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Remarks by Deputy Secretary of Commerce Karen Dunn Kelley at the Manufacturing Extension Partnership Summit

AS PREPARED FOR DELIVERY

Thank you, Walt, for that kind introduction, and thank you all for joining us today. This year’s summit theme is The United State of Manufacturing, and I particularly like this theme for two distinct reasons. First, it’s a description of this room: manufacturing leaders from every corner of our nation representing a wide variety of industries and 14 of our world-class universities. Second, the theme defines the goal of the summit. By the end of the MEP National Network Summit, we hope you leave with a clearer picture of technological progress in the manufacturing industry as well as the challenges that lie ahead.

During the 20th century, the United States achieved and maintained global leadership thanks to our industrial developments in manufacturing and technology. For the past several decades, however, American manufacturers have been disadvantaged by lopsided trade deals, unfair trade practices by other nations, and changes in global markets.

We all know too well the stories of American manufacturers moving production offshore, exporting their jobs rather than their products. However, those who projected that American manufacturing would incrementally wither away were simply wrong. Today, nearly 13 million Americans work in the manufacturing sector, and their products account for 11.4% of U.S. GDP.

I am proud that President Trump, Secretary Wilbur Ross, and our entire Department of Commerce team are working hard to renew or replace past policies with fairer trade deals and pro-growth policies to increase the number of American manufacturing jobs and products. President Trump’s deregulatory achievements have made it markedly easier for American manufacturers to expand and create new jobs. The Tax Cuts and Jobs Act signed in 2017 lowered the corporate tax rate, quintupling the repatriation of earnings from $155 billion dollars in 2017 to $776.5 billion dollars in 2018. And of the earnings brought back to the U.S., 65% was repatriated by companies in the manufacturing industry. 

On the trade front, this Administration has prioritized rebuilding American manufacturing. Last September, President Trump signed a renewed US-Korea free trade agreement that expanded export opportunities for American auto and truck manufacturers. This translates into more sales and more jobs for our auto and auto parts manufacturers. 

We have also successfully negotiated a new US-Mexico-Canada trade deal—or USMCA for short—to replace NAFTA. USMCA boosts country-of-origin rules, requiring Automobiles to have 75 percent of their components manufactured in the US, Mexico, or Canada to qualify for zero tariffs (up from 62.5 percent under NAFTA). The Office of the United States Trade Representative estimates that passage of USMCA will result in $34 billion dollars in new auto manufacturing investments here at home, $23 billion dollars in new purchases of American auto parts, and the creation of 76,000 thousand auto industry jobs.

In addition to USMCA, we will continue trade negotiations with China next month and are pursuing new trade deals with Japan, the UK, and the EU. The Trump Administration’s trade policies seek to level the playing field for our manufacturers and finally address the unfair structural and systemic trade practices by foreign nations. 

And we will not stop with deregulation, tax reform, and renewed trade frameworks. Revitalizing American manufacturing will also come through supporting small and medium sized manufacturers with the tactical, practical issues they face every day. That is why I proudly share the good work of NIST MEP whenever I can. 

MEP has grown from a small pilot program 31 years ago to a truly national program with a national impact. With centers in all 50 states and Puerto Rico, MEP is the only federal program singularly focused on helping small and medium-sized manufacturers. This work—in conjunction with the economic development organizations and educational institutions here today— provides manufacturers with access to cutting-edge research and development in areas such as advanced robotics, artificial intelligence, 3D printing, and Machine Learning. 

Since its inception, MEP has helped over 102,000 manufacturers. During Fiscal Year 2018 alone, we estimate that MEP Centers helped to create and retain more than 122,000 manufacturing jobs, support sales revenues of $16 billion dollars, and spur $4 billion dollars in new manufacturing investments.

During a recent visit to southwestern Pennsylvania, I was able to experience MEP first-hand at RE2 Robotics, a company that makes advanced robotic arms primarily for energy, aviation, aerospace, and military applications. RE2 successfully developed a robotic arm that mimics the dexterity of humans while using an all-American supply chain, sourced from companies within 200 miles of Pittsburgh. RE2 has worked with its local MEP Center, Catalyst Connection of Pittsburgh, for the past 10 years. RE2 credits Catalyst Connection with significant help in technological training and recruiting skilled workers. I share the story of RE2 and Catalyst Connection because it’s an example of what we can accomplish when we create the environment for manufacturers to succeed and then support them in their areas of need.

These success stories are not unique to Pittsburgh; they’re happening across our country. In fact, just 40 miles north, Georgia MEP is making an impact as well. NIST MEP leaders recently shared with me the story of Derrick Gordy. Derrick owns an industrial gas company in Cartersville, GA. Derrick wanted to expand his business from merely delivering tanks of nitrogen gas to building nitrogen generators. In the early stages of expanding his business, Derrick faced many problems. When Derrick determined that his nitrogen generators needed a part that was only sold in Europe, the Georgia MEP stepped-in and redesigned the part. Georgia MEP then connected Derrick with local manufacturers that could produce the newly designed part in mass quantity. The coordination between Derrick and Georgia MEP is an example of leveraging public-private partnerships to drive innovation forward and increase productivity! 

