Tag: manufacturing

Personal Spending Slowed in September even as Income Growth was Strong

The Bureau of Economic Analysis said that personal spending growth weakened somewhat in September, even as personal incomes grew. Consumers purchased 0.2 percent more in September, down from the 0.3 percent rate of August. On a year-over-year basis, the pace of personal spending growth has decelerated from 3.3 percent in June to 2.7 percent in September, suggesting some degree of hesitance on the part of Americans to increase their overall spending.

This was particularly true for durable goods products, which spending in this category essentially flat in the third quarter, according to this data. For the month, spending on durable goods was down 1.3 percent in September, rebounding from a 1.4 percent increase in August. In contrast, nondurable goods spending in the third quarter was up 1.3 percent, with a 0.6 percent gain in September.

Meanwhile, personal income growth remained strong, up 0.5 percent in both August and September. Over the course of the past 12 months, incomes have risen 3.7 percent, but in the third quarter, the annual pace accelerated to 4.45 percent, a sign of renewed strength.

Manufacturing sector wages and salaries edged higher for the month, up from $754.3 billion to $754.6 billion. This figure has grown slow-but-steady, reflecting upward movement from averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.  Total wages and salaries were up 0.5 percent and 0.4 percent over the past two months.

With growth in personal income outstripping personal spending in each of the past three months, the savings rate has moved higher. It has grown from 4.4 percent in June to 4.9 percent in September. This was the highest savings rate of 2013 so far, approaching the average of 5.3 percent for January to November of 2012. (I omitted December due to accelerated payouts skewing the data in the lead-up to the fiscal cliff deal.)

These data also show that inflationary pressures remain modest. Similar to the recent consumer price index report, price gains for consumer items have risen in an acceptable range. Year-over-year growth in prices for core personal consumption expenditures was 1.2 percent in September, the same as in August and roughly unchanged for the past six months. This keeps prices below the 2 percent growth threshold established by the Federal Reserve Board, with minimal inflationary pressures for now.

Chad Moutray is the chief economist, National Association of Manufacturers.

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An Opportunity for Manufacturers and Exporters in the Pacific Northwest

A big debate on energy exports is playing out in the Pacific Northwest. Passions are running high on both sides, no doubt fueled in part by meticulously brewed cups of java.

NAM President and CEO Jay Timmons recently waded into the debate. In remarks to business community leaders in Portland and later in Seattle, he made a strong case in support of building the infrastructure necessary to move goods and commodities, such as coal and natural gas, to markets abroad. He said:

Building, modernizing and expanding export terminals makes sense. In a still sluggish economy, expansion will create over 10,000 jobs in the Pacific Northwest and throughout the entire manufacturing economy in America. Expansion means more private investment in export infrastructure—not just for commodities like coal and liquefied natural gas—but for agriculture and manufactured products. It’s a winning proposition.

Currently, plans to modernize export terminals in Washington and Oregon are  effectively on hold. Approval of these projects takes the consent of seemingly every level of government, giving opponents plenty of opportunities to stall. All the while, the Pacific Northwest is missing out on the increased economic activity the export terminals would make possible.

The debate over energy exports isn’t isolated to the Pacific Northwest. Similar debates are taking place across the country, particularly on the issue of natural gas exports. The United States has abundant supplies of natural gas, which are now being developed thanks to advancements in hydraulic fracturing. By exporting energy, whether coal or natural gas, the United States can enhance its global economic leadership, boost economic growth and create high-wage jobs.

“Other growing global economies need energy,” Timmons remarked during his trip to the Pacific Northwest. “Why shouldn’t it be from America?”

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Veterans are Strengthening the Manufacturing Workforce

Veterans enter the civilian workforce every day.  Unfortunately, there are more veterans than open jobs—as a roughly 8 percent unemployment rate among veterans indicates.

After bravely serving our country, veterans deserve a hero’s welcome. They also deserve a good job, and manufacturers are stepping up to make that happen. Across the country, manufacturers are looking for ways to introduce veterans to manufacturing and get them to work.

