General

Washington, D.C. – The leading organizations representing manufacturers and millions of manufacturing workers in the United States, Mexico and Canada released the following statement on the three-year anniversary of the United States–Mexico–Canada Agreement (USMCA/T-MEC/CUSMA)

“On this three-year anniversary, we recognize the substantial value that the United States–Mexico–Canada Agreement has represented for our industry’s competitiveness, our economies and North American workers. Manufacturing is critical for the entire North American economy. Our closely integrated supply chains contribute more than $3 trillion annually to the North American economy, and more than $2 billion worth of manufactured goods cross our borders each day.

“Free trade has benefited manufacturers across North America for decades, and the USMCA helps to secure those advantages. The USMCA can only reach its full potential if it is fully implemented in a manner that upholds its letter and spirit. The National Association of Manufacturers, the Confederation of Industrial Chambers of Mexico and Canadian Manufacturers & Exporters continue to strongly and respectfully urge political leaders of all three countries to work together to live up to the commitments of the agreement, which garnered broad support in the U.S., Mexico and Canada. Full compliance with the agreement will provide certainty for the more than 23 million manufacturing workers in the United States, Mexico and Canada and boost our region’s ability to take full advantage of the one-in-a-generation opportunity to strengthen our supply chains though the attraction of new economic activities to North America.

“The strong and unique partnership between the U.S., Mexico and Canada goes beyond our economic alliance. It is rooted in our shared values of democracy, the rule of law, transparency, free enterprise and opportunity. As we see those values under attack around the world, it is critical that we strengthen our regional alliance to elevate and defend those values—for the good of our people and people around the world, as well as for our economic and national security.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

To learn how sectors and businesses are using artificial intelligence, The Economist (subscription) created an index of firms in the S&P 500—and the results show that “even beyond tech firms the interest in AI is growing fast.”

What’s going on: “We looked at five measures: the share of issued patents that mention AI; venture-capital (VA) activity targeting AI firms; acquisitions of AI firms; job listings citing AI; and mentions of the technology on earnings calls. … [C]lear leaders and laggards are already emerging.”

The findings: In the past three years, approximately two-thirds of the companies examined by The Economist have placed a job ad that refers to AI. One of the sharpest increases in such mentions has been among chipmakers.

• The number of registered AI-related patents rose between 2020 and 2022.
• This year, about 25% of venture deals by S&P 500 companies involved AI start-ups, an increase from 19% just two years ago.

Outside Silicon Valley: While the index found that the most “enthusiastic” users of AI are technology companies, “[b]eyond tech, two types of firms seem to be adopting AI the quickest.”

• Data-heavy sectors, including insurance, pharmaceutical and financial-services companies “account for about a quarter of our top 100.” In this category, Abbott is building AI-powered medical tools.
• The other category of company quickly adopting AI includes “industries that are already being disrupted by technology,” such as automakers, telecom, retail and media. Among these are Ford and General Motors, which are using AI in electric-vehicle manufacturing.

The last word: AI use may have some drawbacks, including cybersecurity risks, potential legal liability and possible inaccuracy of results. However, these “must be weighed against the potential benefits, which could be vast.”

The Federal Energy Regulatory Commission granted all remaining permits to the Mountain Valley Pipeline project in Virginia and West Virginia on Wednesday, allowing it to resume construction after a pause of more than a year, E&E News’ ENERGYWIRE (subscription) reports.

What’s going on: “In a unanimous order issued Wednesday, the commission said that all work on the 303-mile pipeline could proceed. … The commission also authorized FERC’s Office of Energy Projects to approve any future modifications to the Mountain Valley project as proposed by its sponsors—as long as the director of the office finds them ‘to be needed to complete construction.’”

• FERC approval comes just days after the project received its final water-crossing permit from the Army Corps of Engineers.
• The debt-ceiling deal signed into law this month by President Biden contained provisions requiring approval for the MVP, which the agency first approved in 2017.

Why it’s important: “The pipeline has been described by [supporter and West Virginia Sen. Joe] Manchin and others in Congress as a poster child for … the nation’s inefficient energy permitting system.”

• The MVP—the only natural-gas project under development in Appalachia—will help deliver clean, affordable energy from Appalachian shale reserves to customers in the eastern U.S.

A win for timely permitting: “In its order Wednesday, FERC also said it was setting aside its policy of generally considering requests for rehearing before allowing construction.”

What’s next: Developers plan to restart construction “shortly” and finish this year.

