A new report by the National Association of Manufacturers (NAM) found that American manufacturing firms each face 297,696 regulatory “restrictions” on their operations imposed by the U.S. government
The report, “Holding US Back: Regulation of the U.S. Manufacturing Sector,” examines regulations imposed on U.S. manufacturing firms under the Code of Federal Regulations (CFR) and complies the results of interviews with corporate compliance officials and a survey of NAM members in an “attempt to convey the opportunity cost” of government regulations, the organization said.
“We believe in smart regulations that keep our communities and workplaces safe, but too often, these rules go too far or are too complex. Manufacturers want to invest more and hire more in the United States, but too often the cost of doing business – and even just functioning on a daily basis – makes that difficult,” NAM President Jay Timmons said in a statement.
4,169 regulations exist within 43 parts of the CFR around the sourcing of raw materials, NAM said, including import limitations, permitting and licensing requirements, restrictions on certain materials, origin/history reporting on raw materials, and more.
“Aside from regulating manufacturers directly, regulation can have an indirect impact too. When it sources raw materials and energy, manufacturers don’t realize the higher price that is passed down the supply chain from ‘upstream’ regulation,” the report said, citing a requirement on chemical formulators to register their products with the U.S. Environmental Protection Agency (EPA) to ensure compliance with federal regulations on chemicals.
The U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) country of origin labeling (COOL) was named as another significant regulatory barrier for manufacturers, which require food manufacturers to track raw materials through the supply chain. Retailers are required to provide information to customers on the origin of their food. Manufacturers must keep records, keep the materials segregated, and track them through the manufacturing process.
“Segregating and tracking raw materials is not costless to manufacturers. Requirements may vary for different products, even if the inputs are identical. As such, the regulations influence a company’s decisions on where raw materials are sourced,” the report said.
The study’s authors identified 44,268 regulations on preliminary processing, production, and assembly within 239 parts of the CFR, ranging from product standards and bans to ingredient restrictions.
“It is not uncommon for multiple federal agencies [to] regulate the content of a particular manufactured product,” noted the report’s authors.
In a press release announcing the report’s release, NAM expressed hope that President Donald J. Trump may reduce barriers on America’s manufacturers.
“For the last eight years, the outgoing administration has hindered small and mid-sized firms’ success,” said Drew Greenblatt, president and chief executive officer of Marlin Steel and chairman of NAM Small and Medium Manufacturers, in the release. “Time and money that could be spent on job creation are instead wasted on complying with out-of-touch federal rules. We believe in smart regulations – and simply want to see balance and common sense return to rulemaking. Congress and the next administration can work in the best interest of manufacturers by getting to work right away on rethinking red tape and regulations in a thoughtful and productive way.”
A full copy of the report can be found here.