Overregulation and Workforce Challenges Weigh Heavily on Manufacturing Sector
Optimism Sinks to Pandemic Lows in Q3 Outlook Survey
Washington, D.C. – The National Association of Manufacturers released its Manufacturers’ Outlook Survey for the third quarter of 2023, which registered the lowest level of optimism among NAM members (65.1%) since Q2 2020, as the sector continues to confront a tight labor market, unbalanced federal regulations and critical policy debates in Congress.
“Manufacturers continue to be challenged in today’s economy, but what this survey makes clear is that unbalanced federal regulations are harming families and communities, with nearly two out of three manufacturers reporting that the regulatory burden is preventing them from hiring more workers or increasing pay and benefits,” said NAM President and CEO Jay Timmons. “Congress and the administration can help correct this trend by restoring sensible regulations, enacting further permitting reforms, taking action to keep our tax code competitive and other bipartisan steps to strengthen manufacturing in America and build on the progress we achieved with tax reform, the Bipartisan Infrastructure Law, the CHIPS and Science Act and more.”
Key Survey Findings:
- Only 65.1% of respondents felt positive in their company’s outlook, edging down from 67.0% in the second quarter. It was the fourth straight reading below the historical average (74.9%).
- Concern about an unfavorable business climate was the highest in six years (Q2 2017).
- The survey found that 69.1% of small manufacturers, and 63.2% of all respondents, would hire more workers or increase compensation if the regulatory burden decreased.
- More than 70% of manufacturers would purchase more capital equipment if the regulatory burden on manufacturers decreased, with 48.6% increasing compensation, 48.6% hiring more workers, 42.5% expanding their U.S. facilities and 38.4% investing in research.
- The top challenges facing manufacturers include attracting and retaining a quality workforce (72.1%), weaker domestic economy (60.7%), rising health care/insurance costs (60.1%), unfavorable business climate (56.7%), increased raw material costs (45.5%) and supply chain challenges (37.8%).
You can learn more at the NAM’s online regulatory action center here.
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 $2.91 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.
Employee Overtime Rule Would Cost Manufacturers
An overtime pay rule proposed last week by the Biden administration could cost employers—including manufacturers—up to $664 million over a decade, according to Inc. magazine.
What’s going on: A draft regulation set forth last week by the Labor Department “would require employers to provide overtime pay to salaried workers who earn less than $1,059 per week, or around $55,000 per year. The current overtime threshold is $35,568. The Labor Department is responsible for setting the threshold that requires employers to pay out overtime.”
- In compliance with the Fair Labor Standards Act, many companies already pay overtime to hourly employees who work more than 40 hours a week. While the FLSA doesn’t apply to salaried workers, the new requirement would.
Why it’s problematic: If the rule goes into effect, its cost to employers could be as high as “$664 million (with a 7 percent discount rate) over a 10-year period,” according to the Labor Department—and that’s a price manufacturers can ill afford, according to the NAM.
- “Manufacturers have spent the past several years adapting operations and personnel management resources to meet the evolving needs of their workforce in a post-pandemic environment, including through improved wages and benefits and productive workplace accommodations,” said NAM Managing Vice President of Policy Chris Netram.
- “The … proposed rule would inject new regulatory burdens and compliance costs to an industry already reeling from workforce shortages and an onslaught of other unbalanced regulations.”
What’s next: Once published in the Federal Register, the draft regulation will be subject to a 60-day public comment period.
Manufacturers Signal Concerns with Proposed DOL Overtime Rule
NAM: DOL’s proposed rule would inject new regulatory burdens and compliance costs to an industry already reeling from workforce shortages
Washington, D.C. – In response to the U.S. Department of Labor’s issuance today of a proposed rule altering the exemptions for overtime eligibility under the Fair Labor Standards Act, National Association of Manufacturers Managing Vice President of Policy Chris Netram issued the following statement:
“Manufacturers have spent the past several years adapting operations and personnel management resources to meet the evolving needs of their workforce in a post-pandemic environment, including through improved wages and benefits and productive workplace accommodations. The DOL’s proposed rule would inject new regulatory burdens and compliance costs to an industry already reeling from workforce shortages and an onslaught of other unbalanced regulations.
“Creating new regulatory processes and imposing additional mandatory costs will act as a drag on the sector and upend productive employer–employee relations. We look forward to expressing our concerns with this proposal directly to the DOL and administration leaders as the process moves forward.”
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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.
NAM: Auto Worker Strike Would Harm Economy
As manufacturers continue to reel from supply chain disruptions, the NAM is calling for a swift resolution to forestall a potentially devastating United Auto Workers strike.
