Tag: manufacturers

Manufacturing Production Sees a Slight Gain in May

The Federal Reserve Board said that industrial production was unchanged in May, with manufacturing activity up 0.1 percent. So far in 2013, manufacturing production has been virtually unchanged, up in two months and down in three. On a year-over-year basis, manufacturers have increased their output by 1.7 percent. That is far from ideal, as we would like to see production increase by at least double that to signify a flourishing manufacturing sector. Nonetheless, it is indicative of many of the weaknesses that we are seeing right now in the sector.

At the same time, manufacturing capacity utilization remained at 75.8 percent, which while the same as April’s figure represented a slowdown from the 76.4 percent utilization rate of December.

Both durable and nondurable goods production were up slightly in May, increasing 0.2 percent and 0.1 percent, respectively. Manufacturing activity gained the most in the month in the apparel and leather (up 3.1 percent), computer and electronic products (up 1.1 percent), wood products (up 1.1 percent), petroleum and coal products (up 0.9 percent), plastics and rubber products (up 0.9 percent), nonmetallic mineral products (up 0.8 percent), and motor vehicle (up 0.7 percent) sectors.

These increases were somewhat offset, though, by declines in primary metals (down 1.0 percent), furniture (down 0.8 percent), aerospace and miscellaneous transportation (down 0.6 percent), machinery (down 0.4 percent), and food and beverage (down 0.3 percent) sectors. (continue reading…)

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Rep. Paulsen Discusses the Trade Challenges in India with Manufacturers

Today Congressman Erik Paulsen (R-MN) joined the NAM’s India Task Force meeting to discuss the ongoing challenges resulting from India’s recent discriminatory trade practices. Paulsen and Congressman John Larson (D-CT) are circulating a letter urging Secretary of State Kerry to press for an end to this discrimination during his visit to India at the end of this month.

Congressman Erik Paulsen discusses India's discriminatory trade practices with manufacturers.

Congressman Erik Paulsen discusses India's discriminatory trade practices with manufacturers.

Manufacturers are already facing significant barriers to trade and India’s recent actions threaten the trade relationship with our fourth largest trading partner worth $60 billion just last year. The courts and policymakers in India are engaged in a persistent pattern of discrimination designed to benefits India’s economy at the expense of American jobs. Last week the NAM joined 16 other business groups in sending a letter to President Obama asking his Administration to directly engage the Indian government to stop these practices and to keep it from happening again in the future.

From the letter:

“These actions and others constitute a disturbing trend that may continue and even expand to other products, sectors, and countries.  Already there are indications that other countries are considering similar measures.  Such actions are completely at odds with recognized global norms and raise troubling questions about India’s compliance with its international obligations to protect ideas, brands, and inventions and to treat imported goods no less favorably than domestic products.”

The discussion with Congressman Paulsen today was a great opportunity for manufacturers to discuss the concerns about India with a member of the Ways and Means Committee. We will continue to urge members of Congress to ask the Administration to engage India’s government so we can protect American jobs.

 

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House Holds Hearing on Background Ozone

Yesterday, the House Committee on Science, Space and Technology, Subcommittee on the Environment, held a hearing to examine the achievability of potential new ozone standards. The EPA, which substantially lowered the Ozone Standard in 2008 and then unsuccessfully tried again in 2010, is widely expected to propose lowering the Ozone Standard even further at some point this year. As witnesses from the scientific, legal, academic and state regulatory community testified today, achieving a lower standard in many parts of the country will be nearly impossible – if not completely impossible – because of naturally occurring ozone or ozone that is beyond the control of any U.S. regulatory agency (known as “background”).

Ozone can travel several thousand miles and concentration levels are greatly impacted by, amongst other things, topography and weather. However, after EPA sets an air quality standard, like the Ozone Standard, states have limited tools with which to achieve these federal mandates. So manufacturers end up bearing the brunt of the costs, even in areas where there are very few industries. In fact, several national parks, with no industrial activity at all, have been found to be in “nonattainment”.

