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President Obama Tours Manufacturing Facility to Talk Infrastructure

This afternoon President Obama toured the facility and spoke at of Ellicott Dredges in Maryland. During his visit the President spoke about the importance of infrastructure projects. He announced a Presidential Memorandum to modernize infrastructure review and permitting regulations, policies and procedures.

Our nation’s infrastructure is in need of investment and repair. Manufacturers rely on our rails, roads, ports and waterways to deliver billions worth of commodities annually. It is a positive step that President Obama is discussing the need for reforms but we need real action to speed up the review process of many infrastructure projects. The environmental streamlining reforms in the Water Resources Development Act, which passed the Senate this week, are the types of reforms that we would need to see for future projects.

Just yesterday Peter Bowe, President and CEO of Ellicott Dredge Enterprises, testified before the House Small Business Subcommittee on Agriculutre, Energy and Trade about the benefits of Keystone XL.

“So what does the Keystone pipeline have to do with us, and why do we care? For us, it’s all about jobs, not construction jobs for the pipeline itself, but ongoing jobs every year for decades to come, all related to the production of oil from the Alberta oil sands deposits. This oil needs the Keystone pipeline. The oil sands in Alberta are one of the largest markets worldwide for dredging equipment. Our dredges are used to rehandle the tailings generated by the mining process. Tailings are the wet waste which is a combination of clay, sand, and water after the oil- bearing bitumen has been removed. All the oil sands projects generate substantial amounts of tailings which are deposited into ponds. Oil sands producers have been criticized for water usage, but now, thanks to tailings reclamation, they recycle 85% to 90% of water used, and dredges are an integral part of the recycling process.”

Keystone XL will create thousands of jobs and is critical for the competitiveness of companies like Ellicott Dredges. Keystone XL has been pending for more than 5 years, the time has come to approve this important energy and infrastructure project.

Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.

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Setting the Facts Straight in the Pacific Northwest

Recently the Sierra Club and other environmental groups sent several coal companies and BNSF Railway notice that they intend to file a lawsuit over coal dust from railway cars in the Pacific Northwest. The threat of this frivolous lawsuit only harms our economy and jobs in the Northwest.

Yesterday, The Seattle Times ran an op-ed from Roger McClellan, past chairman of the Environmental Protection Agency’s (EPA) Clean Air Scientific Advisory Committee and an expert on toxicology and human health-risk analysis, disputing these baseless claims. In the piece McClellan points out that the anecdotal evidence and the opinions of just a handful of people should not be used to sway the public when it comes the transportation of coal, but these decisions should be based on scientific evidence and facts.

Excerpt from the piece:

For starters, claiming that finding a piece of coal on the ground or in the water leads in a direct line to a health or environmental risk violates one of the basic tenets of toxicology and risk assessment — the mere presence of a substance does not indicate harm. There are other factors that need to be taken into account, the main one being exposure.

Just because a piece of coal is found in the water or coal dust is found near a rail track does not mean humans are exposed to it. Coal is not a substance that breaks down easily. Coal is relatively innocuous. Simply moving it by trains or trucks or barges does not equate to a risk to the environment or human health.

Coal continues to play an important role in meeting energy needs around the world, with steady improvements made in its transport and use. Coal has been transported through the Northwest by rail for decades and there has never been any evidence of harm associated with this rail transport.

As McClellan notes coal has been transported for decades through the Northwest by rail and there has never been any evidence associated moving the coal on the railways. Only when debate heated up over the coal export terminals has this become a hot topic for environmental groups. Thousands of jobs are on the line and the decision on the coal export terminals should be based on facts. We must work to reduce our export barriers for valuable exports like coal, not create new ones.

 

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The South Korean President Speaks to Congress

Today South Korean President Park Geun-hye addressed a joint meeting of Congress as part of her visit to Washington. NAM Board Member and Quality Float Works CEO Sandra Westlund-Deenihan and company President Jason Speer attended the speech today as special guests of Speaker Boehner.

