Tax

London, U.K. – As the National Association of Manufacturers’ Competing to Win Tour begins its second week of bolstering strategic alliances across Europe, the association released findings from its Q1 2023 Manufacturers’ Outlook Survey. The survey found that expanding trading opportunities with Europe is a top priority for manufacturers, with more than 77% of respondents supporting negotiating new agreements with European nations.

“At a time when democracy and free enterprise are under attack from forces around the world, America can provide the leadership needed to defend our values, our institutions and our way of life,” said NAM President and CEO Jay Timmons. “By advancing an ambitious trade agreement agenda, we can ensure that the U.S.—and not competitors like China—writes the rules for the global economy and trading system. That has been the focus of our conversations with government, association and business leaders across Europe over the past week.”

The survey also continues to illustrate the need for Washington to enact policies that support the sector’s competitiveness as businesses face record job openings and increased production and input costs.

“With geopolitical turmoil and a banking crisis injecting further uncertainty into the economy, policymakers must act with urgency on key tax, trade, permitting and regulatory proposals if they want to help manufacturers in America fend off a recession,” said Timmons.

Background: Manufacturers have called on Congress and the White House to address key tax, trade, and permitting policies in recent months and have pressed lawmakers to work across the aisle to move legislation. The NAM conducted the survey from Feb. 21 to March 7, 2023.

Key Findings:

• Of companies that are engaged in international trade, nearly two-thirds of manufacturers said that Europe was either a somewhat or very important market for their company. With that in mind, 77.7% would support U.S. efforts to launch market-opening trade agreement negotiations with countries in Europe.
• Nearly three-quarters of respondents (74.9%) listed attracting and retaining a quality workforce as a primary business challenge, with increased raw material prices (60.1%) and supply chain challenges (55.8%) the next biggest impediments.
• More than 90% of respondents said that higher tax burdens on manufacturing income would make it difficult for their companies to expand their workforce, invest in new equipment or expand their facilities. Similarly, 93.9% suggest that increased regulatory burdens would weaken their ability to invest in their workers, equipment or facilities.
• More than 74% of respondents said that permitting reform—which would simplify and speed up the approval process for new projects—would be helpful to their manufacturing company, allowing them to hire more workers, expand their business or increase wages and benefits.
• More than 55% of respondents said that new proposed air standards from the Environmental Protection Agency would raise their costs of compliance, with roughly one-third suggesting that it would lead to increased permitting challenges and lessen investment and facility expansion plans.

Conducted by NAM Chief Economist Chad Moutray, the Manufacturers’ Outlook Survey has surveyed the association’s membership of 14,000 manufacturers of all sizes on a quarterly basis for the past 25 years to gain insight into their economic outlook, hiring and investment decisions and business concerns.

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 $2.81 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.

A bipartisan Senate duo introduced legislation on Thursday that would both allow businesses to once again fully deduct R&D expenses in the year they are made and expand the refundable R&D tax credit.

What’s going on: The American Innovation and Jobs Act, sponsored by Sens. Maggie Hassan (D-NH) and Todd Young (R-IN), would restore the immediate deductibility of R&D expenses. Last year, a tax change went into effect requiring companies to amortize or deduct their R&D investments over a period of years, making R&D more costly.

Why it’s important: According to a recent NAM analysis, the sector would lose nearly 60,000 jobs and face an output decline of more than $31 billion this year alone if the change is not reversed.

• The U.S. has now become a global outlier, joining Belgium as the only other developed country requiring the amortization of R&D expenses.
• Meanwhile, China provides a 200% “super deduction”—20 times the amount allowed in the U.S. tax code—for its manufacturers’ research.

The NAM says: “Manufacturers applaud the introduction of the American Innovation and Jobs Act, which will help the U.S. out-compete China,” said NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram.

• “Across the country, manufacturers are hiring workers, investing in communities and creating the products, materials and processes that drive us forward. Congress should approve the American Innovation and Jobs Act quickly to support critical research that allows manufacturers to improve lives in America and for people around the world.”

