Transportation and Infrastructure

Hydrogen demand is likely to skyrocket in the next few decades—if permitting delays and other setbacks don’t stymie it, according to WSJ Pro (subscription).

What’s going on: “A new report from consulting firm McKinsey forecasts a fivefold rise in hydrogen demand to 600 million metric tons a year by 2050, if climate change is limited to 1.5 degree Celsius. On current trajectories, however, that supply could be between 175 million to 291 million metric tons a year if steps aren’t taken to speed up permitting and lower both equipment and investment costs, the report warned.”

• The report identified three major challenges to meeting the rising demand: increased costs, a slow permitting process and “lack of access to capital,” which can be attributed largely to higher interest rates.

Incentives abound: Government incentives for hydrogen are on the rise. Up to $300 billion has been made available worldwide for hydrogen-energy projects this year, a sixfold increase from 2021.

• Last week, the Energy Department announced $7 billion in subsidies to create seven clean-hydrogen “hubs” in the U.S.

More support required: More action from government is still needed—particularly when it comes to allowing hydrogen projects to proceed.

• “Faster permitting times are needed to bring more hydrogen projects online, as well as the renewable energy to power their electrolyzers, industry experts say. A recent report from the International Energy Agency said current project lead times are too long and can act as a barrier to clean hydrogen uptake.”

What we’re doing: Manufacturers have long been urging policymakers to fix the broken U.S. permitting system.

• The NAM recently laid out a multistep plan for Congress “to modernize and update our nation’s antiquated permitting system.”

The world must add or replace nearly 50 million miles of transmission lines in the next 17 years to allow countries to meet climate goals and achieve energy security, according to a new report by the International Energy Agency covered by CNBC.

What’s going on: The amount of transmission line needed—49.7 million miles—“is roughly equivalent to the total number of miles of electric grid that currently exists in the world, according to the IEA.”

• The undertaking “will require the annual investment in electric grids of more than $600 billion per year by 2030,” double current global investment levels in transmission lines.
• Countries must also make changes to the way they operate and regulate their grids.

Why it’s important: Investment in global transmission lines has not kept pace with the growing appetite for renewables, and without replacements and additions to transmission lines, power bottlenecks will become “ever larger.”

Growing gridlock—and demand: “There are currently 1,500 gigawatts of renewable clean energy projects in what the IEA calls ‘advanced stages of development’ that are waiting to get connected to the electric grid around the world.”

• Meanwhile, demand for electricity will only rise as more of the globe moves to electric power.
• But building new transmission lines takes time, owing to lengthy permitting processes—which is why the NAM has long advocated speeding the process in the U.S.

Our view: “The NAM has identified building additional transmission lines as a top priority for the next round of permit reform negotiations,” said NAM Vice President of Domestic Policy Brandon Farris.

• “We will continue to fight to break down barriers to building new projects, including manufacturing facilities, energy generation, transmission lines, bridges, roads and more.”

When Carrie Shapiro began her career as an engineering student at the Georgia Institute of Technology, she didn’t expect to work in manufacturing—but the moment she walked into a manufacturing facility near her school for an interview, she was hooked.

“I’ve had so many opportunities in manufacturing that I never wanted to leave,” said Shapiro. “From the very beginning, I was able to keep learning and growing and making better relationships.”

Today, Shapiro serves as the vice president of sourcing execution at Georgia-Pacific—a pulp and paper company—where she guides procurement and uses her expertise in supply chain operations to benefit the company’s 110 facilities. As a leader in the industry, she’s also focused on helping potential creators understand all that manufacturing has to offer.

A changing world: Shapiro’s role has been especially important over the past few years, as the COVID-19 pandemic and its aftermath forced companies to adjust their supply chains and react to shortages in real time. For Shapiro, that process required rethinking risks, using data effectively and focusing on achieving stability before optimization.

• “The mistake that we often make is we try to optimize something that’s not stable,” said Shapiro. “If you’ve got chaos in your supply chain, you have no business trying to optimize it. You have to stabilize first.”

A need for humans: As Shapiro notes, data has become more readily available than ever before, and new tools are helping organizations make smart adjustments in real time. Yet, human decision-making and critical thinking still have a vital role at the center of manufacturing.

• “Tools are great, software is great, tech is great—but it should be an enabler and not a magic wand,” said Shapiro. “You still have to know your process, understand your current state and know your capabilities across the supply chain to make effective decisions. Tools don’t absolve you from doing the real work of continuous improvement.”

