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As Tax Day Arrives, Evidence Shows Tax Reform Is Still Jet Fuel for U.S. Manufacturing Growth

By | General, Shopfloor Main | No Comments

As millions of Americans face the first tax day filing deadline completely covered under the new tax reform law, U.S. manufacturers are continuing to see sustained growth due to the overhauled tax code nearly a year and a half after its passage. 

Economic data since tax reform was signed into law points to a stunning and quick turnaround. The U.S. economy grew 3.1% from the fourth quarter of 2017, when tax reform was signed into law, to the fourth quarter of 2018, the fastest year-over-year growth in nearly fifteen years. Moreover, business investment spiked 6.9% in 2018, the strongest reading in five years.

The enactment of tax reform, which replaced an outdated system with a more competitive tax code, served as rocket fuel for the U.S. manufacturing industry in particular. U.S. manufacturers created more than a quarter million jobs in 2018, the best year for job creation since 1997, and manufacturing production skyrocketed to the highest level in a decade. A National Association of Manufacturers (NAM) industry-wide survey from April 2018 found that 86% of manufacturers were already planning to increase investments due to the changes and more than two thirds reported plans to increase wages and benefits. 

According to an NAM Outlook survey released in December, last year was the most optimistic year for manufacturers on record. A similar survey from March found the industry has enjoyed nine consecutive quarters of record optimism, largely due to the tax law. 

“Tax reform sparked the robust manufacturing job growth manufacturers predicted,” NAM Chief Economist Chad Moutray said.

Through its “Keeping Our Promise” campaign, the NAM has reported on dozens of stories of small and large manufacturers across America who have raised wages, increased hiring, and invested in new production due to the tax law.

“Tax reform has provided a tremendous boost to the men and women who make things in America,” NAM Vice President of Tax and Domestic Economic Policy Chris Netram said. “Manufacturers are enjoying historic levels of business optimism and have created jobs at the fastest pace in decades.”

However, while tax reform has sparked a surge in U.S. manufacturing, Netram also warned that efforts by politicians in Washington to roll back the law would directly threaten the past year and a half of record growth. 

Indeed, the March 2019 NAM survey found that, when asked about the impact of Congress potentially repealing pro-growth provisions in the tax law, two-thirds of respondents would consider reducing capital investments in the United States, and 54% and 62% said it might force them to have to scale back employment and wages and bonuses, respectively.

“It’s clear that adopting a more competitive tax system has boosted the industry,” Netram said. “It’s also clear that rolling back the benefits of tax reform would make it more difficult to further grow our thriving American manufacturing sector.”

President Trump Just Signed Two Executive Orders To Speed Up Energy Infrastructure Projects

By | General, Shopfloor Main | No Comments

In a big win for U.S. manufacturing workers, President Trump signed two long-anticipated executive orders in Houston on Wednesday intended to cut red tape and speed up the permitting process for energy infrastructure projects. 

The first order takes aim at oft-overlooked laws and regulations that have plagued the permitting process for energy infrastructure projects. Chief among them are Clean Water Act water quality determinations known as “401 certifications” which have become political flash points for states and opposition groups in recent years. The order will also update regulations for the export of liquified natural gas (LNG), which have not been updated to keep pace with modern, state-of-the-art LNG export facilities. 

“Section 401 has been abused by states and project opponents, turning it into a tool of obstruction,” Ross Eisenberg, NAM Vice President of Energy and Resources, said. “This Executive Order will clarify the responsibilities of federal and state governments in administering Section 401 so that the statute is applied in a fair, uniform fashion.

The second order would clarify permitting for cross-border energy infrastructure and is intended to prevent future projects like the Keystone XL Pipeline from getting caught up in years of litigation, reviews, and delays. 

Together, these two executive orders will promote badly-needed development of infrastructure to meet U.S. energy demand, create and support jobs for U.S. manufacturing workers, and provide reliable and affordable energy to U.S. consumers.