The U.S. economy grew more robustly in Q1 of 2023 than previously calculated, according to a large upward revision from the Commerce Department on Thursday, CNBC reports.

What’s going on: “Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.”

Why it’s important: The news may indicate that the U.S. is not headed toward economic recession.

• A separate report released this week shows that layoffs were below expected levels, “indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points.”
• Unemployment claims were down last week, too, according to the Labor Department.

The NAM says: “While the latest NAM Manufacturers’ Outlook Survey  revealed that most manufacturers predict a recession in the next 12 months, it is also possible that the U.S. economy could achieve the ‘soft landing’ that the Federal Reserve and other policymakers have been seeking,” said NAM Chief Economist Chad Moutray.

• “This is particularly true if the labor market remains solid and if spending continues to hold up. The current outlook is for the U.S. economy to expand 1.7% in 2023, with 1.2% growth in 2024.”

For Fernando Torres, the vice president of operations at thermoplastics manufacturer Greene Tweed, the issue of immigration is personal. In 1996, at the age of 16, Torres immigrated to the United States. He was undocumented for a time, and he was forced to figure out how to stay afloat.

His story: Alone, without stable residency and barely speaking the language, Torres had a harrowing start in the U.S. But he worked his way through community college, where he excelled in math courses even though he wasn’t yet fluent in English. Torres attributes his love for math and science to his grandfather, who he says is the smartest man he’s ever met.

• “I had a difficult situation at the age of 16 in a new country without knowing the culture or the language, asking, what am I going to do?” said Torres. “Living in this country, it’s the country of opportunities, so I had to find ways to make it work and pursue the American dream.”
• “But, as an undocumented person, the jobs available were not pretty. Whether I was washing dishes at a seafood restaurant or cutting the lawns in Arizona in the middle of the 120-degree- weather summers, I just had to find a way to survive.”

Entering the industry: After community college, Torres was accepted into Arizona State University’s program for aerospace engineering—and eventually, he found a place in the commercial sector at Greene Tweed. Today, he’s a U.S. citizen, and he’s just as passionate as ever about the value of immigration.

Immigration and manufacturing meet: Torres has seen the skills gap in manufacturing firsthand, and he knows how difficult it is to fill critical jobs. That’s one reason why immigration is so important to the manufacturing industry, he pointed out.

• “There is a shortage of people,” said Torres. “Skilled laborers are very difficult to find in our country, and retirements are outpacing anyone that’s coming in. There’s not enough people to run our factories—and if we want the economy to grow, we need people to grow it.”

Read the full story here.

There was notable growth in energy-sector jobs last year, according to a new Department of Energy report cited by The Hill.

What’s going on: The number of positions in both traditional and renewable energy grew from 2021 to 2022.

• Jobs in renewables increased 3.9%, while conventional-energy jobs grew even more. Positions in natural-gas fuel rose 24%, those in coal fuel rose 22% and those in petroleum 13%
• “Overall, the energy sector grew by nearly 300,000 jobs, employing 7.8 million people in 2021 and more than 8.1 million in 2022.”

Outsize expansion: The energy sector’s job growth was more significant than that of jobs in general.

• “The report said jobs in the battery electric vehicle field had the most growth overall, expanding by 27 percent from 2021 to 2022.”

The NAM’s view: “The growth in energy-sector jobs demonstrates the strength of domestic energy production, but misguided regulations could undo all this momentum,” said NAM Vice President of Energy & Resources Policy Brandon Farris. “The NAM is working to achieve permitting reform and rein in unbalanced regulations so it doesn’t go to waste.”

The Federal Reserve will likely raise interest rates again in the near future, Chairman Jerome Powell said Wednesday, according to The Wall Street Journal (subscription).

What’s going on: Powell said that because the Fed lifted rates so quickly last year, the effects haven’t been fully realized yet.

• “‘Policy hasn’t been restrictive for very long … so we believe there’s more restriction coming,’ Powell said during a panel discussion with other central bankers at the European Central Bank’s annual symposium in Sintra, Portugal.”
• Core inflation will probably not reach the Fed’s target of 2% until 2025, Powell added.

The background: While central banks throughout the world have increased interest rates quickly in the past year in an effort to control inflation, they “have been astonished so far at the resilience of their economies to higher borrowing costs.”

