future with a clear eye and a steady hand.
American manufacturers have long been known for building a
better mousetrap. Today let me ask you to think about what it's
really going to take, to build a better America.
One of the most important priorities for this government
will be to build savings and long-term investment -- and get our
fiscal house in order. This means, first off, bringing down the
deficit.
You know, the other day I saw a couple in a sports car, with
a bumpersticker -- one of those great barometers of our time.
And the bumpersticker said, "We're spending our kid's
inheritance."
Maybe they were. Individuals can spend as they choose. But
government can't. And this government will secure the next
generation's financial future. We will see that they're not
mortgaged to a mounting national debt.
Last month I submitted a budget to Congress with a clear
agenda to cut the Federal deficit, and enhance business' ability
to plan, expand, and build.
My friends, next year alone, Federal tax revenues will rise
by more than $80 billion -- and yes, here I go again -- with No
New Taxes.
Our plan will hold the line on spending, using that revenue
to slash the deficit by more than 40 percent, bringing it down
below the target mandated by Gramm-Rudman-Hollings.
To encourage long-range investment and entrepreneurship in
businesses of all sizes, it's time we restored the capital gains
differential. Bear in mind that the economies of the Pacific Rim
-- the "four dragons" of Hong Kong, Singapore, Taiwan, and the
Republic of Korea -- all completely exempt capital gains from
tax.
This is another case where less means more. More revenue
to the Federal government -- $4.3 billion more, according to
Treasury estimates. More savings, and more investment. More
competitive, flexible businesses. More opportunities for
innovation. And more jobs for all Americans.
This is no tax break for the rich. No, it's a sure and
proven path to widespread economic growth.
To spur investment in basic research, we've proposed a
permanent extension of the research and experimentation tax
credit. A 13 percent increase for science and technology
programs. And we intend to stay on track in our effort to double
the National Science Foundation's budget by 1993.
To support capital formation, we will encourage personal
savings. Not only by keeping inflation in check -- but also by
restoring the integrity of our nation's savings and loans
institutions. Our plan has been well-received on both sides of
the aisle on Capitol Hill -- and I've asked for action within 45
days.
Over the long run, it will be vital to help ease the
pressures now building on that most important organization in
America -- the family -- by promoting choice and options in
issues like child care.
Last week I sent legislation to Congress that puts money in
the hands of parents, rather than bureaucracies, without bias in
favor of any one child care solution.
Our plan empowers all families: dual earners, single
parents, those who choose to remain at home; those who prefer
informal, neighborhood arrangements; and especially those on low
incomes, struggling to be self-sufficient.
Education is long-range planning at its best -- a solution
for the next century, for problems we haven't even begun to
recognize yet. It is an essential key to our competitive future.
Let no one suggest that education is a minor matter on the
national agenda. It is vital to everything we are, and can
become.
But there are no quick fixes here, either. No stop-gap
solutions. Like most of the long-term issues on the national
agenda, American education won't be fixed with a bolt of
lightning here, a puff of smoke there.
It will take collective effort at all levels, public and
private, to get it right. Those businesses that are involved
with local schools -- developing the workforce at its source --
are making fail-safe investments. And they stand to reap the
greatest rewards.
For those workers already on the line, we must build new
skills and flexibility as jobs change. By one estimate, 75
percent of all people now working will need some kind of
retraining before this century is over.
The NAM policy position you adopted last year said that
"investment in human resources is at least as important as
investment in equipment and technology." No doubt about it.
The astounding gains in productivity you've already achieved
can be pushed still higher -- but we'll have to look beyond
upgrades to plant and equipment.
Ever since the 1930s, most of this country's productivity
improvements -- and most of our growth in national income -- have
been directly linked to labor quality: and that means education,
training, and retraining. Machine capital has contributed 20
percent, or less, to productivity.
I'm reminding you of something you already know: machinery
and technology alone don't improve productivity. People do.
Right now we provide over $50 billion in tax relief
incentives for plant and equipment, and R & D. And that's
worthwhile. But we're only providing about $25 million in
incentives for private investment in human resources.
That suggests that new buildings and machinery are 2,000
times more important than improving the skills and productivity
of our workers. Well, as another old song goes, "it ain't
necessarily so."
If employers need to shift more investment toward human
capital, we need to give them the right incentives -- keeping
them revenue neutral -- and we need to give them the right degree
of choice over where, and how, to make those investments.
It's good to see the increased attention companies are
giving to training and development. Time was, when they used to
think the H.R. guy was the one who made sure there was enough
potato salad at the company picnic. Not anymore.
Long-range business success will depend more than ever on
comprehensive, coordinated job training. Public-private
partnerships -- like Private Industry Councils, working through
the Job Training Partnership Act -- will be especially crucial
for smaller businesses. They're a way to pool resources. And
they work.
This administration will continue to look for ways to
stimulate these partnerships, and provide incentives for the kind
of education and training that meet market demands. Two days ago
Secretary Cavazos unveiled a plan for vocational training that
[did x, y, & z]. And more will be done.
You know, Henry Kissinger once said, "There cannot be a
crisis next week. My schedule is already full." Well, I have to
add one more to the schedule -- another issue where we plan to
play for keeps: We've got to get drugs out of the workplace, and
out of our schools.
Drug abuse in the workplace costs $00 billion every year,
and puts productivity and lives at risk. Bill Bennett is off to
a fast start. But we will also be looking to you to set
effective, well-reasoned drug policies in your businesses.
Employers can teach their people to recognize the signs of
substance abuse in their co-workers -- and understand how drug
abuse hurts the non-users on the line. And where testing is
concerned, it should be seen as a way out of trouble -- not a way
out of work.
Another compelling long-term question is how we can leave
the earth we've inherited a little better than when we found it.
And, you know, this is no political litmus test. I think of
Teddy Roosevelt as one of the great conservationists -- one of
the great environmentalists. Our grandsons should be able to
fish on the same lakes we've enjoyed.
The time has come to set aside the partisan approach to
these enormous environmental questions. We must devise a global
answer to the problem of ozone depletion and global warming. We
intend to make rapid progress on acid rain, and see that a new
clean air bill is produced. And we've already broken ground in
joining with other nations to call for the elimination of CFCs --
as well as adopting a tough new policy on the export of hazardous
waste.
In all of the central tenets of the agenda I've asked you to
consider today -- long-term savings and investment, support for
the family, education and retraining, stopping drugs, and
cleaning up the environment -- we must rely on something much
larger than legislation.
We must rely on the spirit of this great nation. The spirit
that says: Houses should not stand empty, while people lack
shelter. Jobs should not go unfilled, while young men and women
stand idle on streetcorners. No one should go hungry, in the
richest nation on earth.
In a country badly governed, wealth is something to be
ashamed of. But in a country well governed, poverty is something
to be ashamed of.
The last item on my agenda for the 21st century is to make
volunteerism a part of the national culture. It is to assure
that every American can seize a share of prosperity -- and help
to create more of it.
Whether through the constellation of local community groups
already at work -- or through new ideas, like our program for
Youth Engaged in Service -- we must make progress through shared
strength.
We will have to rely less on the collective wallet, and more
on collective will. But this does not mean lowering our sights,
or our expectations. Just the opposite.
In an era of tight budgets, we are not going to just have to
"do with less." We're going to have to learn how to do more with
less -- and do it better.
Yes, we are prosperous. And we are at peace. But such
quiet moments can often become pivotal in a nation's history.
The hinges upon which this moment turns move silently.
The choices are ours to make. Taken together, those choices will
determine whether the door to the next American century is
closing -- or opening wide, for all who wish to enter.
Thank you. God bless you. And God bless America.
924
Anonymou
1
There ain't no such animal.
12
Fifty million Frenchmen can't be wrong.
Caption for cartoon of a farmer at
Saying popular with American so
the circus looking at a dromedary.
diers during World War I [1917
From Life [November 7, 1907], cred-
1918]
ited to Everybody's Magazine
13
Say it ain't so, Joe.
2
How old is Ann?
Small boy to "Shoeless Joe" Jack
Popular phrase for "who knows?"
son of the Chicago White Sox, as h
[early 20th century]¹
emerged from a grand jury session
3 The Pyramids first, which in Egypt were laid;
[1920] on corruption in the 191
World Series
Next Babylon's Garden, for Amytis made;
Then Mausolos' Tomb of affection and guilt;
14
Don't sell America short.
Fourth, the Temple of Dian in Ephesus built;
Saying [c. 1925.
The Colossus of Rhodes, cast in brass, to the
15 Lord, through this hour
Sun;
Be Thou our Guide,
Sixth, Jupiter's Statue, by Phidias done;
So by Thy power
The Pharos of Egypt comes last, we are told,
No foot shall slide.
Or the Palace of Cyrus, cemented with gold.
Westminster Chimes
Seven Wonders of the Ancient World
16 Climb high
4 Use it up, wear it out;
Climb far
Make it do, or do without.
Your goal the sky
New England maxim
Your aim the star.
5
Earned a precarious living by taking in one
Inscription on Hopkins Memorial
another's washing.
Saying
Steps, Williams College, Williams
town, Massachusetts
6 Something old, something new,
Something borrowed, something blue,
17 Mother, may I go out to swim?
And a lucky sixpence in her shoe.
Yes, my darling daughter:
Wedding rhyme
Hang your clothes on a hickory limb
And don't go near the water.
Rhyme
7
God looks after fools, drunkards, and the
United States.
Epigram
18 See the happy moron,
He doesn't give a damn.
8 Oh, why don't you work
I wish I were a moron-
Like other men do?
My God, perhaps I am!
Rhyme
How the hell can I work
When there's no work to do?
19
The difficult we do immediately. The im-
Hallelujah, I'm a Bum [c. 1907]
possible takes a little longer.
Slogan of United States Army
9 Old soldiers never die;
Service Forces
They only fade away!³
British Army song [c. 1915]
20
Kilroy was here.⁷
Army saying, World War II
10 She was poor but she was honest,⁴
And her parents was the same,
21
SNAFU (Situation Normal All Fouled Up).
Till she met a city feller,
Ib.
And she lost her honest name.
22
G.I. Joe.
Song [c. 1915]
World War II term for
11 It's the same the whole world over,
infantryman⁸
It's the poor wot gets the blame,
⁵Sometimes "forty" or "thirty" is heard instead of
It's the rich wot gets the pleasure,
"fifty." When Texas Guinan and her troupe were refused
Ain't it all a bloomin' shame?
entry into France [1931], she was quoted as saying: "It
Ib. chorus
goes to show that fifty million Frenchmen can be wrong."
She promptly renamed her show Too Hot for Paris, and
"Mary is 24 years old. She is twice as old as Ann
toured the United States with it.
was when Mary was as old as Ann is now. How old is
The phrase may have stemmed from "Never be a bear
Ann?" - Braintwister in the New York Press [October 16,
on the United States," attributed variously to JUNIUS S.
1903]
MORGAN [1813-1890] and J. P. MORGAN [1837-1913].
Answer: Ann is 18.
⁷See Faulkner, 838:14.
There are variants for the less familiar last line, such
This name, chosen for the soldier in Lieutenant DAVE
as: And a silver sixpence in each shoe.
BREGER'S comic strip for Yank. the Army weekly. first
'See MacArthur. 7747.
Johnson
June 17, 1987
CONGRESSIONAL RECORD -
H 5197
then they took a look at the prices for
for the Elderly in lieu of the Consumer
the skills and productivity of our
the things that they bought in 1986
Price Index currently in use in any of the
workers.
and found a great disparity. The
several retirement or disability programs ad-
The advantage of enacting the job
senior citizens in America found that
ministered by the Federal Government.
training tax credit now is that it would
During the course of such study and investi-
it cost them a great deal more than 1.3
gation. the Secretary shall consult with the
require neither large Federal outlays
percent just to keep buying the goods
appropriate officers of the several Federal
nor a complex government delivery
and services they need to stay afloat.
departments or agencies that provide sepa-
system.
They thought something was wrong in
rate retirement or disability programs for
Assistance in the form of lower taxes
Washington: they knew that prices
individuals who are at least sixty-two years
would be particularly advantageous to
had increased more than 1.3 percent in
of age.
small businesses which provide 80 per-
1986.
(b) Within ninety days of the date of the
cent of jobs in America and are the
What is so special about the spend-
enactment of this Act, the Secretary shall
ing patterns of the elderly? Well, for
transmit to each House of the Congress a
powerful pistons of prosperity in my
written report containing a detailed state-
home state of Connecticut.
the most part they live on a fixed
ment of his findings and conclusions as a
The tax-free IRA withdrawal oppor-
income, and that Income is primarily
result of the study and investigation made
tunity, which would be available at
devoted to paying for the essentials of
by him under subsection (a) together with
dollar levels of up to $5,000 over 5
life; shelter, food, heat, and medical
his recommendations for legislation which
years, draws on an already established
care. I don't have to tell my colleagues
he may deem necessary for utilizing the
network of retirement financing cur-
that the price tag for health care went
Consumer Price Index for the Elderly in
up over 7 percent in 1986.
provisions of law affecting retirement or dis-
rently invested in by over 15 million
The same holds true for public
ability benefits provided by the Federal
working households.
Government to any individual who is at
The key is to provide the ability to
transportation services-up last year
least sixty-two years of age.
invest in one's future, to improve one's
over 6 percent. In housing, we all
position; it is this opportunity to
know that interest rates have fallen
and that buying a new house is now
1920
better oneself and one's family that is
at the very heart of the Great Ameri-
more affordable-but how many sen-
INTRODUCTION OF THE NA-
can Dream.
iors buy a new house?
TIONAL TRAINING INCENTIVES
Our legislation, the National Train-
My legislation would require the
ACT
ing Incentives Act, would help Ameri-
BLS to compute a new CPI tailored
specifically for the elderly. My bill
The SPEAKER pro tempore (Mr.
can families fulfill that Dream, fami-
would also require that Secretary of
COOPER). Under a previous order of the
lies who have seen their hopes dashed
Labor study and investigate any ad-
House, the gentlewoman from Con-
and spirit extinguished by forces
ministrative or legislative changes
necticut [Mrs. JOHNSON] is recognized
beyond their control: the impersonal
needed for the utilization of the CPI
for 5 minutes
forces of structural economic change.
Mrs. JOHNSON of Connecticut. Mr.
industrial modernization, rapidly
for the elderly in any of the several
Speaker, today I am reintroducing leg-
changing markets, destabilizing flows
disability or retirement programs ad-
islation with Representative BILL
of financial capital, regional competi-
ministered by the Federal. Govern-
CLINGER of Pennsylvania to provide 2
tion, foreign competition.
ment.
new approach to Job skills training
Our legislation is intended to com-
Finally, the bill would require that
the Secretary submit to Congress
that will keep American men and
plement rather than replace current
women working in good jobs and pro-
Government-funded retraining pro-
within 90 days after passage a detailed
statement of his findings along with
vide them with greater career opportu-
grams such as those under the Job
nities throughout their life.
Training Partnership Act (JTPAI,
recommendations for legislation neces-
Our pioneering legislation, which
which I support.
sary for the utilization of the CPI-EI-
derly in final disability or retirement
was introduced first in the 98th and
Through Government incentives
programs.
again in the 99th Congress, seeks to
provided by tax relief. our measure
achieve effective job training by: First,
places training responsibilities in the
I believe this legislation is justified
permitting businesses to receive a 20-
hands of those who provide the jobs
and necessary. The current CPI simply
percent tax credit for increasing their
and need an educated, highly skilled
does not take into account the buying
patterns and spending priorities of the
investment in human resources to pro-
workforce and provides training op-
elderly. We can develop a more honest
vide stronger worker training pro-
portunities for those who want to
and truthful index for the effects of
grams, and second, allowing people
work and move ahead in life.
inflation on our elderly-they deserve
with individual retirement accounts
With the tragic economic dislocation
it.
[IRA's] who want to improve their job
we all have seen in the industrial
skills to withdraw funds without pen-
sector and the urgent need for busi-
HR
alty or taxation to help pay for em-
ness, workers, and Government to
A bill to provide for the monthly publica-
ployment training.
better manage these changes when
tion of a Consumer Price Index for the E3-
The 20 percent tax credit, which
they must occur, our legislation is the
derly and to provide for the utilization of
would apply for additional training ex-
right approach toward ensuring a com-
such an Index in the determination of
cost-of-living adjustments authorized
penses over a company's 5-year histori-
prehensive, coordinated, and coopera-
under certain Federal programs for indi-
cal average training costs, would stim-
tive job training effort, and continued
viduals who are at least sixty-two years of
ulate effective on-the-job private
prosperity for American families.
age.
sector training in businesses of every
Mr. Speaker, I am submitting the
Be it enacted by the Senate and House of
size.
bill for the RECORD at this point, fol-
Representatives of the United States of
Current law enshrines a gross mis-
lowed by a section-by-section analysis
America in Congress assembled. That the
match in providing over $50 billion in
and a brief discussion of the key issues
Secretary of Labor shall. through the
tax relief incentives for investment in
raised by our legislation.
Bureau of Labor Statistics, prepare and
publish monthly a price index which accu-
plant and equipment and research and
DIGEST OF DEAFT LEGISLATION To Br PRO-
rately reflects the distribution of expendi-
development while offering a meager
POSED BY REPRESENTATIVE WILLIAM F.
tures on goods and services purchased gen-
$25 million for investment In human
CLINGER. JR_ OF PENNSYLVANIA, To PRO-
eraily by individuals who are at least sixty-
resources, an area where we believe we
VIDE INCENTIVES FOR WORKER TRAINING
two years of age and have retired from the
will either make or break our Nation's
THROUGH BOTH EMPLOYER AND INDIVIDUAL
workforce. This index shall be known as the
productivity and competiveness.
INITIATIVE AND TO REQUIRE THE SECRETARY
Consumer Price Index for the Elderly.
OF LABOR TO STUDY THE FEASIBILITY AND
SEC. 2. (a) In the preparation of the Con-
That, my collergues, is 8 ratio of
Cosr OF A NATIONAL Jos BANK
sumer Price Index for the Elderly. the Sec-
2,000 to 1. I repeat, current law sug-
National Training Incentives Act of 1987-
retary shall study and investigate any legis-
gests that new buildings and machines
Declares that It is the policy and responsi-
lative or administrative action necessary for
and products and processes are 2,000
bility of the Federal Government to encour-
the utilization of the Consumer Price Index
times more important than improving
age cooperation between employers and em-
THE white HOUSE
washington
your (?) lunch to
Mosbacher your head
A Brady
table
Dole (?)
"lBush
Previous Day Playe
Alexander
(Sandy) Troubridge
Richard that
(Dick)
Into
THE WHITE HOUSE
washington
Joennie Hodseson
437-3065
Meyflower
347-3008
Special Issue
January 30, 1989
Briefing
NAM
Industry's
Dear NAM Member:
Last November, our nation elected its 41st president. The 101st
Congress convened earlier this month. Confirmation proceedings
for the president's cabinet nominees are under way. Washington's
policymakers are set to begin work on the difficult issues that
await them. Many of the decisions they reach-or fail to reach-
will affect industry for the rest of the century and beyond.
Agenda
This special issue of Briefing highlights NAM's policy agenda for
the 101st Congress. Our top priorities range from rising health care
costs to proposed clean air legislation, from the federal budget
deficit to education. Although diverse, NAM's policy recommen-
dations share a common denominator-the premise that a robust
manufacturing sector is essential to the well-being of our society.
Sound, pro-competitive government policies help create an
environment in which industry is able to make its maximum
contribution.
NAM is committed to working with the administration, Con-
gress and other interested parties to forge pro-competitive, long
term solutions to the nation's problems. When a key floor vote or
committee markup is imminent, NAM will call on you to
101
communicate your views to your elected officials. Lawmakers do
st
listen to their constituents. Timely grassroots lobbying efforts can
make the difference.
The new year presents both serious challenges and oppor-
tunities. The National Association of Manufacturers is dedicated
to working with policymakers to maximize those opportunities. As
Congress
your chairman, I welcome any comments and suggestions that
you might have.
Sincerely,
RE Huburs
Richard E. Heckert
NAM Chairman
National Association of Manufacturers
Washington, D.C.
(202) 637-3000
2
Special Issue
Promoting Industry's
Keeping the Export
Boom Alive
Competitiveness
Exports accounted for 30 percent
of U.S. economic expansion in
1987 and almost 40 percent in
1988. The increase in manufac-
Pension Issues
tured exports created 800,000
Employee
new jobs last year. To promote
Although the 100th Congress technical
continued U.S. economic growth,
Benefits
tax corrections law addressed pension
NAM is urging the Bush admin-
asset reversions, the 101st Congress is
istration to launch a major export
expected to revisit that topic and a host
promotion drive to capture new
of other pension-related issues.
markets abroad.
Health Costs
Last year, NAM worked to prevent
Key tenets of the export pro-
The cost of health care in the U.S. has
enactment of a proposal to increase the
motion program NAM envisions
reached crisis proportions. Health care
pension reversion excise tax from 10 to
include: strengthening the Exim-
expenditures have quadrupled in the
60 percent. The final compromise
bank; beefing up U.S. export pro-
last 15 years. Employers now spend $150
raised the excise tax to 15 percent.
motion programs; protecting U.S.
billion per year on health care. Yet,
NAM will continue to oppose all
commercial interests overseas;
many NAM member companies con-
increases in the reversion excise tax
dropping proposed Treasury De-
tinue to experience annual health care
because if access to surplus funds is
partment changes in the taxation
cost increases of 15-30 percent and
restricted, employers will be more
of export income; developing an
more.
likely to fund plans at lower levels,
aggressive mixed credit program;
Lawmakers are also alarmed by the
threatening the retirement security of
and continuing to improve the
cost of health care-and by the number
millions of workers.
U.S. export control system. NAM
of uninsured, estimated at 30 to 37
NAM will also support flexible pen-
believes future U.S. competitive-
million. Pressure for change is building.
sion portability proposals that would
ness depends upon the designa-
And some of the proposed solutions,
allow an employee to transfer pension
tion of international trade as a
such as Sen. Edward Kennedy's (D-MA)
savings when changing jobs. Such pro-
high-priority item on the national
widely publicized mandated health
posals would better meet the needs of
agenda.
benefits proposal, would drive up labor
an increasingly mobile work force.
costs and diminish U.S. competitiveness
NAM will also monitor legislation
without addressing many of the root
regarding the use of surplus pension
last year derailed on a procedural vote
causes of health care inflation. NAM
funds to finance retiree health benefits,
of 243-169 a four-year, $64 billion long
strongly opposes the proposal.
the impact of leveraged buyouts on
term care entitlement proposal spon-
NAM believes that Congress needs to
pension plans and the taxation of
sored by Rep. Claude Pepper (D-FL-18).
take a close look at the entire health care
employer-provided benefits.
The legislation would have raised $29.5
system-including the relationship be-
Long Term Care
billion by lifting the $45,000 cap on the
tween technology, quality and costs; an
1.45 percent Medicare payroll tax-
overbuilt hospital industry; a costly mal-
Long term health care emerged as a
leaving a $34 billion budget shortfall.
practice system; and an inefficient pay-
priority issue in the last Congress and is
NAM worked as part of a coalition that
ment system that invites cost explosion.
certain to command considerable atten-
was instrumental in blocking the
The association will continue to sponsor
tion in the 101st Congress.
measure.
educational forums, testify before Con-
NAM believes long term care is an
NAM offers alternative recommenda-
gress and help explore new ideas to
important issue with major cost and
tions that include encouraging the in-
ensure that the solutions reached are as
employment implications for companies
surance industry to develop innovative
cost-effective and pro-competitive as
and workers. But broad federal entitle-
long term coverage, educating active
possible.
ments aren't the answer. The House
workers and urging them to plan for
NAM Briefing (USPS 432-110) is published weekly during sessions of Congress by the National Association of Manufacturers, 1331
Pennsylvania Avenue, NW, Suite 1500-North Lobby, Washington, DC 20004-1703. Subscriptions: $50 included in NAM membership;
nonmembers $200 a year.
Chairman of the Board: Richard E. Heckert
Editor: Douglas R. Kurkul
President: Alexander B. Trowbridge
Assistant Editors: John Cohen, Laura Pettey
Postmasters: Send address changes to Briefing, National Association of Manufacturers, 1331 Pennsylvania Avenue, NW, Suite
1500-North Lobby, Washington, DC 20004-1703. Second class postage paid at Washington, DC, and at additional mailing offices.
3
Briefing
their long term health needs, and per-
mitting individuals to make tax-favored
transfers from life insurance contracts
Small Manufacturers Lead the Way
and IRAs to purchase long term care
Small manufacturers continue to lead
A recent survey of NAM small com-
insurance.
the way to innovation, increased pro-
pany members-which account for
ductivity and economic expansion.
80 percent of the association's mem-
Uniquely able to take advantage of
bership-targeted three key issues of
Risk
emerging, cost-cutting technologies
concern in the 101st Congress: man-
and improved management tech-
dated benefits, deficit reduction and
niques, small companies originate 55
tax increases. NAM also helps small
Management
percent of the nation's innovations.
manufacturers assert their clout on
Small manufacturers also keep
Capitol Hill. The association's Small
America working. Manufacturing
Manufacturers Forum will hold its
Product Liability
employment rose a net 1.3 million
third annual "Washington Legislative
positions between 1976 and 1986,
Conference" on 3/21-22, during
The current product liability system-
with small manufacturers achieving a
which small business executives will
based on a patchwork of state laws-
gain of 1.4 million jobs, according to
meet individually and in small
pays an estimated $4.8 million in legal
the Small Business Administration. In
groups with members of Congress
and transaction costs for every $1.9
total, small business accounts for 39
and Bush administration officials. The
million paid to claimants. Fear of debil-
percent of total GNP.
