Manufacturing Sees Boost in 2014 Budget
Despite significant spending cuts to Medicare and defense, President Obama’s proposed budget for Fiscal Year 2014 added funding across the board for manufacturers, reflecting his determination that the industry will be the lynchpin for building a stronger middle class.
The president called manufacturing a “first priority,” pointing to the recent addition of about 500,000 jobs within the American manufacturing market after 10 years of decline.
Helping to promote the continued growth of manufacturing jobs was a focus on individual STEM education and wages. Pre-kindergarten through 12th grade will be the first area of investment, followed by increased funding for job-specific training programs and an increase in the minimum wage to $9 an hour.
But job creation was not the only item on the agenda. To fund the 15 manufacturing innovation institutes that the president announced in his State of the Union Address, the proposed budget asked for $1 billion. Together, these hubs will create a National Network for Manufacturing Innovation (NNMI) that would bring together companies, university and community colleges, and government to co-invest in new manufacturing technologies.
In August 2012, the Administration launched the first of those hubs in Youngstown, Ohio with a $45 million funding commitment from five Federal agencies, led by the Department of Defense. Three new manufacturing innovation institutes are slated for launch later this year, and will be led by the Departments of Defense and Energy in partnership with the private sector.
On the manufacturing front, nano-manufacturing and bio-manufacturing were but two of the applications mentioned throughout the proposal. Helping to provide gains in those areas is a proposed $2.9 billion for Federal advanced manufacturing R&D at NSF, DOD, DOE, DOC, and other agencies, which represents 87 percent increase from 2012. Other areas that the government hopes will reap the benefits of this investment include robotics (through the National Robotics Initiative), advanced materials (through the Materials Genome Initiative), and defense technologies.
These two applications were again mentioned regarding the $754 million allotted for the Department of Commence’s National Institute of Standards and Technology (NIST) labs. Smart manufacturing was among another focus of NIST research going forward. The budget also includes $21 million for the Advanced Manufacturing Technology Consortia program, a public-private partnership that will map out the industrial research trajectory and provide funding for public, private and educational organizations working toward that end.
The DOE’s Office of Energy Efficiency and Renewable Energy (EERE) would receive more than three times the funding it received from 2012, boosting its funding for its Advanced Manufacturing Office to $365 million. However, these figures do not account for inflation. Nonetheless, it will be key for supporting one or more of the Manufacturing Innovation Institutes that are underway, and should help fund the Clean Energy Manufacturing Initiative (CEMI).
In turn, the resulting research should help to refine manufacturing processes to consume less energy and accelerate product development, but in light of recent research on materials manufacturing, it will be interesting to see how far this initiative will take us. In addition to a focus on manufacturing efficiency itself, the effort will also work to develop new manufacturing processes for advanced vehicles, biofuels, solar energy, wind energy.
The final recipient of funding for the development of new manufacturing technologies was the National Science Foundation (NSF), which would receive a $49 million bump that would raise its funding to $160 million.
Keeping Jobs at Home
Widening the scope from manufacturing technologies to the manufacturing sector as a whole, the proposed budget has also added support for domestic manufacturing through export initiatives, tax incentives, supply chain initiatives and investments within American manufacturing communities.
$520 million alone would go to Commerce’s International Trade Administration (ITA), which will in turn support the National Export Initiative. The ITA will focus on increasing exports, particularly from small businesses by enforcing free trade agreements with other countries. In addition, the President has launched an Interagency Trade Enforcement Center (ITEC) which has asked to receive $22 million to essentially act as an international trade referee to make sure that American businesses are on a level playing field with the rest of the world.
Also helping to keep business within our borders is the 2011 SelectUSA program, which would garner $20 million to help local elected officials compete with foreign businesses.
Kicking off a series of investments in collaboration centers is the Department of Commerce’s Manufacturing Extension Partnership (MEP), which would launch Manufacturing Technology Acceleration Centers (MTACs) with the help of a $25 million funding increase. These centers are meant to be industry-specific coordination points for related supply chains that will come alongside two additional centers funded by existing resources which will be announced this year. On the SMM scale, the Small Business Administration will be helping its American Supplier Initiative to identify new opportunities for small suppliers in the federal and commercial supply chains.
The Investing in Manufacturing Communities Partnership is another program that would launch under this proposed budget. This proposal would contribute $113 million to help bring grants to about five communities for manufacturing parks, manufacturing research and academic centers, and infrastructure.
Hand in hand with this is an $8 billion investment to a Community College to Career Fund, which will bolster collaboration between colleges and businesses in order to train a technically-adept workforce. This is meant to continue the efforts of the Trade Adjustment Assistance Community College and Career Training Grants, which expires in 2014.
As a part of this budget, manufacturers should see their tax rates lowered to 25 percent. The administration has also announced its support for making the Research & Experimentation (R&E) tax credit permanent, giving assurance that investments in U.S. innovation are worthwhile.
Finally, the budget includes $23 billion to encourage investments in renewable energy and energy-efficient practices, as a part of the administration’s plan to meet their 2020 goal to double generation from wind, solar, and geothermal sources. The Production Tax Credit for renewable sources would also become permanent and refundable. Similarly, the deduction for energy efficient commercial property would also become permanent. Tax credits for advanced energy manufacturing equipment and facilities for clean energy manufacturing total $4.8 billion.
The investments come out to a total $4.5 billion investment into manufacturing, once research, clean energy, insourcing, jobs and education are included. While some in the industry are unimpressed by the size of the investment, that number looks a lot bigger once you look at programs across other industries that are will be lost in the coming fiscal year.