The often-quoted statistic from the National Association of Manufacturers - that U.S. industry faces a 22.4 percent cost disadvantage, unrelated to wages, compared with other countries - just got worse. Brace yourself: The handicap now is 31.7 percent.
The reason, NAM said, is high U.S. costs for corporate taxes, employee benefits, legal costs, natural gas prices and pollution abatement. These are so-called ``structural costs,'' money paid before a bolt gets turned or an injection press squirts plastic.
The sharp rise shows a ``significant and long-term problem'' for U.S. manufacturers, said NAM President John Engler.
Washington-based NAM issued its updated report, ``The Escalating Cost Crisis,'' on Sept. 27, showing the 31.7 percent disadvantage. The 22.4 percent rate came from the first study, in 2003.
``The costs have gone up and the disadvantage that we had three years ago has widened,'' Engler said during an Oct. 3 speech that kicked off the Northern Ohio Energy Management Conference in Akron.
The other countries in the comparison are Canada, Mexico, Japan, China, Germany, the United Kingdom, South Korea, Taiwan and France.
It's fashionable to blame China for the woes of U.S. manufacturing, Engler said, but the NAM study shows many of the problems are home-grown.
``We've got some government policies here in the United States that make it tougher to do business here,'' Engler said.
The U.S. corporate tax rate was responsible for more than one-third of the increase. While the rate has remained the same since the 2003 report, some trading partners have cut corporate taxes, widening the gap. ``By standing still, we've lost ground. We've fallen further behind,'' Engler said.
Legal costs are a major problem for America, Engler said. ``This is a country rife with lawsuit abuse,'' he said.
Ohio has lost about 200,000 manufacturing jobs since 2000, Engler said. But the state still employs 800,000 Ohioans, ``a huge number,'' he told energy conference attendees.
Increased efficiency and automation are two reasons for fewer jobs, Engler said, but foreign competition is another - helped by high U.S. costs.
The cost study was done by Jeremy Leonard, an economist at the Manufacturers Alliance/MAPI, a Washington think tank. NAM and MAPI released the report. Leonard called the results ``an astonishing increase from just three years ago.''
The two-day Akron conference looked at electricity rates, deregulation and new technologies. Engler said that, for manufacturing, high energy consumption reflects healthy business. And, despite attention to alternative energy like hydrogen, most of that power will continue to come from oil, gas, coal and nuclear.
``The big four right there are going to be important for a long time,'' he said.
NAM supports a national energy strategy. That plan could include drilling for natural gas on the Outer Continental Shelf, including in the Gulf of Mexico.
``We have to be able to compete globally, but in order to compete, we have to have access to energy. It's pretty straightforward,'' Engler said.