April 28, 2008

Foreign Investment, Some Clarity Please

An op-ed in The Asian Wall Street Journal on the Committee on Foreign Investment in the United States, or CFIUS, which reviews foreign acquisition of more than 10 percent of a U.S. company, generally. Joshua Trevino of the Heartland Institute's Information Technology and Telecom News reports the system is clunky and may harm the economy.

By introducing an element of unpredictability into those capital flows, CFIUS does more harm than good. And this comes at a time when the U.S. economy is slowing and needs all the help it can get.

The number of "obvious" cases ripe for rejection – Iran buying centrifuges, for instance – is exceedingly rare. Among other reasons, this is because most of America's post-Cold War state enemies are too poor to buy important U.S. assets. So CFIUS does most of its work on "marginal" cases where there might be some grounds for concern but the potential threat to security interests isn't clear.

A reformed CFIUS would restrict itself to the scrutiny of deals involving actual enemies of the U.S. – for example, states on America's list of terror sponsors. Barring that, it would subject itself to judicial appeal.

The burden is on CFIUS to prove its activities are in the interest of national security, not protectionism, Trevino writes.

Posted by Carter Wood at 8:48 AM | Click here to comment | Send to a Friend

April 21, 2008

Export Promotion Hearing; NAM's Vargo to Testify

The House Committee on Foreign Affairs, Subcommittee on Terrorism, Nonproliferation, and Trade, holds a hearing at 10 a.m. Thursday: "U.S. Export Promotion Strategy." Testifying is the NAM's Frank Vargo, Vice President for International Economic Affairs.

Timely hearing, what with it being Small Business Week and all, and since NAM President John Engler spoke last Thursday at the annual conference of the Export-Import Bank. He highlighted an NAM member company, Air Tractor Inc., of Olney, Texas, featured in the Eximbank's annual report.

Developing markets are creating a growing demand for capital goods such as agricultural and construction equipment, but U.S. exporters often face limited availability of longer-term financing for borrowers in these markets. Air Tractor Inc., in Olney, Texas, a small-business manufacturer of agricultural and forest fire-bombing airplanes, has found an invaluable tool in Ex-Im Bank’s medium-term financing to increase its exports.

In 40 transactions over the past 12 years, Air Tractor has used the Bank’s medium-term insurance to export an estimated $20 million of its aircraft, primarily to small private-sector buyers in Argentina and Brazil. Exports now account for approximately 39 percent of the company’s total sales.

Posted by Carter Wood at 9:23 AM | Click here to comment | Send to a Friend

February 21, 2008

Shooting Down a Satellite

Good coverage of the successful destruction of a failing satellite at Wired's The Danger Room.

Posted by Carter Wood at 8:52 AM | Click here to comment | Send to a Friend

February 14, 2008

First Campaign: From the Author

Garrett Graff, author of "The First Campaign," was on "America's Business with Mike Hambick" last week -- available here -- talking about the intersection of technology (or more specifically, technological change), policy and politics. Graff comments today on his blog:

My relationship with NAM was one of the more interesting twists of the book: While ideologically we don't agree on much, one of my best sources/idea-bouncer-offers in writing "The First Campaign" was Pat Cleary, who at the time headed up communications at NAM. We found that we agreed on a ton of issues regarding trade, the economy, education, and even health care. I ended up featuring the story of Tony Raimondo, a member of NAM's board of directors, quite prominently in the book. American business has a lot in common with the progressive left on many of the First Campaign issues and it'll be interesting to see whether a thoughtful Democrat nominee can reach across the aisle and build some support in the business community. NAM, by the way, has an excellent blog that covers many of the First Campaign issues: Shopfloor.org.

And thank you for the kind comment.

Interestingly enough, the intersection mentioned above is getting even more crowded as Raimondo is running as a Democratic candidate for U.S. Senate in Nebraska. We don't plan to cover the race here (suspecting there's some free speech regulator just waiting to crack down), but it will be very informative to see how the issues discussed in "The First Campaign" play out when a manufacturer is the candidate.

