Tale of two manufactering plants

Today in South east Pennsylvania two different press conferences were occurring at two different manufacturing plants. Both press conferences were being held to discuss the fiscal cliff. One was held at the manufacturing facilities of the Rodon Group, an injection molding company that makes toys for the popular K’Nex  brand. President Obama was at this plant talking about the fiscal cliff.  His idea was to raise taxes on those that make over 250,000 dollars a year. Only 2% of Americans make over this threshold. The president believes this will solve our deficit crisis and save jobs. However this will not help the United States debt. Most estimates see that an additional 80 billion will be raised. This is about 5 to 10% of the annual deficit.

Over in Ivyland another press conference was being held at the Manufacturing plant of American Bar Products. This press conference was loaded with heavy hitters in the business community which included Gene Barr President of the PA Chamber of Business and Industry, David Taylor Executive Director of Pennsylvania’s Manufacturers Association and Kevin Shivers Pa State Director of NFIB. These Business leaders spoke out against President Obama’s plan and indicated that it would in fact hurt small business in this country.  

American Bar Manufacturing plants makes steel bars for all sorts of applications. The owner of American Bar, William Marsh, said eloquently “How do we compete on a global market where we are competing against lower labor cost around the world. The only way to compete and pay high wages is to have high labor productivity. The only way to have high labor productivity is to have the best equipment. The only way to have the best equipment is to continually innovate, Invest and sometimes fail.  Innovate again until it works.” So what is the impact of the Presidents policy?  Marsh went on to explain that companies like American Bar have very little debt. That means that capital expenditure on innovation and equipment are financed solely on earning IE profit. Marsh explained that “higher taxes mean lower amounts of retained earnings. Lower amounts of retained earnings means lower amounts of capital investment, lower innovation, less hiring, lower wage growth..”

Marsh went on to explain from a small business point of view, “If you raise tax on productive work,  people will work less and there will be less profit. With less profit there is less NOT MORE government revenue.  The impact of the Presidents policy will be, less business investment, less capital expenditure, less innovation, less capital accumulation, lower productivity growth, lower employment growth, and lower wage growth. If this is true why is the president proposing these policies of raising taxes? “

David Taylor, VP of Pennsylvania Manufacturers Association, Described Obama’s tax plan as an “obsessive fixation with tax increases; he fails to realize that most of PA manufacturers are structured to pay business taxes at the personal rate.” Taxing these folks takes away the working capital of their businesses, robbing them their ability to expand their business operations and increase pay roll.”

Gene Barr, President of the PA chamber, Gave a broad view of the fiscal Cliff.  He explained the impact of Obamacare and stated that we have “ an administration that believes prosperity comes from government.”

Ana Puig Co-Chair of the Kitchen Table Patriots and FreedomWorks PA had a grassroots perspective. She pointed out that when these “crisis” happen, the tax hikes are immediate while the spending cuts are promised.

Kevin Shivers, From NFIB said it best, “there are over 250,000 small businesses in Pennsylvania and President Obama found one who actually supported his tax plan. Well, I represent about 15,000 members that oppose the president’s tax plan.”

Over all, for a press conference held in a hard to find manufacturing site, there was a great turn out from the public.  The message needs to get back to the White House that the people understand what is going on and hopefully we will rain in spending and avoid the fiscal cliff.