General

Durable goods orders beat expectations in May, rising 1.7% to a record $288.2 billion from $283.2 billion in April, according to U.S. Census Bureau data.

• Excluding transportation equipment, orders for new durable goods increased 0.6% last month, to $185.62 billion from $184.54 billion in April.

Year over year: New durable goods orders have increased solidly on a year-over-year basis—5.4%—since May 2022.

• They have dipped 0.3% over the past 12 months when excluding transportation equipment, however.

Core capital goods: Orders for core capital goods, a proxy for capital spending in the U.S. economy, increased 0.7% in May, to $73.96 billion from $73.46 billion. That’s an all-time high.

What’s up: The following categories posted strong sales in May:

• Non-defense aircraft and parts (up 32.5%)
• Motor vehicles and parts (up 2.2%)
• Electrical equipment and appliances (up 1.7%)
• Machinery (up 1.0%)
• Other durable goods (up 0.6%)
• Primary metals (up 0.5%)

The NAM’s take: “Durable goods orders were stronger than expected in May, with continuing resilience despite a challenging economic environment amid an uncertain outlook,” said Moutray.

A natural gas pipeline that would bring affordable energy to customers in the Mid- and South Atlantic regions of the U.S. got its final permit late last week, according to E&E News’ ENERGYWIRE (subscription).

What’s going on: On Friday the planned 303-mile Mountain Valley Pipeline—set to run from West Virginia to southern Virginia—received its water crossing permit, which will allow developers to build the project across rivers and streams in accordance with Section 404 of the Clean Water Act.

• The permit was part of the debt-ceiling deal signed earlier this month by President Biden
• Construction of the MVP, the only large pipeline project currently being built in Appalachia, has been paused for more than a year because of legal battles, according to another ENERGYWIRE (subscription) story.

Why it’s important: The granting of the water crossing permit—which comes more than five years after the pipeline’s initial approval—is a step forward for permitting reform.

• The approvals process for critical infrastructure in the U.S. takes far longer than it does in other countries that have comparable environmental regulations, NAM Vice President of Energy & Resources Policy Brandon Farris told Congress at a recent hearing.
• This lag needlessly delays—or worse, drives overseas—critical infrastructure, Farris said.

Manufacturers act: Last week the NAM, along with members of the NAM’s Council of Manufacturing Associations and Conference of State Manufacturers Associations, launched Manufacturers for Sensible Regulations, a coalition aimed at speeding up the  permitting process and addressing the large volume of regulations being handed down by the federal government.

What’s next for MVP: The MVP has approximately four to five months of construction remaining. It could begin service this year or in early 2024, according to one estimate.

• To finish construction, the project will require the permission of the Federal Energy Regulatory Commission, which “must still validate that the project has all their permits,” ENERGYWIRE reports.

The Creators Wanted tour landed in Atlanta last week for the SkillsUSA National Leadership and Skills Conference—the largest gathering of the America’s future skills workforce.

Over the course of the three-day program, the tour, an initiative of the NAM and the Manufacturing Institute, helped change attitudes and challenge misconceptions about manufacturing, opening up a new world for some of the country’s most talented rising workers.

By the numbers: The tour’s SkillsUSA stop, sponsored by Honda, Snap-on, FactoryFix and Union Pacific, helped share the story of modern manufacturing with many of the brightest career mentors and technical education students in the United States.

• 15,000 people attended the event, including many career and technical education students, educators and parents.
• More than 1,500 people took part in the Creators Wanted immersive experience at SkillsUSA.
• More than 120,000 students and career mentors signed up to learn more about modern manufacturing careers during the tour stop in Georgia.

More participants: Other leading manufacturers were also in attendance, engaging students with information about careers in manufacturing. A few of the participants included Caterpillar, John Deere/Korematsu, Volvo NA Group, Vermeer Corp., Toyota, Cummins, Penske and 3M.

A special guest: Snap-on Chairman and CEO Nick Pinchuk dedicated a full day to inspiring students and educators. The NAM executive committee member and Manufacturing Institute board member emphasized the “Creators Wanted” mantra in order to remind participants that manufacturers aren’t just recruiting workers—they’re inspiring and empowering creators.

Read the full story here.

Diversity, equity and inclusion efforts have a lot of payoffs: they widen talent pipelines, increase retention rates and improve business outcomes. So what are manufacturers doing to strengthen DE&I in their workplaces? A newly updated survey from the MI and Keybridge has the answers.

What it is: The MI and Keybridge conducted their inaugural DE&I benchmarking survey in October 2021, and manufacturers’ DE&I efforts have grown a lot since then. One year later, the MI and Keybridge repeated the survey, and the results are in—along with recommendations for manufacturers seeking to grow further.

