Real GDP Grew by 2.6% in the Second Quarter

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

The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 2.6 percent in the second quarter, according to preliminary data. In addition, it revised first quarter growth down from 1.4 percent to 1.2 percent. As a result, the real GDP increased by 1.9 percent at the annual rate in the first half of 2017. For the year a whole, I am currently predicting real GDP growth of 2.2 percent, with 2.6 percent growth for the current third quarter. This is not far from the 2.1 percent average growth rate seen since the Great Recession, but I continue to believe that there is upward potential in the forecast, especially for 2018, if pro-growth policies are enacted.

Looking at the underlying data, consumer and business spending were the bright spots, with net exports also making a positive contribution for the second straight quarter. Personal consumption expenditures rose by 2.8 percent in the second quarter, accelerating from the 1.9 percent pace seen in the first quarter on an increased willingness to purchase goods. Along those lines, durable goods spending was marginally negative in the first quarter with consumers more cautious, but jumped 6.3 percent at the annual rate in the second quarter. With that said, spending on motor vehicles remained soft. Nondurable goods spending was also stronger, up 3.8 percent in the second quarter. Overall, personal spending contributed 1.93 percentage points to the top-line growth figure of 2.6 percent, including 1.02 percent from goods spending. Read More

What’s Going On In Canton, Mississippi?

By | Shopfloor Main, Shopfloor Policy | No Comments

Manufacturing workers at the Nissan plant in Canton, Mississippi, enjoy some of the highest wages, best benefits and most stable jobs in the state. Nissan gives back to the community—donating more than $13.6 million to local charities—and their investment in the facility has strengthened the city and state.

Now, outside interests want to disrupt this positive work environment and community relationship. The United Auto Workers (UAW) is pushing for dramatic changes at the plant—encouraging workers to cast votes on unionization without any real benefit and many downsides.

The NAM’s partner organization in Mississippi, the Mississippi Manufacturers Association, lays out the details here. The future of manufacturing workers in Canton could be negatively impacted by the UAW’s actions. Everyone involved, especially the local community, should be concerned. If something isn’t broken, why is an outside group trying to fix it?

Women in Manufacturing: Confidence, Partnership, and the Power of Perseverance

By | General, Shopfloor Main | No Comments

By Aneesa Muthana, President and Owner of Pioneer Service, Inc.

It’s been said women have an uphill battle in this industry. That they need to work harder for less money, that the machining industry treats women unfairly.

I had it easy.

I had mentors – supportive parents that kick started my interest in their trade and acted as role models. Father taught his trade to myself as well as my brothers. I watched my mother, who had no education and couldn’t speak English, find a job as a factory worker. Her work ethic won her respect, and she received raises without even asking for them.

As I grew older, my father preferred me in the front office, but I wouldn’t leave the shop. As a compromise, after I finished my daily office work, I could return to the machines. Dad knew this was the best deal he would get, so he put a speaker in the shop, and soon I was hurdling over bundles of metal to answer the phone.

So when people ask me how I was able to succeed as an outsider –  a woman in manufacturing – it’s because I watched my mother defy convention not with words, but with work(wo)manship. When Dad, who I love dearly, tried to move me into a more traditional woman’s role, I chose compromise over defiance. Was it unfair? Probably. But if my mother could earn her coworkers’ confidence with nothing but sweat and quality, then I knew I was capable of doing the same.

Spoiler alert: the world is unfair. Fate does not discriminate. It does, however, reward tenacity.

The problem with the “oppressive male regime” narrative is twofold. First, it creates an adversarial relationship that gets in the way of partnership. Second, it makes women into victims, reinforcing the sentiment they are doomed to fail.

I mentor women in manufacturing not because they’re oppressed – many men are onboard with women in the workplace – but because the main ingredient in success is confidence and some women still lack it. Victimhood erodes confidence.

As a young woman of 23, fate came for me in the form of divorce. My uncle threw me a lifeline, offering me a position in his new small machining company. I was practiced in my field and had already spent years managing other businesses, so instead I offered to share leadership of Pioneer Service. He agreed. Not because I was a woman, not because I was his blood, but because I had already proven capable and I was eager to prove myself.

Almost 25 years later, I am President and owner. I owe it to my parents and my uncle, who showed me that men are not the enemy. Treat them like an enemy, and they will respond like one. Show them what you can do instead, and most men – most people – are smart enough to see you as an asset.

Fate owes you nothing. Earn your place and let the results speak for themselves – the world will take notice.

Manufacturing Investment Creates New Detroit Auto Jobs

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Detroit is synonymous with manufacturing. America’s manufacturers built the city. For over a century, manufacturers’ factories have produced the cars which move the world and the jobs that drive Detroit. Their investment made Detroit the Motor City.

