General

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.

Prices paid by businesses to goods and services producers in the U.S. rose by slightly less than anticipated in March, according to Investing.com.

What’s going on: “The producer price index for final demand rose 0.2% last month, after rising by 0.6% in February, the Labor Department’s Bureau of Labor Statistics said. Economists had expected the PPI to gain 0.3%. In the 12 months through January, the PPI increased 2.1%, below the 2.2% expected, after climbing 1.6% in February.”

• “Core” PPI, which excludes food and energy prices, rose 0.2% on the month, for an annual increase of 2.4%.
• The data comes just a day after the release of a higher-than-anticipated consumer price index for last month.

The details: Services inflation stayed elevated, with a gain of 0.3% in prices in March, Barron’s reports.

• Goods prices, however, edged down 0.1%.
• A 1.6% decline in energy prices made up much of March’s overall decrease and outweighed a 0.8% increase in food prices.

Why it’s important: The news may mean an interest-rate cut from the Federal Reserve will come later than previously thought.

Prices paid by consumers for goods and services rose last month, according to CNBC.

What’s going on: The consumer price index, “a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.”

• March’s seasonally adjusted CPI increase was the same as February’s.

Core CPI: Core CPI, which excludes often volatile food and energy costs, also increased 0.4% on a monthly basis.

• Core CPI for March was 3.8% higher than it was in March 2023.

Why it’s important: CPI is the most widely used measure of inflation, and these data “indicat[e] that inflation is staying stubbornly higher and likely keeping the Federal Reserve on hold with interest rates.”

The EPA late last week awarded $20 billion to community development banks and nonprofit organizations to combat climate change in disadvantaged communities in the U.S., the Associated Press reports.

What’s going on: Money from the “green bank” initiative “could fund tens of thousands of eligible projects ranging from residential heat pumps and other energy-efficient home improvements to larger-scale projects such as electric vehicle charging stations and community cooling centers.”

• Previously called the Greenhouse Gas Reduction Fund, the $27 billion “green bank” overseeing the grants was created by the 2022 Inflation Reduction Act. Its aim is “to reduce climate and air pollution and mobilize public and private capital in the communities that need it most.”

Where the money went: At least $14 billion of the funding is reserved for low-income and rural areas, neighborhoods of color and communities with shuttered coal mines, among other locations.

• One of the bank’s funds is the National Clean Investment Fund. Grants from that pot include nearly $7 billion to help consumers, schools and small businesses and farms, $5 billion to “leverage the existing and growing national network of green banks” and $2 billion for decarbonized, affordable housing, according to Axios.
• Another fund, the $6 billion Clean Communities Investment Accelerator, is for centers that offer technical help and lending to clean-technology projects.

How it works: “Recipients committed to spending $7 in private sector funding for each $1 from the federal investment money, to ‘reduce or avoid’ 40 million metric tons of carbon dioxide each year and earmark 70% of the money for disadvantaged and low-income communities. These groups are often passed over by commercial banks and investors yet are  disproportionately impacted by climate change.”

A newly finalized rule from the EPA will require chemical and plastics plants to slash emissions of two widely used compounds, according to The Wall Street Journal (subscription).

What’s going on: The EPA’s final rule, released Tuesday, requires manufacturing facilities to curb emissions of chemicals including ethylene oxide and chloroprene. These two chemicals have broad applications, from sterilizing medical equipment to producing synthetic rubber.

• The rule would affect about 200 plants across the U.S. and include a requirement for “fenceline monitoring,” the use of technology to measure the ambient air concentration for certain chemicals.
• Once in effect, the regulation could reduce emissions of both compounds by almost 80% annually, the EPA said.

The background: The news comes less than a month after the EPA finalized a rule to regulate the use of ethylene oxide as a sterilizing agent, a decision that will affect the way most medical devices—including complex, lifesaving ones, such as artificial heart valves—are sterilized.

Regulatory onslaught continues: “While the EPA listened to some of manufacturers’ concerns, such as allowing more time for companies throughout the supply chain to assess the impact on their operations, the rulemaking adds to the ongoing regulatory onslaught our industry has been facing,” said NAM Managing Vice President of Policy Chris Netram.

Effect on supply chains: The fenceline monitoring schedule will be a “significant burden” to manufacturers, as will the EPA’s requirement that operations be fully shut down for small plant repairs, Netram continued.