A firm commitment: 72% of manufacturers agreed that improving and maintaining DE&I was a key focus for their company—and many of them have been taking tangible steps toward that goal.

• Of the 60% of companies that made public statements affirming their commitment to DE&I, most have followed through with diversity commitments, employee resource groups, donations and transparent updates on their DE&I progress.

Widening talent pools: More than 60% of respondents reported that the representation of women within their companies has increased in the past five years. Still, there were also some challenges in expanding the diversity of hiring pools.

• 50% of companies reported struggling with hiring diverse candidates, with 40% struggling with retaining diverse workers.

Where to start: Companies that have not yet taken concrete actions toward fulfilling their commitments can get started by developing a strategic plan or designating a senior leadership position for DE&I issues, the report recommended.

Read the full story here.

Businesses “that provide tools, chemicals and other supplies for the semiconductor industry” may now apply for a piece of the funds set aside in last year’s CHIPS and Science Act, according to The Wall Street Journal (subscription).

What’s going on: Late last week, the Biden administration announced broadened eligibility for companies capable of using federal subsidies to increase chip production in the U.S.

• Last year’s legislation, which the NAM championed, earmarked $39 billion for the purpose.
• In February, the Commerce Department’s CHIPS Program Office began “accept[ing] applications for the construction, expansion, or modernization of semiconductor materials and manufacturing equipment facilities for which the total capital investment equals or exceeds $300 million,” according to the National Institute of Standards and Technology, which is part of Commerce.

Why it’s important: “‘We can have as many fabs [chip plants] as we want, but the reality is, we also need the supply chain—the chemicals, the material, the tools that go into those fabs,’ Commerce Secretary Gina Raimondo said at a briefing,” according to the Journal.

Lots of interest: Nearly 400 businesses across 37 states have signaled their interest in receiving funds under this latest phase.

• “The department is already accepting full applications for the C[HIPS] Act funding from companies with plans to build facilities for leading-edge semiconductors, and will soon accept submissions from companies that plan to build chips that are currently state-of-the-art or older.”
• Suppliers may begin submitting applications this fall, but the administration has not yet said when the funds will be disbursed.

When Mary Andringa arrived at NAM headquarters on Wednesday, she expected a tour of the renovated office. Instead, the former NAM Board chair was surprised by an applauding crowd who gathered for the ribbon-cutting for one of the NAM’s meeting rooms, now named the Mary Andringa Room in commemoration of her decades-long service to manufacturers in the U.S. The NAM’s conference rooms are named for many luminaries of manufacturing, including Andrew Carnegie, Thomas Edison, the Wright Brothers, Jonas Salk and Marie Curie.

“I was absolutely overwhelmed, humbled and honored,” Andringa said.

A longtime supporter: Now chair emeritus of Vermeer Corporation—a family-owned, midsized manufacturer of industrial and agricultural machines in Pella, Iowa—Andringa served as NAM Board chair from 2011 to 2013 and has been an active participant on the NAM Board since the early 2000s.

• Andringa found her experience as NAM Board chair deeply meaningful, remarking on the close relationship she developed with NAM President and CEO Jay Timmons, who was also newly appointed in 2011.
• “It was a really great experience because I had a few years under my belt as CEO [of Vermeer],” Andringa said, “and I could share best practices with Jay. It was great to see how he took initiative and dug into some areas that needed more cooperation, like the NAM’s partnerships with state associations.”

Visiting the Hill: Andringa said she “enjoyed being a voice for manufacturing” in meetings on the Hill and with several administrations.

• Whether advocating against compliance regulations that created needless hardship for manufacturers, or for removing trade barriers impeding U.S. exports, Andringa stressed that she always made her case to policymakers on both sides of the aisle.
• “The NAM tries to be the voice of reason. … It has done a good job connecting with both parties and whoever is in the White House,” she said.

Read the full story here.

Companies that provide services and goods to the oil and gas sector are repurposing some of their machinery for use in renewable energy technologies, according to The Wall Street Journal (subscription).

What’s going on: With investment in renewable energy sources expected to reach $1.74 trillion this year, oil-field-service firms including Baker Hughes are diversifying their portfolios to include investment in new energy segments.

• “Baker Hughes said orders in its new energy segment could reach $6 billion to $7 billion by 2030. At the midpoint, that represents about a fifth of the revenue that Wall Street expects it to generate that year.”
• In addition to maintaining its longstanding book of geothermal business, Baker Hughes is now “looking to do carbon capture and sequestration, which … requires geological knowledge” that the firm already has.