In addition to MEP, the Department of Commerce offers several other programs that support American manufacturing. Our International Trade Administration operates 106 US Export Assistance Centers or “USEACs” across the country that support manufacturers of all sizes in identifying and gaining access to new overseas markets. Also, within our International Trade Administration, our SelectUSA team, charged with increasing foreign direct investment into the U.S., has launched a “ReSelect USA” effort. ReSelect USA provides American businesses, including manufacturers, the guidance and market intelligence they need to invest, re-invest, or expand in the U.S. ReSelect USA is telling everyone who will listen that this Administration’s pro-growth policies – combined with our world-class workforce -- make the United States the ideal place for a manufacturers next facility. 

To that end, as many of you consider expanding your own businesses, or for the economic development organizations here today that may be consulting others about expanding their footprint, I’d ask that you take a hard look at opportunity zones. The Tax Cuts and Jobs Act signed in 2017 established the opportunity zones program to encourage investments in communities that are economically-distressed but have great potential for growth. Long-term investments in opportunity zones receive strong, preferential tax treatment. Therefore, these investments not only spread economic prosperity to communities that have been overlooked for far too long, but they are also good for the bottom line. More information about Opportunity Zones is available on our Economic Development Administration’s website. From NIST MEP, to trade, to US Export Assistance Centers, to ReSelect USA, to investing in opportunity zones, the Department of Commerce takes a whole-of-government approach to ensuring American manufacturers have the tools they need to succeed in the 21st century.

I’d like to address another uniquely 21st century issue that more and more manufacturers are grappling with and the Department is working hard to get right. That’s the issue of Cybersecurity. Cybersecurity is key to both economic and national security. The Department of Homeland Security indicates that there are 16 critical infrastructure sectors whose assets are considered so vital that their destruction would have a debilitating effect on national security. Critical Manufacturing is one of those 16 sectors. 

Unacceptably, recent DHS data notes that there have been more cybersecurity incidents within the critical manufacturing sector than any of the other 16 sectors. Small and medium-sized manufacturers are particularly vulnerable to cyber-attacks, as many do not see themselves as targets. But malicious actors – particularly from foreign adversaries -- are frequently targeting manufacturers as a way to penetrate American supply chains.

To help address these threats, MEP has developed a set of cybersecurity training tools for all 51 MEP Centers, and MEP Centers have already provided cybersecurity awareness, training, and assistance to over 3,100 small U.S. manufacturers in both the defense and commercial markets. NIST MEP and DOD also created a national partnership to help small defense contractors better understand the cybersecurity requirements in their contracts. Our small manufacturers play a vital role in our national security mission, and we must protect their assets from cyberattacks to secure the intellectual property of American innovators and to preserve the integrity of our military’s supply chains.

It’s also important for manufacturers to understand their potential cyber security risks and how NIST MEP can help in improving their cyber posture. To that end, two weeks from now, on October 4th, we will celebrate National Manufacturing Day. On National Manufacturing Day, manufacturers of all sizes in every state open their doors to the public for factory tours, career workshops, open houses, and informational sessions. Last year on National Manufacturing Day, nearly 600,000 people participated in nearly 3,000 events held across all 50 states and Puerto Rico. Manufacturing Day is an opportunity to remind communities across our nation about the services we provide and to inspire the next generation by opening their eyes to 21st Century manufacturing. 

On National Manufacturing Day, I plan to visit the campus of Carnegie Mellon University. I’m personally looking forward to tours of CMU’s Advanced Robotics Manufacturing Institute and the Manufacturing Futures Initiative. I will also have the chance to visit Astrobotic, a space manufacturing firm that is designing and building a lunar rover which could be launched to the moon as soon as 2021. Astrobotic was actually born as a start-up at Carnegie Mellon and offers another example of how collaboration between our universities and the private sector can lead to innovation and growth. I encourage all of you to consider hosting a National Manufacturing Day event because in order to have a sufficient manufacturing workforce tomorrow, we must inspire the young minds of today.

This Administration has prioritized creating the workforce for the 21st century. In July 2018, President Trump established the National Council for the American Worker, co-chaired by Secretary Ross and Senior Advisor Ivanka Trump. The Council created a Workforce Policy Advisory Board, consisting of America’s top CEOs and Education leaders, who have pledged to develop a marketing campaign around multiple career pathways, increase data transparency for the labor market, modernize candidate recruitment, and encourage employer-led training. 

To accelerate employer-led training, the Council created the Pledge to the American Worker. The pledge is a commitment from a private sector company to expand a specific number of training and skill development programs for their current and future employees. More than 300 companies have signed the pledge promising 13.7 million new training opportunities. I encourage all of you to learn more about the Pledge to American Workers and to ask the companies that you support to consider signing it. 

I know that many of you have witnessed the technological advancements in the manufacturing industry over the past few decades. I hear from manufacturers across this country that it is becoming harder and harder to find skilled labor. In fact, the number of manufacturers reporting difficulty in hiring in our MEP survey has doubled since 2010. The shortage of skilled workers will not be addressed overnight, and technological progress will continue to produce new challenges. Solving this challenge requires long-term coordination between the government, including NIST MEP and economic development organizations, educational institutions, and manufacturers. One example of progress comes in the form of the Maryland MEP training framework to help companies develop customized apprenticeships in manufacturing. Several companies have already leveraged the framework, including Dixon Valve, who is here with us today. Thank you Maryland MEP for your leadership. 

In closing, I want to thank all of you for participating in our MEP National Network. The revitalization of American manufacturing depends on you. Whether you work for an educational institution an economic development organization, NIST MEP, or an American manufacturer, all of you play a critical role in ensuring the future of American manufacturing is robust, technologically advanced, and secure. 

Thank you for the opportunity to address you this morning, and I look forward to visiting many of you in the communities you serve.
 

Leadership