Policy and Legal

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.”

Recent changes to the U.S. tax code are threatening manufacturers’ continued success—and they need to be reversed now, Winton Machine Company CEO and NAM board member Lisa Winton told U.S. lawmakers at a recent hearing.

What’s going on: Winton, whose 25-year-old company designs and manufactures machines used in tubular part and coaxial cable fabrication, testified before the House Ways and Means Committee at a hearing last Friday on the state of the American economy.

• Winton spoke about the challenges facing manufacturers and highlighted the impact of two recent changes to the tax code that increase the cost of financing machinery purchases: the phaseout of immediate expensing and limitations on deductions for interest on business loans.
• “While I would like to double the size of my facility, the cost of doing so has risen fourfold over the last several years,” said Winton, whose business is one of approximately 244,000 small manufacturers in the U.S.

Why it’s important: “These changes are like a tax on manufacturing growth,” Winton said.

• Winton expressed concern that “these changes will force our customers to keep using older pieces of equipment, rather than purchasing newer or additional ones, or they will buy cheaper equipment from Asia.”
• In addition to these two harmful changes, Winton spoke about another recent revision requiring businesses to deduct or amortize their R&D expenses over a period of years. This makes R&D more expensive because businesses “can [now] only recover a small portion of those costs each year.”
• In sharp contrast to this treatment, China currently allows a “super deduction” for manufacturers, Winton noted.

More to come: There are more harmful changes on the way. The 20% pass-through deduction is set to expire in 2025, “at the same time that tax rates for pass-through entities like ours go up across the board,” Winton said.

• In addition, a scheduled change to the estate tax could force family-owned businesses to sell off pieces of their companies. 

The last word: “None of these tax changes are fair to our employees, their families [or] our communities,” she said. “We need to fix them so we’re not making it harder to do business in America.”

Immigration reform is an economic necessity—and it needs to happen now in order to spur economic growth and keep manufacturing in the U.S. competitive, NAM President and CEO Jay Timmons told an audience at a recent roundtable in Phoenix featuring Sen. Kyrsten Sinema (I-AZ).

• “Manufacturers want to build consensus,” Timmons said. “Most Americans agree that our immigration system is broken. And we need to fix it, whether it’s major legislation or targeted, specific fixes.”

What went on: The NAM and the Arizona Chamber of Commerce & Industry hosted Sinema last Friday for a discussion on fixing immigration policy and other matters critical to manufacturers.

• A seven-person panel—which included Valley Forge & Bolt CEO Michele Clarke and Intel Corporation State Government Relations Senior Director Jason Bagley—talked about the current challenges facing manufacturers and the urgent need for solutions on immigration, workforce development, tax policy and more.
• Held at the Phoenix facilities of defense-electronics company Mercury Systems, the roundtable was part of the NAM’s Competing to Win Tour, a facility-visit and discussion circuit that began in February. Its aim: to bolster manufacturing competitiveness through conversations between manufacturers, political and community leaders, employees and the media.

What needs fixing: “As I travel across Arizona, I hear from employers of all sizes about the challenges they face filling jobs,” Sinema told the audience of manufacturers and industry stakeholders. “This is especially true in the manufacturing sector. That is why I’ve been hard at work identifying realistic solutions.”

• Indeed, the workforce “problem isn’t going away,” added Timmons, who moderated the event. “We have nearly 700,000 open jobs right now. And 4 million manufacturing jobs will need to be filled by the end of the decade, 2.1 million of which could go unfilled if more people are not brought into the industry … according to research from Deloitte and the Manufacturing Institute, the NAM’s workforce development and education partner.”

How to fix it: Part of the solution is right in front of us, Timmons said.

• “There are many policy fixes that could build our pipeline of skilled employees—people who can excel in manufacturing positions while contributing to our society and building lives for themselves in America.”
• He referenced “A Way Forward,” the NAM’s policy blueprint featuring implementable action items for legislators on immigration reform and related issues, such as the undocumented population and green-card backlog.

NAM on the air: Timmons and Arizona Chamber CEO Danny Seiden were guests on Phoenix radio station KTAR News’ “Mike Broomhead Show” to discuss the Competing to Win tour and the importance of manufacturing jobs.

The Federal Trade Commission is proposing to ban noncompete agreements, but doing so would disrupt the operations of most manufacturers, according to the findings of a recent NAM poll.

