Labor and Employment

Prices paid by consumers for a variety of goods and services rose faster than expected last month, according to CNBC.

What’s going on: “The consumer price index, a closely followed inflation gauge, increased 0.4% on the month and 3.7% from a year ago, according to a Labor Department report Thursday. That compared to respective Dow Jones estimates of 0.3% and 3.6%.”

Core CPI: Core CPI, which excludes often-volatile food and energy costs, were in keeping with economist expectations, inching up 0.3% on the month and 4.1% year over year.

The details: Housing costs accounted for most of the inflation uptick.

• The shelter index—which composes about a third of the CPI weighting—rose 0.6% in September and 7.2% from September 2022.
• Food and energy costs rose 0.2% and 1.5%, respectively.
• Prices for services, “considered a key for the longer-run direction for inflation,” rose 0.6% excluding energy services.

What it means: “These data are not likely to change the trajectory of monetary policy, with the Federal Open Market Committee likely to pause [interest-rate hikes] once again at its Oct. 31–Nov. 1 meeting,” said NAM Chief Economist Chad Moutray. “Interest rates are not likely to see a cut until mid-to-late 2024.”
 

The “Big Three” carmakers are being forced to keep laying off workers as the United Auto Workers union continues its strike, according to CBS News.

What’s going on: To date since the strike began, General Motors, Ford and Stellantis have had to lay off a total of 4,835 employees.

• “While we are doing what we can to avoid layoffs, we have no choice but to reduce production of parts that would be destined for a plant that is on strike,” Ford Vice President for Americas Manufacturing and Labor Affairs Bryce Currie said in a statement this week, CBS reports. “Strike-related layoffs are an unfortunate result of the UAW’s strategy.”
• In addition, many auto suppliers have suspended the employment of hundreds of workers because of the strike.

Why it’s important: Economic losses to the auto industry through the first three weeks of the strike totaled approximately $5.5 billion, Michigan-based economic consultancy Anderson Economic Group estimates.

• That figure includes $2.68 billion in lost revenue for the carmakers, $579 million in direct wages for workers, supplier losses of $1.6 billion and dealer and customer losses of $1.26 billion.

The NAM’s take: “The strike is causing tremendous economic harm throughout the economy,” said NAM Vice President of Economic Policy Brandon Farris. “It isn’t just the automakers, but every employee that has been laid off and many of the small and medium manufacturers that supply them.”

• “Many of those manufacturers may never recover,” he continued. “The NAM strongly urges a quick resolution. The longer the strike lasts, the harder it will be to undo the drastic economic harm caused to employees and manufacturers.”

As United Auto Workers President Shawn Fain prepares to give an update on labor-contract negotiations this afternoon, the UAW’s three-week-old strike at plants across the Midwest is hurting auto suppliers, according to The Washington Post (subscription).

What’s going on: “More than 3,000 supplier employees have been affected so far, a Washington Post tally shows, while an industry association says nearly 30 percent of its supplier members have resorted to layoffs.”

• More than 60% of suppliers said they expected to begin layoffs this month. Others say these cuts could “broaden over time” if the strike continues
• The strike has reverberated beyond the automotive sector, too. U.S. Steel recently announced 300 temporary layoffs after it was forced to idle an Illinois furnace because of the walkouts.

Why it’s important: “The [strike’s] fallout shows the outsize role the auto industry plays in the U.S. economy, to which it contributes about 3 percent of gross domestic product.”

• What’s more, the widespread shuttering of smaller auto suppliers—which number in the thousands and are often the main source of employment in the areas where they operate—would make it harder for General Motors, Ford and Stellantis to resume normal operations after the strike.

Manufacturers say: “The longer the strike, the more likely thousands of citizens across Michigan will face layoffs, and not just UAW members,” John Walsh, president and CEO of the Michigan Manufacturers Association (an NAM state partner), wrote in The Detroit News (subscription).

• “Layoffs, in turn, will affect restaurants, stores and local businesses. The economic impact will be felt throughout our families and our communities.”

