Tax

It’s been more than two years since the Miscellaneous Tariff Bill expired—and the lack of renewal is harming manufacturers in the U.S.

What’s going on: Manufacturers have been operating without an MTB—legislation that temporarily eliminates or reduces tariffs on products not available in the U.S.—since January 2021, when MTB legislation that had been passed in 2018 expired.

• The MTB is renewed typically every few years. In June 2021, the Senate passed an MTB measure as part of the U.S. Innovation and Competition Act, and the House passed a different version in the America COMPETES Act,  but Congress did not agree to trade provisions in the final China competition legislation.
• No MTB legislation has been introduced during this Congress in either chamber.

Why it’s important: The result of this inaction has been a direct economic hit to manufacturers, particularly small and medium-sized manufacturers that are paying more for product inputs.

• Since the MTB expired in December 2020, manufacturers and other businesses have paid more than $1 billion—or $1.3 million per day—in anticompetitive tariffs for goods they cannot source in the U.S., according to an NAM analysis
• The added costs can create higher prices for consumers, making it harder for American families to buy goods from manufacturers in the U.S.
• Due in part to these tariffs, some manufacturers are having difficulty maintaining current staffing levels and expanding opportunities for existing workers.

Hurting the heartland—and Ukraine: Sukup Manufacturing Co., headquartered in Sheffield, Iowa, is a family-owned and -operated manufacturer of grain-storage and grain-handling products. It is paying tens of thousands of dollars in tariffs to import components from the Kyiv province of Ukraine.

• In 2022, the company paid nearly $40,000 in tariffs on imports from Ukraine.
• Ukraine’s export market is essential to its economic development as well as its ability to withstand Russia’s invasion. The lack of an MTB is creating barriers between companies in the U.S. and their Ukrainian partners at exactly the wrong time.

Read the full story here.

Washington, D.C. – Today, the National Association of Manufacturers and Make UK hosted a meeting at NAM headquarters where they formalized manufacturers’ commitment to supporting close economic ties between the United States and United Kingdom. Make UK CEO Stephen Phipson and NAM President and CEO Jay Timmons signed an updated memorandum of understanding, which will serve as a roadmap to the cooperation between the two organizations and outlines the key goals and objectives for the partnership.

“The NAM and Make UK have such a strong, special relationship, just as the U.S. and the UK do, and we must continue to deepen that partnership and the commercial and economic ties between our countries,” said Timmons. “Cooperation between American and British companies not only makes our economies stronger, but also strengthens the transatlantic strategic alliances to support the rule of law, freedom and opportunity from those who threaten our shared values. Especially with Russia’s continued assault on Ukraine, it is critical that we unleash the power of commerce to preserve, protect and expand democracy.”

The MOU calls for Make UK and the NAM to work together to provide opportunities for their members to strengthen manufacturing through a number of avenues, including exploring potential trade delegations, trade fairs and business networks; facilitating visits and economic delegations between representatives of the two organizations for promoting trade, investment and commercial exchanges among member companies and organizations; and working together on joint meetings, conferences, seminars, reports, letters and mutually agreed advocacy on trade and investment-related issues.

“Make UK is delighted to have further strengthened our partnership agreement with our American counterpart, the National Association of Manufacturers, as we focus increasingly on boosting cross-Atlantic trade,” said Phipson. “In recent months, we have agreed to a process of even broader sharing of market intelligence, data and policy work, facilitating visits for economic delegations to visit on both sides of the Atlantic to unlock new trading opportunities.

“We will continue to work ever more closely as we look to cement commercial exchanges and opportunities for shared promotion as we build on the ties that have connected our two nations for generations. Relations with the U.S. are vital, and its market is the second-most important for UK goods. In a post-Brexit world, it is likely to assume ever greater importance as part of our efforts to boost global trade.”

Click here to view the full text of the MOU.

-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.

Washington, D.C. – Today, the National Association of Manufacturers filed a motion to intervene in National Center for Public Policy Research v. SEC, a case about the Securities and Exchange Commission’s authority to dictate the content of public company proxy ballots and the topics on which shareholders are required to cast votes. If granted intervenor status, the NAM will argue that the SEC’s rules requiring companies to include activist proposals on the proxy ballot violate federal securities law and the First Amendment. Following the filing of the motion to intervene, NAM Chief Legal Officer Linda Kelly released the following statement:

“Manufacturers are facing an onslaught of activists seeking to hijack the proxy ballot to advance narrow political agendas, and the SEC has become a willing partner in the effort. The corporate proxy ballot is not the appropriate venue for policy decisions better made by America’s elected representatives, and manufacturers are regularly caught in the middle as activists on the left and the right bring fights from the political arena into the boardroom. The NAM Legal Center is standing up for manufacturers to ensure they can focus on growing their businesses, driving economic expansion and job creation and creating value for shareholders.”