The situation will be particularly vexing in the Western United States, where ozone attributable to pollution from Mexico and several Asian and European countries contributes significantly to higher ozone measurements. Many of these regions are rural areas of the country with few industries, yet according to EPA would be classified as “nonattainment” and left with little hope of future economic development. As EPA considers lowering the Ozone Standard this year, potentially bringing nearly the entire country into nonattainment, serious consideration should be given to the impact background ozone levels have on nonattainment determinations and the impacts a lower ozone standard could have on manufacturers across the country.

Greg Bertelsen is director of energy and resources policy, National Association of Manufacturers.

 

 

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Immigration Reform: Principles Matter

Earlier today, the National Association of Manufacturers (NAM) hosted a dual town hall discussion on why the time for comprehensive immigration reform is now. Cosponsored by Cargill, Microsoft and the Minnesota Chamber of Commerce, the event highlighted just how important the issue is to businesses and local communities across the country. That significance resounded from Cargill’s headquarters in Hopkins, Minnesota to the Washington, DC platform where House Budget Committee Chairman Paul Ryan (R-WI-1) addressed the crowd.

Right now, the United States is educating foreign-born talent and then returning them to our competitors around the world. Our birthrates are not where they need to be to lock in our competitive advantage. Immigration reform will create jobs and drive economic growth, economist Douglas Holtz-Eakin said in Washington. As Ryan noted, maintaining the status quo on immigration will get us nowhere fast. “When we’ve got baby boomers retiring, when we’ve got 10,000 people retiring every day as they will be for ten years coming, we’re going to need people,” he said. “Immigration helps us get the labor force that we need so that we can have the kind of growth we want.” Manufacturers in particular stand to benefit from having access to the qualified workers they need to keep manufacturing in the United States and thrive in a global marketplace.

For Ryan and other lawmakers, immigration reform is not simply an economically-motivated decision. It is the right thing to do. NAM President and CEO Jay Timmons has been making the case for comprehensive immigration reform based on those same principles. It is something that town hall panelist and Brooklyn Park, Minnesota Mayor Jeffrey Lunde understands completely. Brooklyn Park is the most diverse city in the state and an indicator of future U.S. demographics. “It’s not stats to us – it’s people,” Lunde said from Cargill’s headquarters.

The NAM couldn’t agree more, especially when opponents question the ethics of immigration reform. Immigration reform is the ethical thing to do. Cargill Chairman and CEO Gregory Page put it best when took the stage. “What we see in America are 11 million people, the great majority of whom came here to work and to work hard, often in jobs that are difficult for employers like ourselves and others to fill. We see this as a moral question in the other direction,” he said. “How are we going to treat people who have contributed so much for so many years?”

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The Importance of Trade Opportunities for Manufacturers

The importance of trade to small and medium-sized manufacturers was exemplified today by the testimony of Doug Hundt of Vermeer on U.S. trade relations with Brazil. In discussing the opportunities and challenges for Vermeer and other manufacturers before the Ways and Means Trade Subcommittee this morning, Hundt noted how over a quarter of its Iowa workforce – 700 hundred out of 2,400 employees – depends on Vermeer’s global sales.

Hundt also explained how manufacturers in the United States have the technology and products that Brazil and other countries need to meet their infrastructure and economic development goals. Hundt noted how Vermeer’s products can help cities in Brazil put in sewer systems efficiently without tearing up existing city streets. And his testimony provided even more examples of innovative products that can help meet the needs of the global economy.

The examples that Vermeer provided today are important reminders of the power of trade to sustain and grow manufacturing in the United States. Greater commercial engagement in Brazil and throughout the global economy is vital for our manufacturers to reach new customers and markets to grow jobs and manufacturing in the United States.

With continued headwinds in the global economy, the administration and Congress need to step up their activity to level the playing field for manufacturers in America.  From the development and approval of the Executive-Congressional partnership known as Trade Promotion Authority and the completion of comprehensive and market-opening trade agreements to high-level dialogues with key countries that keep trade and economic issues as top priorities, the NAM urges more robust progress and is committed to working aggressively in support of concrete outcomes to open markets and create opportunities for manufacturers throughout the United States.

