The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) said that manufacturing activity expanded for its fifth straight month in July, albeit with a slight easing for the month. The composite index edged down from 53.2 in June to 52.6 in July, but more importantly, this report suggests that manufacturers are doing better today than the contracting levels of activity seen in the October to February time frame. The boost in sentiment reported more recently has come from relatively strong expansions in new orders (down from 57.0 to 56.9) and production (up from 54.7 to 55.4), with the latter growing at its fastest pace in 12 months. Indeed, demand and output have now expanded for seven consecutive months, which is encouraging. Exports (down from 53.5 to 52.5) also slowed a bit in July but have expanded for five consecutive months, according to ISM. Read More
Government agencies have a tremendous advantage when it comes to defending new regulations in court. Judges start with a legal presumption that not only gives the benefit of the doubt to the agency, but sets a very high bar for reversing rules that most people might not have issued. As long as an agency’s rules are authorized by statute and not clearly erroneous or otherwise an abuse of discretion, courts will accept them.
That’s what the D.C. Circuit did today when it largely upheld the Environmental Protection Agency’s (EPA) rules on boilers and incinerators. All of the challenges to the rules by the Manufacturers’ Center for Legal Action and other business organizations were rejected by the appellate court. The court upheld one EPA requirement that could not be met by any small, remote incinerator or heavy oil-fired boiler in use today. It similarly rejected industry complaints about new energy assessment and recordkeeping requirements, as well as concerns about compliance with the rules when equipment malfunctions despite full compliance with regulations and due diligence by operators.
What is unusual is that the court agreed with several arguments made by environmental groups. It ordered the EPA to issue a regulation for cyclonic burn barrels and to decide whether certain other incinerators must be regulated under the Clean Air Act. The court also ordered the agency to provide further explanations about the decisions it made not to regulate emissions of a certain hazardous pollutant (non-dioxin/furan organic pollutant), about why certain exemptions should be allowed and about why it declined to regulate certain non-mercury emissions.
The bottom line is the court upheld all of the EPA’s regulations and ordered the agency to cover even more than it did, or at least give a full explanation of why it won’t.
The latest gross domestic product (GDP) numbers confirm that the U.S. economy remains mired in slower-than-desired growth despite recent signs of progress in some data points. Real GDP grew just 1.2 percent in the second quarter, well below the consensus estimate of 2.6 percent, with first quarter growth revised down to 0.8 percent. This release reflects a rebound in consumer spending, but there were significant drags on activity from fixed investment and inventories. Indeed, manufacturers and other business leaders continue to be quite cautious, and as a result, they are holding back on capital spending and hiring, waiting for better signs of traction in the economy.
The U.S. economy has averaged 2.2 percent growth annually since the end of the Great Recession, and with this release, real GDP is likely to expand by 1.8 percent in 2016. That would, however, suggest a better second half of the year, as real GDP grew just 1.0 percent at the annual rate in the first half. With that in mind, we need policymakers – especially in this all-important election year – to focus on pro-growth measures that will spur stronger activity. Read More
NAM President and CEO Jay Timmons joined CNN Newsroom’s Carol Costello for a live interview on the policy priorities manufacturers need to see from the presidential candidates before making a decision in November. Timmons shared the NAM’s “Competing to Win” platform document on-air as manufacturers’ core agenda for voters and pro-manufacturing candidates.
Reading the Democratic National Committee (DNC) platform paragraphs on trade, one might believe that trade and trade agreements have been an overall negative for the United States, its entrepreneurs and its workers. Indeed, that is the apparent belief of many in labor and other organizations that are opposing the Trans-Pacific Partnership (TPP).
In reality, the massive growth of trade and U.S. participation in helping create the World Trade Organization (WTO) and leading the conclusion of 14 free trade agreements (FTAs) with 20 countries over the past half century have spurred a quadrupling of U.S. exports of made-in-the-USA manufactured goods. Those exports and other rules have helped advance a quadrupling of U.S. manufacturing output. Hundreds of millions of people around the world have moved out of abject poverty into a growing middle class, which is vital in its own right but also provides new and needed growth opportunities for the most-productive manufacturing sector in the world—our own.