What’s going on: In February, the NAM polled manufacturing leaders to learn their thoughts on the impact of the FTC’s proposed rule, which would prohibit employers from imposing noncompete agreements on employees. Among the poll’s key takeaways:

• Approximately 70% of respondent manufacturers use noncompete agreements.
• The ban would cause a disruption for approximately 66% of manufacturers.
• The majority of manufacturers—about 89%—said they use noncompetes that last from six months to two years.
• Approximately half of manufacturers polled said a ban would have a negative impact on their investment in training and related programs.

Why it’s important: “Manufacturers use noncompete agreements only for select workers handling their most sensitive information, which cannot be allowed to fall into competitors’ hands,” said NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling.

• “These agreements are critical for protecting intellectual property. Banning them would force companies to completely change the way they operate and the way teams work together—disrupting workplaces, jeopardizing their ability to develop important new products and ultimately hurting customers.”

What should be done: If the FTC insists on moving forward with a noncompete rule, it should withdraw its current proposal and put forth a more tailored version “with exemptions clearly articulated and justified for the public’s consideration,” NAM Director of Labor and Employment Policy Brian Walsh told the agency.

Washington, D.C. – Following the American Investment in Manufacturing (AIM) Act, bipartisan, bicameral legislation that would reinstate the Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) measure for U.S. businesses, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“America’s leadership in the world and our ability to defend American values depend on a strong and thriving manufacturing industry. The AIM Act will strengthen our ability to make critical investments in machinery and equipment while protecting more than 450,000 American jobs,” said Timmons. “We thank the bipartisan group of House and Senate members who understand that a competitive tax environment is a key driver to ensure that we can continue to grow and invest in manufacturing in America at this critical time.”

Over the past month, both chambers of Congress introduced legislation to 1) restore the immediate deductibility of research and development costs; 2) reverse the new, stricter limit on interest deductibility; and 3) revise the tax code to restore businesses’ ability to take 100% deductions for equipment and machinery purchases in the tax year of purchase.

“While the U.S. tax code is making it harder for manufacturers to grow, other countries are encouraging industrial investment. For example, China is giving manufacturing companies there a 200% deduction for R&D, while the U.S. only offers a fraction of that. The legislation that’s been introduced can help us turn the tables and make it easier for America to out-innovate China,” Timmons added. “So we’re asking Congress and the Biden administration to make passage of these bills a priority so we can build on the successes that we had following tax reform in 2017, when manufacturers were able to keep their promises and invest in their companies and communities across the board.”

Background:

Research and development: On Jan. 1, 2022, a harmful tax change went into effect that makes R&D more expensive in the United States by requiring businesses to deduct their R&D expenses over a period of years.

Read more about the NAM’s work on this provision here.

Interest deductibility: When manufacturers borrow funds to buy capital equipment, the interest they pay on those loans is tax deductible up to a certain limit. But a recent change in the tax law modified how that limit is calculated—shrinking the deduction for companies that invest in long-lived depreciable assets, making debt financing more expensive and  the U.S. an outlier among advanced economies and leaving less capital for job creation and investment.

Read more about the NAM’s work on this provision here.

Full expensing: Under the 2017 tax law, manufacturers were able to deduct 100% of their investments in assets with long, useful lives, supporting their ability to acquire vital equipment and strengthening their competitiveness. However, the ability to deduct 100% of these costs began to phase down at the beginning of 2023 and is set to expire completely in 2027.

See how full expensing has benefited small manufacturers in the United States 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.

Every year the Bryce Harlow Foundation gives its Business–Government Relations Award to an individual who’s given their all to a career in professional advocacy—and this year, that person was NAM President and CEO Jay Timmons.

Honorees: On Wednesday evening in Washington, D.C., the foundation held its 42nd Bryce Harlow Foundation Annual Awards reception and dinner. The night’s awardees were Timmons and Rep. Debbie Dingell (D-MI), the winner of the foundation’s other honor, the Bryce Harlow Award.

