Manufacturing CEO survey shows record high optimism on prospect of tax reform
- The National Association of Manufacturers surveys CEOs of 14,000 large and small manufacturers every quarter.
- The latest survey shows optimism at the highest point in 20 years.
- Nearly 63 percent of CEOs said business tax reform would encourage capital spending and more than half said they would expand their businesses.
The National Association of Manufacturers said Monday its latest quarterly CEO survey reflects historically high optimism on expectations for the passage of tax reform in Washington.
The trade group said CEO optimism — hitting a high mark in 20 years of the survey — should send a message to legislators that failure to enact the bill would be a blow to American business.
"These incredible numbers demonstrate the absolute urgency of getting tax reform signed into law because manufacturers are saying loudly and clearly that more jobs, better pay and manufacturing growth are on the horizon," said Jay Timmons, president and CEO of NAM. "This also serves as a warning to lawmakers: Fail to get this done, and American manufacturing workers will suffer the consequences of inaction."
Each quarter, the NAM surveys 14,000 large and small manufacturers to gain insight into their economic and hiring outlook. Of those who participated in the fourth quarter study, 94.6 percent said they were positive about their own company's outlook.
Nearly 63 percent said comprehensive business tax reform would encourage their company to increase capital spending, and more than half said they would expand their businesses (57.9 percent).
"The single most important thing that we need to see out of tax reform is permanent, more competitive tax rates," said Austin Ramirez, president and CEO of HUSCO International, a Wisconsin-based hydraulic and electro-hydraulic component manufacturer. "I compete against competitors in Asia and Europe who are operating in a different paradigm with lower tax rates, and the high rates in the U.S. make us less competitive."
Almost 54 percent of CEOs in the survey said they would hire more workers, and nearly half (48.8 percent) said they would increase employee wages and benefits.
"Tax reform will enable us to provide our employees with better salaries, wages and benefits which will have a real impact to improve the standard of living for them and their families," said Bruce Pulkkinen, senior advisor and former president of the third generation, family-owned architectural woodworking company, Windham Millworks in Maine. "We can't accept the status quo anymore."
NAM CEO Timmons anticipates tax reform would increase the amount of available manufacturing jobs from today's 350,000 to 2 million jobs by 2025.
"If we get it right, we'll grow this economy. The president calls it 'rocket fuel,' I agree with that. Couple that with regulatory reform reducing the burdens on manufacturers who are simply trying to do the right thing and make ends meet and hire new people," Timmons said on CNBC's "Power Lunch." "I think there's no end in sight to how we can grow this economy."
Commerce Secretary Wilbur Ross told CNBC this optimism is not unique to the manufacturing sector.
"President Trump's policies of deregulation, free and fair trade and now tax cuts have created an environment where businesses want to invest, grow and create jobs here at home," Ross said.
Chloe Aiello contributed to this report.