Background:

• Under SEC Rule 14a-8, public companies are required to include most shareholder proposals on their proxy ballot—proposals that in recent years have skewed increasingly toward social or political topics unrelated from a company’s business and its long-term value.
• The SEC evaluates company requests to exclude certain proposals from the ballot and increasingly requires companies to include and take a position on these proposals. For example, the NAM strongly opposed recent SEC guidance preventing companies from excluding proposals on environmental, social and governance topics of “broad societal impact”—irrespective of whether the proposal has any connection to the company’s operations.
• As intervenor in National Center for Public Policy Research v. SEC, the NAM would argue that the SEC cannot compel corporate speech, in violation of the First Amendment and federal securities laws, by forcing companies to include activist proposals on their proxy ballots.

-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.

Washington, D.C. – The National Association of Manufacturers has launched a six-figure television and digital advertising campaign calling for reforms to ensure pharmacy benefit managers pass on prescription drug discounts directly to workers and employers. The campaign spotlights how these insurer-owned middlemen are contributing to skyrocketing health care costs and driving up the cost of medicines by pocketing big discounts from drugmakers instead of passing them on to America’s workforce.

“America’s manufacturing workforce has struggled with skyrocketing health care costs driven by insurer-owned PBM middlemen for far too long,” said NAM President and CEO Jay Timmons. “PBMs pocket big discounts from prescription drugmakers instead of passing them on to workers and employers. Manufacturers are committed to providing quality health care benefits to our employees, so we need reforms to stop insurer-owned PBMs from keeping discounts and driving up prescription drug costs.”

To view the latest television ad, click 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 $2.90 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.

Washington, D.C. – Following the release of the Environmental Protection Agency’s new rule on power plant emissions, National Association of Manufacturers Vice President of Energy and Resources Policy Brandon Farris released the following statement:

“Manufacturing in America is cleaner and more sustainable than ever, and the power generation sector has been making historic strides in bringing zero-emissions sources online. Even as that trend continues, this proposed regulation will prove unfeasible. With nearly 60% of our nation’s energy generated from natural gas and coal, this will either require deployment of still nascent technologies at an impractical pace or force those plants to shut down entirely. With the many threats to global energy security, that is a grave risk to our economy and to our families. The U.S. cannot afford to shut down more than half of our power generation and grind our economy to a halt. The NAM looks forward to working with the administration to ensure emissions standards protect public health while allowing manufacturers to continue pioneering technologies to make our air even cleaner and our climate even healthier.”

-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.

Washington, D.C. –  A new report conducted by Oxford Economics and commissioned by the National Association of Manufacturers warns that the Environmental Protection Agency’s proposed air quality regulations for particulate matter (PM2.5) are projected to threaten $162.4 billion to $197.4 billion of economic activity and put 852,100 to 973,900 current jobs at risk, both directly from manufacturing and indirectly from supply chain spending. In addition, growth in restricted areas may be constrained, limiting investment and expansion over the coming years. Due to these limited opportunities for expansion or investment, these areas in nonattainment could lose out on an additional $138.4 billion in output and 501,000 jobs through 2027.

Overall, the regulations could make it extraordinarily difficult to create new manufacturing jobs and protect existing manufacturing jobs in areas out of attainment. The regulations could also prevent much needed infrastructure improvements in these areas. This is because compliance with the regulations could require restricting manufacturing operations, resulting in fewer jobs, less investment and higher costs for consumers and families.

“Improving air quality in the U.S. is a top priority for manufacturers, and we’ve worked for years to make progress in delivering some of the cleanest manufacturing processes in the world,” said NAM President and CEO Jay Timmons. “This analysis makes clear these new regulations will weaken our ability to invest in the technology and processes that would continue to reduce emissions—while jeopardizing high-paying manufacturing jobs. We need to let manufacturers do what they do best: innovate and deploy modern technologies to protect the environment, while creating jobs and strengthening the economy.”

