Today, manufacturers in the United States don’t seem to be able to move very far in any direction without being subject to regulation.
Good or bad, it’s a fact that over the past two decades manufacturers have seen a significant growth in government regulation around labor, finance, transport, energy, and the environment.
A new study by NERA Economic Consulting on behalf of the Manufacturers Alliance for Productivity and Innovation (MAPI) finds that regulation has doubled since the 1990s.
The study, which looks at the impact of regulation on the U.S economy, estimates that 2,183 new regulations have been imposed on U.S. manufacturers since the 1980s and the annual number of regulations affecting manufacturers has grown by 80 percent in the past three years alone.
Regulation has cost the U.S. economy $265 billion to $726 billion a year since the early 1990s, the study claims, while manufacturing output could contract as much as six percent over the next decade.
But the manufacturers’ study doesn’t address the benefits of the regulations it reviews. According to the White House Office of Management and Budget, federal regulations over the last decade have reaped an estimated $132 billion to $655 billion annually while costing the economy a comparatively small $44 billion to $62 billion annually.
Of the five main categories of regulation—financial, labor, energy, environmental, and transportation—which the NERA study addresses, controls around the environment, particularly air pollution, have had the greatest impact on manufacturers, with transportation and energy regulation coming close seconds.
The Environmental Protection Agency (EPA) and the Department of Transportation (DOT) have imposed the greatest number of controls, and manufactures who responded to a NERA survey identified regulations such as REACH, ROHS, RCRA, and the Clean Water Act as particularly “burdensome”.
Energy-intensive sectors are being hit hardest by regulation, and the chemicals and petroleum products sectors could see output fall by 10 percent annually over the next decade, the study claims.
In addition, 70 percent of manufactures who responded to the NERA survey said that regulations had an impact on their companies’ location or expansion decisions, with energy and financial regulations being the biggest influencers.
We’ve yet to see how all this will play out over the coming election year when U.S.-based manufacturing and job creation are becoming the central themes.
Do you think deregulation is the answer to a flailing manufacturing economy?