Making progress: “Orders in its new energy business were substantial enough to be noted on [the company’s] earnings calls. It booked more than $400 million of orders in the segment last year and said it is on track to exceed that amount this year.”

• Orders comprised carbon capture and sequestration equipment for a large Malaysia project.
• Some of the services can be a source of recurring revenue, as in the case of California direct air capture projects, which are required to monitor carbon dioxide levels underground for 100 years.

Sales of existing homes inched up in May, according to the National Association of Realtors.

What’s going on: Existing home sales increased to 4.30 million units from 4.29 million units in April.

• Sales strengthened in the South and West but weakened in the Midwest and Northeast.
• The median sales price for existing homes was $396,100 in May, a decrease of 3.1% from a year ago.

By housing type: Single-family house sales edged down 0.3%, to 3.85 million units from April’s 3.86 million units.

• Meanwhile, sales of condominiums and co-ops increased 4.7%, to 450,000 units from 430,000 in April.

Unsold homes: The unsold inventory of existing homes on the market rose to 3.0 months from 2.9 in April but stayed near historic lows.

Overall: Home sales have declined 20.4% on a year-over-year basis, from 5.40 million units last May.

The NAM’s take: “The existing home market remained challenged by affordability and lack of inventory, although sales remained higher than the 4.00 million units in January,” said NAM Chief Economist Chad Moutray.
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A transmission line that was stuck in permitting limbo for 18 years finally broke ground Tuesday, E&E News’ ENERGYWIRE (subscription) reports.

What’s going on: “Interior Secretary Deb Haaland and Energy Secretary Jennifer Granholm traveled to Wyoming for a ceremony to celebrate work on the 732-mile TransWest Express Transmission project. The line will add 3,000 megawatts of transmission capacity, sending electrons from what is set to be the country’s largest onshore wind project in Wyoming across four states for use in California, Arizona and Nevada.”

A milestone: The project—which was initiated by Arizona Public Service Co. in 2005—is a “‘momentous milestone’” that advances the Biden administration’s objective of constructing 25,000 megawatts of renewable, onshore power sources on public land by 2025, Haaland said.

Permitting reform needed: “It’s a milestone that came after nearly two decades of work, a reminder of how long it can take major grid projects to go through the federal permitting process even as the administration says construction is necessary. Granholm said the Biden administration is committed to making sure future transmission lines don’t face the same roadblocks as TransWest Express.”

• Because it crosses public and private land in multiple states, the TransWest Express project required green lights from federal, state and county governments, as well as private approvals.
• Added Granholm, “‘It took way too long to get this permitted.’”

Meeting goals: To meet “projected levels of renewables,” the U.S. will need to expand its high-voltage transmission network by more than 50% in the next 12 years, according to the Department of Energy.

• “The bipartisan infrastructure law of 2021 included $15.5 billion for DOE to spend on transmission infrastructure. The Biden administration has said future studies will identify key corridors where it can exercise backstop authority to sidestep state opposition to new power line routes.”

What’s next: The $3 billion TransWest Express line is expected to begin construction this year and be fully complete by the end of 2028.

Manufacturers risk losing out on several climate and energy tax credits if they don’t act fast—and will miss an opportunity to save millions.

That’s the message from Brian McGoff, president and chief operating officer of Dalrada Corporation—a manufacturing solutions provider focused on sustainability. The Biden administration and Congress have created additional financial incentives for manufacturers that embrace sustainable practices, but these incentives won’t be around forever.

The benefits: Currently, manufacturers can access a wide range of climate and energy-focused tax credits, grants and other benefits, from new programs and funds created through the Inflation Reduction Act to legacy tax credits like the 179D tax deduction—a provision that was expanded recently to offer significantly more value.

• “If you make qualified upgrades or a retrofits to your existing building or facility, the government used to give you a tax credit through 179D that was worth $1.88 per square foot times your tax rate,” said McGoff.
• “Now, it’s $5 per square foot for projects that meet the prevailing wage and apprenticeship requirements. T hat’s a direct tax credit—so if you define the project, design it, start implementation and have the proper software to demonstrate the required savings, you can apply.”
• “The lifetime cap on the maximum deduction allowed for a property was replaced with a more favorable three-year cap,” he added. “Companies are allowed to elect an alternative deduction for energy-efficient retrofits in the year the retrofitting plan is certified, to reduce the building’s energy usage intensity by at least 25%.”

How it works: The 179D commercial buildings energy-efficiency tax deduction primarily enables building owners to claim a deduction for installing qualifying systems in buildings, says McGoff.

Read the full story here.