General

Producer prices dropped more than expected in May, and the annual producer-inflation increase was the smallest in almost two-and-a-half years, Reuters (subscription) reports.

What’s going on: “In the 12 months through May, the [Department of Labor’s Producer Price Index] climbed 1.1%. That was the smallest year-on-year rise since December 2020 and followed a 2.3% increase in April. The annual PPI rate is moderating as last year’s surge drops out of the calculation.”

• Producer prices for final demand goods fell 1.6% in May, owing largely to falling energy costs, after increasing an unrevised 0.2% in April.
• Economists surveyed by Reuters had predicted the PPI would dip 0.1% from April and rise 1.5% year-on-year.

The backdrop: The report comes a day after the Labor Department reported the smallest year-on-year increase in U.S. consumer prices in more than two years.

Why it’s important: Federal Reserve “officials are expected to keep rates unchanged at the end of their two-day meeting, for the first time since March 2022 when the U.S. central bank embarked on its fastest monetary policy tightening campaign in more than 40 years. … [The central bank] was seen leaving the door open to further rate increases given the economy’s resilience, particularly the labor market.”

The U.S. railway system may be a solution to serious energy problems, according to ENERGYWIRE’s E&E News (subscription).

What’s going on: During extreme weather events, “trains could dispatch batteries across the country, preventing blackouts without expensive new energy infrastructure,” according to a new Department of Energy study cited by the news source.

• The fix would be less expensive than constructing either new transmission infrastructure or standalone battery storage for extreme-weather occurrences, researchers found.

Why it’s important: Approximately two-thirds of the U.S. is at risk of blackouts this summer, the North American Electric Reliability Corporation warned recently.

Power by rail: Just one train could carry enough battery storage to supply 50,000 households with energy for 12 hours, researchers found.

• “The reach of the country’s 140,000-mile rail network also makes it attractive from a grid perspective, since it extends into dense population centers and transmission-congested regions. That reach has already prompted DOE to identify rail rights-of-way as potential hot spots for a transmission buildout.”

However … While mobile battery storage looks promising, it needs further exploration on a larger scale, one source told E&E News.

As demand for raw materials escalates, mining companies in the U.S. are struggling to find enough workers to keep up, reports The Wall Street Journal (subscription).

What’s happening: The U.S. is advancing its green-energy transition while also developing new domestic sources of minerals to decrease reliance on China.

Workforce shortage: “The overall industry’s seasonally adjusted head count shrank by nearly 39% since 1990 … according to the Bureau of Labor Statistics.”

• While colleges and universities—not to mention companies themselves—are working to fill the gap, they are not turning out new workers fast enough.
• “‘The problem is that talent isn’t lying around waiting to be paid more—there just isn’t enough of it,’ said Andrea Brickey, an associate professor of mining engineering and management at the South Dakota School of Mines & Technology.”

Get help: If you are searching for ways to attract or upskill workers, the Manufacturing Institute (the NAM’s 501(c)3 workforce development and education affiliate) has you covered. It can also help you start preparing now for manufacturing’s biggest opportunity to reach young people and prospective workers: MFG Day.

The yearly rate of inflation slowed in May to less than half of what it was at its peak last year, but it’s still far higher than the Federal Reserve’s goal, according to The Wall Street Journal (subscription).

What’s going on: Consumer prices increased 4% in May from a year earlier, marking the 11th straight month of slowdowns.

• On a monthly basis, consumer prices rose 0.1% in May, following a 0.4% increase in April.
• Core consumer prices—which exclude food and energy and are considered a better predictor of future inflation—rose 5.3% year-over-year in May, owing partly to increasing rent costs.

The good: “The U.S. economy has maintained momentum this year, staving off predictions of recession. The job market remains robust, and consumers have boosted their spending, though one measure shows economic output is falling. A possible credit crunch following the March collapse of a few regional banks could crimp the economy.”

The not so good: “While inflation has cooled significantly, higher prices for many goods and services are weighing on household spending decisions.”
 
What’s coming: The Fed meets today and tomorrow to determine its next steps for interest rates, which it has raised aggressively in the past year—though it probably will not raise them again this week, according to NAM Chief Economist Chad Moutray.

• The Fed “is likely to make no changes to the federal funds rate this week, but with inflation remaining more stubborn than preferred, it could hike short-term rates by 25 basis points at either or both of its July 25–26 and Sept. 19–20 meetings before hitting the pause button on rate changes,” he said.

The NAM is standing up for manufacturers in courtrooms nationwide. Funded by voluntary contributions from NAM members, the NAM Legal Center is the leading voice for manufacturers in the courts, promoting manufacturing interests by reining in regulatory overreach, protecting vital manufacturing priorities and litigating on behalf of manufacturers across the United States.