• Earlier this month, the European Central Bank raised its rates a quarter percentage point. Last week, the Bank of England raised its key interest rate by a relatively aggressive half percentage point, citing a resilient economy, tight labor market and large pay increases for workers.
• At its meeting earlier this month, the Fed left the benchmark federal-funds rate at 5% to 5.25%, following 10 consecutive rate increases at prior meetings.

What it means: “Slowing down rate increases, including by possibly raising rates at every other meeting, represents an ‘effort to get more information from the data to see how much restraint is really coming,’ [Powell] said.”

What’s next: Most central banks—including the Bank of England—will probably raise rates again in the near future, according to the Journal.

With the backing of major HVAC manufacturers, start-ups are working to make air conditioners that are capable of easing the strain on the power grid, according to The Wall Street Journal (subscription).

What’s going on: “Companies such as Blue Frontier, Transaera and Montana Technologies are raising money from investors including industry giant Carrier Global … to develop more efficient technologies. Many of those efforts focus on the humidity rather than the heat, using new materials like liquid salt to dry out the air.”

Why it’s important: The number of air conditioners in use worldwide is expected to more than double by the middle of the century, to 5.5 billion, with many units likely to be inefficient.

• “Stalwarts such as Carrier and Trane Technologies say they are spending billions of dollars to offer more efficient versions of conventional ACs while evaluating the new approaches.”

A different AC unit: Traditional air-conditioning units work by converting refrigerants from gas to liquid and then back again, while circulating air with fans. They are unable to remove humidity without cooling the air, which is what makes them inefficient, according to the article.   

• “Blue Frontier aims to separate humidity and temperature control using a liquid salt solution that was developed with the National Renewable Energy Laboratory. The solution also stores energy, reducing consumption at peak times, when electricity grids are strained on hot days.
• Innovation is also required to make air conditioning affordable for people in developing nations, according to the Journal.

More investment: “The need for new approaches is pushing Carrier to make venture investments to complement its other growth strategies, said Jennifer Anderson, Carrier’s chief sustainability officer. Trane is investing in startups like data-center-cooling company LiquidStack while looking at new technology approaches, CEO Dave Regnery said.”

Consumer confidence hit its highest level in nearly a year-and-a-half in June, Reuters (subscription) reports.

What’s going on: “The Conference Board said its consumer confidence index rose to 109.7 this month, the highest reading since January 2022, from 102.5 in May. Economists polled by Reuters had expected the index to climb to 104.0.”

On jobs: The survey’s labor market differential, which comes from respondent views on the difficulty of getting jobs, increased to 34.4 in June from 30.7 in May—a sign that many still view the labor market as tight.

• This finding is in keeping with a key data point in the NAM’s Q2 Manufacturers’ Outlook Survey, in which the majority (74.4%) of manufacturers cited attracting and retaining a quality workforce as a top challenge.

What we’re saying: The latest consumer confidence index is good news, according to NAM Chief Economist Chad Moutray.

• “Americans felt more upbeat in their assessments of both current and future conditions, with improved prospects for jobs and a strengthened overall economic outlook, including for household finances,” he said.

In other good news: Sales of new homes increased to a 15-month high in May, up 20% from a year ago, bolstering hopes that the U.S. economy might avoid a recession.

More than $42 billion will be given to states to expand their broadband internet access, the White House announced this week, according to The Wall Street Journal (subscription).

What’s going on: “States and territories have been jockeying for months for their share of $42.5 billion allocated in an internet-construction fund called the Broadband Equity Access and Deployment program. The law requires that federal agencies use a new, more accurate map of where high-speed internet service is missing before disbursing the funds.”

• Texas will get the most money under the project ($3.3 billion) followed by California ($1.9 billion). Also set to receive significant sums are the less-populous Alaska, West Virginia and Montana.

The goal: The effort is meant to connect everyone in the U.S. to “affordable, high-speed internet service by 2030,” according to the Journal.

Why it’s important: Approximately 8.5 million U.S. households and businesses are located in areas of the country without access to high-speed internet access, which the Biden administration called “a necessity in today’s society” in an announcement about the funds.

• BEAD is one of six federal internet-construction programs authorized by the NAM-backed bipartisan infrastructure law of 2021.
• The legislation also includes $2.75 billion for digital equity and inclusion and $2 billion in loans and grants for internet infrastructure in rural locations, CNET reports.

Our view: “Manufacturers supported the bipartisan infrastructure law, and today’s historic broadband investment announcement will enhance industry operations through leading edge connectivity,” the NAM tweeted on Monday. “Thank you @POTUS for your leadership to advance domestic [manufacturing] priorities.”