Posted by Carter Wood at 9:21 AM | Click here to comment | Send to a Friend

February 2, 2008

Stimulus, Growth and Confidence

John Engler, the president of the National Association of Manufacturers, was in St. Petersburg, FL on Thursday to speak to the Business and Institutional Furniture Manufacturers Association. He also had an opportunity to do an interview with The St. Petersburg Times, discussing the economy and manufacturing. Excerpt:

Will the recent economic stimulus package help the country?
From the manufacturing standpoint, I don't think the stimulus package will help solve all of the economic challenges that the nation faces. However, I feel it's very helpful in restoring public confidence.

There are some provisions that are beneficial in the short term for business and manufacturing. Accelerated depreciation would be helpful allowing companies larger depreciation on capital investment. We would like to see something in net operating losses (where a company can carry losses to a profitable year). We do believe the R&D credit for companies has to be done. For an economy that's dependent on innovation, that is absolutely the least that we should be doing.

Florida's manufacturing sector and the auto industry are also addressed.

BTW, guest speaker at BIFMA's annual leadership conference was Colin Quinn, the comedian. Quinn was an engaged and entertaining attendee, took notes about the speeches, and Gov. Engler and he had a nice conversation.

Posted by Carter Wood at 1:59 AM | Click here to comment | Send to a Friend

January 13, 2008

Capitalism, the Real Engine of Change

From the best columnist around, Mark Steyn.

This past week’s issue of The Economist has a heart-rending vignette from one of the most ruthlessly capitalist industries on the planet: “In 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free.”

”That was the moment we realized the game was completely up,” an EMI exec told the magazine. In the United States, album sales in 2007 were down 19 percent from 2006. Don’t blame me. I still buy plenty of CDs. But that’s because I like Doris Day, and every time I try to insert one of these newfangled MP3s into my fax machine it doesn’t seem to play. But if you’re not Mister Squaresville, and you dig whatever caterwauling beat combo those London hep cats are digging on their iPods, chances are you find the local record store about as groovy as the Elks Lodge.

Now there are generally two reactions to the above story. If you’re like me, you’re reminded yet again why you love capitalism. It’s dynamic. And the more capitalist your economy, the more dynamic it is. Every great success story is vulnerable to the next great success story — which is why teenagers aren’t picking their CDs from the Sears-Roebuck catalog. There’s a word for this. Now let me see. What was it again?

Oh, yeah: “change.” Innovation drives change, the market drives change. Government “change” just drives things away: You could ask many of the New Hampshire primary voters who formerly resided in Massachusetts.

Well, this is where we put in a plug for Ranch Records in McMinnville, Oregon. Otherwise, point taken. (The Economist story is here.)

BTW, an arm of the Canadian government is investigating Steyn for excerpts from his recent book published in MacLeans.

Posted by Carter Wood at 1:45 PM | Click here to comment | Send to a Friend

December 29, 2007

Goodbye, Old Friend

AOL pulls plug on Netscape.

Posted by Carter Wood at 2:18 PM | Click here to comment | Send to a Friend

December 22, 2007

Dollars for Domains

Why a $200,000 Domain is Worth the Investment

Kevin Ham is making big business out of domain name investments. He recently topped the charts last November at the 2007 GeoDomain Expo in San Francisco buying Perth.com for $200,000. And again, last spring in Vegas, Ham didn’t blink an eye when shelling out $650,000 in one afternoon for a swath of domains including Christianrock.com. Ham already owns God.com and Satan.com.

Ham has a foothold in the Web 2.0 domain buying game. He capitalizes on the business community’s lack of online real estate panache by buying great domain names and selling them back for big profit. Today’s companies don't want a tweaked version of their name and they’re finally realizing that their websites are becoming who they are, the face of the company. So companies turn to Ham’s domain trough and pay top dollar.

The reality in this Web 2.0 world is that a business with an emphasis on ecommerce and the right domain name could send 200 more people to their site a month for their goods and services. The domain price pays for itself quickly.

