Input Stories

The NFIB Small Business Optimism Index rose 2.2 points in October to 93.7, marking the 34th consecutive month below the 50-year average of 98. Meanwhile, the Uncertainty Index rose seven points to 110, the highest reading ever recorded. This high level of uncertainty is making small business owners hesitant to invest in capital and inventory, with 54% of owners reporting capital outlays in October and a net 9% of owners reporting inventory reductions compared to gains. However, uncertainty is expected to fall with the election over.

Although price increases have slowed in recent months, inflation is the top concern for small business owners, with 23% identifying higher input and labor costs as their primary issue. Filling job openings continues to be a top issue for small businesses. In October, 35% of small business owners reported jobs they could not fill, up 1% from September.

A net 26% of small business owners planned price hikes in October, up 1% from the month prior. A net 31% of small business owners reported raising compensation, down one point from September and the lowest reading since April 2021. Following the Federal Reserve’s September interest rate cut, a net 5% of owners reported paying a higher rate on their most recent loan, down 7 points from September and the lowest reading since January 2022. Profitability remained under pressure, mainly due to weaker sales.

The outlook for general business conditions remains negative but has improved significantly from earlier in the year. While small business owners are still facing unprecedented economic adversity, owners remain hopeful as they head toward the holiday season.

Manufacturing activity in New York state grew significantly across most indices in November, with the headline general business conditions index rising 43.1 points to 31.2, the highest reading since December 2021. The new orders index increased to 28.0, rising 38.2 points, and the shipments index grew 35.2 points to 32.5, reflecting sharp increases in both. Unfilled orders fell to -10.3, while inventories improved from -7.5 to 1.0. Delivery times lengthened slightly, while supply worsened to -4.1.

Despite the sharp increase in business activity, employment decreased slightly, with the index for the number of employees falling to 0.9 from 4.1. The average employee workweek improved some, from 4.7 to 6.1, signaling a slight increase in hours worked. Input and selling price diverged, as reflected in the prices paid index falling 1.2 points to 27.8 and the prices received index moving up 1.6 points to 12.4, which means some cost improvement for manufacturers that have been operating in a weakened pricing environment.

Although expectations for future business activity decreased 5.5 points to 33.2 after the previous month’s index hit a multiyear high (38.7), firms continue to feel optimistic about the future. The capital spending index also continued to increase, rising 3.7 points to 13.4 in November.

Industrial production fell 0.3% in October after declining 0.5% in September. The decline in October was influenced significantly by the strike of Boeing workers, with a smaller impact from the lingering effects of two hurricanes. Manufacturing output decreased 0.5%, with aerospace and miscellaneous transportation equipment dropping a dramatic 5.8%. At 102.3% of its 2017 average, total industrial production in October was down 0.3% from the same month last year. Capacity utilization fell to 77.1%, 2.6 percentage points below its long-term average from 1972 to 2023, but was up 1.2% from the same month last year.

In October, major market groups saw mixed results. Among consumer goods, the production of durables decreased 1.4%. On the other hand, the index for nondurables increased 0.4%, with growth in both energy and nonenergy goods. The business equipment index declined 2.7% in October, weighed down by the sharp 13.9% drop in the production of transit equipment, affected for a second month by the strike.

Durable goods manufacturing decreased 1.2%. Apart from the large drop in aerospace and miscellaneous transportation equipment, declines occurred in primary metals (down 3.3%), motor vehicles and parts (down 3.1%) and furniture and related products (down 1.1%), with slight declines in numerous other durable industry groups. Nondurable goods manufacturing, on the other hand, inched up 0.1% in October, with the largest gain in petroleum and coal products (up 0.9%) and the largest drop in printing and support (down 2.6%).

Manufacturing capacity utilization decreased 0.5% to 76.2%, which is 2.1 percentage points below the long-term average.

Nominations for the Manufacturing Leadership Council’s flagship awards are now open.

What’s going on: The Manufacturing Leadership Awards—given annually by the MLC, the NAM’s digital transformation arm—honor manufacturing companies and leaders for the groundbreaking use of digital manufacturing. Those interested in submitting company and/or individual names for consideration for the 2025 awards can do so through Jan. 17, 2025.

• Awards will be given in nine project categories and three individual categories. New for 2025 are Business Model Transformation (for projects) and Women in Manufacturing 4.0 (for individuals).

How they’re evaluated: For the individual categories, the judges—a panel of established digital manufacturing experts from outside the MLC—assess whether nominees have advanced digital transformation at their companies and whether they meet the criteria for being role models to other manufacturing leaders.

• For the project categories, judges evaluate how each undertaking improved manufacturing processes, furthered business goals and advanced company strategy.

