Input Stories

U.S. power companies are finding it increasingly difficult to get the large transformers they need to move electricity long distances—and the Department of Energy should step up to help them, the Government Accountability Office said this week, according to E&E News’ ENERGYWIRE (subscription).

What’s going on: A “GAO report called on DOE to create a plan, with deadlines, to overcome growing delays and difficulties U.S. utilities are facing in getting new large power transformers that are required to move electricity across more than 160,000 miles of U.S. high-voltage lines.”

• Most of the transformers are imported from overseas, and there is still a shortage due to pandemic-related supply chain disruptions.
• In some cases, delivery times have more than doubled, and the largest of the transformers can cost up to $10 million.

Why it’s important: “Transformers are critical for the future energy mix, as they are needed to create a larger grid for increased wind and solar generation, according to analysts.”

• In 2027 the demand by North American power companies for large transformers will likely be about twice what it was in 2020, according to the DOE.

What can be done: The DOE should create a plan to get more power companies to take part in voluntary programs to loan out spare large transformers during emergencies, the GAO recommends.

• The largest of these sharing agreements, the Edison Electric Institute’s Spare Transformer Equipment Program, had 57 participating utilities as of March.
• Thirty-one utilities in 28 states have signed onto a grid program to furnish spare transformers during cyberattacks or natural disasters.

The challenges: “[S]hortages of skilled manufacturing craftsmen able to build the transformers’ complex windings are a significant challenge … [DOE] said it is working on expanding apprenticeship programs to address the issue.”

Our take: “Transformers and transmission lines are critical to meet our growing energy security needs,” said NAM Director of Domestic Economic Policy Brandon Farris.​​​​​​

• “The NAM will continue working with the DOE and others to ensure that current and future needs are met, including developing the next generation of the manufacturing workforce and breaking down permitting barriers to expedite the buildout of our grid.”

Manufacturing employment declined in July, marking the third decrease of 2023, according to the Bureau of Labor Statistics.

What’s going on: Jobs in manufacturing dipped by 2,000. Year to date, the sector has added just 11,000 employees, a significant slowdown from its pace of 385,000 in 2021 and 390,000 in 2022.

• However, the number of workers in the industry in July—12,985,000—is just short of the number in February, 12,988,000. The latter was the most since November 2008.
• Overall, the economy added 187,000 jobs in July, coming in under expectations, according to Yahoo Finance.

Wages: Average hourly pay of production and nonsupervisory staff in manufacturing increased 0.3% in July to $26.46, with 5.3% growth in the past year. 

Where employment is up: In July, manufacturing’s largest employment gains were in transportation equipment (up 5,600), computers and electronic products (up 2,500), miscellaneous nondurable goods (up 1,800), primary metals (up 1,700), miscellaneous durable goods (up 1,300) and nonmetallic mineral products (up 1,000).

The NAM says: “Total manufacturing employment has remained relatively resilient despite a challenging economic environment in the sector, including weaker demand, production and an uncertain outlook,” said NAM Chief Economist Chad Moutray.
 

A persistent shortage of construction workers in the U.S. is slowing the completion of everything from single-family homes to major infrastructure projects, according to CNBC.

What’s going on: To meet labor demands this year, “construction firms will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring,” CNBC reports, citing data from Associated Builders and Contractors.

• “The construction industry averaged more than 390,000 job openings per month in 2022, the highest level on record, while unemployment in the sector of 4.6% was the second lowest on record.”

Why it’s important: The industry’s labor shortage is not likely to be resolved any time soon. When combined with rising materials costs, it will only worsen the backlog of projects, which is already at a four-year high.

What’s needed: The bipartisan infrastructure bill of 2021 allocated money for projects, but not for “enticing new workers … or training” them, according to CNBC. Another component of the solution: immigration reform, a policy the NAM has long advocated.

• “More money is going to need to be spent on training additional workers, bringing people into this industry,” a source told CNBC.
• Said another, “We should also be looking at ways to allow more people to lawfully enter the country and work in construction careers, whether that’s a temporary work visa program that’s specific to construction, or broader comprehensive immigration reform.”