What’s going on: The UAW is negotiating a new labor agreement with important automotive manufacturers, as the current contract expires Sept. 14.
Why it’s important: The automotive manufacturing industry in the U.S. is one of the strongest and most productive in the world, and it significantly supports the health of the U.S. economy.
- A strike of 143,000 UAW members against Detroit’s “Big Three” auto manufacturers could mean an economic loss of $5.617 billion after just 10 full days, according to a new report by Anderson Economic Group.
- Nationwide, every $1 spent in the transportation-equipment sector causes another $1.59 to be spent elsewhere—for a total economic impact of $2.59, according to NAM calculations using 2021 IMPLAN data.
- In 2022, the total value-added in motor vehicles and parts in the U.S. was $171.6 billion, according to the Bureau of Economic Analysis.
State-level impact: In 2019, a 42-day auto-worker strike at one of the Detroit manufacturers “sent the state of Michigan into a one-quarter recession” and resulted in an economic loss of $4.2 billion, according to reporting by The Detroit News.
- As of 2021, the latest year for which this data is available, Michigan’s total output from motor vehicles, bodies and trailers, and parts manufacturing was $37.5 billion, accounting for 37% of total manufacturing output in the state, according to the BEA.
- At the same time, Michigan had 175,745 full- and part-time employees in the sector, or 28.7% of all manufacturing employees in the state.
- Meanwhile, the total output of Illinois’ auto sector accounted for 19.3% of the state’s total manufacturing output, while employment came to 23.6% of the state’s manufacturing employees.
Undermining manufacturing in the U.S.: “Manufacturers in America, especially in the automotive sector, operate in an integrated supply chain, which means that small and medium-sized manufacturers around the country—in union and non-union shops—would endure the consequences of a stoppage. As we continue to emerge from the global pandemic and work to get our economy on a sustainable track, a strike would be devastating for working families across our country,” said NAM President and CEO Jay Timmons.
- “President Biden has prioritized strengthening manufacturing in America, but that will be quickly undermined if a strike occurs. The administration should be encouraging a swift resolution to avoid ripple effects throughout the broader manufacturing economy and in communities from coast to coast.”
Rep. Emmer, NAM Visit Glenn Metalcraft
Workforce challenges and the regulatory onslaught against manufacturers were some of the key topics covered during a recent NAM meeting with House Majority Whip Tom Emmer (R-MN) in Princeton, Minnesota.
What’s going on: Emmer met NAM leadership last Monday for a facility tour of heavy-gauge metal spinnings company Glenn Metalcraft, led by its president and CEO, Joe Glenn.
- On the walkthrough, Emmer got to see and hear the impact of the current legislative deluge hitting manufacturers.
- “My visit to Glenn Metalcraft demonstrated the need to address the regulatory state overwhelming manufacturers in the heartland,” Emmer said. “Small and medium-sized manufacturers are working hard to grow their businesses and increase compensation for employees, but those efforts are undermined by new regulations and the lack of permanent, competitive tax policies to promote research and development and capital investment.”
“Fighting to thrive”: Glenn spoke candidly about his and other manufacturers’ current struggles with the excessive mandates handed down by federal agencies.
- “Manufacturers across the country are fighting to thrive under the weight of an increasing number of unbalanced and often unfeasible regulations from agencies across the federal government—all amid an uncertain economic environment,” Glenn said before thanking Emmer for “giving us a voice.”
- The majority of manufacturers—more than 63%—say they now spend over 2,000 hours a year complying with federal mandates, according to the NAM’s Q2 2023 Manufacturers’ Outlook Survey.
Tax treatment of R&D: Emmer’s support of the American Innovation and R&D Competitiveness Act—which would permanently restore immediate research-and-development expensing for small businesses for 2022 and all subsequent years—has been instrumental in the legislation’s progress, NAM Managing Vice President of Communications and Public Affairs Jamie Hennigan told the whip. Now we just need to move the issue forward, he added.
- Glenn underscored the importance of full expensing when he told Emmer that it had helped his company open new facilities.
- Emmer agreed on the necessity of competitive tax provisions and said he, too, wanted to see them reinstated.
A persistent problem: NAM leaders and Glenn also addressed another ongoing challenge for manufacturers in their discussion with Emmer: the acute shortage of skilled workers.
- The difficulty of attracting and retaining skilled workers has consistently ranked among the top problems cited by manufacturers in the Outlook Survey, as Hennigan pointed out.
