General

The Federal Trade Commission will vote next week on the final version of a rule that would prohibit noncompete agreements between employers and their employees, Law360 (subscription) reports.

What’s going on: “According to the FTC’s announcement, the agency’s five commissioners will vote April 23 on whether to ‘authorize public disclosure of the proposed final rule,’ first unveiled in draft form in January 2023. Assuming a vote in the affirmative, staffers will give a presentation on the rule, followed by a second vote to issue the rule in its final form.”

• The agency did not indicate which, if any, changes it has made to the previous version of the rule.
• The FTC received more than 26,000 comments on the rule during the 90-day public comment period.

Why it’s important: A noncompete ban would cause disruption to the majority of manufacturing operations in the U.S., a 2023 NAM survey found.

• Some 70% of manufacturers in the U.S. use noncompete agreements, and they do so to safeguard intellectual property, sales information, industrial processes and business strategies.
• Approximately 66% of survey respondents—representing manufacturers of all sizes—said a ban would interfere with their operations.
• Around 50% of those polled said a ban would have a negative effect on their investment in employee training programs.

The NAM says: “The FTC’s proposed rule severely threatens manufacturers’ ability to protect intellectual property and responsibly invest in their employees,” said NAM Director of Transportation, Infrastructure and Labor Policy Max Hyman.

• “The NAM remains engaged on this critical issue for our members and will weigh our options in response to the commission’s vote next week.”

Energy Secretary Jennifer Granholm called the Biden administration’s recent moratorium on liquefied natural gas export permits “a pause for a study” at a Senate Energy and Natural Resources Committee hearing Tuesday, according to POLITICO Pro (subscription).

Committee Chairman Sen. Joe Manchin (D-WV) questioned several recent energy-related moves by the Biden administration.

What’s going on: “It is a pause for a study. You don’t need to hype it out beyond what it is,” Granholm told the committee on Tuesday. “It is a pause to get data.”

• The administration has received bipartisan criticism for the freeze of LNG export permits since announcing the move in January. NAM President and CEO Jay Timmons said the pause “undercut[s] President Biden’s own stated goals” and “weakens our country while giving Russia an upper hand.”

An examination of prices: Granholm told the committee the pause “was needed to examine prices and market demand since the last time a study was conducted.”

• She said the study will take into account foreign nations’ emissions “that may be linked to the absence of U.S. natural gas shipments.”

45V guidance: Sen. Manchin asked Granholm about proposed guidance on the Inflation Reduction Act’s first tax credit, known as the 45V. In a news release from the committee, Sen. Manchin said the proposed guidance, “if implemented … would jeopardize the viability of the industry before it even has a chance to get off the ground.”

• Sen. Manchin mentioned a recent letter to the administration from all seven “hydrogen hubs”—locations designated late last year by the administration to scale up the nation’s clean hydrogen production—saying the centers would “no longer be economically viable” without revision to the 45V proposed guidance.
• “Do you think we should heed the warning of [the Department of Energy]’s own seven hubs, and do you have any insight into what might be changed?” he asked.
• Granholm responded that the administration has “gotten over 30,000 responses, and they are working through those responses.”
• She added, according to POLITICO Pro, “The bottom line is clearly we want the hubs to succeed.”

Our take: “No matter what you call it, the administration’s pause on LNG export permits runs counter to the wishes of the American people and the interests of the United States and our allies,” said NAM Director of Energy and Resources Policy Michael Davin.

• “According to a recent NAM survey, 87% of Americans believe the U.S. should continue to export natural gas. The administration should listen.”

U.S. manufacturers and other businesses are sharing the details of the potential economic fallout if Congress fails to pass NAM-supported, pro-growth tax legislation, The Wall Street Journal (subscription) reports.

What’s going on: “[L]arge public companies say the law as it stands is costing them hundreds of millions or billions of dollars, while some owners of small and medium-sized businesses say they wonder if their firms will survive.”

• The Tax Cuts and Jobs Act of 2017 allowed manufacturers across the U.S. to expand their businesses, hire and purchase new, much-needed equipment. But in 2022 and 2023, three critical provisions from the law—immediate expensing for domestic research and development, enhanced interest deductibility and full expensing—expired, hurting businesses of all sizes.
• In January, the House passed the Tax Relief for American Families and Workers Act, which would reinstate all three measures. The NAM has been pushing the Senate to pass the legislation, too.

Why it’s important: Lift truck and solutions manufacturer Hyster-Yale Materials Handling Inc. “spends around $100 million a year on R&D, and the law change that went into effect in 2022 increased its tax bill by about $25 million a year.”

• “So that’s $25 million less that I have to invest back into my business, whether it’s R&D, whether it’s plants and equipment [or] hiring new people,” Chief Financial Officer Scott Minder told the Journal.
• Other companies say the lack of action on the House-cleared tax bill “may prompt reduced investment in other areas and increase the rate of return required for new projects.”