• Timmons was introduced by Dow Inc. Chairman and CEO (and NAM Board Chair) Jim Fitterling, who called the NAM leader “ethical down to his bones” and said, “Jay has a reputation of working honestly and earnestly with Democrats, Republicans and Independents, and he earned that reputation because fundamentally he’s committed to policy solutions that create a win–win, not only for both political parties, but also for American manufacturers and American workers.”
• Dingell also praised Timmons’ steadfast, post-partisan approach to manufacturing advocacy. “He has worked to make sure Democrats and Republicans are part of the discussion about manufacturing and understand how critical it is to this country. … To be honored in the same year as you, Jay, means more than you’ll ever know.”
• In his own remarks, Timmons praised both Bryce Harlow Foundation President Barbara Faculjak’s “outstanding leadership” and Rep. Dingell’s “incredible example for [the next] generation.”

Pep talk: Also honored at the dinner were the 2022–2023 Bryce Harlow fellows, a group of 30 graduate students pursuing careers in advocacy through government relations or lobbying. Timmons spoke directly to them for most of his speech.

• “Over the course of your careers, you will face important decisions,” he said. “You’ll ask yourself questions like, ‘Where should I work?’ ‘What will I do next?’ ‘How much can I make?’ … I want to encourage you to ask another: ‘Why?’”
• “The question matters … because if you can answer honestly and feel yourself standing up a little straighter with a sense of purpose, then you’re in the right profession,” he said. “If your ‘why’ is right … then the ‘what,’ ‘where’ and ‘how much’ will take care of themselves.”
• Timmons went on to tell the fellows part of his own story: how he dropped out of college to move to D.C. and “join the Reagan Revolution”—against his parents’ wishes. But even then he was able to answer his own “why.”

The manufacturing “why”: For the NAM, the organizational “why” is “to advance the values of free enterprise, competitiveness, individual liberty and equal opportunity.”

• Timmons told the students that part of their jobs “as advocacy leaders” would be to defend democracy, now under attack in Russia’s war against Ukraine and elsewhere in the world. While not perfect, Timmons said, democracy has done more to improve people’s quality of life than any other system in history.

Your authentic self: “[T]here was always something or someone who told me to change course or that I wasn’t right for a job—including those voices that told me to pack it up when I was outed as a gay man at a time when that wasn’t exactly an asset for a career,” Timmons said. “If I’d listened, I wouldn’t be here.”

• Today Timmons is the president and CEO of the country’s largest manufacturing association and is happily married with three children.
• “So bring your authentic self to the table,” he concluded. “Soak in all the knowledge and wisdom you can from others. But ultimately, have confidence in your own inner voice, your own judgment and your own vision.”

Click here for Timmons’s full remarks.

The NAM is opposing the reintroduction of legislation that would institute “card check” and other labor policies harmful to manufacturers.

What’s going on: A coalition of nearly 100 organizations including the NAM urged Congress last week to reject the Protecting the Right to Organize Act, introduced in the House in February by Rep. Robert C. Scott (D-VA).

• “This bill would limit workers’ right to secret ballot elections, trample free speech and debate, jeopardize industrial stability, threaten vital supply chains, limit opportunities for small businesses and entrepreneurs, cost millions of American jobs and greatly hinder the economy,” they told Congress.

What’s in it: This legislation would significantly worsen—not improve—conditions for employees, the coalition argued. It would:

• Limit workers’ free speech and remove the right to vote via secret ballots.
• Hand confidential worker information over to unions without employee consent.
• Allow unions to choose bargaining units that maximize their chances of winning elections.
• Eliminate right-to-work laws.
• Allow intermittent strikes and remove bans on unions boycotting companies that do business with those engaged in an active labor dispute.

The cost: “The economic impact of the PRO Act would be catastrophic,” the coalition continued, citing one study which “found that the bill’s independent worker reclassification provision alone could cost as much as $57 billion nationwide, while the joint-employer changes would cost franchises up to $33.3 billion a year, lead to over 350,000 job losses, and increase lawsuits by 93%.”

In the spotlight: Many provisions of the PRO Act were raised during a hearing Wednesday of the Senate Health, Education, Labor and Pensions Committee chaired by Sen. Bernie Sanders (I-VT)—demonstrating that this issue and this legislation will remain a top priority for him and others in the Senate.

The NAM wrapped up its “Competing to Win” Tour in Europe with key meetings in Brussels and Paris, cementing important partnerships and building consensus on the imperative to strengthen U.S. alliances with European nations. It also advocated policies that will enable manufacturers to withstand geopolitical risks and threats to global stability.

Brussels power meetings: In Brussels, the epicenter of EU political activity, NAM President and CEO Jay Timmons met with a who’s who of experts deeply involved in trade and economic policy. He touched on a wide range of priorities including free trade agreements, permitting reform in the United States, IP, energy security and regulatory certainty.