Our take: “The record manufacturing construction activity seen in the U.S. is further straining an already tight labor market,” said Chad Moutray, chief economist at the NAM and director of the Center for Manufacturing Research at the Manufacturing Institute, the NAM’s 501(c)3 workforce development and education affiliate.

• “Leaders in the sector are trying to think of ways to differentiate themselves in the competition for talent. Such pressures—along with changing demographics—are likely to keep workforce challenges front and center over the coming years.”

The U.S. and Europe are working to address “China’s accelerated push into the production of older-generation semiconductors,” Bloomberg (subscription) reports.

What’s going on: Last year, the U.S. imposed restrictions on the export of certain advanced technologies to China. Beijing has reacted by investing heavily in building facilities making older chips that do not face such U.S. restrictions.

• Legacy chips—those produced using 28-nanometer-and-larger equipment—remain critical in the global economy as components of everything from electric vehicles to military devices.
• China is on track to build 26 semiconductor factories through 2026, while the U.S. is forecast to construct 16 facilities “that use 200-millimeter and 300-mm wafers.”

Why it’s a problem: “Senior EU and U.S. officials are concerned about Beijing’s drive to dominate this market for both economic and security reasons, [sources] said. They worry Chinese companies could dump their legacy chips on global markets in the future, driving foreign rivals out of business…”

• If that were to happen, Western firms could become reliant on China for the chips, the sources say, and that could pose a national security risk.

Importance of legacy chips: The global pandemic demonstrated that older-model semiconductors remain important, as chip shortages hit companies’ bottom lines.

• The U.S. and Europe have been trying to expand their own chip production to avoid a repeat. Efforts have included the 2021 CHIPS and Science Act, which set aside $52 billion to bolster domestic semiconductor manufacturing in the U.S.

​​​​​​​A problem to solve: “Commerce Secretary Gina Raimondo alluded to the problem during a panel discussion last week at the American Enterprise Institute. ‘The amount of money that China is pouring into subsidizing what will be an excess capacity of mature chips and legacy chips—that’s a problem that we need to be thinking about and working with our allies to get ahead of,’ she said.”

The Department of Energy is loosening proposed energy-efficiency regulations for gas cooktops after reviewing data submitted by one of the NAM’s trade association partners and a utility company, POLITICO (subscription) reports.

What’s going on: “In a notice of data availability to be published in Wednesday’s Federal Register, DOE floated less stringent efficiency requirements for gas stoves. The initial proposal called for a consumption limit of 1,204 … British thermal units, or kBtu, per year, down from the baseline estimate of 1,775 kBtu per year. But the new proposal raises those figures slightly. Now DOE is proposing a limit of 1,343 kBtu per year, down from a recalculated baseline of 1,900 kBtu per year.”

• The Association of Home Appliance Manufacturers and PG&E provided the DOE with data on cooktops with higher consumption rates, which the agency had not used in its initial efficiency testing.
• “Other comments led DOE ‘to better understand’ what features consumers want in a gas stove, including multiple high input rate burners and continuous cast-iron grates,” POLITICO reports.

Why it’s important: Manufacturers would be required to spend more than $2.5 billion to comply with the originally proposed rules, according to the DOE’s own estimates. However, consumers would save just 12.5 cents a month in energy costs.

• The mandates would have been so strict as to make 96% of gas stoves on the market noncompliant.

What Congress has done: In June the House passed the Save Our Gas Stoves Act, which would prevent the DOE from advancing its unworkable stove requirements.

What we’re doing: The NAM has held high-level discussions with policymakers on the importance of feasibility, affordability and consumer choice in rulemaking.

• To that end, in June the NAM and members of the NAM’s Council of Manufacturing Associations and Conference of State Manufacturers Associations created the Manufacturers for Sensible Regulations, which aims to combat the recent regulatory onslaught by federal agencies.

The NAM says: “Manufacturers depend on regulatory clarity and certainty,” said NAM Managing Vice President of Policy Chris Netram.

