General

Most expensive regulation in history may be coming this December. Merry Christmas, America.

This morning, the National Association of Manufacturers (NAM) released a study by NERA Economic Consulting that examines the economic costs of a stricter new standard for ground-level ozone. The study, an executive summary, and individual results for each of the lower 48 states can be found on our website at http://www.nam.org/ozone.

We asked NERA to model an ozone standard set at 60 parts per billion (ppb), a level EPA is currently considering and the number environmental and health advocates are asking the EPA to arrive at. According to NERA, the costs of a regulation set at this level are very, very high: $270 billion in GDP, 2.9 million lost job-equivalents, and nearly $1,600 less for the average household to spend per year. But as troubling as those numbers are, what is equally if not more troubling is the reason for them: EPA has identified only a third of the controls needed to comply with a 60 ppb standard, and the remaining two-thirds are left to what the agency calls “unknown controls.”

Let me state that again: we don’t know what we would have to do to make two-thirds of the reductions (approximately 2.6 million tons of nitrogen oxides) in order to meet a 60 ppb standard. That’s a problem.

What NERA did was try to estimate what we would really have to do to get those 2.6 million tons out of the environment. They concluded that you’d have to start shutting down, scrapping or substantially modifying everything from power plants and factories to heavy-duty trucks, trains, farm equipment, off-road vehicles and even passenger cars. All of that comes at an extremely high cost.

So for the benefit of our members and the Administration, we asked NERA to produce what we believe is the most intellectually rigorous analysis that’s ever been done in the area of ozone. NERA took into account the unique characteristics of each state and did the analysis from the ground up. They identified which sectors would bear the compliance burdens in each state, and how. And they identified areas where data is lacking and provided guidance on what EPA can do to fill these gaps.

This study, we hope, will help guide EPA and others in the Administration to a reasonable end point. The existing ozone standard – the most stringent ozone standard ever – was just revised in 2008, and is still being implemented. It will drive substantial reductions in ozone levels for the next several years. We all want clean air and clean water, and manufacturers are committed to complying with the 2008 standard and doing our part.

Ozone levels are getting so low that even national parks like Yellowstone and Rocky Mountain would be in violation at the levels EPA is considering. As NERA’s study shows, we may have reached the point at which significant further reductions simply cannot be accomplished in any cost-effective manner.

We believe the current standard of 75 ppb needs to be on the table for EPA’s proposal in December. As this study shows, 60 ppb is simply not achievable and should be off the table.  We sent the report to EPA leadership this morning and offered to provide them an in-depth briefing to understand the study results and methodology. We hope they will take us up on our offer.

This regulation directly impacts every single one of our 12,000 members. We owe it to them to make sure EPA gets this regulation right.

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WTO Trade Facilitation Agreement Faces Deadline and Disagreement

U.S Trade Representative Michael Froman is holding out hope that India and a few other countries blocking implementation of the World Trade Organization’s Trade Facilitation Agreement reached last year in Bali will reconsider their position before today’s midnight deadline.

“I certainly encourage the other countries who are currently holding up that agreement –​ it’s a very small number of countries who’ve expressed their willingness to break that consensus – I encourage them to come back to the table and support the consensus,” Ambassador Froman said at a Senate Finance Committee hearing yesterday. In his written testimony, Ambassador Froman noted that the WTO Trade Facilitation Agreement is part of a coordinated trade and development strategy for Africa in particular. The Organisation for Economic Co‑operation and Development (OECD) estimates that full implementation of the Trade Facilitation Agreement would reduce trading costs by more than 14% for developing countries and by more than 15% for lower middle-income countries.

The NAM strongly supports implementation of the Trade Facilitation Agreement, in accordance with the timeline agreed upon in Bali. An important deadline for the first phase of implementation comes today, with the July 31 deadline for the WTO’s General Council to accept notifications of “Category A” commitments, adopt the Protocol of Amendment, and open the Protocol for acceptance. Unfortunately, a meeting of the WTO Preparatory Committee on Trade Facilitation adjourned earlier this month without consensus on a Protocol of Amendment. WTO Director General Roberto Azevedo has scheduled an informal meeting with the heads of all 160 delegations for 9 p.m. in Geneva (3 p.m. in Washington, D.C.). The WTO expects to issue a statement after the meeting.

