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Regulation Burdens the Manufacturing Sector

Posted 8:37 PM by

The Manufacturers Alliance for Productivity and Innovation (MAPI) recently commissioned a study titled "Macroeconomic Impact of Federal Regulation on the Manufacturing Sector." The study found federal regulations are having a cumulative impact on the manufacturing sector that far outweigh their individual costs and are threatening the competitiveness of U.S. manufacturing.

In other words, regulations have a big impact on manufacturing profitability.

The study found there have been 2,183 regulations issued since 1981 that were determined to have an impact on the manufacturing sector. Of the 2,183 regulations issued, 235 were classified as "major" regulations, meaning their impact on compliance costs was equal to $100 million or more. The study also found that these major regulations were estimated to reduce future output by 2.3% to 6% annually.

Of all regulations issued, it was determined that environmental regulations had the biggest impact on compliance costs for U.S. manufacturing. This results in a large impact on energy-intensive manufacturing sectors, such as chemicals and petroleum, with the cumulative impact of regulations estimated to reduce output by 9.0% to 10% annually. 

Finally, the study found the estimated loss in GDP for 2012 related to the compliance costs of regulation on the manufacturing industry to range from $240 billion up to $630 billion.

About the Author

Justin Hayes is a director in Katz, Sapper & Miller’s Audit and Assurance Services Group as well as being a member of the Not-for-Profit and Governmental Services Groups. Justin works with clients to help them avoid risk and maximize efficiencies by keeping an eye on their bottom line and helping ensure accurate financial reporting. Connect with him on LinkedIn.

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