“The NAM has consistently called for measures to accelerate the permitting process for new energy infrastructure for several years, and has actively called on the Trump Administration to improve the way federal and state agencies authorize these projects,” Eisenberg said. “Manufacturers need predictable permitting laws that tell us the rules of the road and how we can meet them.”

Modernizing and investing in America’s infrastructure is a top priority for manufacturers in the United States, who rely on critical infrastructure projects to connect with employees, work with suppliers, transport goods to market and increase productivity. When infrastructure fails to meet those needs, it negatively impacts growth.

The National Association of Manufacturers (NAM) continues to rally support for broad-based, jobs-creating investment in expansion and modernization, including advocating increased public and private infrastructure funding, developing an interstate system focused on moving goods to market, investing in ports and inland waterways, supporting efforts to reduce traffic congestion and modernizing drinking water and wastewater systems as well as modernizing information and telecommunications infrastructure. Learn more about the NAM’s plan at NAM.org/BuildingToWin.

Additional Health Care Mandates Only Add to the Business Challenge of Rising Health Costs

By | Around the States, Health Care, Shopfloor Main, Shopfloor Policy | No Comments

Manufacturers consistently rank rising health care costs as a primary business challenge according to the National Association of Manufacturers Outlook Surveys conducted each quarter. The manufacturing industry has a history of leading the business community in providing health benefits to employees—98 percent of NAM members provide health insurance to employees and they do so because it is the right thing to do for their workforce and their families.

New health care mandates will continue to challenge the ability of employers to provide self-funded health care innovations that help control costs. Since manufacturers have a proud tradition of providing health care to employees, manufacturers are eager to explore ways to reduce health care costs and strengthen ERISA – the Employee Retirement Income Security Act of 1974. The economies of scale that have come to define employer-sponsored coverage, create a vehicle through ERISA to design benefits that are flexible, innovative and efficient. However, this approach only works if health care innovation is encouraged and permitted. Employers can no longer be strangled by additional regulations or the burdens of 50 different ways to comply which is why ERISA plans and their sponsors work hard to contain costs. Manufacturers want our employees to thrive, be healthy and share in our success as manufacturers.

Oklahoma is now considering a new mandate that will impact how and where pharmacy benefit coverage is provided, potentially requiring an open-ended pharmacy network and mandated reimbursement requirements outside the scope of many pharmacy benefit plans that Oklahoma employers will have to cover.

HB 2632 and S 841 represent a wrong-headed approach. The NAM agrees with the State Chamber of Oklahoma and urges legislators to fully understand the cost impacts of yet another health care mandate thrust on employers and their employees.

Innovation Should Not Be A Scapegoat for Rising Health Care Costs

By | Around the States, Health Care, Innovation, intellectual property, Shopfloor Main, Shopfloor Policy | No Comments

Cutting-edge advancements in pharmaceutical medicine improves lives and reshapes the health care industry as we know it every day. Innovation fuels progress, and America’s biopharmaceutical manufacturers are leading the way toward developing solutions to the greatest health care challenges, as they always have. The results are clear: more new medicines are created in the United States than every other country in the world combined. Unfortunately, some states have pursued and continue to pursue legislation to address rising health care costs that would stifle innovation—neither improving care for patients nor reducing health care costs in the process.

Minnesota House File 1246 would threaten intellectual property rights by requiring manufacturers to disclose highly-sensitive proprietary information, creating unnecessarily burdensome requirements that are contrary to the free and competitive market that has allowed biopharmaceuticals to develop new life-saving treatments. Our country far outpaces others in the discovery of new cures because of our emphasis on innovation that is carried out through robust research and development and protected by vigorous intellectual property rights. Degrading those rights degrades the progress they make possible.

The legislation being considered in Minnesota will not lower prescription drug costs nor address the rising cost of health care. Manufacturers support solutions to address rising health care costs, but as the manufacturing sector accounts for more than three-quarters of all private sector R&D in the United States and receives more patents than any other industry, proposed solutions must not come at the cost of crippling the biopharmaceutical sector’s innovation.

