Transportation Can’t Wait!

Today, the Senate voted to pass H.R. 2353, the Highway and Transportation Funding Act of 2015. The House passed the measure earlier this week in a 387-13 vote. The NAM sent Key Vote letters to the House and Senate this week in support of the short-term measure that will keep federal highway and transit projects around the nation funded until July 31.

H.R. 2353 is not the solution that manufacturers envisioned when the 114th Congress commenced in January 2015.  This legislation is yet another temporary fix to a problem that has grown in size and scope over the years. Dealing with long-term transportation funding at a later date is not leadership.

With deteriorating roads and bridges, aging transit systems and growing maintenance backlogs across the states, Congress is telling manufacturers, businesses and the American people that transportation can wait.

Transportation can’t wait. Several small and large manufacturers took time away from their shop floors last week and came to Washington to keep making the case for transportation infrastructure before Members of Congress and at the White House.

NAM Member Scott Stevens, President of Dimension Fabricators in Schenectady, New York fabricates reinforced steel. He came to Washington last week from New York to articulate the importance of a well-funded, multi-year highway bill and explain the real-world impacts when states pull back infrastructure funding due to the long-term uncertainty of a federal transportation authorization. Scott was joined by NAM Member Stephen Roy, President of Mack Trucks in Greensboro, NC, a subsidiary of the Volvo Group. Scott Stevens has several Mack Trucks in his fleet and when he does well and grows, he buys more Mack Trucks.  Scott and Stephen also met NAM Member Ron Dickerson, a Vice President and General Manager at Nucor Steel Indiana in Crawfordsville, IN. Dimension Fabricators and Mack are also Nucor customers. The customer and supplier relationship unfolded during meetings on the Hill and this what happens when manufacturers tell a powerful story.

While assurances have been made that the surface transportation authorization is critically important in this Congress, this week’s transportation vote was not a win for manufacturers. It’s simply another day to keep things moving and avoids the embarrassing spectacle of a shutdown.

For NAM Member Astec Industries whose President and CEO Ben Brock also traveled to Washington last week, the temporary move is yet another disappointment and represents the frustration manufacturers feel about Washington. Over the past few weeks, Astec has worked to mobilize its employees and the communities where it manufactures and it will continue efforts.

Manufacturers can’t wait. Congress must act.

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Small Business Manufacturers Testify on Benefits of Trade

Manufacturers celebrated this week the annual “World Trade Week,” reaffirming the importance of trade to economic opportunities and job growth. The House Small Business Committee highlighted the impact of trade on small businesses with a hearing on Wednesday. NAM Board member and Power Curbers, Inc. President and CEO Dyke Messinger testified on the hearing panel, pressing for congressional passage of Trade Promotion Authority (TPA) and a long-term reauthorization of the Ex-Im Bank to help level the playing field for manufacturers in the United States. (continue reading…)

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Consumer Prices Rose 0.1 Percent in April

The Bureau of Labor Statistics said that consumer prices rose 0.1 percent in April, slightly lower than the 0.2 percent gains observed in both February and March. Lower energy prices helped to reduce the pace of the headline number, with energy costs down 1.3 percent for the month. Gasoline prices declined 1.9 percent in April, easing a bit after 2.4 percent and 3.9 percent increases observed in February and March, respectively. On a year-over-year basis, gasoline sells for 31.7 percent less today than in April 2014. Note that the average price of gasoline has risen a little since then, with the Energy Information Administration reporting that the average price of regular gasoline was $2.604 per gallon on May 18, up from $2.315 on April 6. This is still more than one dollar lower than seen 12 months ago. (continue reading…)

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This Could Be the Year!

Every sports fan begins their team’s season thinking, “this could be the year” and hopes for the stars to align so that they can watch their favorite team in the title game.

In the tax policy world, we continue to hope that this is the year where Congress will pass, and the Administration will sign into law, comprehensive tax reform. However, just as athletes know you cannot forget about the fundamentals, as Congress continues to work towards comprehensive tax reform, they need to also ensure that the basics of sound tax policy are in place for our economy to grow. To that end, manufacturers across the country applaud the introduction today of H.R. 2510 by Rep. Pat Tiberi (R-OH) that would make permanent 50% first year expensing, aka “bonus depreciation” along with a complimentary provision which allows companies with AMT credits to accelerate the use of these credits in lieu of bonus depreciation. (continue reading…)

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Kansas City Fed Reported Contracting Activity for the Third Consecutive Month in May