Forum will also sponsor informational
itating lawsuits often prevents new prod-
NAM is committed to advancing
conferences during the course of the
ucts from reaching the marketplace.
the interests of small manufacturers.
year.
NAM and its members are poised to
build on the progress made last year,
when the House Energy and Commerce
program which requires employers to
of spending-not by increasing taxes.
Committee approved 30-12 a landmark
label hazardous materials, educate and
Federal spending rose by 90 percent in
reform bill-H.R. 1115-thus becoming
train workers, and post material safety
the 1980's, nearly double what would
the first House panel ever to approve
data sheets. OSHA strengthened worker
have been necessary to keep up with
federal product liability legislation.
protection 1/13/89 when it issued new
inflation. If Congress and the president
NAM will launch a broad-based, two-
exposure limits for hundreds of toxic and
fail to reach a deficit-reduction com-
house reform drive this year.
hazardous substances.
promise, then NAM would support a
A uniform federal product liability
A 101st Congress risk notification
one-year spending freeze estimated to
standard is urgently needed. To assure
proposal could come as part of a broader
reduce the deficit by $20.1 billion.
that lawmakers get the message, NAM is
package of "OSHA reform" proposals.
NAM also supports the goals of the
sponsoring a Product Liability Fly-in on
Such a package could include provisions
National Economic Commission (NEC)-
3/21-22, to flood Capitol Hill with manu-
dealing with workplace inspections,
the bipartisan budget panel established
facturers calling for reform. NAM
mandatory rights for workers to partici-
by Congress in 1987 budget legislation.
member action could make the dif-
pate on workplace safety committees,
The NEC is charged with formulating a
ference between the status quo and a
and worker inspection and enforcement
deficit-cutting strategy that promotes
viable product liability law.
power. NAM will again work to ensure
capital formation and spreads the deficit
that policymakers protect the safety and
reduction burden equitably among all
Health Risk Notification
health of employees in a cost-effective
sectors of the economy. The Com-
The new Congress may consider legisla-
and pro-competitive manner.
mission is expected to issue its recom-
tion to establish a worker health risk
mendations by 3/1/89.
notification program in the Department
of Health and Human Services. NAM
Budget
Budget Process Reforms
led the successful fight against 100th
A permanent solution to the nation's
Congress health risk notification legisla-
budget deficit/spending crisis will re-
tion that would have saddled employers
with millions of dollars in unwarranted
Deficit Reduction
quire not only short-term fiscal disci-
pline, but also long-term reforms in the
liability and led to government-
The Gramm-Rudman-Hollings (GRH)
budget process itself. NAM urges the
mandated health benefits and employee
Act requires Congress to reduce the
adoption of several specific budget
transfers. The 100th Congress bill passed
budget deficit from an estimated $160
process reforms to enforce fiscal respon-
the House by a 225-186 vote, but stalled
billion in FY 1989 to $100 billion in FY
sibility and restrain excessive govern-
in the Senate after backers failed on four
1990. Because high deficits drain the
ment spending.
occasions to invoke cloture and force a
nation of capital necessary for invest-
Specifically, NAM favors extending
vote on the bill.
ment and expansion, NAM supports
the Gramm-Rudman-Hollings (GRH)
Occupational disease notification leg-
GRH and other initiatives to significantly
deficit-reduction law-now scheduled
islation isn't necessary because the
reduce deficit spending.
to expire in 1993-to preserve the law's
Occupational Safety and Health Admin-
NAM believes the budget deficit
automatic funding cut (sequestration)
istration (OSHA) already administers a
should be cut by restraining the growth
and spending limit provisions. NAM also
4
Special Issue
supports extending GRH to cover all
controls. A final NAPAP report is due in
and future voluntary waste minimiza-
federal spending programs, except for
September, 1990.
tion efforts by innovative firms.
interest payments on the debt and
Lawmakers may also address ozone
means-tested programs for the poor.
nonattainment as part of a broad clean
Currently, only about 21 percent of the
air bill. EPA data reveals that most of the
Taxation
federal budget is subject to GRH.
72 ozone nonattainment areas comply
The association will also press for
with the federal standard 99 percent of
additional reforms, including a balanced
the time. NAM continues to support the
budget amendment to the Constitution,
health-based air quality standards estab-
Expiring Tax Provisions
the line-item veto, enhanced presiden-
lished by the Clean Air Act, but opposes
Despite the last-minute passage of tax
tial authority to rescind spending, and a
the imposition of punitive sanctions
technical corrections legislation at the
biennial budget.
against areas that have made progress
close of the 100th Congress, several tax
toward attainment. The association
incentives critical to manufacturing
would favor a moderate strengthening of
growth and technological advancement
Environment
the law's ozone and carbon monoxide
are scheduled to expire, or have already
controls. However, the EPA should also
lapsed, and must be reinstated or ex-
work to establish a more reliable system
tended in the 101st Congress.
of measuring noncompliance.
Internal Revenue Code Section 127-
Clean Air
allowing workers to exclude from tax-
RCRA/Waste Minimization
NAM will work in the 101st Congress to
able income the tuition assistance they
assure that industry is not hamstrung by
Legislation to reauthorize the Resource
receive from employers-expired at the
an unnecessary overhaul of the Clean
Conservation and Recovery Act (RCRA)
close of 1988. Reinstatement of Section
Air Act. Industry already spends more
will seek to change America's solid and
127 will help U.S. manufacturers main-
than $33 billion annually for air pollu-
hazardous waste disposal habits. Debate
tain a more qualified and competitive
tion controls. Legislation to rewrite the
resumes where it left off in the 100th
work force.
Clean Air Act in the last Congress-S.
Congress, where an unsuccessful RCRA
Legislative action is also necessary to
1894, sponsored by current Majority
renewal proposal sought to establish a
preserve the 20 percent R&D tax credit,
Leader George Mitchell (D-ME)-would
national waste management hierarchy.
now scheduled to expire at the close of
have nearly doubled that burden. The
NAM believes that waste minimiza-
this year. In extending the R&D tax
bill's stringent acid rain controls would
tion proposals, whether freestanding or
credit, last year's technical corrections
have caused significant declines in
included in RCRA reauthorization,
law included an NAM-opposed provi-
manufacturing profits, a cumulative
should emphasize voluntary market-
sion requiring corporate taxpayers to
drop of at least $223 billion in U.S. GNP
oriented incentives-rather than man-
reduce the amount they deduct for R&D
and a loss of over 860,000 jobs, according
datory percentage reductions. Any
expenditures by 50 percent of the
to a landmark NAM study.
reporting requirements should mini-
research credits they receive. NAM will
In environmental terms, a major re-
mize paperwork burdens, which often
work to exclude this short-sighted pro-
write of the Clean Air Act simply isn't
do little to improve public and environ-
vision from future extensions of the
warranted. An interim National Acid
mental safety. Industry has already insti-
R&D credit.
Precipitation Assessment Program
tuted voluntary initiatives that minimize
NAM also supports improving the
(NAPAP) report indicated that few lakes
volume, reduce toxicity, and reuse and
Section 861 allocation of R&D expendi-
have been adversely affected by acid
reclaim solid and hazardous wastes.
tures to foreign and domestic income.
rain and that sulfur dioxide and nitrogen
NAM supports a RCRA reauthoriza-
Section 861 dictates that U.S. multina-
oxide emissions will continue to decline
tion package that improves solid waste
tional firms conducting R&D activities in
over the next decade without federal
management and recognizes previous
the United States allocate a percentage
of their R&D spending to foreign-source
income when calculating foreign tax
credits. This provision effectively de-
Competitiveness Through Education and Training
creases foreign-source income, thereby
Industry has a vital interest in improv-
NAM will work with the 101st
reducing allowable foreign tax credits
and increasing overall tax liability. The
ing the quality of education of the
Congress and the new Bush admini-
1988 technical corrections law provides
nation's young and upgrading the
stration to formulate effective policies
only a temporary remedy. It allows U.S.
skills of America's work force. Though
concerning vocational education,
firms to allocate 64 percent of their U.S.
many companies have established
training/retraining and tuition assist-
R&D spending to U.S.-source income
education programs to prepare cur-
ance. Through its membership and in
and 64 percent of foreign research ex-
rent and prospective employees for
cooperation with all interested par-
penditures to foreign-source income.
the increased technological demands
ties, the association will work on ini-
The 64 percent allocation provision,
of an ever-changing workplace, fur-
tiatives at the local level to encourage
however, is effective only for the first
ther efforts are required to enhance
private-public partnerships as a
four months of the taxpayer's first tax-
American competitiveness.
means of improving public education.
able year after 8/1/87. NAM will seek a
permanent solution to the R&D expense
5
Briefing
allocation issue, as well as other tax
amounts of debt-has elicited new con-
incentives important to manufacturers.
cerns from Congress, the Treasury
Department and the president. Senate
How to Contact Congress
Alternative Minimum Tax
committee hearings are already under
way. Lawmakers are worried that take-
(202) 224-3121
The 101st Congress may consider an
increase in the rate of the corporate
over abuses and LBOs are threatening
(Congressional Switchboard)
alternative minimum tax (AMT)-a
long-term business planning, research
The mailing address for senators is
mechanism to ensure that all corpora-
and development initiatives and inter-
U.S. Senate, Washington, D.C.
tions showing economic income pay at
national competitiveness.
20510. The address for mail to
least some federal income tax-as part
In the last Congress, an NAM-backed
representatives is U.S. House of
of a deficit reduction package. A 100th
takeover reform bill was pulled from the
Representatives, Washington, D.C.
Congress proposal to increase the AMT
Senate floor after several attempts were
20515.
rate was dropped in the 1987 budget
made to amend the bill with "pro-raider"
Legislative Alerts. It's often said
"summit" agreement. NAM is poised to
provisions curtailing corporate defense
that all of politics is local. Your
fight attempts to increase the AMT rate
mechanisms and stripping states of cor-
voice carries weight with your
in the 101st Congress.
porate governance rights. This year's
elected officials. When important
On an offensive front, the association
proposals are expected to focus on a
action on key legislation is immi-
is seeking improvements in the switch
variety of new factors. NAM is working
nent and industry communication
scheduled for 1/1/90 to the Adjusted
with allied organizations and con-
with lawmakers can make a dif-
Current Earnings (ACE) preference
gressional committees to help formulate
ference, NAM asks its members to
within the AMT. The ACE preference,
takeover reform proposals that do not
contact their representatives or
as currently drafted, would decrease the
impede free market forces, but that
senators. The red Legislative Alert
value of depreciation deductions and
allow manufacturers to pursue long-
arrow in Briefing is your signal that
complicate accounting procedures nec-
term competitive strategies free from
contacts are urgently needed.
essary for corporate compliance. NAM
the looming threat of the most abusive
NAMNET. The 101st Congress
has already organized a coalition to
takeover tactics.
is certain to address an array of
reform ACE, or at the very least, to
issues affecting your company,
improve the treatment of depreciation
Dealer Terminations
regardless of size or industry. The
under ACE SO as not to impair critical
If manufacturers are to remain competi-
best way to keep tabs on Congress
capital formation.
tive, it is critical that they retain their
is via NAMNET, NAM's electronic
ability to control distribution and servic-
legislative information system. Put
Capital Gains
ing of their products. Antitrust legisla-
NAMNET to work as your own
The Bush administration will soon offer
tion introduced in the last Congress, S.
electronic legislative assistant!
a proposal to reduce the tax on capital
430, was designed to strip manufacturers
Call (202) 637-3082 for informa-
gains-income derived from asset sales.
of this right by making it easier for
tion.
Reps. John Rhodes (R-AZ-1) and Phil
dealers to sue firms in the wake of a
Crane (R-IL-12) have already offered
termination. NAM led a coalition that
capital gains tax cut proposals. And the
was instrumental in blocking passage of
in lawsuits targeting manufacturers and
Treasury Department has also explored
430 last year and will play a similar role
extorting expensive triple damages.
various capital gains tax options, includ-
in the 101st Congress.
Industry and labor organizations joined
ing a sliding scale mechanism that would
tax long-term investment gains at a
Antitrust Law
together last year in a push for legislation
to effectively eliminate the triple dam-
lower rate than short-term gains. NAM
The Bush administration is expected to
ages automatically awarded in most
strongly supports cutting the capital
propose antitrust reforms to increase,
successful RICO suits. Although last
gains tax, which would encourage in-
protect and encourage marketplace
year's bill did not become law, NAM will
vestment and economic expansion and
competition. Current antitrust laws dis-
again lead a business and labor coalition
help put the U.S. on equal footing with
courage American firms from engaging
drive for RICO reform legislation in the
competing nations, many of which have
in joint manufacturing or research ven-
101st Congress.
a nominal capital gains tax or none at all.
tures that could result in the profitable
development of new products and tech-
Trucking Deregulation
nologies. NAM strongly supports the
The Motor Carrier Act of 1980 made
Corporate
concept of antitrust reform and hopes to
work with the administration for changes
significant strides toward deregulating
the trucking industry. Because Amer-
Governance
that improve the competitive position of
U.S. manufacturers. The association is
ican industry relies heavily on truck
awaiting the administration proposals.
transportation, manufacturers would
reap tremendous benefits from total
Hostile Takeovers/LBOs
RICO Reform
deregulation. During the 101st Congress,
an NAM-led coalition will resume its
The recent surge of leveraged buyouts
The Racketeer Influenced and Corrupt
drive for comprehensive trucking de-
(LBOs)-takeovers financed with huge
Organizations Act (RICO) is being abused
regulation legislation.
6
Special Issue
acted last year, the president can now
International
terminate foreign acquisitions, mergers
or takeovers of U.S. companies when
The 101st Congress
Trade
national interests are threatened.
Senate
55 Democrats
South Africa Sanctions
45 Republicans
Trade and Competitiveness
The drive to establish further restric-
House
tions on U.S. business ties to South Africa
The enactment of omnibus trade legisla-
259 Democrats
tion and approval of the U.S.-Canada
is already in motion. Rep. Ron Dellums
174 Republicans
Free Trade Agreement last year were
(D-CA-8) has reintroduced a sweeping
2 vacancies
sanctions bill, H.R. 21, that is similar to
important steps toward improved inter-
legislation which passed the House last
NAM will soon publish its 101st
national competitiveness. Much of this
year's activity builds on last year's
year. H.R. 21 would block the flow of
Congress Directory, featuring law-
achievements. The trade act, which
virtually all trade and investment be-
makers' addresses and phone num-
tween the U.S. and South Africa. U.S.
bers, committee rosters and phone
affects virtually every aspect of the
companies would be required to pull
numbers, a list of cabinet depart-
nation's trade laws, will be implemented
their investments from that country
ments and more. Watch for order-
this year. And a new Canada-U.S. Trade
within a year.
information in upcoming issues
Commission will supervise implementa-
tion of the bilateral accord.
NAM supports the abolition of apar-
of Briefing!
Negotiations are under way to im-
theid in South Africa, but opposes addi-
prove the multilateral trading system-
tional sanctions. U.S. companies have
better known as the Uruguay Round of
promoted development of South African
firms have disability plans that provide
the General Agreement on Tariffs and
labor unions, encouraged nondiscrimi-
paid, job-guaranteed leave for mater-
Trade (GATT). Meanwhile, the Euro-
nation in the workplace, and spent
nity. Corporate child care assistance
hundreds of millions of dollars to support
programs are also growing at an astro-
pean Community's ongoing drive to
South African education, health care,
nomical pace. NAM members should
eliminate remaining market barriers by
1992 could create major opportunities-
housing and social development. Sanc-
communicate their opposition to paren-
or roadblocks-for American com-
tions legislation would eliminate U.S.
tal leave legislation in letters and meet-
panies. NAM will continue to advise
business as an important force in the
ings with legislators.
member companies of important devel-
fight against apartheid.
Child Care
opments on the trade front as they
occur, and argue industry's case to U.S.
President George Bush is expected to
agencies and negotiators whenever
Labor Relations
propose a toddler tax credit program to
necessary.
help low-income families afford child
care and to expand the range of day care
Foreign Investment
options available to parents. Allies of the
Parental Leave
Alliance for Better Child Care (ABC), on
Foreign direct investment, like domestic
investment, creates American manu-
One of the first major legislative battles
the other hand, want broader legislation
to subsidize child care costs for lower
facturing jobs, spurs economic growth
of the 101st Congress is likely to involve
and middle-income families that utilize
and increases the competitiveness of
parental leave. Last year, a proposal
U.S. industry. Nevertheless, Rep. John
designating job-guaranteed parental and
"professional" day care services. They
Bryant (D-TX-5) has reintroduced legis-
employee medical leave as a minimum
would also regulate child care providers.
lation, H.R. 5, to require foreign investors
labor standard advanced to the Senate
The issue is of concern to employers-
in U.S. businesses and real estate to file
floor. It was debated for two weeks as
60,000 of which already provide day
detailed disclosures with the Depart-
part of a so-called "pro-family" package
care assistance, according to a 1987
ment of Commerce. Penalties for non-
that also included a child care entitle-
Bureau of Labor Statistics study.
compliance would include forfeiture of a
ment bill. Supporters hope that last
NAM will work with policymakers to
year's debate may have paved the way
ensure that child care legislation does
foreign company's U.S. assets. A similar
"Bryant bill" passed the House on a 250-
for enactment of a parental leave bill in
not result in employer mandates, impose
170 vote last October.
this Congress.
unnecessary government regulations or
NAM cochairs a coalition of employer
create a new federal bureaucracy.
NAM opposes mandatory foreign
investment reporting rules on grounds
groups that opposes parental leave legis-
that they are both discriminatory and
lation because of the reduced flexibility,
Compulsory Unionism
unnecessary. The Commerce Depart-
increased costs, and decreased produc-
The AFL-CIO is once again expected to
ment already collects extensive foreign
tivity it would impose on employers,
push for legislation to ban dual shop
investment data, which is published in
particularly small companies. The legis-
operations in the construction industry.
aggregate form. Furthermore, the U.S.
lation is also unnecessary. Almost all
Dual shop operations constitute a well-
continually monitors foreign investment
working women today already have
established practice whereby a com-
activity for its impact on national secur-
some form of job-guaranteed maternity
pany owns independent, separately
ity. Under the omnibus trade law en-
leave. An estimated 95 percent of larger
managed union and open-shop subsidi-
7
Briefing
aries. Consequences of enactment
solution is a comparable worth study,
released by the American Petroleum
would include higher construction costs
which would empower a federal consul-
Institute on 1/18. Oil imports increased
for industry, a vast expansion of per-
tant to arbitrarily determine the wages
by 9 percent last year, totaling 42 per-
missible picketing, loss of employee
of government workers.
cent of domestic consumption. And in
freedom of choice regarding union
Enactment would increase pressure
December, the U.S. imported more oil
representation, and the establishment of
for expansion to the private sector. The
than it produced for the first time in nine
a dangerous precedent that could be
ultimate result could be the largest
years.
extended to other industries.
expansion of economic regulation in U.S.
Despite a crucial need for increased
Industry has made substantial strides
history-at a cost of over 2.8 million jobs,
domestic petroleum development legis-
in demonstrating that dual shop legisla-
according to the National Bureau for
lation to open a small portion of Alaska's
tion isn't necessary. It is already illegal to
Economic Research. A bill similar to
Arctic National Wildlife Refuge
establish "sham" non-union subsidiaries
H.R. 41 passed the House by a 302-98
(ANWR) to energy leasing stalled in the
for the purpose of evading collective
vote last year, before dying in the
100th Congress.
bargaining obligations. And National
Senate. NAM will continue to oppose
One ANWR proposal did clear a
Labor Relations Board statistics show
comparable worth as a fundamentally
House Committee last May. However,
that less than one-tenth of 1 percent of
unsound means of determining wages.
the panel added an organized labor-
unfair labor practice charges even allege
backed Manton (D-NY-10) amendment
a double-breasting abuse.
Labor Law Reform
to require union wages for construction
Anti-dual shop legislation passed the
During the 101st Congress, congressional
and maintenance work associated with
House in the last Congress, but by a far
allies of organized labor may propose
ANWR development. NAM and a broad
smaller margin than in 1986. The legisla-
amending the National Labor Relations
industry coalition strongly opposed this
tion failed to reach the Senate floor, due
Act to pursue a variety of union priorities.
requirement. The association will work
largely to the efforts of an active coali-
One idea that was the subject of a
for approval of environmentally safe
tion cochaired by NAM and strong
hearing in the last Congress is a proposal
ANWR energy development legislation-
grassroots communication from industry
to radically change a well-established
without union wage language-in 1989.
to lawmakers. NAM will continue to
precedent in the resolution of labor
combat dual shop legislation in the year
disputes that permits an employer to hire
Nuclear Power
ahead.
permanent replacements during an eco-
Many experts foresee the possibility of
nomic strike. NAM will oppose this and
Minimum Wage
electricity shortages in the decade
other so-called labor law reforms that
ahead. NAM supports a revitalization of
The 101st Congress will consider H.R. 2,
would set unwarranted precedents and
the commercial nuclear power indus-
legislation to increase the minimum
impede needed management flexibility.
try-the source of 18 percent of the
wage from $3.35 to $4.65 per hour by
Overseas Relocations
nation's total electric power load. In the
1992. While strongly supported by the
last Congress, lawmakers passed a NAM-
AFL-CIO, a large minimum wage hike
During the last Congress, Sen. Howard
supported 15-year renewal of the Price-
would hurt many of the workers it is
Metzenbaum (D-OH) introduced legisla-
Anderson nuclear liability law. This
intended to help. The Congressional
tion requiring employers of 50 or more
year, NAM will pursue legislative and
Budget Office estimates that raising the
workers to provide the Department of
regulatory actions to reform plant design
wage to $4.65 could cost 500,000 jobs. A
Labor with 120 days advance notice
and licensing procedures. Such meas-
hike would also hurt company produc-
before relocating operations from the
ures would enhance safety, while cutting
tivity by driving up labor costs-to the
U.S. to overseas; the department would
electricity costs for consumers by reduc-
tune of $48 billion, according to a Uni-
publish semi-annual lists of such com-
ing licensing delays and cost overruns.
versity of Chicago study. And increased
panies. Under the bill, these companies
production costs would lead to higher
would be ineligible for federal grants or
Offshore Oil
product and service pricetags for con-
loans for five years. Failure to comply
As much as one-half of America's un-
sumers. NAM opposes a large minimum
with the notice requirement could lead
wage increase and instead supports
tapped oil and gas reserves lie beneath
to sanctions of $10,000 per day of viola-
the oceans' outer continental shelf
creation of a youth training wage to help
tion. Similar legislation is likely in the
(OCS). An estimated four billion barrels
entry-level job seekers gain the skills
101st Congress. NAM will work to ensure
of recoverable oil and 11 trillion cubic
and experience they need in today's
such legislation is not enacted into law.
work force.
feet of recoverable natural gas remain
undeveloped off the Pacific Coast alone.
Comparable Worth
Energy and
Nonetheless, a handful of coastal state
lawmakers have blocked federal lease
Bad ideas are often advanced in Wash-
Resources
sales of the richest OCS acres via riders
ington under the guise of worthy goals.
to the Interior Department's appropria-
Rep. Mary Rose Oakar (D-OH-20) has
tions bills. Five DOI appropriations have
again introduced legislation-H.R. 41-
included OCS leasing moratoria since
ostensibly aimed at pay equity and the
Alaska Energy
1982. NAM strongly opposes leasing
elimination of discrimination in federal
U.S. oil production hit the lowest level in
bans and supports environmentally safe
pay practices. But the bill's proposed
24 years in 1988, according to figures
OCS leasing.
8
Special Issue
further PAC contribution limits, which
Technology and Industry's Future
would reduce the ability of corporate
employees to support candidates of their
NAM's Council on High Technology
amples are auto body configurations,
choice. The association is now studying
will address a wide range of issues in
eyeglasses and telephones.
non-binding PAC guidelines that would
1989 including research and devel-
Industrial designs are covered by
encourage PACs to avoid questionable
opment incentives, the regulation of
U.S. patent law, which allows legal
practices such as donating to two candi-
emerging technologies and intellec-
protection only if a design can meet
dates running for the same seat.
tual property rights. The association
the tests of "useful," "new" and
established the Council to alert
"unobvious." But many designs can-
member companies to significant leg-
not pass the unobvious test and lose
islative, regulatory and private sector
out on protection.
Regulatory
developments pertaining to industry
Other industrialized countries pro-
that impact manufacturers. Member-
vide designs with easier to obtain
Reform
ship on the Council's task forces-
copyright-like protection. As a result,
open to all NAM members-includes
U.S. designers obtained a mere 3,428
a subscription to High Tech Progress, a
design patents in one recent year,
monthly newsletter addressing tech-
while Germany protected over 61,000
Paperwork Reduction Act
nological issues and trends.
designs and Japan over 33,000.
The Paperwork Reduction Act of 1980
One of the Council's chief concerns
Stronger industrial design safe-
created an executive branch mecha-
in 1989 will be the issue of industrial
guards would give industry the ability
nism for paring down reams of dupli-
design protection. Industrial designs
to reap more fairly the rewards of
cative and unnecessary government
are original and distinctive designs
America's manufacturing and inno-
paperwork. The act established the
embodied in a utilitarian article. Ex-
vative genius.