The escalating costs of domain names should be an eye-opener for manufacturers. Two things to keep in mind: 1) Your company could have a better domain name, but it could come at a cost; and 2) domain-name clearinghouses, and maybe Kevin Ham himself, is buying every version of your domain and hording it until your company ponies up the big bucks.

Posted by Greg Snapper at 1:05 PM | Click here to comment | Send to a Friend

December 21, 2007

Congress Raised Taxes on Innovation

Bloomberg:

Dec. 21 (Bloomberg) -- Hewlett Packard Co., CA Inc. and thousands of other U.S. companies may see their taxes rise in 2008 because Congress adjourned without extending a tax credit for research.

Lawmakers including House Ways and Means Committee Chairman Charles Rangel and Senate Finance Committee Chairman Max Baucus said they will take up the credit, along with dozens of other expiring tax provisions, next year. Still, companies that would use the credit cannot assume it will be restored for the purposes of financial reporting.

``For R&D intensive companies, this is an immediate, $8 billion tax increase,'' said Monica McGuire, senior policy director for taxation at the National Association of Manufacturers, a Washington advocacy group.

How soon next year, gentlemen?

The NAM's statement on the failure to extend the R&D tax credit is here.

Posted by Carter Wood at 1:32 PM | Click here to comment | Send to a Friend

November 20, 2007

Improve Export Controls for Security, Competition

Rep. Don Manzullo (R-IL), writing in The Hill Blog:

The purpose of U.S. export control policy is to keep sensitive goods and technology away from our potential adversaries and facilitate legitimate trade with our allies. These “Cold War” era controls have not been updated for the 21st century and now impede trade without providing adequate national security protection.

Under our current regime, the Democratic People’s Republic of Korea was able to start a nuclear program, as was Iran. But these same controls have led to our closest allies designing out U.S. technology and “know how” to avoid the extraterritoriality of our controls. For example, the British Future Rapid Effect System, the next generation of weapons systems for the United Kingdom, will not employ “best in the world” U.S. technology because it’s too difficult to get an export license.

Manzullo, who co-chairs the bipartisan Congressional Manufacturing Caucus, writes that he identified the International Trafficking in Arms Regulations (ITAR) overseen by the Department of State’s Directorate of Defense Trade Controls as the best venue for improving the export controls system.

We're not up to speed on all the provisions in the bipartisan H.R. 4246, the Defense Trade Controls Performance Improvement Act, introduced on November 15 by Rep. Brad Sherman (D-CA), so cannot speak to the validity of each and every provision. Still, the NAM greatly appreciates the attention, approach and leadership being shown on this arcane yet politically difficult issue. Improving export controls will serve the nation's security interests while bringing a measure of predictability and accountability to the approval process.

Posted by Carter Wood at 5:35 PM | Click here to comment | Send to a Friend

November 5, 2007

A Counterfeit Backhoe -- Chinese Fakes are BIG

[More from J.P. Fielder, senior communications director, from NAM President John Engler's trade mission to Japan and China. In China, Engler is heading a delegation that represents the President's Advisory Committee for Trade Policy and Negotiations, or ACTPN.]

Two very interesting points from the ACTPN delegation's meeting with James Fallows, senior editor for The Atlantic Monthly and arguably the most knowledgeable journalist about the interrelation of U.S. and Chinese manufacturing. (His July cover story was, "China Makes, the World Takes.")

First, Japan still dwarfs China in overall GDP and that we cannot lose focus on this important ally and manufacturing partner. This is something we discovered last week as the Japanese, from business leaders to government officials, were highly appreciative of Gov. Engler's visit.

Second, protecting intellectual property should be a priority for U.S. policy toward China, and there's plenty of work to be done. As a casual observer, I was struck by the prevalance of counterfeit products in China. Sure, everyone expects the swarms of vendors selling knock-off Rolexes, Coach purses and "Beijing 08" knit hats, but I became painfully aware of the issue while driving to the Great Wall during our one day of touring, on Sunday.