On July 17, the NAM was joined by eight other trade associations in sending a letter to G20 Trade Ministers in support of the WTO Trade Facilitation Agreement. In the Chairman’s Summary of the G20 Trade Ministers meeting on July 19, Australian Trade Minister Andrew Robb said “We undertook to show leadership in our support for the full implementation of all elements of the Bali outcome agreed at the 9th WTO Ministerial Conference in December 2013, including the Agreement on Trade Facilitation, consistent with the agreed timelines. We agreed this is critical to securing a strong future for the multilateral trading system. We reaffirmed the importance of capacity building to help developing countries implement their commitments.”

Ahead of the G20 Trade Ministers meeting, India’s trade ministry said it would be “difficult” for the country to support the TFA Protocol unless it is satisfied that adequate emphasis is being placed on negotiations about food security. In a statement to Reuters after the G20 meeting, WTO Ambassador Michael Punke said that “India clearly and forcefully expressed its concern that work proceed on all fronts, including food stockpiling, and received assurances that all G20 members are committed to the full implementation of all Bali agreements on the agreed timetables.”

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Tennessee Mat Maker Is Expanding With Help Of Ex-Im

Wearwell Inc. is a small Tennessee company that makes rugged and long-lasting mats used on factory floors around the world.

It’s a second-generation company and has about 100 employees who work nearly around the clock in a 150,000-square-foot facility. The company provides retirement benefits to their employees, offers them health care, and makes WWL-now (1)products stamped with the words “Made in the U.S.A.”

Given this, Chief Executive Steve Goldsmith said he is worried that some lawmakers appear willing to end a program – the U.S. Export-Import Bank – that has helped them grow.

“All these people talk about creating jobs. We’re hiring. We’re expanding. We’re a U.S. manufacturing company,” Mr. Goldsmith said. “The Export-Import Bank is the kind of thing that benefits us. It strikes me as odd, you think we’re the company lawmakers want to help.”

Wearwell is just one of the thousands of companies around the United States that use the Ex-Im Bank to create and support jobs. The Ex-Im Bank has supported 1.2 million jobs over the last five years, and those jobs are at risk if Congress doesn’t reauthorize the Bank by the end of September.

Mr. Goldsmith said the company started using the Ex-Im Bank several years ago. “Coming out of the recession, we were going strong but decided we wanted to diversify” and start going international, he said.

He said their mats can be found on factory floors, including large automotive factories, throughout the United States and Europe. He said the company tried going to private sector lenders first to get help, but private banks wanted to charge them $20,000 or more in premiums for insurance before they even exported anything.

“To start with a $20,000 credit insurance bill before you have any sales is kind of onerous,” he said.

Insurance, Mr. Goldsmith said, is necessary when working overseas, and he asserts the Ex-Im Bank’s pay-as-you-go credit insurance is better.

“I really have no knowledge or ability to collect bills overseas if someone decides not to pay me,” he said. But when the Ex-Im Bank is involved, people know to pay up or they’ll have to deal with the U.S. government.

Mr. Goldsmith said people in foreign countries generally take pride in buying American-made products and U.S. politicians should take note of that.

“This is creating jobs and this is getting U.S. products out there,” he said. “We wouldn’t be able to do that without Ex-Im. There’s a certain prestige around the world to having U.S.-made products.”

“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit http://www.nam.org/Issues/Trade/Ex-Im-Bank.aspx.

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Exporters for Ex-Im: Milwaukee Business Owner Says ‘Point Blank’ Ex-Im Has Helped Him Create Jobs

Bill Maxon is the second generation of his family to run Maxon Industries Inc., a Milwaukee-based company that has been able to send its concrete-transportation equipment all over the world because of the Export-Import Bank of the United States.

Maxon IndustriesMr. Maxon doesn’t understand the recent dust-up over the Ex-Im Bank. He’s a self-described fiscally conservative Republican but has spent several years working with the small government agency – and he’s seen firsthand how it helps companies grow.

“I can tell you point blank that I have created jobs with the assistance of Ex-Im Bank,” Mr. Maxon said.