The Kansas City Federal Reserve Bank said that manufacturing activity contracted for the third consecutive month in May. The composite index dropped from -7 in April to -13 in May, suggesting a sharper drop in activity than the month before. Indeed, several of the key data points declined at faster rates in May than in April. This included new orders (down from -12 to -19), production (down from -2 to -13), shipments (down from -7 to -9) and the average workweek (down from -10 to -14). At the same time, employment (up from -18 to -17) decreased sharply, and exports (up from -12 to -9) contracted for the fifth straight month, even as both measures fell at slightly slower paces for the month. (continue reading…)

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NAM Applauds House Passage of Permanent R&D Credit

With a strong push from manufacturers, the House passed legislation (H.R. 880) May 20 to reinstate, strengthen and make permanent the tax credit for research and development (R&D) – the lifeblood of manufacturing.

While designed to be an incentive to spur private sector investment in innovation, the R&D credit has never been a permanent part of the tax code. Instead, it has been extended sixteen times since it was first enacted in 1981, most recently expiring at the end of 2014. The on-again, off-again nature of the credit creates unnecessary uncertainty for manufacturers who need to know the credit will be around when planning for long-term R&D projects. Making the R&D credit permanent would provide manufacturers with much-needed certainty, increase its incentive value, create over 36,000 jobs annually, and restore the U.S. position as the leader in global innovation. (continue reading…)

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Philly Fed: Manufacturing Outlook Eased Slightly in May

The Philadelphia Federal Reserve Bank said that the manufacturing outlook eased slightly in May. The composite index of general business activity dropped from 7.5 in April to 6.7 in May. In general, the outlook has weakened so far this year relative to last year, with the headline measure averaging 6.1 through the first five months of 2015. This compares to the more-robust average of 25.1 observed in the second half of 2014, with the softness experienced year-to-date largely the result of a number of headwinds seen in the U.S. and global economy. At the same time, manufacturers in the Philly Fed district have reported expanding levels of activity for 15 straight months. (continue reading…)

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Markit: U.S. Manufacturing Activity Slowed in May; Europe Improved, but China Contracted Once More

The Markit Flash U.S. Manufacturing PMI declined from 54.1 in April to 53.8 in May, easing to its lowest level since October 2013. It was the second straight monthly deceleration in manufacturing activity, and the slowing in May reflected slower growth in new orders (down from 55.3 to 54.2) and output (down from 55.3 to 55.0). Exports (up from 48.8 to 49.6) continued to contract, but declined by less for the month. On the positive side, hiring (up from 53.7 to 54.3) accelerated to its fastest rate in six months. Moreover, even with some weakening in sentiment, the measures for demand and production growth for U.S. manufacturers remains decent overall. (continue reading…)

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House Foreign Affairs Subcommittee Examines National Security Role of Ex-Im Bank

The House Foreign Affairs Committee’s Terrorism, Nonproliferation & Trade Subcommittee is examining today the role of trade promotion agencies like the Ex-Im Bank in supporting U.S. foreign policy. The United States needs a strong industrial base with robust R&D capability to support its national security interests, and those companies can benefit greatly from overseas markets. In many of those markets, export credit agencies (ECAs) like Ex-Im Bank play a crucial role in supporting suppliers for energy, aerospace and infrastructure projects.

This morning, the NAM hosted a conference call to highlight these issues with former U.S. Commerce Secretary Carlos Gutierrez and former National Security Advisor General James L. Jones. Also joining the call were to two manufacturers that illustrate the role of Ex-Im Bank in supporting their overseas growth and in enabling their commitment to U.S. foreign policy objectives. Secretary Gutierrez and General Jones joined with a dozen former U.S. government officials in February to send a letter to Congress underscoring the importance of commercial and economic diplomacy to U.S. national security. (continue reading…)

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Housing Starts Rebounded Strongly in April, Growing at Fastest Pace since November 2007

The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity rebounded strongly in April. New housing starts jumped from an annualized 944,000 in March to 1,135,000 in April, its fastest pace since November 2007, the month before the start of the Great Recession. As such, it appears that the housing market has begun to move beyond the weather-related softness seen in some regions of the country in February and March. On a year-over-year basis, housing starts have risen 9.2 percent since April 2014.

Both single-family (up from 628,000 to 733,000) and multi-family (up from 316,000 to 402,000) housing starts were higher in April, which was encouraging. The single-family growth rates was the fastest since January 2008, with multi-family starts reaching a nine-month high. (continue reading…)

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