As we passed a roadside construction site, Al Bernard, an ACTPN delegate and senior vice president of Manitowoc, manufacturer of heavy cranes, pointed to one of the backhoes working at the site. "That's a counterfeit backhoe," he suddenly said. "WHAT!? How can you tell?" I asked. This side of counterfeiting is very new to me, as I thought it was an industry making cheap junk (think T-shirts, purses and poorly constructed watches) in a garage. Wrong! This is about real American products being ripped off and built in foreign factories. In this case, it was a Caterpillar backhoe, not exactly something you slap together in the back garage but something that requires a legitimate assembly line and manufacutring facility.

Caterpillar is a strong all-American company based in Peoria, Illinois. Chinese free-riding on the ingenuity of hard-working Americans, not to mention the millions in R&D, is just not right. The rampant counterfeiting needs to be addressed by the Chinese government and with consultation from the international community, if necessary.

Posted by JP Fielder at 4:58 PM | 2 comments; click here to read them or submit your own! | Send to a Friend

October 1, 2007

Information Technology Adds to Business Success

Doing some reading on the use of information technology in health care, this interview in a recent Business Week turned up: "Why 'Total Geeks' Build Businesses Faster." BW's columnist Karen Klein talked to Harry J. Harczak Jr., CDW executive vice-president, about the findings of a CDW survey of mid-sized businesses and their use of information technology. Interesting findings.

The Business Rearview Mirror Survey reported:

73% of the "total geeks" – the most tech-savvy corporate leaders -- reported double-digit average annual growth in their businesses over the past five years.

Close to half -- 48% -- of "total geeks" also reported that their businesses reached the 100-employee milestone within five years of launch, compared to one-third of all survey respondents.

Those who view IT as a "strategic or competitive resource" tended to grow faster than CEOs who said they "spent just enough" to ensure that employees could do their jobs.

Less than 1 percent of the executive stills use slide-rules...

Posted by Carter Wood at 1:27 PM | Click here to comment | Send to a Friend

September 18, 2007

From Our Friends North of the Border

Pretty frank report on the health of the Canadian manufacturing economy by Jayson Myers, president of the Canadian Manufacturers and Exporters group. The Canadian dollar today stood at $0.9769 U.S., a 30-year high.

A 30-year-high. Wow.

From the Canadian Press:

The steep rise in the loonie, coupled with the slowdown in the U.S. economy, is forcing the kind of adjustment in the Canadain manufacturing sector that hasn't been seen since the signing of the Free Trade Agreement with the U.S. in the late 1980s, said Jayson Myers, president of the Canadian Manufacturers and Exporters group.
By most estimates, the sector has shed 250,000 jobs - almost all in Ontario and Quebec - over the past three years.

"Quite frankly, what's happening is companies are closing their production in Canada and shifting production down into the U.S. because there is too much capacity due to the slow-down in the American market," he said.

"I think they have to be prepared to compete at parity or higher and the only way they can do that is to have world-class operations, investing in high-valued products and services and by using the best technology."

A good discussion of the possibilities and problems posed by the high Canadian dollar. Smartly, the manufacturers seek to improve their status the same way other countries have, by making their corporate tax rates more competitive -- reducing the tax to 15 per cent by 2012, from the current projected reduction to 18.5 per cent.

Posted by Carter Wood at 5:42 PM | Click here to comment | Send to a Friend

September 13, 2007

Make Internet Tax Moratorium a Permanent Fix

The NAM sent a letter up to Capitol Hill on Wednesday calling for passage of two pieces of legislation -- H.R. 743 and S. 156 -- to place a permanent moratorium on taxation of Internet services. (The current moratorium expires Nov. 1.

As the NAM's letters (here and here) explain,

This moratorium, originally enacted in 1998 and extended twice since then, prevents state and local tax jurisdictions from taxing Internet access and imposing multiple and discriminatory taxes on e-commerce. Keeping Internet access tax-free is a key factor in ensuring affordable access to the Internet and promoting further broadband deployment for both individuals and businesses.

The Internet is an essential tool for manufactures of all sizes. Manufacturing is the largest industry sector doing business-to-business e-commerce and manufacturers spent nearly a trillion dollars in 2004 for such cost-saving operations as Just-in-Time inventory management.