Linda Dempsey is vice president of international economic affairs, National Association of Manufacturers.

 

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Manufacturers Look Forward to Continue Working with Furman As He Moves to the CEA

As the Principal Deputy Director of the President’s National Economic Council, Jason Furman has displayed an understanding of some of the issues that face Manufacturers, particularly as they relate to operating in a struggling economy.  Jason has earned the respect of economists and policymakers across the political spectrum, much as President Obama said yesterday.

In recent years, he’s been helpful in our efforts to advance both expanded net operating loss relief and bonus depreciation, two tax provisions that helped many manufacturers through slow economic times. From our perspective, Jason will be taking over as head of the Council of Economic Advisers at another critical time as the debate over reforming our nation’s tax code heats up.  While the NAM is firmly behind comprehensive tax reform, we are concerned about reform efforts that could increase the tax burden on American manufacturers.  As the tax debate moves forward, there’s a lot of important issues to consider and we look forward to working with Jason on pro-growth, pro-manufacturing tax policy.

Dorothy Coleman is vice president of tax and domestic economic policy and Chad Moutray is chief economist, National Association of Manufacturers.

 

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SAVE Act Introduced in the Senate

Yesterday Sens. Bennet (D-CO) and Isakson (R-GA) re-introduced the “Sensible Accounting to Value Energy Act” (Save Act), S 1106. The objective of this legislation is to “encourage investments in energy efficient home building” and to do so through a mortgage lending process that recognizes and rewards those investments.

S. 1106 would require the Secretary of Housing and Urban Development (HUD) to develop and issue guidelines to federal mortgage agencies on calculating loans made on each residential property factoring in the energy costs and efficiency of that property. The objective is to provide the loan applicant with additional information as to the energy costs and the energy efficiency of that property. The legislation would also permit appraisers to have access to this information and to factor into their appraisal the energy and water improvements made to the property. For instance, the appraiser can take into account such things as “labels and ratings of building and installed appliances, blueprints, construction costs, incentives regarding energy and water-efficient components and systems installed in a property…”

The SAVE Act would provide consumers with additional and important information about the energy efficiency and the energy costs of purchasing a home. Thus consumers would be able to make more informed decisions. For example, if they have an idea of their yearly energy costs, it can help them to determine the true cost of home ownership.   The result would be that the marketplace would be better able to reflect the value of homes that are more energy and water efficient.  (continue reading…)

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Manufacturing Employment Falls Again in May

Manufacturing employment fell by 8,000 workers in May according to the Bureau of Labor Statistics. With the latest revisions to the data, this was the third consecutive month of declining employment in the sector, a sign of just how weak activity has become in recent months. Manufacturers have added just 41,000 workers over the past 12 months or just 1.9 percent of total non-farm jobs created, signifying that the sector’s contributions are well below what we need to see. Since the second half of 2012, the manufacturers have been challenged by slowing global sales, U.S. fiscal woes, higher taxes, and reduced government spending. To the extent that the industry is growing, it has been modest at best, dampening the enthusiasm for job growth.

The decline in manufacturing employment occurred in both durable and nondurable goods industries, down by 2,000 and 6,000 respectively. Areas of strength included motor vehicles (up 2,400), wood products (up 1,300), computer and peripheral equipment (up 1,100), and chemicals (up 900).  But, these gains were lessened by declines in the printing and related support (down 3,200), machinery (down 3,100), food manufacturing (down 2,800), and primary metals (down 2,200) sectors, among others.

On the positive side, the average weekly earnings of workers in the manufacturing sector rose slightly, up from $803.40 to $804.65. Likewise, the average number of hours worked were unchanged at 41.8 hours, with overtime hours off from 4.3 hours to 4.2 hours on average.