Learn more: Read our stories on how the 2022 expensing requirement is impacting International Paper, Marlin Steel Wire Products, Ultragenyx, Miltec UV and  Brewer Science (whose story was also covered today by The Wall Street Journal, subscription).

Washington, D.C. – Following the introduction of the American Innovation and Jobs Act by Sens. Maggie Hassan (D-NH) and Todd Young (R-IN), National Association of Manufacturers Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement:

“Manufacturers are hiring workers, investing in communities across the United States and creating the products, materials and processes that drive America forward. Manufacturers applaud the introduction of the bipartisan American Innovation and Jobs Act, which restores full deductions for research, helping the American industry out-compete China, which provides a 200% super deduction for manufacturers’ research—20 times the amount in the U.S. tax code,” said Netram. “Manufacturers, the vast majority of which are quite small, perform 55% of private-sector research and development. These investments in innovation spur economic growth and support the creation of high-paying jobs across the country. Congress should approve the American Innovation and Jobs Act quickly to support critical research that allows manufacturers to improve lives in America and for people around the world.”

Background: As of 2022, manufacturers can no longer immediately deduct their R&D expenses in the year in which they are incurred. Instead, manufacturers must deduct or amortize their expenses over a number of years, which makes R&D much more expensive to undertake. The American Innovation and Jobs Act would restore the immediate deductibility of R&D expenses, a policy that was in place for nearly 70 years. In the 117th Congress, the American Innovation and Jobs Act garnered 35 cosponsors: 17 Democrats and 18 Republicans. A recent analysis released by the NAM finds that the industry would lose 59,392 jobs and face a decline in output of $31.69 billion this year if Congress does not act.

-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.

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on President Biden’s fiscal 2024 budget plan:

“There is no escaping the fact that the tax increases in President Biden’s new budget proposal would reverse the recent significant growth we’ve achieved in American manufacturing jobs and investment.

“After the 2017 tax reform made rates more competitive, manufacturers kept their promises to raise wages and invest in their communities. In fact, 2018 was the best year for manufacturing job creation in the previous 21 years. And in the past two years, as we rebuilt from the pandemic, we’ve created more jobs in the sector than at any point since the Reagan administration. So it comes as a surprise that President Biden, who has vocally championed manufacturing growth in pushing successfully for infrastructure investment and the CHIPS and Science Act, wants to pursue policies that would undo our progress.

“We have to get serious about competing with China; the president’s budget does the opposite. This proposal further undermines manufacturing in America by failing to reverse tax policies that make it more difficult for our industry to perform research, while China currently employs a 200% super deduction on R&D for manufacturing. It’s also now more expensive to buy critical machinery and finance new investments. If these lapsed deductions aren’t reinstated, it will mean lost jobs, less innovation and fewer opportunities for our communities.

“As manufacturers work to lead our economy forward, we also remain committed to lowering health care costs through market-based solutions that deliver choice and flexibility. Unfortunately, this administration’s insistence on imposing drug pricing requirements is an abdication of free market principles that poses serious risks to the development of new treatments and therapies—the very type of innovation that saves lives in America and around the world.

“Manufacturers are committed to growing investment, jobs and wages here in America. We need our government leaders to share that commitment.”

Background: Read more about how these critical tax priorities impact manufacturers across the country 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 $2.81 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.

Fresh off International Women’s Day, which was March 8, there’s some encouraging news on the labor front: more women are coming back to the workforce, both in manufacturing and throughout the economy.

In manufacturing: Female employment in the industry reached its height this year, with a total of 3.77 million workers, according to NAM calculations based on BLS numbers.

• Women now account for 29% of the manufacturing workforce.
• A year ago this week, the Manufacturing Institute, the NAM’s 501(c)3 workforce development and education partner, launched its 35×30 campaign, an initiative that aims to boost women’s share of the manufacturing workforce to 35% by 2030.

The overall economy: “Women have gained more jobs than men for four straight months, including in January’s hiring surge, pushing them to hold more than 49.8% of all nonfarm jobs,” according to The Wall Street Journal (subscription).

• “Female workers last edged higher than men on U.S. payrolls in late 2019, before the pandemic sent nearly 12 million women out of jobs, compared with 10 million men.”