The last word: “Manufacturers have made it clear that the [Biden] administration’s regulatory agenda could easily derail manufacturing’s recent success,” NAM President and CEO Jay Timmons said in a statement after the visit.
- “Glenn Metalcraft and so many others are forced to make tough decisions as agencies issue unbalanced regulations that threaten our sector’s ability to grow and compete.”
- “The positive effects of tax reform, the Bipartisan Infrastructure Law and the CHIPS and Science Act are all being undermined by the growing regulatory burden, and I want to thank Whip Emmer for spotlighting this threat in his home state of Minnesota.”
Rep. Emmer, NAM Visit Glenn Metalcraft
Workforce challenges and the regulatory onslaught against manufacturers were some of the key topics covered during a recent NAM meeting with House Majority Whip Tom Emmer (R-MN) in Princeton, Minnesota.
What’s going on: Emmer met NAM leadership last Monday for a facility tour of heavy-gauge metal spinnings company Glenn Metalcraft, led by its president and CEO, Joe Glenn.
- On the walkthrough, Emmer got to see and hear the impact of the current legislative deluge hitting manufacturers.
- “My visit to Glenn Metalcraft demonstrated the need to address the regulatory state overwhelming manufacturers in the heartland,” Emmer said. “Small and medium-sized manufacturers are working hard to grow their businesses and increase compensation for employees, but those efforts are undermined by new regulations and the lack of permanent, competitive tax policies to promote research and development and capital investment.”
“Fighting to thrive”: Glenn spoke candidly about his and other manufacturers’ current struggles with the excessive mandates handed down by federal agencies.
- “Manufacturers across the country are fighting to thrive under the weight of an increasing number of unbalanced and often unfeasible regulations from agencies across the federal government—all amid an uncertain economic environment,” Glenn said before thanking Emmer for “giving us a voice.”
- The majority of manufacturers—more than 63%—say they now spend over 2,000 hours a year complying with federal mandates, according to the NAM’s Q2 2023 Manufacturers’ Outlook Survey.
Tax treatment of R&D: Emmer’s support of the American Innovation and R&D Competitiveness Act—which would permanently restore immediate research-and-development expensing for small businesses for 2022 and all subsequent years—has been instrumental in the legislation’s progress, NAM Managing Vice President of Communications and Public Affairs Jamie Hennigan told the whip. Now we just need to move the issue forward, he added.
- Glenn underscored the importance of full expensing when he told Emmer that it had helped his company open new facilities.
- Emmer agreed on the necessity of competitive tax provisions and said he, too, wanted to see them reinstated.
A persistent problem: NAM leaders and Glenn also addressed another ongoing challenge for manufacturers in their discussion with Emmer: the acute shortage of skilled workers.
- The difficulty of attracting and retaining skilled workers has consistently ranked among the top problems cited by manufacturers in the Outlook Survey, as Hennigan pointed out.
The last word: “Manufacturers have made it clear that the [Biden] administration’s regulatory agenda could easily derail manufacturing’s recent success,” NAM President and CEO Jay Timmons said in a statement after the visit.
- “Glenn Metalcraft and so many others are forced to make tough decisions as agencies issue unbalanced regulations that threaten our sector’s ability to grow and compete.”
- “The positive effects of tax reform, the Bipartisan Infrastructure Law and the CHIPS and Science Act are all being undermined by the growing regulatory burden, and I want to thank Whip Emmer for spotlighting this threat in his home state of Minnesota.”
House Majority Whip Emmer, NAM Spotlight Cost of Regulations and Policies to Boost Manufacturing
Princeton, MN – The National Association of Manufacturers hosted House Majority Whip Tom Emmer (R-MN) at Glenn Metalcraft for a facility tour on Monday to discuss the impact of the current regulatory burden manufacturers are facing across federal agencies.
Leaders also discussed manufacturers’ policy priorities as outlined in the latest version of “Competing to Win,” the NAM’s comprehensive blueprint to bolster manufacturers’ competitiveness.
“My visit to Glenn Metalcraft demonstrated the need to address the regulatory state overwhelming manufacturers in the heartland. Small and medium-sized manufacturers are working hard to grow their businesses and increase compensation for employees, but those efforts are undermined by new regulations and the lack of permanent, competitive tax policies to promote research and development and capital investment,” said House Majority Whip Tom Emmer. “I want to thank the National Association of Manufacturers and Glenn Metalcraft for providing insight that will guide my work in Congress.”
