Business Operations

Manufacturers are increasing their investments in digital assets, according to a recent survey from the Manufacturing Leadership Council, the NAM’s digital transformation division.
 
What’s going on: Due in large part to expectations of economic growth, manufacturers plan to either maintain or boost their spending on smart factory investments, they told the MLC in the recently published results of the Smart Factories and Digital Production Survey.

• Respondents also said they are optimistic about continued digitization and adoption, with 69% expecting moderate growth and no recession.
• While 28% would call their current operations “smart” or “somewhat smart,” 76% expect to be there in the next two years.
• Awareness of AI is growing by leaps and bounds among manufacturers; some 34% said they see AI as very significant. (Last year, just 10% said the same.)   

Key points: The survey’s top takeaways include the following:

• Digital transformation is changing the game: Most manufacturers—60%—see digital transformation as something that is redefining the industry.
• More manufacturers are going digital: Some 75% of manufacturers say they are at “midlevel” digital maturity, up significantly from 2024 and 2023.
• AI’s role is inevitable: Fully 80% of manufacturers fully or partially agree self-managing and self-learning facilities powered by AI and machine learning are coming.

401(k) fees are a hot topic of conversation if you are an HR leader. When Miltec UV Human Resources Director Karen McKernan was discussing 401(k)s with an old friend, she discovered that Miltec, a small manufacturer, paid much more in fees than her friend’s larger employer. She was aghast, but what could Miltec do about it? The company did not have the purchasing power of a large firm, and so its options seemed limited.

Not so fast. Soon after that conversation, McKernan started receiving emails from the NAM about its new multiple employer plan, the Manufacturers Retirement & 401(k) Savings Plan, which allows many companies to participate in one 401(k) plan. Not only does the larger number of participants lower the fees, but the plan offers administrative and compliance oversight, as well as other benefits.

After doing her research, McKernan was convinced. By mid-2022, she was working with the NAM, the plan administrator, and recordkeeper and service provider Principal to make the switch. On Nov. 1, 2022, the new plan went live for Miltec employees. Today, McKernan says, she would never go back.

The benefits: Once McKernan laid out all the advantages for Miltec’s owners and 401(k) trustees, NAM 401(k) was an “easy sell,” she told us.

• Not only did the fee reduction seem like a “no-brainer,” but the new plan would lift a considerable administrative burden that had fallen entirely on McKernan. It would also offer benefits to employees that Miltec, as a small company, could not add on its own without creating even more administrative tasks.
• Furthermore, the NAM 401(k) comes with an independent 3 (38) investment fiduciary, One Digital, which reviews the funds’ performance regularly and issues reports on a quarterly basis, ensuring low-performing funds are “watched” and subsequently removed and replaced when needed. By delegating investment decisions under this arrangement, a company significantly reduces its potential liability for poor investment decisions.
• Additionally, any plan with more than 100 participants must undergo an annual audit, which is time consuming and expensive. Under NAM 401(k), the plan coordinates and manages the audit for participating companies.

What she doesn’t miss: McKernan listed all the duties she used to perform for Miltec’s own 401(k), which have now been taken over entirely by the NAM’s plan. She doesn’t miss:

• Monitoring enrollment, which Miltec’s employees can now undertake directly on Principal’s website;
• Sending out many required annual notices;
• Compliance testing and 5500 filings (which ensures the plan meets the IRS’s requirements for retirement plans, so that employees can receive tax benefits);
• Sending out summary annual financial reports and quarterly statements; and
• Handling employees’ questions and all communications about the plan.

In contrast, McKernan now only provides information to Principal through an automated payroll report and keeps an eye on how things are going, just in case. There have been few problems, she told us, and those were fixed with alacrity by Principal and the NAM.

Implementation: The entire timeline, from learning about NAM 401(k) to finalizing the switchover, took no more than a few months, McKernan said.

