Tag: manufacturing

The Manufacturing Descends on Capitol Hill

Over the past two days the manufacturing army has descended on Capitol Hill to meet with lawmakers about the policies impacting their businesses. I had the privilege of sitting in on a meeting yesterday with Dwayne Welch, executive vice president and chief sales and marketing officer for HSM Solutions based in Hickory, NC as he met with Congressman Patrick McHenry (R-NC).

During the meeting Mr. Welch discussed the need for comprehensive tax reform with Congressman McHenry. Manufacturers currently have the highest corporate tax rate in among developed nations. If manufacturers are going to be able to compete globally and drive our economy comprehensive tax reform is a must.

The need for additional investment in infrastructure was also discussed, as well as comprehensive immigration reform. Manufacturers need access to skilled workers in order to fill many open positions.

Congressman McHenry was very supportive of these critical issues impacting manufacturers. This was just a snap shot of one of more than 200 meetings that took place yesterday and today with members of Congress, their staff and with the Obama Administration.

 

 

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NAM Urges Members of the House to Back Sugar Reform Amendment

Today the NAM sent a Key Vote letter to members of the House urging support for the Pitts/Davis amendment to the Farm Bill which would reform our nation’s sugar program. The U.S. sugar program creates an artificially high domestic price for sugar which harms U.S. food and beverage manufacturers ability to compete.

From the letter:

“A 2006 report by the U.S. Department of Commerce found that for every sugar job saved under the program, three manufacturing jobs are lost. A 2011 report by Iowa State University economists arrived at a similar conclusion, noting that the sugar program annually costs U.S. consumers as much as $3.5 billion and sacrifices 20,000 manufacturing jobs.
The Pitts/Davis/Goodlatte/Blumenauer amendment would eliminate some aspects of current sugar subsidies, especially those added in the 2008 farm bill. It does not repeal the sugar program. However, it would repeal higher price support levels, alleviate trade restrictions that limit the supply of sugar to domestic users and eliminate a requirement that the government buy surplus sugar and sell it at a loss.

Sensible reforms in the amendment would preserve high-paying manufacturing jobs and reduce government-imposed costs on manufacturers. We urge your support.”

 

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NY Fed: Improvement in General Business Conditions, But Other Measures Weaken

The New York Federal Reserve Bank said that manufacturers’ perceptions about general business conditions improved in June, even as other measures of activity weakened. The Empire State Manufacturing Survey’s composite index rose from -1.4 in May to 7.8 in June. This good news was somewhat tempered by the fact that there is still a high degree of cautiousness in many of the responses. For instance, nearly half of those taking the survey felt that business conditions had not improved since last month, with 21.6 percent commenting that they were worse.

Indeed, most of the other key subcomponents were lower in June than in May. The new orders index dropped from -1.2 to -6.9. The largest difference between the two months was the percentage that said that their sales had increased, falling from 30.5 percent in May to 23.2 percent in June. (The difference primarily flowed into those suggesting that new orders were the same.) Similarly, the shipments index decreased from 0 to -11.8, and the average workweek index declined from -1.1 to -11.2.

Illustrating just how stalled hiring is right now, the employment index shifted from somewhat modest growth (5.7) to no growth (zero). Roughly 81 percent of respondents said that the number of employees had not changed this month, with the remainder split between positive or negative hiring.

On the positive side, the forward-looking measures remained cautiously optimistic, even as there was some easing in many of the variables. Almost 37 percent feel that new orders should increase in the next six months, with 46.5 percent feeling that they will remain the same. At the same time, employment growth is expected to be increase very slowly (down from 11.4 to 1.6), with capital spending following suit (down from 22.7 to 3.2). Technology investment has actually turned negative this month (down from 11.4 to -3.2), with 83.9 percent planning to make no changes.

In short, the Empire State Manufacturing Survey is our first glimpse at June sentiment among manufacturers. Unfortunately, the data are more pessimistic than positive, with continued weaknesses in the sector. We will get data from the Philadelphia Fed on Thursday. They will hopefully improve from last month’s contracting levels.

Chad Moutray is chief economist, National Association of Manufacturers.

 

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Manufacturers Ask the Executive Branch to Invest in Energy Efficiency

Today the NAM, several member companies and a number of other organizations sent President Obama a letter expressing our strong support for the continuation of the administration’s effort to reduce the federal government’s energy consumption. The federal government is the largest single user of energy in this country and many federal buildings are in need of upgrades and improvements.

In 2011 the President issued a Presidential Memorandum directing agencies to use $2 billion of private sector financing and expertise to upgrade federal buildings. Under this directive federal managers could utilize energy savings performance contracts (ESPC) and utility energy service contracts (UESC) to purchase energy efficiency upgrades by using gains from energy savings. ESPC and UESC pose no risk to the federal agency because the results are guaranteed and the contractors assume the risks.

To use a military term , the federal government is a “target rich” environment for these upgrades. A number of energy audits have been completed by federal agencies and to date more than $9 billion in addressable energy efficiency measures have been identified, and no doubt there are still more that will be identified in the coming years. We would like the President to again challenge the Executive Branch to identify and contract for $1 billion each year for the next five years in energy saving projects using performance-based contracting. The letter also request that the Executive Branch identify and develop a “best practices” program so that individual agencies can share their successes and their challenges.

We think this makes a lot of sense. This effort will keep the momentum going in the agencies, it will allow the federal government to improve and modernize infrastructure, and it will enhance energy security. All this and it will be done by using energy savings and not with appropriated tax payer dollars.

Manufactures have been leaders in energy efficiency both in the manufacturing of equipment and the utilization of equipment. We understand that a kilowatt saved is a dollar saved. Lowering our energy consumption not only allow us to better utilize our financial resources and but in many instances it helps us to be more productive using less energy. These savings impact the bottom line and help manufacturers to be more competitive in the global economy. Being energy efficient is simply smart!

Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.

 

 

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Producer Prices Jump 0.5 Percent in May

The Bureau of Labor Statistics reported that producer prices for finished goods jumped 0.5 percent in May. As such, raw material costs bounced back somewhat from the 0.6 percent and 0.7 percent losses, respectively, in February and March. This shifted the year-over-year rate up from 0.6 percent last month to 1.7 percent now. Despite the uptick, pricing pressures overall still remain modest.

The higher figure stemmed both from increases in both food and energy prices. The cost of finished energy goods rose 1.3 percent, partially offsetting the 3.4 percent and 2.5 percent declines in the prior two months. This increase is consistent with the rise in the price of West Texas intermediate crude rose from an average of $92.02 per barrel in April to $94.51 in May. Meanwhile, food prices were 0.6 percent higher after an up-and-down year so far where costs have been higher one month only to fall the next. The largest food price increases were for fruits, vegetables, dairy, eggs, and fish.

Outside of food and energy, producer prices were up only slightly. Core inflation – which excludes food and enrgy costs – rose 0.1 percent in May, with a year-over-year pace of 1.6 percent.  This number is important, as it indicates that inflationary pressures remain below the Federal Reserve Board’s stated target of 2 percent or less. With the next Federal Open Market Committee (FOMC) scheduled for June 18 and 19, this data will become more relevant. The expectation is that the FOMC will continue to pursue its “highly accommodative” policies, even as it might taper the level of asset purchases that it conducts each month from its current $85 billion to something less than that. (continue reading…)

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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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