NAM Emphasizes USMCA, Protecting Investors in Mexico Meetings
In high-level meetings with government, manufacturing and trade group leaders held in Mexico last week, the NAM hammered home a key message: For North American manufacturing to remain globally competitive, Mexico must protect investor holdings in the country.
What’s going on: During a jam-packed three-day visit to Mexico City, NAM President and CEO Jay Timmons and an NAM contingent met with top officials in the new Sheinbaum administration, as well as leadership at multiple agencies and associations.
- These included newly appointed Deputy Trade Minister Luis Rosendo Gutiérrez, the Business Coordinating Council (CCE), the Confederation of Industrial Chambers of Mexico (CONCAMIN), the Mexico Business Council (CMN), the National Council of the Export Manufacturing Industry (INDEX) and others.
What they said: The NAM’s main message at each gathering was the same: Companies investing in Mexico need assurance that their portfolios will be protected regardless of the fate of proposed judicial reforms in the country.
- The NAM also underscored the importance of the U.S.–Mexico–Canada Agreement, which is due for review in 2026, and the necessity of ensuring that the deal is upheld for all three parties.
- If its terms are respected, USMCA could help North American manufacturing outcompete China.
On China: This week, just days after his office’s meeting with the NAM, Gutiérrez announced that the Sheinbaum administration will seek U.S. manufacturers’ help to reshore—mainly from China—the production of some critical technologies (The Wall Street Journal, subscription).
- “We want to focus on supporting our domestic supply chains,” he told the Journal, adding that talks with U.S. companies are still in the informal stage.
The NAM says: “Manufacturing is at the heart of the USMCA,” said NAM Vice President of International Policy Andrea Durkin, who was part of the NAM group on the ground in Mexico. “The NAM intends to work to ensure that the agreement strengthens the competitiveness of manufacturers.”
New DOD Loan to Fund “Critical Technologies” Manufacturing
The Defense Department’s Office of Strategic Capital is now accepting applications for flexible direct loans to build, expand and/or modernize “critical technologies” facilities (Federal Register).
- It’s also seeking input from companies and trade associations on the Defense Department’s loan program, via a Request for Information open through Oct. 22 (Federal Register).
What’s going on: The OSC’s credit program, launched Sept. 30, aims “to attract and scale private capital in industries and technologies that are critical to America’s national and economic security,” according to the Defense Department. This is part one of the application process.
- The financing is geared toward manufacturers that must spend significantly on industrial or specialty equipment to create new assembly lines in existing facilities.
- The money is also intended to help them cover “soft” expenses, such as factory preparation and installation, associated with critical technology projects.
Why it’s important: “The funding from this program could benefit manufacturers of all sizes that are working to expand their businesses and product lines in critical areas of the economy,” said NAM Director of Energy and Natural Resources Policy Mike Davin.
- The OSC loans offer flexible terms, a U.S. Treasury-comparable interest rate, long repayment periods and deferred payments.
Who’s eligible: Manufacturers within the 31 “Covered Technology Categories”— which include advanced manufacturing, cybersecurity, battery storage and spacecraft—are encouraged to apply.
- There is no company-size or employee-number threshold or limit, and manufacturers with existing federal grants are eligible.
J&J: Price Controls, PBMs Problematic
Drug price controls will “chill” critical innovation in pharmaceutical manufacturing and do nothing to address the underlying causes of high medication costs, Johnson & Johnson leaders said recently.
What’s going on: J&J Chairman and CEO Joaquin Duato and Executive Vice President and Chief Financial Officer Joseph Wolk told Bloomberg TV earlier this month that the pharmaceutical price controls mandated by the 2022 Inflation Reduction Act do a disservice to patients everywhere.
- “[T]he Inflation Reduction Act … is something that is misguided, and it’s going to chill innovation,” Duato told Bloomberg’s David Gura earlier this month. “When you chill innovation on investment in [research and development], then you have [fewer] cures.”
- The IRA gave the federal government authority to set prices for certain prescription medications in Medicare. In August, the Biden administration released the first 10 Medicare prescription drugs subject to those price controls, which go into effect in 2026.
- “I’d like to see a much more fact-based dialogue around the topic of drug pricing,” Wolk added. “About six years ago, Johnson & Johnson … was paying about 25% in discounts and rebates off [the] list price [of medications]. Today, that [figure is] 60%, yet the patients aren’t receiving the benefit of those discounts.”