• Principal oversaw the transition, with weekly check-ins, a dedicated project manager and a schedule that included clear deadlines. While transitioning 401(k) plans is “a project,” McKernan said, Principal “managed it very well, including all required communications, and finishing right on time.”
• A word of advice: “If I had to do it all over again, I would have moved the plan over on Jan. 1 instead of Nov. 1,” said McKernan. Having two different plans in one year proved to be more of a headache than she expected, as it forced Miltec to do compliance testing on both plans in 2022.

The reception: “The company’s employees and owners are very pleased with the new NAM plan,” McKernan said.

• Aside from the savings in time and money, NAM 401(k) offers a host of other features that manufacturers can customize. One new feature that has proved popular with Miltec’s employees is loans, noted McKernan.
• In addition, Miltec’s previous plan had a 12-month waiting period before employees could participate, but NAM 401(k) reduced the wait to six months—which is far more appealing to new hires, she added.
• Ultimately, Miltec’s leaders and employees understood and appreciated the logic of joining a multiple employer plan, said McKernan. “They recognize the more participants you have, the more buying power you have. They are seeing the positive results of having access to a robust fund lineup and how that translates to lower fees every time they receive a quarterly statement.”

The bottom line: “I honestly don’t see how a small manufacturing company wouldn’t benefit from joining the NAM 401(k),” said McKernan.

• “I’ve been in HR for a very long time, and when we talk to job candidates about benefits, the 401(k) plan always comes up. It’s a benefit that is necessary to attract talent, as well as help your employees meet their retirement goals,” she added.
• “I wouldn’t hesitate to recommend this plan to any small, medium or large manufacturer.”

Get ready! Manufacturing’s leading annual event on accelerating digital transformation is right around the corner.

What’s going on: Rethink—held by the Manufacturing Leadership Council on Marco Island, Florida, each June—is a must-attend conference for anyone interested in Manufacturing 4.0 and where it’s headed (The MLC is the digital transformation division of the NAM.)

• This year’s event takes place June 15–18 at the JW Marriott Marco Island Beach Resort.

Why you should go: Rethink attendees will get an inside look at the cutting-edge processes and technologies transforming manufacturing today—directly from those creating and implementing them. They’ll also get a chance to:

• Consult with peers on manufacturing’s most critical initiatives, including smart factories and digital production, resilient supply networks and analytics and data mastery;
• Participate in real-time discussions and one-on-one meetings to help them understand how various solutions can solve their business problems;
• Hear from industry leaders and experts during panel discussions, executive interviews and more;
• Interact and collaborate with peers during interactive “think tank” sessions; and
• Hear from the MLC’s event partners during Rethink’s exclusive VIP Tour.

Who will be there: Scheduled speakers include Siemens USA President and CEO Barbara Humpton, Eaton Vice President of Industry 4.0 Craig Sutton, Hershey Company Vice President of Manufacturing, Operations Technology and Supply Chain Strategy Will Bonifant, Rockwell Automation Senior Vice President of Intelligent Devices Tessa Myers and many more.

The gala: Closing out the packed three-day event is the Manufacturing Leadership Awards Gala, at which the MLC will recognize award finalists and winners of the Future of Manufacturing Award, the Manufacturing Leader of the Year, the Small/Medium Enterprise Manufacturer of the Year and the Large Enterprise Manufacturer of the Year. The gala will take place on the evening of June 18.

Attend: Register online here for Rethink 2025. (NAM members get a discount at checkout.) Questions? Send them to [email protected].

At the NAM, we’re examining some of the top trends that are shaping manufacturing this year, and offering the resources you need to take action.

Today, we’re taking a look at the industry’s efforts to enable innovation—and how manufacturers are working to stay on the cutting edge.

Applying technology: Digitalization can increase the speed and agility of innovations in areas like prototyping, iteration, simulation and modeling. And by using AI and data analytics to improve decision-making, manufacturers can build resilient, transparent supply chains that are more efficient and effective.

Upscaling workforces: Because of the rapid pace of technological advancement and adoption, manufacturers will have to create a workforce that is ready for the future—and processes designed to transfer knowledge and skills effectively and continuously.