Why it’s happening: The child-care disruptions and health concerns that made many women leave the workforce during the pandemic are diminishing, while employers offer historically high pay and increasing numbers of remote positions.

Why it’s important: More women in the workforce could help ease both worker shortages and inflation.

• With January unemployment reaching a 53-year low, “[a] greater supply of labor could work to counter rising wages and align with the Federal Reserve’s goal of cooling inflation,” according to the Journal.
• More job seekers could also help U.S. manufacturers, whose job openings edged up to 803,0000 in January.

The last word: “In just a year, the 35×30 campaign has made great strides in increasing the number of women in manufacturing—and the latest data show as much,” said MI President Carolyn Lee. “We’re close to our goal. Together, we can get the rest of the way there and make it to 35% by 2030.”

Electronic waste is a big problem.

In 2019, the world generated a record 53.6 million metric tons of discarded electronic and electrical devices, according to a Global E-waste Monitor report. That’s an increase of 21% in just five years. But there’s more: The figure is expected to double by 2050, hitting 120 million tons annually.

The good news is that manufacturers can be an active part of the solution. Though their bread and butter has typically been bringing new products to market, manufacturers are now also developing end-of-life processes for goods to mitigate environmental impact, according to Bright Machines Vice President of Industrial Solutions Adam Montoya, writing in the Manufacturing Leadership Council’s Manufacturing Leadership Journal. (The MLC is the digital transformation division of the NAM).

The challenge: complex components. Disassembling a product is not nearly as straightforward as assembling it, according to Montoya. Take a server, for example. A company might know what’s inside it based on its original configuration, but memory or processor upgrades could have changed over the course of its life.

• When a lot of change has taken place, the dismantling process is unique to each server, making it complex and difficult to automate.

The solution: intelligent disassembly. Improving the end-of-life process for electronics requires intelligent disassembly, a combination of smart technology and a different way of thinking, says Montoya. Here’s how it works:

• Automation technology that uses AI and advanced vision systems interprets the contents of a particular component and compares it against the original blueprint.
• Next, the system assesses the presence and location of components within the unit.
• It then sorts, separates and removes components so they can be reclaimed or recycled.

The bottom line: Manufacturers stand to realize many benefits from intelligent disassembly. Components with sensitive data can have machine-driven proof of destruction. Systems with usable parts can be repurposed rapidly.

• Ultimately, it’s an important way for manufacturers to collectively reduce carbon footprints and electronic waste while delivering business value, says Montoya.

For more on this topic, read Rethinking End-of-Life Technology Value in the Manufacturing Leadership Journal. And to learn more about how manufacturing leaders are undertaking digital transformations, join the MLC at its Rethink conference in Marco Island, Florida, on June 26–28.

An idea becomes a prototype, then a treatment, then a lifesaver. That’s how R&D is supposed to work, but as Tolmar, Inc., can tell you, tax policy is a crucial element as well.

Tolmar spent years developing a therapy to improve the treatment of advanced prostate cancer. The resulting long-acting injectable, called ELIGARD®, works by stopping testosterone production to slow the growth of cancer cells. It’s a remarkable technology, now used by patients nationwide and around the world who are fighting advanced prostate cancer.

This innovation was facilitated by a U.S. tax policy that supported R&D investments by pharmaceutical companies. However, a recent change means that Tolmar and other pharmaceutical R&D units will find it more difficult to produce innovations that make human lives better, safer, healthier and longer.

The problem: Until about a year ago, businesses were able to deduct 100% of their R&D expenses in the year in which they incurred the expenses. Starting in 2022, however, a change in tax policy requires businesses to spread their R&D deductions out over a period of five years, making it more expensive to invest in innovation.

The cost for companies: “We have a finite amount of capital to put into the development of new products. The changes in tax policy will lead to difficult decisions,” said, Tolmar Chief Financial Officer Jeff Lederman.

• “We typically put the vast majority of our cash back into the company—whether that means investing in R&D, capital purchases or our workforce—and if we have less funding, we have to cut back in some or all of those areas. So, this policy change could have a significant impact on our organization.”