• 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.”

After an aggressive campaign by the NAM, the U.S. Securities and Exchange Commission has scaled back a damaging cybersecurity proposal that would have been deeply problematic for manufacturers. Yet, the final regulations still impose compliance burdens on publicly traded companies. Here’s what manufacturers can expect now that the rule is finalized.

The background: Last year, the SEC proposed a new set of cybersecurity disclosure requirements for public companies.

• The centerpiece of the rule was a mandate to disclose cybersecurity incidents to the public within four days.
• The proposal also would have required detailed reporting on companies’ policies and procedures for responding to cybersecurity threats.

The problem: Requiring detailed public disclosures about cybersecurity incidents and processes could provide a roadmap to potential hackers, and sharing information about ongoing incidents could compromise efforts to stop an attack.

The NAM response: The NAM urged the SEC to make commonsense adjustments to protect manufacturers from attacks and give companies the flexibility to respond to cybersecurity incidents appropriately.

The result: The final rule is more tailored than the initial proposal, reducing the risk that companies will be forced to expose sensitive information. But its requirements still constitute new compliance burdens on manufacturers.

For the details of the final rule, ​r​​​​ead the full story.

Every manufacturer should have the tools they need to be protected against cyberattacks. Check out NAM Cyber Cover—an exclusive cybersecurity and risk mitigation program for NAM member companies and organizations.

With increased pressure from customers, regulators and even shareholders, sustainable business practices are no longer optional for manufacturers. From reduced energy and materials consumption to lower emissions and ethical sourcing, manufacturers are expected to meet ambitious new goals. Luckily, the Manufacturing Leadership Council has established a new member working group devoted to helping manufacturers reach these objectives.

Support set-up: With five virtual meetings each year, the M4.0 Sustainability and Net Zero Decision Compass Group will explore key issues, best practices and challenges related to creating sustainable, compliant and environmentally friendly operating strategies.

• At the first meeting, “Next Steps in Manufacturing 4.0 Sustainability,” on March 10, attendees heard from 3M Senior Vice President of Environmental Strategies and Fluorochemical Stewardship Dr. Rebecca Teeters and Lexmark International Chief Sustainability Officer John Gagel. Both speakers are also MLC board members.

Why the new group: The MLC decided to create the group after a survey of their more than 3,300 members revealed sustainability was a top member business concern.

• “We decided that given the intensity of interest in sustainability and related subjects, such as net zero and the circular economy, this was an opportunity to dedicate a whole new group to the topic,” said MLC Co-Founder, Executive Director and Vice President David Brousell.

Good for business, too: While manufacturers have been discussing and working toward sustainability for decades, recent growing concerns about climate change and other environmental issues are making the matter increasingly urgent.

• Manufacturers that take on sustainable business practices are seeing competitive advantages ranging from cost savings to higher product quality to increased shareholder and employee satisfaction.

Lessons from manufacturing peers: The new Decision Compass group will share sustainability strategies, the real-world achievements of manufacturing companies, knowledge about the use and application of advanced technologies and timelines for implementation.

• Participants will also be able to see how they stack up against other manufacturing companies.

Get involved: The MLC offers resources to help manufacturers improve their operations and learn about digital manufacturing. To learn more about the sustainability group or find out about MLC membership, email [email protected].

An international treaty now on course to clear the Senate “is the strongest enforceable international accord on greenhouse gases to which the U.S. has agreed to abide,” according to POLITICO Pro (subscription).

The background: The Kigali Amendment, advanced Wednesday by the Senate Foreign Relations Committee, is a change to the Montreal Protocol of 1987, which “banned various chemicals [hydrofluorocarbons, or HFCs] that were depleting Earth’s ozone layer.”

• Negotiated in 2016 by the United Nations, the Kigali Amendment aims to phase down the global use of HFCs, popular refrigerant alternatives and potent greenhouse gases.
• It “is projected to avoid up to half a degree Celsius of warming by 2100, making it a key part of global goals to limit warming.”
• In late 2020, Congress passed legislation requiring the EPA to issue rules phasing down the use of HFCs by 85% by 2036, in keeping with the Kigali Amendment’s requirements.