Weighing a move: Hyster-Yale—which “spends around 80% of its research budget in the U.S.”—would like to keep its operations in the U.S., Minder continued, but it can’t guarantee that it will continue to do so without the return of the expired TCJA tax provisions.

• Other manufacturers are reporting a similar predicament.

​​​​​​​The last word: “The stakes are clear: Congress must pass the Tax Relief for American Families and Workers Act or risk significant economic damage across the manufacturing sector,” said NAM Vice President of Domestic Policy Charles Crain.

• “Manufacturers are depending on Congress to restore these pro-growth tax policies, which support the investments in R&D and capital equipment that are so critical for manufacturing growth.”

President Biden called for tax increases during a visit to his hometown of Scranton, Pennsylvania, on Tuesday, the Associated Press reports.

What’s going on: “Biden used Scranton, a city of roughly 75,000 people, as the backdrop to argue that getting rich in America is fine, but should come with heftier tax bills.”

What he said: President Biden—who has proposed a 25% minimum “billionaires tax”—used the bulk of his speech to call for tax hikes.

• “The president said decades of Republicans’ policies that cut taxes for the wealthy with the idea of stimulating the economy ‘failed America.’”
• President Biden has said raising taxes on the wealthiest Americans is “how we invest in the country.”

However … The Tax Cuts and Jobs Act of 2017 was “rocket fuel” for manufacturing, NAM President and CEO Jay Timmons said during his 2024 State of Manufacturing Address in February.

• In fact, as we discuss in another story in this edition of Input, the expiration of three pro-growth tax provisions from that law has harmed manufacturers throughout the U.S. And more tax hikes are scheduled to take effect at the end of 2025.
• It is critical to a healthy manufacturing industry and U.S. economy in general that expired, pro-growth provisions be reinstated—and that Congress act to forestall further tax increases next year.

The final say: “[T]he path is clear,” Timmons said in his February address. “No new taxes on manufacturers.”

The Office of the U.S. Trade Representative must revise its digital trade policy now to reassert American leadership, the NAM and more than 40 industry partners told the Biden administration ahead of U.S. Trade Representative Katherine Tai’s testimony this morning before the House Committee on Ways and Means.

What’s going on: In the past few years, the USTR has “retreat[ed] from digital trade protections,” the groups told National Security Adviser Jake Sullivan and National Economic Council Director Lael Brainard. Problematic actions/items by the USTR include:

• The October 2023 withdrawal of longstanding U.S. World Trade Organization positions that support the protection of cross-border data flows, stop data localization requirements, end discrimination against U.S. firms and their goods and services and protect sensitive data from bad actors;
• Abandonment of core U.S. policy priorities in the Indo-Pacific Economic Framework for Prosperity; and
• The omission in the USTR’s 2024 National Trade Estimate Report on Foreign Trade Barriers of numerous digital trade barriers, despite the statutory obligation under the Trade Act of 1974 to detail such barriers.

Why it’s important: These moves raise “deep economic and national security concerns,” the groups continued. They are in direct opposition to the interest of U.S. companies and their employees, and they give greater power to foreign nations, including China, “to write the rules that will govern the global digital economy for years to come.”

What must be done: The USTR must revise its stance on digital trade to “stand up for U.S. businesses and workers who face damaging digital trade barriers in foreign countries.”

Construction of a manufacturing plant that promises to be vital to the world’s move toward electrification is now underway, according to Chemical Industry Digest.

What’s going on: “Orion S.A., a specialty chemicals company, broke ground on a plant in Texas that will be the only facility in the U.S. producing acetylene-based conductive additives for lithium-ion batteries and other applications vital for the global shift to electrification.”

• Batteries require conductive additives, and those produced at the Texas facility southeast of Houston will be made using acetylene, a colorless gas.
• Equistar Chemicals LP, a subsidiary of polymer and polyolefin technologies manufacturer LyondellBasell, will manufacture acetylene at a nearby location.
• The new plant will be similar to an Orion facility already in operation in southern France that also uses acetylene from LyondellBasell.

“A crucial part”: “[W]e see electrification as a crucial part of our plan to reduce carbon emissions across our industries,” said LyondellBasell Executive Vice President of Global Olefins and Polyolefins, Refining and Supply Chain Kim Foley. “By supporting the production of key battery components, we’re contributing to solutions for a better tomorrow.” The company recently released its annual sustainability report.

• The battery additives produced at the Texas facility will have “one-tenth of the carbon footprint of other commonly used materials,” according to the article.
• And the plant “will bring new technology and high-skilled jobs including laborers, millwrights, welders, equipment operators, among others jobs in Texas, and [will] positively impact long-term job creation for the local community,” Energy Job Shop reports.

Should manufacturers strive to be “cutting edge”?

That’s the question explored in “Is ‘Cutting-Edge’ Good? Assessing Product Newness Factors in Technologically Turbulent Environments,” the paper that won the Innovation Research Interchange’s 2023 Maurice Holland Award.