Key Findings:

• The regulations create a total economic exposure of $87.4 billion for manufacturing economic activity, equal to 2.4% of the U.S. manufacturing sector’s gross value added.
• The number of manufacturing jobs associated with this exposed activity is 311,600, or 1.9% of all U.S. manufacturing employment.
• Manufacturing in the U.S. exposed to the proposed standard supports between $75 billion and $110 billion in GDP and between 540,500 and 662,300 jobs in the U.S. through supply chain spending.
• Due to limits on expansion and investment, the proposed rule would put at risk approximately $138.4 billion of gross value added (in 2021 prices) and 501,000 jobs in 2027 in areas of nonattainment.
• Under the proposed rule, 200 counties could be placed out of attainment.
• California’s manufacturing sector will be most exposed, followed by Michigan and Illinois.
• Manufacturing operations in the U.S. are environmentally cleaner than the global average.

Find the latest information on the NAM’s efforts to oppose top-down air regulations, including statements from manufacturing leaders, 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 $2.90 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.

Yesterday, the U.S. Securities and Exchange Commission finalized a rule that requires new disclosures from companies conducting stock buybacks.

The background: Stock buybacks are a commonplace practice that allow companies to ensure that their cash reserves are being used effectively. Returning capital to shareholders benefits both the company and its investors by increasing shareholder returns, enhancing capital formation and ensuring efficient capital allocation.

• Over the past few years, however, policymakers and regulators have taken steps to discourage buybacks, and the SEC has now finalized a rule targeting them.

The burden: The SEC’s rule imposes several new burdens on manufacturers conducting buybacks:

• A requirement that companies disclose detailed buyback data from each day of a fiscal quarter—imposing significant costs and dramatically increasing the complexity of businesses’ quarterly filings
• A requirement that companies provide disclosures justifying their buybacks, which could further politicize these capital allocation decisions
• New disclosures related to companies’ stock buyback programs and transactions by company management and boards of directors

The pushback: The NAM spoke out against the SEC’s rule when it was proposed last year, detailing the harm it would do to manufacturers.

• In particular, the NAM called on the SEC to reverse its proposed next-day disclosure requirement, which would have mandated upward of 250 new SEC filings per year for many public companies.

The result: Thanks to the NAM’s advocacy, the SEC’s final rule left out the daily disclosure requirement—a significant victory for manufacturers.

• However, companies will still be required to track daily buyback activity to comply with the quarterly day-by-day reporting mandate.
• In addition, the final rule maintained the proposal’s burdensome requirement that companies describe the “objectives or rationales” for any stock buybacks as well as the “process or criteria” used to set buyback targets.

The next steps: Most domestic companies will be required to provide daily buyback data in their Q4 2023 filings, meaning that daily tracking will begin in October 2023 and be reported to the SEC in early 2024. Most foreign companies will be required to comply in their Q2 2024 filings.

The last word: “The NAM is disappointed that the SEC has chosen to unjustifiably punish manufacturers for returning capital to their shareholders,” said NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram. “Manufacturers, investors, retirement plans and the entire economy benefit when companies can efficiently allocate capital via share repurchases.”

Further reading: The SEC rule is not the only action targeting buybacks in the past few years. The Inflation Reduction Act included a new tax on buybacks—which the NAM also opposed. It is currently engaging with the IRS to minimize the harm done to manufacturers by the tax. Read more here.

Washington, D.C. – Following the Securities and Exchange Commission’s decision to finalize its costly and unnecessary stock buybacks rule, National Association of Manufacturers Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement:

“The NAM is disappointed that the SEC has chosen to unjustifiably punish manufacturers for returning capital to their shareholders. Manufacturers, investors, retirement plans and the entire economy benefit when companies can efficiently allocate capital via share repurchases. The NAM was successful in convincing the SEC to abandon the most damaging aspect of its initial proposal, but the commission’s attempt to discourage these commonplace, commonsense transactions via an overly complicated, expensive and unworkable disclosure mandate is nevertheless a departure from its mission to enhance capital formation and protect investors.”

-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 $2.81 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.

As a family-owned small business that works with giant, complex industries like aerospace and medical devices, Westminster Tool knows its ability to innovate is what sets it apart. The 25-year-old company makes complex injection mold systems, composite tooling and components—including devices used in medical transplants and high-performance plastic parts for military aircraft.

• “We’re constantly looking to improve ourselves,” said Westminster Tool Chief Financial Officer Colby Coombs. “We’re always looking to push technological advancements, bring products to market faster, improve quality and reduce cost.”