Office of Information and Regulatory
Affairs within the Office of Manage-
ment and Budget (OMB) to officiate
over federal regulations requiring
Public Affairs
political action committees (PACs),
various types of recordkeeping and
NAM will push for reforms that level the
form processing. Some consumer
playing field between incumbents and
groups have targeted the act-due to be
challengers.
Campaign Finance Reform
reauthorized this year-charging that
In the last Congress, NAM was in-
OMB interferes with the implementa-
More than 98 percent of House incum-
strumental in blocking legislation which
tion of legitimate regulations. NAM is
bents seeking reelection were returned
called for taxpayer financing of con-
highly supportive of the reauthorization
to Congress last November. The advan-
gressional campaigns. NAM will oppose
to protect industry from new, costly and
tages of incumbency make it very
similar plans in the 101st Congress.
time consuming federal red tape. The
difficult if not impossible for most
PAC patterns of supporting incum-
association is ready to work with the
challengers to displace members. As
bents over challengers have also
administration and allied organizations
Congress studies campaign finance
inspired proposals to limit PAC contribu-
to ensure the reauthorization of this
reform options including the role of
tions. NAM traditionally has opposed
important act.
For more information about the issues covered in Briefing, contact the NAM
Legislative Analysis Department, (202) 637-3187. Each week's Briefing is available prior to publication
by 3:00 p.m. (ET) the previous Friday on NAMNET - NAM's public policy electronic network.
MAM
Second Class
National Association
NAM Congress
of Manufacturers
of American Industry
1331 Pennsylvania Avenue, NW
Newspaper Postage Paid
Suite 1500 - North Lobby
March 22-23, 1989
Washington, DC 20004-1703
Call (202) 637-3023
MAM
NATIONAL ASSOCIATION
OF MANUFACTURERS
Summary of 1989 Priorities
Policy and Communications Division
February 1989
TABLE OF CONTENTS
GOVERNMENT REGULATION, COMPETITION AND SMALL MANUFACTURING DEPARTMENT
Antitrust Reform
1
Dealer Termination
2
Regulatory Reform Issues (RICO; Trucking Deregulation)
3
Takeovers and Leveraged Buyouts
4
INDUSTRIAL RELATIONS DEPARTMENT
Education and Training Issues
5
Health Care Access and Cost Control Issues
6
Mandated Benefits (Parental Leave) / Child Care
7
Occupational Disease Notification
8
OSHA Reform
9
Product Liability
10
Reversion of Excess Pension Assets
11
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
EC-92 Implementation
12
Exchange Rates
13
Export Promotion
14
Foreign Investment in U.S
15
GATT Negotiations
16
Implementation of 1988 Trade Legislation
17
RESOURCES AND TECHNOLOGY DEPARTMENT
Clean Air Act Amendments
18
Clean Water Issues
19
Superfund Implementation
20
Waste Management and Minimization
21
TAXATION AND FISCAL POLICY DEPARTMENT
Deficit Reduction
22
R&D Tax Issues
23
Restoration of Capital Formation Incentives
24
Taxation of Employee Benefits
25
i
GOVERNMENT REGULATION, COMPETITION AND
SMALL MANUFACTURING DEPARTMENT
ISSUE: Antitrust Reform
LEGISLATION: To improve U.S. international competitiveness, the Departments of
Justice and Commerce have recommended increasing the ability of companies to
pool their resources and talents in R&D and production joint ventures,
especially those areas facing foreign government-sponsored and supported
activities, i.e., computer chips, high definition television, etc. Two possible
methods of encouraging such joint ventures would be to provide a certificate of
exemption to a venture and the other by reducing antitrust damages for a venture
that had notified the government of its activities. The former approach seems
the best method, but would face possible delays in obtaining certification,
while the latter provides speed but with the uncertainty of a potential lawsuit,
albeit at single rather than treble damages.
It has been rumored that the new administration will send the Congress a
comprehensive reform package (as did the prior Administration) calling for
reform of Sec. 7 of the Clayton Act, redefining that section so that there must
be a "significant probability" that a merger will be harmful before it would be
prohibited. Another area would reduce treble damages in most private suits to
single damages (except in price-fixing cases) but provide for federal treble
damages recovery. A claim reduction provision will also be included to reduce
the "whip saw" tactics of early antitrust settlements. Provisions dealing with
interlocking directors have also been discussed.
EMPLOYMENT/COST IMPACT: Antitrust reform of this magnitude could lead to an
appreciable reduction in the cost of doing business and would have a beneficial
impact upon our competitiveness.
STATUS: The Bush administration will make this one of their early efforts.
Congress appears to be especially interested in the R&D and production joint
venture proposal. The interlocking director proposal has also drawn support.
NAM POSITION: NAM would support the effort to increase greater cooperation in
joint ventures and in fact has done so in supporting laws on the books that
provide limited protection, i.e., the Export Trading Company Act of 1982 and the
National Cooperative Research Act of 1984. NAM has in the past also supported
the other antitrust reform proposals, except granting treble damages to the
government.
NAM ACTIONS: We will actively support the administration effort to reform the
antitrust laws by testifying, working with members and their staffs and forming
a coalition to generate business support, etc.
NAM Staff Contact: Larry Fineran (202) 637-3051
Rev. 1/19/89
-1-
GOVERNMENT REGULATION, COMPETITION AND
SMALL MANUFACTURING DEPARTMENT
ISSUE: Dealer Termination
LEGISLATION: This proposal would: (1) codify the per se illegality of vertical
price-fixing and (2) overturn the Supreme Court's 1984 decision in Monsanto V.
Spray-Rite Service Co., which held that in order to prevail in a treble damage
claim, a terminated dealer must show more evidence of a conspiracy than
complaints about its pricing to a manufacturer.
EMPLOYMENT/COST IMPACT: This legislation would make it harder for manufacturers
to enforce quality standards, since prices reflect money spent on activities
such as adherence to product safety, health requirements and customer education.
Also, overriding the Monsanto decision would increase unnecessary litigation by
allowing unwarranted cases to go to trial.
STATUS: It is expected that a version of last year's bill (S.430) will be
introduced in both Houses early in this session.
NAM POSITION: NAM supports a manufacturer's right to terminate a dealer for
reasons not directly related to pricing practices and opposes those portions of
this legislation relating to the Monsanto decision. NAM does not, however, have
a policy position on the per se illegality of vertical price-fixing.
NAM ACTIONS: NAM will again play the lead role in a large coalition to oppose
the passage of this proposal. Hill visits, testimony, and grassroots lobbying
will be an integral part of this effort to prevent a bill from being reported
out of committee.
NAM Staff Contact: Larry Fineran (202) 637-3051
Rev. 1/19/89
-2-
GOVERNMENT REGULATION, COMPETITION AND
SMALL MANUFACTURING DEPARTMENT
ISSUE: Regulatory Reform Issues (RICO; Trucking Deregulation)
LEGISLATION: During 1989 the RICO reform effort will receive renewed attention
because of the abuses arising from the indiscriminate civil suits being filed.
Rep. Rick Boucher (D-9-VA) and Sen. Orrin Hatch (R-UT) will be the principal
supporters. Also, the Office of Information and Regulatory Affairs (OIRA),
charged with implementing the Paperwork Reduction Act, needs reauthorization and
attempts will be made to weaken it. Legislation to complete trucking
deregulation will also be considered. Regulatory reform is still alive and
kicking in 1989.
EMPLOYMENT/COST IMPACT: Passage of civil RICO reform will greatly reduce the
litigation cost of many companies, thus freeing up these assets for more
constructive purposes. The cost of complying with the remaining remnants of
trucking regulation still runs into hundreds of millions of dollars that could
be more wisely spent. Controlling paperwork is another budget reduction issue
for business.
STATUS: Senator Hatch and Representative Boucher will be introducing identical
RICO reform bills in mid-February. Senator Packwood (R-OR) is actively seeking
cosponsors for his trucking deregulation bill. The OIRA reauthorization will
not be seen until late in the first session.
NAM ACTIONS: During the 101st Congress NAM will support the efforts to reform
RICO, to complete trucking deregulation and to reauthorize OIRA. Particular
effort will be made on RICO reform where NAM will lead a multi-association and
company coalition effort.
NAM Staff Contacts: Larry Fineran (202) 637-3051 and
John Pilcher (202) 637-3048
Rev. 1/27/89
-3-
GOVERNMENT REGULATION, COMPETITION AND
SMALL MANUFACTURING DEPARTMENT
ISSUE: Takeovers and Leveraged Buyouts (LBOS)
LEGISLATION: 1988 was a banner year for the introduction of legislation to deal
with perceived abuses in the area of takeovers and "leveraged buyouts." In the
past hostile takeovers have generated considerable interest and debate in the
business community and in the Congress. Recently, the accelerated number of
LBOs has generated a similar burst of interest. Questions about fairness of the
prices paid and the vulnerability of highly-leveraged companies to a recession
have increased. Suggestions that our tax laws favor takeovers and LBOs by
encouraging debt and penalizing equity have initiated calls for changing such
laws. The use of pension fund dollars and bank loans to finance these deals has
also called into question the stability of our retirement and financial systems.
All of these factors have again elevated this issue to a high-visibility
position for 1989.
EMPLOYMENT/COST IMPACT: Takeovers have left major companies with burdensome
debts and reduced their ability to make capital and R&D investments. Numerous
plants and facilities have been closed and many industrial jobs lost.
STATUS: Numerous committees in both Houses have held or scheduled hearings on
the issue, i.e., the Banking Committee and Finance Committee in the Senate and
the Ways and Means, Banking and Energy and Commerce Committees in the House.
The Treasury is reportedly actively considering regulations to reduce the bias
currently in the tax code that favors debt over equity. The Federal Reserve and
the Comptroller of the Currency are closely watching the banking system to
ensure that the commercial banks and the thrifts are not overextending
themselves in purchasing "junk bonds."
NAM POSITION: The lack of stability in the financial markets has diverted
manufacturer's attention from long-term to short-term goals. This has had the
effect of hurting our effort to respond to international competition.
NAM ACTIONS: Lobbying activities on this issue likely will include: (1) Hill
visits by NAM members, as well as meetings with Congressional members in their
home states and districts; (2) NAM testimony before both the House and Senate;
(3) NAM active leadership of coalition activities; and (4) preparation of op-ed
pieces and an issue brief.
NAM Staff Contact: John Pilcher (202) 637-3048
Rev. 1/19/89
-4-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Education & Training Issues
LEGISLATION: The "technical corrections" bill enacted in the 100th Congress
included a one year retroactive extension of the employee educational assistance
program (Internal Revenue Code Sec. 127). This extension expired again on
December 31, 1988. The omnibus trade bill enacted in August 1988 (P.L. 100-418)
included increased funding and a new dislocated worker program (replacing Title
III of the Job Training Partnership Act). The statute also provides for
demonstration grants to enhance the quality of various facets of public
education including the encouragement of educational partnerships with the
private sector.
EMPLOYMENT/COST IMPACT: The effects of poor or inadequate education and skills
have many dimensions and are difficult to quantify but some measures point to
the need for increased attention by the private and public sectors. It has been
estimated that productivity losses caused by poorly trained workers cost U.S.
businesses about $25 billion a year. One out of four ninth graders drops out of
school each year at an estimated cost to the nation of $240 billion in lost
earnings during their lifetime. Among dislocated workers, as many as 40% are
functionally illiterate and over 20% lack a high school education. A recent
article in the Washington Post noted: "One of the saddest social facts in
America today is that thousands of good manufacturing jobs go begging for want
of applicants functionally literate enough to hold them."
STATUS: No significant legislation has been introduced but it is clear given
the fiscal realities of the deficit that tax incentives and federal programs
will not be the total answer.
NAM POSITION: Providing the nation's youth with the basic abilities required to
enter the workforce and preparing current workers to adapt to increasingly rapid
changes in the workplace will require a combination of federal/local and private
sector initiatives. It is not simply a matter of increased federal funding.
NAM ACTIONS: NAM has been actively involved in federal job training programs
and supportive of enhanced dislocated worker adjustment initiatives but
recognizes the importance of private sector involvement. Most recently, NAM has
initiated efforts to develop a comprehensive, substantive approach to education
and training/retraining programs. A formal task force has been organized and
will initiate a carefully targeted effort at the local and national levels,
building on programs currently in place.
OUTLOOK: Reauthorization of vocational education legislation and examination of
the effectiveness of the Job Partnership Training Act are expected to receive
early attention in the 101st Congress. The private sector, based on self
interest, will increase its efforts and leverage in private and public
initiatives, to ensure its access to a qualified labor pool.
NAM Staff Contacts: Phyllis Eisen (202) 637-3135 and
Diane Generous (202) 637-3133
Rev. 1/23/89
-5-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Health Care Access and Cost Control Issues
LEGISLATION: The fact that there are estimated to be 37 million Americans
totally uninsured for health care will continue to be a matter of concern. In
the last Congress, S.1265 and H.R.2508 would have mandated employer-paid health
insurance for employees working at least 17.5 hours weekly and their dependents.
Coverage included hospital and physician care, diagnostic services, pre-natal
and well-baby care, and both in-patient and out-patient mental health services.
Employers would have had to pay at least 80% of premiums, except for low-wage
workers, for whom the payment would have been 100%.
EMPLOYMENT/COST IMPACT: A Nathan Associates study assessed the minimum costs of
this legislation at $33 to $39 billion annually. The Institute for Research of
the Economics of Taxation (IRET) estimates the costs to be approximately $100
billion. Labor cost increases of this magnitude would clearly make U.S.-made
products less competitive and lead to significant job losses.
STATUS: Senator Kennedy's (D-MA) staff has begun redrafting the "Minimum Health
Benefits for All Workers Act." The proposal to mandate employer-provided health
benefits received extensive hearings in 1987-88, and was marked-up by the Senate
Labor and Human Resources Committee. No floor action occurred in either chamber
in the 100th Congress. Momentum is growing however, to address the problems of
the uninsured from Republicans and Democrats alike. Senator Hatch (R-UT),
ranking minority member of the Labor and Human Resources Committee, is drafting
legislation to improve health care access. NAM is assisting in this process
through participation in a specially-convened advisory group.
NAM POSITION: NAM opposes attempts to make employee benefits mandatory and, in
the case of health insurance, instead supports private sector solutions, group
purchasing of insurance for small firms, tax incentives for the self-employed,
improved medicaid coverage and state programs financed by general revenues. In
addition, finding ways to control escalating health care costs in general is a
major NAM priority.
NAM ACTIONS: NAM is on the steering committee of a broad-based business
coalition of over 60 trade associations and individual employers opposed to
mandated benefits. To support our lobbying position, the NAM membership is
being surveyed on attitudes and alternatives to mandated benefits.
OUTLOOK: Senator Kennedy (D-MA) is expected to introduce a revised mandated
health insurance bill in March. The intent of the revisions is to gain business
support.
NAM Staff Contact: Sharon Canner (202) 637-3124
Rev. 1/23/89
-6-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Mandated Benefits (Parental Leave) / Child Care
LEGISLATION: In the 100th Congress, S.2488 and H.R.925 would have required
business to provide 10 weeks of job-protected, unpaid leave to employees with a
new child, while continuing all health benefits. Longer leaves would be
required for an employee's own illness The Act for Better Child Care, also
called the ABC bill, was the focus of the child care debate in 1988. S.1885 and
H.R.3660 (companion bills) would have established federal child care regulations
and had a $2.5 billion price tag. S.2085 and 4002 embodied a less expensive
approach aimed at increasing the supply of child care slots by emphasizing state
and local initiatives.
EMPLOYMENT/COST IMPACT: GAO sets the annual cost of mandated leave at $188-$212
million, contrasting with the Nathan Associates' estimate of $600 million
annually for only the cost of continuing health insurance. Small companies are
hit especially hard by workplace disruptions as their ability to respond to
business and employee needs is diminished. All child care legislation carries a
price tag that would further increase the federal budget deficit.
STATUS: S.2488 was defeated on the Senate floor after it was attached to an
amended ABC child care bill and a "kid porn" amendment to create a "pro-family"
package. The Senate failed to invoke cloture, 50-46. Sen. Hatch joined with
Sen. Dodd to support the child care portion of the defeated package. The House
did not consider H.R.925 on the floor. 1989 hearings on parental leave are
scheduled for February 2 in the Senate and February 7 in the House.
NAM POSITION: NAM supports the diverse initiatives being explored by business
to address the needs of working parents. A shrinking labor pool and increasing
numbers of women in the workforce will pressure employers to meet the benefit
needs of workers, whether for dependent care, family leave, flexible work hours,
etc. Efforts to mandate leave benefits are opposed by NAM. The federal role in
child care should be to encourage affordable, quality child care through state
and local initiatives and greater public-private sector cooperation. NAM does
not support federal regulation of child care and encourages Congress to review
existing federal programs for cost efficiency before enacting new programs.
NAM ACTIONS: NAM co-chairs the Concerned Alliance of Responsible Employers
(CARE), which successfully fought mandated leave in the 100th Congress and is
planning strategy for the 101st Congress. NAM is working closely with Capitol
Hill staff as the new child care bills are being drafted.
OUTLOOK: Mandatory leave bills similar to 1988 measures will be introduced
early in the House and Senate. Child care legislation has already been
introduced in the 101st Congress, and Sens. Hatch and Dodd are reportedly
working on a measure both could support.
NAM Staff Contact: Diane Generous (202) 637-3133
Rev. 1/19/89
-7-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Occupational Disease Notification
LEGISLATION: Legislation introduced in the 100th Congress (H.R.162 and S.79)
would have: (1) created a new and duplicative federal bureaucracy; (2)
triggered lawsuits based on stress, not disease; (3) triggered needless
notification and distress of workers and their families under unrefined
processes; (4) focused attention on after-the-fact notification rather than
disease prevention; (5) mandated employer-funded medical monitoring for each
notified worker if any of the allegedly harmful exposures occurred in the
employer's workplace; and (6) mandated, upon a physician's recommendation,
permanent employee transfers from an exposed position to a non-exposed position
with no loss of wages, benefits or seniority-and if no non-exposed position
exists, mandate a fully-paid 12-month medical leave.
EMPLOYMENT/COST IMPACT: Litigation costs are unknown, but one company's
experience with a similar notification program was 800 workers notified, $335
million in claims filed. Annual medical monitoring costs are estimated at $500
to $3,600 per worker. Job transfers are estimated to cost $21,350 to $25,541
per employee. The aggregate annual costs have been estimated by Robert R.
Nathan Associates to run as high as $6 billion.
STATUS: The House passed H.R.162 in October 1987. NAM and the business
community scored a major victory on March 29, 1988, when after eight days of a
filibuster led by Senator Hatch (R-UT) and four unsuccessful cloture votes,
Senator Metzenbaum (D-OH), sponsor of S.79, withdrew the bill from Senate
consideration. The final vote was 52-42 against cloture. It is unclear whether
this legislation will resurface in the 101st Congress. Reportedly, Congressman
Gaydos is reluctant to reintroduce the bill unless he is assured that the Senate
can pass such a bill. OSHA reform legislation may take priority over this issue
on organized labor's agenda. Conceivably, however, occupational disease
notification could be one element of such a reform package.
NAM POSITION: NAM opposed H.R.162 and S.79, but supported the Henry-Jeffords
House substitute which would have created a commission to study the
effectiveness and feasibility of worker risk notification and required risk
notification of studied workers, and would have strengthened existing OSHA
regulations.
NAM ACTIONS: An NAM-led coalition with over 250 active members coordinated:
lobbying strategy; Hill visits; Senate staff lunches; Hill staff briefings;
editorial board visits; home state visits; action alerts to NAM members; and NAM
and coalition letters to the Hill. Currently, the coalition is gearing up in
the event that the legislation is reintroduced.
NAM Staff Contact: Susan Spangler (202) 637-3128
Rev. 1/19/89
-8-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Occupational Safety and Health Act (OSHA) Reform
LEGISLATION: No legislation has been introduced on this issue as yet.
EMPLOYMENT/COST IMPACT: No determination of employment/cost impact has been
undertaken.
STATUS: No legislation has been introduced on this issue as yet.
NAM POSITION: NAM supports a safe and healthful workplace. There is no
official NAM policy position on OSHA reform as yet. However, a task force of
NAM members has been formed to develop an NAM policy position. Thus far, the
task force members appear to be opposed to opening up the Act for changes,
although they may favor some administrative reforms.
NAM ACTIONS: An NAM task force has been formed to develop the NAM position on
this issue. Hill meetings with Senate and House offices have been initiated to
gather information on possible legislative proposals.
OUTLOOK: The degree to which the 101st Congress will focus on OSHA reform is
still unclear. Some level of attention, however, is certainly anticipated. A
congressional task force formed by Representative Paul Henry (R-MI) is currently
reviewing the issue and plans to introduce a legislative proposal sometime in
the next few months. Democratic members are also reportedly studying the issue
and developing proposals. Organized labor announced that it will have its own
proposal to release sometime in February. There is also a chance that an OSHA
reform proposal could incoporate some element of the High Risk Occupational
Disease Notification and Prevention Act which was introduced last year and
defeated in a Senate filibuster.
NAM Staff Contact: Susan Spangler (202) 637-3128
Rev. 1/26/89
-9-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Product Liability
LEGISLATION: In the 100th Congress, H.R.1115 as reported by the House Energy
and Commerce Committee in June 1988 would have: (1) created uniform strict
liability standards and established important limitations on manufacturers' and
sellers' liability; (2) set a 25-year time limit after which manufacturers
wouldn't be liable for products; (3) toughened standards for punitive damage
awards; (4) redefined the role of the workers' compensation and tort systems to
minimize transaction costs; (5) limited company liability if the injured person
was drunk or on drugs; (6) limited claimant's damages if a product is misused or
altered; (7) established penalties for frivolous claims; and (8) established an
alternative dispute mechanism. The Education and Labor Committee held one
hearing on the workers' compensation section; the House Judiciary Committee was
scheduled to hold hearings but they were cancelled.
EMPLOYMENT/COST IMPACT: The Rand Institute has estimated that about $30 billion
is spent each year on the tort system.
STATUS: No bills have been introduced yet.
NAM POSITION: NAM supported H.R.1115 but was disappointed and concerned about
the specific exclusion of asbestos in the bill. NAM fought all weakening
amendments in the Judiciary and Education and Labor Committees. NAM also
supported S.666, a similar but not identical measure.
NAM ACTIONS: NAM was one of the key negotiators in the H.R.1115 compromise and
has: (1) testified before both the House and Senate; (2) lobbied all members of
the full Energy and Commerce Committee; (3) lobbied over 200 members of the
House for cosponsorship; (4) done press interviews and releases and conducted
two press briefings in 1988; (5) had NAM leadership make personal visits to key
Congressional members seeking their support; (6) organized business rallies in
support of H.R.1115; (7) directed targeted grassroots lobbying efforts at
subcommittee and full committee members; and (8) placed op-ed pieces and
conducted other media activities. NAM will wage a similar multi-faceted
campaign in the 101st Congress with an eye to floor action.
OUTLOOK: Building on momentum from last year's success, bipartisan introduction
in both the House and Senate is expected in February and joint referral to the
Judiciary and Commerce Committees is likely. Early action is hoped for by the
House Judiciary Committee whose new chairman, Jack Brooks (D-TX), is expected to
be tough but fair. A carefully designed, targeted campaign will be waged in the
Senate to overcome opposition of Judiciary chairman Fritz Hollings (D-SC), a
long-time foe of the issue. As always, heavy grassroots support will make the
difference between success and failure.
NAM Staff Contact: Phyllis Eisen (202) 637-3135
Rev. 1/23/89
-10-
INDUSTRIAL RELATIONS DEPARTMENT
ISSUE: Reversion of Excess Pension Assets
LEGISLATION: The Technical Corrections Act of 1988 raised the excise tax on
pension plan reversions from 10% to 15%. This small but permanent increase was
agreed to by Senate and House conferees in lieu of a proposal that would have
increased the tax to 60% through May 1, 1989. In addition, Treasury Department
officials agreed to withhold final determinations on all pension plan
terminations/reversions through May 1, 1989.
EMPLOYMENT/COST IMPACT: Expected revenue from the excise tax increase is
estimated at $200 million.
STATUS: No legislation pertaining to reversions has been introduced in either
House during the early days of the 101st Congress. However, the reversion issue
was among several pension-related measures discussed during Labor Secretary
nominee Dole's confirmation hearings.
NAM POSITION: NAM is opposed to legislation that restricts employer access to
surplus pension assets. NAM is also opposed to legislation that would require
employers to share surplus assets with employees and/or retirees in the event of
a withdrawal or plan termination. Such legislation will undoubtedly cause
employers to fund their plans to minimum levels, thereby threatening benefit
security for American workers.
NAM ACTION: NAM continues to lead industry efforts to actively oppose
restrictive legislation on surplus pension assets. Actions include visits to
key members of both houses and grassroots activities, as necessary.
OUTLOOK: Although proponents succeeded in increasing the reversion excise tax
to 15 percent in 1988, they are expected to demand additional restrictions this
year, including sharing of excess assets with employees and retirees in the form
of increased pension benefits. Sen. Metzenbaum (D-OH) has already indicated he
intends to pursue legislation in this area. Deficit concerns will also pose a
threat, as lawmakers look to pensions and other benefits as a source of revenue.