• “The potential disruption to supply chains could make it more difficult to create jobs in communities across the country.”

Vessel traffic in and out of the Port of Baltimore—which contributes $15 million a day in economic activity, Business Insider reports—was suspended Tuesday after a container ship hit the Francis Scott Key Bridge in the early morning. The collision caused the bridge to collapse, sending at least seven vehicles and their occupants into the Patapsco River, according to the Baltimore Sun (subscription).

What’s going on: “Officials, who spoke amid a continuing and massive search and rescue mission, said the port was not shut down and remained open to process trucks inside terminals.”

• Other ports are likely to be able to absorb container ships headed for Baltimore, The New York Times (subscription) reports.

Why it’s important: “The port, which generates more than 15,300 direct jobs, had rebounded from global supply chain difficulties and disruptions during the coronavirus pandemic and hit records last year for handling cargo,” according to the Baltimore Sun. “It is the nation’s 16th busiest port, ranking first for volume of autos and light trucks, roll-on/roll-off heavy farm and construction machinery, imported sugar and imported gypsum.”

• Baltimore is the closest Atlantic port to major Midwestern manufacturing hubs.
• Truckers are concerned about increased congestion resulting from the closure, “particularly because deliveries such as hazardous material loads cannot travel through Interstate 895 or I-95 tunnels.” Trucking companies are already warning customers of delays for shipments going through the Mid-Atlantic, according to The Wall Street Journal (subscription).
• In addition to affecting consumers in the Baltimore area, the traffic stoppage is likely to affect jobs at the port.

Washington, D.C. – The National Association of Manufacturers released its Manufacturers’ Outlook Survey for the first quarter of 2024, which reveals that the expiration of federal tax incentives related to R&D, interest deductibility and expensing for capital investments has already caused nearly 40% of respondents to pull back on hiring and investing due to increased taxes.

“Manufacturers’ concerns in this survey should provide a stark warning to both parties ahead of the State of the Union: If you want to continue America’s manufacturing resurgence, focus on constructive policies to strengthen our industry—reinstating key tax provisions, achieving immigration solutions and advancing permitting reform. But if President Biden wants to put his manufacturing legacy at risk, nothing will do that faster than raising taxes on manufacturers or continuing this regulatory onslaught,” said NAM President and CEO Jay Timmons.

The latest data show that two-thirds (65.5%) of manufacturers said that rules coming from the Biden administration will be costly to implement. Additionally, amid the regulatory onslaught, concern about the overall business climate was elevated and not far from levels last seen at the end of 2016.

“President Biden and Sen. Britt will opine on their parties’ respective priorities, many of which manufacturers share. But actions speak louder than words. Congressional inaction and the stream of senseless regulations from the EPA and elsewhere are creating greater uncertainty for businesses, which hurts manufacturers’ ability to create jobs and raise wages. All of this is undermining manufacturers’ confidence and has the potential to drive investment away from the United States,” added Timmons. “Our commitment is to work with anyone who will put policy—policy that supports people—ahead of politics, personality or process.”

Overall, 68.7% of respondents felt either somewhat or very positive about their company’s outlook, edging up slightly from 66.2% in the fourth quarter. It was the sixth straight reading below the historical average of 74.8%.

Key Survey Findings:

• Nearly 94% of respondents say that it is important for the federal tax code to help reduce manufacturers’ costs for conducting R&D, accessing capital via business loans and investing in capital equipment purchases, with 58% saying that it is very important.
• The majority of respondents (72.4%) said that the length and complexity of the current permitting reform process affects their investment decisions in various degrees, with 38.9% suggesting that they were extremely or moderately impacted. In survey responses throughout 2023, manufacturers stated that reform to the current system could allow them to hire more workers, expand their business and increase wages and benefits.
• More than 65% of manufacturers cited the inability to attract and retain employees as their top primary challenge.
• An unfavorable business climate (58.9%), rising health care and insurance costs (58.2%) and weaker domestic economy and sales for manufactured products (53.2%) are also impacting manufacturing optimism.

You can learn more at the NAM’s online tax action center here.

The NAM releases these results to the public each quarter. Further information on the survey is available here.

-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 $2.85 trillion to the U.S. economy annually and accounts for 53% 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.

