From the Old Slater Mill, in Pawtucket, to modern submarine production, at Quonset Point, the manufacturing sector has always been central to Rhode Island’s economy. Simply put, in the Ocean State, a strong manufacturing sector means a strong economy. Now, as we face our 21st month of double-digit unemployment, we must do more to revitalize the state’s proud manufacturing sector.
Over and over, I’ve traveled around the state to meet with local manufacturers, listen to their frustrations and discuss ideas to help their businesses grow. During these visits I heard one theme over and over again: Unfair foreign competition is killing domestic industries. One Pawtucket manufacturer told me that it recently lost 8 percent of its business to a Chinese competitor. If we want to keep manufacturing jobs, we need to level the playing field with foreign competitors.
I have announced my own plan to help manufacturers keep good jobs in America. My “Making It in Rhode Island” plan will help local companies compete against foreign rivals, provide continued access to credit for small businesses, bolster support services for local manufacturers and help small businesses facing bankruptcy keep their doors open and avoid layoffs.
The first bill in this package — the Offshoring Prevention Act — would end a perverse tax incentive that rewards companies for shipping jobs overseas. It makes no sense that our tax code lets a company delay paying income taxes on profits made through overseas subsidiaries. My bill would stop this practice for profits earned on manufactured goods exported to the U.S. We should not reward companies for eliminating American jobs.
In addition to dealing with inequity in the tax code, domestic manufacturers also face unfair currency manipulation, most notably from China. The Chinese government has long kept that nation’s currency artificially cheap relative to the dollar, making Chinese goods inexpensive for U.S. consumers, and American goods expensive in China. This manipulation makes it hard for our manufacturers to compete with cheaper Chinese goods both at home and abroad. While the Obama administration has made some progress over the past year in addressing this, I believe it needs to ramp up efforts to encourage China to stop this unfair practice, and I strongly support legislation that would allow tariff adjustments to counter currency manipulation.
Helping our companies compete globally is essential, but we also need other efforts to support their expansion at home. I supported a provision of the Recovery Act to make it easier for small businesses to obtain capital by waiving fees on Small Business Administration-backed loans. This program is scheduled to expire in March; I will work to extend it for as long as it takes the economy to recover.
I will also continue to support funding for the Manufacturing Extension Partnership and its Ocean State affiliate, the Rhode Island Manufacturing Extension Service (RIMES). This service provides affordable business consulting to manufacturers, a service that has helped hundreds of local companies expand, begin new product lines and create thousands of jobs. We need to make sure that RIMES can continue to help our businesses reach their full potential.
Finally, we need to support those businesses that have fared poorly in the recession. Unlike large companies, small family-owned firms do not currently have access to a feasible reorganization process in bankruptcy. These smaller companies typically go out of business because Chapter 11, with its high costs and elimination of owner equity, does not meet their needs. That costs our economy jobs, and denies these small businesses a second chance. So last year I introduced the Small Business Jobs Preservation Act, which would create a new bankruptcy process to help smaller companies stay in businesses and maintain jobs. This legislation would help preserve jobs at zero cost to the taxpayer, and will continue to be one of my top priorities in the new year.
The Rhode Island manufacturers with whom I’ve met haven’t asked for a government handout; they simply want fairer competition and some modest help to weather the downturn and ultimately grow and prosper. So this year, as our local manufacturers continue fighting to stay afloat against a rising tide of foreign competition and a bad economy, I’ll be fighting in Washington to make sure these businesses get the support they need to keep jobs in America.