Input Stories

The owner of seven oil-and-gas leases that were recently canceled by the Biden administration is readying for a legal fight, according to POLITICO’s ENERGYWIRE (subscription).

What’s going on: The Alaska Industrial Development and Export Authority—which bought the leases from the federal government in 2021—“has vowed to pursue legal action against the federal government for the cancellation of the leases spanning 365,000 acres in the coastal plain of the Arctic National Wildlife Refuge.”

• Last week, the Interior Department announced that it would nullify the leases “based on what the administration called an inadequate National Environmental Policy Act review process.”
• “A willingness to circumvent laws passed by Congress has consequences reaching far beyond ANWR’s boundaries, and will impact future development across this country,” the economic development organization responded in a statement.

Required by law: While canceling the leases appears to fall under Interior’s purview, the agency is obligated by the 2017 tax law to offer two lease sales in ANWR, according to former Interior Secretary David Bernhardt, ENERGYWIRE reports.

Why it’s important: ANWR is estimated to hold more than 10 billion barrels of technically recoverable oil. Drilling for it would create more than 100,000 jobs while generating hundreds of billions of dollars in new government revenue, according to data from the House Committee on Natural Resources cited in USA Today.

Our take: “The administration should be taking actions that strengthen energy security, not weaken it,” said NAM Vice President of Domestic Economic Policy Brandon Farris.

• “The cancellation of the ANWR leases based on the NEPA review process underscores our need to continue to reform our broken permitting system. The NAM continues to push Congress and the administration to develop policies that cut through red tape to develop all energy projects, including renewables, nuclear, oil and gas, hydrogen and more.”

Looking to make the most of the AI computer chips they have, technology companies are increasingly “turning to software that can squeeze more performance out of available chips and help reduce costs,” The Wall Street Journal (subscription) reports.

What’s going on: While larger firms are using hard-to-get graphics processing units to build multiple different AI models that “do things such as detect cybersecurity threats and help improve network performance,” other businesses are using central processing units to do similar tasks.

• CPUs aren’t as powerful as GPUs, but they are easier to find.
• And when “tuned with open-source software tools to get more performance out of them,” CPUs can help businesses meet their processing needs.

Boosting performance: As GPU demand continues to outpace supply, companies are using third-party software to squeeze additional performance from existing GPUs, too.

• One Israeli start-up installs optimization software on client GPUs to “automatically put idle computing power to use to gain better processing efficiency,” according to The Wall Street Journal.
• A Seattle-based startup “is betting that most businesses won’t want to deal with owning and managing an array of AI hardware … so it rents out access to processing power from cloud providers that it speeds up on customers’ behalf.”

Renting the cloud: Indeed, cloud-company giants can offer access to much-needed processing power “by renting it out as they do with computer services,” one source told the Journal.
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Factory orders for manufactured products declined 2.1% in July, after having risen for four consecutive months, while factory shipments increased 0.5%, according to U.S. Census Bureau data.

Orders: Durable goods orders fell 5.2% in July, mostly due to declines in orders of aircraft and aircraft parts.

• However … excluding transportation equipment, factory orders increased 0.8% in July, with durable goods up 0.5%.
• Nondurable goods orders rose 1.1% in the same period.

A spending proxy rises: New orders for core capital goods—nondefense capital goods excluding aircraft, a proxy for capital spending in the U.S. economy—inched up 0.1% in July to $73.60 billion, just shy of the record high of $73.87 billion in May.

• Year-over-year, core capital goods orders have increased 0.8%.

The long view: Orders for new manufactured goods have decreased 0.7% in the past year, with factory orders excluding transportation declining 2.5% year-over-year. 

Shipments: July marked the third consecutive month of increases for factory shipments.

• But in the past 12 months, total factory shipments have declined 0.6%, or 2.3% year-over-year excluding transportation equipment.
• Core capital goods shipments fell 0.3% in July, pulling back for the second month in a row from May’s record high of $74.05 billion.