So when a harmful R&D tax change went into effect, it caused real problems for the Connecticut-based company.

The change: Until recently, businesses could deduct 100% of their R&D expenses in the same year they incurred the expenses. But since last year, the tax code has required businesses to spread their R&D deductions out over a period of five years, making it much more expensive upfront to invest in the kind of innovation at which Westminster Tool excels.

The impact: As a result of the policy shift, Westminster Tool has found itself paying significantly more in taxes—and having to scale back its ambitions.

• “The impact has been large,” said Coombs. “Because of this change, I had to reconsider a contract that was going to mean new jobs and diversification just based on the cash flow that I needed in order to pay the government.”
• “Ultimately, this law may prohibit me from hiring more people, training more people in new skills, investing in our community and bringing in new work stateside.”

The uncertainty: As a result of uncertainty, small businesses are being forced to hold off on investments they can no longer afford.

• “I am at the mercy of this law, waiting to see how it plays out before I can make any large-scale investment in our business,” said Coombs. “It is putting massive pressure on our ability to grow and be an employer of choice in our community.”

The urgency: Coombs also emphasized the international nature of the challenge. With so many global competitors—especially those based in China, which provides a super deduction for manufacturers—an inability to invest in R&D will hurt manufacturing in the U.S.

• “If Congress doesn’t do the right thing this year, this is going to be a job growth prohibitor or a job killer,” said Coombs. “We are trying to compete with international competitors that aren’t hamstrung by this problem. If Congress fails to fix this issue, it will drastically impact my ability to compete with the global powers in our industry.”

The small business effect: Coombs notes that small businesses in particular will be harmed by this change, since they don’t have the cash reserves to take on significant new expenses.

• “Small companies don’t have the balance sheets to handle this,” said Coombs. “We are doing the best we can to survive, to represent our state, to make advancements and offer the best job opportunities we can. This law is prohibiting me from doing what we’re striving to do.”

The last word: “Failure by Washington to reverse this change will put companies underwater and out of business,” said Coombs.

You can find more information and ways to take action at the NAM’s R&D Action Center.

Reforming the permitting process for infrastructure projects could raise standards of living in America, unlock the full potential of ambitious recent legislation and make us less dependent on hostile foreign nations—all while making manufacturing in the U.S. more competitive, NAM President and CEO Jay Timmons told lawmakers yesterday.

What’s going on: Timmons gave testimony at “Opportunities to Improve Project Reviews for a Cleaner and Stronger Economy,” a hearing of the U.S. Senate Committee on Environment and Public Works, where he stressed the need to fix the needlessly time-consuming, complex permitting system.

• “For manufacturers, permitting reform is essential for our ability to compete in the global economy,” he said. “If we want more critical minerals for chip manufacturing, more domestic energy development and transport . . . more manufacturing facilities and jobs back home, better highways, bridges, airports [and] waterways, then we need permitting reform to make them a reality in the near future.”

Cut the wait: There is no reason for projects to take a decade or more to get approval, Timmons said.

• “If Washington could streamline the process—like manufacturers do in our businesses every single day—we could do more for this country,” Timmons continued, citing a White House Council on Environmental Quality report which found that environmental impact statements take an average of four-and-a-half years to complete.
• Timmons noted that in the case of one project, permits “from the U.S. Army Corps of Engineers were delayed a year due to the failure of the U.S. Fish and Wildlife Service to complete a required informal consultation under the Endangered Species Act.”

What to do: Timmons urged senators to work together to realize the following manufacturing priorities for permitting reform:

• Consolidated permitting processes with enforceable deadlines
• Fast approvals for transportation infrastructure projects
• A commitment to developing homegrown critical resources
• A moratorium on federal-agency regulations prior to the implementation of current standards
• Congressional assurance that lawmakers will hold the administration to recent and future statutory streamlining efforts

Protecting our values: Leaner, more efficient permitting and a commitment to sustainability and other American values can go hand in hand—and that’s exactly what manufacturers want, according to Timmons.

• “Manufacturers have a deep commitment to environmental stewardship, and we do not believe corners should be cut,” he said. “We believe in protecting our community, our neighbors and our environment. Reform is about . . . ensuring that this country—a democracy rooted in free enterprise—isn’t outpaced or outflanked or overtaken by nations that don’t share our values, don’t respect the environment or don’t recognize the dignity of human rights.”