• Timmons met with top trade policy leaders in the EU, including Tomas Baert, a trade adviser to European Commissioner Ursula von der Leyen, and Member of European Parliament and Chairman of the Trade Committee Bernd Lange.
• The team also met with BusinessEurope, led by Director General Markus Beyrer and Deputy Director General Luisa Santos, and participated in a roundtable organized by BDI Brussels Head of Office Heiko Willems. The roundtable also included some of BDI’s leading German member companies.

Evening event: The finale of the day in Brussels was a reception co-hosted by NAM Council of Manufacturing Associations member Distilled Spirits Council at the residence of U.S. Ambassador to the EU Mark Gitenstein.

• Timmons and NAM Vice President for International Economic Affairs Ken Monahan discussed the U.S.-EU relationship and the NAM’s priorities with key EU leaders on trade, including European Parliament members Reinhard Hans Bütikofer and Radek Sikorski.

French connection: In France, Timmons met with the ardent champion of manufacturing Benoit Bazin, chief executive officer of Saint-Gobain, one of the world’s largest building materials companies and the manufacturer of innovative material solutions. In North America, Saint-Gobain has approximately 150 locations and more than 15,000 employees.

• The NAM also visited AmCham France. Managing director Eglé de Richemont said following the meeting: “Today, AmCham France had the privilege to welcome three top representatives from the [NAM] to discuss over key themes, including the importance of close economic partnership between the U.S. and France, the criticality of resilient manufacturing in the U.S., France and across Europe and the importance for manufacturers of standing with Ukraine now and tomorrow for the rebuilding of the country.”

The final word: After meeting with other manufacturers on the final leg of his tour, Timmons remarked “We’ve been hard-charging now for almost two weeks, and it’s truly inspiring how unified our partners across the Atlantic are in their solidarity with Ukraine and in meeting this moment with not just talk but also action. We’re just getting started.”

Solid international relationships will see us through any crisis, and artificial intelligence will add jobs to manufacturing, not remove them. Those were just two of the messages driven home by NAM President and CEO Jay Timmons during a Yahoo! Finance interview this week.

• Timmons gave the interview after a busy few days in London as part of the Competing to Win Tour in Europe, where he met with U.K. leaders and the U.S. ambassador to discuss strengthening the U.S.–U.K. alliance.

Trade deal needed: To ensure future manufacturing competitiveness, the U.S. needs a “robust agenda” from the Biden administration—now, said Timmons.

• “We haven’t seen a trade deal negotiated in our country or with our country for four presidencies,” continued Timmons. “We’re growing manufacturing in the United States thanks to the 2017 tax reforms, thanks to the infrastructure investment legislation, thanks to the CHIPS and Science Act.”
• “But … 95% of the world’s customers live outside of the United States. And we can strengthen our supply chains and we can also sell our products if we have the right trade agreements in place.”

Uniting to solve problems: Reinvigorating historic alliances is crucial to overcoming “any obstacle,” said Timmons.

• “[W]e want to make sure that our allies are … able to work together to solve some of these big macroeconomic issues, whether it’s a banking crisis or whether it’s increasing trade opportunities,” Timmons said.

AI: Meanwhile, AI will only expand and improve workers’ jobs, not replace human beings, Timmons said.

• AI is “going to [have] an incredibly positive impact on the sector because it is going to enhance manufacturing capability and output and it’s going to be a supplement to jobs all across the world,” Timmons said.
• “Think about all the technological advances we’ve had over the course of the last few decades, but especially the last five to 10 years. All of these advances have given additional capabilities to the workers.”

Filling jobs: Also needed is a strong workforce. Timmons discussed some of the findings of the NAM’s test Manufacturers Survey, in which nearly 75% of manufacturers cited attracting and retaining quality employees as a top challenge.

• He touched on some of the many initiatives of the Manufacturing Institute, the NAM’s 501(c)3 workforce development and education affiliate, to shore up labor force participation. These include second chance hiring, Creators Wanted—which seeks to inspire tomorrow’s workforce—and more.

The last word: “And that takes this full circle,” Timmons said. “Young people are learning new skills when it comes to technology. Robotics, artificial intelligence, augmented reality, all of those things are what modern manufacturing is all about. And the next generation are the ones that are going to deliver for us.”