Advertisement

How Government Regulations Changed the World of Manufacturing

Mike Keller

Mike Keller is the president of distribution company Keller Marine & RV.

Editor’s Note: To read more in this series on by Mike Keller, click here and here.

Growing up in a small business, I was always a believer that government intervention was a bad thing. I realized at an early age that most small businesses do not have the staff or the budget to keep up with the ever-changing regulatory environment.

In small business, government regulation is burdensome at best and stifling to profitability growth.

This fact makes the business owner become anti-regulation and, in many cases, anti-government when it comes to business involvement.

In the 1980s and ’90s, government regulation of small businesses increased by 100 times compared to the regulation of the 1960s and ’70s. I would suggest that this increase in regulation did more to make the U.S. companies anti-competitive than all the other factors.

If you want to manage a U.S. company, you have the challenge of dealing with a minimum of 10 major government agencies.

To list a few, there’s the EPA, DOT, OSHA, IRS, FLSA, EEOC, Employee Retirement Income Security Act, privacy laws for employees, state licensing issues, and all other state and local laws. Meanwhile, you are competing against manufacturers that don’t have the same level of governmental interference.

I am not saying that businesses shouldn’t be held to a professional standard. As good corporate citizens, I think businesses have a commitment to the environment. Manufacturers need to be able to produce their products with minimal or no impact to the environment. The problem is that these rules should apply to all manufacturers throughout the world.

If we truly want fair competition throughout the world, we need uniformity in regulation. Given that the Chinese government is not likely to impose regulation on the very companies they are subsidizing, the U.S. is forced to impose tariffs. It is the only way to create fair competition with China.

However, U.S. officials should also realize that the way they perform their jobs can help as well.  This means rather than being quick to fine and penalize business that are not in compliance, they should advise and direct those U.S. businesses toward compliance. Government officials should not see fines and penalties as a revenue source – they should see those things as penalizing their U.S. companies in a world market.

These two changes in government policy will go a long way in helping U.S. companies to be competitive in a world market. Environmental issues are also the result of the Chinese lack of regulation.

When Chinese companies are environmentally irresponsible, the whole world suffers. Consequently, the Chinese manufacturer wins the business and the U.S. manufacturer suffers. When consumers see the better prices of Chinese products, they do not understand that lower-priced products come with a cost to the environment.

If consumers knew this, would it change their buying behavior? Is it up to U.S. suppliers to not support Chinese companies that are not responsible to the environment?

I think that if we educate consumers on the real cost of lower-priced products, most of them would make the right choice.

I would be overstating this argument if I were to suggest that all Chinese manufacturers are irresponsible to the environment. The manufacturing of many products has very little environmental impact. However, for the ones that do, this is a huge difference.

Bottom line: Less government fines and penalties, and more consumer awareness of bad corporate environmental offenders would go a long way to address the ability of U.S. companies to compete with China.