Read the full story here.

A planned offshore wind farm whose developers are billing it as the largest in the world has produced electricity for the first time, according to CNBC.  

What’s going on: “Located in the North Sea, over 130 kilometers off England’s northeast coast, the Dogger Bank Wind Farm still has some way to go before it’s fully operational, but the installation and powering up of its first turbine is a major feat in itself. That’s because GE Vernova’s Haliade-X turbines stand 260 meters tall—that’s higher than San Francisco’s Golden Gate Bridge—and have blades measuring 107 meters.”

• Once the installation is complete, the ship will have 277 Haliade-X turbines.

Why it’s a game-changer: “Described by Dogger Bank as the ‘largest offshore jack-up installation vessel ever built,’ in many ways, it’s the pinnacle of an extensive supply chain involving numerous businesses and stakeholders.”

• Thanks to four legs that allow the vessel to lift itself above the water’s surface, the wind farm will be able to operate in depths of up to 80 meters—some 30 meters deeper than fixed-foundation wind farms.

Power producer: Once fully up and running, project developers say the Dogger Bank Wind Farm will have a capacity of 3.6 gigawatts, enough “to power as many as 6 million homes per year.”

• For the sake of comparison, the U.K.’s fully operational Hornsea 2—considered a major wind farm—has a capacity of just over 1.3 GW, according to another CNBC piece.

A complex project: The totality of the undertaking is “huge,” according to one source, and being made more complex “by the use of next-generation turbines and a next-generation installation vessel.”

• Given the immense size of the Haliade-X turbines, “we use a number of specially designed pieces of equipment to transport” them, a GE Offshore Wind spokesperson said.

The NAM’s view:  “Offshore wind can be an important part of an all-of-the-above energy strategy that helps meet energy security and decarbonization goals,” said NAM Vice President of Domestic Policy Brandon Farris. “Manufacturers keep leading the way with investments in the next generation of energy technologies—and the NAM will continue to advocate energy policies that provide manufacturers affordable, reliable energy.”  ​​​​​​​

The Bridge of the Americas in South-Central El Paso, Texas—one of the largest land ports for U.S.–Mexico trade—restarted commercial operations on a limited schedule yesterday, according to a notice from U.S. Customs and Border Protection.

• It’s a development that the NAM advocated, having engaged in continued talks with the Biden administration and relevant agencies since cargo movement was suspended last month.  

What’s going on: The port of entry reopened at 6:00 a.m. Tuesday and closed at 2:00 p.m., a schedule it will keep temporarily each week Monday through Friday.

• In recent weeks, large numbers of migrants have crossed the Texas–Mexico border, and the CBP stopped commercial movement along the Bridge of the Americas so federal customs agents could assist with the influx.

Why it’s important: “The temporary bridge closure and the Texas Department of Public Safety’s (DPS) enhanced safety truck inspections at El Paso’s two other truck ports of entry have drastically slowed cargo truck crossings in recent weeks between El Paso and Juárez, Mexico,” according to the El Paso Times on MSN.

• Last week, the value of goods in thousands of trucks backed up on the Mexican side of the border “had surpassed $1.5 billion,” according to a source cited by Reuters (subscription).
• Prior to the temporary closure, the bridge had been processing approximately 500 northbound trucks a day, according to the El Paso Times.

The NAM says: “Mexico is the largest trading partner of the U.S. and facilitating trade between the two countries is vital to manufacturers’ operations,” said NAM Director of Trade Facilitation Policy Ali Aafedt. “The NAM will continue to share the impacts of the disruption with the federal government and urge solutions to resolve the continuing backlog.” 
 

Since the onset of COVID-19 in 2020, supply chains have faced extraordinary challenges around the world. In the midst of shortages and disruptions, as well as global conflicts, how can manufacturers ensure that they receive the materials they need and deliver their products on time?

At a recent NAM event, attended by more than 75 executives from both manufacturing companies and association partners, Supply Chain Insights Founder Lora Cecere addressed the question of how the industry can build resiliency into the supply chain of the future. Here’s some useful advice from her keynote speech, called “Supply Chain Workshop: Connecting and Securing the Supply Chain for 2030.”

Defining resilience: As Cecere noted, in many cases manufacturers may have different ideas about what resilience represents—and it’s important to settle on a clear definition.

