December 5, 2003    Volume 10, No. 21

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"It Is A Fact" -- Top Commerce Official Says Leadership And Vision Do Not Exist In Government

(Click here to download the Department of Commerce's transcript from this event. It was supplied to Mfg. & Tech. News under a Freedom of Information Act request.)

The U.S. Department of Commerce is in no position to become a champion of a national manufacturing strategy aimed at reviving U.S. industry, says the second most powerful person in the agency. The department does not have the resources or vision for spearheading a manufacturing agenda, says Deputy Secretary of Commerce Sam Bodman.

"The Commerce Department can and will be active," Bodman told a group of about 20 manufacturing executives meeting this past June to help the agency develop a national manufacturing innovation strategy. "I will tell you the authority of this department -- the inherent authority of this department within government -- is modest," he said. "Thatıs not a complaint. Thatıs not an excuse. It is a fact."

The departments of State, Treasury, Justice and Defense are far more powerful than the Commerce Department, which has a budget of $5 billion. "The measure of oneıs manhood or womanhood in this town is oneıs budget size," Bodman told the executives at the end of long day of discussions. "We [employ] a lot of people here but we have a $5 billion budget. That sounds like a lot. Itıs peanuts in this town."

As a result, the agency is forced into a position of leverage that is based on philosophical arguments, the "force of personality and...of being willing to differ from the crowd," Bodman told the group. None of these skills "falls within the rubric of how Washington runs," he said. "Everybody in this town tries and works very hard at being nice to everybody else at all times, almost at all cost and the reason for it is nobody knows who they will end up working for next month," he relayed. "Thatıs just a fact. Itıs not a complaint. Itıs not an excuse. Itıs a fact."

Donıt look for any leadership on the manufacturing issue from government, Bodman explained, because by the very nature and structure of government that leadership cannot exist. "A lot of what I hear you all asking -- we need a leader, we need somebody to take a position and do things -- that runs counter to the way the town works and you need to know that."

The Commerce Department will not take a direct stand on manufacturing issues any time soon, said Bodman, who has since announced his departure from the agency to become the Deputy Secretary of the Treasury Department. The Bush team has already worked "very hard" passing tax cuts that will benefit the manufacturing sector. The tax cuts should work their magic and manufacturers just have to be patient, he said in June.

The administration is "hopeful and optimistic" that there will be a turnaround in the manufacturing sector due to the huge infusion of money into the economy from tax cuts.

"One way or another, before we get anything profound done at our end, we are going to see what happens and to the extent that the economy recovers, employment recovers. It will be quite interesting to see what happens in the manufacturing sector and get some measure of that."

Bodman made his remarks after arriving late in the afternoon of the day-long symposium entitled "Made in America 2020: The Future Face of Manufacturing." He was expected for much of the day, but arrived to hear the words "doom and gloom" from a couple of manufacturing experts in attendance, many of whom traveled a long distance to be there. However, in reading the transcript from the event, a copy of which was obtained through a Freedom of Information Act request by Manufacturing & Technology News, only the discussion about the governmentıs role in setting a manufacturing policy could be classified as being overly gloomy. Much of what was discussed during the day was about the prospects for innovation, new technology and new business processes in the manufacturing sector.

There was a great deal of anticipation of Bodmanıs appearance, as well as the expected showing of Under Secretary of International Trade Grant Aldonas, who was conducting a national survey of manufacturers for a "Manufacturing Strategy" initiated in March. That report was expected to be delivered by Labor Day. Aldonas never showed up at the event and his report has again been postponed, according to sources. The earliest it might appear is after President Bush makes his 2005 budget submission to Congress, they say.

The day-long event was hosted by the Commerce Departmentıs Technology Administration and was closed to reporters because "we are interested in following the topic of manufacturing and not to score points in the press," Technology Administration director Phil Bond explained at the opening of the roundtable discussion at 9:00 a.m.