The Bureau of Labor Statistics said that nonfarm payrolls rose by 175,000 in May, just slightly above the expectations of around 165,000. At the same time, the labor participation rate edged up somewhat from 63.3 percent in April to 63.4 percent in May. This contributed to the unemployment rate increasing from 7.5 percent to 7.6 percent.

The May report confirms that the U.S. economy is modestly growing. The service sector appears to be the main beneficiary of this growth. For manufacturers, these data are quite frustrating, as they are indicative of many of the larger trends that we are seeing for the sector. Recent reports show that new orders have been soft, with exports challenged by weaker economies overseas and persistent domestic uncertainties.

Manufacturing needs to be firing on all cylinders if we are going to have robust economic growth. When manufacturers are once again making significant contributions to output and employment, as they have overall since the end of the recession, we will see significant economic growth. Washington must move forward with policies that will help eliminate the headwinds and uncertainties that are limiting hiring and growth.

Chad Moutray is chief economist, National Association of Manufacturers.

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Manufacturers Urge Action to Address India’s Unfair Trade Practices

Today the National Association of Manufacturers (NAM) joined 16 other business groups on a multi-industry CEO letter addressed to President Obama that calls on the President to address the unfair and discriminatory trade practices by the Government of India against U.S. exports and outlines proposed solutions to end these practices. The letter was signed by the leaders of 17 U.S. industry associations.  A full copy of the letter can be found at: U.S. Business Community Letter

The following groups signed the letter to President Obama

  • National Association of Manufacturers
  • U.S. Chamber of Commerce
  • CropLife America
  • BIO
  • Telecommunications Industry Association
  • PhRMA
  • United States Council for International Business
  • Emergency Committee for American Trade
  • American Business Conference
  • National Electrical Manufacturers Association
  • Air Conditioning, Heating and Refrigeration Institute
  • Association of Home Appliance Manufacturers
  • American Foundry Society
  • Semiconductor Industry Association
  • Dental Trade Alliance
  • National Foreign Trade Council
  • Solar Energy Industries Association
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Manufacturing Construction Spending Fell in April

The Census Bureau reported the total construction spending rose 0.4 percent in April. This was below the 0.8 percent consensus estimate, with a decline in residential construction activity and reduced spending from manufacturers. Private sector housing construction spending declined 0.2 percent for the month but has increased a whopping 18.3 percent since April 2012. This pullback mirrors the decline in new housing starts reported a couple weeks ago. Despite April’s decrease, though, residential construction remains one of the brighter spots in the economy.

Meanwhile, manufacturing construction spending fell 2.6 percent, down from an annualized $50.2 billion in March to $48.9 billion in April. Year-over-year, manufacturers have added just over $1 billion to their construction spending activity put in place, a gain of 2.2 percent. Still, this is not totally a fair way of presenting the annual change, as there has been a high degree of volatility in this figure over much of that time. The average for 2012 was $48.00 billion and peaked at $52.2 billion in December.

Overall private, nonresidential activity rose 2.2 percent, the first increase since December. The largest gain was in the power sector, with construction activity in that segment up 10.8 percent. Year-over-year growth in that power industry, though, was down 2.8 percent. Other nonresidential areas with higher construction spending in April included amusement and recreational (up 3.5 percent), educational (up 2.9 percent), and transportation (up 1.5 percent) entities. In addition to manufacturing, there was reduced monthly construction investment among religious (down 11.5 percent), communication (down 4.1 percent), and office (down 2.1 percent) institutions.

Meanwhile, public construction spending was down 1.2 percent in April and 5.1 percent year-over-year. Dollars spent on public residential projects were off 5.4 percent for the month, with nonresidential spending down 1.1 percent. The largest monthly gains were in commercial (up 8.2 percent), sewage and waste disposal (up 6.8 percent), and public safety (up 5.5 percent) projects. In contrast, the power (down 13.3 percent), conservation and development (down 5.7 percent), and educational (down 4.4 percent) sectors had the greatest declines in public construction spending in April.

Chad Moutray is chief economist, National Association of Manufacturers.

 

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