Quality Float Works P

Quality Float Works CEO Sandra Westlund-Deenihan and President Jason Speer attend South Korean President Park Geun-hye's Speech before a joint session of Congress.

The South Korean market is extremely important to the Schaumburg, IL based Quality Float Works which manufactures metal floats and valves used for the gas, plumbing oil and agricultural industries. The trade agreements passed in 2011 with South Korea, Panama and Colombia have helped Quality Float Works and other small and medium-sized manufacturers expand into new markets which in turn supports economic growth and job creation here in America.

Free trade agreements are critical to our export growth. Exports to just our 20 FTA partners grew by more than $41 billion in 2012 and are up by nearly $230 billion since 2009. This makes up nearly 48 percent of all U.S. manufactured goods exports for 2012 and 60 percent of the increase in 2012 exports.

We must continue to do more to open new export markets for companies like Quality Float Works. With 95 percent of the world’s consumers outside our borders we rely on exports to grow our economy and jobs.

 

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Positive News for the Auto Industry, Ford Expands Missouri Facility

We have had some good news this week out of the auto sector. U.S. automakers announced an increase in sales for 29 percent from last April. This marks the industries best April since 2007.

Additionally, Ford announced the company will be adding nearly 900 workers at is Kansas City, MO factory to increase production of F-150 trucks. Ford is also renovating this facility to produce the Transit cargo van which will add 1,100 workers.  So in total the company will add more than 2,000 jobs which is great news for American workers and manufacturing.

When a company like Ford is able to expand production it is positive news for manufacturers all throughout the supply chain. We’ve seen several indicators in recent weeks that manufacturing growth is slowing, and today’s trade report showed that exports feel again in March. We need action from Washington on pro-growth policies to help create more positive stories of job creation similar to this from Ford and the auto industry.

 

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The Federal Reserve Keeps Current Policies in Place As Expected

The Federal Reserve kept its existing monetary policies in place at its latest Federal Open Market Committee (FOMC) meeting. This was largely expected. With the policy positions unchanged, the focus instead was on the language that the Fed used to describe economic conditions. In particular, the Fed said that the U.S. economy is “expanding at a moderate pace,” but it added that “fiscal policy is restraining economic growth.”

This latter point is a reference to higher payroll taxes, across-the-board federal budget cuts, and the continuing debate over how to resolve our nation’s fiscal challenges. Given the limitations of fiscal policy right now and lack of action from Congress and the Administration, the FOMC has felt that it needs to act to stimulate growth pursuant to its dual mandate of tackling both inflation and unemployment. With pricing pressures under control for the time being, the Fed is free to pursue highly accommodating policies.

Specifically, the Fed will continue to purchase $85 billion in mortgage-backed and long-term securities each month, helping to push down long-term interest rates. The Fed will continue to make these purchases until the unemployment rate reaches 6½ percent or until longer-term inflation consistently exceeds 2½ percent. In the event that either of these thresholds is reached, the FOMC would re-evaluate its current stance.

The minutes of the last FOMC meeting in March led many to believe that some voting members were open to scaling back these purchases if economic conditions improved in the coming months; however, it is widely expected that these purchases will continue at least until year’s end, if not longer. Note that the Fed’s most recent economic projections do not have the unemployment rate reaching 6.5 percent until the beginning of 2015.

As with previous statements, Esther L. George, the President of the Kansas City Federal Reserve Bank and a voting member of the FOMC this year, dissented. She remains “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.” Ms. George is one of the “inflation hawks” who continues to worry about the long-term impact of the Fed’s stimulative policies.

Chad Moutray is chief economist, National Association of Manufacturers.

 

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Monday Economic Report – April 29. 2013

Last week was a disappointing one on the economic data front. Real GDP—the inflation-adjusted value of the nation’s output of goods and services—climbed 2.5 percent in the first quarter of 2013 at a seasonally adjusted annual rate, according to the Bureau of Economic Analysis’s advance estimate. While that represented an acceleration in economic growth from an even weaker 0.4 percent pace in the final quarter of last year, it was far below many analysts’ estimates.