Now a new manufacturer is investing in Detroit.

Since 2012, Mahindra Detroit-based North American Technical Centre has employed 120 expert engineers. Leveraging American ingenuity, the $19 billion manufacturing company has been driving innovation there. From Mahindra’s Detroit enterprises came a cutting-edge minivan design, $2.5 billion in revenue and 3,000 American manufacturing jobs.

Now the company is doubling down on Detroit. On July 17th, Mahindra announced a new $1.5 billion investment. It promises $2.5 million more revenue. And that means more rewarding, well-paying jobs for American workers. The project’s centerpiece is a new factory. In it, 3,000 Detroit manufacturing workers will build off-road utility vehicles, targeting a key segment of the auto market.

In a CNBC interview, Chairman Anand Mahindra said his business values “the best talent in the world.” That’s what he found in Detroit. And that’s why he rewarded its workers with good jobs, solid wages and greater investment.

Mahinda continues the Motor City tradition: employing great people to manufacture great products.

Manufacturing was the Largest Industrial Contributor to Real GDP in the First Quarter

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

Real GDP grew 1.4 percent in the first quarter, pulled lower by weak inventory spending and softer-than-desired consumer spending. At the same time, business investment was a bright spot in the report, and, according to new data from the Bureau of Economic Analysis, so was manufacturing. Real value added output rebounded in the first quarter, up 4.7 percent after falling by 2.9 percent in the fourth quarter. As a result, manufacturers contributed 0.54 percentage points to headline growth in the first quarter, a notable improvement from the 0.39 percentage point drag seen in the fourth quarter. Indeed, it was the largest industrial contributor to real GDP growth in the release. Read More

Manufacturers Say The President is Getting it Right on Regulations

By | General, Shopfloor Main | No Comments

President Trump and Congress are tackling regulations like we haven’t seen in generations, bringing expansion, hiring and more investment opportunities for Manufacturers.

According to the NAM Manufacturers’ Outlook survey, 80 percent of manufacturers say the president’s actions on regulations are headed in the right direction, with more than half of respondents saying those actions will allow them to expand operations, increase investment and add more workers.

Manufacturers’ record-high optimism reported in the first quarter has carried into the second quarter of this year, marking the highest two-quarter average (91.4 percent) for manufacturing optimism in the survey’s 20-year history. In addition, 89.5 percent of respondents report a positive outlook for their company.

Read the Full Report Here

Housing Starts Rebounded in June after a Soft Spring

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

The Census Bureau and the Department of Housing and Urban Development reported that new housing starts rebounded in June after a soft spring. New residential construction rose from an annualized 1,122,000 units in May, an eight-month low, to 1,215,000 in June. Since reaching 1,288,000 units in February, housing starts have pulled back; however, on the positive side, this is the first time activity has exceeded 1.2 million since then, which is encouraging. Homebuilder optimism remains strong despite slipping once again, with respondents to that survey predicting healthy gains in activity over the next six months (see below). I am forecasting growth of 1.28 million starts by year’s end.

Looking at the June data, single-family (up from 799,000 to 849,000) and multifamily (up from 323,000 to 366,000) starts increased in the month, with both at their fastest rate since February, mirroring the headline number. The Midwest and Northeast saw the strongest growth, with only marginal gains in the West, whereas activity slipped in the South. On a year-over-year basis, housing starts rose 2.1 percent from June 2016’s pace of 1,190,000. Single-family starts have jumped 10.3 percent over the past 12 months, up from 770,000 one year ago. In contrast, multifamily starts, which can be highly volatile from month to month, have fallen 12.9 percent over that time frame.

Read More

Manufacturing Production Rebounded Somewhat in June

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The Federal Reserve reported that manufacturing production rebounded in June, up 0.2 percent, after falling in two of the three prior months. Overall, springtime production in the sector was choppier than we would have desired or expected, especially given the more robust outlook in other data sources. Yet, even with some disappointment in recent months, the longer-term trend for output among manufacturers has been quite positive. Across the past 12 months, manufacturing production has risen 1.2 percent. It was the eighth consecutive positive year-over-year reading for manufacturing output and progress from the 0.2 percent year-over-year gain in June 2016. Similarly, manufacturing capacity utilization inched up from 75.3 percent in May to 75.4 percent in June. For comparison purposes, utilization in the sector was 75.1 percent one year ago. Read More

Timmons: Scott Garrett at the Ex-Im Bank is a Bad Deal for America’s Manufacturers

By | General, Shopfloor Main, Trade | No Comments

The U.S. Export-Import (Ex-Im) Bank has operated for decades with a mission to support U.S. jobs through exports. Back in April, President Donald Trump confirmed his support for the export credit agency. In 2015, a bipartisan supermajority in Congress voted to reauthorize the agency through 2019. Who would want to stand in opposition to this small federal agency with an outsized, tangible benefit for the U.S. economy? Unfortunately, the former Congressman who has been nominated to lead the agency is just that person. Former New Jersey Rep. Scott Garrett, the nominee to lead the Ex-Im Bank, has been a vocal and dogged opponent of the Ex-Im Bank.