Finally, leveraged buyouts (LBO's) will be examined with respect to their impact
on excess assets and other pension issues.
NAM Staff Contact: Ed Gilroy (202) 637-3137
Rev. 1/17/89
-11-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: 1992 European Community Internal Market (EC-92) Implementation
LEGISLATION: None in the United States. EC-92 will be implemented through more
than 300 directives and other policy actions to be adopted by the European
Community (EC) and its member states. The purpose of these directives and
policies is to eliminate barriers to an internal EC market.
EMPLOYMENT/COST IMPACT: U.S. exports to the EC last year totalled $80 billion.
Intra-EC trade by U.S.-owned firms equalled $550 billion. Two-thirds of the
non-communist world's GNP is accounted for by the U.S. and the EC.
STATUS: EC-92 process began in 1985 with a proposed target list of 300
directives and policy initiative aimed at eliminating barriers to an internal
market. Half of the 300 actions have already been taken. While most of these
have been highly technical, some major actions have been taken, for example, in
the public procurement area. Major decisions in areas ranging from antitrust to
industrial relations are still to come.
NAM POSITION: While EC-92 holds the potential for being a significant benefit
both to American exporters and U.S. companies in Europe, there are a number of
issues in the implementation of EC-92 which need to be watched very closely.
These include technical standards, public procurement, reciprocity, industrial
relations, intellectual property, competition policy, and monetary policy.
NAM ACTIONS: NAM officials and members have met with numerous EC
representatives to learn more about EC-92 and to express concerns about
potential impact on U.S. manufacturing interests. Similar meetings have also
taken place with U.S. officials. In addition, an NAM report has been prepared
on the major issues for U.S. manufacturers in EC-92.
NAM Staff Contact: Steve Cooney (202) 637-3141
Rev. 1/19/89
-12-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: Exchange Rates
LEGISLATION: None pending. 1988 Omnibus Trade and Competitiveness Act
contained provisions for greater Congressional oversight and requirement for
annual report each October from Treasury to Congress on exchange rate policies.
EMPLOYMENT/COST IMPACT: In the mid-1980s, most experts estimated that
50 percent of the U.S. trade problem stemmed from the overvalued dollar.
STATUS: Since the September 1985 agreement among major industrial countries to
intervene in the exchange markets and to coordinate economic policies to a
greater degree, the value of the dollar has fallen by approximately 40 percent
against other major currencies. But dollar still remains overvalued in some
cases, especialy in relation to currencies of some Asian nations such as Korea
and Taiwan. As required by the 1988 trade law, the U.S. has begun negotiations
with these countries regarding their exchange rates.
NAM POSITION: Exchange rates should reflect underlying economic fundamentals.
A rise in dollar should be resisted, but NAM does not favor intervention in
markets to induce a major decline in the dollar at this time. Negotiations with
countries having undervalued currencies should be pursued vigorously. Long
range reform of the international monetary system should also be a priority.
NAM ACTIONS: NAM has been a leader in the 1980s in calling attention to the
exchange rate issue and was the primary organization working on exchange rate
provisions in 1988 trade law. NAM offered detailed comments on the Treasury
exchange rate report required by the law. Future work will be guided by an NAM
Task Force handling issue.
NAM Staff Contact: Steve Cooney (202) 637-3141
Rev. 1/25/89
-13-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: Export Promotion
LEGISLATION: No single bill deals with this issue. Some export disincentives
(e.g., export controls, antibribery law) were dealt with in the 1988 Omnibus
Trade and Competitiveness Act. The strength of various export support programs
(e.g., Eximbank) will be determined by action on appropriation bills this year.
And some components of an export drive can be implemented by the Executive
Branch with no new legislation.
EMPLOYMENT/COST IMPACT: Policies directly affecting U.S. exports can involve
large amounts of trade. Nearly $60 billion in manufactured exports fall under
export control requirements. Other industrial nations offer $5 billion in
direct credits for export financing and over $15 billion each year in mixed
credits (e.g., the combination of foreign aid and official export financing).
Approximately $5 billion in U.S. exports are generated by the export source rule
in the U.S. tax law.
STATUS: An export promotion campaign-Export Now-was launched in 1987 by the
Commerce Department, but this effort does not address some of the major
initiatives which should be included in a U.S. export drive.
NAM POSITION: A major export drive should certainly include strengthening the
Eximbank, beefing up the Foreign Commercial Service, greater protection of U.S.
commercial interests overseas (e.g., product standards), avoiding changes in
U.S. taxation of export income, development of an aggressive mixed credit
program, and continued improvement of the U.S. export control system.
NAM ACTIONS: NAM has written key trade and economic officials in the Bush
Administration on the need for an export drive and is preparing an op-ed on the
subject to gain greater press exposure. NAM will continue to support the basic
idea of an export drive and work on individual issues as they come up in 1989.
NAM Staff Contact: Howard Lewis III (202) 637-3144
Rev. 1/19/89
-14-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: Foreign Investment in U.S.
LEGISLATION: H.R.5, introduced by Congressman Bryant (D-TX-5), would require
special new procedures for the registration of foreign investment in the U.S.,
including disclosure of sensitive commercial information. This legislation is
virtually the same as the so-called Bryant provisions which were dropped from
the 1988 Omnibus Trade Act.
EMPLOYMENT/COST IMPACT: Foreign direct investment in the U.S. has increased
from $35 billion in 1977 to $262 billion in 1987. By 1985, 7.5% of all
manufacturing industry employees worked for U.S. affiliates of foreign-owned
firms.
STATUS: Committee hearings and votes on H.R.5 and similar legislation are
expected in both the House and Senate this year.
NAM POSITION: NAM opposes placing new registration requirements on foreign
investment in the U.S. Such action would impede necessary capital flows and
have serious implications for U.S. interest rates. It would run counter to the
policies pursued by the U.S. government for the past three decades regarding the
free flow of investment. And it would provide a convenient excuse for foreign
governments to restrict U.S. investment overseas.
NAM ACTIONS: An NAM-led coalition of member companies will coordinate work on
this issue, including: lobbying strategy, Hill briefings and visits, work with
the Executive Branch, letters and other representations.
NAM Staff Contact: Steve Cooney (202) 637-3141
Rev. 1/19/89
-15-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: General Agreement on Tariffs and Trade (GATT) Negotiations
LEGISLATION: Authority for an up or down vote by Congress on a GATT agreement
to eliminate tariff and non-tariff barriers was contained in the 1988 Omnibus
Trade Act.
EMPLOYMENT/COST IMPACT: With world merchandise trade now exceeding
$2.3 trillion each year and business service trade reaching $500 billion
annually, GATT rules governing tariff and non-tariff barriers will become
increasingly important.
STATUS: The current GATT talks began in 1986 and are due to conclude in 1990.
At a recent mid-term review, agreement was reached on how negotiations should
proceed in a number of areas including improvements in the functioning of the
GATT system, reduction in tariffs, limits on trade-distorting industrial
subsidies, new rules for trade in services, and restrictions on trade-related
investment measures. No agreement was reached in two critical areas: ending
agricultural subsidies and protecting intellectual property. GATT members will
try to resolve differences in an April meeting.
NAM POSITION: NAM believes that the current GATT round is the single most
important opportunity the U.S. has to maintain an open international trading
system and so further U.S. commercial interests. Throughout the GATT talks, the
NAM urges the U.S. Government to assess all proposals and/or compromises against
the realization that manufactured products represent the core of U.S. trade.
NAM ACTIONS: NAM lobbied for GATT negotiating provisions in 1988 Omnibus Trade
Act. The organization has met continuously with various government officials to
present manufacturers' views on specific issues in the talks. These efforts
will continue in 1989, coordinated by an NAM Working Group handling this issue.
NAM Staff Contacts: R.K. [Judge] Morris (202) 637-3145 and
Patricia Morgan (202) 637-3143
Rev. 1/19/89
-16-
INTERNATIONAL ECONOMIC AFFAIRS DEPARTMENT
ISSUE: Implementation of 1988 Omnibus Trade and Competitiveness Act
LEGISLATION: Legislation signed into law on August 23, 1988 contains provisions
for: (1) negotiating authority for new GATT round; (2) strengthening of U.S.
unfair trade law; (3) expansion of Congressional oversight of exchange rates;
(4) improvement of U.S. export controls; (5) clarification of antibribery law;
(6) protection of intellectual property rights; and (7) authorization of
harmonized tariff system.
EMPLOYMENT/COST IMPACT: Some experts estimate about $10 billion of U.S. trade
is affected by unfair trade practices which the trade bill would address.
Others estimate that about $9 billion in exports are lost annually due to export
control problems, some of which are addressed in the trade bill. It is not
feasible, however, to estimate an overall dollar impact for the new law.
STATUS: This complex law of over 500 pages has already begun to be implemented
and this process will continue throughout 1989. Examples of provisions already
implemented include exchange rate oversight report, the harmonized tariff
system, provisions on review of foreign investment for national security
reasons, and sanctions against the Toshiba Corporation for export control
violations. Implementation of the unfair trade provisions is expected to occur
in May and April of 1989. Export control regulations are expected to be issued
in February and March of 1989.
NAM POSITION: NAM consistently supported enactment of the omnibus trade bill
and will comment when necessary and appropriate on the various regulations and
reports resulting from this bill.
NAM ACTIONS: NAM has already commented on various policy actions taken under
the new law such as the Treasury report on exchange rate policies. NAM will
work with various departments and agencies on development of regulations
implementing changes in export controls, antibribery laws, trade statutes, and
other policy areas.
NAM Staff Contact: Howard Lewis III (202) 637-3144
Rev. 1/19/89
-17-
RESOURCES AND TECHNOLOGY DEPARTMENT
ISSUE: Clean Air Act Amendments
LEGISLATION: In the last Congress there were several clean air bills. S.1894,
a comprehensive approach to amending and expanding the Clean Air Act, was a
five-titled bill covering ozone nonattainment, acid rain, mobile source
controls/fuels, NAAQS and air toxics. H.R.3054 was an ozone nonattainment bill
with deadline extensions for cities, new penalties, and mass transit grants
matched by 50% local funding. H.R.2666 was an acid rain bill applying to the
entire U.S. and mandating major emissions reductions from fossil-fueled
utilities. H.R.4331 was an acid rain bill similar to 2666, but with a later
target date for reduction. Early in the 101st Congress there have been three
bills introduced on clean air: H.R.4 on air toxics, H.R.99 on ozone and carbon
monoxide nonattainment and H.R.144 on acid rain controls. Introduction of
several bills on the global warming issue is expected.
EMPLOYMENT/COST IMPACT: Annual cost estimates for S.1894 were $28.3 billion
(CRS) $2.1 to $16 billion (CBO) ; $16.4 to $21.7 billion (EPA); and $6.37 to
$7.37 billion (OTA for ozone nonattainment only). NAM's acid rain study of 99th
Congress legislation indicated significant GNP decline matched by increases in
both the budget and trade deficits, reduced housing starts and hundreds of
thousands of jobs lost.
STATUS: Hearings and markups were held throughout the 100th Congress on Clean
Air legislation. Although none of the bills were brought before the full House
or Senate for a vote, negotiations took place at the end of Congress to fashion
compromise acid rain legislation. No final compromise was reached. NAM
anticipates much Congressional activity on Clean Air legislation because of
changes in power in the Senate and the Administration. We also anticipate many
hearings and bills attempting to address the global climate change issue.
NAM POSITION: NAM is opposed to S.1894 and H.R.3054, 2666, 4331 and 5032. Air
toxics control may need to be reviewed in light of the recent court decision on
benzene. The NAM supports scientific and public policy review of the global
climate change issue within an international setting. It is likely that the
United Nations Environment Programme (UNEP) will convene a meeting in 1989 to
establish a framework for a multinational agreement similar to the Montreal
Protocol to Protect the Stratosphere.
NAM ACTIONS: NAM will continue opposing bills which would radically change the
existing Clean Air Act. Efforts will include: (1) widespread briefings on
NAM's acid rain study; (2) NAM and coalition letters; (3) NAM member company
visits to Congressional members both in D.C. and at home; (4) preparation of
testimony, op-ed pieces and issue briefs; (5) Hill briefings of members and
staff; (6) media and speaker events; (7) field issue meetings; and (8)
participation in the Clean Air Working Group Coalition and the Hazardous Air
Pollutants Coalition. NAM chairs an industry group that is looking into global
climate change issues.
NAM Staff Contact: Theresa Pugh (202) 637-3175 and
Jana Oakley (202) 637-3153
Rev. 1/18/89
-18-
RESOURCES AND TECHNOLOGY DEPARTMENT
ISSUE: Clean Water Issues
LEGISLATION: Federal and state groundwater protection legislation is emerging
as a leading environmental issue. Over the past 15 years, environmental policy
has moved toward a comprehensive scheme of regulation governing waste disposal,
toxics, and air and water emissions by industrial and municipal sources. This
framework now includes the Clean Air Act; Clean Water Act; Safe Drinking Water
Act; Toxic Substances Control Act; Federal Insecticide, Fungicide and
Rodenticide Act; Resource Conservation and Recovery Act; and Comprehensive
Environmental Response, Compensation and Liability Act. Effective groundwater
protection will require action against diffuse sources of pollution, which are
traditionally areas of state and local primacy. Large, identifiable industrial
point sources have been aggressively policed under the Clean Water Act, Clean
Air Act and other statutes. Municipal compliance with existing regulations,
however, is notoriously lax, and the resulting agricultural and residential
contamination problems have seldom been addressed.
EMPLOYMENT/COST IMPACT: No comparative estimate on all bills is available.
However, drinking water cleanup costs can be extremely expensive.
STATUS: In the 100th Congress, Sen. Durenberger (MN-R) introduced S.2091 and
S.2092, a comprehensive groundwater package. This bill would have set a
national goal of non-degradation of groundwater and authorized the promulgation
of health-based protection standards. Some industry critics were concerned that
this might have implied a "zero emissions standard". Durenberger's legislation
authorized $900 million and called for taxes (or user fees) on pesticides and
fertilizer products sold for household lawn and garden use. S.2091 and S.2092
did not see any legislative activity in the 100th Congress but are expected to
be reintroduced in the 101st Congress.
H.R.791 was a groundwater research bill which passed the House in December
1987 after five committees worked to resolve differences. A Senate version
passed in October. However, the differences were never resolved and the bill
failed as the 100th Congress adjourned. Senator Moynihan (D-NY) will probably
remain the chairman for the Senate Water Resources, Transportation, and
Infrastructure Subcommittee of the Environmental and Public Works Committee. He
will no doubt move to introduce another groundwater protection bill. However,
it may be closer to H.R.791 than S.20, his 100th Congress bill.
NAM POSITION: The NAM supports protection of the nation's drinking water
supplies. In the 101st Congress, free-standing legislation may be introduced to
deal with drinking water issues. Groundwater protection may also be included in
the reauthorization of the Resource Conservation and Recovery Act (RCRA).
NAM ACTIONS: The NAM submitted comments to the Senate Environment and Public
Works Committee in the 100th Congress. The NAM will continue to work for policy
which balances water quality, quantity and regulatory reasonableness.
NAM Staff Contact: Theresa Pugh (202) 637-3175
Rev. 1/23/89
-19-
RESOURCES AND TECHNOLOGY DEPARTMENT
ISSUE: Superfund Implementation
LEGISLATION: The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (CERCLA) and the Superfund Amendments and Reauthorization
Act (SARA), which have created the most extensive and expensive environmental
program in the history of the country, address the cleaning up of hazardous
waste sites. The direct impact of EPA's implementation of the Superfund scheme
on individual sites has a tremendous impact on companies.
EMPLOYMENT/COST IMPACTS: The Superfund process develops a general fund, raised
through taxes on corporations, to address hazardous waste sites. There are
currently approximately 1175 sites on EPA National Priority List (NPL). Some
environmentalists believe that there will ultimately be 2000 sites on the NPL.
Assuming that the average cost per site is $20 million, $40 billion may
ultimately be needed to address the National Priority List.
STATUS: EPA is currently proposing/reviewing several important policies, which
include the role of municipalities as potentially responsible parties (PRPs) and
a revision of the National Contingency Plan (which is EPA's blueprint for how
the clean-ups proceed). EPA is currently in a 60-day comment period (until
February 23, 1989) on the NCP.
NAM POSITION: An NAM policy position on Superfund implementation is currently
in the developmental process.
NAM ACTIONS: NAM has formed an ad hoc group to address the implementation of
Superfund. The group plans to formulate specific recommendations as to how
Superfund is operated in order to make it run more efficiently.
NAM Staff Contact: Richard Seibert (202) 637-3157
Rev. 1/26/89
-20-
RESOURCES AND TECHNOLOGY DEPARTMENT
ISSUE: Waste Management and Minimization
LEGISLATION: The Resource Conservation and Recovery Act (RCRA) is up for
legislative reauthorization in 1989. Congress will review solid waste
management under RCRA. It is likely that states will be required to have more
stringent solid waste planning and capacity responsibilities. Solid waste
management requirements will more closely resemble current hazardous waste
regulations. Any bill to reauthorize RCRA will focus on waste minimization
and/or source reduction of waste. The NAM supports voluntary reduction of
hazardous and solid waste. Such waste minimization efforts are protective of
the environment and are sound management practices for companies. Waste
minimization reduces disposal costs and long-term liability exposure. NAM
opposes including energy and mining waste under RCRA. This has been reviewed by
the U.S. EPA periodically, and the EPA has agreed with the NAM view and has
decided not to regulate energy waste as hazardous under RCRA.
EMPLOYMENT/COST IMPACT: No estimate available for RCRA reauthorization as a
whole. Estimated reclamation costs of covering certain mining waste (uranium
mill tailings) is $2 billion for 20 sites, excluding groundwater cleanup.
Estimated costs of covering drilling and oil wastes would be $44 billion
initially and $5 billion a year thereafter, with nearly 50% fewer wells drilled
and 200,000 oil-related jobs lost.
STATUS: Action on RCRA reauthorization is not expected until the ozone and
carbon monoxide (CO) nonattainment and air toxics problems are resolved in the
Clean Air Act debate.
NAM POSITION: NAM opposes inclusion of mining waste and waste from petroleum
exploration and development as "hazardous" under RCRA. NAM policy provides for
treating federal facilities equally to private industry under environmental
statutes. However, NAM is concerned with contract debarment terms and penalties
such as those under H.R.3782 and 3783 of the 100th Congress. The NAM opposes
mandatory waste minimization.
NAM ACTIONS: NAM is reviewing issues of importance to manufacturers such as
land disposal bans, incineration limitations, and other items which would be
subject to revision under a RCRA reauthorization bill. NAM recently published a
booklet to help member companies minimize hazardous waste, "Waste Minimization:
Manufacturers' Strategies for Success."
NAM Staff Contact: Theresa Pugh (202) 637-3175
Rev. 1/19/89
-21-
TAXATION AND FISCAL POLICY DEPARTMENT
ISSUE: Deficit Reduction
LEGISLATION: None pending as yet. Typically, resolutions setting forth the
revenue and outlay levels for the upcoming fiscal year are not actually
introduced until sometime in the spring, after fairly extensive hearings. For
the federal government's fiscal year beginning October 1, 1989 (FY90), the
Gramm-Rudman-Hollings law specifies that the budget deficit may not exceed $100
billion. If Congress and the Administration cannot agree on a budget meeting
this target, automatic spending cuts are triggered under a process known as
sequestration. Under sequestration, cuts are apportioned on about a 50-50 basis
between the defense and nondefense portions of the budget, with some entitlement
programs, most notably Social Security, entirely exempted from being cut.
EMPLOYMENT/COST IMPACT: The federal deficit, which in recent years has ranged
from 3% to 6% of GNP, significantly impacts the U.S. economy. While the
economic costs are difficult to quantify precisely, it is generally conceded
that the deficit has added several percentage points to long-term interest rates
and also has contributed significantly to overvaluation of the dollar.
STATUS: In January 1989 President Reagan submitted an FY90 budget proposal
which met the G-R-H deficit target. On February 9, 1989, President Bush is
scheduled to announce, at least in broad outline, his proposed revisions to the
outgoing Administration's last budget proposal. Among other things, the Bush
proposal is expected to ask for less defense spending, holding increases in the
defense budget to no more than the rate of inflation. Unlike prior years,
serious budget negotiations between Congress and the Administration are likely
to occur early in the process, rather than at the last minute. The National
Economic Commission, a bipartisan panel formed to recommend a deficit reduction
plan to Congress and the Administration, has been asked by Treasury Secretary
Brady to deliver its report by March 1, 1989. It is unclear whether a strong
majority of the NEC's 14 members will be able to agree on any plan by that date.
NAM POSITION: NAM believes the G-R-H deficit target can and should be met by
restraining the growth rate of government outlays, without raising taxes and
without resort to the subterfuge of mandating certain employee benefits. NAM
supports reform of entitlement programs, including Social Security, especially
by limiting automatic cost-of-living adjustments to less than 100% of the rate
of inflation. If, as an absolute last resort, added tax revenues are required,
NAM would support only a general consumption tax levied at a uniform rate on the
broadest possible base of goods and services. NAM also supports procedural
reforms, in particular Presidential line item veto authority and the balanced
budget constitutional amendment.
NAM ACTIONS: In November 1988, NAM testified before the National Economic
Commission, urging adoption of a comprehensive deficit reduction plan based
entirely on expenditure restraint and including no new taxes. NAM will continue
to assert this position vigorously during the upcoming FY90 budget process.
NAM Staff Contacts: Paul Huard (202) 637-3075 and
Monica McGuire (202) 637-3076
Rev. 1/31/89
-22-
TAXATION AND FISCAL POLICY DEPARTMENT
ISSUE: R&D Tax Issues
LEGISLATION: None pending as yet. The two provisions in question are the tax
credit for increased R&D expenditures, and the formula to be used under Internal
Revenue Code Section 861 in allocating R&D expenditures between U.S. and foreign
source income. Both provisions were extended for short periods by the Technical
and Miscellaneous Revenue Act of 1988 (the so-called "technical corrections"
bill), but the Section 861 extension has already expired and the extension of
the R&D credit expires at the end of 1989. Bills to make both provisions
permanent-or at least to extend them temporarily once again--are expected to be
introduced during the spring of this year.
EMPLOYMENT/COST IMPACT: Consistent and predictable treatment of R&D under
federal tax laws would improve our technological competitiveness, which
underlies both productivity improvements and an increased standard of living.
STATUS: No bills have been introduced at this time, nor have any hearings on
R&D tax issues yet been scheduled.
NAM POSITION: NAM strongly supports both the tax credit for increased R&D
expenditures, and the formula to be used under Internal Revenue Code Section 861
in allocating R&D expenditures between U.S. and foreign source income. Both
provisions should be made permanent. If this is not feasible, any further
extensions should be for significant periods of time, preferably three years or
more.
NAM ACTIONS: NAM is an active member of the CORETECH coalition and in 1989, as
in past years, will work with the coalition to secure favorable legislative
action on these important R&D tax issues.
NAM Staff Contact: Paul Huard (202) 637-3075
Rev. 1/31/89
-23-
TAXATION AND FISCAL POLICY DEPARTMENT
ISSUE: Restoration of Capital Formation Incentives
LEGISLATION: As part of the 1986 tax reform legislation, capital gains tax
rates were increased, the investment tax credit (ITC) was abolished, and
depreciation schedules were greatly lengthened. President Bush, however, is a
strong supporter of reduced capital gains tax rates, and the Administration is
expected to support a plan for doing this. The Administration's capital gains
proposal may be unveiled as early as February 9, 1989, when the President is
expected to announce his budget plan for the government's 1990 fiscal year.
EMPLOYMENT/COST IMPACT: It has been estimated that reduced capital gains tax
rates could actually raise tax revenues by as much as $15 billion annually, due
to increased economic activity. Other capital formation incentives, such as
restoration of the investment tax credit and improvement of depreciation
schedules, would in the long run lead to both increased capital investment and
increased employment.
STATUS: No hearings on capital formation tax issues have as yet been scheduled.
Bills on the capital gains issue are, however, certain to be introduced.
NAM POSITION: NAM supports the restoration of effective capital formation
incentives, including but not limited to lower capital gains tax rates, shorter
depreciation lives, restoration of the investment tax credit, and increased
deductibility for individual retirement savings.
NAM ACTIONS: NAM expects to be able to support the Administration on the
capital gains issue and is planning to do SO. Meaningful action on other
capital formation issues, unfortunately, does not appear very likely in 1989.
NAM Staff Contact: Paul Huard (202) 637-3075
Rev. 1/31/89
-24-
TAXATION AND FISCAL POLICY DEPARTMENT
ISSUE: Taxation of Employee Benefits
LEGISLATION: None pending at this time. Most revenue bills enacted in the last
decade, however, have included provisions to extract additional revenues, for
deficit reduction purposes, through increased taxation of employee benefits
and/or the imposition of restrictions on tax qualified pension and profit
sharing plans.
EMPLOYMENT/COST IMPACT: Increased taxation of, or restriction of, employee
benefits tends to result in increased wage demands by labor to offset their
higher tax burden or lost benefits. The ensuing increase in labor costs tends
to result in lower productivity and/or fewer jobs, and frequently also leads to
curtailment or elimination of benefits.
STATUS: No hearings on employee benefits taxation issues have as yet been
scheduled. These issues are not likely to be considered unless Congress and the
Administration agree to a tax increase for the government's 1990 fiscal year, an
agreement which does not appear very likely at this time.