Prior to Bodmanıs joining the group in the late afternoon, there were high hopes by those who work for him about his willingness to lead the Department in a plan to revive U.S. manufacturing. He quickly dashed those hopes and a number of attendees contacted by Manufacturing & Technology News said Bodmanıs comments about the inability of government to act in a meaningful way effectively deflated the day. "It was a waste of time," said the CEO of one company who attended. Another said that there was "zero value-added and nothing will result from it." Another attendee said: "It was banting roosters, banting around." However, not all attendees contacted by Manufacturing & Technology News left the event bothered by Bodmanıs attitude. They thought it was refreshing that he would be so honest.

During the afternoon session there was much talk about the roll of government in creating a more conducive environment for manufacturers. "Government at all levels affects what happens in business in total and manufacturing in particular," said W.R. Timken, chairman of The Timken Co. of Canton, Ohio. "Basically, the issue for government is to decide what it is doing that hurts U.S. manufacturing and what it could do to help U.S. manufacturing."

Throughout his life, Timken said, he has "run into a wall of legislators and governors and others who simply donıt understand the contribution of manufacturing to the economy. And Iım a little afraid that if we stick with a report from my friend, Secretary Don Evans, and that is all the further we get, it will not be enough."

Frank Vargo, vice president of international affairs and economic policy at the National Association of Manufactures, who spent 34 years working at the Commerce Department, said he didnıt expect much of a response from Commerce. He warned that manufacturing is moving overseas at an accelerating rate and "all of our members say, unfortunately, weıre just at the beginning -- itıs really going to pick up. If we continue in our present direction, weıre not going to have the future that we want."

Vargo said both industry and government have to change. "Itıs not clear to me that the Commerce Department and its role in the government and the way the government perceives manufacturing and the U.S. role in the world economy is adequately incorporated into the structure of the government [to] make the kind of changes necessary," he said, echoing views later heard from Bodman.

As a seasoned Commerce Department veteran, Vargo told the group not to get its hopes up. "I worked in this building for many years but the deputy secretary [Bodman] is not here. Why is he not here? Itıs not because he is disinterested. He has got other priorities. Grant Aldonas was supposed to be here. I know Grant, a fabulous guy -- hard working. He has got other priorities, too, and that is kind of how the government is on this."

Vargo said the biggest challenge is not in figuring out and prioritizing what needs to be done. "Itıs deciding that we really have to do them. And we are not there. In my view, if we keep going in the direction weıre going, you know, weıre toast."

Prior to Bodmanıs arrival, Vargo said that he got the feeling from the administration that "we have done it now [with tax cuts] and there is nothing more that needs to be done, and that is just not so."

Bruce Mehlman, Assistant Secretary for Technology Policy, defended his political bosses. "I would disagree with any suggestion that this is not very important now to the Secretary of Commerce," he told Vargo. Commerce Secretary Don Evans went to Chicago to speak at National Manufacturing Week and has Aldonas working on a major manufacturing study. "I anticipate more than just a report -- but action, and action on a permanent basis -- a continuing partnering relationship. I would observe that we are being heard" across the Bush administration. Mehlman said that Bodman, as former CEO of Fidelity Investments, "guides all of our efforts and all of our thinking and has been very interested" in the dayıs discussion. Mehlman, an articulate, passionate and smart lawyer, left the agency in November to become director of the Computer Systems Policy Project in Washington.

Jim Zawacki, president of GR Spring and Stamping of Grand Rapids, Mich., then told Mehlman that he "didnıt want to challenge [him], but I was a panelist at a roundtable and I sat next to Grant Aldonas and when asked about [creating a new Assistant] Secretary of Manufacturing -- and itıs on tape, on record -- he said for five minutes that there is nobody in this building who understands manufacturing."

A few minutes later, Deputy Secretary Bodman said: "There was a comment [concerning] a vision for manufacturing within the government. I will tell you it is very hard for this government to have a vision on anything. We are totally stovepiped and we live within these compartments. This is not by way of a complaint. This is not by way of an excuse. It is by way of a fact."

(Click here to download the transcript from this event.)

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