Harnessing partnerships: Manufacturers can lean into collaborations that help to accelerate innovation. By connecting with manufacturing peers, government institutions and academia, industry leaders can develop unique and inventive paths forward.

Expert insight: According to CEO and Co-Founder of Narratize Katie Trauth Taylor, tools like generative artificial intelligence can accelerate and automate manufacturing innovation—with human ingenuity at the helm.

• “Human-led AI methodologies enhance teams’ ability to analyze opportunities, translate complex concepts into compelling business cases and think deeply about their innovative work,” said Taylor. “With reduced documentation and improved communications, product teams can reallocate their time value-generating work—deeper market research, sharper strategy and accelerated development.”

Resources for you: Want to dive deeper? Check out some additional resources from the NAM.

• Explore the Innovation Research Interchange, a division of the NAM that focuses on value creation and top-line growth through the management of innovation.
• Join one of the Manufacturing Leadership Council’s Plant Tours in person—or read summaries of past tours—to get an inside look at how other manufacturers have reshaped processes to advance their businesses.

Former Transportation Security Administration Assistant Administrator for Strategic Communications and Public Affairs Alexa Lopez has joined the NAM’s communications team.
 
What’s going on: Lopez, a native of Dayton, Ohio, is the NAM’s vice president of communications and public affairs, a newly created position.

• “Alexa knows how to navigate complex challenges, craft compelling narratives and drive real impact,” NAM President and CEO Jay Timmons said. “She has built a career on delivering results, and manufacturers will benefit from her ability to elevate our industry’s voice at a time when manufacturers’ influence on the future has never been more important.”
• Lopez holds a Master of Public Affairs and a Master of Arts in Arts Administration from the Indiana University O’Neill School of Public and Environmental Affairs.

Proven track record: At the TSA, Lopez led all media operations, strategic communications, marketing and branding and multimedia efforts and served as adviser to the TSA administrator. She was at the agency for four years.

• Prior to that, Lopez worked in public affairs at the Federal Emergency Management Agency, the American Society of Civil Engineers, Ogilvy Public Relations and the City of Bloomington, Indiana.

“$80 billion is given away every year in state and local incentives,” according to Atlas Insight Managing Partner Brian Corde. “Plus, the Biden administration has added $455 billion just in federal grants.”

In this investment landscape, manufacturers need all the help they can get finding, applying for and complying with these incentive programs. Atlas Insight, the NAM’s partner for its Incentives Locator, walks companies through this entire complicated process.

Last week, we talked to Corde and Kathy Mussio, Atlas’s other managing partner, about how companies select their new sites. This week, we’ve asked them what manufacturers need to know about incentives.

How do incentives work? Incentives come in two forms, Corde and Mussio explained. First is the type you automatically qualify for if you meet the requirements, known as statutory or as-of-right incentives.

• The second is the type that Atlas lends its expertise to—discretionary incentives. These programs offer funds and other pools of money that require business cases, negotiation, applications, and later, proof that a company has met its stated obligations (also known as compliance).
• These programs can take many forms. As Mussio put it, “Some states have programs that offer cash to help close the financial gap between two competing locations or increase a project’s ROI—helping to make a location more competitive in the financial analysis.”
• There are many, many incentives out there, the Atlas partners told us, and the most important steps are understanding which ones a company may be eligible for and helping clients quantify the potential savings.

What if you’re staying put? These incentives aren’t just for new facilities, Corde and Mussio emphasized. “A majority of incentives are given to companies staying in place,” Corde added.

• Companies can take a lot of actions to qualify for incentives—expand their workforces, buy new equipment, train workers in new technologies or add square footage for new production lines.
• “It’s our job to help NAM members identify their projects that could use incentives. Then we benchmark the incentives, then negotiate on the companies’ behalf, then lock the incentives down with the state or city,” Corde said.

What’s benchmarking? Atlas compares incentive offers from states and localities with the incentives awards that similar companies have received in the past, another way to help ensure that their clients get the best possible deals. There’s always room for negotiation, the partners say.