Washington, D.C. Today, the National Association of Manufacturers President and CEO Jay Timmons delivered the 2024 State of Manufacturing Address from RCO Engineering, Roseville, Michigan.

Remarks Prepared for Delivery:

Good morning! Thank you to everyone across the country for joining us.

We’re here at the facilities of RCO Engineering, in Macomb County, Michigan.

Like John [Walsh] said, you’re part of a tradition today. Every year, we travel the country to deliver the NAM’s State of Manufacturing Address.

We reflect on everything manufacturers are accomplishing, all the good we’re doing for the world—and how we’re driving the American economy forward.

Manufacturing represents more than 10% of the U.S. economy, or $2.9 trillion, and 16% of the economy here in Michigan. But manufacturing’s impact on our country and on the world is incalculable.

Think about all you have accomplished—and all that our diverse industry has accomplished this past year.

• From deploying cutting-edge digital technologies in factories and plants…
• …to developing treatments that slow the progression of debilitating illnesses like Alzheimer’s…
• …and strengthening our supply chains closer to home.

Next-generation electric vehicles, for example, will be powered by inputs like the industrial batteries that will be built at UL’s Advanced Battery Laboratory, which broke ground last year here in Michigan.

That’s just a small sample of accomplishments worth celebrating.

At the heart of our achievements are incredible manufacturing teams—like RCO Engineering.

You celebrated your 50th anniversary last year. Your company has had an amazing story, growing and adapting with the times, broadening your capabilities to include aerospace design.

Resilience, adaptability, constantly refining and strengthening the commitment to the communities you serve—that’s why manufacturers in the U.S. are the best in the business.

***

You know, I caught a headline recently that read, “U.S. Winning World Economic War.”

The point was this: Our economy “grew faster than any other large, advanced economy last year—by a wide margin—and is on track to do so again in 2024.”

Now, it doesn’t always feel like we’re winning. But, the numbers show we are in many ways. And why are we winning? Well, that’s easy. You. You. Manufacturers in America.

The state of the manufacturing industry depends on the people in it. And we are now 13 million strong—the largest in more than 15 years.

If we can continue on this trajectory, this resurgence, imagine what the state of manufacturing might look like in 2030—at the end of the decade.

Artificial intelligence may unlock new superpowers for American workers. We might reach a point where no other country can keep up with our productivity or the pace of innovation. Manufacturing investment could flock to our shores even faster.

But, here’s the important part: That’s not guaranteed.

In the past few weeks, Washington, D.C., has made a few good decisions, but it has also made some major unforced errors. Leaders in both parties are on the verge of making more. That’s part of the reason that only 66% of manufacturers right now have a positive outlook for their companies.

So that economic “war” we’re winning? We could see the tide turn.

We will head in the wrong direction…

…if Congress lets taxes go up on small businesses when rates expire next year…

…or if they hit you with even more regulations—regulations even harsher than ones they have in Europe…

…or if they fail to solve the immigration crisis because they put politics over good policy…

…or if they choose trade barriers rather than trade agreements…

…or if they abandon our allies overseas and put our national security at risk.

Yes, there are reasons to be optimistic, but there are big decisions we have to get right if we want to achieve our full potential.

That … that is why I can report that the state of manufacturing in America today remains strong and resilient but under threat.

This is an election year, and your voices need to be heard clearly.

But we’re not here to endorse a candidate. No. We are here to hold all candidates and leaders accountable. Because it takes leadership from both parties to ensure manufacturers have the optimal conditions to thrive.

The industry’s growth has gotten a boost from transformative decisions across many presidential administrations:

• Trade agreements under Presidents Bush and Obama that let us sell more American products overseas
• Historic tax reform and regulatory certainty under the Trump administration
• And the landmark infrastructure bill, the CHIPS and Science Act and more under the current administration

That’s the kind of leadership we want.

In his State of the Union Address next month, President Biden will probably take some credit for what manufacturers have achieved. That’s fair.

I know he deeply cares about manufacturing. As he often says on the road, “This nation used to lead the world in manufacturing, and we’re going to do it again.”

But what he won’t tell you is that his federal agencies are, at this very moment, working to undermine his manufacturing legacy—those agencies are undermining your success.

In fact, just two weeks ago, they announced one big regulation that could wipe out up to 1 million jobs.