Facilitating the next generation: “With ratification of the Kigali Amendment, the U.S. will join about 130 countries in a multi-decade plan to phase down the production and consumption of 18 highly polluting substances known as HFCs,” Sen. Jim Risch (R-ID) said, according to POLITICO Pro.

• “The Kigali Amendment will facilitate the transition to the next generation of refrigerants. Our U.S. industry enjoys a strong competitive advantage in the production of successor chemicals that will replace HFCs. Approval of this treaty will ensure our companies have full and fair access to the markets of the other treaty parties.”

Next steps: Assuming all 50 Democrats vote for the treaty, final Senate ratification will require a minimum of 17 Republican votes to reach the required two-thirds majority.

Our take: The NAM applauded the Kigali Amendment’s passage, which it calls for in its climate change roadmap, “The Promise Ahead.”

• “We have been urging policymakers to support Kigali ratification and prove that smart policy can be a win for the economy and the environment,” said NAM Vice President of Energy and Resources Policy Rachel Jones.
• “If we can finish getting this through the Senate, we will have set ourselves on a path to create up to 150,000 jobs in the United States and cut billions of tons of CO2 from the atmosphere. This kind of win-win should be the model for approaching all of our environmental challenges.”

A new overtime rule from the U.S. Department of Labor is likely to change some of the existing rule’s white-collar exemptions. NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling joined us to explain what’s happening.

The background: The overtime rule, part of the Fair Labor Standards Act, dictates that employees must receive overtime pay of at least time and a half for hours worked over 40 in a workweek. It contains exemptions for white-collar workers based on their salaries and duties. If an employee makes a minimum amount of money or is classified as an executive, administrator or professional, they are exempt from overtime pay.

• “The NAM has provided comments over the years to the Department of Labor and the Wage and Hour Division concerning the exemptions from Fair Labor Standards Act minimum wage and overtime requirements for certain executive, administrative, professional, outside sales and computer employees,” said Boerstling. “Manufacturing employees, on average, earn $92,832 in pay and benefits.”

The new action: A new overtime rule is expected soon, and employment law attorneys expect the U.S. Department of Labor to recommend higher salary thresholds for the rule’s white-collar exemptions.

What it means: A new overtime rule that raises salary thresholds for white-collar exemptions would make more employees eligible for overtime pay and potentially cause challenges for employers and even those employees who have worked to advance themselves away from hourly jobs and into salaried company positions. The current salary threshold is $35,568 per year.

Our take: Boerstling made the case directly to the Department of Labor during an April public listening session. “The NAM urges caution in any effort to expand overtime exemptions as manufacturers believe adjustments would be disruptive in a challenging economic and workforce environment,” she said.

• “The manufacturing workforce has tremendous autonomy and latitude in this labor market to address pay and compensation issues directly with their employers.”

Next steps: The NAM continues to work toward a regulatory solution but could have to take legal action to protect employers and manufacturers across the country. Check out the NAM Legal Center to learn how we are working to support our members nationwide.

The last word: “We think that any rulemaking that is being prepared for public release on overtime exemptions for certain white-collar workers should be paused and reconsidered until a later time when supply chain and inflationary challenges have subsided,” said Boerstling.

In the midst of supply chain challenges, truckers say they need more new trucks to meet the current demand for shipping, according to The Wall Street Journal (subscription).

Production delays: The production of heavy-duty trucks has slowed due to an ongoing parts shortage and a long backlog of orders.

• According to industry executives, the delays are preventing trucking companies from adding trucks and replacing old ones at a time when the demand for shipping is high.

Other challenges: The production delays have coincided with a truck driver shortage, high fuel prices and logistics problems associated with supply chain bottlenecks.

The forecast: Market researchers expect production of about 296,000 heavy-duty trucks in 2022. As recently as 2019, the industry produced 344,560 trucks.