NAM POSITION: NAM supports the general structure of the current tax law,
pursuant to which employee benefits are not currently taxable to employees
provided certain requirements are met. NAM supports a moratorium on further
changes in the rules of employee benefits taxation, so that both employers and
tax administrators may have a reasonable period to learn to cope with existing
rules. In addition, some of the existing rules-for instance those under
Internal Revenue Code Section 89-are so convoluted and difficult that NAM
supports their outright repeal.
NAM ACTIONS: NAM is an active participant in a business coalition to repeal
Section 89. In addition, NAM will actively oppose any attempted increase in
taxation of employee benefits and/or any further imposition of restrictions on
tax qualified pension and profit sharing plans.
NAM Staff Contact: Paul Huard (202) 637-3075
Rev. 1/31/89
-25-
MANUFACTURING TRENDS
A report by Jerry J. Jasinowski, NAM executive vice president, on forces affecting manufacturing and how companies are responding
October 1988
Achieving Manufacturing Excellence
A special report on how successful manufacturers are meeting the competition of today's global economy
The first stage of manufacturing's drive to become more globally competitive succeeded, through a 40 percent exchange
rate improvement and a 10-25 percent reduction in business costs. The second stage will be more difficult, requiring the
federal government to commit to a national agenda to improve our competitiveness, while companies vigorously pursue
actions aimed at achieving production and operational excellence. The checklist of 10 steps that follows is my way of
categorizing what most successful manufacturing firms are doing to become world-class competitors.
1. Leadership. The best firms are headed by leaders who recognize that manufacturing excellence starts at the top, with a
commitment by the CEO that the production side of the house matters and that the other key elements of the corporation
- strategy, finance and marketing - must make manufacturing excellence a top priority.
2. Strategy. Successful firms use the strengths of manufacturing to formulate and execute a strategy aimed at worldwide
competition. Manufacturing excellence creates competitive advantage by reducing costs, improving quality, creating new
products and providing a more timely and flexible response to customers.
3. Cutting Costs. In the first stage of cost-cutting, manufacturing firms focused on downsizing: reducing direct labor
costs, cutting inventory levels, outsourcing and shutting down inefficient capacity. Now firms are turning to more
sophisticated forms of efficiency, such as cutting overhead costs, better purchasing and materials management, quality
cost-cutting and energy cogeneration.
4. Quality. Today's top corporate priority has shifted from reducing costs to building world-class quality into every
product. The key elements leading to success are understanding how the customer views quality, incorporating new
quality standards into the corporate culture and implementing a total quality improvement program.
5. The Manufacturing Process. The best of today's manufacturing companies also strive for excellence in every facet
of the manufacturing process, focusing on just-in-time principles of eliminating waste, simplification of product and
process design, improved quality, better materials handling, integration of manufacturing and other corporate functions
and a dedication to continuous streamlining of production flows.
6. Capital Investment. While production automation can yield substantial benefits, getting the basics right in
preparation for new capital investments yields the biggest payoffs. The most successful firms debug the entire production
process before they jump to automation. Firms then phase in capital investments according to a clear concept of
integration for all components of the manufacturing firm.
7. Technology. Successful firms are striving to put technology to work more quickly to create new products and
processes. They are doing this by investing more in research and development, eliminating organizational barriers
between the labs and manufacturing and shortening product development time.
8. Human Capital. Successful corporations are finding creative ways to make employees part of the manufacturing
excellence team by showing respect for the individual, involving them in improving the work process, emphasizing
performance-based compensation and putting a high priority on training.
9. Marketing. Successful manufacturing firms know that selling to today's fast-changing global markets requires tying
together marketing and manufacturing to respond to segmented markets and time-based competition with a flexible
production response. The tough competitors make a commitment to sell abroad.
10. The Corporate Culture. The final step - and really the most important - is to build a culture committed to
contínuous learning and improvement, fostering values that make manufacturing a priority, properly measuring what
contributes to a firm's long-term competitive position and developing managers who understand the dimensions of
achieving manufacturing excellence.
©1988 by the National Association of Manufacturers, 1331 Pennsylvania Avenue, NW, Suite 1500 - North Lobby, Washington, DC 20004-1703
Achieving Manufacturing Excellence
This is a personal report on the comeback of
are down 10-15 percent, with leading-
that they can be price-competitive in
American manufacturing, the status of the
edge firms scoring even more impressive
international markets even if the yen
comeback and what remains to be done. Its
gains, e.g., Caterpillar cut employment by
appreciates to 90 to the dollar.
premise is that the competitive circumstances
40 percent, inventories by 50 percent and
In addition, foreign firms have been
at work in American industry have changed
overall costs by 25 percent.
investing heavily in advanced manufactur-
fundamentally and that success in today's
In 1986, the United States led all major
ing technology. In the past five years,
global marketplace demands comparable
industrial countries in manufacturing
Japan has outspent the United States 2-1
changes in the way we think about and
productivity growth. From 1982 through
on automation. During that time, 55
organize production. The essence of these
1987, output per hour in durable manu-
percent of the machine tools introduced in
changes is total commitment to achieving
facturing industries surged nearly 40 per-
Japan were computer-numerically-con-
manufacturing excellence.
cent; productivity in the manufacturing
trolled machines. The U.S. figure was 18
sector at large grew 25.5 percent.
percent. Per worker, the United States has
Where We Stand
The benefits of these gains ripple
one-sixth as many robots as Japan. We are
through the entire economy. Strong
not even up to the figures for Germany
The dollar is down; exports are up; and so
manufacturing industries are dynamic
and Sweden.
are the earnings of U.S. manufacturing
contributors to overall growth. They are a
Becoming world-class competitors re-
companies. Fortune magazine reports that
major market for services, and a key
quires major changes in the ways that U.S.
America has suddenly "seized the lead in
manufacturing firms compete. But it will
the race for global competitiveness." But
also require a national commitment to
witnesses to the ordeal that U.S. industry
suffered in this decade have a right to be
compete and government actions to sup-
skeptical. Is victory really at hand? What
"An administration and
port that goal.
are the facts?
Congress that fully
The chief fact is that American firms are
A National Commitment
more competitive than they were three or
understand the importance
An administration and Congress that fully
four years ago. Since the peak of the real
of manufacturing
understand the importance of manufac-
trade deficit in the third quarter of 1986,
excellence to our national
turing excellence to our national well-
real exports have improved by $112 bil-
being should make manufacturing com-
lion (in constant 1982 dollars), while real
well-being should make
petitiveness a national priority. They
net exports (exports less imports) have
manufacturing
should be aggressive and pragmatic in
improved by $66 billion.
promoting U.S. manufacturing interests.
The most pervasive and powerful rea-
competitiveness a national
Above all, they should appreciate their
son for this improvement is depreciation
priority."
ability to damage the economy by passing
of the dollar relative to the currencies of
legislation that could harm our ability to
our major trading partners -
compete. They should make no economic
Between the first quarter of 1985 (the
policy without full consideration of the
peak value of the dollar) and the first
source of saving and investment. They are
likely effects on our ability to compete in
quarter of 1988 (the trough value of the
responsible for nearly all the nation's
the global economy.
dollar), the exchange rate depreciated by
civilian R&D spending and most techno-
The next administration and Congress
45 percent on a multilateral basis, while
logical advancement. They provide a
will need to take steps in at least the
falling by 50 percent against the yen and
reservoir of well-paid jobs. They are the
following six major areas:
the mark, and 31 percent against the
foundation of a strong national defense.
1. Reducing the budget deficit is priority
pound. Since January 1988, however, it
So how much progress have we made?
number one. The federal deficit eats into
has appreciated about 10 percent on a
We are clearly on the way back. On a
individual and business savings, raises
multilateral basis.
10-point scale, U.S. manufacturing is now
capital costs and increases our dependence
In industry after industry, America is
at "4" and climbing. But getting to be a
on foreign creditors. The administration
becoming the low-cost producer. In dollar
"10" won't be easy, because our com-
and Congress must continue to hold the
terms, Japan's unit labor costs rose by 43
petitors aren't standing still -
line on nonessential domestic spending
percent in 1986; Germany's rose by 40
To hold market share, foreign firms-
(though new spending may be needed for
percent; while American labor costs re-
especially Japanese firms-have not raised
education, commercially significant R&D
mained stable.
export prices to match shifts in exchange
and public infrastructure). Tax policy
Much of the recent export surge, how-
rates. Between 1985 and 1987, the yen
must identify sources of additional rev-
ever, is also the result of relentless self-
gained 45 percent against the dollar, but
enue that favor savings and investment,
discipline and cost-cutting by American
relative Japanese-U.S. export prices in-
such as a broad-based consumption tax.
firms determined to meet the challenge of
creased by less than 20 percent.
2. Avoiding actions that harm manufac-
international competition -
Foreign firms have also been driving
turing competitiveness is priority number
Since 1982, U.S. manufacturers have
hard for greater efficiency. Toyota has
two. Washington needs to have a clear
moved aggressively to consolidate produc-
managed to cut the yen cost of building a
sense that industrial strength is a vital
tion capacity, slash unemployment costs,
Corolla by an estimated 31 percent. Since
national interest, especially in a number of
increase out-sourcing and reduce inven-
1985, Toshiba's labor costs are down by
areas where we seem intent on shooting
tory levels. Sectorwide production costs
40 percent. Some Japanese firms claim
ourselves in both feet. I'm referring to
3
situations such as export controls, costly
Companies began to "sell the sizzle."
nesses. Examples include -
environmental and health care legislation
By the 1970s, however, the old cer-
TRW's sell-off of $800 million worth
and mandated benefits.
tainties of business were disappearing
of low-growth, low-return subsidiaries
3. Tax policy is central to encouraging
under the pressure of rapid technological
and product lines in order to concentrate
savings and investment. An administra-
change, growing international competi-
on core automotive, defense and elec-
tion committed to rebuilding U.S. compe-
tion, the mounting presence of govern-
tronics businesses; and
titive strength must consider restoring
ment in the economy and increasing
General Mills' shedding of low-return
differential treatment for capital gains and
sophistication in financial markets. Mer-
or peripheral units and concentration on
providing more incentives to lower the
gers and acquisitions became an increas-
three basic business segments.
cost of capital. Tax increases on capital
ingly attractive route to corporate growth
Far more often, however, competitive
must be avoided.
and profitability, and that continues.
strategies based on acquisitions, mergers,
4. Trade policy and administration have
But, each day, I see new signs that
or the latest financial chicanery have
to be more aggressive to adapt to the
American firms are getting back to a
resulted in disappointments and divesti-
realities of international competition. We
strategy predicated on manufacturing
tures. Michael Porter of Harvard Business
need to deal more effectively with unfair
excellence. One reason for the change is
School, for example, studied 3,800 diver-
foreign trade practices. Vigorous imple-
that, with some important exceptions, the
sifications (acquisitions, joint-ventures
mentation of the new trade bill must be
other two strategies have lost a lot of their
and start-ups) by 33 major U.S. corpora-
pursued by the next administration.
tions selected at random from 1950 to
5. Taking a long-term view is another
1986. On average, these firms divested
key objective for competitiveness policy.
more than half their acquisitions in new
We must take a hard look at establishing
"Competitive success
industries and divested an astounding 74
rule changes that would rein in corporate
depends on how effectively
percent of their acquisitions in totally
unrelated industries.
raiders without undermining the construc-
and efficiently a
Porter attributes this outcome to a
tive influence of an active acquisitions
market. We also need to take another
manufacturing firm
failure by many diversifying firms to
look at other measures that would en-
appreciate the costs and constraints that
performs its most
courage stability and long-term invest-
diversification can impose on firms. He
ment by financial markets.
fundamental task: making
argues that acquisitions must increase the
6. Education and training are the bed-
competitiveness and value of individual
products."
rock of national productive capacity.
business units; otherwise, they may prove
Long-term prospects for industrial
to be costly mistakes.
Another reason why U.S. firms are
strength hinge on improving the quality of
magic. Experience shows that products
refocusing on production is that if you
American education and training.
cannot be sold by marketing power alone,
don't handle production well, chances are
While action in these areas will not
without regard to price and quality. You
you'll begin to lose the capacity for good
guarantee manufacturing excellence, in-
can't just "sell the sizzle" when the com-
work in other areas too, e.g., product
action will make it next to impossible for
petition dishes up a better product every
design and marketing. To design for
American industry to continue the gains it
time, often for less money.
manufacturability, you must understand
has made over the past few years.
These days, companies that do win with
production. To market effectively, you
marketing-based strategies succeed by
must understand production. And to
How to Compete Better
finding or creating market segments-
understand production you must do it. A
When it comes to choosing how to com-
special niches-in which they can achieve
world-class manufacturing corporation
pete better at the company level, manufac-
cost or quality advantages over their
cannot be hollow at the core.
turers have three basic options: (1)
competitors.
American firms are being driven back
establishing a competitive edge through
Mercedes, of course, is the premier
to the basics of manufacturing excellence
manufacturing excellence; (2) winning by
example of this type of firm. But some
by forces that are affecting manufacturing
application of pure marketing muscle; or
U.S. firms have also proven to be shrewd
firms everywhere in the world. Increas-
(3) diversifying through mergers and
and aggressive niche marketers (e.g.,
ingly, firms are coming to the competitive
acquisitions. Each of these strategies has
Rubbermaid). The key lesson in their
fray with similar attributes and capabil-
some validity and has enjoyed periods of
experience is that successful niche mar-
ities. Among the major industrial coun-
popularity among American companies.
keting depends on efficient and/or highly
tries, labor cost differentials are becoming
In the years when the United States was
flexible manufacturing. Markets may be
less significant as labor becomes a less
just beginning to build its industrial might,
narrower, but products still have to appeal
important component of production
the most successful industrial entrepre-
on the basis of price and quality, or
costs. Capital markets are internationally
neurs were people who exploited the
because they are more responsive to
linked. Knowledge about advanced man-
production potential of new technologies.
evolving consumer tastes.
agement practices and new products and
Their competitive strategies were based on
In the past decade or so, diversification
processes is quickly transferred across
manufacturing efficiency and scale.
strategists have also had a pretty rough
national boundaries. Differences in distri-
American industry was built on what was,
ride. To be fair, the record shows diversi-
bution systems and practices are diminish-
by the standards of the day, very large-
fication can still be profitable if it results in
ing. Markets are becoming saturated,
scale manufacturing excellence.
a collection of closely related businesses
buyers more demanding.
As America grew as a mass market,
within a single company. Diversification
Under these conditions, competitive
firms drifted away from the notion that
built around a common expertise or cor-
success depends on how effectively and
first-class manufacturing was the central
porate capability can work. Indeed, com-
efficiently a manufacturing firm performs
element in business success. Marketing
panies are sloughing off alien businesses to
its most fundamental task: making pro-
driven strategies began to dominate.
get back to bundles of interrelated busi-
ducts. Competitive advantage is increas-
4
ingly dependent on production strengths.
1
Manufacturing Excellence
The CEO's role in all this is crucial. To
What does the move to manufacturing
Starts at the Top
endure, the commitment to excellence
excellence mean, in practice, for top man-
agement? It means giving operations a lot
The environment facing today's managers
must be part of the CEO's vision and
is clearly much more difficult than in the
priorities. Since it involves pulling to-
more attention and status. It means inte-
grating production and other corporate
past because of greater competitive inten-
gether most of the activities of the organi-
functions to coordinate the execution of
sity in a more complex setting. Deregula-
zation, he/she must play a critical integrat-
competitive strategy. It means staying
tion, the movement toward the global
ing role. By personal example and by
economy, the maturation of certain
exercising the power to shape corporate
away from "quick fixes" and paying
markets and the increasing speed of tech-
institutions, he/she must ensure that this
enough, but not too much, attention to
quarterly income statements. And it
nological development are the factors that
commitment is woven into the cultural
means mobilizing and cultivating people.
have raised the level of competition. The
fabric of the firm so that continuous
In short, it means observing the 10 prin-
world has also been made more complex
improvement is achieved.
ciples I want to discuss next: my checklist
by globalization, the increased number of
for manufacturing excellence.
firms or products available, and the in-
creased use of more sophisticated tech-
2.
Helping Define
The checklist that follows is my way of
Competitive Strategy
categorizing what the most successful U.S.
nologies (see Kotter, The Leadership
manufacturing firms are doing, on a prac-
Factor). In this world of intense competi-
Without a strategy for competitive suc-
tive activity among complex organizations,
cess, you are likely to fail unless you are
tical level, to make themselves world-class
lucky. Without integrating manufacturing
competitors. But first, I will outline three
into your strategy, you are putting your-
underlying themes that are pertinent to
self at a big competitive disadvantage.
the effort.
"To endure, the
Competitive strategy defines the way a
The first theme is that there are no single
quick fixes. Rebuilding and sustaining
commitment to excellence
company makes a success out of whatever
individual business or businesses it is in,
competitive strength entails nothing less
must be part of the CEO's
how each business unit in the company
than an open-ended and broad-based
vision and priorities
identifies and exploits advantages over
campaign of incremental improvement in
actual and potential competitors.
every facet of production: a determined,
he/she must play a critical
Competitive strategies come in different
methodical, neverending pursuit of world-
class performance.
integrating role."
shapes and sizes. For example, Harvard's
Mike Porter identifies three generic
The second theme is that manufactur-
approaches that businesses can take to
ing firms face a constantly changing and
master their competitive environments:
complex competitive environment. What
the need for leadership has increased and,
(1) achieving low-cost leadership; (2)
worked competitively yesterday is no guar-
in my view, this is even more the case if
building a reputation or product that is
antee for success tomorrow, as the per-
one is pursuing a strategy of manufactur-
perceived as unique in the industry; and
sonal computer market vividly illustrates.
ing excellence.
(3) targeting a particular market segment
The third theme is the importance of
Winning with a production-based
and achieving cost leadership or product
people. All the talk about advanced manu-
competitive strategy demands total dedi-
differentiation within that segment.
facturing technology notwithstanding, the
cation to building top-quality products
Harvard Professor Robert Hayes, in the
way firms use people will determine more
that are competitively priced and delivered
NAM-endorsed video tape "Manufactur-
than anything else the extent to which they
on time, and to developing new products
ing Strategy," emphasizes that firms can
achieve production excellence.
in step with shifting market opportunities.
compete on the basis of five factors: cost,
Getting down the experience curve is
In short, it demands a commitment to
quality and performance, dependability
one of the things that makes a winner and
what has come to be called "manufac-
and service to the customer, flexibility,
so far only people can do it. Good
turing excellence."
and innovation.
machines work the same way every time.
Manufacturing excellence is the out-
Whatever the strategy, it is better if
Use doesn't make them more productive.
growth of continuous effort to beat the
tailored, not bought off the rack. Each
Good people, on the other hand, get
competition by purging the production
firm must define its own strategy based on
better with practice. They learn to use
chain of operations and people that do not
its circumstances and ability to discover or
machines more efficiently; they find ways
add value to final products. It means
create advantages in the key dimensions of
to improve processes and products. Chal-
drastic reduction in inventories every-
competition: cost, quality, on-time de-
lenges make them try harder.
where in the production system. It means
livery, product development/flexibility,
This acknowledged importance of
aggressive simplification of products, pro-
sales and service. Each firm must decide
people is good news and bad news. The
cesses and organizations. It means integrat-
how it is different from its competitors
good news is that competitiveness doesn't
ing design, manufacturing and marketing
and how it can best compete.
demand massive investments in advanced
functions, and cultivating teamwork
The important aspect about competi-
production machinery and control sys-
throughout the firm. It means heavy in-
tive strategy that many firms seem to
tems, at least at first. There is no magic
vestments of time and money in the
forget is that its focus is the marketplace. It
bullet that is too expensive to buy or too
continual enrichment of human and
is a plan of attack (or defense) that aims at
complicated and mysterious to use.
physical capital. It means making the
exploiting advantages and neutralizing dis-
The bad news is that people are harder
measurement of manufacturing perform-
advantages in the general competitive
to retool than machines. Moreover,
ance the principal indicator of company
environment.
changing people's behavior may mean
success. And it means everyone "from the
The focus is: How do we beat the
rebuilding a company's philosophy and
top floor to the shop floor" sharing a
competition? For example, cost-cutting by
the basic way it works: a pretty tall order.
personal sense of responsibility for cus-
itself may be simple scrimping. Carried to
Now for the checklist:
tomer satisfaction.
excess, it may sap a firm's competitive
5
strength. Alternatively, and much more
organizational structure and the use of
of literally hundreds of productivity
positively, cost-cutting may be part of a
human resources must be consistent with
improvement measures and techniques.
strategy aimed at achieving or sustaining
the overall competitive and manufactur-
Common to all these is a new attitude: a
an overall low-cost position.
ing strategy.
commitment by management and workers
Of course, the success of such a strategy
to continuous improvement. When man-
might also depend on not cutting costs.
3
Cutting Costs and
agement and workers together approach
Achieving a low-cost position could entail
manufacturing with the attitude there has
heavy front-end investments in new pro-
Improving Productivity
to be a better way to do everything, and
cess technology and employee training.
Cost-cutting has been American indus-
when they apply imagination, the solu-
So, strategic cost-cutting could translate to
try's first answer to the competitiveness
tions are almost unlimited. Without
higher operating costs, at least over the
challenge. U.S. firms have attacked high
enormous outlays for fancy new equip-
short haul.
production costs with determination and
ment, but with careful attention to the
Moreover, since the competition is no
with considerable success.
human side of work, companies are find-
longer only homegrown, the question is
Companies have taken two basic
ing they can achieve 20-40 percent gains in
really: How do we beat the competition
approaches to cost-cutting: (1) rational-
labor productivity within several years.
worldwide? Winning worldwide demands
izing, i.e. sharpening the firm's focus on
Further, management and labor are both
at least two challenges. One is making
core operations; and (2) taking a variety
taking a more realistic view of what
excellent products at competitive prices,
of steps to increase productivity.
companies can afford in the way of pay
delivering them on time and giving solid
Rationalization. Companies that
raises. Manufacturing compensation in-
after-sales service. When it comes to
drifted into broad diversification in the
creased about 10 percent per year during
excelling here, it isn't good enough any
1960s are now ruthlessly shedding opera-
the 1970s; it is increasing at about 2.5
more to be "the best in Indiana." The only
tions not central to their basic competitive
percent per year during the 1980s.
safe position is to be "the best manu-
Many manufacturing companies have
facturer in the world."
made dramatic strides in reducing direct
The second challenge is "taking it to the
"Whatever competitive
labor costs. In several of today's most
competition." By itself, being the best isn't
good enough, isn't safe enough. Our
strategy is chosen, it is
competitive firms, it is not uncommon to
hear of plants with direct labor costs as
major overseas competitors have shown
essential that the
low as 5 percent of total product costs. As
us clearly that the way to build world-class
manufacturing part of the
a result, the main focus of cost-cutting
competitive capability is to go for world
attention is shifting from direct labor to
market share.
organization consistently
other cost drivers-especially indirect
For example, regarding Honda North
support that strategy."
labor and headquarters staff costs-and
America's plan to export 70,000 cars in
materials costs.
1991 (50,000 of them to Japan), com-
By simplifying and tightening up their
pany President Tetsuo Chino asserts: "It is
capabilities. Put bluntly, companies are
manufacturing processes and raising qua-
not enough that our U.S. operations are
getting rid of businesses that don't fit their
lity, companies are dismantling what
competitive only in the United States. It is
core focus.
experts call "the hidden factory": all the
the world arena where the competition
Recent examples of corporate rationali-
checkers and controllers who keep track
will be won."
zation include the TRW case cited earlier
of things, but don't make anything.
Exporting to, or manufacturing in, all of
and Monsanto's sell-off of its loss-incur-
Also, managements are discovering that
the world's major markets usually means
ring commodity petrochemical businesses
they really can run companies-quite big
larger profits, more investment and greater
and concentration on more competitive
ones-without in-house staff assistants
overall financial strength; it creates oppor-
specialty petrochemical products.
for everything. Companies are laying off
tunities for scale economies; it increases
To enhance manageability, rationalizing
staff. When they occasionally need spe-
production and marketing flexibility.
companies are also downsizing their core
cialized expertise, they contract outside
Worldwide operation may also increase
businesses. Downsizing concentrates re-
for it. Some firms are letting line managers
"company learning." Marketing innova-
sources and management attention and
decide the types of corporate staff they
tions and new process or product tech-
eliminates excess or inefficient capacity. In
want or don't want.
nologies developed overseas may contri-
mature industries, especially, reductions
Since materials costs are becoming
bute to greater success at home.
in capacity have been remarkable.
more important, firms are following two
Moreover, by contesting all markets,
Since 1982, U.S. raw steelmaking capa-
tracks to cut these costs. First, they are
U.S. companies help to keep the competi-
city has been cut by 27 percent. When
trying to reduce the materials content of
tion honest. Challenging the competition
you combine capacity reduction with
products. Second, they are trying new
worldwide limits profits by foreign com-
plant modernization, you get striking pro-
approaches to sourcing. Some companies
panies in non-U.S. markets. As a result,
ductivity gains. USX now makes a ton of
are turning to worldwide sourcing. Some
foreigners may be weaker financially and
steel in less than four man-hours, down
are emphasizing quality-assurance sourc-
have less price flexibility when they con-
from 10 man-hours a few years ago.
ing. And still others are emphasizing the
tend with U.S. firms in the United States.
