A new year and a new Congress is giving me hope that some real change will finally be made to get manufacturing back on track.

Example number one: There’s a new Sheriff in town! Congressman Darrell Issa, a Republican Representative from California, is now the chairman of the House Committee on Oversight and Government Reform. This committee has the power to investigate any aspect of the federal government, and Issa plans to use it.

Issa’s first act was to invite manufacturers to write him with suggestions for eliminating job killing legislation and regulation. I immediately took him up on the offer. Here’s what I told him:

“Channellock, Inc is a family-owned, 125 year old manufacturer (yes, manufacturer, one of the few left!) of high quality pliers and hand tools. We have never missed a payroll, always paid our taxes and are makers of globally-sold products. I would think that Channellock is the kind of company our government would like more of, but right now it sure doesn’t feel that way.”

I went on to explain to Congressman Issa that the government needs to eliminate reform or trash the following laws and acts to help manufacturers make products and create jobs:

The IRS Tax Code – It’s draconic, ambiguous, confusing and flawed. Channellock spends too much time trying to meet the intent of the code, and even our CPAs and auditors can’t decipher this monster. It’s philosophically flawed because it rewards consumption and penalizes production, productivity, and success. It needs to be abolished and replaced with a national sales tax that would reward success, production and productivity;

ObamaCare – It’s a bad law.  We have a private medical care program at Channellock and our associates participate in the cost. We like it and can, so far, afford it. We do not want this nationalized health care program, period!  Under ObamaCare we have no idea what the future is for our medical costs. This looms large when it’s time to consider any new hires. We need less government manipulation of health care and more competition in the health care market(s). Repeal it;

Pension Protection Act of 2006 – This is a disaster for any company with a defined benefits pension program.  Up until passage of this law, Channellock had an adequately funded plan. With the stroke of a pen, we immediately became underfunded. This forced us to freeze our plan. We are now faced with funding a frozen plan by pumping in millions of additional dollars, even though it already has plenty of assets. These are dollars that could and should be used for capital additions, hiring more people, paying medical plan costs and paying our folks more money; 

Research & Development Tax Credits – This is well-intentioned, but doesn’t work. For more than two years, Channellock has been under IRS audit for the tax years ending 2005 – 2008 because the IRS does not understand the R&D Tax Credit law and how it’s applied. For example, we installed three robots on a forging drop hammer. To our knowledge, this has never been done before. Do you think there might be some research and development involved?  Of course! Nevertheless, the IRS disallowed the entire project.

To avoid problems from the outset, we even hired R&D tax experts to make sure we did everything correctly. Then to resolve the issue, we spent money to fly these experts from Texas to Pennsylvania to explain our side to the IRS. It didn’t matter.

The end result is that we have spent time and money digging up useless information and fighting with our own government instead of devoting those resources to making pliers and becoming more competitive against our Chinese challengers. The R&D tax code needs to be reformed so this doesn’t happen;

Death/estate tax - Channellock is a family-owned business and has been for 125 years.  I am part of the fourth generation running the company and my three children are all very involved in the management of this business. In order to avoid having the next generation take money out of the company to pay millions in taxes, we have to buy a huge amount of life insurance. These premiums could and should be plowed back into the business to allow us to hire more folks and be more competitive. Eliminate the estate tax, now!

Cap and Trade Tax – This potential legislation is bad and here’s why: Channellock uses a lot of electricity to run equipment and heat steel for forging. We are First Energy/Penelec customers and most of their power for this region comes from the Homer City, Pa. coal-fired generation facility. If a cap and trade tax is passed, our electrical costs will skyrocket. Don’t pass this;

Employee Free Choice Act/Card Check – What a misnomer!  This potential legislation is nothing more than a union power grab. We have been unionized since 1935, so this act does not mean a whole lot to us. Still, there are provisions within the bill that will hurt all manufacturing companies. 

I believe that anything Congress and the government can do to create some sort of policy that will stimulate our nation’s manufacturing base will pay huge dividends for the citizens of this country. We have lost thousands of factories over the last five years. With that continuing loss, so goes our nation’s standard of living. 

Here’s a final suggestion: Eliminate the Department of Energy and create a Department of Manufacturing to be an inside-the-government advocate for the creation of a globally competitive U.S. manufacturing base. Staff the agency with folks that have met payrolls in the private sector and understand how free enterprise and business works.

P.S. - Now I know some will not agree with these comments, but in the writer's humble opinion, these are the type of changes we need to stay viable as a U.S. maker of high quality hand tools. Remember, the Chinese and Vietnamese hand tool makers do not have any of these types of regulations.