The background: Pharmacy benefit managers are supposed to pass the manufacturer discounts they receive on to health plans and patients—but instead, they frequently pocket the discounts, the NAM has told Congress on several occasions.
- That’s one of several problematic business practices Congress must end by enacting comprehensive PBM reform, the NAM has said.
- Such legislation would do far more to benefit consumers than capping drug prices.
Cause and effect: The result of price controls will be fewer breakthrough cures and treatments for patients suffering from various illnesses, J&J told Bloomberg TV.
- “The number of medicines that will be there will be [lower], just because [fewer] investors would be putting money into developing new medicines,” Duato continued. “It’s going to be less attractive for investors to put money there.”
- And as Wolk said in another Bloomberg segment: “Investing in R&D, prioritizing R&D years in advance for [a drug] that may happen 10 years down the road is critically important.”
What should be done: If Congress truly wants to help patients with the cost of medications, it must focus on “the middlemen who are really driving up prices: pharmacy benefit managers,” NAM President and CEO Jay Timmons said recently.
NAM-Supported Bills Clear House Committee
The NAM this week advocated the passage of two pieces of manufacturing-critical legislation, successfully driving the agenda of a Wednesday House Energy and Commerce Committee markup.
What’s going on: The committee—with the NAM’s strong support—approved two bills that address longstanding manufacturing priorities:
- A congressional resolution disapproving of the Environmental Protection Agency’s harmful PM2.5 rule
- A bill instituting important pharmacy benefit manager reforms
Reversing an unworkable PM2.5 standard: The EPA announced a new, more restrictive particulate matter standard in February, reducing allowable levels from 12 micrograms per cubic meter of air to 9 micrograms—despite a standard of 9 being “essentially background levels in some of the country,” as the NAM has pointed out.
- “Manufacturers have sharply reduced particulate matter emissions, or PM2.5; as a result, industry in the United States has some of the cleanest and most efficient operations in the world,” NAM Vice President of Domestic Policy Chris Phalen told the committee.
- “Now, the vast majority of emissions are from sources well outside of our control, with fires, dirt roads and other nonpoint sources accounting for 84% of PM2.5 emissions,” Phalen continued. “[T]he EPA’s rule will make it more difficult for states to issue permits for the construction of new facilities or expansions of existing factories.”
- The committee’s PM2.5 resolution, offered under the Congressional Review Act, seeks to overturn the EPA’s unworkable standard.
Reforming PBMs: PBMs are unregulated middlemen whose business practices drive up health care costs for manufacturers and manufacturing workers.
- “By applying upward pressure to list prices that dictate what patients pay at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business practices, PBMs increase health care costs at the expense of all patients in America,” NAM Vice President of Domestic Policy Charles Crain said.
- Provisions in the NAM-supported Telehealth Modernization Act would increase transparency into PBMs’ business practices and delink their compensation from medicines’ list prices.
The last word: “Manufacturers commend the Energy and Commerce Committee for approving these important bills, which will reduce costs and enhance growth at manufacturers across the country—allowing our industry to continue to create jobs here at home and drive U.S. competitiveness on the world stage,” said NAM Managing Vice President of Policy Chris Netram.
Techmer PM Offers Safe Alternatives to PFAS for Manufacturers
The search for alternatives to chemicals called PFAS has been going on for years. Recently, materials design company Techmer PM created one—a new chemical for use in polymer processing.
The new solution: Last year, the Clinton, Tennessee–based manufacturer introduced the HiTerra T5—a polymer processing aid that helps maintain film surface smoothness and die-lip buildup—which replaces traditional chemistry based on per- and polyfluoroalkyl substances.
- The HiTerra T5, which meets Environmental Protection Agency guidelines and does not interfere with other additives, is being used in large-scale commercial undertakings by Techmer PM customers.
Why it’s critical: In March, the EPA issued the first federal reporting limits and guidelines for tracking the use of PFAS in manufacturing, along with other PFAS-related regulations. Individual states are also imposing their own restrictions on PFAS chemicals.
- The current regulatory environment is motivating plastics processors and raw materials suppliers to seek new alternatives to this chemistry.