• “I define resilience as the ability to have the same cost quality and customer service given the level of demand and supply variability,” she said.

Differentiating supply chains: While most manufacturers talk about the supply chain as a unified system, Cecere encouraged participants to differentiate various kinds of supply chains from one another.

• “We have responsive supply chains that are all about time—things like flu vaccines and bathing suits,” which must be shipped during certain seasons, Cecere observed.
• “And then there’s the agile supply chain, which is very low volume and not predictable. We can’t measure that in the same way we measure the efficient supply chain, but we need to manage flow.”
• “We don’t have just one supply chain. We have multiple supply chains,” she emphasized.

Putting customers at the center: As businesses design and adjust their supply chains, customers can get lost in the equation, Cecere cautioned. In one exercise she has used in her research, she asks participants to draw a supply chain—and the results she’s received show how many manufacturers are leaving out an important piece of the puzzle.

• “Most people will start with a truck, smokestack, then a factory, a mill,” said Cecere. “But isn’t the supply chain really about the customer? And how do we align the customer from the customer’s customer to the supplier’s supplier? … The role of the supply chain is the delivery to the customer.”

Using data effectively: According to Cecere, about 80% of supply chain data is not used. She encourages manufacturers to look creatively at the wide range of data available to generate useful insights.

• “We’re not looking at all the data we have, and we’re not thinking hard enough about how we use it,” she said.

Developing purple unicorns: Cecere encouraged participants to develop teams of “purple unicorns”—people with strong supply chain domain knowledge who can also innovate—and allow them to test new ideas and learn from failure.

The last word: “Supply chain excellence is not functional excellence—it is the ability to drive outcomes,” said Cecere. “This cannot be about the lowest cost; this has to be about the best potential of flow for cost, quality, customer service and inventory.”

Learn more: For more information, check out the full presentation here.

Since the onset of COVID-19 in 2020, supply chains have faced extraordinary challenges around the world. In the midst of shortages and disruptions, as well as global conflicts, how can manufacturers ensure that they receive the materials they need and deliver their products on time?

At a recent NAM event, attended by more than 75 executives from both manufacturing companies and association partners, Supply Chain Insights Founder Lora Cecere addressed the question of how the industry can build resiliency into the supply chain of the future. Here’s some useful advice from her keynote speech, called “Supply Chain Workshop: Connecting and Securing the Supply Chain for 2030.”

Defining resilience: As Cecere noted, in many cases manufacturers may have different ideas about what resilience represents—and it’s important to settle on a clear definition.

• “I define resilience as the ability to have the same cost quality and customer service given the level of demand and supply variability,” she said.

Differentiating supply chains: While most manufacturers talk about the supply chain as a unified system, Cecere encouraged participants to differentiate various kinds of supply chains from one another.

• “We have responsive supply chains that are all about time—things like flu vaccines and bathing suits,” which must be shipped during certain seasons, Cecere observed.
• “And then there’s the agile supply chain, which is very low volume and not predictable. We can’t measure that in the same way we measure the efficient supply chain, but we need to manage flow.”
• “We don’t have just one supply chain. We have multiple supply chains,” she emphasized.

Learn more: To hear more from Cecere, attend “Manufacturing in 2030: The Coming Data Value Revolution,” an event of the NAM’s digital-transformation arm, the Manufacturing Leadership Council, Dec. 6-7 in Nashville, Tennessee. Register here.    

Read the full story here.
 

In the push for more critical minerals, governments and companies worldwide are looking to “a new but also old source”: closed mines, or brownfield sites, The Wall Street Journal (subscription) reports.

What’s going on: “[O]pening new mines takes years—particularly when faced with strong local opposition—and delays might hamper policymakers’ efforts to diversify these supply chains. Even with recent investment announcements, analysts are forecasting supply shortfalls.”

• Reopening shuttered mines is often a quicker and less painstaking process because it allows the companies to “avoid damaging new land and work with local communities that have a memory of economic activity the industry can bring,” as a source told the Journal.

A successful start: One Swedish mining company is seeking to reopen an old copper-and-zinc mine in Norway that closed 25 years ago owing to low copper prices. “Last month, the local municipality unanimously approved plans to reopen” the mine.

• Several American firms are now seeking to reopen closed U.S. sites in the Southwest, and other projects are being planned in Italy and Germany.

​​​​​​​A “shift” in the U.S.: A U.S. company with plans to reopen an old gold mine in Idaho recently received funding from the Defense Department, which recognized the importance of the site as a source of antimony, a much-needed mineral in the defense sector.

