Two House Banking Committee leaders have proposed a $6.7-billion, five-year plan to help revitalize the nation's manufacturing base, warning that otherwise, American industry won't be able to carry out the Reagan administration defense buildup.
"No one can dispute the fact that America's industries are worn out," said Rep. Jim Blanchard (D-Mich.), chairman of the Banking subcommittee on economic stabilization.
"Plants and factories sit idle; machinery is antiquated or obsolete; production is seriously hampered by shortages of skilled labor, and our country's dependence on foreign sources for crucial parts and supplies is an ominous, but steadily growing reality."
The proposal by Blanchard and Rep. Stewart McKinney (R-Conn.), the subcommittee's top-ranking Republican, would provide $1 billion a year in loan and price guarantees to small and medium-size businesses that need to modernize plants and equipment and recruit more skilled employes. Job training funds would also be authorized.
To qualify, a company would have to be producing defense-related materials or be a potential defense supplier that could be called on as military procurement increases. The list of qualified industries would be prepared by the Defense and Commerce Departments.
Stripped to essentials, the bill is a basic industrial revitalization bill of the kind advocated by congressional Democrats and liberal economists and business analysts in recent years. As such it runs head-on into the policies of the Reagan administration and its conservative allies, which oppose business subsidies, loan guarantees and other targeted aid.
But Blanchard and McKinney hope to win conservative support by connecting aid for these kinds of companies and the achievement of the defense buildup called for by President Reagan.
The plan is cast as an amendment to the Defense Production Act of 1950, over which their subcommittee has jurisdiction. The loan guarantees are currently authorized by the act, which must be renewed this year. Blanchard and McKinney held lengthy hearings and called 125 witnesses, including top Pentagon procurement officials, to try to strengthen their case.
In addition, the bill would provide federal aid to expand domestic capacity for producing critical strategic materials such as cobalt and manganese, which are now imported from the Soviet Union, South Africa or Zaire--nations that the United States could not depend upon in an emergency, the two congressmen say. There is powerful conservative support for development of domestic strategic minerals.
The plight of smaller manufacturing companies in the industrial states is the main motivation of the two subcommittee leaders, they made plain. Michigan and Connecticut are filled with the smaller machine-tool companies, foundries, fabricators and other industrial manufacturers that would benefit from the bill.