Take Hoerbiger Corporation of America. When the Florida-based manufacturer saw a need for skilled machinists, it saw veterans as a natural fit.  As the Sun-Sentinel reports,

 [E]arlier this year the company developed a training program to fill the gap and began recruiting veterans.

They tend to exhibit “maturity, discipline, tenacity and an ability to get the job done,” said David Gonzalez, the company’s human resources manager. He recruited veterans in May at the Paychecks for Patriots job fair in Dania Beach.

The result: Seven of the 12 machinists put through the program are military veterans.

To help train these individuals, Hoerbiger turned to another manufacturer and a cutting-edge educational system.

Hoerbiger trained the group with the help of new machine simulation software by Machining Training Solutions, a Longwood, Fla., company operated by Al Stimac, president of the Manufacturers Association of Florida. Ten to 12 workers can be trained at a time with the interactive software.

“My whole concept was to train using the methods that students are used to, such as today an iPad or a computer. The learning curve is reduced drastically,” Stimac said.

There are similar stories across the country. The National Association of Manufacturers through the Manufacturing Institute is working with a number of manufacturers are part of the Get Skills to Work program.  This initiative matches the skills veterans received in the military to skills coveted by manufacturers. If veterans need to learn new skills, the Institute and its partners can help them earn those credentials through partnerships with community colleges and other educational institutions.

Manufacturers are helping veterans transition from the military in other ways as well. In addition to its efforts to recruit veterans to its workforce, Whirlpool Corporation recently became the official appliance sponsor of Homes for Our Troops, a non-profit initiative dedicated to building homes for severely injured veterans.

It’s the least manufacturers can do for the men and women who make great sacrifices to safeguard our freedom.

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Boeing Introduces a New Member to the Dreamliner Family

NAM Member Company, Boeing, introduced its second member of the Dreamliner family today.  The first flight of the new, innovative 787-9 successfully took place today at 1:30pm EST.

Boeing has always had a reputation for manufacturing advancements in air travel and they have done it again today with their new plane manufactured in Everett, WA.  The new 787-9 will carry more passengers, cargo, and has the ability to travel further than any other 787.  It is a more capable and efficient airplane than those that came before it.  The entire Boeing team, from the designers, engineers, executives and the men and women on the shop floor deserve a round of applause for taking air travel to the next level.

The NAM congratulates Boeing on delivering another state-of-the-art and efficient means of travel to customers around the world.

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Manufacturing Construction Spending Declined in June

The Census Bureau said that overall construction spending fell 0.6 percent in June, with weaknesses in both the residential and nonresidential sectors. Despite a very healthy gain in residential activity of 17.6 percent over the past 12 months, it was 0.1 percent lower in June. This somewhat mirrors earlier findings on lower housing starts and permits — a decrease possibly influenced by higher mortgage rates. That report suggested that the decline in new residential construction activity was primarily in the multi-family units segment.

Meanwhile, the level of manufacturing construction projects decreased from $45.9 billion in May to $45.1 billion in June. This was off from $49.5 billion in December, suggesting a drop of 8.9 percent year-to-date. The December figure was a bit of an outlier, though, and the year-over-year decline was a more modest 1.9 percent. Either way, it is clear that there has been a pulling back in construction investment in the first half of 2013.

For the larger private, nonresidential sector, spending declined 0.9 percent for the month, with year-over-year growth of 1.4 percent. The largest monthly increases were in the power, communications, and transportation sectors. In contrast, religious, educational, amusement and recreation, and lodging entities reduced their construction spending in June.