The increase was driven by a 3.2 percent jump in consumer spending, the largest gain for that category in nine quarters, which came despite a tax increase that took effect at the beginning of the year. A sharp decline in the savings rate in the first quarter, however, indicated that the burst of spending growth was funded in part through a lower accumulation of savings, a situation that is unlikely to continue as the year goes on and individuals adjust their spending habits in response to reduced after-tax income. Indeed, monthly retail sales data suggest this adjustment may have begun as early as March.

Meanwhile, nonresidential fixed investment, though positive, grew at a lower rate than seen in the closing months of 2012 as businesses remained wary of making sizable forward-looking expenditures given a fragile global economic environment and a domestic backdrop of fiscal contraction and continued policy uncertainty. While exports rebounded in the first quarter from a decline in the previous period, they increased at a low pace relative to their post-recession pattern. Moreover, federal government spending was off sharply as the sequester became effective in March.

Other data releases last week did little to assuage growing concerns that the economy may be in the midst of yet another “spring swoon.” The Chicago Fed’s National Activity Index, a composite of 85 monthly economic indicators, slipped into negative territory in March. Meanwhile, the Kansas City and Richmond Fed manufacturing surveys, the Markit Purchasing Managers’ Index (PMI) and the durable goods orders reports all suggested an erosion of manufacturing sector momentum. Even the resurgent housing market was not immune from the March gloom, with existing home sales off modestly (though new home sales, as well as a variety of other measures, gave a more encouraging snapshot of housing’s recovery).

This week’s reports will shed further light on the direction of the economy at the end of the first quarter and beginning of the second. Of particular note:

  • Wednesday’s release of the ISM Manufacturing PMI, a closely watched bellwether, will provide an early read on the strength of the manufacturing sector on a national level in April.
  • Friday’s release of the employment report by the Bureau of Labor Statistics will provide insight into whether March’s disappointing gain of only 88,000 jobs was merely a one-month anomaly or the start of another deceleration in the pace of labor market recovery.

Other highlights include the Dallas Fed’s April survey of manufacturing conditions in Texas, the Conference Board’s Consumer Confidence Index for April and March data on factory orders and construction spending from the Census Bureau.

Timothy Gill is director of Economic, National Electrical Manufacturers Association.

 

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Kansas City Fed Activity Down Slightly

The Federal Reserve Bank of Kansas City released its April Manufacturing Survey today and the composite index fell slightly to -5. This is improved from the -10 we saw in February but is relatively the same as last month’s index.

Firms reported optimism on future activity but several reported a deteriorating outlook since earlier in the year. One of the firms survey commented, “Our expectations for future increases have cooled considerably in the last few months. New business opportunities are not coming forth as previously expected. Retailers are making changes in supply as expected, probably driven by more aggressive pricing tactics by incumbent suppliers.”

Tomorrow we will see what the GDP report says for the first quarter this year. The durable goods orders yesterday showed that manufacturing has slowed somewhat over the past few months. The impact of the sequestration and other global concerns are starting to have a real impact.

 

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Monday Economic Report – April 22, 2013

Common themes emerged from several surveys and economic data releases last week: (1) Overall economic activity expanded at a moderate pace in March and early April; (2) the manufacturing sector grew modestly, with the exception of the motor vehicle and parts industry, which experienced robust gains; and (3) residential and commercial real estate activity continued to improve.

The New York Fed’s Empire State Manufacturing Survey indicated conditions for manufacturers in the district improved only slightly in April. The headline general business conditions index fell six points to 3.1 (an index above zero indicates expansion as compared to the prior month). Both new orders and shipments sub-indices weakened, offset slightly by a better employment index. The headline for the Philadelphia Fed Manufacturing Survey slipped from 2.0 to 1.3, with new orders down but the shipments index improved. Expectations over the next six months retreated as well.