Maxon Industries is like thousands of companies—the majority of them small businesses—that have relied on the Ex-Im Bank to grow and keep jobs in the United States. If Congress doesn’t act soon, the Ex-Im Bank’s charter will expire on September 30.

The Ex-Im Bank has supported 1.2 million jobs in the last five years, something Mr. Maxon can speak to.

His 30-person company, he said, wouldn’t be where it is today without Ex-Im Bank.

The company sells large capital equipment to move and place concrete, such as large cement mixing trucks. Their equipment helped transport millions of cubic yards of concrete for the expansion of the Panama Canal and supported power generation plants in countries such as Turkey.

He said he relies on Ex-Im Bank because as a small business his local bank is “scared as hell of doing business overseas.”

The Ex-Im Bank provides export credit insurance, alleviating concerns that a foreign customer may be unable or unwilling to pay for the goods received and enabling commercial lenders to provide necessary financing. In his company’s five years of working with Ex-Im Bank, it has never had to file a claim.

Mr. Maxon is quick to emphasize that his company, and all the others that use the insurance the Ex-Im Bank offers, pay for the service.

He said the competition from foreign companies is fierce, and companies from China – and elsewhere –often get aggressive help from their government. According to a recent NAM report, U.S. Ex-Im Bank is dwarfed by our major trading partners when it comes to export credit assistance.

He doesn’t like to even entertain what would happen if the Ex-Im Bank were reauthorized, but he knows it will hurt his business.

“Ex-Im Bank helps me almost every day,” he said.

“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit http://www.nam.org/Issues/Trade/Ex-Im-Bank.aspx.

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Real GDP Rebounded Strongly in the Second Quarter; Up 0.9 Percent in the First Half of 2014

The U.S. economy grew strongly in the second quarter, up 4.0 percent and recovering from a very disappointing first quarter. With that said, the first quarter data was revised again, improving slightly from a decline of 2.9 percent to a decline of 2.1 percent. The second quarter data were higher than the consensus estimates and mostly reflected an economy that has rebounded from weaknesses earlier in the year, including winter disruptions. Still, real GDP growth in the first half of 2014 was soft overall, increasing just 0.9 percent.

Consumer and business spending were strengths in the second quarter. This is perhaps not a surprise given the softness seen in the first quarter and data released since then suggesting recovering levels of activity. On the consumer side, goods spending rose an annualized 6.2 percent in the second quarter, its fastest pace since the fourth quarter of 2010 but also reflecting a bounce-back from the 1.0 percent rate of the first quarter (when winter storms prevented people from going to the stores). Personal consumption added 1.69 percentage points to real GDP, with 1.38 percent stemming from goods spending.

Businesses provided the biggest boost to the economy in the second quarter, with higher levels of investment for structures, equipment and intellectual property. Housing was also a positive for the first time in three quarters. Gross private domestic investment added 2.57 percentage points to real GDP, rebounding from the 1.13 percent drag seen in the prior quarter. Inventory spending alone contributed 1.66 percentage points to the bottom line as firms restocked their shelves after letting them deplete in the previous two quarters. Indeed, inventory spending was so strong that it could slow the growth rate in the third quarter a bit.

Government spending added 0.30 percentage points to growth, but reduced defense spending was a drag at the federal level. State and local government investments returned to being a positive contributor to growth.

Export growth remained the primary weakness in the economy, subtracting from real GDP for the second straight quarter. While goods exports increased 2.3 percent at the annual rate for the quarter, this was more than outstripped by the 13.3 percent gain seen in goods imports. As a result, net exports subtracted 0.61 percentage points from real GDP in the second quarter.

Overall, the news was positive, with healthy increases in consumer and business spending helping to lift the economy in the second quarter. This suggests that we have begun to move beyond the softness seen in the disappointing first quarter. Yet, we also cannot help but note that 2014 has started off much weaker than we would have liked, with real GDP increasing by less than 1 percent in the first half of the year. While manufacturers remain mostly upbeat about the second half, it means that real GDP will once again settle in for an average of around 2 percent this year. That is not at all what we were thinking at the start of the year.