- “The biggest challenge is that fluorinated chemistry is excellent at reducing friction, reducing melt fracture, improving hydrophobicity, stain resistance and helping the processing that manufacturers use, for example, to make film,” Techmer PM CEO Mike McHenry told the NAM in a recent interview. “It also helps with wear on small gears. It’s very effective, and it has unique properties that customers are accustomed to.”
More replacement efforts: Techmer PM is working closely with its customers to come up with additional PFAS alternatives, McHenry said.
- Because one of PFAS’ most useful characteristics is its ability to resist fire, “we’re looking at ways to remove halogen flame retardants, including fluorinated compounds” and find a comparable alternative for customers, McHenry said.
Unrealistic timelines: While the firm is hard at work developing potential replacements, the stringent deadlines that the EPA has set for the reporting and potential elimination is damaging, McHenry told us.
- “It can take years to get use approval [for alternatives], and finding them is a huge challenge in itself,” he went on. “We see the timelines being put forth as something that needs to be looked at, and [manufacturers] need support.”
- “For some uses—tubing, for example–it’s going to be very difficult to find something that will work the way fluorinated chemistries do. As much as we all want to move away from [PFAS], there are some instances in which it will be worse” to rush the search than continue using PFAS, he added.
- One of these areas is medical devices, McHenry said. The gowns used to protect surgeons and nurses, for example, are coated in PFAS-containing substances, which “will be very difficult to replace.”
The long view: For many applications, dependable alternatives will likely be found at some point, McHenry concluded.
- “I think we’ll find alternatives, but it’s not one-size-fits-all, and it will take time,” he said. “The versatility of fluorinated compounds is unique.”
Rep. Garbarino, NAM Talk CIRCIA Flaws
A draft Department of Homeland Security rule requiring that certain sectors expedite cyber-incident reporting has several shortcomings that must be addressed before the rule becomes final in the fall of 2025, the NAM told Rep. Andrew Garbarino (R-NY) in a meeting this week.
What’s going on: Rep. Garbarino, chair of the House Homeland Security Subcommittee on Cybersecurity and Infrastructure Protection, met with manufacturers and the NAM Technology Policy Committee Tuesday to talk cybersecurity issues.
- Much of the discussion focused on draft rulemaking published in April by the DHS’s Cybersecurity and Infrastructure Security Agency. It would require “covered entities” in “critical infrastructure sector[s]” to report any major cybersecurity incidents to CISA within 72 hours.
- Under the Cybersecurity Incident Reporting for Critical Infrastructure Act, CISA must finalize the rule by October 2025.
Why it’s a problem: The NAM agrees with the concerns Rep. Garbarino raised with CISA, including:
- The burden associated with imposing onerous reporting mandates on companies recovering from cyberattacks;
- An overbroad scope, which forces into compliance both organizations that are not truly “critical infrastructure” and those that are too small to have the resources needed to complete the required actions;
- An overbroad definition of incidents requiring reporting;
- An excessive amount of required information;
- An unreasonably high cost of compliance and the diversion of resources away from cyber-incident response; and
- The risk that the proposed rule will jeopardize CISA’s role as a trusted partner of industry.
NAM in action: The NAM submitted comments in response to CISA’s proposal earlier this year outlining these concerns, as well as calling for a reduction in both the number of entities required to file incident notifications and the number of incidents they have to report.
The NAM says: “CISA needs to significantly rethink its approach to CIRCIA’s implementation,” said NAM Senior Director of Technology Policy Franck Journoud.
- “The proposed rule requires far too much information about far too many incidents from far too many companies. CISA should not mandate that companies under attack from hackers divert precious security resources to generate mountains of incident data that CISA will not have the means to process or act upon.”
Take precautions: If you are looking to strengthen your company’s cyber protections, check out NAM Cyber Cover, an affordable, broad security program for NAM members that provides proactive monitoring with automated alerts at no extra cost.
Meet the Manufacturing Leader of the Year
If you’re looking for insights on digital transformation, cultural change and what’s ahead for manufacturing, it pays to consult an industry leader. Dan Dwight, president and CEO of Cooley Group, fits the bill.
Dwight was named the 2024 Manufacturing Leader of the Year in the Manufacturing Leadership Awards, presented by the Manufacturing Leadership Council, the digital transformation division of the NAM. Additionally, Cooley Group won the Small/Medium Enterprise Manufacturer of the Year and the Manufacturing in 2030 Award.
