Manufacturers Alliance for Productivity and Innovation: Regulations Hinder U.S. Manufacturing

From: Industry Market Trends

Groups Weigh In on Assertion that Regulations Hinder U.S. Manufacturing


Federal regulations continue to pose a financial burden to manufacturing, according to a report published by the Manufacturers Alliance for Productivity and Innovation (MAPI). Several trade and government groups offer their assessments of the situation.

The costs to manufacturing brought by federal regulations have increased an average of 7.6 percent annually since 1998, NERA Economic Consulting reported for MAPI. Since 1981, federal agencies have promulgated 2,302 regulations that affect manufacturers.

Of those regulations, 270 are considered “major,” meaning they are determined by the government to have an annual economic effect of $100 million or more. Minor regulations receive no cost-benefit analysis because their impact cannot be determined, industry advocates point out. So the real economic drag could be larger.

The number of major regulations has risen over the last three presidential administrations. During the Clinton era, major regulations affecting manufacturing averaged 36 per year. The number was 45 per year during the Bush administration, and now is 75 per year during Obama’s tenure, the MAPI report states. NERA’s analysis concluded that “the load will reduce manufacturing output by up to 6 percent over the next decade and by as much as $500 billion this year alone.” The MAPI report is an update to a more extensive analysis released in 2012.

Federal agencies are required to ensure that when new regulations are issued “that the benefits justify the costs, consider public participation and adopt flexible approaches to rulemaking,” said Emily Cain, a spokesperson for the White House Office of Management and Budget (OMB). “The federal government should be smart about how it regulates and not impose unjustified regulatory burdens.”

Cain called the Obama administration’s approach “a cost-effective, evidence-based, 21st-century regulatory system” that “maintains a balance between protecting the health, welfare, and safety of Americans and promoting economic growth, job creation, competitiveness, and innovation.”

Erik Glavich, director of infrastructure, legal, and regulatory policy for the National Association of Manufacturers (NAM), told IMT that the MAPI study “reinforces the idea that manufacturers are disproportionately burdened by regulation.” The report highlights the issue of cumulative regulatory burdens, he said. “The issue is not just with new regulations, but all the old regulations just sitting there,” so new regulations, he explained, “become duplicative, adding inefficiencies within the regulatory system and uncertainties to the costs our members face.”

MAPI CEO Stephen Gold agrees that new regulations have a cumulative effect.

“The problem is that the system allows so many regulations to be added every year on top of those that came before,” he said. “The different agencies all add their own regulations, but they’re not talking to each other. Over the years, they simply get layered one on top of the other. Having those thousands of rules interacting with each other is acting as an economic drag.”

Not all regulation affects members of the Association For Manufacturing Technology (AMT), said Pat McGibbon, vice president for industry intelligence and engagement for the group, which represents manufacturing equipment suppliers and distributors. He said, however, that some “regulations need to be changed to help our industry and many of our customers get back on the acceleration path of the early 90s.”

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