Also, the trade data suggest that we need to do more to increase manufactured goods exports. We have seen export growth continue to decelerate so far this year. This means that policymakers should consider policies that will aid manufacturers as they seek new markets. First and foremost, it means that we need to reauthorize the Export-Import Bank. (See our study released yesterday that shows the magnitude of foreign export credit activity overseas.). As a result, the United States would forfeit billions of dollars of export opportunities if we failed to reauthorize the Ex-Im Bank by September 30.  The weak U.S. export data also mean that we need the President and Congress to work together expeditiously to enact new Trade Promotion Authority legislation that is critical to enable the United States to negotiate comprehensive and high-standard agreements in Europe and the Asia Pacific and elsewhere, which will boost U.S. manufacturing exports.

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Forfeiting Opportunity is Not an Option

Earlier today, the NAM released a new report that documents the massive size and growth of foreign export credit activity. The findings of the report, along with those of an NAM policy brief, underscore why the reauthorization of the U.S. Export-Import (Ex-Im) Bank is critical to support exports, manufacturing and jobs.

A diverse array of manufacturers, small and large, who use the Ex-Im Bank joined NAM President and CEO Jay TimmonsExImPanel in Washington to unveil the report. Without the Ex-Im Bank, these manufacturers and thousands more would not be able to grow jobs at home and compete in the global marketplace. Even with the Ex-Im Bank’s services, manufacturers in the United States seeking to export their products, and expand their businesses to reach the 95 percent of consumers who live outside U.S. borders, are at a competitive disadvantage.

As the report found, foreign export credit agencies (ECAs) continue to grow among our largest trading partners and in emerging markets. The ECAs of nine of our top trading partners—Brazil, Canada, China, France, Germany, Japan, Mexico, South Korea and the United Kingdom—provided nearly half a trillion dollars in export credit assistance to their exporters in 2013. Collectively, that amount is more than 18 times greater than the modest $27 billion the U.S. Ex-Im Bank provided the same year. China dominates the export credit financing landscape and authorized more than $153 billion in 2013.

If Congress fails to reauthorize the Ex-Im Bank, the discrepancy in export financing between the United States and the rest of the world will only continue to grow. Other nations will jump in and fill the void. Neither our nation’s manufacturers nor the economy can afford for that to happen.

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NAM Applauds Introduction of Trade Secrets Protection Act

The NAM welcomed today’s introduction of the bipartisan Trade Secrets Protection Act of 2014 and applauded the bill’s sponsors, Representatives George Holding (R-NC), Jerrold Nadler (D-NY), Howard Coble (R-NC), Hakeem Jeffries (D-NY), Steve Chabot (R-OH) and John Conyers (D-MI) for their focus on this critical issue.

The Trade Secrets Protection Act is the House companion to legislation (S.2267) introduced in April by Senators Chris Coons (D-DE) and Orrin Hatch (R-UT). It marks a critical step toward ensuring manufacturers can effectively and efficiently enforce their trade secrets at home and abroad.

Trade secrets include everything from the special recipe for a food or beverage to research, marketing data and customer lists. They are the proprietary manufacturing processes and marketing plans that set products apart from the competition.

These vital intangible assets have never been more important to manufacturers large and small. But they increasingly are at risk in today’s mobile and interconnected global economy.

Trade secrets can comprise as much as 80 percent of the value of a company’s knowledge portfolio. But according to one estimate, theft costs businesses in this country some $250 billion a year.

The Trade Secrets Protection Act would help to address this challenge by providing access to federal civil enforcement for trade secrets theft. Right now, businesses must go state-by-state to defend their rights.

At the same time, it would provide a critical foundation for essential trade secrets commitments in U.S. trade agreements, including those under negotiation with Europe and 11 Pacific Rim nations.

The NAM was pleased to testify before the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet last month on the importance of strengthening trade secret protection and enforcement in ways that advance manufacturing in the United States.

We look forward to working with Congressmen Holding, Nadler, Chabot, Conyers, Coble and Jeffries, and with many others in the House and Senate to promote swift consideration and passage of the Trade Secrets Protection Act.

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Timmons in Pittsburgh to Talk Energy and Manufacturing Comeback

NAM President and CEO Jay Timmons addressed some of the country’s leading manufacturing executives today in Pittsburgh at an energy panel hosted by Jones Day.  The discussion centered on the critical need for an affordable and abundant energy supply to fuel the manufacturing comeback.