Recently, Dwight sat down for an Executive Dialogue interview with the Manufacturing Leadership Journal to share his secrets to success. Below are excerpts from the interview.
What leaders need: When asked what qualities manufacturing leaders need in the digital era, Dwight says that they must be willing to undergo big changes, but must also keep their teams in the loop.
- “Successful leadership in the digital era demands, among other things, a higher level of transparency,” he explained. “Your team needs to see the road map in front of them because successful and sweeping transformations are extremely time consuming with a lot of jagged edges that the leadership team needs to address.”
How cultures should change: As for the wider cultural changes that will help a company through its digital transformation, resiliency and adaptability are crucial, Dwight said.
- “Cooley’s digital transformation began with a cultural transformation built around becoming more agile and adaptable,” he noted. “Every decision we make places long-term resiliency and cross-functional collaboration as our operational North Star.”
- “Cooley decentralized our decision-making structures, eliminating hierarchal instruction and empowering team members to communicate transparently and more frequently,” he added.
Small manufacturers’ advantage: When asked whether small and medium-sized manufacturers are at a disadvantage in the era of digital transformation, Dwight says that Cooley has turned its small size into an asset.
- “Our longevity is built on using our size to our advantage. We are more resilient, more agile, more adaptable than our competitors who are often [much larger] because we constantly invest in pro-growth strategies regardless of the economic environment,” he explained.
- “Our investments in innovation generate consistent new product revenue of over 20%, and our investments in Manufacturing 4.0 digitization generate consistent, robust productivity dividends,” Dwight added.
What’s next? Cooley Group is looking ahead to further transformations, including in supply chain management, Dwight said.
- “Our business architecture and change management team leaders are working within their respective teams across the organization to build into our processes a more outward-looking focus,” he said.
- “For example, our M4.0 implementation leader has added supply chain resiliency to her leadership responsibilities. Her team seeks to build out Cooley’s end-to-end business resilience.”
MLC in action: Dwight says that Cooley Group has always been able to count on the MLC to find the insights that it needs for digital transformation and its Manufacturing 4.0 journey. As he put it recently, “When challenges do arise, the MLC can help us think through what the future might look like.”
Watch a full video of this interview for more insights.
Click Bond Brings AI into Supply Chains
Manufacturers have always been on the cutting edge of tech development and integration—and it’s no different with artificial intelligence. Today, Click Bond, Inc., a manufacturer of adhesive-bonded fasteners for aerospace and industrial use, is finding applications for AI in the supply chain.
The challenge: Supply chain management is an inexact art, according to Click Bond Chief Executive and NAM SMM Vice Chair Karl Hutter, and technology like AI has the capacity to strengthen operations.
- “There are many spots … [where] a guess has to be taken or padding has to be put in because of the known unreliability of data,” said Hutter. “This is where technology has a big role to play.”
Improving efficiency: AI can break through these challenges, separating signal from “noise” and avoiding presumptions that can cause inefficiencies.
- “We need to have a better sense of the supply, the demand, the schedule,” Hutter said. “This is where those kinds of tools can fit in—so we as a supplier can optimize our production runs, meet our customers’ needs efficiently and be responsive to just-in-time supply.”
- “AI does that key job of finding what matters and correlating historic data and making predictions in a way a human can’t,” he continued.
Translating data: Because there is no single, industry-wide method for formatting data, it can be difficult for manufacturers to combine their knowledge. Happily, AI can help.
- “My data tables might look different than my customers’ and suppliers’,” said Hutter. “AI can understand the rules of data structure, and that of our customers and suppliers, and it can be a translator between them.”
- For example, Click Bond has supplied products to the Boeing Company for almost 40 years, contributing to every type of product made across its military, civil and space divisions. AI stands to take that collaboration to an even higher level.
Enhancing production: AI tools also help manufacturers during the production process by translating different kinds of data and pointing toward solutions.
- “[AI’s translation capability] applies to the technical data environment, too—how you go from a model and simulation to a produced part,” said Hutter. “It’s the same thing. How do you do technical data interchange confidently and securely? This technology [can help].”
Advice for other manufacturers: Hutter recently took part in a workshop on these tools, and he encourages manufacturers who are curious about the technology to find similar opportunities.