In terms of public construction projects, there were decreases of 1.1 percent for the month, or 9.3 percent lower year-over-year. There was lower spending found in the conservation and development, water supply, sewage and waste disposal, and public safety. These were somewhat counteracted by increases in power, office, health care, and commercial developments, among others.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Business Economists Note Slowing in the Second Quarter, Cautious Optimism Ahead

The National Association for Business Economics (NABE) released its latest Industry Survey, which found that sales and earnings decelerated somewhat in the second quarter. A net percentage of 20 percent said that their sales were rising in the second quarter, down from 47 percent in the first quarter. This brings it back to levels seen in the third and fourth quarters of 2012. In the goods-producing sector (which includes manufacturing), 43 percent of respondents said that their sales were increasing in the second quarter, down from 73 percent who said the same thing in the first quarter.

These data mirror other indicators which have found softness in the second quarter. Timothy Gill, the Chair of the NABE Industry Survey Committee and the Vice President of Business Information & Statistics for the Aluminum Association, an NAM member, said that these results “possibly [reflected] increased headwinds from a weak global economic environment and tighter domestic fiscal policy in the latest period.”

The slowing pace of sales growth has impacted profit margins. In the goods-producing industries, 29 percent of respondents said that their profits had declined over the past three months, with half of them reporting no change. That represents deterioration in profits from the first quarter, where no one in the goods-producing sectors had declining sales (relative to the fourth quarter of 2012). In the larger economy, the results were similar, with the net percentage of those reporting higher profits down from 16 percent in the first quarter to -3 percent in the second.

The news on employment was more positive. Overall, there was a pickup in hiring observed in this latest survey. While 60 percent of respondents said that they had not changed their employment levels, 29 percent noted an increase in hiring in the second quarter. That is up from 22 percent reporting increased hiring in the first quarter. This carried through to the goods-producing sectors, as well, with 29 percent of those taking the survey suggesting that they had hired new workers in the second quarter, up from 18 percent three months ago. Here, it is important to note that goods-producing industries include construction and mining, both of which have seen employment gains of late, in contrast to manufacturing.

In terms of forecasts, business economists surveyed tend to be cautiously optimistic about the next 12 months. Seventy percent think that real GDP will grow 2.1 percent to 3.0 percent between the second quarter of 2012 and the second quarter of 2013. That is up from 60 percent who said the same in the last survey and 47 percent six months ago. As such, expectations about the future economic environment have been upgraded overall.

With that said, several other economic forecasts for 2014, including the one from the Federal Reserve, predict real GDP growth rates of 3.0 percent or more, and as such, these numbers appear to be slightly more subdued. Nearly one-fifth of the respondents felt that growth would be from 1.1 percent to 2.0 percent, for instance; although, that was down from 26 percent who said the same thing three months ago.

Chad Moutray is the chief economist, National Association of Manufacturers. He is a former board member of NABE.

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We Must Continue to Fight to Protect the First Amendment

NAM President and CEO Jay Timmons warned of the assault on the business community’s right to advocate its priorities in his Member Focus column. A right guaranteed to all political actors by the First Amendment regardless of their point of view.

Last Friday Senate Republican Leader Mitch McConnell delivered a speech to the American Enterprise Institute about the growing threats against the First Amendment.  He warned specifically about government agencies’ attempts to prevent speech, “Right now, there’s an effort over at the FCC to get groups that buy campaign ads to disclose their supporters. This is utterly irrelevant to the mission of the FCC. We need to say so. The SEC is under pressure right now to force publicly-traded companies into disclosing all their political spending, even though it has no core interest in knowing what political causes companies support. This proposal doesn’t protect shareholders, and it doesn’t lead to better corporate governance.”

As Senator McConnell urged in his speech, we must continue to fight against and call out attacks on the First Amendment regardless of the target. Our nation is the strongest when all voices can be heard in the political process and none are singled out or discouraged.

The NAM will continue to work to protect the First Amendment rights of manufacturers and their ability to participate in the political process. Manufacturers have the right to weigh in and voice their concerns about policies impacting their businesses and their ability to create jobs. Continued efforts in Congress to weaken First Amendment protections will only hurt our democracy.

 

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Happy 150th Birthday to Bayer

Congratulations and happy birthday is in order for Bayer. This week the company is celebrating 150 years of science for a better life. The company was founded in 1863 and ever since the company has been innovating and finding ways to manufacture products to make the lives of people, animals and even plants healthier.