After months of slow growth, China’s economy is showing signs of picking up speed, “offering a glimmer of hope” for the U.S. and Europe, according to The Wall Street Journal (subscription).

What’s going on: “Factories in September reported their first expansion in activity since the spring, while railway and flight bookings point to a bumper week ahead for tourism as China takes a break to celebrate its weeklong National Day holiday.”

The big picture: While economists say it’s too early to call an economic turnaround—owing in large part to China’s continuing property-market slump—there are signals that things are improving.

• “An official gauge of activity in the nation’s manufacturing sector rose to 50.2 in September from 49.7 in August, China’s National Bureau of Statistics said Saturday, the first time since March that its purchasing managers index crept over the 50 mark that separates expansion from contraction.”
• Similar gauges for nonmanufacturing sectors and construction also expanded at a faster pace.
• With that said, the country’s manufacturing and overall economic growth are well below what was expected earlier in the year—particularly in the aftermath of last year’s “zero-COVID” policies. That has implications for both China and the global economy, according to NAM Chief Economist Chad Moutray.

What’s next: Many economists believe that to continue this growth, China needs more government stimulus. This could come in the form of household tax breaks, or cash or vouchers that consumers can spend directly. 
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Washington, D.C. – Following the U.S. Supreme Court’s denial of cert to reconsider the D.C. Circuit’s decision affirming the validity of Optional Practical Training extension for STEM graduates, a program that expands access to hundreds of thousands of skilled workers for manufacturers and other American businesses, National Association of Manufacturers Chief Legal Officer Linda Kelly released the following statement:

“Today’s decision ends a years-long legal battle, and the NAM Legal Center is proud to have fought to preserve the STEM OPT program, which will aid manufacturers in filling critical, skilled positions. Thanks to the NAM Legal Center’s efforts, the STEM OPT program will remain a vital talent pipeline, providing opportunities for those graduates in science, technology, engineering and math to enhance their education through hands-on work.

Background: In 2018, after an anti-immigration activist group brought a lawsuit against the Department of Homeland Security seeking to invalidate the entire STEM OPT program, the NAM and two other business groups moved to intervene as defendants in the case. The U.S. District Court for the District of Columbia ruled in the NAM’s favor in 2020, holding that DHS acted within its statutory authority and in accordance with the Administrative Procedure Act by continuing the STEM OPT program, a decision the D.C. Circuit affirmed in 2022. Today’s decision by the Supreme Court not to hear the case maintains the Circuit Court’s ruling and preserves the STEM OPT program.

-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 $2.91 trillion to the U.S. economy annually and accounts for 55% 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, the Confederation of Industrial Chambers of Mexico and the Canadian Manufacturers & Exporters hosted the inaugural North American Manufacturing Conference at NAM headquarters where they formalized manufacturers’ commitment to supporting close economic ties between the United States, Canada and Mexico. NAM President and CEO Jay Timmons, CONCAMIN President José Antonio Abugaber Andonie and CME President and CEO Dennis A. Darby signed a memorandum of understanding, which will serve as a roadmap to the cooperation between the three organizations and outlines the key goals and objectives for the partnership.

“There’s never been a greater need for us to stand together. The world is caught between different political and economic systems. One system, our system here in North America, enriches lives and lifts people up into freedom and prosperity, while other systems oppress their people and rob them of their liberty,” said Timmons. “Together, we are an indomitable force for prosperity. The United States–Mexico–Canada Agreement is a powerful force multiplier for the already unmatched productive power of our industries. And this agreement reminds us of what we can achieve when we work together.”

“Today we live in a new reality. The commercial competition with China, the pandemic, the conflict in Ukraine, among others, place us before a second great industrial transformation in North America, the first one being propelled by NAFTA 30 years ago. Some call it nearshoring, friend-shoring, ally-shoring or reshoring. No matter the name, the truth is that this phenomenon is modifying the structure of international industrial organization. North America is the epicenter of this transformation,” said Abugaber Andonie.