The Federal Reserve’s Beige Book conveyed similar messages: overall economic activity expanded at a moderate pace entering the second quarter. Residential construction and automotive sales and production remained strong, but several districts reported uncertainty or weakness in defense-related sectors. Oil and natural gas activity has been robust, while coal production continued to decline. Employment conditions remained largely unchanged, and wage pressures were generally modest.

Industrial production in March rose 0.4 percent from the prior month, or 3.5 percent over March of 2012, largely reflecting a 5.3 percent increase in utility output due to unseasonably cold weather. Manufacturing production was down 0.1 percent from the prior month, with durable goods production declining 0.2 percent and nondurable goods essentially unchanged. The auto sector continues to lead the manufacturing sector, rising nearly 3 percent from February, or up 10 percent from a year ago. (continue reading…)

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How the MTB Impacts Your Golf Bag

This past Tuesday was National Golf Day, making this a fitting week to bring you the story of PING and how policies in Washington, particularly the miscellaneous tariff bill, are impacting golf equipment manufacturers.

In 1959, Karsten Solheim, a Norwegian immigrant and engineer, designed and manufactured a putter in his garage to address his frustration with putting, dubbing the new putter the PING putter because of the unique sound made when it struck the ball. A local golf professional was so impressed by the accuracy of the putter that he suggested Karsten make his invention available to other golfers.  Soon after, Karsten transformed the family garage into a miniature manufacturing and assembly facility.

By 1966, Karsten Manufacturing Corporation became his full time job. Karsten pioneered the idea of custom fitting each golfer for golf clubs with specifications to fit each golfer’s characteristics and swing. Now PING manufactures and delivers premium, custom fit golf clubs to its customers within 48 hours of receiving an order.

Manufacturing workers assemble golf equipment at a PING facility in Arizona

Manufacturing workers assemble golf equipment at a PING facility in Arizona

Karsten’s youngest son, John Solheim, assumed leadership of the company in 1995 and has overseen its growth while building on the foundation of innovation, quality and integrity established by his father over 50 years ago. (continue reading…)

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Toyota Will Boost Production in U.S. and Create More Jobs

Today Toyota Motor Manufacturing announced that the company plans to begin manufacturing the Lexus ES 350 in Kentucky. Production will take place at the company’s Georgetown plant and will create 750 new jobs. The company is investing $360 million in the facility and will start producing vehicles in 2015. This will be the first time Toyota has manufactured Lexus vehicles in the United States.

This is positive news for manufacturing in the United States and also shows the benefits of direct foreign investment for job creation. One of the top goals of the NAM which is laid out in our Growth Agenda is to make the United States the best place in the world to manufacture and attract direct foreign investment.

Just yesterday the NAM’s Vice President of International Economic Affairs Linda Dempsey testified before the House Energy & Commerce Subcommittee on Commerce, Manufacturing and Trade hearing about global investment in America. She discussed the economic impact of foreign investment on manufacturing in the United States.

“Foreign Direct Investment (FDI) plays a critical role in manufacturing. Based on data from the Commerce Department’s Bureau of Economic Analysis, FDI inflows in manufacturing equaled nearly $83.4 billion in 2012, accounting for almost 50 percent of total FDI inflows. FDI in manufacturing has shown substantial growth since 2003 and is showing a rebound from the weakness in 2008 and 2009. About 95 percent of all FDI in the United States comes from developed countries, starting with the United Kingdom. While the share fluctuates yearly, a substantial portion of such investment since 2005 has been in the manufacturing sector. The most recent data from 2012, which are still preliminary, show that FDI in manufacturing accounts for nearly 50 percent of total FDI that year.”

With the global competition growing there is clearly more room for growth in FDI. It currently remains 20 percent more expensive to manufacture in the United States compared to our largest trading partners.  To make America the best place for foreign direct investment policymakers must move forward with pro-growth policies laid out in the NAM’s Growth Agenda.

 

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