It’s referred to as National Ambient Air Quality Standards or PM 2.5. It’s not the name that matters. It’s the consequences. It’s stricter than rules they have even in Europe. And in vast portions of the country, we will barely be able to build new manufacturing facilities as a result.

Michigan would be one of the states hit hardest. And if new manufacturing investments dry up, that spills over to the rest of the state economy.

It affects the family trying to sell their home, the teacher hoping for new investments in schools, the students looking for job opportunities here in the state.

And to what end? You cannot solve the world’s environmental challenges by driving manufacturing investment away from the United States to countries with lower standards.

The Biden administration also won’t solve climate change by pausing approvals of exports of American liquified natural gas, which they announced they would do last month.

Instead, they are forcing our allies, like Europe and Japan, to buy dirtier energy from countries we can’t trust, potentially enriching the likes of Russia. Russian natural gas, by the way, has substantially more emissions potential than the liquified natural gas we produce in the U.S. So, we’re also making it harder to achieve our climate goals. And it undercuts our most basic national security objectives.

Can we agree that makes no sense?

Look, the regulatory onslaught is real. It’s a hidden tax. The average American may not feel it yet. But if there isn’t a course correction, they will.

So here’s our message to federal agencies: Stop the onslaught. Work with manufacturers so that regulations are sensible.

And here’s our message on taxes: No new taxes on manufacturers in America.

Remember the 2017 tax reforms? They were rocket fuel for our industry. We kept our promises to raise wages, hire workers and invest in our communities. We would not be outpacing other countries without them.

But many of the competitive rates and the pro-growth deductions we won in 2017 are expiring in 2025. Some already have.

Can we agree that it is economic malpractice to let taxes go up on innovators and on America’s small businesses? Why should you have to work even harder to compete with China?

One of our member companies shared with us the difference tax policy makes. Valley Forge & Bolt is a small, Arizona–based manufacturer of machine parts. We’ll be with them tomorrow, in fact.

After the 2017 tax cuts, the company hired more employees, expanded benefits, replaced aging equipment and invested in technologies that improve productivity. The result? The company had the best sales year in its history. But, as they warned us, if the government raises taxes, there will be tradeoffs.

So the path is clear: no new taxes on manufacturers. And while we’re at it, Congress should bring back some of the tax policies that made it easier for manufacturers to invest in the future.

Right now, our entire industry is waiting on the U.S. Senate to pass a bipartisan tax bill that restores expired or phasing-out tax incentives for investments in R&D, new facilities and equipment.

These provisions, especially on R&D, have been a force multiplier for you here at RCO. It’s just common sense that the tax code should encourage these kinds of investments.

Common sense. We know that’s in short supply in D.C. And where is that most obvious? Immigration policy.

Can we all agree that what’s happening at the border is unacceptable?

And can’t we all agree that legal immigration is a net positive for our economy and our country?

And if we can agree on that, then shouldn’t we be able to support a bipartisan border security and national security bill—one supported by the border patrol union for that matter?

We didn’t like every piece of that Senate bill either. But here was my test: Does it make us more secure than we are today? Yes. Does it make our workforce stronger than it is today? Yes. And does it help our allies overseas? Yes.

I don’t care if you’re a Democratic or Republican member of Congress: If your answer is do nothing—on immigration or on national security—then you need to explain to the overwhelmed border communities why you are not sending help.

You need to explain to manufacturers with more than 600,000 open jobs why you won’t improve the visa program so they can find talent to fill more of those positions.

And, you need to explain your decision to Ukrainian soldiers, who left their families for two years to fight on the front lines against our adversary—against a country that is working every day to see the U.S. fail. You need to tell them why the land of the free should abandon the brave people defending democracy.

I have to tell you, I am flat out of patience, and I know you are too. I’m sick of the games, and the shifting goal posts, and the “leaders” who don’t respect you enough to give you a straight answer from the start.

So, here’s what we’re going to do. From now through the election—and then every day after that—we’re going to hold our leaders accountable.

You want to support manufacturing? Here’s our roadmap. It’s called “Competing to Win.”

It’s common sense. It’s consistent. It will make manufacturers in the U.S. even more globally competitive. And we will make sure policymakers know about this agenda and what’s at stake.

And they need to hear that from you—at town halls, at chance meetings, on social media.