“Manufacturers are an important driver of economic development and prosperity. We are key players in the changes and challenges of the 21st century,” said Darby. “This agreement between representatives of Canada, the United States and Mexico reinforces the strong ties between our three economies and manufacturing industries and serves as a reminder that we can achieve so much more when we work together. We would like to thank our colleagues from the NAM and CONCAMIN for this agreement, and we look forward to future cooperation.”

The MOU calls for the organizations to share information on each organization’s services and activities and to jointly develop the North American manufacturing agenda of the future. The associations will share best practices and policy recommendations to assist manufacturers in addressing future commercial challenges in North America, including, but not limited to, global competitiveness. They will work collaboratively to understand the challenges facing manufacturers in North America and commit to host the North American Manufacturing Conference on an annual basis in Mexico, Canada or the United States, on a rotating basis.

Click here to view the full text of the MOU.

About Canadian Manufacturers & Exporters

Since 1871, Canadian Manufacturers & Exporters has been helping manufacturers grow at home and compete around the world. Our focus is to ensure manufacturers are recognized as engines for growth in the economy, with Canada acknowledged as both a global leader and innovator in advanced manufacturing and a global leader in exporting. CME is a member-driven association that directly represents more than 2,500 leading companies that account for an estimated 82% of manufacturing output and 90% of Canada’s exports.

CONFEDERACIÓN DE CÁMARAS INDUSTRIALES DE LOS ESTADOS UNIDOS MEXICANOS

The Confederation of Industrial Chambers of the United Mexican States, CONCAMIN, established in 1918, is the main organization representing the different industrial sectors and activities of high importance for the economic development of Mexico.

It is an effective business representation organization, recognized by its leadership and full capacity to develop projects and initiatives through its work commissions, that contribute to achieve sustained development for the Mexican industry.

• We are an Organization committed to the economic growth of the country.
• Obligatory organ of consultation of the three orders of government in all those topics related to the industry in Mexico, according to the Law of Business Chambers and their Confederations.
• Annually, about 30% of the Gross Domestic Product that is generated in the country comes from those affiliated with the Confederation of Industrial Chambers of the United Mexican States.

In accordance with the provisions of the Law of Business Chambers and their Confederations, we are an organization of consultation and collaboration of the State; Therefore, we maintain a close, harmonious and purposeful relationship with the three levels of government and the powers of the nation.

-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 $2.91 trillion to the U.S. economy annually and accounts for 55% 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.

With many manufacturers relying on financing to expand their businesses and hire workers, Congress should reverse a stricter limitation on interest deductibility that went into effect in 2022, the NAM told policymakers last week.

What’s going on: The stricter limitation is effectively a tax on investment, NAM Senior Director of Tax Policy David Eiselsberg said at a briefing last Thursday hosted by Sens. Shelley Moore Capito (R—W.VA) and Kyrsten Sinema (I—AZ) on the American Investment and Manufacturing Act.

• “The stricter limitation makes it more expensive for capital-intensive companies—which many manufacturers are—to finance critical purchases, grow their businesses and hire new workers,” Eiselsberg said. “Failing to reverse this harmful change could cost the U.S. economy 467,000 jobs and reduce U.S. GDP by $43.8 billion,” he added, citing a 2022 EY study prepared for the NAM.

The background: Before last year, manufacturers were allowed to deduct 30% of their earnings before interest, tax, depreciation and amortization (known as EBITDA). The 2022 tax change limits that deduction to earnings before interest and taxes (EBIT).

• The AIM Act, which was introduced in April by Capito and Sinema, would permanently reinstate the EBITDA standard.

Financing growth —and competitiveness: Reversing the stricter limitation would safeguard manufacturers’ ability to finance growth, which is particularly important “ at a time when the cost of capital itself has increased due to rising interest rates,” Eiselsberg said.

• The current policy puts the U.S. at a global disadvantage, since, he continued, “of the more than 30 [Organization for Economic Cooperation and Development] OECD countries with an earnings-based interest limitation, the U.S. is the only one that employs an EBIT standard.”

NAM in the news: POLITICO highlighted the AIM briefing.