Supremes Hear False Claims Act Challenge

By | Shopfloor Legal, Shopfloor Main | No Comments

This morning, the U.S. Supreme Court heard oral arguments in Cochise Consultancy v. United States. The case concerns the statute of limitations for a relator in a False Claims Act (FCA) qui tam lawsuit in which the United States has declined to intervene. Relators, also known as whistleblowers, may bring a lawsuit for alleged fraud against the government and potentially receive a share of any recovery as a reward. The FCA establishes two distinct statute-of-limitations periods: six years for relators’ claims and no more than 10 years for claims brought by a government official or with the knowledge of a government official.

After serving time in prison for being part of a fraudulent subcontracting scheme, the relator in this case alleged that Cochise violated the FCA. Cochise argued the statute of limitations barred the claim because it requires a violation to be brought within six years of the violation or three years “after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed.” The Supreme Court is addressing the issue of whether the “government knowledge” period of up to 10 years applies only when the government intervenes in the case or whether that period also applies to relators even when the government has chosen not to pursue the claim.

The National Association of Manufacturers (NAM) filed an amicus brief in the Supreme Court urging a limited time frame for private relators to bring FCA cases. The NAM’s brief argues that a relator in an FCA action is limited to the six-year statute of limitations. The shorter statute of limitations would reduce the number of very old claims that manufacturers would be forced to defend—at significant expense and with the disadvantage of faded memories and dated evidence.

Advance Regulatory Policies to Encourage a 21st Century Rail Network

By | Infrastructure, Innovation, Shopfloor Main, Shopfloor Policy, Technology, Transportation | No Comments

Since their inception, railroads have paved the way for American industrialization, safely transporting freight across the country with an efficiency and speed never before imagined possible. The American rail network has driven some of our most consequential economic developments, using that innovation to improve millions of lives. Now, groundbreaking advances in automation and analytics are opening yet another exciting frontier for rail—one that, with the right approach from D.C. policymakers, and the Federal Railroad Administration (FRA) in particular, can once again redefine the world of transportation.

To craft a technology-friendly regulatory strategy, FRA need simply look to its peer agencies in the automotive sector. The recent flurry of innovation in autonomous vehicle technology is progressing thanks in large part to the U.S. Department of Transportation’s (DOT) “light touch” regulatory approach toward testing and deploying these new technologies. Despite the fact that all real-world testing carries some initial risk, DOT has not allowed misconceptions to stand in the way of progress and the long-term safety benefits of autonomous vehicles. The same approach that is working there will work for rail as well.

While rare, one-third of train accidents are caused by human error, many of which will be eliminated by integrating automated processes into rail operations. Further, the deployment of autonomous technology is easier in the rail industry given that railroads operate on separate fixed tracks. In a world where DOT has vigorously supported the automation of millions of interacting cars and trucks, FRA’s support for similar—and simpler—opportunities to automate many different aspects of rail operations is an attractive and less controversial way to facilitate analogous rail-safety benefits.

Encouragingly, FRA made progress last April when it issued a request for information on automation in the rail industry. In response, Norfolk Southern provided substantive insights into the many technologies available to automate various aspects of our network—from locomotives and dispatch, to yard operations and inspections. We look forward to the next steps and urge FRA to promote the safety benefits of such technologies by issuing guidance that encourages railroads and third-party technology vendors to pursue innovation.

At Norfolk Southern, we are firmly committed to developing high-tech tools that will undeniably improve the safety and efficiency of our operations. Indeed, automated and predictive technologies can help open a new world of operational improvements, and we are working hard every day to realize these benefits and reimagine a safer, more reliable future for freight transportation. Yet we simply cannot unlock the full potential of this new technology without a 21st century regulatory environment that facilitates private innovation.

