Labor and Employment

California’s port system will get a $1.5 billion upgrade, according to Sourcing Journal (subscription).

What’s going on: “The Port of Los Angeles has been awarded $233 million in grants, while the Port of Long Beach received $383 million. The Port of Oakland got $119 million in funding, and the Port of Hueneme received $80 million.”

• “$1.2 billion will go to 15 projects designed to increase the capacity to move goods throughout the state’s global trade gateways while lessening environmental impacts on neighboring communities.”
• At Los Angeles, grant-funded improvements are set to include “a project that augments an existing partial roadway that directly serves 10 percent of all waterborne containers entering and exiting the entire United States.”

The background: The investment announcement by California Gov. Gavin Newsom late last week came less than a month after the Pacific Maritime Association and the International Longshore and Warehouse Union—dockworkers and their employer, respectively—reached a tentative six-year labor agreement at all 29 West Coast ports.

Why it’s important: The grants will decrease port congestion, boost business, add jobs and help operations use more zero-emissions energy, sources told the publication.

What we’re saying: “These types of congestion- and capacity-focused upgrades will ensure that ports across California remain operationally sound for years to come,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.

• “As with the historic investment funded by the bipartisan infrastructure law, these improvements will keep products flowing and manufacturing lines open.”

Washington, D.C. – The leading organizations representing manufacturers and millions of manufacturing workers in the United States, Mexico and Canada released the following statement on the three-year anniversary of the United States–Mexico–Canada Agreement (USMCA/T-MEC/CUSMA)

“On this three-year anniversary, we recognize the substantial value that the United States–Mexico–Canada Agreement has represented for our industry’s competitiveness, our economies and North American workers. Manufacturing is critical for the entire North American economy. Our closely integrated supply chains contribute more than $3 trillion annually to the North American economy, and more than $2 billion worth of manufactured goods cross our borders each day.

“Free trade has benefited manufacturers across North America for decades, and the USMCA helps to secure those advantages. The USMCA can only reach its full potential if it is fully implemented in a manner that upholds its letter and spirit. The National Association of Manufacturers, the Confederation of Industrial Chambers of Mexico and Canadian Manufacturers & Exporters continue to strongly and respectfully urge political leaders of all three countries to work together to live up to the commitments of the agreement, which garnered broad support in the U.S., Mexico and Canada. Full compliance with the agreement will provide certainty for the more than 23 million manufacturing workers in the United States, Mexico and Canada and boost our region’s ability to take full advantage of the one-in-a-generation opportunity to strengthen our supply chains though the attraction of new economic activities to North America.

“The strong and unique partnership between the U.S., Mexico and Canada goes beyond our economic alliance. It is rooted in our shared values of democracy, the rule of law, transparency, free enterprise and opportunity. As we see those values under attack around the world, it is critical that we strengthen our regional alliance to elevate and defend those values—for the good of our people and people around the world, as well as for our economic and national security.”

-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 $2.90 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 U.S. economy grew more robustly in Q1 of 2023 than previously calculated, according to a large upward revision from the Commerce Department on Thursday, CNBC reports.

What’s going on: “Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.”

Why it’s important: The news may indicate that the U.S. is not headed toward economic recession.

• A separate report released this week shows that layoffs were below expected levels, “indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points.”
• Unemployment claims were down last week, too, according to the Labor Department.

The NAM says: “While the latest NAM Manufacturers’ Outlook Survey  revealed that most manufacturers predict a recession in the next 12 months, it is also possible that the U.S. economy could achieve the ‘soft landing’ that the Federal Reserve and other policymakers have been seeking,” said NAM Chief Economist Chad Moutray.

• “This is particularly true if the labor market remains solid and if spending continues to hold up. The current outlook is for the U.S. economy to expand 1.7% in 2023, with 1.2% growth in 2024.”

Consumer confidence hit its highest level in nearly a year-and-a-half in June, Reuters (subscription) reports.

