Manufacturers Say Onerous and Redundant Regulations are Stifling Growth

As the Trump administration continues to eye regulations, some manufacturing organizations are concerned that government mandates are holding back the industry.

Considering the strong rebound of American manufacturing in recent years, it’s hard to prove this point. Yet there is a consensus that a number of onerous and redundant federal regulations are, at the very least, limiting further growth and potential in the global economy.

The Manhattan Institute is one organization leading the pack of those voicing concerns. Senior fellow Mark Mills says while new technologies are making American firms more competitive than ever, an “overbearing regulatory state” stands to hold the industry back. Mills says a $60 billion budget and an “army” of 300,000 regulators are creating headwinds that cost small manufacturers an average of $20,000 per employee, twice the burden as for other businesses.

“That’s far more than they pay in taxes, and at least double the compliance costs non-manufacturers experience. For small manufacturers, regulatory compliance costs nearly $35,000 per year per employee,” Mills said.

“a $60B budget and an army of 300,000 regulators are creating headwinds that cost small manufacturers an average of $20,000 per employee, twice the burden as for other businesses.”

The Trump administration recently announced it would soon unveil a plan to trim regulations in the industry. After three months of study and consultation with manufacturers, the Commerce Department reviewed 171 public comments and is preparing to announce a “hit list” of regulations to be streamlined or eliminated to reduce the burden on manufacturers.

The forthcoming report “will identify a lot of problems and lay out ways to take responsible actions.” One common theme heard from the industry is the desire to reject tightened ozone rules under the U.S. Clean Air Act’s National Ambient Air Quality Standards. Industry trade groups and manufacturers such as 3M argue this would raise costs and expose them to new permitting hurdles. The National Roofing Contractors Association said meeting such new regulations would require new engineering controls in the industry and would be prohibitively expensive.

Some smaller manufacturers also say regulations can hamper operations. Taylor Guitars, for example, a small guitar manufacturer in El Cajon, Calif., told Reuters that the firm even needs permits from the Fish & Wildlife Service to use mother-of-pearl inlays in its guitars. Taylor said the shell is not a species protected under law and that the declaration “does not seem to serve any conservation or other purpose.” Charlie Redden, Taylor’s director of supply chain, said that new regulations are also impacting their ability to obtain high-end wood materials.

The Plastics Industry Association also said that while regulations are necessary, they should be written in a “fair process” and benefit the people they are intending to protect. The association said in a statement that manufacturers, including the plastics industry, face “overwhelming costs associated with the need to comply with government regulations.”

The National Association of Manufacturers released a report earlier in the year which found that manufacturers face nearly 300,000 restrictions from federal regulations. NAM’s survey also found that nearly 90% of manufacturers said if its compliance costs were significantly reduced, it would reinvest in hiring, R&D or capital replacement.

SHARE
Craig Guillot
Craig Guillot is a business writer based in New Orleans, La. His work has appeared in Wall Street Journal, Entrepreneur, CNNMoney.com and CNBC.com. You can read more about his work at www.craigdguillot.com.

PARTNER CENTER