“Manufacturers across the country are fighting to thrive under the weight of an increasing number of unbalanced and often unfeasible regulations from agencies across the federal government—all amid an uncertain economic environment,” said Glenn Metalcraft President and CEO Joe Glenn. “Glenn Metalcraft would like to thank Whip Emmer and the National Association of Manufacturers for giving us a voice and calling attention to this issue.”
“Manufacturers are struggling to navigate substantial regulations from Washington on top of the deluge of new laws from St. Paul. We appreciate Whip Emmer for expanding our state-level efforts on the national stage,” said Minnesota Chamber President and CEO Doug Loon. “The National Association of Manufacturers is an excellent partner in championing policies for businesses to grow and compete globally. We appreciate their efforts with the Biden administration and Congress to hold agencies accountable and deliver sensible regulations.”
“The barrage of federal regulations from Washington has created serious concern across our industry, with manufacturers reporting that it’s standing in the way of job creation, investment and wage growth. Manufacturers have made it clear that the administration’s regulatory agenda could easily derail manufacturing’s recent success. Glenn Metalcraft and so many others are forced to make tough decisions as agencies issue unbalanced regulations that threaten our sector’s ability to grow and compete,” said NAM President and CEO Jay Timmons. “The positive effects of tax reform, the Bipartisan Infrastructure Law and the CHIPS and Science Act are all being undermined by the growing regulatory burden, and I want to thank Whip Emmer for spotlighting this threat in his home state of Minnesota.”
Background: Recently, the NAM, members of the NAM’s Council of Manufacturing Associations and Conference of State Manufacturers Associations launched Manufacturers for Sensible Regulations, a coalition addressing the impact of the current regulatory onslaught coming from federal agencies.
According to the NAM’s Q2 2023 Manufacturers’ Outlook Survey, more than 63% of manufacturers report spending more than 2,000 hours per year complying with federal regulations, while more than 17% of manufacturers report spending more than 10,000 hours. The NAM survey also highlighted that only 67% of manufacturers are positive about their own company’s outlook, the lowest percentage since Q3 2019. It shows the consequences of regulations: If the regulatory burden on manufacturers decreased, 65% of manufacturers would purchase more capital equipment, and more than 46% would increase compensation.
-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.
How Manufacturers Can Tap into a Large, Talented Workforce
Discipline, reliability, a team-player mindset, leadership—manufacturers are looking for all these qualities in the talent they recruit. What if companies could tap into a population not only equipped with these skills but experienced in using them in high-stakes situations?
Well, the Manufacturing Institute—the workforce development and education affiliate of the NAM—has good news, if you haven’t heard it already: this population exists, and it’s military talent. Transitioning service members, veterans, National Guard members, reservists and military spouses have a wealth of skills and experience that translate easily into a manufacturing context.
So how can manufacturers reach these workers and make the best use of them? The MI recently convened both military and manufacturing leaders in Fayetteville, North Carolina, for its third Workforce Solution Series event, where they answered this question and offered a range of useful advice. Here are some of the highlights.
Generally speaking: Major General Eugene J. LeBoeuf, Deputy Commanding General, U.S. Army Reserve Command, highlighted the talents and skillsets that Army reservists can offer the manufacturing industry, including agility, a can-do attitude and a thorough grounding in engineering, logistics and mechatronics.
- With nearly 190,000 soldiers, the Army Reserve comprises much of the readiness force of the U.S. Army. Many of these reservists are underemployed or unemployed, which means they represent an opportunity for manufacturers.
- Manufacturers interested in hiring from this labor pool can partner with the Private Public Partnership Office, which connects companies with reservists at no cost.
Reaching military talent: Several panelists emphasized the importance of developing recruitment processes that encourage military talent to apply and interview for manufacturing jobs.
- “Make sure that the requirements you’re listing in your position descriptions are actually required. Do you really need someone to have a master’s degree to get the job done?” asked Rob Patton, vice president of Fayetteville Cumberland Economic Development Corporation.
- As a recently transitioned service member, James Goppert, HR business partner at WestRock, explained some of the challenges that military talent may face when entering the workforce. “Having to explain military skills and certifications to a civilian in an interview was strange. It would have been helpful to have someone on the other side who understood my experiences.”
Open to all possibilities: Jennifer Goodman, senior manager of talent initiatives at Coca-Cola Consolidated, drew on her experiences as a military spouse. “Military spouses are 92% women and have a 22% unemployment rate. That’s a huge labor pool that’s going underemployed or unemployed.”