Here in Michigan, you will be in the spotlight this election season, so grab the microphone.

Ask them, where are the trade deals we need?

Will they commit on the spot not to raise taxes on manufacturers in America?

Can they get to “yes” on an immigration solution?

Will they support the growth and upskilling of the manufacturing workforce?

Our commitment is to work with anyone, and I truly mean anyone, who will put policy—policy that supports people—ahead of politics, personality or process.

We will stand with you if you stand with us in advancing the values that have made America exceptional and keep manufacturing strong.

Free enterprise.

Competitiveness.

Individual liberty.

Equal opportunity.

Because here’s what I know: Manufacturers are building an incredible future for our country and our world.

The world needs us. The world needs you. Manufacturing teams like you make life better for everyone.

That’s our job, and we’re going to do it no matter how one election turns out.

People are counting on us, and Washington should either get on board or get out of our way.

We see beyond the horizon, so we refuse to let short-term thinking take us down the wrong path.

We are standing at a crossroads. We know the right path, and we’re going to lead the way.

Thank you so much for your welcome—and for your leadership.

-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 $2.85 trillion to the U.S. economy annually and accounts for 53% 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.

Washington, D.C. Today, the National Association of Manufacturers kicked off its 2024 Competing to Win Tour in South Carolina. NAM President and CEO Jay Timmons and NAM Board Chair and Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer Kathy Wengel visited Milliken & Company and Springs Creative Products Group to hear from team members on the shop floor on the issues impacting their businesses.

“Manufacturers are fueling the U.S. economy and driving innovation to create a better future for everyone. We’re here in South Carolina to showcase the people and stories behind our industry, and to translate their perspectives into action that will make our industry and country stronger. Building these strong relationships beyond Washington, D.C., in the cities and states driving our sector deepens our understanding of regional challenges and reinforces the NAM as the leading voice representing all manufacturers, large and small,” said Wengel.

Tomorrow, Timmons will deliver the 2024 NAM State of Manufacturing Address, in which he will provide the industry’s assessment of manufacturing in the United States, as candidates from all sides work to claim the manufacturing vote in the 2024 election.

“For more than a decade, the annual NAM State of Manufacturing Address has focused the nation’s attention on the industry that is the backbone of the American economy, and we are on this tour to hear from the people making decisions on how to grow their businesses every day. Lawmakers from all parties want to claim they stand with manufacturers, but we judge them not by their words but by their deeds. So manufacturers across America have a message for Washington: we are here to hold all candidates and leaders accountable. It takes leadership from both parties to ensure manufacturers have the conditions to thrive and invest in communities across the country. If they fail to act, they will fail the 13 million people who make things in America,” said Timmons.

Timmons will also highlight the challenges facing manufacturers in America and the urgent need to enact a competitiveness agenda that addresses pressing issues, including the looming tax hikes on small manufacturers, the need to expand trading opportunities, the regulatory onslaught from federal agencies, the failure of Congress to address immigration reform and the threats to our energy security and supply chains.

-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 $2.85 trillion to the U.S. economy annually and accounts for 53% 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.

The House passed a health care package on Monday that includes measures to curb some practices by pharmacy benefit managers, according to STAT News.

What’s going on: The Lower Costs, More Transparency Leadership Act, which passed on a bipartisan vote, “would equalize payment between hospital outpatient departments and doctors’ offices for administering medicines in Medicare, rein in some practices by pharmacy benefit managers and codify health care price transparency rules.” 

• The vote on the measure was scheduled for September originally but was pushed back amid a larger funding dispute.

What it means: The package would prohibit PBMs from “spread pricing”—or charging Medicaid more than they pay pharmacies for medications.

• It would also require PBMs, “clinical lab test providers, imaging providers [and] ambulatory surgical centers … to be more transparent about their pricing.”

What’s next: “Some community health advocates hope Monday’s vote will jump-start negotiations with the Senate, where leaders have signaled they’re looking for more than what’s in the House bill,” POLITICO reports.

Our view: “House passage of the Lower Costs, More Transparency Act is a step forward for PBM transparency, but Congress must continue to advance reforms that ensure PBMs pass on prescription drug discounts directly to plan sponsors and patients as well as delink their compensation from the list price of drugs,” the NAM said on Tuesday.