What’s going on: “The Conference Board said its consumer confidence index rose to 109.7 this month, the highest reading since January 2022, from 102.5 in May. Economists polled by Reuters had expected the index to climb to 104.0.”

On jobs: The survey’s labor market differential, which comes from respondent views on the difficulty of getting jobs, increased to 34.4 in June from 30.7 in May—a sign that many still view the labor market as tight.

• This finding is in keeping with a key data point in the NAM’s Q2 Manufacturers’ Outlook Survey, in which the majority (74.4%) of manufacturers cited attracting and retaining a quality workforce as a top challenge.

What we’re saying: The latest consumer confidence index is good news, according to NAM Chief Economist Chad Moutray.

• “Americans felt more upbeat in their assessments of both current and future conditions, with improved prospects for jobs and a strengthened overall economic outlook, including for household finances,” he said.

In other good news: Sales of new homes increased to a 15-month high in May, up 20% from a year ago, bolstering hopes that the U.S. economy might avoid a recession.

Unions and their employers at 29 West Coast ports have reached a tentative deal resolving a labor crisis that has lasted almost a year, reports CNBC.

No details yet: While the deal will last six years and cover all 29 ports, no details have been released yet.

• “We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating,” said Pacific Maritime Association President James McKenna and International Longshore and Warehouse Union President Willie Adams in a joint statement.

​​​​​​ Ramping back up: Workers at several ports had engaged in slowdowns or had not shown up for shifts over the course of the past two weeks, leading to delays and congestion.

• “The ports, which are currently running at 70% capacity, will need several days to clear out the containers once a full labor force is back to work.”

​​​​​​​The NAM says: “Manufacturers welcome last night’s announcement of a long-term deal between the #ILWU and #PMA. Certainty at America’s West Coast ports ensures reliability in domestic shipping lanes and keeps manufacturing in America competitive and thriving,” tweeted NAM President and CEO Jay Timmons.

• “@POTUS understands that manufacturing is the backbone of our economy, and @ShopfloorNAM thanks President Biden for his leadership in bringing these parties back together to reach a final agreement that eliminates the threat of additional supply chain disruptions.”

More than 99% of International Longshore and Warehouse Union Canada workers whose jobs are critical to West Coast port operations voted in favor of a labor strike, according to CNBC.

What’s going on: “The vote, which took place on June 9–June 10, occurred during a 21-day cooling-off period between the British Maritime Employers Association and ILWU Canada. Negotiations with the Federal Maritime Conciliation Service started on March 28. Two mediators appointed by the Canadian government were overseeing the discussions that ran through the end of May.”

• June 24 is the soonest a strike would occur.

In the U.S.: The Canadian development—which threatens the Port of Vancouver, the largest port in Canada—comes as tensions rise in the U.S. between the ILWU and the Pacific Maritime Association, which have been negotiating a labor contract since May 2022.

Why it’s a problem: About 15% of container trade that comes through the Port of Vancouver is destined for or coming from the U.S.

• “Canadian shippers could shift trade to the neighboring Port of Seattle, but the Port of Seattle has been significantly impacted by labor slowdowns and work stoppages which led to its closure on Saturday as the ILWU in the U.S. continues to negotiate with the Pacific Maritime Association for a new contract, with wages and automation proving to be sticking points.”

Why it’s important: The events in Canada are “a significant blow to operations on the West Coast,” ITS Logistics Vice President of Drayage and Intermodal Paul Brashier told the Journal.

• “These ports are vital to Midwest manufacturers and the auto industry, as most transpacific freight enters at these points prior to interlining to rail and going to inland rail ramps in Chicago and other major markets. More significant is that these ports were used as relief valves to avoid ILWU activity.”

Our view: The NAM has been recommending White House intervention in the U.S. labor dispute for many months.

• “[With] the dramatic impact of port closures, your leadership and intervention are needed,” NAM President and CEO Jay Timmons told President Biden last week. “Manufacturers respectfully encourage you to bring the parties back together and reach a final agreement that reopens our West Coast ports and eliminates the threat of additional supply chain disruptions.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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