Question 2: Office of Management and Budget, through the Economic Classification Policy Committee (ECPC) proposed this in January of 2009.

Opinion, They are foundationally incorrect because they define maunufacturing as “manufacturer utilizes inputs such as capital, labor, and energy to transform material inputs into a new product…” and then call a firm which does not so transform inputs as a manufacturer. The factoryless Goods producer neither utilizes inputs nor transforms inputs into products.
“Characteristics of factoryless goods producers include:
Does not perform transformation activities;Contracts with manufacturing service provider to perform transformation activities to its specifications”
In my world, such a firm would be called a Customer.

How does non-transformation count as manufacturing?
They make a two more points: “Owns rights to the intellectual property or design (whether independently developed or otherwise acquired) of the final manufactured product;”Owns the manufactured product it contracted another establishment to produce”

So lets use baking a cake as a proxy for manufacturing. Ingredients are transformed to make a final good for sale.

For example, I go to a real bakery (one with ovens and mixers) and I give it the recipe for the cake and icing and decoration I want. And lets say I want to sell these cakes (maybe they are special for a football team or something).

According to the proposal, I can call myself a bakery- I contracted for someone else to perform the transformation; it is my design and intellectual property, and I am selling it. I am now a Bakery by the logic of defining what is a factoryless goods producer.

Either manufacturing is transformation, or it isn’t.

Design is not manufacturing. Contracting is not manufacturing. Sales is not manufacturing.
Record companies are not manufacturers. Movie studios are not manufacturers. Companies who similarly design something for sale but have it made by someone else are not manufacturers either. Except in the wishful thinking of Washington.

Thanks for the questions.

How do I contact my congressman to vote against this farce?