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NAFTA: A Win for Manufacturing Workers

By | Presidents Blog, Shopfloor Main | No Comments

Negotiations for revising and modernizing the North American Free Trade Agreement (NAFTA) begin today, and American manufacturing workers whose jobs are dependent on exports are watching closely.

NAFTA went into effect in 1994, and since then, the United States has sold three times as much to Canada and Mexico. In 2016, the two countries alone purchased one-fifth of all manufactured goods made in the United States. This is a big deal for manufacturing workers and their families because those sales support jobs here at home—a lot of well-paying jobs. Sales of manufactured goods to Canada and Mexico, made possible through NAFTA, support the jobs of more than 2 million manufacturing workers.

When someone says that we need to abandon NAFTA to support manufacturing workers, they have the facts backward. It’s certainly true that NAFTA could use some improvements. After all, it’s more than 20 years old. A tune-up, if done right, could help, especially if it’s focused on eliminating remaining barriers to selling U.S. goods, raising standards to U.S. levels, cutting red tape and improving existing enforcement tools.

Those would be steps in the right direction. However, we should not blame manufacturing’s challenges over the past few decades on NAFTA. NAFTA has been a powerful tool to strengthen our industry and help manufacturers in the United States nearly double our production. It’s other policies that have held us back and discouraged investment in the United States—policies like our outdated tax code and our overreaching, complicated regulatory system. Our declining, deteriorating infrastructure has also hurt the industry and our workers.

So as negotiators sit down this week and again in the coming weeks to determine what NAFTA will look like in the future, I urge them to stick to the facts and help manufacturers build on the agreement’s accomplishments to improve, not weaken, America’s global competitiveness. Manufacturers will continue advocating a stronger, modernized NAFTA so that we can keep growing and thriving here in America.

Environmental Streamlining E.O. Opens Critical Relief Valve to Build Additional Infrastructure

By | Shopfloor Main, Shopfloor Policy | No Comments

Today, the President issued an executive order to streamline the federal permitting approval process as a part of his infrastructure initiative. Specifically, the executive order will simplify the permitting process to provide for one federal decision that should be made within two years. Executive Order establishing disipline and accountablity in the enviornmental review and permitting process for infrastructure projects can be found here. Manufacturers welcome today’s news and have long called for federal leadership in reducing excessive red tape in the environmental permitting process for infrastructure projects. Accountability and transparency for all permitting decisions are critical to achieving a set of best practices and certainty that will encourage additional private sector investment and efficiency. Infrastructure should built in a period of a few years, not a decade.

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Canton Vote Shows Positive Culture and Collaboration at Nissan

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

Last week, employees at Nissan in Canton, Mississippi, sent a strong message by overwhelmingly deciding not to unionize. The campaign to unionize the Nissan employees lasted for months, but at the end of the day, the vote was clear and demonstrates that the positive culture and collaboration between employees and employers at Nissan should continue.

Nissan’s support of Mississippi’s manufacturing workers has helped the industry and the state’s economy grow again. Manufacturing in Mississippi now accounts for more than 143,000 jobs, with an annual compensation of more than $58,000. Manufacturing workers at the Nissan plant in Canton 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 contributing more than 8,000 volunteer hours to more than 200 local organizations. Their investment in the facility has strengthened the county and state. The unemployment rate in Madison County is among the lowest in the state at 3.7 percent, while the region’s unemployment rate (5.3 percent) is less than the state average (6.6 percent) and the national average (5.5 percent).

The campaign is over, the vote has taken place, and now the decision of the employees should be respected so the employees and Nissan can continue on this path of success and good work for the Canton community.

The Business Imperative to Tackle Sustainability Now

By | General, Shopfloor Main, Shopfloor Policy, Sustainability | No Comments

By Cristian Barcan
Vice President of Sustainability and Industry Affairs, The Vinyl Institute
Executive Director, Vinyl Business and Sustainability Council

Proven support of sustainable development is the new business imperative. And it’s not just about being an environmentally responsible company, but also considering the social and economic impacts of your decisions on the communities in which you live and work and across your entire supply chain.

Indeed, a recent Unilever survey found that one-third of consumers today are making purchase decisions based on a company’s environmental and social impact. The company surveyed 20,000 adults across five countries, including the United States and United Kingdom.