Jones DayTimmons kicked off the event by noting that, “major events like the shale revolution don’t happen often. Manufacturers can’t let this opportunity pass us by, so we welcome any chance to talk about the transformation in our sector.”

Despite recent manufacturing success, there are significant obstacles facing the economy.  Timmons told executives that “if policymakers make the wrong choices, those decisions could bring the energy revolution to a halt and do irreparable harm to manufacturing and the overall economy.”

Timmons also urged energy and manufacturing executives alike not to settle with their current success but to continue to lead the push for comprehensive policy reform.  He presented manufacturers with a new goal, suggesting that “our challenge in the months ahead is to run up the score on energy—and fix the broken policies that are holding manufacturers back.”

To learn more about the importance of energy to manufacturers, click here.

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Exporters for Ex-Im: Maker Of Biodegradable Products Doesn’t Want Ex-Im Bank To Vanish

Leslie Harty and her husband made –and still sell— the country’s first biodegradable coffee bag.

Their company, Maverick Enterprises Inc., has been operating in Monroe, North Carolina, for 21 years. The company specializes in making biodegradable products, including coffee bags and containers for food, to help reduce landfill waste.

Mrs. Harty, the company’s president, said they used the U.S. Export-Import Bank from 2005 to 2010 when they were selling biodegradable bags to companies in Mexico. They ultimately lost one of the contracts but intend to use the Ex-Im Bank again soon because they’re finishing up a biodegradable backing to use in baby diapers.

The potential buyer is in Mexico, and Mrs. Harty said the company will apply for export credit insurance from the Ex-Im Bank once the product is complete.

“I wouldn’t send anything down to Mexico without having the insurance from Ex-Im Bank,” she said. She said she’s heardMaverick Enterprises “horror stories” of small businesses trying to collect payments for products they’ve exported.

She said it would be “disastrous” if the Ex-Im Bank weren’t reauthorized by Congress in September, right when the company is set to begin exporting again. In addition to hurting the company’s sales, it would hurt their ability to conduct research and development.

She said the company is currently designing biodegradable netting for capturing fish and for laying sod as well as small biodegradable coffee cups like those used in Keurig coffee machines.

Those cups, or pods aren’t biodegradable. There’s a potential market for biodegradable coffee pods, and they’d like to capture those sales if possible.

Having the Ex-Im Bank as a resource, she said, will help them do that.

“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit http://www.nam.org/Issues/Trade/Ex-Im-Bank.aspx.

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Exporters for Ex-Im:Mint Oil Maker Wants Ex-Im Bank Reauthorized

Terry Cochran didn’t know it at the time, but growing up on a mint farm helped prepare him for his career.

OLYMPUS DIGITAL CAMERAMr. Cochran and his brother run Norwest Ingredients in Royal City, Washington. A 15-person company, they makes mint and other oils used in gum, confection and a range of oral care products from mouthwash to toothpaste. They buy mint oil from farms around the country and process it to ensure it’s safe – and of high quality – before selling it in giant barrels that cost more than $10,000.

The two brothers started the company in 1998 and started exporting shortly thereafter. They’ve gained enough credibility that they count toothpaste giant Colgate among their customers. But as they grew, getting financing from commercial banks became a problem.

“As we grew and more and more of our sales were overseas, our local banks began to get a bit uneasy about it because as you know once it’s overseas it can be hard to get paid,” Mr. Cochran said. The company turned to the U.S. Export-Import Bank, which has approved the company loan guarantees for overseas customers. Their sales have increased, on average, about 20% annually since they began exporting.

Norwest Ingredients is like the many other small firms that rely on the Ex-Im Bank when commercial banks aren’t willing or able to help them expand abroad. The Ex-Im Bank has supported 1.2 million jobs in the last five years, and those jobs could be at risk if Congress doesn’t reauthorize Ex-Im Bank by the end of September.

Mr. Cochran doesn’t want to see that happen. If the Ex-Im Bank doesn’t get reauthorized, his sales will suffer.

And some of the company’s suppliers, including the employees who work on mint farms like Mr. Cochran did, will suffer.

“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit http://www.nam.org/Issues/Trade/Ex-Im-Bank.aspx.

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