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Association: Energy, health care sway manufacturing outlook

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U.S. energy policy, regulation and health care law are likely weighing on the minds of manufacturers, and that's giving a mixed read of recent industry outlook surveys, said an analyst from the Pennsylvania Manufacturers' Association.

The Federal Reserve Bank of Philadelphia's Business Outlook Survey showed manufacturers in eastern and Central Pennsylvania, southern New Jersey and Delaware showed declines in the past month's activity but are generally optimistic about the next six months.

Thirty-two percent of firms reported activity declines, but 43 percent expect activity to improve over the next six months, according to the survey. Four out of 10 blamed Hurricane Sandy for plant shutdowns or reduced activity in the past month.

"I don't know that accounts for everything," said Carl Marrara, director of government affairs for the Harrisburg-based Pennsylvania Manufacturers' Association.

Political fallout is one factor to consider, he said.

Companies were in a wait-and-see mode before the election, he said. They are likely still concerned about President Barack Obama's policies and regulations regarding energy and health care.

Companies want to know how changes under the Patient Protection and Affordable Care Act, also called Obamacare, will affect their businesses before moving ahead, Marrara said. That and the president's tighter regulations on the coal industry could be generating some uncertainty and slowing up the manufacturing sector, he said.

Many manufacturers are going to move forward and attack the market instead of waiting, especially since the president's policies will remain in place, he said.

"Now Pennsylvanians have to improve our business climate to attract business over other states," Marrara said.

Balanced energy policy will be a huge component of revitalizing manufacturing because it needs large amounts of reliable and inexpensive electricity, he said. Gas development is one component of that, but it and coal face pressures from environmental groups, he said.

In Pennsylvania, the prospect of Shell's natural gas ethane cracker plant being built near Pittsburgh is important to manufacturing throughout the state, he said. The plant will produce the raw materials used in many other factories. That could generate greater manufacturing growth in the state, he said.

"We have hope," Marrara said. "The numbers are a little discouraging … but we're on the same playing field as everyone else."

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