- “There is nothing that makes these concepts come to life [like] getting your hands on them,” said Hutter. “You can sit there and furrow your brow and read a bunch of articles, but the best thing to do is to find one of the many opportunities for some hands-on education—and you’ll start to understand what these tools can do.”
NAM Leads Effort to Reform PBMs
Middlemen created to manage the price of prescription drugs are instead driving up health care costs for manufacturers and manufacturing workers, the NAM told the House Committee on Oversight and Accountability on Tuesday, the same day the committee released a report on pharmacy benefit managers’ practices and held a hearing on the matter.
What’s going on: “PBMs’ business models have the direct effect of increasing health care costs at the expense of manufacturers and manufacturing workers,” NAM Vice President of Domestic Policy Charles Crain said in advance of the hearing, the latest in a series examining PBM practices.
Crain told lawmakers PBM reform legislation should include:
- “Increased transparency into PBMs’ business models and the many factors that contribute to a drug’s costs, formulary placement and the PBMs’ compensation;
- Rebate passthrough, which will ensure 100% of negotiated pharmaceutical savings are passed from the PBM to the health plan sponsor and workers; and
- Delinking of PBM compensation from the list price of medication.”
Report highlights: The committee’s report, the culmination of a 16-month investigation, is in line with the NAM’s longstanding advocacy. The report found that PBMs:
- Drive increased drug prices, which inflate PBM profits;
- Extract high rebates from biopharmaceutical manufacturers, often pocketing a significant portion of any savings rather than reducing costs for patients;
- Dictate whether and how medicines appear on formularies, which determine insurance companies’ coverage decisions and patients’ out-of-pocket costs;
- Steer patients toward drugs based on PBMs’ profit margins rather than patient costs; and
- Operate without sufficient transparency into their business practices.
What it all means: The committee “identified numerous instances where the federal government, states and private payers have found PBMs to have utilized opaque pricing and utilization schemes to overcharge plans and payers by hundreds of millions of dollars,” the report states.
- The report indicates that the present role of PBMs in prescription drug markets is failing and requires change, something the NAM has long advocated. “Congress and states must implement legislative reforms to increase the transparency of the PBM market and ensure patients are placed at the center of our health care system, rather than PBMs’ profits.”
The last word: “Manufacturers provide health care benefits so they can effectively attract and retain employees, to maintain a healthy and productive workforce and because they believe it is the right thing to do—but PBMs are a meaningful cause of the skyrocketing costs of health care,” Crain said.
- “Congress must enact reforms to the PBM system so that employers can negotiate, compete and achieve health care savings for their workers.”
CISA Should Revise Draft Cyber Rule
Requirements proposed earlier this year by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency are overbroad and would prove burdensome to manufacturers if adopted, the NAM told the Biden administration last week.
What’s going on: In April, CISA published draft rulemaking under the Cyber Incident Reporting for Critical Infrastructure Act of 2022—scheduled to go into effect next year—that would require “covered entities” in “critical infrastructure sector[s]” to report major cyber incidents to CISA within 72 hours. It also mandated that any ransomware payments be reported within just 24 hours.
Why it’s a problem: The proposed rulemaking could affect more than 300,000 entities, according to CISA’s own estimate (JD Supra). Many of these organizations are either not truly “critical infrastructure” or too small to have the resources to undertake the outlined actions in the specified time, the NAM told CISA.
- Furthermore, the regulations themselves are too expansive, mandating the reporting of incidents that do not even affect the operation of critical infrastructure.
- They also require huge amounts of information in a short period—from companies in the throes of recovery from devastating cyberattacks.
The NAM says: “[T]he NAM respectfully encourages the agency to drastically reduce the number of entities required to report, and the number of incidents they have to report,” NAM Vice President of Domestic Policy Charles Crain told the agency during the public comment period on the proposed regulation, which ended last week.
- “Doing so will ensure that CISA receives useful information about cybersecurity incidents—without overburdening manufacturers with overbroad and unworkable disclosure requirements.”
What to do: In addition to narrowing the scope of “covered entities,” CISA should revise several aspects of the rulemaking before implementing it, the NAM said. Changes should include:
- Limiting the volume of reported cyber-incident information;
- Narrowing the scope of reportable cyber incidents; and
- Lightening and safeguarding the contents of cyber-incident reports.