• The honor, named for the IRI’s founder, has been bestowed annually since 1982 by the IRI, the NAM’s innovation division. It goes to the best article published in the IRI’s flagship publication, Research-Technology Management.
• Winning papers exemplify a commitment to significant work in research and development and innovation management, originality of new management concepts and excellence in presentation.
• The 2023 award-winning paper, by Michael Obal, Todd Morgan and Wesley Friske, does all three, according to the IRI.

Providing value: “In innovation, novelty generates the most attention but does not always translate into better value for the company and customers,” said Research-Technology Management Editor-in-Chief Yat Ming Ooi.

• “This article tells readers when and to whom novel new products matter and why companies need to strike the right balance to ensure better new product performance.”

Authors respond: Research-Technology Management “is a leading academic journal for innovation-related research, and thus having an opportunity to publish an article in RTM is a significant accomplishment in its own right,” said co-author Friske, an associate professor at Missouri State University’s marketing department. “I am also grateful for the opportunity to share this award with my friends and co-authors, and it is particularly important to me now that Todd is no longer with us.”

• Co-author Morgan, an assistant professor at Cleveland State University’s Monte Ahuja College of Business, passed away in 2023.
• “I’m honored to receive the Holland Award from Research-Technology Management alongside Todd and Wes,” said co-author Obal, an associate professor at the University of Massachusetts Lowell’s Manning School of Business.

About the IRI: The IRI offers insights, case studies, research, benchmarks and strategic connections—all built around a set of innovation growth drivers as determined by members annually. Click here to learn more about the IRI.

Read the full story here. 

U.S. industrial production increased modestly in March, in keeping with economist forecasts, according to baha.

What’s going on: “Industrial production in the United States rose by 0.4% in March after increasing 0.1% in the previous month, the Federal Reserve’s Board of Governors stated in its report published on Tuesday.”

The details: Manufacturing output increased 0.5% on a monthly basis and 0.8% on an annual basis. It rose 1.2% in February.

• Mining declined 1.4% in March and 2.0% year on year.
• The utilities index grew 2.0% for the month but declined 3.1% year on year.

Capacity utilization: Capacity utilization—a measure of potential output—for the industrial sector as a whole increased to 78.4%, up from 78.2% in February but “1.2 percentage points below its long-run average.”

What it means: These data are among “signs that manufacturing is starting to pick up,” MarketWatch (subscription) reports.

• “The S&P Global U.S. Manufacturing PMI has been in expansion territory for the past three months, and the ISM factory index was 50.3 in March, the first reading above the break-even level of 50 since September 2022.”

The number of renewable energy projects awaiting entry onto the power grid rose significantly in 2023, according to POLITICO Pro (subscription).

What’s going on: There were “2,600 gigawatts of energy and storage capacity trying to connect [last year], according to a report released Wednesday by the Energy Department’s Lawrence Berkeley National Laboratory.”

• The waiting projects—most of which are wind, solar and storage capacity initiatives kickstarted with incentives from the Inflation Reduction Act of 2022—could more than double current grid capacity, the report says.
• Solar accounts for most of the generation.

The problem: Despite an order passed by the Federal Energy Regulatory Commission last year intended to speed up the process of getting new resources connected, “most regions have not yet implemented the new rule, leaving power systems across the country jammed.”

• The need to link in new energy sources quickly will only grow in the coming years, as the U.S. moves more toward electrification.

Our view: “Energy security is more important than ever,” NAM Director of Domestic Policy Michael Davin said. “Manufacturers need affordable, reliable energy to power economic growth. This is why we greatly need comprehensive permitting reform to expedite these projects and many more.”

The Senate this week approved a resolution to repeal the National Labor Relations Board joint employer rule, Reuters (subscription) reports.

What’s going on: In a 50–48 vote Wednesday, the Democrat-controlled Senate passed a Congressional Review Act resolution to block an NLRB “rule that would treat companies as the employers of many of their contract and franchise workers and require them to bargain with those workers’ unions.”

• President Biden pledged to veto the resolution, which the House approved in January. A veto would send the measure back to Congress, where it appears to lack the necessary votes for an override.
• The CRA “allows Congress to repeal agency rules through a majority vote in both houses.” The president must sign the resolution for it to take effect.
• The rule was scheduled to go into effect in February but was blocked by a federal judge in Texas. The NLRB is considering options in response to the decision.

What it would do: “The rule would treat companies as ‘joint employers’ of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.”

Why it would be problematic: The NLRB requirement would lead to confusion about which businesses should be considered employers, “disrupting franchising and routine contracting arrangements,” according to another Reuters article.

The NAM says: The joint employer rule would “harm manufacturers at a time when they need the flexibility and contingency offered through temporary and contract workers to best manage supply chain impacts, demand for manufactured products and other inflationary challenges,” the NAM told the NLRB in December.