Just as it has throughout our country’s history, the rail industry is leveraging technology to surge towards transportation’s new technological horizon. By following the lead of other DOT agencies and regulating in a flexible, outcome-based manner, FRA can accelerate this technological progress, helping to dynamically transform the freight-rail industry and creating a safer system and a more efficient transportation network for 21st century manufacturers

NAM Supports Bill to Codify Workplace Equality for LGBTQ Employees

By | Shopfloor Main, Shopfloor Policy | No Comments

Today the Equality Act—bipartisan legislation that would, among other things, protect LGBTQ individuals from discrimination in the workplace—was introduced in the House and Senate. The National Association of Manufacturers has long opposed discrimination based on an employee’s sexual orientation or gender identity. Today we joined with more than 40 other industry associations—representing a truly stunning breadth of the American economy—in supporting the Equality Act.

Manufacturers have led the way in providing their employees with fair and meaningful protections against sexual orientation- and gender identity-based discrimination. The reason for this is simple: talented employees demand it, and employers understand the importance of creating an environment in which the very best people can succeed based on merit. At the same time, manufacturers know that discrimination in any form is antithetical to the values that we work to uphold every day: equality of opportunity, individual liberty, free enterprise, and competitiveness.

The bill’s basic approach of including protections based on sexual orientation and gender identity under the existing framework of the Civil Rights Act is sensible. By making these protections consistent with those for other protected classes, it takes advantage of decades of judicial precedent to provide as much clarity as possible to the businesses who must ultimately comply. The Civil Rights Act also provides long-established protections for religious organizations, and it limits its reach to employers with 15 or more employees.

The Equality Act creates a clear federal standard that matches the sentiments manufacturers already share: gender identity and sexual orientation have no impact on an employee’s abilities and discrimination is not welcome on the manufacturing floor. This legislation will no doubt see twists and turns as it works its way through Congress. We welcome this process, which will undoubtedly include a robust debate. We look forward to working with Congress as this important legislation moves forward.

Old Ideas on So-Called “Net Neutrality” Resurface in the New Congress

By | Culture and Entertainment, Economy, Regulations, Shopfloor Main, Shopfloor Policy, Technology | No Comments

Senator Ed Markey and Representative Mike Doyle recently introduced the Save the Internet Act in the Senate and House (S. 682 and H.R. 1644 respectively). The bills resurrect some old ideas on regulating the internet in the name of so-called “net neutrality”. Today, the House Energy and Commerce Committee held a hearing entitled “Legislating to Safeguard the Free and Open Internet” where they considered this legislation.

Manufacturers agree that Congress, rather than the Federal Communications Commission, should act to establish a predictable legislative framework for a free and open internet, but the bill the committee considered today is not the way to do so. The Save the Internet Act would repeal the FCC’s most recent action that replaced heavy-handed, Obama-era regulations with sensible regulations designed for the internet of today. And, rather than provide new ideas to bring our nation’s communications law into the 21st century, the bills would then reinstate those earlier overly-burdensome regulations classifying the internet as a utility under Title II of the Communications Act of 1934.

Title II regulations are not the correct way to achieve an open internet. They ignore the competitive landscape of the marketplace and, based on a law enacted before color television much less the internet, fail to account for the internet as it exists today. They would have the unintended effect of harming consumers and industry by injecting further regulatory uncertainty into the shifting federal approach to broadband, potentially stymying private sector capital investments. The FCC’s most recent actions only went into effect last summer, and the sensationalized predictions that they would signal the end to an open internet were not accurate.

Manufacturers depend on a reliable telecommunications infrastructure to connect and enable manufacturing technologies. While the legislation the House committee considered today would unquestionably be a step backwards, the National Association of Manufacturers encourages Congress to consider forward-thinking legislative solutions for our nation’s broadband future—solutions that apply fairly across the internet ecosystem and provide the certainty necessary for our industry’s continued innovation.

Energy Efficiency Legislation Paves the Way for Smart and Sustainable Manufacturing

By | Energy, Environment, Shopfloor Main, Shopfloor Policy, Sustainability | No Comments

This week, Senators Jeanne Shaheen from New Hampshire and Lamar Alexander from Tennessee introduced the Smart Manufacturing Leadership Act (S. 715), a bipartisan bill that would support manufacturers—particularly small- and medium-sized manufacturers—in adopting advanced technologies to increase their sustainability by improving the energy efficiency and productivity of their facilities and operations. Representatives Peter Welch from Vermont and Tom Reed from New York also introduced companion bipartisan legislation (H.R. 1633) in the House. The National Association of Manufacturers has been a longstanding proponent of The Smart Manufacturing Leadership Act and looks forward to working with Congress as these measures moves forward.