Learn more and take action: Visit the NAM’s Full
Expensing Action Center, which features a tool that lets manufacturers to send customized messages directly to Congress.

The United Autoworkers union set a new strike deadline late last night, according to The Street.

What’s going on: In a video post on X, “UAW president Shawn Fain said [the union] would unveil more strike targets, with more union members participating, by noon eastern time Friday failing significant progress in talks with Ford, General Motors and Chrysler-owned Stellantis.”

• After negotiations for a new four-year labor contract failed late last Thursday, the UAW—which represents almost 150,000 U.S. autoworkers—ordered a walkout from vehicle plants belonging to the “Big Three” carmakers in Michigan, Missouri and Ohio.
• About 12,700 workers are now picketing assembly lines throughout the Midwest.
• Each of the vehicle manufacturers has put forth offers in recent days, and each has been rejected by the union, the demands of which include a sizable wage raise and a 32-hour workweek at 40-hour-a week pay.

Why it’s important: A 10-day strike of 143,000 UAW members against the three vehicle manufacturers could mean an economic loss of $5.617 billion, according to a recent report by Michigan-based consultancy Anderson Economic Group.

• A protracted strike this year would put “the state of Michigan and parts of the Midwest … into a recession,” Anderson Group CEO Patrick Anderson told the news outlet.

Our take: “ The economic harm produced by a strike goes well beyond GM, Ford and Stellantis,” said NAM Vice President of Domestic Policy Brandon Farris.

• “Numerous small and medium-size manufactures are already feeling the effects. The NAM encourages a swift resolution. Let’s get everyone back to work building products that our country relies on.”

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on the United Auto Workers’ announcement to start a “Stand Up” strike:

“The impact of this strike will echo far beyond the city of Detroit as multiple economic analyses have demonstrated. The small and medium-sized manufacturers across the country that make up the automotive sector’s integrated supply chain will feel the brunt of this work stoppage, whether they are a union shop or not.

“American families are already feeling economic pressures from near-record high inflation and this will only inflict more pain. We urge a swift resolution to end this strike and avoid further undermining the strength of our industry and harming our broader economy.”

-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 $2.91 trillion to the U.S. economy annually and accounts for 55% 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 United Auto Workers union went on strike for the first time at all the Detroit “Big Three” carmakers early this morning, according to The Wall Street Journal (subscription).

What’s going on: “UAW officials initiated the walkout after failing to clinch new labor deals with General Motors, Ford Motor and Jeep-maker Stellantis for about 146,000 U.S. factory workers. Bargaining went late into the night, but the two sides remained too far apart to avoid a walkout at the 11:59 p.m. ET deadline.”

• Workers at a Ford Bronco plant in Detroit, a GM pickup-truck factory in Missouri and a Stellantis Jeep plant in Ohio were told to leave their posts.
• The three targeted facilities make some of the firms’ most popular vehicles. 

Why it’s important: Automotive manufacturing in the U.S. is among the most productive industries in the world, underpinning the American economy as a whole.

• In fact, a strike of 143,000 UAW members against GM, Ford and Stellantis could lead to an economic loss of $5.617 billion after just 10 full days, according to a recent report by Anderson Economic Group.
• In 2019, a 42-day strike at one of the three vehicle manufacturers put the state of Michigan into a quarter-long recession and resulted in an economic loss of $4.2 billion, according to The Detroit News.  

Our response: “The impact of this strike will echo far beyond the city of Detroit, as multiple economic analyses have demonstrated,” NAM President and CEO Jay Timmons said this morning. “The small and medium-sized manufacturers across the country that make up the automotive sector’s integrated supply chain will feel the brunt of this work stoppage, whether they are a union shop or not.”

• “American families are already feeling economic pressures from near-record-high inflation, and this will only inflict more pain. We urge a swift resolution to end this strike and avoid further undermining the strength of our industry and harming our broader economy.”

NAM in the news: Bloomberg (subscription),  POLITICO, Reuters (subscription) and Bloomberg Law (subscription) all covered the NAM’s response to the walkout.
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