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Obama manufacturing, wage push met with some skepticism

By Ben Berkowitz

(Reuters) - President Barack Obama's call for a renaissance in American manufacturing could lead to new jobs down the road, but his push to increase the minimum wage now could be a harder fight, with retail groups and small businesses opposed to the extra cost.

The president used Tuesday night's State of the Union address to lay out a plan to bring manufacturing jobs back to the country, including a network of institutes that would teach new industrial skills.

In an effort to make his point that it can be done, Obama mentioned Apple Inc, whose chief executive, Tim Cook, attended the speech, and which has already pledged to move some Mac computer manufacturing back to the United States from China. He also acknowledged companies such as Caterpillar, Ford and Intel for doing the same.

But even the staunchest supporters of American manufacturing dismissed what they say amounted to token gestures that will not make a real dent in the employment picture.

"Fact check on Apple bringing jobs back to US cited (in the speech): Tim Cook is investing only a ROUNDING ERROR of Apple's market cap in the US," Scott Paul, president of the Alliance for American Manufacturing, said on Twitter.

Apple said last year it would move some production of its Macintosh computers back to the United States, though it did not say which products or how much production, and it did not include iPads or iPhones in the effort.

Either way, though, investors said they supported the message: American workers need skills they currently lack and the economy will not improve until that changes.

"Our nation needs to do more exporting," said Steve Westly, a California venture capitalist, former state controller and one-time senior eBay executive who co-chaired Obama's campaign in the state. "We need to do a better job of retraining Americans to get those jobs ... I think most people get that."

INFRASTRUCTURE AND ENERGY

One way or another, those projects will require labor, which is where two other key elements of the speech came in: immigration reform and a hike in the minimum wage to $9 an hour from $7.25 an hour.

Obama made specific reference to changing the immigration laws to encourage highly skilled engineers and entrepreneurs to come to America and help expand the economy.

While Obama did not specifically speak to the issue of expanding the so-called H-1B visas for skilled workers, business leaders said his comments were still a good start.

"The President's remarks reflect the growing, bipartisan support in Washington to improve our nation's access to top international talent, as part of broader based immigration reform," Paul Guzzi, president of the Greater Boston Chamber of Commerce, said in a statement.

There may be broad support for immigration reform, but the minimum wage hike is much more controversial. Last year the holiday season saw protests against McDonald's and Wal-Mart Stores over wages, part of broader union efforts for higher worker pay.

"The minimum wage increase is more of a threat to small companies rather than the larger companies, particularly in food service," said JJ Kinahan, chief derivatives strategist at TD Ameritrade, in an email interview.

"However, the bigger effect on these companies is the cost of their goods - which are often processed by smaller companies," raising their costs beyond what they can still pass along to consumers, he said.

The National Small Business Association largely cheered the president's speech but took issue with the wage proposal, which it said "could be very problematic for segments of a struggling small-business community."

The National Retail Federation, which has in the past pushed for tax relief alongside minimum wage proposals, also questioned the president's plan.

"A minimum wage hike right now would be one more factor driving up costs for employers and creating headwinds for job creation, especially among the small businesses that create most of our nation's new jobs," David French, the federation's senior vice president for government relations, said in a statement.

ENERGY FREEDOM

The president also used the speech to come back to a favored theme: energy independence. While promising to speed new oil and gas permits, the president also suggested capturing more of the revenue they generate via an "Energy Security Trust," which would fund research into alternate fuel sources for cars and trucks.

But he was non-committal on what that fuel might be - a nod, perhaps, to the fact that the administration recently backed away from a goal of having 1 million electric vehicles on the road by 2015.

The president also nodded clearly at the uncertainty that has gripped the country time and again in the last two years - namely the debt ceiling fight in 2011 and the "fiscal cliff" in late 2012. Critics appreciated Obama's call to end the bickering but said more still needed to be done.

"Growth and job creation should absolutely be national priorities. But saying so doesn't make it so. What's required is action in Washington to create a better business environment, and we need to stop lurching from crisis to crisis. If growth is really the goal, the President and Congress should start with actual budgets, legislation and debate," Business Roundtable President John Engler said in a statement.

(Reporting by Ben Berkowitz in Boston; Additional reporting by Scott Malone and Ross Kerber in Boston, Phil Wahba in New York and Deepa Seetharaman in Detroit; Editing by Eric Beech)

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