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MEMA supports tax reform that does not threaten supply chain

Thursday, March 2, 2017 - 09:00
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The Motor & Equipment Manufacturers Association (MEMA) and its four specialized divisions are aligned with the goals of the Trump administration and Congress to strengthen America’s global manufacturing competitiveness and to create more American jobs. To reach these goals, MEMA said it supports a simplified, more predictable tax code that would generate investment, economic growth and job creation in the United States.

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Motor vehicle component manufacturers are the largest employer of manufacturing jobs in the U.S., contributing nearly 3 percent of the U.S. gross domestic product. Suppliers directly employ more than 871,000 Americans, up 19 percent since 2012, and generate a total direct and indirect employment impact of 4.26 million jobs, up nearly 18 percent since 2012.

MEMA says that this job growth is made possible by a highly integrated North American supply chain that supports both the automotive makers and the companies that supply motor vehicle parts. Many suppliers located in the U.S. import and export vehicle parts and components within the North American market. Depending on supply chain logistics, parts are often exported to be combined with other parts, then imported back to the U.S. for final vehicle assembly.

While MEMA supports tax reform, a border adjustment tax (BAT), which is a component of the current U.S. House Republican tax reform proposal, could disrupt the integrated supply chain for many companies and cause a ripple effect throughout the U.S. economy by 1) increasing costs for vehicle manufacturers, 2) decreasing available capital for new product development, 3) increasing consumer prices, 4) lowering sales, and 5) potentially decreasing manufacturing jobs in America. MEMA has engaged a leading research firm to investigate these potential effects and identify specific initiatives that will lead to a more competitive manufacturing environment and continued job growth in the U.S.

“The President has said that he wants to increase jobs in America and put forward tax reform that is in the best interest of American businesses, consumers, and workers,” said MEMA President and CEO Steve Handschuh. “MEMA and its members are eager to work with the new administration and Congress to identify and implement tax reform that will allow our industry to continue as an economic engine for America.”

In January, MEMA released an important economic impact study that clearly defines the critical role motor vehicle parts suppliers play in the U.S. economy. The motor vehicle component manufacturing industry in the U.S. has experienced robust growth due to increased demand and vehicle sales. The stability and integration of the North American supply chain has been particularly beneficial to suppliers, contributing to growth in jobs and investments in the United States. MEMA supports reasonable tax reform that will allow this trend to continue.


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