Need more proof that you need to embed sustainability? It’s not just consumers asking. Stakeholders and financial markets are asking questions about a wide range of non-financial business drives (e.g., human rights, labor rights, anti-corruption) and looking for this information to be included in annual reports. Moreover, there is a growing list of exchanges that have adopted environmental, social and governance disclosure rules.

Companies must not only embrace the idea of sustainability, but also walk the walk.

Your sustainability journey starts with data.

When it comes to your business, you may think you know what people care about. You might have innovated on the factory floor to mitigate chemical emissions or invested in more sustainable product packaging. Perhaps you have a carpooling initiative or a telework policy to reduce your company’s transportation footprint. You’ve written the story on your blog, put out a press release and maybe even gotten some publicity for your efforts. All good. But what if people don’t care about your employees’ commuting habits but are really concerned about how much oil and gas you’re using shipping products to market?

You have to know what your key stakeholders really want.

Every business operates with a certain amount of anecdotal knowledge. To take your business down a truly sustainable pathway, you need to move from “how do you know” to “here’s how we know.” You need the proof points. You need to undertake a materiality assessment.

The importance of mapping hotspots.

A materiality study is a process for obtaining an overall snapshot of how your company or industry is doing in the environmental, social and economic spheres—and where it could do better. The aim of such a study is to identify the “hotspots,” changes (e.g., emissions, wastewater use) you can put in place quickly to have the biggest immediate payback.

Step 1 in a materiality assessment is to identify the major categories of importance to your company. Think of it as a spreadsheet with columns for the major steps in your supply chain and rows broken down by category. Step 2 is research. This research should start with a literature review to understand what has been published or said about you by your many stakeholders. As you do this, you can start to count the number of times that people focused on “emissions to air,” for example, versus “water use.” Following the literature review, it’s important to interview key internal and external stakeholders to get fresh insights into how different audiences perceive your business and to test your hotspot assumptions against the literature review and what others tell you does and does not matter to them.

Your materiality assessment will give you the data your company needs to make informed decisions about how to prioritize your sustainability efforts.

Led by the Vinyl Business and Sustainability Council (VBSC), the vinyl industry is undertaking its first materiality study. Because it’s an industry-wide initiative rather than a company-specific one, our materiality assessment will include information across nine distinct market segments. The VBSC is hoping to have preliminary results this fall and a clearer picture of our hotspots and where to focus next.

More Than 100 Groups Agree: Administration Has Opportunity to Boost Enforcement

By | Shopfloor Main, Trade | No Comments

America exports a lot, particularly to our border neighbors, Canada and Mexico, which alone purchase more manufactured goods from the United States than the next 10 foreign countries combined. They purchase almost as much from the United States as we buy from them, even though together they are less than one-sixth of the size of the U.S. economy.

But beyond the cars and corn, the tractors and trailers and the steel and soybeans, America has also been exporting its most basic Constitutional values. Through the original NAFTA Chapter 11, the United States sought to guarantee many of the same basic private property protections that we honor in our own country—due process, equal protection and compensation when a government seizes or “takes” private property. Those core provisions of the U.S. Constitution and U.S. law are part of the original NAFTA and have helped protect U.S. property in both countries when their governments have treated American businesses unfairly.

Since these provisions are not fully part of Canadian or Mexican law, NAFTA also established a neutral enforcement mechanism, known as investor-state dispute settlement (ISDS), to ensure that individuals, nonprofits and businesses could all have the ability, as we have in the United States, to recover damages when those governments harm U.S. property. This enforcement mechanism is a neutral, internationally recognized arbitration found in more than 3,000 agreements worldwide and more than 50 other agreements signed by the United States.

Manufacturers, service providers, energy, technology and food and agricultural producers and their workers all have a stake in ensuring that these basic property protections and enforcement tools are not weakened in the upcoming NAFTA talks. To the contrary, the Trump administration has an important opportunity to improve the coverage of these rules so that all forms of U.S. property, including major resource and infrastructure contracts and intellectual property, are fully protected and that the ISDS enforcement tool is strengthened. For that reason, the NAM was joined by 112 groups representing millions of businesses across the manufacturing, services, technology, energy and food and agricultural sectors of the U.S. economy to urge the Trump administration to maintain and upgrade these basic provisions of the NAFTA.