Efficiency. The second general
timeliness of delivery. Managements are
Whatever competitive strategy is cho-
approach firms have used to cut costs is to
rediscovering the purchasing function,
sen, it is essential that the manufacturing
boost efficiency and productivity in exist-
insisting on better purchasing, and inte-
part of the organization consistently sup-
ing or modernized plants and offices.
grating purchasing into the mainstream of
port that strategy. Decisions about facili-
Widespread automation accounts for
the manufacturing process.
ties, equipment and sourcing must share
some of the improvements. Even more
Companies are cutting costs in lots of
the same focus. Similarly, policies for
important then automation, however, has
other ways, too-
quality improvement, inventory control,
been the introduction by American firms
Preventive Maintenance. Better main-
6
tenance of machinery extends machinery
making the entire manufacturing process
Though superior quality is now a goal
life, thereby reducing capital costs.
more efficient. And sixth, U.S. firms are
for most American manufacturers, actual
Quality Cost-Cutting. Raising quality
learning that quality has great motiva-
results still lag behind.
can lower costs by reducing waste, rework
tional power. Quality engages the hearts
The American Society for Quality Con-
and warranted service.
and minds of managers and workers.
trol estimates that the costs of bad quality
Cogeneration. Despite softness in
To become a top quality producer, a
in U.S. companies are three times those in
energy prices in the past several years,
company must understand some basic
Japanese companies. J.D. Powers' annual
companies with an eye on long-range
principles about quality control:
assessment of auto owners' satisfaction
competitiveness are still working to cut
Quality is defined by the customer, not
indicates that U.S. quality remains below
energy costs. Cogeneration — which is the
the producer.
that of the Japanese. A Department of
equivalent of killing two birds with the
Quality control is based on prevention,
Defense study shows that nonconform-
same stone — is getting a lot of attention.
not inspection.
ance and rework rates in the Japanese
Health-Care Cost Control. According to
Quality control means doing things
electronics industry run 0.5-1 percent,
an NAM survey of CEOs, their number
right the first time.
compared with 8-10 percent in the United
one concern this year is the skyrocketing
Quality control is more than an
States. Ernest Hugh and Alan Anderson,
cost of health insurance. Companies are
authors of The Spirit of Manufacturing
trying to contain these costs by changing
Excellence, claim that Japanese companies
benefits and financing, and by turning to
"Many companies have
are driving down defects to 10 per million,
more efficient health-care providers.
while there are still U.S. manufacturers
moved into a second stage
Since the late 1970s, manufacturing has
operating at 10,000 to 20,000 defects per
gone through two stages of cost-cutting.
of cost-cutting, giving
million.
The first focused on direct labor costs in
much more attention to
For U.S. quality leaders, the firms that
the plant; companies cut labor and capa-
have made remarkable advances, quality
city. But in recent years many companies
overhead and letting the
has had tremendous payoffs. Quality sells.
have moved into a second stage of cost-
cost-cutting broom sweep
It's profitable, too.
cutting, paying more attention to over-
head and letting the cost-cutting broom
through all company
sweep through all company operations.
operations."
5.
Improving the
We're still in stage two. We have to
Manufacturing Process
keep it up, but we must also do more. In
The best of today's manufacturing com-
particular, we must exploit the oppor-
attempt to make better products; it is a
panies strive for excellence in every facet
tunities for increased productivity inher-
search for better ways to make products.
of the manufacturing process. Although
ent in product and process improvement:
Under total quality control, inspection
there are many ways of looking at it, the
the subjects of the next three categories on
should occur throughout production, not
technique most widely associated with
the checklist.
just at the end.
manufacturing excellence is "just-in-time"
Quality control requires making oper-
manufacturing, or JIT.
ations as fail-safe as possible, i.e., reducing
Some people think of JIT as simply an
4
Top Priority:
deviation from zero defects.
inventory control system or a means to
Building In Quality
Quality control is an ongoing process;
achieve stockless and small-lot produc-
Starting in the mid-1980s, American in-
it never ends.
tion. But it really is a system of enforced
dustry rediscovered quality with a ven-
CEOs who are serious about quality
problem-solving aimed at reducing lead
geance. Companies participating in the
must build the emphasis on quality into
times and waste. With waste-like buffer
1987 survey of Boston University's Man-
the culture of the firm. Quality must be a
stocks-eliminated, problems of quality
ufacturing Roundtable identified pro-
principal measure of firm performance.
or scheduling immediately become ap-
grams for quality control as the single
Employees must be deeply and genuinely
parent. The inadequate worker, the poor
most important element of manufacturing
involved. Their advice about manufac-
machine, the inefficient work layout can-
strategy through the end of the decade.
turing improvements must be heeded.
not be hidden.
There are at least six reasons why. First,
Their responsibilities for production must
JIT is just one of the many techniques
largely because of the Japanese, quality has
be expanded.
used to achieve manufacturing excellence.
become a major element in global compe-
Companies dedicated to quality do
When all are applied, the results can be
tition. Second, U.S. companies have dis-
extensive training. High quality produc-
spectacular.
covered that markets are increasingly
tion requires workers who can use, main-
Some experts claim that the best practi-
attracted to quality; quality has tremen-
tain, fix and experiment with production
tioners in Japan and the United States
dous selling power and creates loyal cus-
equipment. It also requires workers who
have achieved 50-100 percent finished
tomers. Third, in light of the accumulating
understand the basic principles of prob-
goods inventory reductions; 70-90 per-
evidence, U.S. manufacturers have finally
lem-solving and who can communicate
cent work-in-process reductions; 40-70
admitted to themselves that they have not
effectively. Quality workers make quality
percent space reductions; 30-50 percent
been quality-competitive. Fourth, U.S.
products.
capacity increases; 70-90 percent shorter
manufacturing companies that started
In addition to operating on these prin-
lead-times; 30-50 percent overhead cost
quality improvement programs have dis-
ciples, companies are making quality gains
reductions; 30-50 percent product cost
covered that the costs of bad quality are
by reorganizing manufacturing processes
reductions; and rejects reduced from 2
far higher than they had assumed, often
and, in particular, by adopting cellular or
percent to .001 percent.
running more than 20 percent of sales.
modular production methods. As one
A common view holds that manufac-
Fifth, U.S. manufacturers have learned
expert notes, no one in a module can hide
turing excellence is based on four general
the pursuit of quality is a potent device for
bad work.
principles: (1) elimination of waste; (2)
7
elimination of complexity; (3) integration
Integration. Companies achieving
products also require less packaging.
of activities inside manufacturing and
manufacturing excellence also seem to be
Again, materials are saved.
between manufacturing and all the other
very good at integrating engineering, pro-
There is a saying that the best materials
functions of the firm; and (4) continuous
duction and marketing.
handling system is no materials handling.
improvement. Two of these principles
The classic symptom of a lack of inte-
Cellular plant layouts and JIT manufac-
require some explanation.
gration is a high number of engineering
turing can come close to this. Still, for
Elimination of Product and Process
change orders. In a recent survey of the
many categories of production, materials
Complexity. Product complexity pushes
engineering change systems in 30 U.S.
handling remains inevitable. In those
up scrap costs, reduces yields, keeps setup
industrial firms, Booz Allen found that
instances, tasks once assigned to hand
costs high, impedes automation, hinders
more than 50 percent of the firms pro-
feed, conveyors or forklift trucks are now
inventory reduction and drives up the
cessed 2,000 engineering changes annu-
being assigned to robots, automated
number of transactions that have to be
ally: one change per working hour. There is
guided vehicles, and automated storage
dealt with in engineering, production,
no way to achieve efficient production
and retrieval systems. Though effective
marketing and administration.
under such circumstances.
when properly fitted into a production
Minimizing product complexity starts
Integration of engineering, production
system, these high-tech techniques should
with a carefully thought-out product
and marketing paves the way for further
be carefully integrated into the simplest
strategy. The aim should be to reduce the
integration within production. It is then
production operation possible.
breadth and turnover of the product line
possible to link manufacturing, materials
Among U.S. manufacturers, how many
while protecting high-value differentiated
are striving for excellence? One hint is the
products. The elimination of product
extent to which they are adopting JIT. A
complexity blends into the elimination of
"The aim of integration is
1986 survey of suppliers to U.S. auto
process complexity right when products
manufacturers reveals that more than 80
are first designed.
flexibility, which means
percent of them had begun to implement
A rule of thumb in the defense industry
all parts of the plant
JIT programs.
seems to be that as much as 60 percent of
operate in harmony,
While these facts show that JIT pro-
avoidable manufacturing costs are created
grams are now common - at least among
during the design phase. That percentage
not in lock step."
auto component manufacturers - other
may be lower for standard products, but
facts from the same survey suggest that the
the basic point remains: The most effec-
companies are not applying JIT principles
tive way to simplify production is to
handling and control systems. Integration
comprehensively. Of the companies with
simplify products.
is not the same as putting the entire plant
JIT programs, 56 percent reported re-
Another step toward elimination of
in a straight jacket, with every activity
duced inventories, 45 percent better cus-
process complexity is the focused factory
tightly coupled to every other. The aim of
tomer relations and 43 percent improved
approach. The focused factory reduces
integration is flexibility, which means all
quality. That's encouraging. On the other
complexity by devoting a single facility to
parts of the plant operate in harmony, not
hand, only 33 percent reported improved
a single purpose. Alternatively, focus can
in lock step.
productivity, only 23 percent reduced set-
be increased by creating discreet mini-
Manufacturing excellence also calls for
up costs and only 22 percent better
factories within regular plants.
another important type of integration,
employee relations. it is really seen
Under the new plant configurations,
that with suppliers. Successful supplier/
as part of a total manufacturing excellence
complexity diminishes for two main rea-
buyer relationships require much top
program-should lead to better results
sons. First, there is far less material
management involvement on both sides;
than these.
movement and clutter. Materials have less
the sharing of product, process and speci-
distance to travel. The arrangement per-
fication change information; technology
mits small-lot production and quicker
exchange; and joint involvement in design,
throughput. Less material is needed in
6.
Retooling the Factory
not to mention multiyear commitments
and Automation
production. Second, control is much
on the buyer's part.
The first step toward the factory of the
easier. Combining manufacturing cells
The measures used to improve the
future is a step back to basics. Advanced
with pull production techniques can
manufacturing process are increasingly
manufacturing technology offers extraor-
sharply reduce the need for fancy com-
being targeted at inventory and materials
dinary opportunities for improvements in
puterized scheduling systems.
handling. That is because materials now
the areas of cost, quality, flexibility and
Mistake-proof production is another
account for the largest share of manu-
deliverability. But to benefit from these
way to eliminate process complexity. The
facturing costs, often 50 percent or more.
opportunities, companies planning to
Japanese call it the "poka-yoke" system.
The attack on materials is occurring on
install sophisticated equipment and sys-
You immobilize everything on machinery
three fronts: (1) reducing the materials
tems must devote enormous energy to
that is adjustable and not essential to the
content of products; (2) substituting
simplifying their manufacturing practices.
immediate task. Then you install all sorts
materials, which allows for whole new
We've all seen the reports on how the
of guides and fixtures to assure tasks can
approaches to manufacturing; and (3)
Japanese are outspending us on advanced
be performed only one way: the right way.
adopting improved techniques for mater-
manufacturing technology. But it's impor-
Success breeds success. Reducing com-
ials handling.
tant to understand that Japanese manu-
plexity reduces the need for supervision.
Regarding the first approach, products
facturers have also directed a great deal of
Good plants tend to be thin plants, thin in
can be designed to require less materials
investment at improving equipment al-
layers of supervision. Reduction in the
content. Parts can be machined with less
ready in place. As recently as 1980, as
numbers of supervisors cuts costs. Speed-
scrap or they can be formed initially
much as 60 percent of Japanese capital
up in decision-making cuts costs, too.
according to net shape principles. Either
spending went for improving old ma-
Maybe even more.
way, there is less waste. Lighter or sturdier
chines. At the same time, only about 25
8
percent of our investment dollar went to
automation's sake. Once cells are per-
The relationship between the lab and the
improving existing equipment. In contrast
fected, they are integrated. In this way, the
plant has been turned on its head. The
with the Japanese, U.S. industry's first
factory incrementally works toward com-
ability to make now gives firms an edge in
reaction to the competitiveness challenge
puter integrated manufacturing.
the ability to invent.
was to try to buy manufacturing excel-
This approach would seem to fly in the
What does all this mean for U.S.
lence off the shelf.
face of systems principles, according to
manufacturers? First, we simply will have
What's becoming clear now is that
which management's aim should be to
to spend more on R&D. The recent
investment in advanced manufacturing
optimize the efficiency of the entire plant,
record of industry expenditures on R&D
technology is usually not a good first step
not activities (cells) within it. While the
shows why. Corrected for inflation, in-
in the movement to manufacturing excel-
theory is good, manufacturing managers
dustry spending on R&D increased about
lence. The preparatory steps have to be
5.5 percent during the 1980-84 period.
product and process simplification, and
Since then, it has gone up by about 2.5
continuous and substantial upgrading of
workers' skills.
"With a big automated
percent a year. Starting a few years ago,
business spending on R&D in Japan and
The authors of The Spirit of Manufac-
system, we say get it going
Germany exceeded such spending in the
turing Excellence advocate what they call
right and then don't touch
United States. Also, American manufac-
"grind-it-out" automation, which for
turers must stop treating R&D as dis-
them means reducing set-up times to a few
it; the Japanese say get it
cretionary expenditures. In too many
minutes, getting machine uptime to 99
going right and then
cases, the R&D spending patterns of
percent, designing all complexity out of
companies have fluctuated with the swings
products and processes and getting the
tamper with it all the time
of business cycles.
most out of existing equipment. They
to make it even better.'
Second, U.S. industry must speed up
think the grind-it-out strategy is simpler to
the rate at which it commercializes tech-
implement, demands relatively little front-
nology. Studies constantly demonstrate
end capital, keeps risk low, and builds
that the United States is more inventive
in-house capabilities to design and imple-
have come to appreciate that the try-to-
than Japan, but most studies also show
ment customized process that cannot be
optimize-everything-at-once approach is
that the Japanese convert new ideas into
duplicated by competitors.
next to impossible, especially given the
marketable products faster than we do.
In highly automated environments,
complexity of modern manufacturing. If
workers must be real-time hands-on tech-
the parts are not running smoothly, all
The challenge for U.S. industry is to get
nicians capable of adjusting the system to
that the systems approach boils down to is
a bigger payoff from its product develop-
obtain steady minor improvements. Here
the integration of chaos.
ment efforts. Step one here is keeping the
the distinction between the U.S. and
The most successful U.S. manufactur-
customer in mind throughout the product
Japanese approach is startling. With a big
ing firms seem to be urging the rest of us,
development process. But beyond this,
the experiences of foreign and domestic
automated system, we say get it going right
by example, to remember these simple
and then don't touch it; the Japanese say
rules: basics first-simple-tech before
firms indicate that it is possible to increase
get it going right and then tamper with it all
high-tech; get everything possible out of
significantly the productivity of corporate
the time to make it even better.
existing equipment; then automate; and,
research and development.
lastly, integrate.
Successful managements create specific
Studies of companies that have put in
mechanisms to break down the organiza-
fairly ambitious automation projects come
up with some fascinating results. As much
as 50 percent of the benefits of the
7
Increasing the Payoff
tional barriers between company labs and
company sales personnel. In fact, the
From R&D
companies with the best product devel-
projects seem to be attributable to
Most observers seem to agree that
opment records appear to mix up all the
improvements in basic manufacturing
America's dominance in industrial R&D
functions that have a role in designing,
practices required to accommodate auto-
is seriously eroding. To make matters
making and selling a product.
mation. Another 20 percent of the bene-
worse, this erosion has occurred just as
All sorts of devices can be used to
fits come from manufacturing-driven
R&D is becoming an increasingly impor-
ensure interaction between R&D and
product redesign. Only about 30 percent
tant determinant of winners and losers in
manufacturing personnel. For instance,
of the benefits seem attributable to the
global competition. Though product and
R&D personnel can be made responsible
automated system itself. In short, suc-
process innovations have always been key
for managing innovations beyond the pro-
cessful automation forces manufacturers
to business success, emphasis everywhere
totype stage or the pilot plant stage. Or
to do the fundamentals right, and that's
on innovation now makes them key to
company policies and incentives can be
where the big payoff comes from.
survival. And the ability to manage
aimed at encouraging internal entrepre-
Once the fundamentals are right, com-
R&D-to innovate quickly and repeat-
neurship. Small teams of innovators can
panies can deepen their investment in
edly-is as important as the product or
be turned into miniature firms within
advanced manufacturing technology.
process innovations themselves.
larger enterprises.
Among experts, the predominant view is
Moreover, R&D and production are
Successful high-tech companies also
that this involves adding new hardware
becoming increasingly interdependent. It
seem to have an organizational readiness
and software on a cell-by-cell basis. The
no longer suffices for a company to be the
to live with the improvisation and experi-
aim is to strive for perfection within each
best at designing products unless it is also
mentation inherent in getting new pro-
individual cell. If business expands, capa-
very good at making them. What the
ducts or processes to market. In Japan,
city is added by replicating cells. The
Japanese have shown, and what a few U.S.
products get developed through a repeti-
extent to which cells are automated de-
companies have confirmed, is that super-
tive try-it, improve-it, try-it-again process.
pends on the tasks accomplished within
iority in production is now a prerequisite
Gains come through lots of little advances
the cells. Avoided is automation for
for superiority in product development.
rather than the one big technical fix. U.S.
9
companies can match this, but again man-
and selection of employees, followed up
rotate jobs or change teams. Each worker
agement must provide the organizational
by thorough entry training. Once on the
may perform 55 or 60 tasks on a car, while
signals that encourage the experimental
job, training must become a way of life.
it is at his station. Each team has a given set
approach to product development.
Workers need opportunities to upgrade
of operations to perform and team mem-
Regardless of how much companies
their specific job-related knowledge, their
bers decide who does what.
push up the productivity of R&D, it
skills at applying that knowledge, their
When it comes to rewarding teams as
remains costly. What companies cannot
problem-solving skills and their com-
well as individuals, U.S. firms have been
afford to do alone, they are starting to do
munications skills.
fairly cautious. Rarely do companies tie
in collaboration with other high-tech
At the minimum, 3 5 percent of shop-
compensation to team performance. U.S.
companies. Cooperative ventures in
floor workers' total work time should be
firms have been more active, though, in
R&D are becoming more common.
devoted to training, whether formal or
using reward systems to prepare the
Managements must become much more
on the job (OJT). For workers assigned to
ground for better teamwork. Some com-
familiar with cooperative research arrange-
specific problem-solding teams, the num-
panies, for example, now use pay-for-
ments-how to structure them and how
ber should be more like 10 percent. In
knowledge systems; they pay higher wages
to manage them. Successful ventures will
for the mastery of new skills and the
most likely be directed at solving prob-
assumption of expanded responsibilities.
lems common to an industry or to several
"American
Despite the hundreds of techniques that
firms, whereby each participant can ex-
can be applied to promote employee
ploit the results according to its own
manufacturing firms
involvement, one truth always must be
competitive strategy. The arrangements
cannot keep pace with the
kept in mind. No technique will work
will have to be designed and managed to
assure that everybody wins.
world's best unless workers
unless management believes employees
are knowledgeable, trustworthy, willing to
Today, innovation involves many activ-
and managers, together,
accept responsibility and concerned with
ities outside the normal bounds of R&D.
It involves organizational experimenta-
take personal responsibility
improving operations.
tion. It involves lots of training. It involves
for winning."
new relationships outside the firm, from
suppliers to customers. It is the area where
9.
Meshing Marketing
and Manufacturing
some U.S. companies are making tremen-
very advanced factories-FMS plants, for
A great Confederate cavalry com-
dous strides. But it is an area where many
example-where traditional workers have
mander once said that winning is mainly a
U.S. companies still face an uphill climb.
been replaced by programmers and highly
matter of "getting there firstest with the
skilled maintenance personnel, training is
mostest." The same principle applies in
almost constant. Doing and learning are
8
Making Employees
global competition. Winners get there
inseparable.
"firstest with the mostest" of what markets
Part of the Team
At its best, employee involvement
really want.
American manufacturing firms cannot
means well-trained people are putting
Getting there "firstest" means tying
keep pace with the world's best unless
their skills to work in teams. Building
together marketing and manufacturing to
workers and managers, together, take per-
team spirit means giving workers substan-
meet time-based competition. Increas-
sonal responsibility for winning. The task
tial responsibility for manufacturing excel-
ingly, competitive success depends on
is immense. Attitudes have to change.
lence. Some companies combine opera-
shortening the time it takes to convert a
Teamwork, not individualism and not
tions and maintenance functions. Produc-
laboratory idea to a product on the
"adversaryism," must be the principal
tion workers who maintain their equip-
shipping dock; then ensuring that delivery
mode of operation.
ment know about it and care more about
is quick, on time and exactly according to
What that means in practice is that
it. Companies that practice TQC integrate
specs.
managers must treat production workers
quality and production responsibilities,
Getting there "firstest" also depends on
as a major competitive resource, not a
empowering production workers to shut
making manufacturing more flexible, i.e.
necessary evil.
down the line when they spot a quality
achieving efficiency with shorter product
Many American firms already do.
problem and encouraging them to suggest
runs and cutting down the time it takes to
Omark Industries' 1984 annual report
process and product improvements.
shift from producing one product to
carried the names of all Omark employees:
Changing people's attitudes and expec-
producing another. The demand for flex-
more than 4,000 names. Ford received
tations about their work means, in many
ibility is market-driven. Mass markets are
1,401 employee suggestions for building
cases, changing the way work is organized.
crumbling; niche markets are becoming
Taurus better. In every case, management
People don't really get team spirit without
more important. The globalization of
got back to the people who made the
the opportunity to work in teams, and
competition means that products must
suggestions.
unless team achievements are measured
now be tailored to diverse national tastes.
Employee involvement starts at the top
and rewarded.
Product life cycles are shortening; new
of a company. Management must demon-
Thus, whenever feasible, employee in-
products must fill the gap left by quick-
strate by repeated acts that it values and
volvement translates to giving small groups
dying products.
respects employees. It must define and
of workers the responsibility for produc-
Since flexible manufacturing is so
explain the mission of the firm in ways
ing whole components, or families, of
important, it is worth reemphasizing what
that elicit enthusiasm and support from
components.
American firms have learned about it in
employees. And management must invest
For example, teams of five to 11 people
the past few years. Flexible manufacturing
in employees.
build entire sections of the Buick Reatta.
doesn't necessarily mean putting in big,
This last point means that employee
There is only one formal job classification
expensive, computer-controlled machines.
involvement begins with careful recruiting
in the Reatta plant and workers are free to
But it does mean rearranging existing
10
layouts to allow for shorter production
part of the day-to-day life of the firm from
Measurement and Reward Systems.
runs and faster throughput. It means
top management to the shop floor-
Measurement systems define success in
adapting existing machines and organizing
cannot be done on command. Rhetoric
every sphere of corporate activity. The
work stations to reduce set-up times and
alone won't change the attitudes of veteran
right measurements, reinforced by the
cut down on rework. It means designing
U.S. workers toward their work or their
right rewards, make the commitment to
products and parts for flexibility and
workmates and supervisors.
excellence credible.
saving customization touches until the end
New attitudes need new institutions to
Good measurement means, first and
of the assembly process.
sustain them. For U.S. firms on the
foremost, measuring the right things.
Getting there with the "mostest" adds
leading edge of advanced manufacturing
Some American managers have had a
the idea that manufacturing companies
technology, these new institutions take
tendency to measure the wrong things, to
must match their products with their
varying forms. Some are tangible, e.g.,
assess the performance of their companies
processes if they are to have true market-
blended work responsibilities on the
in operational rather than strategic terms.
ing clout. The days of product develop-
shop-floor, reduced managerial hierarchy,
The ultimate measure of success, how-
ment divorced from attention to process
and measurement and reward systems that
ever, is the firm's performance in the dog-
are gone. These days, in fact, the tradi-
reflect long-term competitiveness objec-
eat-dog world of global competition.
tional product-process relationship is
tives. Some, like the values embodied in
An implication of this assertion is that
often reversed. The best Japanese manu-
corporate culture, are less tangible.
bottom-line success measures-quarterly
facturers, for example, concentrate on
Corporate Culture. In all organiza-
profits, stock values, price/earnings
perfecting manufacturing processes. Once
tions, shared values, objectives and expec-
ratios-must become less dominant.
these are as good as possible, the com-
tations are a precondition of quick and
Toyota's precept is "Win first. Profit
panies design products that are compa-
concerted action. In a modern corpora-
later." Profiting later may be easier in
tible with the process advantages. Provid-
tion, these qualities are partly a function of
Japan than it is here because Japanese
ing flexibility is built into the processes.
concrete institutions, e.g., measurement
firms are less dependent on equity markets
The Japanese know how they can deliver
and reward systems. They are also an
and their capital costs are lower. But the
the "mostest" because products have been
outgrowth of the CEO's personal style
point of the precept applies everywhere. If
designed with manufacturing capability in
and example. In either case, the CEO's
competitiveness is the goal, market share
mind. This approach goes beyond the
must be factored into the bottom line.
concept of "design for manufacturability."
Good measurement is also critical at the
Its aim is to design to exploit manufac-
"Increasingly, competitive
operational level. Effective cost-cutting,
turing strength.