If the moratorium is allowed to expire, no doubt some of the 7,000 eligible taxing authorities would seek to implement a tax, and as the truism goes, tax something, get less of it.

Or, as the NAM's Monica McGuire says, “New taxes on Internet access amounts to turning the information superhighway into a high-priced toll road." Karen Kerrigan of the Small Business and Entrepreneurship Council has a good analysis of the issues in this column, and Phil Kerpen of Americans for Prosperity considered the broad debate last week here.

Posted by Carter Wood at 7:51 AM | Click here to comment | Send to a Friend

August 30, 2007

High Fashion or High Crimes? Counterfeiting

Excellent New York Times op-ed today, "Terror’s Purse Strings," a clear-eyed view of the manufacturing and distribution of counterfeit fashion and accessories. About 11 percent of the world's clothing is counterfeit, experts say.

Most people think that buying an imitation handbag or wallet is harmless, a victimless crime. But the counterfeiting rackets are run by crime syndicates that also deal in narcotics, weapons, child prostitution, human trafficking and terrorism. Ronald K. Noble, the secretary general of Interpol, told the House of Representatives Committee on International Relations that profits from the sale of counterfeit goods have gone to groups associated with Hezbollah, the Shiite terrorist group, paramilitary organizations in Northern Ireland and FARC, the Revolutionary Armed Forces of Colombia.

Sales of counterfeit T-shirts may have helped finance the 1993 World Trade Center bombing, according to the International AntiCounterfeiting Coalition. “Profits from counterfeiting are one of the three main sources of income supporting international terrorism,” said Magnus Ranstorp, a terrorism expert at the University of St. Andrews, in Scotland.

Reporter Dana Thomas recounts a raid she joined in China.

The NAM is a member of the Coalition against Counterfeiting and Piracy. We have an online resource kit devoted to the topic.

Posted by Carter Wood at 9:55 AM | Click here to comment | Send to a Friend

August 24, 2007

A Permanent Ban on Internet Taxes?

Make the ban on Internet access taxes permanent to encourage investment and innovation.
The NAM is a member of a broad coalition, Don't Tax our Web. Really broad. And describing the issue in a clear fashion is this piece from Forbes.com.

"Companies have to be able to plan, they have to have a sense of what their costs will be," says Broderick Johnson, a spokesman for the umbrella group. "The problem with a temporary moratorium is that it certainly sends a signal that this may expire."

And regarding the state vs. federal question, Johnson says that for nearly a decade, it has been Congress' policy that the Internet is "not burdened by state and local taxes."

The Internet would seem to fall under broad Commerce Clause applications, right?

The NAM's July news release urging a permanent ban on taxing Internet access is here.

Posted by Carter Wood at 8:47 AM | Click here to comment | Send to a Friend

August 22, 2007

Counterfeit Pills: The European Threat

Such interesting stories in the European press that we missed here. For example, in Die Welt, a national German newspaper. One tenth of pharmaceutical drugs in European pharmacies is fake? Wow.

EU wants to stop fake pills
One out of every 10 pills in Europe's pharmacies is a counterfeit. When it comes to on-line offers, at least half of the medicines are fake. In the best of cases, the dubious copies have no effect. But they can also have side effects, which aren't mentioned on the instructions.

The results can be deadly for patients if contents don't match the packaging: Counterfeit drugs are extremely dangerous. Above all, experts warn, the Internet is increasingly becoming an exchange route for contaminated medicines. The EU is describing the developments as "especially dramatic: In 2006, 2.5 million counterfeit drugs were seized, compared to 500,000 the previous year. For this reason, the EU authorities are seeking to become more active and erect new barriers against the import of illegal pharmaceuticals.

Meanwhile, here in the states...

Washington -- Congress passed two spending bills just before its August recess that would expand Americans' access to imported prescription drugs. Both measures, however, still need the other chamber's approval.

Well, as long as they're not Chinese prescription drugs, they're safe, right?

Posted by Carter Wood at 7:09 AM | Click here to comment | Send to a Friend