Why does this matter for workers and businesses in the United States? Consider one early case already decided under NAFTA Chapter 11—Metalclad Corporation v. Canada. In 1993, California-based Metalclad Corporation invested more than $20 million to clean up and operate a waste facility that had more than 20,000 tons of hazardous waste contaminating local water supplies. Metalclad’s investment in Mexico included support from American workers and U.S.-produced materials.

Mexican federal and local officials supported Metalclad’s investment before the purchase and Metalclad received all the necessary Mexican federal authorizations and permits following government review and an environmental audit. Just before opening the facility, however, the local Mexican government blocked Metalclad from opening. Metalclad filed an ISDS case after which the local authority filed a so-called “ecological decree” to prevent the site from operating. An ISDS panel and later a Canadian court enforcing the award found that the Mexican government’s failure to allow Metalclad to operate the facility was in violation of one of the most basic property protections—that governments must compensate private property owners when they seize their property, as found in the Takings Clause in the Fifth Amendment to the Constitution. As a result of the ISDS claim, Metalclad was awarded compensation for a significant part of the investment that it had made.

There are many more instances of foreign governments that have wholly seized U.S. property and turned it over to local competitors or that have lured millions of dollars in infrastructure development, only to refuse to honor the contract to the detriment of U.S. businesses and their workers.

The Trump administration’s focus on ensuring fair treatment by foreign governments is a critical part of a robust U.S. trade agenda and maintaining and improving ISDS enforcement and the protection of U.S. property overseas is a critical tool in the toolbox. Businesses across the United States agree.

Manufacturing Job Openings Bounced Back in June; Nonfarm Postings at New All-Time High

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

The Bureau of Labor Statistics reported that manufacturing job openings bounced back from 350,000 in May—its slowest pace so far this year—to 388,000 in June. That was the best number since March’s reading of 404,000, which was a 16-year high. In June, both durable (up from 201,000 to 214,000) and nondurable (up from 149,000 to 174,000) goods firms had more job postings. Openings in the sector have averaged 372,000 year to date in 2017, an improvement from the average of 342,000 for all of 2016. We would expect stronger job openings data moving forward, especially given recent improvements in the economic outlook for the sector, and this should lead to better hiring figures. Read More

Manufacturers Have Added 16,000 Jobs in July, Averaging 12,500 Workers per Month Since November

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

The Bureau of Labor Statistics reported that manufacturers added 16,000 net new workers in July, extending the gain of 12,000 workers June. (June was estimated originally to be a gain of just 1,000 workers, and the May data were also revised from a decline of 2,000 to 0.) The July increase in manufacturing was the fastest since February, and the sector has now increased employment in seven of the past eight months. Over that eight-month span (since November), manufacturers have averaged 12,500 new jobs per month—definite improvement from the loss of 16,000 workers on net in 2016. In July, there were 12,425,000 manufacturing workers. At the same time, average weekly earnings for manufacturing workers rose from $1,086.30 in June to $1,092.03 in July, up 2.8 percent over the past 12 months from $1,062.02.

In another sign that manufacturing jobs are on the rise, Toyota announced today that it will build a $1.6 billion U.S. assembly plant to develop electronic vehicle technologies. The plant opening in 2021 will produce up to 300,000 vehicles per year and employ 4,000 manufacturing workers. Read More

ISM: Manufacturing Activity Expanded Strongly in July but Eased from June’s 34-Month High

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

The Institute for Supply Management (ISM) said that manufacturing activity continued to expand strongly in July, even as it pulled back from nearly a three-year high in June. The ISM Manufacturing Purchasing Managers’ Index (PMI) decreased from 57.8 in June, its strongest reading since August 2014, to 56.3 in July. Despite some easing in many of the key measures in this survey, the underlying data reflect healthy expansions in demand and output, with manufacturers mostly upbeat in their outlook. The sample comments tend to echo these sentiments, noting strong sales, exports and profits. In addition, better growth in the sector has exacerbated workforce challenges, with one respondent suggesting, “Labor shortages are pretty universal, leading to longer lead times through the supply chain.” Read More

Real GDP Grew 2.6 Percent 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 its 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 National Association of Manufacturers’ 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?