The platform describes many things that trade agreements should and shouldn’t do. A quick review shows that the TPP meets every single one of the DNC platform’s objectives; yet, unfortunately, the platform fails to endorse the TPP.
|DNC Platform||TPP Provisions|
|“Any future trade agreements must make sure our trading partners cannot undercut American workers by taking shortcuts on labor policy or the environment.”
“We believe any new trade agreements must include strong and enforceable labor and environmental standards in their core text with streamlined and effective enforcement mechanisms.”
|The TPP includes the most extensive labor and environment provisions of any U.S. trade agreement, requiring countries to adopt and enforce domestically the types of International Labour Organization, international environmental agreement and other standards that U.S. labor and environment groups have long cheered.
The TPP provides new levers to address with labor and environmental violations that otherwise would not exist: if countries fail to meet their extensive obligations, they will face dispute settlement proceedings and potentially trade sanctions.
|“They must not undermine democratic decision-making through special privileges and private courts for corporations.”
“We should never enter into a trade agreement that prevents our government, or other governments, from putting in place rules that protect the environment, food safety or the health of American citizens or others around the world.”
|The TPP promotes U.S. democratic values in many ways, including by:
· Explicitly affirming the rights of governments to regulate in the public interest;
· Providing any individual, organization or business the ability to protect their property located abroad through a neutral forum, but that forum cannot overturn any law or regulation; and
· Ensuring food safety and other regulatory and standards provisions are developed in a science-based manner as we do in the United States.
|“Trade negotiations must be transparent and inclusive.”||The TPP was negotiated with strong public consultations with stakeholders of all types, with public hearings, public comments and more than 1,800 congressional briefings.
The full text of the TPP has been available since November 2015 for all members of Congress and the public to read.
|“We will oppose trade agreements that do not support good American jobs, raise wages and improve our national security.”||The TPP eliminates all foreign tariffs on U.S.-manufactured exports in the 11 TPP countries and eliminates other discriminatory and unfair barriers. The TPP also sets high standards based on the U.S. Constitution, laws and regulations to promote a more level playing field and help manufacturers and other businesses and their workers compete more successfully.|
|“Trade agreements should crack down on the unfair and illegal subsidies other countries grant their businesses at the expense of ours.”||Combatting unfair subsidies is dealt with explicitly as part of the WTO Agreement on Subsidies and Countervailing Measures, which currently applies to all TPP countries and 161 other countries around the world, and the TPP in no way undermines countries’ WTO obligations. Furthermore, the TPP adds new anti-subsidy disciplines by prohibiting subsidies to foreign state-owned enterprises, as well as other disciplines to ensure such enterprises do not receive or give unfair advantages to our competitors.|
|“It should promote innovation of and access to lifesaving medicines.”||The TPP advances innovation by ensuring that innovation is protected, including with new provisions that criminalize the growing theft of trade secrets, as well as strong provisions on the protection of U.S. patents, trademarks and copyrights.
The TPP could have and should go further in protecting the innovation climate that will spur development and dissemination of lifesaving medicines. Strong intellectual property protections have, indeed, fostered the creation of 91 percent of all available medicines.
|“And it should protect a free and open internet.”||The TPP makes major advances in promoting a free and open internet not seen in any other trade agreement, including through:
· Preserving the right of individuals and businesses and organizations of all sizes to access and move data and be forced to store data locally; and
· Promoting public participation and transparency in the development of laws and regulations affecting the internet.
For manufacturers in the United States to continue to grow and to sustain and add new high-skilled and good-paying American jobs, we need new demand for our products. It’s that simple. Manufacturers need access to new markets without discriminatory and unfair barriers. That is what trade agreements like the TPP will do.
The most important sentence on energy in the Democratic National Committee (DNC) platform document is the one it took out: this version of the platform no longer supports an “all-of-the-above” energy strategy.
Coal is out. Nuclear energy and hydropower aren’t even mentioned once in the platform. This version seeks to pick winners and losers in the energy space and remake the energy mix the way the DNC platform committee sees fit, regardless of what the market wants.
You know why that’s a bad idea? Because just about every time the government tries to pick winners and losers in the energy space, the government gets it wrong—like really, really wrong.
