Obama Says Tax Code Should Encourage U.S. Manufacturing Jobs

President Barack Obama took aim at China and companies that move jobs overseas as he called for changes in the tax code to encourage U.S. manufacturing.

Obama highlighted his message following a tour of a Milwaukee factory of Master Lock Co., which has restored about 100 jobs from offshore.

“Right now, companies get tax breaks for moving jobs and profits overseas,” Obama said in the text of his remarks to factory workers and local officials. “Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world.”

He urged Congress to revamp the tax code to lower rates for companies that hire U.S. workers. Obama, who met yesterday with Chinese Vice President Xi Jinping, also vowed that his administration will investigate “unfair trade practices in countries like China” to help domestic industries.

Obama is running for re-election with the economy still struggling to replace the 8.8 million jobs lost due to the recession. Manufacturing has been at the forefront of economic growth. Production (IPMGCHNG) at U.S. factories rose 0.7 percent after a revised 1.5 percent gain in December that was the largest in five years, figures from the Federal Reserve in Washington showed today.

Manufacturing payrolls increased 50,000 last month, exceeding the most optimistic forecast in a Bloomberg News survey and capping the largest two-year gain since 1985, Labor Department figures showed.

Auto Industry

Obama said the recovery of the nation’s auto industry following the government bailout of General Motors Co. (GM) and Chrysler Group LLC proves that U.S. manufacturing can lead the recovery.

“What’s happening in Detroit can happen in other industries” Obama said. “It can happen in Cleveland and Pittsburgh and Raleigh. And today, it’s happening right here at Master Lock.”

The president is at the start of a three-day trip that also will take him to California and Washington for fundraising events that his campaign expects will raise more than $8 million. He also plans to stop at a Boeing Co. (BA) plant in Everett, Washington to talk about manufacturing and exports.

While Obama won Wisconsin by 14 percentage points in 2008, Republicans swept most statewide offices the 2010 midterm elections. The state since has become a focal point of a partisan fight over worker rights. Republican Governor Scott Walker championed a law restricting collective bargaining for public employees, triggering a recall drive spearheaded by Democrats and their allies in organized labor. Walker greeted Obama at the airport.

Wisconsin Jobs

Wisconsin had a 7.1 unemployment rate in December, lower than the national average. The state has struggled to regain the 54,000 manufacturing jobs lost since the start of the recession in December 2007. Over the past year, manufacturers have added about 9,000 positions, according to data compiled by Bloomberg.

Wisconsin’s economic health since Obama took office ranked 16th among U.S. States, according to the Bloomberg Economic Evaluation of States Index, which uses data on employment, real estate, taxes and local stocks to track the direction of state economies.

“Americans are flatly worse off than they were when this president took office,” Republican National Committee Chairman Reince Priebus, who is the former chairman of Wisconsin’s Republican party, said on a conference call yesterday.

“Is Master Lock doing well because of Obama’s policies, or is it in spite of his policies?” Priebus said. “I think, and most Wisconsinites would tell you, that it’s the latter.”

Company Example

John Heppner, chief executive officer of Master Lock, who participated in the White House event last month on returning jobs to the U.S., said in an interview that “we really haven’t had the White House impact on our job growth yet.”

“Certainly all the attention we are getting is nice, but we started this initiative back in 2010 to bring back jobs,” Heppner said. “I think the White House took notice and said, ‘OK, what are they doing?’”

The Master Lock Milwaukee plant has 412 employees of 1,650 globally. In 1997, there were 1,500 Milwaukee employees. The facility has added 100 jobs since 2010 and 150 since the low point in about 2000. The company has indicated it expects to restore more jobs in 2012 or 2013.

The president’s 2013 fiscal year budget presented to Congress on Feb. 13 set aside almost $121 billion over a decade to bolster manufacturing, including tax credits for clean-energy vehicles, tax breaks for bringing jobs back from overseas and credits for companies locating in hard-hit communities. The administration plans to give an outline of its priorities for overhauling corporate taxes by the end of the month.

Obama also highlighted part of his 2013 budget proposal submitted to Congress this week that contains funds for an Interagency Trade Enforcement Center that would monitor and enforce trade agreements and laws, including China’s trade practices.

To contact the reporters on this story: Kate Andersen Brower in Milwaukee at kandersen7@bloomberg.net; Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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