As part of that work, the Legal Center brings the powerful voice of manufacturing into ongoing cases and helps shape the legal environment for the entire sector. That’s where the Legal Center’s Amicus Program comes in.

What it does: The Legal Center’s Amicus Program is focused on supporting NAM members in their litigation—whether they are pushing back against harmful rules that are impacting their operations or defending themselves in lawsuits with broader implications for the manufacturing sector.

The wins: The Amicus Program has achieved a series of critical wins for manufacturers in recent months, including the following:

• Save Jobs USA v. DHS: The Legal Center helped turn back an anti-immigration challenge in the District of Columbia, thus preserving the ability of H-4 visa-holders to work in the U.S. The victory protected manufacturing employees and their families, along with employers and the health of the overall economy.
• Brown v. Saint-Gobain Performance Plastics Corporation: The Legal Center successfully pushed back against an effort to invent a new type of legal claim for so-called “medical monitoring” that would have forced the company to compensate individuals with no current injuries. The victory protected manufacturers from unpredictable and potentially unbounded liability in New Hampshire and avoided setting a dangerous precedent that other states might follow.
• PhRMA v. Williams: The Legal Center effectively blocked an attempt by the state of Minnesota to force manufacturers to provide their products for free in a lawsuit against an insulin manufacturer. By helping defeat this effort, the NAM helped protect property rights for businesses in every sector.
• CRA v. City of Berkeley: The Legal Center stood with manufacturers in Berkeley, California, who faced a backdoor ban on gas appliances in new construction. The victory averted a regulatory patchwork and safeguarded appliance manufacturers.

The last word: “The breadth of the subject matter shows how expansive and effective the Legal Center is,” said Michael Tilghman of the NAM Legal Center. “Our national Amicus Program is addressing issues before federal and state courts ranging from government overreach to high-skilled immigration and product liability—and manufacturers can be confident that we have their backs.”

Contact us: As a member-driven program, the Legal Center pursues cases that are important to NAM members, whether they’re a party in the case or the case will have an important impact on manufacturing. To share potential opportunities for our involvement, email Tilghman at [email protected].

The Department of Energy will give an $850 million loan to battery cell developer KORE Power for the construction of a domestic battery manufacturing plant, The Hill reports.

What’s going on: The DOE on Friday announced the conditional loan to build “KOREPlex” in Buckeye, Arizona, as part of a broader strategy to “strengthen the U.S.’s supply chain for batteries for electric vehicles as well as for energy storage,” according to The Hill.

• It’s a milestone in the Biden administration’s objective to make half of all new vehicles sold in the U.S. in 2030 zero-emissions, according to the DOE.

Why it’s important: Once operational, the facility is expected to produce enough battery-cell storage to power more than 28,000 electric vehicles annually, the DOE said.

• The project is slated to create as many as 700 temporary construction jobs and 1,250 permanent operations positions.

Artificial intelligence is transforming manufacturing, and federal policies shouldn’t get in the way, NAM Director of Human Resources and Innovation Policy Julia Bogue told the Department of Commerce last week.

Four key areas: Manufacturers are chiefly concerned about AI in four areas.

• Safety: “AI is broadly used in the factory setting to prevent injury by making tasks safer,” Bogue pointed out. “AI is also used to prevent future injury by studying repetitive movement that could lead to torn rotator cuffs, wear on knee cartilage and other injuries caused over time.”
• Training: AI is also revolutionizing training for workers, teaching them how to complete tasks and learn new procedures while on the job
• Efficiency: AI aids efficiency in a number of ways, including through predictive maintenance for manufacturing equipment. It can predict when a part will need to be replaced, so that maintenance can be scheduled at the least disruptive time. “An example of this is utilizing AI to monitor fan vibration to calculate when the fan will need to be replaced,” Bogue noted.
• Product design and development: “AI can be used to make products safer, improve quality and improve efficiency,” Bogue said.

Regulations: “Regulation should not restrict innovation or competitiveness, as the NAM believes the growth of AI represents an opportunity for manufacturers,” said Bogue. Manufacturers understand the need for careful, smart regulation, she added.

• In a recent survey by the Manufacturing Leadership Council (the NAM’s digital transformation arm), 75.9% of survey respondents said that “manufacturers should adopt a code of ethics or conduct” for the use of AI.

How to do it: The federal government should tailor its regulations to different sectors, evaluating the risks of particular use cases instead of applying a single standard, said Bogue.

• As the agency conducts its analysis, it should also consider that “our present understanding of risks, costs and benefits may be limited because technology lends itself to future unanticipated breakthroughs and applications.”

Further reading: Interested in learning how manufacturers can apply AI technologies to their operations? Connect with the MLC to learn more—and consider signing up for its annual conference, Rethink, coming up soon on June 26–28 in Marco Island, Florida. Virtual attendance is also an option!