The cost to patients: This tax change could also have a negative impact on patients in the United States and around the world by delaying the development and availability of innovative new therapeutic products.

• Tolmar is one of a small number of U.S. manufacturers of long-acting injectable prostate cancer treatments, and the company has a number of other innovative medicines and therapeutics in its pipeline.

• “This is not so much about saving dollars; it’s about patient impact,” said Tolmar President and Chief Operating Officer Shawn Silvestri. “The results we’re chasing are meaningful to patients’ lives. If you’re looking for something that’s purpose-driven, that’s the kind of work we do—and that makes the choices for me that much more difficult.”

A competitive disadvantage: While the impact on patients is the most worrisome effect, the R&D tax change also has negative implications for American economic competitiveness.

• Making research more expensive puts companies that operate in the U.S., as Tolmar does, at a distinct disadvantage, especially when other countries are aggressively supporting domestic research.

Our move: At the NAM, we’re pushing Congress to reverse this change and allow manufacturers to keep investing in innovation, jobs and workers. Learn more and take action at www.nam.org/protect-innovation.

Boca Raton, FL – This morning, Ukrainian President Volodymyr Zelenskyy delivered remarks to the National Association of Manufacturers Board of Directors.

To view the address and a transcript of the remarks, click HERE.

Key Excerpts:

Voldodymyr Zelenskyy, President of Ukraine:

But what will our joint victory mean? This is not a purely ideological battle. Yes, we will prove that democracy is stronger than tyranny. When Russia loses, we will prove that terrorist states cannot overcome the power of a united democratic world.

…..

The American business [community] has every opportunity to take on leadership positions both in the reconstruction of the Ukrainian economy and infrastructure, and in demonstrating to the world that human nature should serve worthy goals and that it produces, and will always produce, the best result.

……

All these are not just investment opportunities, not just industries and not just growth. This is a wide space for victories—your victories, American business. And I urge you to prepare for these victories now, to come to Ukraine now so that by the time we restore peace, your hard work has already yielded results. And I believe that it will be soon. Thank you for your attention. I invite all of you to Ukraine. Glory to our brave soldiers. Glory to Ukraine.

Jay Timmons, President and CEO, National Association of Manufacturers:

Ukraine’s fight is our fight because this is far more than a war between two countries. It is a battle between freedom and tyranny. So America, and the American business community, stands with Ukraine today, tomorrow, through the end of the war and as Ukrainians rebuild their country after Russia is defeated.

….

We reaffirm our support for the “sanctions implemented against Russia” and for Ukraine’s “fight to preserve freedom and independence.” And we reaffirm our “commitment … to safeguarding democracy and democratic institutions not only here at home, but also abroad.”

…..

Manufacturers in America will continue to stand with Ukraine, and we will be there after Russia is defeated so that we can help you and your people build a stronger nation forever rooted in our shared democratic values.

BACKGROUND: The NAM has been an active and vocal supporter of Ukraine’s fight to defend democracy. More information on these efforts can be found below:

• NAM State of Manufacturing address, opening comments on Russia’s brutal invasion of Ukraine (Feb. 21, 2023)
• Timmons: Biden’s Visit Shows the World That the U.S. Stands with the Ukrainian People (Feb. 20, 2023)
• Manufacturers Support Aid for Eastern Europe (Jan. 26, 2023)
• Manufacturers in the U.S. Stand with Ukraine, Memorandum of Understanding between the NAM and the Ukrainian League of Industrialists and Entrepreneurs (Jan. 25 2023)
• Manufacturers Lead with Their Hearts in Ukraine Aid (March 23, 2022)
• Manufacturers United in Support of Ukrainian People, NAM Board of Directors’ unanimous resolution denouncing Russia’s aggression (March 8, 2022)

-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.

Boca Raton, FL—The National Association of Manufacturers today honored NAM board member and Snap-on Chairman and CEO Nick Pinchuk with the Manufacturing Icon Award during the NAM’s spring board meeting in Boca Raton, Florida. The award recognizes leaders who inspire Americans to promote, perpetuate and preserve manufacturing in America.

