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Mandating what products companies use is bad for business

March 13, 2013 J


AFP-Arkansas opposes Senate Bill 54, which mandates that state construction projects use 25% “Made in America” steel and iron materials. This patriotic-sounding mandate sounds great, but as with every other government mandate, it is the taxpayers who suffer from the resulting high costs and increased waste.

By mandating what types of products a construction project must use, the costs of the project increase—and those increased costs are passed on to the taxpayers. During construction, firms have every incentive to keep costs low. They do this by purchasing the lowest cost materials available without sacrificing the quality of the final product. Adding a “Made in America” mandate complicates the process by forcing firms to substitute more expensive inputs of similar quality, which always drive up the end cost. This mandate also burdens builders, sub-contractors and suppliers with yet another layer of bureaucracy. Inevitably, the state of Arkansas would have to increase overhead spending to track the compliance of such a mandate.

Already, American manufactures face a competitive disadvantages because of federal/state government mandates and regulations. Taxpayers should not have to continue to shoulder the burden of government over-regulation by increasing cost of taxpayer funded projects.

Arkansas needs to look no further than the federal government’s failed attempts to insert “Buy American” provisions in the 2009 stimulus boondoggle which cost taxpayers millions. Taxpayers would be best served if Arkansas rejected this cost-raising scheme.

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