As job growth has risen in industries that don’t require college degrees, high school graduates are increasingly going directly into the workforce, according to The Wall Street Journal (subscription).

The big number: “The college enrollment rate for recent U.S. high school graduates, ages 16 to 24, has declined to 62% last year from 66.2% in 2019.”

• At the same time, the unemployment rate for teenage workers fell to a 70-year low of 9.2% last month.

What’s happening: High school graduates are turning toward jobs that offer competitive wages, particularly in industries like manufacturing, without requiring a pricy degree beforehand.

• For example, machinists earn $23.32 an hour, above the national median wage of $22.26 an hour.
• “If you can get [a job] without a B.A. and with decent wage growth, why go get a B.A.?” as ZipRecruiter Chief Economist Julia Pollak put it.

Demand for training: Meanwhile, more young people are pursuing other forms of job training.

• “The number of apprentices has increased by more than 50%.”
• The changing economy has led to wider acceptance of forgoing college, as employers’ interest in hiring high school graduates has grown, according to Steve Boden, a supervisor at Maryland’s Montgomery County Public Schools.

What we’re doing: The Manufacturing Institute, the NAM’s 501(c)3 workforce development and education affiliate, has been training students so they can enter rewarding career paths that do not require degrees.

• FAME, founded by Toyota in 2010 and currently operated by the MI, is a work/study career pathway program that provides education, training and certifications for the Advanced Manufacturing Technician occupational track.
• If you are interested in understanding the FAME model of skills or what it takes to join or start a chapter, sign up for an informational session here.​​​​​​​​​​​​​​

The number of ships waiting to dock at the ports of Los Angeles and Long Beach is growing as labor slowdowns continue, according to CNBC.

What’s going on: “On Wednesday, six vessels were delayed at the Port of Los Angeles, while two vessels at the Port of Long Beach were at anchor on arrival—unable to interface with the port operations, according to a vessel update announced by the Marine Exchange of Southern California Vessel Traffic Service, Los Angeles and Long Beach.”

• The backlogs are the result of a long-simmering labor dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association—dockworkers and their employer, respectively.
• Earlier this week, the largest terminal operator at the Port of Long Beach closed for day and night shifts, following a weekend when many longshore workers did not show up for work. Scattered labor activity has resulted in operational disruptions at ports across the coast since last Friday.

The background: The ILWU and PMA have been negotiating terms of a work contract for more than a year, and dockworkers have been operating without a contract since last July.

Why it’s important: “Data from MarineTraffic shows that vessel problems are shifting from isolated to more pervasive. Over the past 2½ months, average wait times at anchorage in LA were between a half-day to 1½ days, with service time averaging of two to five days. ‘This indicates we’ve broken past the ‘normal’ and are back into a stressed maritime supply chain,’ said Capt. Adil Ashiq, head of North America for MarineTraffic.”

• The disruptions—which come as peak inventory-building season begins for shippers—could ultimately contribute to the kind of container congestion seen during the global pandemic.

Pushing for White House weigh-in: On Wednesday, NAM President and CEO Jay Timmons urged President Biden to intervene in the negotiations and cited an economic study that found even a brief, localized port closure could cost the U.S. economy nearly $500 million a day.

• “This ongoing work stoppage will exacerbate inflation and lead to dramatic economic consequences across all industrial and consumer product sectors,” wrote Timmons. “Your leadership and intervention are needed.”

Keeping her employees happy and engaged is something Pamela Kan, president and owner of Bishop-Wisecarver, takes seriously.

And for good reason. Workforce retention is a pain point for many manufacturers and consistently cited, along with recruitment, as a top business challenge in the NAM’s Manufacturers’ Outlook Survey.

For Kan, meeting this challenge starts with getting her employees’ input—what’s on their minds, their career aspirations and the ways they think the company can improve. Then she acts on it.

Garnering feedback: To assess engagement, Bishop-Wisecarver surveys its employees and calculates an employee net promotor score, which is an internal measurement of employee satisfaction. Kan, the executive director of culture and people and department heads then discuss the areas that need improvement.

• “We share with employees where we have friction points or where things need to change,” Kan said. “We make that very visible. We then start checking these things off the list.”The company also offers employees many different opportunities to share what’s on their minds, through informal check-ins, team huddles, employee lunches and skip-level meetings.

• “Every single one of these times we are asking for feedback,” Kan emphasized. “We document it and follow up on it, because whenever you ask for feedback and you don’t then respond with changes or next-level discussions, you break the trust with your employees that you care about them.”
• “I reach out to new employees at the 60-day mark to see how it’s going,” she continued. “One actually reached out and said, ‘yeah, we need to talk.’ It was all positive. Some things he didn’t quite understand, being new [to the company], and it showed me some gaps in our onboarding process.”

Read the full story here.