Linking manufacturing to changing
success depends on
for example, depends on knowing how
costs accumulate in the value-added chain.
market needs also calls for building
shortening the time it takes
Conventional accounting systems tend to
bridges between plant personnel and cus-
to convert a laboratory idea
report operating costs without getting at
tomer personnel. Effective marketing
underlying cost drivers, matters such as
requires closer ties between sellers and
to a product then on
product design and product line breadth,
buyers, between marketing people and
customers, between engineering and cus-
ensuring that delivery is
process technology, plant scale and sourc-
ing policies.
tomers, and even between production
quick, on time and exactly
In a similar vein, conventional applica-
people and customers. At Chaparral Steel,
according to specs."
tions of investment-return and discounted-
every production worker - indeed,
cash-flow analysis may fail to capture
everyone in the company-is part of the
important benefits (and costs) of invest-
sales force.
role is critical. He must believe, and he
ments in advanced manufacturing tech-
Another thing U.S. firms are finding is
must make everyone else in the corpora-
nology, e.g., longer equipment life, higher
that they must do a better job under-
tion believe, that the factory is a key
product quality, preparation for the next
standing how the market perceives quality.
competitive resource-not a black box, not
advance in production technology and
To illustrate: Japanese semiconductor
a set of buildings and machines whose
increased "factory learning." Manufactur-
manufacturing equipment generally re-
only requirement is that they be kept
ing excellence may require new measures,
quires less set-up time and breaks down
running smoothly. Similarly, he must
or new applications of old measures,
less often than American-made equip-
believe and make others believe that labor
especially in the areas of cost accounting
ment. By contrast, U.S. machines can
is a resource for problem-solving and a
and financial analysis.
perform a broader array of tsks. Both
key to increased productivity through
On the shop floor as well, new per-
Japanese and American machines meet
continuous learning.
formance measures, e.g., measures of
high quality standards in their own terms.
Belief, however, is unlikely to spring
individual learning and measures of work-
The problem is most buyers seem to value
from rhetoric alone. In practice, this
team performance, reinforced by appro-
speed and reliability more than flexibility.
means that the corporate fast track has to
priate rewards, are essential to making
The foregoing points add up to one
be rerouted through operations. Manufac-
"commitment to manufacturing excel-
central fact: Without the right manufac-
turing must be represented in the highest
lence" more than a catch phrase.
turing system, firms cannot be serious
echelons of corporate decision-making.
Sherwin-Williams gave employees at
contenders in today's fast-moving market-
Moreover, this new status must be re-
one of its automotive paint plants a wage
ing environment.
flected in salary scales and in more sym-
increase for each new skill learned. A year
Building a Culture
bolic ways-in perks, in lines and boxes
after the program started, 95 percent of
10
on the organization flow chart, in office
the work force had developed new skills.
for Improvement
geography. Even when people read be-
The point here is not only to create a
Internalizing the commitment to manufac-
tween the lines, the message has to be that
foundation for teamwork, but to foster
turing excellence-making it a permanent
manufacturing is important.
continuous learning-almost paradoxic-
11
ally, to bring manufacturing back to an
process and product designers put their
idea of individual craftsmanship that pre-
ideas into practice on the shop floor,
Volume 2, Number 2
vailed in a simpler age.
becoming production workers until these
Huge and Anderson suggest four ways
ideas are "debugged," up and running.
Manufacturing Trends is published
to institutionalize continuous learning:
At Xerox, Ford, Kodak, and Hewlett-
Packard, teams of people from produc-
periodically by the National Asso-
Make learning objectives part of each
worker's performance appraisal; train in-
tion, engineering, marketing and design
ciation of Manufacturers. NAM is
house experts to design and deliver
solely responsible for its contents;
courses; designate on employee involve-
the forecasts, however, do not
ment teams, experts in particular pro-
"The point is to foster
necessarily reflect NAM policy
cesses to educate other members of the
positions.
team; and pay workers for the mastery of
continuous learning,
additional skills. Firms must also train
workers to operate successfully in teams
almost paradoxically, to
Analysis and Commentary: Jerry J.
and give them the technical preparation
bring manufacturing back
Jasinowski, NAM executive vice
necessary for effective problem solving.
to an idea of individual
president and chief economist.
Organizational Changes That Foster
Teamwork. For many U.S. companies, a
craftsmanship that
Subscriptions and Reprint Information.
first step toward creating scope for team-
prevailed in a simpler age."
Material in this publication may not
work has been an effort to break down
be reprinted without permission or
narrow and rigid work rules, thereby
appropriate credit. To subscribe or
giving people the opportunity and the
skills to help each other.
work together from the point that a new
request reprints, contact Savannah
In many firms, as noted earlier, scope
product is conceived until the product
Walker, NAM Communications
for teamwork also means giving individual
gets to market.
Department, 1331 Pennsylvania
production workers greater control of the
In sum, on a scale of 1 to 10, world-
Avenue, NW, Suite 1500-North
production process, and greater responsi-
class manufacturers score a 10. That's
Lobby, Washington, DC 20004-
bility for process improvement, quality
where American companies should be.
1703; (202) 637-3094. Ask to be
control and even customer service. It
We're part way there. I've suggested that
means a blurring of traditional divisions
attaining manufacturing excellence re-
added to mailing list #29. Addi-
between workers and supervisors.
quires work in 10 different areas. The
tional copies are $5.00 apiece, with
It can also mean blurring the line be-
most competitive U.S. companies seem to
bulk discounts available. To order,
tween staff and line responsibilities. In the
make progress on all counts. It all seems to
write to publications coordinator at
most advanced Japanese and U.S. manu-
fit. The way you get to 10 is by tackling the
address listed above.
facturing plants, for example, teams of
10 challenges on the checklist.
12
THE WHITE HOUSE
February 13, 1989
WASHINGTON
KBK
MEMORANDUM
REVISED
TO:
Steve Studdert
FROM:
JOSEPH W. HAGIN
SUBJECT:
APPROVED PRESIDENTIAL ACTIVITY
EVENT:
Address National Association of Manufacturers
Luncheon
DATE:
March 23, 1989
TIME:
12.00 p.m.
12:30 p.m.
DURATION:
90 Minutes
LOCATION:
Mayflower Hotel
ATTIRE:
Business Suit
REMARKS REQUIRED: Yes
MEDIA COVERAGE: Open
FIRST LADY
PARTICIPATION: No
ADDITIONAL
INFORMATION:
CONTACT:
,
TELEPHONE: OFFICE
HOME
NOTE: PROJECT OFFICER, SEE ATTACHED CHECKLIST
Ed Rogers
Marlin Fitzwater
David Bates
James Cicconi
David Demarest
David Valdez
Fred McClure
Jean Lamb
USSS - PPD
Susan Porter Rose
Steve Studdert
Operations - Executive Residence
Patty Presock
John Keller
WHCA Audio/Visual
Speechwriting Office
Tim McBride
WHCA Operations
Laurie Firestone
J. Bonnie Newman
Robert Guttman
Tony Lopez
7210
MAM
National Association
of Manufacturers
ALEXANDER B. TROWBRIDGE
January 26, 1989
President
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
As the enclosed copy of my November 15th letter to you
indicates, we are extraordinarily pleased by your assumption
of the nation's highest office, and can only add commendations
on the way you have structured your Cabinet and launched your
administration with last week's excellent inaugural address.
We requested in the attached letter that you plan to again
join us for the NAM Congress of American Industry, and we very
much hope that your calendar has been noted for a luncheon speech
to our meeting on Thursday, March 23rd, at the Mayflower Hotel.
As the attached copy of Mr. Irastorza's letter indicates, long
range planning has only recently been possible, but do hope
that we can honor you on that day when probably 800-1000 of
our nation's manufacturers will be represented. It would be
an excellent forum to discuss our mutual hopes and plans to
enhance America's competitive capabilities in the global
marketplace, both by public policy decisions and private sector
initiatives.
You have honored us in the past by joining our annual
meeting, and I hope very much that we can welcome you again
on March 23rd.
Sincerely,
Sandy Troubudge
1331 Pennsylvania Ave., NW
Suite 1500 - North Lobby
Washington, D.C. 20004-1703
(202) 637-3012
JAN 3 1989
<<<<<<<<<<<<<
OFFICE OF THE VICE PRESIDENT
WASHINGTON
December 28, 1988
Mr. Alexander B. Trowbridge
National Association of 100 Manufacturers
Suite 1500, North Lobby
1331 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-1703
Dear Mr. Trowbridge:
Thank you for inviting the Vice President to speak at
the National Association of Manufacturers' annual
meeting on March 23.
Due to the changes that will be taking place, at this
time we are not free to consider commitments beyond
January 20, 1989. We also suggest that you renew your
invitation closer to the date of the event.
This office is holding your letter and will pass it on
to the appropriate scheduler at the time of transition.
Thank you for your interest.
Sincerely,
Hector F. Irastorza, Jr.
Deputy Assistant to the Vice President
for Scheduling
MAM
National Association
of Manufacturers
ALEXANDER B. TROWBRIDGE
President
November 15, 1988
Honorable George Bush
Vice President of the
United States
The White House
Washington, D.C. 20500
Dear Mr. Vice President:
I suppose I should begin this with "Dear Mr. President-
Elect", as one main purpose of this letter is to add my voice,
and Ellie's, to the millions who have communicated, in one way
or another, their congratulations to you and Barbara on the
great victory of last week. Your campaign was superbly structured
and your strategy clearly that of a winner, and we are all the
better off as a result.
Another principal purpose is to ask you to put Thursday,
March 23rd, on your calendar for a speech to NAM's annual
gathering "The Congress of American Industry". We plan to
emphasize "The New Leadership Summit" as our theme, bringing
in your top people along with Congressional and business leaders
for a 1½ day review of the priority issues in 1989. Dick Heckert,
our NAM Board Chairman as well as DuPont's, would introduce
you at a time which best fits your schedule between 12 and 2:00
p.m. at the Mayflower Hotel here in Washington.
You were great to address our meetings in the past, and
we certainly hope to be honored by your participation next March
23rd.
I realize it is early to begin planning your 1989 calendar,
but we hope the date is clear and that you can give us an
indication as soon as possible.
With repeated best wishes and congratulations.
Sincerely,
Sandy
1331 Pennsylvania Ave. NW
Suite 1500 North Lobby
Washington, D.C. 20004-1703
(202)637-3012
NAM
- WHO &WHAT
possible:
NICK BRADY
6-700 people
Russell TRANE
Bill? Avekleshoune
Eliz Hole?
Barbara mikulshi
Wostacher
Rich Hecheat pres ding lunder our
CEO, Auport
Susancilaba Scheduling--
tole. spoke (in fort)
Jacqueline Sutherland
Quafe spake
the for writer
parabl, CC, min. wage
Dole
Mikulski
to Speaking serfrom before lunch.
I
Morbacher
THEME: "New workers, New demands:
The Benefits Boom"
[70% small manufacturers]
L 500
SEOCIATION INDEX
NAT'L ASS'N OF MARINE PRODUCTS AND SERVICES
Ass'n of Juvenile Correctional Agencies
Publication:
Nat'l Ass'n of Litho Clubs (1946)
The Legal Investigator. q. adv.
Box 1258, Clifton NJ 07012
NH 03301-2005 Sheridan
Annual Meetings: June-July
Exec. V. President: Philip W. Battaglia, CAE
J.
1989-Philadelphia, PA/July
Members: 4,000 Staff: 3
1990-Jackson Hole, WY/June
Annual Budget: $100-250,000 Tel: (201) 777-6727
Tel:
(603)
224-9749
Hist. Note: Members are supervisory personnel in lithographic
Budget: affiliate of the American Correctional Ass'n.
plants.
An the National Ass'n of Training Schools and
Nat'l Ass'n of Legal Secretaries (Int'l) (1929)
Publication:
1
11
a - present name in 1981.
2250 East 73rd. Suite 550, Tulsa OK 74136 -
Litho Tips. q. adv.
Justice Administrators
Exec. Director: Judi A. Kruse
Annual Meetings: June
Members are and staff members of
Members: 17,000 Staff: 6-10
1988-Minnesota(Breezy Point Resort)/June 22-26/400
1984. centers and agencies for the care and treatment of
Annual Budget: $500-1,000,000 Tel: (918) 493-3540
1989-Baltimore. MD/June 21-25/425
deliquent youth. Membership: $15/yr. (individual):
Hist. Note: Has certification program leading to designation as a
1 USA (organization). 1
Professional Legal Secretary (PLS). Established as the
California Association of Legal Secretaries, it became Legal
Nat'l Ass'n of Lithographic Plate Manufacturers
I
Secretaries, Inc. in 1940 and assumed its present name in 1950.
(1966)
Meetings:
August, with the American Correctional
Publication:
1730 N. Lynn St., Arlington VA 22209
I
The NALS Docket. bi-m. adv.
Exec. V. President: William Teare
Ass's
- SP90-Seattle, WA
MD
Annual Meetings: Summer 1,000
Members: 16-20 companies Staff: 2-5
1989-Birmingham, AL(Wynfrey Hotel)/July 15-20
Annual Budget: under $10,000 Tel: (703) 841-8100
1990-Philadelphia, PA(Adam's Mark Hotel)/July 21-26
Hist. Note: Formerly (1975) the Nat'l Ass'n of Grained Plate
1991-Chicago, IL(Marriott Downtown)/July 27- Aug. 1
Manufacturers. A special industry group of Printing Industries
Ass'n Inactive of Laboratory in 1987. Suppliers (1977)
of America.
Note:
Nat'l Ass'n of Letter Carriers of the United
Intention: NALS News. q. adv.
States of America (1889)
Nat'l Ass'n of Mail Service Pharmacies (1975)
2300 Ninth St. South, Suite 210, Arlington VA 22204
100 Indiana Ave., N. W., Washington DC 20001
Exec. V. President: Delbert D. Konnor
President: Vincent R. Sombrotto
Ass'n of Latino Elected and Appointed
Members: 9 companies Staff: 2
Members: 300,000 Staff: 160
Annual Budget: $10-25,000 Tel: (703) 920-8480
licials (1975)
Annual Budget: over $5,000,000 Tel: (202) 393-4695
Hist. Note: NAMSP represents mail service pharmacy
St., S.E., Washington DC 20003
Hist. Note: Organized in Milwaukee, Wisconsin August 30,
companies. Informs the public about obtaining maximum health
Director: Dr. Harry Pachon
1889 and chartered by the American Federation of Labor in
benefits and prescription services through mail and delivery
leaders: 3,360 Staff: 16
1917. Has a budget of about $12 million. Sponsors and
services. Advocates the interests of mail service pharmacies
Budget: $500-1,000,000 Tel: (202) 546-2536
supports the Committee on Letter Carriers Political Education.
1 Note: NALEO is a non-partisan civic affairs research
with respect to legislation and adminstrative regulation.
Membership: $72/yr.
Annual Meetings: Late fall
organization which work to initiate public policies responsive
Publications:
the Hispanic community and to inform that community of
NALC Bulletin. W.
affecting them. While membership includes state
The Postal Record. m.
Nat'l Ass'n of Management and Technical
representatives, mayors, and members of Congress, it is open
The Activist. q.
all who support its objectives. Membership: $25/yr.
Assistance Centers (1976)
Postmark Washington. q.
(individual), $1,500/yr. (organization/company).
733 15th St., N.W. Suite 917, Washington DC 20005
The Retiree. q.
Executive Secretary: Harold Williams
discations: Citizenship Newsletter. q.
Biennial Meetings: Even years
Members: 110 centers Staff: 1
1988-Portland, OR
Annual Budget: $50-100,000 Tel: (202) 347-6740
NALEO National Report. q.
1990-New Orleans, LA
National Directory of Citizenship Services. bi-a.
Hist. Note: NAMTAC is an association of leading universities
National Roster of Hispanic Elected Officials. a.
across the country that share a mutual objective of economic
Audit of Federal Contracting with Hispanic Firms. a.
growth through university- related assistance. This broad
NALEO Green Sheet. bi-m.
Nat'l Ass'n of Life Companies (1955)
definition ranges from high technology transfer programs to
musi Meetings: Spring
1455 Pennsylvania Ave., N.W., Suite 1250, Washington DC
small business assistance centers and enteprenurial institutes.
20004
The primary goal of NAMTAC is to strengthen these
1989-Albuquerque, NM/June
President: S. Roy Woodall, Jr.
initiatives through organized mutual support. Membership:
Members: 600 companies Staff: 5
$250/yr.
1 Ass'n of Law Firm Marketing
Annual Budget: $250-500,000 Tel: (202) 783-6252
Publication:
NAMTAC Newsletter. m.
ministrators (1985)
Hist. Note: Small life and health insurance companies. Formerly
Nat'l Institute of Life Insurers. Sponsors and supports the
Annual Meetings: Usually in Washington, DC/October
Revere Drive, Suite 500, Northbrook IL 60062
doministrative Manager: Laura Boyd Lapp
National Association of Life Companies Political Action
Committee.
embers: 350 individuals Staff: 2
Publication:
Nat'l Ass'n of Management/Marketing Educators
anual Budget: $100-250,000 Tel: (312) 480-9641
Newsletter. m.
(1968)
st. Note: NALFMA is a professional organization devoted to
Semi-annual Meetings: Summer and Fall/250-300
Hist. Note: Organization disbanded in 1988.
serving the needs of those actively engaged in developing and
implementing marketing programs for law firms. Presidential
term begins in April.
Nat'l Ass'n of Life Underwriters (1890)
Nat'l Ass'n of Manufacturers (1895)
blication:
The Law Marketing Exchange. m.
1922 F St., N.W., Washington DC 20006
1331 Pennsylvania Ave., N.W., Suite 1500 North, Washington
DC 20004
mi-annual Meetings: Annual National Conference & Business
Exec. V. President: Jack E. Bobo
President: Alexander B. Trowbridge
Meeting and Annual Educational Conference
Members: 130-135.000 Staff: 80-100
Members: 13,500 Staff: 180
1989-Philadelphia, PA(Sheraton Society Hill)/April 12-15
Annual Budget: over $5,000,000 Tel: (202) 331-6000
Annual Budget: over $5,000,000 Tel: (202) 637-3000
Hist. Note: A federation of 950-1,000 state and local ass'ns of
Hist. Note: Established in Cincinnati in 1895 to promote
career life insurance underwriters, NALU is a professional
America's economic growth and productivity, particularly in
1 Ass'n of Lawn and Garden Manufacturers
organization of life insurance agents, general agents and
the manufacturing sector. Headquartered in Washington, DC
at. Note: Ceased operations in 1985.
managers. Has an annual budget of $10 million. Supports the
with four field divisions, NAM's member companies produce
Life Underwriters Political Action Committee (LUPAC).
more than 80% of the nation's manufactured goods. NAM is
Membership: $40/per capita.
affiliated with 130 state and local business associations through
1 Ass'n of Leagues, Umpires and Scorers
Publications:
its National Industrial Council, and with 131 manufacturing
1)
Life Association News. m. adv.
trade associations through its Association Council. NAM also
& 1420, Wichita KS 67201
Wheelhorse Newsletter. m.
supports CUE, an organization for positive employee relations.
neral Manager: Steve Shaad
Annual Meetings: September/3-4000
Has an annual budget of $13,000,000.
embers: 9,000-10,000 Staff: 1
1988-Dallas, TX(Anatole)/Sept. 25-29
Publications:
nual Budget: under $10,000 Tel: (316) 267-7333
1989-Boston, MA/Sept. 17-21
PAC Manager. m.
st. Note: Affiliated with Nat'l Baseball Congress.
1990-Nashville, TN/Sept. 9-13
Briefing. W.
blication:
Issue Briefs. irreg.
Official Playing And Scoring Rules For Baseball. a.
Congressional Directory. a.
nual Meetings: Wichita, KS/August
Nat'l Ass'n of Lighting Representatives (1980)
Annual Meetings:
P.O. Box 214, Sea Girt NJ 08750
1989-Washington, DC(Mayflower)/ March 22-23
Exec. Director: Paul E. Saunders
1 Ass'n of Learning Lab Directors (1965)
Members: 600 Staff: 2
KL Note: Became the Internat'l Ass'n for Learning
Annual Budget: $25-50,000 Tel: (201) 528-8118
Nat'l Ass'n of Manufacturing Opticians (1975)
Laboratories in 1982.
Hist. Note: Individuals who sell residential lighting fixtures and
P.O. Box 866428, Plano TX 75086-6428
accessories, and their manufacturers and/or importers.
Exec. V. President: William J. Flannery, III
Publications:
Members: 35 companies Staff: 2
Lantern. m.
Annual Budget: $50-100,000
Tel:
1 Ass'n of Legal Assistants (1975)
(214)
484-8128
NALR Profile Directory. a.
Hist. Note: Membership is comprised of individuals and
" South Main St., Suite 300, Tulsa OK 74119
Semi-annual Meetings: Home Lighting Show in March and
businesses engaged in the manufacture and production of
ec. Director: Marge Dover
Lighting Fair in July
prescription eyewear or related opthalmic goods and services;
embers: 2,500 Staff: 2-5
nual Budget: $250-500,000 Tel: (918) 587-6828
1989-Atlantic City, NJ/March and Dallas, TX/July
members must possess the ability to "full service" fabricate
eyewear.
12. Note: Members are professional legal assistants. Awards
Semi-annual Meetings: Winter and Summer
the Certified Legal Assistant (CLA) designation.
blication:
Nat'l Ass'n of Limited Edition Dealers (1975)
Facts and Findings. bi.-m.
26 S. La Grange Road, La Grange IL 60525
Nat'l Ass'n of Margarine Manufacturers (1920)
nual Meetings: July
Exec. Director: Ray Kiefer
1989-Honolulu, HI(Hawaiian Regent)/June
1101 15th St., N.W., Suite 202, Washington DC 20005
Members: 275 companies Staff: 1
Exec. Director: Charles Ehrhart
Annual Budget: $100-250,000 Tel: (312) 482-3650
Members: 15-20 companies Staff: 2-5
Hist. Note: Members are dealers, vendors, and publishers
Tel: (202) 785-3232
1 Ass'n of Legal Investigators (1967)
involved with collectibles and gifts. Membership: $100/yr.
Annual Meetings: March
outh 29th St., Belleville IL 62223
Publications:
ALI Comptroller: Anthony M. Golec
Bulletin. q.
embers: 500
Newsletter. m.
Nat'l Ass'n of Marine Products and Services
nual Budget: $50-100,000 Tel: (618) 235-2830
Journal. semi-a.
(1972)
IL Note: NALI conducts a certification program for the legal
Annual Meetings: July
401 North Michigan Ave., Chicago IL 60611
nvestigator profession. Membership: $80/yr.
1988-South Bend, IN
President: Jeff W. Napier
225
The information in this directory is available in Mailing List form. See back insert.
Briefing
MAM
Volume XIV
A Weekly Summary
National Association
Number 4
of Legislative and
of Manufacturers
February 27, 1989
Regulatory Developments
Washington, D.C.
NAM Congress of American Industry
To Feature President George Bush
NAM is proud to announce
Chrysler Corporation Chair-
that President George Bush
man Lee A. lacocca and a
will address the 93rd Con-
host of other leaders from
gress of American Industry
the administration, Con-
on Thursday, March 23. The
gress and the private sector.
association's "New Leader-
The Congress of American
ship Summit" will also
Industry will be held March
feature presentations by
22-23 at the Mayflower Hotel
Vice President Dan Quayle,
in Washington, D.C.
Register Today!
Call Betty Williams at (202) 637-3022
Corporations Face Billions of Dollars
health costs can deviate radically from projections as the
In Retiree Health Care Liabilities
use of benefits fluctuates and new technologies and
treatments are introduced.
U.S. corporations face a cumulative total of $400 billion
FASB began work on the proposal nearly a decade ago
or more in unfunded retiree health care liabilities,
and kept the business community abreast of its plans in
according to the federal government. Accounting for
general terms by releasing discussion drafts. The board
these liabilities could have a devastating impact on the
will accept comments through 8/14/89 and will conduct
earnings statements of many companies. These concerns
hearings in New York and Washington in October and
were amplified 2/14. when the Financial Accounting
November. NAM is examining the proposal and will
Standards Board (FASB) issued a long-awaited proposal
submit comments later this year.
that would require companies to record unfunded retiree
The FASB proposal is likely to focus increased con-
health benefit obligations as liabilities on corporate
gressional and press attention on legislative proposals
balance sheets. The proposal is slated to take effect in
dealing with the funding of retiree medical benefits. Rep.
1992.
Rod Chandler (R-WA-8) intends to offer legislation
Since retiree health benefits are not currently tax-
designed to provide employers with tax incentives to pre-
deductible, most employers do not prefund in anticipa-
fund retiree health insurance. Rep. Richard Schulze (R-
tion of these liabilities. They instead account for the
PA-5) is expected to offer an alternative proposal on the
benefits on a pay-as-you-go (cash) basis. The FASB pro-
issue in the coming weeks.
posal would require firms to account for future retiree
NAM recognizes the responsibility that employers
health liabilities in their financial statements.
share-with Social Security and personal savings-in pro-
Retiree medical expenses constitute a growing burden
viding workers with adequate retirement security. The
for employers, both because of health care inflation and
association encourages the adoption of legislation that
demographic factors. An A. Foster Higgins & Co. study
of 1,600 employers covering 10.5 million workers showed
health care costs rose 18.6 percent last year, over three
Inside
times the rate of inflation. In terms of demographics,
studies show that the current three-to-one ratio of
2 Foreign Investment Bill Headed for House Floor
workers to retirees at the average U.S. company will
drop to two-to-one by the year 2000. Planning for retiree
2 NAM Testifies on Global Climate Change
health expenses is further plagued by unpredictability.