The legislation would leverage existing Department of Energy programs and resources at the National Labs to ensure that advanced technologies are being considered to reduce energy consumption. Additionally, the measure would establish a competitive grant program for states to assist small- and medium-sized manufacturers in implementing smart manufacturing practices. Manufacturers have taken the lead in making energy efficiency a priority and remain committed to reducing their energy intensity while producing more energy efficient products. Manufacturers already implement energy efficiency solutions to reduce their costs, become more competitive and help lessen environmental impacts. The industry continues to lead the way in deploying sensible efficiency and waste reduction measures and embracing the importance of utilizing state-of-the-art energy efficient technologies. In fact, manufacturers contributed 19 percent more value to the American economy over the past decade while reducing greenhouse gas emissions by 10 percent.

Manufacturers are committed to increasing their productivity, expanding their businesses and doing so in a way that is sensible, smart and sustainable. During the 115th Congress, the NAM supported the Smart Manufacturing Leadership Act, and we applaud Senators Shaheen and Alexander and Representatives Welch and Reed for reintroducing the bill this Congress. Their leadership continues to demonstrate a strong commitment to policies that promote energy efficiency to improve manufacturing and benefit the environment—and we will urge Congress and the administration to enact this legislation into law.

Don’t Panic About The February Jobs Report. Manufacturing Still Has 428,000 Open Jobs To Fill.

By | Shopfloor Main, Shopfloor Policy | No Comments

Manufacturers added just 4,000 workers in February, the industry’s slowest monthly pace of job growth since July 2017 and pulling back from a gain of 21,000 jobs in January. The overall nonfarm payroll data were also disappointing, from a solid increase of 311,000 in January to 20,000 in February. Weather might have negatively impacted employment growth in the month, and economists were largely expecting a pullback after the strong figure in January (especially in the aftermath of the partial government shutdown). The consensus estimate was for around 180,000 jobs created, though, not the 20,000 the Bureau of Labor Statistics reported. I would not be surprised to see an upward revision in the next release or, at a minimum, a sharp rebound.

With that in mind, it is important to not read too much into these data, as the labor market continues to be strong overall. The U.S. economy has generated a robust 209,080 jobs, on average, each month over the past 12 months, with manufacturers hiring more than 20,000 workers per month, on average, since February 2017. In addition, the unemployment rate dropped from 4.0 percent in January to 3.8 percent in February, continuing to be near 50-year lows. In addition, the so-called “real unemployment rate” declined from 8.1 percent to 7.3 percent in this report, a rate not seen since March 2001. There were 12,834,000 manufacturing workers in February—the most workers in the sector since December 2008—with almost 1.4 million employees added since the end of the Great Recession.

Manufacturers are experiencing a tight labor market that is not expected to go away anytime soon, as businesses face concerns about finding the skilled workers they’ll need to continue growing. In the most recent NAM Manufacturers’ Outlook Survey (released earlier this week), 9 in 10 manufacturers expressed a positive outlook for their business—hitting nine consecutive quarters of record optimism—but the inability to attract and retain workers continues to be the top concern for the sixth consecutive quarter. There are nearly half a million available manufacturing jobs in the United States.

And according to a study from Deloitte and The Manufacturing Institute—the education and workforce partner of the NAM—manufacturers will need to fill 4.6 million jobs over the next decade. That’s why the NAM is working hard, in conjunction with the Trump administration through its American Workforce Policy Advisory Board, to develop cutting-edge solutions to address this workforce shortage. Our country’s continuing economic prosperity will depend on developing the tomorrow’s workforce today, and manufacturers are committed to leading the way toward that end.

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