What happens next: Finalists will be notified in March 2025 and announced shortly afterward. Winners will be announced at the Manufacturing Leadership Awards Gala next June.

• “The Manufacturing Leadership Awards give the MLC the chance each year to honor some of the remarkable people and endeavors in manufacturing today,” said MLC Senior Content Director Penelope Brown. “We look forward to reviewing the nominations and learning more about the incredible innovation taking place in our industry.”

Get involved: Have a person or project in mind for the 2025 Manufacturing Leadership Awards? Submit their names here.

• MLC members receive one complimentary project entry and one complimentary individual entry.

Nevada’s Thacker Pass lithium mine has received final approval on a $2.26 billion loan from the Department of Energy (Reuters, subscription).

What’s going on: On Monday, Lithium Americas—which is building the Thacker Pass lithium mine project in Nevada with a nearly $1 billion investment from General Motors Co.—closed on a loan from the DOE Advanced Technology Vehicles Manufacturing Loan program. The loan, which has a 24-year term, was approved provisionally in March.

• Thacker Pass, which broke ground in March 2023 just south of the Nevada–Oregon border, was approved at the end of the previous administration and is expected to open later this decade.

The big picture: “The funds are a key part of U.S. President Joe Biden’s efforts to reduce dependence on lithium supplies from China, the world’s largest processor of the electric vehicle battery metal,” according to Reuters.

• Last week, the Biden administration approved another lithium project, by developer Ioneer.

What to expect: “With the loan now closed, Vancouver-based Lithium Americas plans to start major construction, a process that could take three years or longer. The mine’s first phase is expected to produce 40,000 metric tons of battery-quality lithium carbonate per year, enough for up to 800,000 EVs.”

• The project is anticipated to create about 1,800 jobs during construction and 360 full-time jobs once it is up and running.

The Annual Meeting of the Members of the National Association of Manufacturers will be held Wednesday, September 25, 2024. The only agenda item to be considered during the annual meeting of the members will be the election of the NAM Board of Directors slate for the 2025–2026 term.

The meeting will begin at 9:00 a.m. ET and will conclude by 9:05 a.m. ET during the NAM Fall Board of Directors meeting. It will be a hybrid meeting taking place via Zoom and in-person for those attending the Fall Board meeting at the Salamander Washington DC.

Members who wish to vote on the Board slate must participate in the meeting, but you may designate a proxy who is able to participate. Proxies must be duly authorized by completing and returning this proxy form. No individual may serve as proxy for more than one person and no NAM employee may serve as your proxy.

To register, please contact Anne Marie Alaska, Director, Board Initiatives at [email protected].

Texas Instruments and HP are the latest recipients of CHIPS and Science Act funds meant to boost domestic semiconductor manufacturing (Bloomberg and Reuters, subscription).

What’s going on: Texas Instruments will receive $1.6 billion in grants and $3 billion in loans under the 2022 legislation (Bloomberg), while HP will get $50 million in grants (Reuters), the Biden administration announced last month.

• All the awards are pending finalization, and amounts could still change following due diligence by the Commerce Department.

Where it will go: The money will go to different undertakings at each company.

• At Texas Instruments, it “will help pay for one factory in Utah and two in Texas—projects that will cost about $18 billion through 2029—the Commerce Department said in a statement. The effort is expected to generate around 2,000 manufacturing jobs and thousands more in construction,” according to Bloomberg.
• The funding proposed for HP will go toward “projects that build on HP’s expertise in microfluidics and microelectromechanical systems with funding set to support manufacturing of silicon devices critical in life sciences lab equipment used in drug discovery, single-cell research and cell line development,” Reuters reports.
• The HP work is expected to create nearly 150 construction jobs and more than 100 manufacturing positions (MarketWatch).

Why it’s important: Most of the funds from the CHIPS and Science Act “is slated to support production of cutting-edge chips by companies such as Intel Corp. … But the law set aside a minimum of $2 billion for less advanced semiconductors—sometimes called legacy chips—like those produced by Texas Instruments. … Legacy chips are essential to the global economy, powering everything from smartphones to refrigerators to weapons systems. And it’s an area where China is increasing its ambitions,” according to Bloomberg.

• The majority of the measure’s funding has now been announced through more than a dozen proposed awards. Announcements are set to be wrapped up by the end of 2024.

The Senate on Thursday rejected a bipartisan tax package that would have reinstated three expired, manufacturing-critical tax policies (The New York Times, subscription). The NAM will continue its efforts to revive the provisions.

What’s going on: The Tax Relief for American Families and Workers Act failed 48–44 in a procedural vote, 12 votes shy of the 60 required for the bill to advance in the Senate.

• The measure would have restored immediate expensing for research and development costs, enhanced interest deductibility and 100% accelerated depreciation for capital equipment purchases.