Eight years ago, we were told that coal would be the dominant electricity source for the next 50 years, that we would hit peak oil and gas and need to build new natural gas import terminals, that a renaissance of new nuclear power plants was upon us and that the vehicle fleet would transition to biofuels. Policies were put into place to adjust to those projections. Fast-forward to today, and just about every one of those predictions has been proven wrong. The one thing the government just couldn’t predict was the pace of innovation. And innovate we did: hydraulic fracturing unlocked hundreds of years’ worth of oil and gas supplies right here in the United States, renewable energy and energy-efficient products and solutions are getting cheaper by the day, the vehicle fleet is getting more efficient and electric vehicles are gaining market share, we are about to become net exporters of oil and gas, and advanced coal and nuclear technologies are getting closer to market.
Point being: a commitment to letting the market decide what energy technologies win or lose got us where we are now. And where we are now is a position of energy strength.
Take natural gas. Manufacturers have historically had an outsized reliance on natural gas. Unlike residential consumers, whose main interactions with natural gas are at the power plant and through their stoves and furnaces, manufacturers rely on natural gas for a wide range of direct and indirect uses. Manufacturers use natural gas as a fuel for direct process uses, such as drying, melting, process cooling, machine drive and refrigeration; as a fuel for direct nonprocess uses in manufacturing establishments, such as heating, ventilation, HVAC and lighting; as a fuel for indirect purposes, such as boilers used to produce electricity and steam; and as a feedstock in refining, chemicals and primary metals sectors. Domestic natural gas has transformed the U.S. economy, made our companies more competitive, created jobs and put money back in the pockets of working Americans.
Over the next decade, total demand for natural gas will increase by 40 percent. Key drivers will be power generation and manufacturing: the chemical industry alone plans to invest in 264 new projects representing $164 billion in capital investment in the United States thanks to natural gas. U.S. supply of natural gas will grow by 48 percent, more than enough to meet growing demand.
Yet, the DNC platform document wants to make it significantly harder to access this energy. It wants to stop energy exploration off the coasts, phase it down on public lands and send the Department of Justice after fossil fuel companies. All of that will make it substantially harder for manufacturers to access the energy that we need to stay competitive.
The DNC platform committee knows as much about the next eight years of our energy future as it did back in 2008. Case in point: the 2008 platform document claimed, “We know we can’t drill our way to energy independence.” Turns out we actually can, and for the most part, have.
The one thing the platform seems to ignore is innovation. Without innovation—without hope—we’re not going to solve any of our environmental challenges and take advantage of new energy opportunities.
Today, the Democratic Party adopted a platform that would drive many manufacturers out of business and many Americans out of their jobs. We hope this statement of party principles is not a signal that Sec. Clinton will follow the extreme voices in her party and copy a playbook that will punish, instead of empower, manufacturers in the United States.
Thankfully, the Democratic platform avoids the divisive attacks on individual liberty and equal opportunity that distracted the authors of the Republican Party platform. The Democrats also included workforce development and immigration policies that are reflected in our manufacturing policy agenda, “Competing to Win.”
On almost every other major manufacturing priority, however, the platform is out of touch with the reality of what manufacturing families are facing. On taxes, regulations, labor, energy and health care, the Democratic Party is not only advocating the continuation of many of President Obama’s antigrowth policies but also doubling down on the belief that government, not the private sector, creates growth and prosperity.
On trade, the protectionist rhetoric is alarming. The failure to support the Trans-Pacific Partnership sells American workers short. Manufacturers in the United States can compete and win around the world—if we have a level playing field with access to the 95 percent of the world’s customers who live overseas.
As an industry, we recognize some positives in this platform. However, these positives are overwhelmed by one job-killing proposal after another.
Secretary Hillary Clinton has chosen a tested and successful governor and senator for her running mate, and manufacturers congratulate Sen. Tim Kaine as he joins the Democratic ticket.
I have worked with Sen. Kaine in a number of capacities over the years and am pleased to count him as a friend. From his time as mayor of Richmond, to lieutenant governor and governor of Virginia, to his current service in the U.S. Senate, Sen. Kaine has proven to be a principled leader. While we don’t always agree on every issue, he takes the time to listen, and most importantly, he keeps his word. He is a dedicated public servant who is well qualified to serve—and who would serve with integrity.
Manufacturers will continue paying close attention to the policy proposals of the Clinton-Kaine campaign. We appreciate Clinton’s stated support for manufacturing, but we remain concerned that many of the positions she’s highlighted on the campaign trail on trade, energy, taxes, regulations and health care would make it more difficult for manufacturers to compete in the global economy and create jobs here at home.
