Shopfloor Blog

The Policy and Politics that Impact Manufacturing

Manufacturers Welcome President Obama’s Decision to Attend Hannover Messe 2016

By | General, Presidents Blog, Shopfloor Main | No Comments

Washington, D.C., December 31, 2015 – National Association of Manufacturers (NAM) President and CEO Jay Timmons issued the following statement after the announcement that President Obama will attend Hannover Messe, the world’s largest industrial trade show, in April 2016:

“Manufacturers applaud President Obama’s decision to attend the largest innovation conference on the globe—to lend his voice and presence to the great story we’re telling of the innovation revolution of manufacturing in the United States. We are excited about showcasing our innovation leadership to the rest of the world and advancing transatlantic trade at Hannover Messe. Understanding the importance of this annual event, the NAM has bolstered our involvement each of the past two years. The NAM is proud to partner with the U.S. Department of Commerce and the many German manufacturers who have made significant investments in American manufacturing, to take U.S. participation at Hannover Messe to the next level and to promote manufacturers’ abilities to transform the world.”

View the full press release.

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Personal Spending Rebounded Somewhat in November, but Remained Softer-Than-Desired Overall

By | General, Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Bureau of Economic Analysis said that personal spending increased 0.3 percent in November, rebounding from being unchanged in October. Indeed, spending on durable and nondurable goods items were both higher for the month, up 1.1 percent and 0.9 percent, respectively, which was encouraging. However, overall spending remained softer than desired, with a general sense that Americans are holding back in terms of their overall consumer purchases. The increases in goods spending in November followed two months of softness, and service-sector spending was unchanged for the second straight month. Moreover, personal consumption expenditures have risen 2.9 percent over the past 12 months. While this represents modest growth in personal spending year-over-year, this pace has decelerated over the course of this year. For instance, the year-over-year rate was 4.4 percent one year ago.
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Manufacturers Challenge EPA’s Ozone Regulation in Court

By | Energy, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Policy, Shopfloor Main | No Comments

Ozone CourtsToday, the National Association of Manufacturers (NAM) filed a challenge to the EPA’s new ozone standard. In October, the EPA lowered the existing standard to 70ppb, despite high costs and impacts for manufacturers, jobs creators and businesses looking to grow or expand.

NAM Senior Vice President and General Counsel Linda Kelly said the following about the challenge:

“The EPA’s ozone regulation, which could be one of the most expensive in history, is unworkable and overly burdensome for manufacturers and America’s job creators. Manufacturers across the United States need regulations that provide balance and allow us to be globally competitive. Further, our air quality is improving, and ozone levels are down more than 30 percent since 1980, yet the Administration insists on moving forward with tightening an already stringent standard. The MCLA and the NAM will continue to fight this new standard that inflicts undue pain on the companies that build things in America.”

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Monday Economic Report – December 21, 2015

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

fed_funds_rate-dec2015As expected, last week the Federal Reserve began the process of increasing short-term interest rates, which have been effectively zero for seven years, by 25 basis points. In its statement, the Federal Open Market Committee (FOMC) said that “there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective.” At the same time, participants slightly increased their economic outlook for 2016, projecting 2.4 percent real GDP growth with the unemployment rate dropping to 4.7 percent next year. As such, the FOMC based its action on progress in the larger economy, even as ongoing challenges remain (particularly for manufacturing). It also sees pricing pressures as being largely contained, with core inflation of 1.6 percent in 2016.

Even with this action, the FOMC assured us that the “stance of monetary policy [will remain] accommodative after this release,” with interest rates remaining at historic lows. They currently predict the federal funds rate to rise to 1.4 percent, 2.6 percent and 3.3 percent in 2016, 2017 and 2018, respectively, up from a current effective rate of 0.15 percent. Of course, manufacturers had mixed emotions about the Federal Reserve’s moves, as noted in our most recent survey. More than 55 percent of respondents felt there were still sufficient weaknesses in the U.S. economy for the FOMC to wait for better data before acting.
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Treasury’s First Step Toward Implementing BEPS Highlights Manufacturers’ Broader Concerns

By | Taxation, Shopfloor Policy, Shopfloor Main | No Comments

As promised, Treasury yesterday released proposed regulations to implement new country by country reporting requirements included in recommendations on Base Erosion and Profit Shifting (BEPS) approved this fall by the G-20 and the Organisation for Economic Cooperation and Development (OECD).