Not giving up: The NAM is already at work on its 2025 tax campaign, Manufacturing Wins, through which manufacturers will continue the fight to restore these expired provisions.

• These policies began phasing down in 2022 and 2023, but even more devastating tax increases are scheduled for the end of 2025.
• Manufacturers have already been meeting with legislators to explain the importance of preserving the 2017 tax reform in its entirety—including vital provisions such as the corporate tax rate, the pass-through deduction and more.

What’s next: “Manufacturers look forward to working with Congress to restore these vital bipartisan provisions and prevent further tax increases on manufacturers as we enter the critical tax conversations of 2025,” the NAM said following the Senate vote.

Manufacturers have long been partners of the Consumer Product Safety Commission—working with the agency to keep the public informed and protected—but a lack of transparency at the CPSC in the past few years has stymied businesses’ attempts “to understand how [they] will be regulated,” the NAM told the House Energy and Commerce Subcommittee on Innovation, Data and Commerce ahead of a hearing Tuesday.

What’s going on: The NAM has regularly called for congressional oversight of the CPSC in recent years. Ahead of the “Fiscal Year 2025 Consumer Product Safety Commission Budget” subcommittee hearing, the NAM highlighted several areas of concern for legislators to address:

• Section 6(b) of the Consumer Product Safety Act: “Manufacturers strongly support maintaining the crucial, balanced and effective information disclosure procedures currently mandated in the Consumer Product Safety Act,” said NAM Vice President of Domestic Policy Charles Crain. “Unfortunately, in recent years, the CPSC has attempted to circumvent these standards, releasing statements that lack any scientific data or research or by taking actions without official agency rulemaking.”
• Effective communication of rulemaking and research with regulated businesses: Despite a CPSA requirement that the agency defer to voluntary standards in certain safety-measure compliance cases, “there are recent examples of the agency commencing a proposed rulemaking in an apparent rush to regulate.” The agency has also begun unnecessarily withholding from manufacturers the test reports and analysis they need to create voluntary standards, while giving manufacturers “reduced time … to implement proposed and final rules.”
• Public engagement by CPSC commissioners and staff: “One of the benefits of a small federal agency with multiple commissioners is the availability of commissioners and senior staff to meet with interested parties on relevant topics,” Crain continued. “Unfortunately, in recent years, the CPSC has been less willing to engage in productive conversations with regulated entities.”

The last word: “It is critical that the CPSC effectively communicate and work with manufacturers to ensure that our shared goal of consumer safety is maintained,” said Crain. “The NAM will continue engaging with both the CPSC and Congress to see that the agency is effectively engaging with the manufacturing community.”

Through the NAM’s recently launched 2025 tax campaign, Manufacturing Wins, manufacturers are calling on Congress to prevent several devastating tax increases from taking effect at the end of next year.

One of those scheduled increases is the expiration of the Section 199A pass-through deduction—a critical incentive, created by tax reform in 2017, designed to help thousands of small and medium-sized manufacturers invest in their businesses.

The NAM recently released a tax explainer on the pass-through deduction, breaking down what it is, what it does and why its preservation is vital to manufacturing in the U.S.  Here are the highlights.

Pass-through defined: The defining characteristic of a pass-through entity is that its business profits get “passed through” to the company owners, who then pay taxes on the business’s income on their personal tax returns.

• The vast majority of businesses in America—96%—are organized as pass-throughs, including S-corporations, partnerships, LLCs and sole proprietorships.
• In manufacturing, pass-throughs are typically small, family-owned firms.

What it’s done for manufacturers: The Section 199A pass-through deduction allows pass-through manufacturers to deduct up to 20% of their qualified business income, decreasing their effective tax rate.

• Combined with a lower individual income tax rate included in the 2017 reform (which reduced the top individual rate from 39.6% to 37%), the pass-through deduction has freed up significant capital for smaller manufacturers to reinvest in their businesses.
• For example, 2018 was the best year for manufacturing job creation in 21 years and the best year for wage growth in 15 years.

What’s in jeopardy: Both the pass-through deduction and the lower individual income tax rates are set to expire at the end of 2025—and they’re certain to hit small and medium-sized manufacturers hard.

•  In a recent NAM survey, 93% of pass-through manufacturers said their ability to grow, create jobs and invest in their companies will be stymied if the expirations are allowed to happen.

What should be done: Congress must make the pass-through deduction permanent and keep individual tax rates as low as possible.

The last word: “Small and medium-sized pass-throughs are the backbone of the manufacturing supply chain,” said NAM Vice President of Domestic Policy Charles Crain. “Congress must act before the end of 2025 to preserve the pass-through deduction and prevent devastating tax increases on small businesses throughout the manufacturing sector.”