As a former governor, Sen. Kaine has firsthand experience and knowledge about the impact of public policy on investment, job creation and competitiveness. On that note, we hope Sen. Kaine, who has spoken positively about the Trans-Pacific Partnership, will persuade his running mate that expanded trade will support jobs for millions of Americans.
Manufacturers encourage the Clinton-Kaine team to take a close look at our policy agenda, “Competing to Win,” to gain a better understanding of the policies that manufacturers desperately need to win in a competitive global marketplace. We look forward to working with all candidates to enact comprehensive tax reform, pursue new opportunities to export American products, implement regulatory reform and help manufacturers to provide meaningful benefits to their employees.
If the Democratic ticket works with manufacturers to grow the economy and enhance our global competitiveness, we indeed can be “stronger together.” After all, when manufacturing succeeds, America succeeds.
As noted earlier, the U.S. economy grew by an annualized 1.1 percent in the first quarter, and the Bureau of Economic Analysis has now released data breaking out that growth by industry. In short, real value-added output in the manufacturing sector increased by 1.4 percent in the first quarter of 2016, slowing from 2.6 percent and 2.4 percent growth in the third and fourth quarters of 2015, respectively. As a result, manufacturers contributed 0.16 percentage points to headline growth in the first quarter, down from 0.31 percent and 0.29 percent in the prior two quarters.
Looking specifically at manufacturing in the first quarter, real value-added from nondurable goods firms rose 3.8 percent at the annual rate, but durable goods manufacturers saw output decline by 0.6 percent. Therefore, durable and nondurable goods businesses contributed -0.04 percent and 0.2 percent, respectively, to real GDP for the quarter. Read More
Yesterday, the Manufacturers’ Center for Legal Action (MCLA), the legal arm of the National Association of Manufacturers (NAM), along with eight other business and manufacturing trade groups, filed an amicus brief supporting Constitution Pipeline in the U.S. Court of Appeals for the Second Circuit. After extensive environmental, safety and economic review, the Federal Energy Regulatory Commission (FERC) had approved the critical energy infrastructure project. However, the state of New York attempted to block the project, undermining the collaborative approval process. Constitution is challenging New York’s denial of its Section 401 water permit for construction of the new natural gas pipeline.
For manufacturers, who use one-third of our nation’s energy, access to abundant and reliable energy sources is essential to our continued growth and ability to compete globally. While states play an important role under the Clean Water Act, they should not be allowed to use their permitting processes, including the issuance of water quality certificates, to unreasonably delay, exact concessions from, or scuttle federally approved projects.
“As some of the largest producers, transporters and users of natural gas in the country, many of amici’s members are directly affected by the decision under review, which denied a certification necessary for the construction of an important interstate pipeline,” said parties in the brief. “Furthermore, amici are concerned by the broader impacts of certification denials like this one on the development of much-needed natural gas infrastructure. Total natural gas demand, driven in particular by manufacturing and power generation, is poised to increase by 40 percent over the next decade, and the U.S. supply is expected to increase by 48 percent over the same period. Furthermore, explosive growth in shale gas requires the construction of new pipeline capacity. Amici thus have a strong interest in the effectuation of Congress’ policy for the efficient, transparent and predictable approval of natural gas pipelines.”
Earlier this year, the NAM released a new comprehensive study that reveals how natural gas has strengthened manufacturing and encouraged U.S. manufacturing growth and employment. This study underscores the need for critical energy infrastructure.
“Over the next decade, our nation’s demand for natural gas is only going to grow, and much of that growth is from manufacturing,” said NAM President and CEO Jay Timmons. “Our study unequivocally shows that if our growing demand is not taken seriously by policymakers, we will have a serious lack of infrastructure that will jeopardize our growth. Natural gas is responsible for millions of jobs, tens of thousands in manufacturing alone. We can’t afford to let misguided policies rob us of this valuable domestic resource.”
The MCLA serves as the leading voice of manufacturers in the courts, representing the more than 12 million men and women who make things in the United States. The MCLA strategically engages in litigation as a direct party, intervenes in litigation important to manufacturers and weighs in as amicus curiae on important cases. To learn more about the MCLA, visit our website.