NAM President and CEO Jay Timmons, in an Op-Ed published today in the Wall Street Journal, outlined the negative impact for manufacturers if the Senate moves to confirm Mr. Garrett as the leader of the Ex-Im Bank.

As a Congressman, Mr. Garrett built a record of votes and statements that sought to dismantle the Ex-Im Bank. Mr. Garrett voted to close the agency at every opportunity. He voted against a reauthorization bill in October 2015 that passed the House with overwhelming bipartisan support. Before the vote, he took to the House floor to mischaracterize the agency as a “fund for corporate welfare” and urge his colleagues to “keep the Export-Import Bank out of business.”

When he voted against the agency’s reauthorization again later in 2015, he issued a statement explaining that he opposed the bill because it would “resurrect the most shameless example of crony capitalism Washington has ever concocted—the Export-Import Bank.” Prior to the 2015 reauthorization, Mr. Garrett voted against the Ex-Im Bank reauthorization in 2012 that was strongly approved by both the House and Senate. Mr. Garrett’s opposition to the Ex-Im Bank has been consistent, vocal and aimed at undermining the agency’s credibility.

Ex-Im Bank Benefits U.S. Manufacturers, Workers and Taxpayers

  • American Workers and Their Families Benefit from Ex-Im: U.S. export sales supported by the Ex-Im Bank have directly supported 1.4 million jobs over the past seven years.
  • Small Businesses: In FY2016, about 90 percent of Ex-Im’s transactions – more than 2,600 deals – directly supported small businesses. Tens of thousands of small business suppliers benefit from partnerships with large exporters that also utilize Ex-Im Bank.
  • Taxpayers: Ex-Im has generated $7 billion for taxpayers in the past 20 years, mostly through fees collected from foreign customers. The agency is self-sustaining and covers its own operating costs. Eliminating Ex-Im would actually increase the U.S. deficit. The agency transferred $284 million in deficit-reducing receipts to the U.S. Treasury for FY 2016.

Mr. Garrett’s past statements are evidence of a fundamental misunderstanding of the Ex-Im Bank’s ability to level the playing field globally. In a competitive global landscape, the Ex-Im Bank is a much-needed counterweight to substantial foreign export financing. The agency recently reported that China continues to be the world’s largest provider of official export credit, providing more trade-related investment support than the rest of the world combined. Together, the BRICS countries (Brazil, Russia, India, China and South Africa) provided a combined total of more than $51 billion in medium- and long-term export credit in 2016 —nearly half of the total official export credit provided worldwide. Last year, without a quorum for its Board of Directors, the Ex-Im Bank was able to authorize just $5 billion. While the agency’s Board of Directors has lacked the necessary quorum to approve certaom deals, an estimated 40 deals worth more than $30 billion are stuck in the pipeline.

The Ex-Im Bank plays a targeted and critical role in securing and creating more American jobs. That is why the agency needs at its helm a leader who will ensure the agency is able to function at its full potential and promote U.S. exports in the face of substantial competition from manufacturers overseas supported by very active export credit agencies. Manufacturers are losing out on opportunities every day that the vacancies on the Ex-Im Bank Board of Directors are left unfilled, but Mr. Garrett – who said “Congress should put the Export-Import Bank out of business” just two years ago – is simply not a credible leader for this agency.

Hiring Rate for Manufacturers at Nearly a 10-Year High in May

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

The Bureau of Labor Statistics reported that the rate of hiring in the manufacturing sector in May grew to its fastest pace since November 2007. According to the latest Job Openings and Labor Turnover Survey data, manufacturers hired 332,000 workers in May, up from 314,000 in April. Expressed as a percentage of the total manufacturing workforce, that meant the hiring rate in the sector jumped from 2.5 percent to 2.7 percent, or nearly a 10-year high. Hiring has trended upward across the past nine months since it bottomed out at 268,000 in August. With that said, total separations—including layoffs, quits and retirements—also rose, up from 317,000 to 327,000, with the separations rate unchanged at 2.6 percent. As a result, net hiring (or hires minus separations) increased by 5,000 in May, rebounding from a loss of 3,000 workers in April. Read More