• Atlas keeps two databases: the first, a listing of all the incentives that exist on the federal, state and local levels, along with all the necessary forms, key contacts and any other requirements. The second database is a list of what other companies have received for similar types of projects.
• This allows Atlas to identify the typical dollar range that an incentive should provide—so a company knows whether it has been offered a good deal, and whether it should negotiate, or even go elsewhere.

How do you get the money? After companies successfully secure an incentive award, they must follow compliance schedules to ensure they keep receiving the funds as project milestones are met, while also retaining documentation in case of audit.

• The government offering the incentive typically requires filings to verify how many employees were hired, the wages they earned, even the employers’ contributions to health insurance premiums.

A lot to lose: “We are being conservative when we say that 50% of incentives awarded never pay out,” Corde said, all because companies fail to fulfill compliance requirements.

How can Atlas help? Atlas creates a “holistic incentive management for its clients, for the entire life of the incentive,” so that companies actually receive their money, the partners explained. It even helps with old incentives that remain incompletely documented.

• “When we retained Atlas, it enabled us to bring several one-off incentive agreements around the U.S. into a centralized process,” said a Schneider Electric spokesperson. “That made it so much easier for us to document our part of the expansion agreements and collect the incentives we were owed. Plus, their performance-based fee for this process has been best in class.”

How to get started: The NAM Incentives Locator is a service for NAM members, which provides a complimentary initial assessment call and preferred rates on contracted services, including an exclusive success-based fee schedule.

• Atlas is often “only paid for successful outcomes, either a confirmation letter or when the company receives the money over time. We will help you be successful and then benefit once you are,” said Corde.

The bottom line: “You need to have a strategy to go after these incentives, because your competitors are.”

Lucid has already made one of the most energy-efficient cars on the market. Now the company is on a mission to strengthen supply chains for the critical materials powering its award-winning vehicles.

Supply chain warrior: The California-based electric vehicle manufacturer—whose 2025 Air Pure sedan is the first EV to achieve a milestone 5 miles of range per kilowatt of energy—recently reached an agreement with Alaskan mining exploration company Graphite One to purchase synthetic graphite for its vehicles’ battery packs.

• The deal, which goes into effect in 2028, is a crucial first step toward cementing a domestic supply chain of graphite, a mineral that makes up about half of every EV’s battery composition. EV batteries require both synthetic and natural graphite.
• “Today 100% of the graphite for batteries assembled in the U.S. comes from overseas,” said Lucid Motors Supply Chain Group Manager of Battery Raw Materials Michael Parton. “Building a robust domestic supply chain ensures the United States and Lucid will maintain technology leadership in this global race.”

Pandemic lesson: The global pandemic revealed the downside of depending on other nations for critical materials, and the importance of cultivating domestic sources instead.

• In 2020, “every company experienced major challenges when it came to shutdowns and global trade,” Parton said. “Having a domestic supply reduces production risk, accelerates response time and agility and lowers the need to carry higher levels of inventory.”

A midstream gap: When it comes to EV batteries and their supply chains, “much of the discussion is on localizing the bookends of the supply chain, the downstream battery production and the upstream mineral extraction,” Parton told us.

• Less discussed is the “midstream environment,” which comprises the precursor cathode active materials (P-CAM) and cathode active materials (CAM) stages. Materials used during these phases in the battery production process include critical minerals such as lithium, nickel and cobalt.
• The P-CAM market has been a difficult one to navigate, Parton added. For years, the P-CAM stage has been outsourced to countries with more cost-effective production. The problem: These countries also have less stringent environmental regulations than the U.S.
• “There’s limited investment announced [in the U.S.] in the refining and chemical conversion process at these stages, but it’s where the real need is,” Parton continued. “To promote localized sources of supply for mined and recycled minerals, there needs to be a domestic option for both P-CAM and CAM.” 

A bipartisan issue: Lucid’s advocacy for a strong domestic supply chain has won bipartisan support in Congress.