While the requirement to file country by country reports (CbCRs) on a company’s global financial and tax data impose an additional administrative burden on companies, the proposed guidance makes clear that the reports will be submitted by Treasury to foreign countries under bilateral treaties and information exchange agreements with protections to ensure confidentiality, consistency and appropriate use of the information by foreign countries. The proposed guidance—which covers who has to file the reports and what information is required—also reiterates Treasury’s position that it will suspend the information exchange if a country fails to abide by these conditions.
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U.S. Economy Grew 2.0 Percent in the Third Quarter

By | General, Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Bureau of Economic Analysis said that the U.S. economy grew 2.0 percent in the third quarter. That is higher than the original estimate of 1.5 percent, but slightly lower than the 2.1 percent figure released last month. The largest variable in these three estimates was the impact of inventory spending, with businesses replenishing their stockpiles at a slower pace in this report than in the last one (but not as severe as originally thought). In the end, spending on private inventories subtracted 0.71 percentage points from real GDP growth in the third quarter. One upside to this, of course, is that a pickup in demand would necessitate additional production because of depleted inventory stockpiles. That could yield somewhat better growth moving forward.

For now, however, the current forecast is for real GDP to increase by 2.0 percent once again in the fourth quarter. The outlook for 2016 is for the economy to grow by 2.4 percent. Read More

Building Partnerships in Innovation

By | Innovation, Technology, Shopfloor Policy, Shopfloor Main | No Comments

picThe Internet of Things (IoT) is transforming manufacturing—from connecting machines on the shop floor to the end-use products. This concept of interconnectedness has enabled owners and operators in our sector to gather critical data that allows them to improve product design, troubleshoot in real-time and make manufacturing an even more integral partners with their customers throughout the lifecycle of their product. Today’s manufacturers continue to find ways to embed the latest technologies into their products and processes. With an eye toward the future, NAM member Caterpillar—a 90-year-old company—has begun to seek partnerships with technology startups to help better understand and take advantage of ideas coming out of the gate.
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The Center News: December 2015

By | Briefly Legal, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Main | No Comments

CenterNewsheader

Sometimes David really does beat Goliath. For 17 years, Deerfield, Florida pump manufacturer Moving Waters Industries (MWI) fought the federal government in a False Claims Act case. And recently they won—and scored a victory for all manufacturers. The Manufacturers’ Center for Legal Action was pleased to have provided amicus support in this case contributing to the positive and somewhat surprising outcome.
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NAM Takes on “Cadillac Tax” in The Washington Post

By | Health Care, Taxation, Shopfloor Policy, Shopfloor Main | No Comments

On Saturday, a letter to the editor from National Association of Manufacturers (NAM) Vice President of Government Relations Joe Trauger ran in The Washington Post highlighting manufacturers’ concerns with the employee benefits tax, commonly called the “Cadillac tax.” This 40 percent tax on employee benefits is a major issue for manufacturers as rising health care costs remain a top concern.

“The recent ‘Cadillac tax’ editorial missed the mark regarding the so-called virtues of the Affordable Care Act’s tax on employee benefits. To suggest that doing away with on-site clinics, flexible spending accounts and other benefits is good policy and will reduce health-care spending is misguided. Manufacturers have identified health-care expenditures as one of their top business challenges. The ACA has done nothing to mitigate those concerns. Most manufacturers will tell you that coverage is more expensive as a result of the law.”

Last week, the NAM released a new study looking at this costly tax. NAM’s SVP of Communications Erin Streeter and SVP of Policy and Government Affairs Aric Newhouse discussed the impacts of the tax in our ShopTalk video series and the action congress is debating to provide relief. As soon as this week, Congress could once again be voting on a delay of this costly tax.

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Monday Economic Report – December 14, 2015

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

MER graph - 12142015The NAM Manufacturing Outlook Index declined from 45.8 in September to 40.5 in the most recent survey, falling below the historical average for the second consecutive quarter. Nearly 60 percent of respondents were either somewhat or very positive about their own company’s outlook, a sharp decline from the 91.2 percent who said the same thing one year ago. Manufacturers continue to wrestle with global headwinds and lower commodity prices, which likely dampened enthusiasm in this report, especially regarding export expectations, with roughly 58 percent suggesting that their firms were negatively impacted by the global slowdown. Capital spending and hiring plans pulled back materially from the prior survey, which we also saw in the latest job openings numbers. On the positive side, manufacturing leaders anticipate 1.4 percent growth in sales and production over the next 12 months. While this pace remained well below the 4.5 percent pace observed in December 2014, it does suggest that activity remains positive, albeit less than desired.

The top business challenge was an unfavorable business climate, cited by 77.3 percent of manufacturing respondents. Indeed, manufacturers continue to be frustrated with the lack of comprehensive tax reform and with a perceived regulatory assault on their businesses. Rising health care and insurance costs were also a major concern, cited by 72.2 percent as a primary challenge. Manufacturers see health insurance costs increasing eight percent over the next 12 months. Small and medium-sized firms anticipate health insurance premiums to jump faster in the next year than large manufacturers do, with rates rising 8.6 percent and 6.5 percent, respectively. Read More