• “The shift we are seeing in the United States is a growing recognition that we must secure supply chains, and a way to do that is bringing mining home and that means getting the public comfortable to bring mining home,” an executive at the firm told the Journal.

New orders for manufactured goods increased in August after declining in July, according to U.S. Census Bureau data.

Factory orders: New orders rose 1.2% in August following a 2.1% decrease the previous month.

• Factory orders for durable and nondurable goods increased 0.1% and 2.1%, respectively, but declines in nondefense aircraft and components pulled down durable goods demand.
• Excluding transportation equipment, new factory orders jumped 1.4%, rising for the third month in a row.

Core capital goods: New orders for core capital goods—or nondefense capital goods excluding aircraft, a proxy for capital spending in the U.S. economy—increased 0.9% to a record high of $73.95 billion in August.

Factory shipments: Factory shipments rose 1.3% in August, marking the fourth consecutive monthly increase.

• Total factory shipments have risen 0.5% over the past year, dipping 0.9% year over year when transportation equipment is excluded.
• Factory shipments excluding transportation equipment have increased 1.0% year to date.

Shipments of core capital goods: Shipments of core capital goods rose 0.7% in August, to an all-time high of $74.38 billion, reflecting 2.6% growth over the past 12 months.

On Sept. 19–20, the NAM convened the inaugural North American Manufacturing Conference in Washington, D.C., along with its counterpart associations from Mexico and Canada, the Confederation of Industrial Chambers of Mexico and Canadian Manufacturers & Exporters.

What’s going on: The conference provided an opportunity for North American manufacturing executives and government representatives to share perspectives on the opportunities and challenges facing the sector across the region. At the conference, industry leaders discussed the need to:

• Ensure that North America has the affordable and reliable energy needed to support the manufacturing industry;
• Support more regional competitiveness, greater growth and the success of the United States–Mexico–Canada Agreement; and
• Address regional workforce needs in the U.S., Mexico and Canada.

Deepening ties: On Wednesday, the NAM, CONCAMIN and CME signed a memorandum of understanding that will serve as a roadmap for future cooperation between the three organizations and support close economic ties between the U.S., Mexico and Canada.

• The memorandum calls for the organizations to share information about each one’s services and activities, and to work together to shape the continent’s future manufacturing agenda.
• In addition to leaders from the NAM, CONCAMIN and CME, speakers at the event included U.S. Trade Representative Katherine Tai, ExxonMobil Senior Vice President Neil Chapman, Toyota Motor North America Executive Vice President – Product Support and Chief Quality Officer Chris Nielsen, Rep. Adrian Smith (R-NE), Bombardier Head of U.S. Strategy Tonya Sudduth, Energy Transfer Co-CEO Tom Long and Caterpillar Inc. Chief Technology Officer and Senior Vice President of Integrated Components and Solutions Division Karl Weiss.

Common principles: “Shared values, shared prosperity” was a central theme of the conference, echoing President Biden’s remarks at the U.N. General Assembly earlier this week.

• “As president of the United States, I understand the duty my country has to lead in this critical moment; to work with countries in every region linking them in common cause; to join together with partners who share a common vision of the future of the world,” President Biden said in New York on Wednesday.
• “There’s never been a greater need for us to stand together,” NAM President and CEO Jay Timmons said. “The world is caught between different political and economic systems. Our system here in North America enriches lives and lifts people up into freedom and prosperity, while other systems oppress their people and rob them of their liberty,” he continued, adding that the USMCA, of which the NAM is a longtime advocate, serves as a reminder “of what we can achieve when we work together.”

Strengthening the region: Throughout the conference, discussions focused on three components of a successful North American economy—growth, resilience and competitiveness—and the critical role manufacturers play in that system.

• “Today, we live in a new reality,” CONCAMIN President José Antonio Abugaber Andonie said. “The commercial competition with China, the pandemic, the conflict in Ukraine … [all] place us before a second great industrial transformation in North America. … Some call it nearshoring, friend-shoring, ally-shoring or reshoring. No matter the name, the truth is that this phenomenon is modifying the structure of international industrial organization. North America is the epicenter of this transformation.”
• Added CME President and CEO Dennis A. Darby: “Manufacturers are an important driver of economic development and prosperity. We are key players in the changes and challenges of the 21st century.”