“Across the industry and across the business community, executives and employees alike look up to Nick Pinchuk. His storied career is a source of inspiration, and he is a wealth of knowledge, a wise counselor and a tireless advocate for the rewarding careers found in modern manufacturing. He has been a tremendous supporter of the NAM and the Manufacturing Institute’s Creators Wanted campaign to build the manufacturing workforce of today and tomorrow, and his policy advocacy on behalf of the industry is best-in-class,” said NAM President and CEO Jay Timmons.

“His presence on television and in the public eye as a principled manufacturing leader, as well as his unwavering service to the NAM and to our industry, makes Nick a true model for business leaders in America. In whatever he does, he demonstrates an unshakeable commitment to the values that have made our country exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity. We’re honored to present this award to Nick in recognition of his outstanding leadership.”

Pinchuk serves on the NAM Executive Committee as the NAM tax, domestic economic and regulatory reform policy vice chair and on the board of directors of the Manufacturing Institute, the workforce development and education partner of the NAM.

-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 more than 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.

NAM President and CEO Jay Timmons has been making the most of his time on the road during the Competing to Win Tour, delivering a strong message to congressional leaders about top manufacturing priorities. He did so again yesterday on permitting reform with congressional leaders in Washington:

• “Some of the biggest obstacles preventing manufacturers—and therefore the entire American economy—from reaching our full potential are the permitting delays, red tape and complicated bureaucracy that have plagued us for decades,” he told the leadership of several House committees.

He went on to cite a number of different areas in which permitting reform is desperately needed, including . . .

Energy: Permitting reform is crucial to almost every sector of energy manufacturing, from oil and gas all the way to nuclear and clean energy technologies.

• “For example,” Timmons noted, “the siting of and infrastructure for hydrogen power generation and transportation and for advanced, small modular and micro-nuclear reactors have progressed far too slowly.”
• “Manufacturers depend on access to reliable and affordable energy to expand, which is why we support reforms that would foster transparent, streamlined and timely federal regulatory processes for the siting, permitting and licensing of energy delivery infrastructure of all types,” he continued.

Transportation: Manufacturers also need railroads, highways, airports and ports to run their operations and get their products out the door.

• “Yet obtaining permit approvals for these projects often takes years, especially when reviews are piecemeal and duplicative,” Timmons pointed out. “[M]any companies are waiting on the sidelines because transportation infrastructure construction moves too slowly—or not at all.”
• “To ensure the broad and beneficial impact of [the bipartisan Infrastructure Investment and Jobs Act of 2021] … it is critical to clear permit backlogs and ease processing timelines,” he said.

Resource development: Manufacturers prioritize sustainability, Timmons noted, but “restricting access to America’s abundant natural resources hinders our ability to strengthen domestic supply chains.”

• “The inconsistent administration of critical mineral policies, for example, has limited our ability to use a wide range of resources that lie on and beneath federal lands—resources that are critical to producing everything from cars to medical devices,” he added.
• “Streamlining resource permitting and leasing policies will help stabilize manufacturing supply chains, control costs for consumers, reduce our reliance on foreign countries and create jobs in the U.S.”

Environmental standards: Manufacturers have worked steadily to improve U.S. air quality, helping to “lead our country to the cleanest air in the modern world,” said Timmons.

• “Unfortunately, when federal agencies continually revise standards before current standards are met and before states have implemented prior mandates, they create unpredictability”—which may mean that new manufacturing facilities get built in other countries instead, where they don’t face as rigorous standards.
• However, if Congress makes regulations more predictable and consolidates review processes, the U.S. “can continue to build on its strong record of environmental stewardship by boosting domestic manufacturing, which is environmentally cleaner than international competitors,” Timmons concluded.

Congressional intent: Congress should make sure that permitting reform isn’t just passed, but also implemented as easily as possible, Timmons advocated.

• It should conform to “on recent and future statutory streamlining efforts such as One Federal Decision,” while making sure federal agencies don’t duplicate each other’s efforts and waste time.

The last word: “Permitting affects every aspect of our lives—from our economic security to our national security,” said Timmons. “[I]f we seize this opportunity to lead, there is no limit to what manufacturers in the United States can accomplish—for the good of our people and for the good of the world.”