• “There’s something in it for everyone when it comes to efficiency,” said Lucid Motors Senior Manager of International and Trade Policy Emily Patt, citing the environmental and self-sufficiency benefits of a resilient domestic supply chain.

What’s next: Lucid is expanding its vehicle lineup beyond the Air and the vehicle’s four trim levels.

• By the end of 2024, the company is scheduled to start production of the seven-passenger Lucid Gravity. The company has also teased an upcoming midsize platform, which is expected to start production in late 2026.

The grand vision: “The pursuit of efficiency drives Lucid as a company,” Patt said. “We’re not just making zero-emission cars; we’re committed to making the best use of the world’s resources to maximize the benefits for electrification and the planet.”

Negotiations between the U.S. Maritime Alliance and the International Longshoremen’s Association have stalled again, “raising the possibility of renewed strikes at U.S. East and Gulf Coast ports in January” (gCaptain).

What’s going on: Talks between the dockworkers and their employers broke down this week over proposed language regarding the use of automation, according to the ILA.

• “This impasse follows a tentative agreement reached in early October, which ended a three-day strike across Atlantic and Gulf Coast ports” and extended the workers’ labor contract until Jan. 15, 2025.
• If the parties are unable to reach a long-term agreement by that date, the union could strike again.

Why it’s problematic: Even a brief work stoppage could have major economic consequences, according to widely cited NAM estimates.

• A strike at East and Gulf Coast ports would jeopardize $2.1 billion in trade every day and could reduce gross domestic product by up to $5 billion a day.

What must be done: “These ports are critical components of the manufacturing supply chain and move products on which Americans depend,” said NAM Director of Transportation, Infrastructure and Labor Policy Max Hyman. “Both sides should return to negotiations as soon as possible and reach a lasting resolution that prevents needless economic destruction.”

Nominations for the Manufacturing Leadership Council’s flagship awards are now open.

What’s going on: The Manufacturing Leadership Awards—given annually by the MLC, the NAM’s digital transformation arm—honor manufacturing companies and leaders for the groundbreaking use of digital manufacturing. Those interested in submitting company and/or individual names for consideration for the 2025 awards can do so through Jan. 17, 2025.

• Awards will be given in nine project categories and three individual categories. New for 2025 are Business Model Transformation (for projects) and Women in Manufacturing 4.0 (for individuals).

How they’re evaluated: For the individual categories, the judges—a panel of established digital manufacturing experts from outside the MLC—assess whether nominees have advanced digital transformation at their companies and whether they meet the criteria for being role models to other manufacturing leaders.

• For the project categories, judges evaluate how each undertaking improved manufacturing processes, furthered business goals and advanced company strategy.

What happens next: Finalists will be notified in March 2025 and announced shortly afterward. Winners will be announced at the Manufacturing Leadership Awards Gala next June.

• “The Manufacturing Leadership Awards give the MLC the chance each year to honor some of the remarkable people and endeavors in manufacturing today,” said MLC Senior Content Director Penelope Brown. “We look forward to reviewing the nominations and learning more about the incredible innovation taking place in our industry.”

Get involved: Have a person or project in mind for the 2025 Manufacturing Leadership Awards? Submit their names here.

• MLC members receive one complimentary project entry and one complimentary individual entry.

Inflation rose again last month (The Wall Street Journal, subscription).

What’s going on: The consumer price index increased 0.2% in October, the fourth consecutive increase (Bureau of Labor Statistics).

• “[P]rices were up 2.6% from a year earlier, in line with economists’ expectations. Core inflation, at 3.3%, also matched forecasts,” according to the Journal.

The details: Shelter prices rose 0.4% in October, accounting for more than half the increases overall (BLS).

• Food prices inched up 0.2%, while energy prices were unchanged after having declined 1.9% in September.

What it means: The news strengthened investor confidence that the Federal Reserve will cut rates in December for the third time this year in an effort to hit its 2% inflation goal, the Journal reports.

• “The October CPI report will likely support the notion that the last mile of inflation’s journey back to target will be the hardest,” Wells Fargo economists wrote in a memo to clients (USA Today).