- While relocation is often a concern for companies, Goodman points out that it does not have to be a disadvantage. “Think of manufacturers who have locations across the country. Maybe you can start a military spouse at one location and then move them to another. Or, if they’ve proven themselves after a few years, you could transition them to remote work.”
- “The benefits don’t stop with the one military spouse you hire,” she added. “We’re a very loyal community with great word of mouth and a larger referral network.”
The last word: “Don’t underestimate the value of an event like this Solution Series can have. You can take the information, energy and passion that you get from meeting with people who have the same goal of building a stronger economy and use it to power you forward,” said Nathan Huret, economic development director for Catawba County.
Learn more: To get started—or continue—with hiring military talent, check out the extensive resources of the MI’s Heroes MAKE America initiative, which prepares prospective military workers for new and rewarding careers in manufacturing.
Manufacturers: DOE Gas Stove Rules Revision Is Step in Right Direction
Washington, D.C. – Following the announcement that the U.S. Department of Energy has modified its proposed energy-efficiency rules for gas stoves to be less restrictive, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:
“Manufacturers depend on regulatory clarity and certainty. Throughout the year, the Department of Energy has proposed an unprecedented slew of regulations, and many were aimed at home appliances. The DOE is now taking steps toward a solution that is less likely to raise production costs significantly for manufacturers, and less likely to reduce the available features, performance and affordability for consumers.
“Manufacturers remain committed to working with the DOE and all federal agencies to ensure that proposed rules and regulations are practical, feasible and environmentally sound without harming our ability to create well-paying jobs and investment in the United States.”
The NAM, along with members of the Manufacturers for Sensible Regulations, have been highlighting the negative impact of unbalanced regulations on manufacturers, noting the agency’s own data showed that 96% of existing gas stove models currently available would not comply.
Background: According to the NAM’s Q2 2023 Manufacturers’ Outlook Survey, more than 63% of manufacturers report spending more than 2,000 hours per year complying with federal regulations, while more than 17% of manufacturers report spending more than 10,000 hours. The NAM survey also stressed that only 67% of manufacturers are positive about their own company’s outlook, the lowest since Q3 2019. It shows the consequences of regulations: If the regulatory burden on manufacturers decreased, 65% of manufacturers would purchase more capital equipment, and more than 46% would increase compensation.
-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.
House Financial Services Approves NAM-Supported ESG Package
The House Financial Services Committee has spent the last month holding hearings about environmental, social and governance policies that impact American businesses—and the NAM has been fighting for manufacturers every step of the way. This week, the committee held a markup to pass a package of legislation on the topic, and the NAM’s priorities were front and center.
The issue: Manufacturers in the U.S. are at the forefront of climate stewardship and innovation even as they power the U.S. economy, yet politically motivated activists and proxy advisory firms are making it difficult for manufacturers to succeed.
- Recent actions from the U.S. Securities and Exchange Commission have empowered these groups. From unworkable ESG disclosure mandates to new standards encouraging shareholder activism to a lack of oversight of proxy firms, manufacturers are getting squeezed.
NAM in action: The NAM has advocated aggressively on behalf of manufacturers, pressing Congress to curb the impact of activists, proxy firms and the SEC on public company governance.
- NAM President and CEO Jay Timmons urged Congress to make changes that would protect manufacturers and Main Street investors, while NAM Managing Vice President of Policy Chris Netram testified before the Financial Services Committee about the need for action.
- “Congress must step in to depoliticize the business decisions that impact the lives and life savings of millions of Americans,” said Timmons. “Manufacturers are determined to create jobs, lead the economy and improve the quality of life for all Americans. We are counting on [Congress’] leadership to counter the SEC’s regulatory overreach and help us achieve these goals.”
The result: The House committee has embraced the NAM’s proposed reforms, a huge victory for manufacturers across the United States. The legislation approved by the committee this week would:
- Prevent activists from hijacking the proxy ballot in pursuit of agendas unrelated to long-term business growth and shareholder value creation;
- Rein in proxy advisory firms and limit their outsized influence on corporate governance;
- Reinforce asset managers’ fiduciary duty to Main Street investors and retirees; and
- Ease ESG disclosure mandates by requiring that public companies only report information that is material to their shareholders.
The last word: “Manufacturers strongly support the Financial Services Committee’s efforts to rein in the SEC’s regulatory overreach, keep activists out of the boardroom and protect Americans’ investments in manufacturing growth,” Netram said prior to the committee’s markup. “[W]e look forward to working with [Congress] to ensure that manufacturers can continue to drive economic expansion in the U.S. and support American competitiveness on the world stage.”