Bayer is now a global company with more than 110,000 employees. Modern manufacturing is full of stories just like that of Bayer. Manufacturers are the drivers of innovation throughout the globe. These innovations include agriculture products, vehicles and earth moving equipment to high tech computers and pharmaceutical products to heal the sick.

To celebrate this anniversary Bayer has planned activities worldwide throughout the rest of 2013. These events will focus on the company’s employees and their families and the communities the company serves.

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Technology Is Driving Manufacturing Innovation

As the manufacturing army descended upon Washington this week for the 2013 NAM Manufacturing Summit, one of the key issues discussed with policymakers is the need to improve America’s infrastructure. Additional investment in our nation’s infrastructure, in particular our communications and broadband infrastructure is necessary.

A modern and advanced infrastructure will help drive our nation’s innovation and economy forward, especially when it comes to manufacturing.

“Manufacturing is driving technology, and technology and innovation drive manufacturing,” said NAM Technology Policy Subcommittee Chair and Verizon Vice President of Entertainment and Tech Policy Eric Fitzgerald Reed. “Machine-to-machine (M2M) technology and the Internet of Things are increasingly relevant and important components of manufacturers’ operations, including global supply chains. The manufacturing community is bringing all aspects of the Internet ecosystem together from different sectors of the economy to ensure robust broadband infrastructure is in place so businesses can thrive and grow.”

Verizon has launched two innovation centers located in San Francisco, CA and Waltham, MA to help spur innovation, build collaborative partnerships with other NAM member companies and create cutting-edge technology solutions.

It’s important that members of Congress understand that everyone from manufacturers to policymakers, need to work together if we are going to build the infrastructure systems that allow manufacturers to compete and create jobs.

 

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Manufacturing Leadership Essential to Good Policy

Over 500 manufacturers took to the Hill on Wednesday, and at the tip of the spear of our manufacturing army was Greg Folley, Vice President of Remanufacturing & Components Division for Caterpillar, Inc.

Four key issues – tax reform, comprehensive immigration reform, energy policy, and infrastructure – that are important to manufacturers, including Caterpillar, took center stage during Greg’s advocacy meetings with several members and staffs representing five states. With Reps. Roskam (IL), Moore-Capito (WV), Guthrie (KY), Smith (NE), and Flores (TX), we found significant areas of agreement, and we certainly got the sense they support the ideas manufacturers have put forth – good news for sure. And that’s why manufacturers took to the Hill for the NAM’s Annual Summit – we’re here to help them get the ball across the goal line.

Each of the candid conversations offered a great deal of back and forth. Greg took the lead in mapping out exactly what manufacturers need and why they need it. As he said, the current tax system is fundamentally uncompetitive and incentivizes companies to shelter in place rather than taking the necessary steps to grow and seek new markets. Lowering the corporate rate and implementing a territorial tax system will allow manufacturers to take off the handcuffs and compete successfully in an increasingly competitive global marketplace. If this happens, we’ll soon see a boom in job creation.

Yet that brings up a second key point – access to the skilled workforce needed to fill those jobs. In leading his meetings, Greg hit the nail on the head, saying that our current immigration system is the equivalent of hanging a “Not Welcome” sign in the window where it should read “Now Hiring.” Essentially the United States is pushing opportunity away, and for manufacturers like Caterpillar, that innovation is not only critical to current success, but also in developing the next generation of technology that will drive growth in the future.

Greg’s visit found a lot of reason to be hopeful for positive policy solutions – but it was abundantly clear that in Washington’s current environment, there remains a lot of work to do. Leadership such as that of Doug Oberhelman, Chairman and CEO of Caterpillar Inc. and Chairman of NAM Board of Directors, Greg Folley, and other manufacturers like Caterpillar is absolutely essential to driving policies that will allow our economy to flourish. And the NAM will consistently be at the door to ensure lawmakers know exactly what they need to do.

 

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