Manufacturers say Obama plan would have mixed impact in Connecticut

Washington — Precision Combustion Inc., a manufacturing firm in North Haven that builds catalytic converters and uses green technology, is the kind of company President Obama wants to help.

“We don’t have much of a policy right now to help manufacturing,” said Kevin Burns, Precision Combustion’s president. “So I think it’s really good (Obama) is now focusing on it.”

But Burns, and others involved in Connecticut’s manufacturing industry, say the president’s plan will have a mixed impact in the state.

The president announced a “New Manufacturing Partnership” earlier this month to bring together industry, universities and the federal government to indentify and invest in key emerging technologies.

And, visiting Ann Arbor, Mich., Friday, Obama reiterated his commitment. “A blueprint for an economy that’s built to last … (is) an economy built on new American manufacturing,” he said.

Obama built on this idea in his State of the Union speech this week, announcing a package of tax breaks and new levies aimed at punishing companies that ship jobs overseas and rewarding those that expand in the United States and hire new workers eligible for $6 billion in other tax credits.

“If you’re a company that wants to outsource jobs or do business around the world, that’s your right. It’s a free market,” the president said during a visit to a manufacturing plant in Cedar Rapids, Iowa, this week. “But you shouldn’t get a tax break for it. Companies that are bringing jobs back from overseas should get tax breaks.”

Connecticut ranks 16th among the states in the percentage of the work force involved in advanced manufacturing — the use of cutting-edge technology in the manufacturing process. That’s the kind of industry Obama wants to promote in his “blueprint for an economy that’s built to last.”

The president wants to give companies an incentive to create manufacturing jobs in the United States by implementing a minimum tax for profit earned overseas. That could blunt the lure of low tax rates in some foreign countries.

Companies that brought jobs home from overseas would receive a 20 percent tax credit, and companies that invest in communities that have suffered major job losses would be eligible for a new $6 billion fund of tax credits.

Obama is also calling for reauthorizing a measure that lets businesses expense the full cost of investments in equipment and making permanent a research tax credit.

Peter Gioia, vice president and economist for the Connecticut Business and Industry Association, said the president’s plan to let businesses expense certain costs, including the amount they spend on research, “is definitely a plus.”

Burns, whose company employs 40 people and grew with the help of federal tax incentives, agreed.

“That is a good idea,” he said.”But what would really help is if (the administration) stops foreign companies from dumping their cheap products here.”

Gioia said the incentives to bring back jobs from overseas would have little impact because U.S. businesses are already doing that. He also said that Obama’s plan to give tax credits to companies who invest in communities that have suffered from major job losses won’t help Connecticut much because the state isn’t likely to have a shutdown of a major company or big layoffs.

“It would have limited beneficial effects,” Gioia said of the president’s plan.”There are probably other states that would benefit more.”

Matthew Nemerson, president of the Connecticut Technology Council, said some of Connecticut’s bigger manufacturers — such as General Electric and United Technologies — could benefit from new  partnerships with schools like the University of Connecticut that could be fostered by Washington.

“Where we need more support is in connecting manufacturing research and development to university research and development,” he said.

Like Gioia, Nemerson said the administration’s plan to “discourage outsourcing and encourage insourcing” will not have much effect in the state because of the growing global economy.

“People here find that drawing a line in the sand on what’s domestic production and what’s overseas production has been difficult,” Nemerson said.

Then there’s the question of whether Congress, mired in a partisan logjam, will approve the proposals that need legislation to implement.

Administration officials are optimistic.

“These are tax reforms that could be passed and signed into law this year,” said National Economic Council Director Gene B. Sperling. “Some of them have had previous bipartisan support.”

Greater detail of the president’s manufacturing plan will be included in the fiscal 2013 budget Obama sends to Congress Feb. 13.