3 RICO Reform Legislation Introduced
Whereas pension benefits can be defined in advance,
4 Waste Minimization Success Stories
2
would facilitate prefunding of retiree health benefits on a
tax-favored basis, including tax-deductible employer contri-
NAM Welcomes
butions and the voluntary use of surplus pension assets.
New Commerce Secretary
NAM-Opposed Foreign Investment
Bill Headed for House Floor
Floor action is possible as early as this week on NAM-
opposed foreign investment disclosure bill H.R. 5, despite
Photo: Bruce Reedy
the fact the measure has not been reviewed by a House
committee.
House Speaker Jim Wright (D-TX-12) planned to dis-
charge H.R. 5-sponsored by Rep. John Bryant (D-TX-
5)-from the House Energy and Commerce Committee
and bring the bill to the floor for a vote last week. The
speaker postponed the vote until at least this week in the
face of strong opposition from the business community,
the Bush administration and members of both parties.
NAM and four other business groups 2/14 sent a letter
Secretary Mosbacher (left) talks with Control
to House members arguing that H.R. 5 remains contro-
Data Corporation Chairman, CEO and Presi-
versial and deserves the benefit of proper committee
dent Robert M. Price, and Senior Vice Presi-
dent for Government Affairs Lois D. Rice.
review. "In bypassing the committee process, substan-
tive input from industry is essentially precluded," the
letter noted.
Commerce Secretary Robert Mosbacher was welcomed to
The business groups' letter called H.R. 5's provision
Washington 2/16 by representatives of some 100 NAM member
that would allow broad public access to foreign inves-
companies. The new cabinet member expressed his interest in
tors' financial data "counterproductive." "Companies
developing a strong working relationship with the business
cooperate with the U.S. government because they believe
community and reiterated President Bush's commitment to the
the government will protect the confidentiality of their
nation's industrial competitiveness. He also called on the manu-
proprietary information," the letter cautioned. "The dis-
facturing community to support the president's budget proposal.
closure provision is discriminatory and could block con-
Secretary Mosbacher is one of several cabinet members who
structive investments and joint ventures between the
will address the NAM Congress of American Industry, March
U.S. and foreign-owned enterprises."
22-23.
In an impressive show of unity, Treasury Secretary
Nicholas Brady and six other cabinet officers sent a
letter 2/16 to the House strongly opposing H.R. 5. The
measure "constitutes a sharp change in U.S. policy from
NAM strongly opposes H.R. 5 and attempts to expedite
one of open investment to one of discrimination," the
floor action on the bill. Member companies should
letter argued, and at the very least should be considered
immediately contact their representatives and urge them to
through the normal committee channels. All seven
vote against the measure should it reach the floor.
cabinet members said they would recommend a veto
should H.R. 5 reach the president's desk.
NAM Embraces Global Climate Change
House Ways and Means Subcommittee on Trade
Research Bill
Chairman Sam Gibbons (D-FL-7) wrote a strongly
worded letter to Speaker Wright protesting premature
NAM favors "an integrated mechanism for research on
floor action on H.R. 5. Gibbons noted that the new
the science and possible impact of global climate
administration had not been provided an opportunity to
change," Thomas G. Lambrix, director of government
address the issue and develop alternative
relations for Phillips Petroleum, told the Senate
recommendations.
Commerce, Science and Transportation Committee on
behalf of NAM on 2/22.
Lambrix's testimony addressed legislation-S. 169, the
National Global Change Research Act-sponsored by
NAM Briefing (USPS 432-110) is published weekly during ses-
Commerce Committee Chairman Ernest Hollings (D-SC).
sions of Congress by the National Association of Manufacturers,
1331 Pennsylvania Avenue, NW. Suite 1500-North Lobby,
The bill seeks to further coordinate existing federal
Washington, DC 20004-1703. Subscriptions: $50 included in
global climate change research programs.
NAM membership; nonmembers $200 a year.
Lambrix discussed three "central elements" to NAM's
Chairman of the Board: Richard E. Heckert
position on global climate change:
President: Alexander B. Trowbridge
Non-natural global climate change is a potentially
Editor: Douglas R. Kurkul
serious issue that NAM is taking seriously. Lambrix
Assistant Editors: John Cohen, Laura Pettey
pledged that manufacturers will continue to work
Postmasters: Send address changes to Briefing, National
toward a better understanding of global climate change,
Association of Manufacturers, 1331 Pennsylvania Avenue, NW,
and will actively participate in the international debate
Suite 1500-North Lobby, Washington, DC 20004-1703. Second
class postage paid at Washington, DC, and at additional mailing
about its causes, effects and possible solutions.
offices.
Good science must be the foundation for policy
actions. "Achieving international consensus on what we
3
know and don't know about enhanced global climate
change is essential," Lambrix stressed. NAM supports
aggressive research to better define the problem, prove or
disprove theories, and analyze the impact of proposed
response strategies.
Global cooperation is crucial. "Unilateral actions by
LOL
LOBBYING
the U.S., no matter how well intentioned, will not be suf-
ficient and could be harmful to achieving solutions,"
CONGRESTORY
MADE
Lambrix cautioned. "We must be concerned with shocks
to our domestic and global economies."
EASY
Lambrix warned against a "crisis management
approach" to global climate change. Our policy should be
to preserve the maximum degree of flexibility, he said.
Contains:
"What we do domestically should compliment the efforts
of the international community."
Address and phone number of every senator, representative,
An expanded and coordinated domestic research
delegate and governor.
agenda, such as outlined in S. 169, could serve as the
Address and phone number of every cabinet department, major
basis from which to proceed in the future, Lambrix said.
executive office and independent agency.
However, he explained, industry cannot be expected to
Complete roster of all standing committees-including party
make significant long-term commitments based on cur-
ratios and seniority rankings.
rent incomplete and conflicting data. "We cannot afford
House and Senate leadership information, and more.
to place the competitiveness of our manufacturing sector
in jeopardy based on any speculative theory."
ORDER YOUR COPY TODAY!
"Any solutions to this global issue should be global in
1-10 copies: $4.00 11-25 copies: $3.50 26 or more copies: $3.25
nature," Lambrix concluded. Therefore, he advised, uni-
(District of Columbia residents add 6% sales tax; California residents
lateral actions would likely be insufficient and damaging
add 6.5% sales tax.)
to U.S. competitiveness. Lawmakers should only
focus on multilateral solutions and a careful study
(Includes postage and handling.)
of the cost and environmental impact of all proposed
ORDERS UNDER $20 MUST BE PRE-PAID
response strategies.
Please send me
copies of the NAM 101st Congress
Directory.
RICO Reform Bills Introduced
Purchase Order #
in House and Senate
Name
With a groundswell of bipartisan support from the busi-
Title
ness and labor communities, comprehensive proposals to
Organization
reform federal racketeering law were introduced in both
the House and Senate 2/22. Sens. Dennis DeConcini
Address
(D-AZ) and Orrin Hatch (R-UT) introduced S. 438, and
Reps. Rick Boucher (D-VA-9) and George Gekas (R-PA-17)
City/State
Zip
introduced H.R. 1046, legislation to revamp the
Racketeer Influenced and Corrupt Organizations Act
Clip this ad and send (with purchase order, or make check payable to
National Association of Manufacturers, as required) to:
(RICO).
The 1970 RICO statute was enacted to stem organized
NAM Publications Coordinator
1331 Pennsylvania Avenue, NW
crime infiltration into legitimate businesses. The statute
Suite 1500 - North Lobby
includes a civil provision allowing individuals and local,
Washington, D.C. 20004-1703
state and federal governments that have been harmed by
racketeering activity to sue companies and collect triple-
MAIL ORDERS ONLY!
damage awards. In recent years, the RICO civil statute
has been abused by private plaintiffs who attach RICO
claims to a broad range of ordinary business suits. An
governments, plaintiffs injured because of insider-trading
American Bar Association report indicated that only 9
violations and consumers who were victims of fraud.
percent of the 260 federal civil RICO trial court decisions
An NAM-led coalition of business and labor groups
reported from 1980 to 1984 involved allegations of crimi-
worked on behalf of a RICO reform bill in the last
nal activity normally associated with racketeering.
Congress. The measure would have allowed plaintiffs to
The new RICO reform proposals would effectively
collect triple damages only when a defendant had been
limit the ability of individuals or competing firms to
convicted of a criminal racketeering offense. While a
extort expensive triple damage awards from ordinary
compromise proposal emerged from the Senate Judiciary
business disputes. Plaintiffs could continue to sue for
Committee, it failed to reach the Senate floor for a final
triple damages if the defendant had been previously con-
vote.
victed of a RICO offense. Certain government officials
With the consensus for RICO reform clearly established,
also still could sue for triple damages. Additionally, the
NAM is again leading a coalition pushing for reform
legislation would allow actual damages, court costs and
legislation in the 101st Congress. NAM is urging
attorney fees to be awarded to specialized units of local
association members to strongly back S. 438 and H.R. 1046.
4
NAM Members Share Waste Minimization
trum of groups, including environmentalists, to establish
Success Stories
the most effective waste management strategies possible.
EPA's Gerry Kotas applauded industry's voluntary
With Congress likely to consider a variety of potentially
waste minimization initiatives. He said one of the
costly hazardous waste management proposals in the
agency's goals is "to integrate a pollution prevention
coming months, NAM is promoting the voluntary reduc-
approach into regulation." Kotas called for a "public and
tion of hazardous waste generation as the optimal
private sector shift in emphasis" in waste management
control strategy. A panel of public and private sector
strategies toward waste minimization.
waste management experts shared waste minimization
NAM, in conjunction with ENSR, has published a
success stories with reporters 2/16 at an NAM press
"how-to" guidebook examining proven strategies for
breakfast.
minimizing the generation of hazardous waste at the
The session featured representatives from two NAM-
plant level. Entitled "Waste Minimization: Manufactur-
member companies that are leading the way in waste
ers' Strategies for Success," the publication is designed
minimization breakthroughs: Robert P. Bringer, staff
for small to medium size companies interested in estab-
vice president, 3M Environmental Engineering and
lishing voluntary waste minimization programs.
Pollution Control; and Harry Fatkin, Polaroid director of
To order, send $19.95 ($29.95 for nonmembers) to
health, safety and environmental affairs. Also joining the
NAM Publications Coordinator, 1331 Pennsylvania Ave.
discussion were Gerry Kotas of the Environmental Pro-
NW, Suite 1500-North Lobby, Washington, D.C. 20004.
tection Agency (EPA), and Dr. Richard Siegel and Robert
Quantity discounts are also available.
Rittmeyer of ENSR Consulting and Engineering (for:
mally ERT).
Senate To Consider Further
Robert Bringer said 3M's Pollution Prevention Pays
(3P) program is now in its 14th year. "We're seeking out
Restrictions On Pension Asset Reversions
projects that not only prevent pollution and help the
environment, but also that have a payback," Bringer
Legislation ostensibly designed to ensure that employees
explained. He said 3P programs have provided a cumula-
and retirees receive a "fair share" of excess pension plan
tive total of $420 million in first-year savings alone. Cur-
assets will be introduced next month, Sen. Howard
rently, 3M has some 2,000 waste reduction projects under
Metzenbaum (D-OH) told the Senate Subcommittee on
way in the U.S. and overseas.
Labor at a 2/9 hearing on the treatment of surplus pen-
Polaroid's program strives to reduce the quantity
sion funds. Organized labor, senior citizen activist
generated of all types of waste-both hazardous and non-
groups and some members of Congress claim that
hazardous-Harry Fatkin explained. The program,
defined benefit pension plan assets represent "deferred
designed to be implemented over the next five to 10
wages" and therefore should belong to workers and
retirees. Often, what is not clarified in this debate is the
years, is a long-term approach to voluntary waste min-
imization. Polaroid has sought input from a broad spec-
fact that employers have promised employees a specific
benefit and have assumed all of the investment risks
when funding that benefit. Accordingly, current law
PRODUCT LIABILITY REFORM
rightfully holds that once benefit obligations are satis-
fied, the employer can recoup any excess.
"FLY-IN"
In an attempt to discourage pension reversions and
raise revenue, the 1988 tax technical corrections law
March 21-22, 1989
permanently increased the excise tax on pension asset
Mayflower Hotel, Washington, D.C.
reversions from 10 to 15 percent, in lieu of a Metzenbaum
proposal for a temporary 60 percent increase. At the
Be part of the manufacturers' march on Capitol Hill as we catapult
same time, the Treasury Department agreed to withhold
the issue of product liability reform to the top of the congressional
final determinations on pension plan reversions and
agenda! Join manufacturers nationwide as they converge on Con-
terminations through 5/1/89. At the hearing, Metzen-
baum, chairman of the Senate Labor Subcommittee, said
gress to DEMAND a fair national product liability reform bill
-NOW!
he intends to have his reversion legislation passed by the
5/1 deadline.
Hear from the experts on the prospects and politics behind this
NAM plans to submit a statement to the panel
year's reform efforts. Join us for a Tuesday evening congressional
strongly opposing any limits on employer access to sur-
reception and a Wednesday morning breakfast with the con-
plus pension funds. The association will emphasize that
gressional sponsors of this year's reform effort.
limiting employer access to surplus assets would jeop-
ardize worker retirement security by encouraging
FLY-IN
COME TO WASHINGTON
employers to fund plans at the minimum allowable levels
ON MARCH 21-22
or discourage them from offering plans at all. If excess
FIGHT FOR PRODUCT
assets are deemed to belong to someone other than the
LIABILITY REFORM - NOW!
employer-sponsor, it would amount to the government
1234084
March
mandating higher pension benefits than originally prom-
Washington.
D.C.
To register, call Karen Ehler at
ised to employees.
LIABILITY
(202) 637-3136.
The number of pension reversions has decreased
significantly during the past three years, due in part to
*This event precedes NAM's Congress of American Industry by one day.
the 10 percent excise tax enacted in the Tax Reform Act
of 1986. According to the Pension Benefit Guarantv
5
Corporation, the number of reversions dropped from 581
in 1985 to 166 in 1988. Given this trend, there is no
Safety Recording
overwhelming need to further restrict reversions.
SAFESystem
Enters the
Standardized Accident Frequency
New Process Patent Provisions Take Effect
and Evaluation System
Computer Age
Title IX of last year's omnibus trade act took effect last
week. The law includes a sweeping process patents title,
NAM is now making available P.C. diskettes that
which now makes it an act of infringement to import
allow companies to track and analyze internal data
into this country-or to use or sell in the U.S.-a pro-
on accidents and illnesses in the workplace. The
duct made through the unauthorized use of a U.S. pat-
diskettes, designed to conform to NAM's SAFE
ented process.
(Standardized Accident Frequency and Evaluation)
The law provides existing patent holders with new
System, produce a full set of standard and unlim-
rights to exclude others from using, selling or importing
ited ad hoc reports that can be used to analyze
into the U.S. products made with the patented process.
safety at your plant or company. Join companies
Many NAM members will also incur new responsibili-
like B.F. Goodrich and Pennwalt Corporation. Buy
ties. If a material or its precursor is made by a patented
a set today, and plan to participate in the SAFE-
process, the importation, use or sale of that material can
expose a firm to costly litigation. Infringers can now be
System by submitting your data to NAM for com-
held liable for damages in U.S. District Court, a pre-
parison with others in your industry.
viously unavailable remedy. The provisions are governed
The diskettes and instruction manual cost $995,
by complex disclosure and response procedures, marking
plus $50 for each additional order.
requirements and specific exceptions.
For details, call Jeffrey Colburn at (301) 937-
NAM urges its members to familiarize themselves with
1238, or write NAM SAFESystem, 1331 Pennsyl-
their new rights and responsibilities. The association has
vania Ave. NW, Suite 1500-North Lobby, Washing-
produced a publication, HOW: Working with the New
ton, D.C. 20004.
Process Patent Law, which can be purchased for $19.95
per copy ($29.95 each for nonmembers). Orders can be
mailed to Publications Coordinator, NAM, 1331 Pennsyl-
vania Ave. NW, Suite 1500-N, Washington, D.C. 20004-
would do everything possible to deliver a draft clean air
1703. For information on quantity discounts, call (202)
package to Congress "ahead of everything else."
637-3158.
EPA is reportedly in the process of drafting acid rain
proposals that would combine mandated scrubbers at
Stage Still Being Set For Clean Air Debate
some coal-fired power plants, subsidies for scrubbers and
clean coal technologies, and flexibility to choose the
Though President Bush has emphasized the need to take
method of compliance. An EPA proposal is not expected
action on clean air, his administration is still drafting a
to reach lawmakers until the spring.
proposal spelling out his positions on specific issues. The
The Senate's leading advocate for a clean air law
president's clean air blueprint-once it is delivered to
rewrite-Majority Leader George Mitchell (D-ME)-is
Capitol Hill-will likely trigger this year's debate.
now in a position to guarantee a floor date for a clean air
In his first appearance before a joint session of Con-
bill. Former Majority Leader Robert Byrd (D-WV) helped
gress 2/9, the president said he would soon submit an
block floor consideration of a Mitchell clean air bill-S.
acid rain proposal with "time certain" reductions in sul-
1894-in the 100th Congress.
fur dioxide (S0₂) emissions. President Bush's pick for
Sen. Max Baucus (D-MT)-who has replaced Mitchell
Environmental Protection Agency (EPA) administrator,
as chairman of the Environment Committee's subpanel
William Reilly, said during Senate confirmation hearings
with jurisdiction over clean air legislation-is reportedly
that clean air legislation was a top priority and that he
considering whether or not to use S. 1894 as a starting
point for this year's debate. The Mitchell bill contains
provisions regulating acid rain, ozone and air toxics.
The House clean air debate is likely to focus on areas
NAM Conference to
that are not in compliance with the federal ozone
Recognize American Ingenuity
standard established by the Clean Air Act. A mora-
torium on EPA sanctions against these nonattainment
NAM's Congress of American Industry-March 22-23 in
areas expired 8/31/88 and was not renewed by the 100th
Washington, D.C.-will include the presentation of the
Congress. The House Energy and Commerce Committee
Coors American Ingenuity Award. Adolph Coors Com-
will likely consider legislative solutions to the non-
pany, an NAM member, created the award in 1986 to honor
individuals who have forever changed the way business is
attainment problem in lieu of EPA sanctions. A group of
done in the U.S. This annual award recognizes individuals
nine Democrats has reintroduced a moderate non-
whose accomplishments are due largely to innovation and
attainment proposal, H.R. 99, but the measure has been
perseverance. As a company which recognizes the impor-
assailed by environmentalists as too lenient.
tance of ingenuity for the future of this country, Adolph
NAM believes the existing Clean Air Act is working, and
Coors Company seeks nominees who have had the courage
supports the development of clean coal technologies and a
to bring forth new ideas, but may have done SO without
reasonable nonattainment solution. However, the associa-
widespread recognition, for possible future selection.
tion opposes stringent acid rain controls and arbitrary non-
attainment sanctions legislation.
6
Pending Issues
Alaska Energy: Senate Energy and Natural Resources Com-
3/8 to allow time for administration to address issue. Bill
mittee Chairman Johnston (D-LA) 2/9 introduced legislation-
would raise wage to $4.65 per hour in three stages by 1/1/92.
S. 406-to open Alaska's Artic National Wildlife Refuge
No action yet on H.R. 2 (Hawkins-D-CA-29). NAM opposes.
(ANWR) to competitive oil and gas leasing. Cosponsored by
Ranking Republican Sen. McClure (R-ID), is similar to measure
Product Liability: Legislation yet to be introduced, but pro-
cleared by Energy panel last year on 11-8 vote. Stage set for
ponents working to garner support. NAM sponsoring Product
ANWR debate in House Interior Committee. Both sides have
Liability Fly-in on 3/21-22 in conjunction with Congress of
staked out legislative positions: Committee Chairman Udall's
American Industry. Program will bring participants up to date
(D-AZ-2) bill-H.R. 39-would block all development; Rep.
on the product liability reform drive and emphasize to law-
Young's (R-AK-AL) measure calls for limited leasing. NAM
makers the critical need to pass federal reform legislation this
supports environmentally safe ANWR development.
year. For details, call (202) 637-3136.
Comparable Worth: No action yet on H.R. 41 (Oaker-D-OH-
R&D Allocation: Tax technical corrections law enacted
20), bill to require comparable worth study of federal labor
force. Referred jointly to Education and Labor Committee and
11/10/88 increases Section 861 allocation from 50 to 64 percent.
Post Office and Civil Service Committee. NAM opposes.
Measure is only effective for first four months of taxpayer's
first taxable year beginning after 8/1/87. Section 861 regulates
Deficit Commission: National Economic Commission (NEC)
allocation of R&D expenses to foreign and domestic-source
income. NAM supports enactment of permanent solution to
scheduled to issue final budget-cutting recommendations to
Congress and the president by 3/1/89 deadline. NAM strongly
current regulatory inequities.
supports commission's goals.
R&D Tax Credit: R&D tax credit extended at 20 percent
Family and Medical Leave: House Education and Labor
level through 1989 in tax technical corrections law enacted
Subcommittee on Labor-Management Relations to mark up H.R.
11/10/88. Bush FY 90 budget proposal includes permanent
770 (Clay-D-MO-1) on 2/28. Full committee markup 3/8.
R&D tax credit. NAM strongly supports permanent enactment
Would require employers to provide government-mandated
as an effective way to promote a U.S. commitment to techno-
leave benefits. NAM opposes.
logical competitiveness.
Hostile Takeovers/Leveraged Buyouts (LBOs): Four
South Africa: Rep. Dellums (D-CA-8) reintroduced sweeping
House committees and two Senate panels have held or sched-
South Africa sanctions legislation-H.R. 21-that is very sim-
uled hearings on LBO issue. NAM has formed Takeover/LBO
ilar to bill passed by House last August. Bill-referred to same
Task Force to help formulate proposals that slow takeover-
seven committees that reviewed last year's measure-would
related abuses without hampering free market forces or eco-
block flow of virtually all trade and investment between the
nomic growth.
U.S. and South Africa. Senate measure not yet introduced as
sanctions proponents prepare 101st Congress strategy. NAM
Minimum Wage: Markup of S. 4 (Kennedy-D-MA) in
opposes additional sanctions.
Senate Labor and Human Resources Committee delayed until
For more information about the issues covered in Briefing, contact the NAM
Legislative Analysis Department, (202) 637-3187. Each week's Briefing is available prior to publication
by 3:00 p.m. (ET) the previous Friday on NAMNET - NAM's public policy electronic network.
MAM
Second Class
National Association
NAM Congress of
of Manufacturers
American Industry
1331 Pennsylvania Avenue, NW
Suite 1500 - North Lobby
Newspaper Postage Paid
March 22-23, 1989
Washington, DC 20004-1703
Washington, D.C.
MAM
Richard E. Heckert
Richard E. Heckert, chairman of the National Association
of Manufacturers; chairman and chief executive officer of
the Du Pont Company; and chairman of the Board of Trustees
of the Carnegie Institution of Washington, is widely recognized
as a spokesman on education issues from the employer's perspective.
As chairman of the National Academy of Sciences study
on High Schools and the Changing Workplace, Heckert played
a leading role in focusing the attention of business leaders
on the issue of educational underperformance in the United
States and in generating support for remedial action. He
has testified on education frequently at Congressional hearings.
Heckert is a member of the National Board for Professional
Teaching Standards, the Joint Council on Economic Education,
the Delaware Council on Economic Education, the National
Action Council for Minorities in Engineering, and the Business
Advisory Commission to the Education Commission of the States.
He is a director of the University of Illinois Foundation;
Dean's Associate of the Business Advisory Council of Miami
University, Oxford, Ohio; a member of the Board of Visitors
of Berry College; and a trustee of Tuskegee University.
Heckert is also an internationally recognized spokesman
on world trade and the competitive position of U.S. industry.
A former member by Presidential appointment of the Advisory
Committee for Trade Negotiations (1978-1987), he is a member
of the Bretton Woods Committee and the Council on Competitive-
ness. He has brought the perspective of scientist and patented
inventor to speeches and papers on the related subjects of
education and America's competitive position.
A native of Oxford, Ohio, Heckert graduated from Miami
University in Oxford in 1944, with a Bachelor of Arts degree.
From 1944-'46 he served in the U.S. Army with a special engineer-
ing detachment at the Oak Ridge, Tennessee, atomic energy facility.
He received a Master of Arts degree and a Doctor of Philosophy
in organic chemistry from the University of Illinois before
joining Du Pont in 1949 as a research chemist.
-NAM-
15 March 1989
Dear Ms. Martin:
As I mentioned on the phone,
a sound educational system is
essential to NAM member companies
if they are to have alert, inform-
ed, proud and productive employees.
Our efforts to encourage and
support such systems are led by
NAM Chairman Richard Heckert of
Du Pont, whose own impressive
credentials to do so are attached.
Please note also two high-
lighted sections from NAM stud-
ies about "continuous learning"
and the role of an educated and
motivated workforce as a "compet-
itive resource."
Call me at 637-3089 if you
have any DAVID B. BOWES questions.
Vice President
Communications
Divid
MAM Bowes