In related news: Economic activity in the U.S. services sector continued to grow last month, with the ISM® Services PMI recording its eighth straight month of growth, the strongest pace since February, according to Markets Insider.
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Real estate companies are turning to artificial intelligence to help cut emissions from commercial buildings, according to The Wall Street Journal (subscription).

What’s going on: While developers and builders have begun using more energy-efficient design and building methods in recent decades, and governments are introducing stricter energy-use codes for commercial spaces, “more than 80% of buildings don’t have smart systems to efficiently manage their energy use.”

• Commercial real estate manager JLL “has been making a string of investments to bring AI systems to companies looking to cut their emissions. … JLL says it expects 56% of organizations to pay a premium for sustainable spaces by 2025.”
• One of its investments is in a firm that installs electric motors and small computers into building systems to better control heating and cooling.

Why it’s important: “AI building systems learn from historical patterns and the daily habits of occupants to predict and power things on and off.”

• “For instance, software and hardware that automatically manages lights, heating and cooling can help buildings cut 20% or more of their yearly energy use.”

A caveat: Just 10–15% of buildings have systems in place to collect the data needed to make these predictions.

• As one source told the Journal, “Bad data means you can’t do any kind of schedules, rules or more sophisticated use cases around artificial intelligence. You have to have the data.”

Check it out: Speaking of data collection, the Manufacturing Leadership Council (the NAM’s digital transformation division) is hosting an event in December that will help manufacturers envision what a data-driven industry might look like by 2030. Learn more and register here.

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. 

Supply chain problems, PALIoT Solutions is coming for you.

This fall, the New-York-state-based startup, whose name derives from a combination of “pallet” and “IoT,” will begin production of its smart shipping pallets. According to company leaders, these products will do nothing less than revolutionize the way food and goods are transported.

From vision to reality: PALIoT cofounders Paul Barry and Richard MacDonald envisioned pallets “whose positive impact on the environment keeps increasing as more of them are manufactured and deployed,” according to the firm’s website.

• To accomplish this feat, the pallets had to be both far lighter and more durable than typical pallets, which are made of wood and nails.
• After significant research and development, Barry and MacDonald came up with the solution: a polyurea-coated, engineered-plywood pallet that was 20 pounds lighter than its traditional peers and contained a proprietary sensor capable of instant communication with the cloud, making inventory tracking a cinch.

The “secret sauce”: “The ‘secret sauce’ is essentially a smart mesh network,” said Barry, who hails from Ireland and has an electrical engineering and investment banking background. “The PALIoT pallets in a shipment will all talk to each other, say, ‘Hey, I’m here.’ And [after shipping,] because they know they’ve been on a truck, they know they have to report all that valuable inventory and environmental data back to the cloud.”

• PALIoT, which will rent its pallets to customers using a per-pallet, pooling model (with an optional subscription service), acquired exclusive global use of the mist® Mesh Networking protocol. This ensures that communication is highly secure and battery sensitive at all times.
• The company estimates it will initially produce between 650,000 and 700,000 pallets a year in the first phase of the launch.

Read the full story here.
 

Late last week, West Coast dockworkers voted to ratify a long-term employment contract that was agreed upon earlier this summer, The Wall Street Journal (subscription) reports.

What’s going on: Approximately 75% of International Longshore and Warehouse Union members voted in favor of the six-year labor contract with the Pacific Maritime Association.

• This ratification vote formalizes the tentative agreement reached in June, which was preceded by several brief work stoppages, and is the culmination of negotiations that began in May 2022.
• “The ILWU represents about 22,000 workers at 29 ports from California to Washington state.”

Why it’s important: These negotiations, which ultimately took 14 months to resolve, were at times tumultuous, and the resulting supply chain disruptions led to a significant loss of West Coast cargo business to the East and Gulf coasts.

• Together the ports of Los Angeles and Long Beach constitute the busiest ocean trade gateway in the U.S., handling almost 40% of U.S. imports from Asia, according to the Los Angeles Times.
• The NAM consistently advocated for a resolution to these talks and commissioned an economic impact study in 2022 that found even a 15-day shuttering of these two West Coast ports would cost the U.S. economy nearly half a billion dollars a day and 41,000 jobs.

The NAM says: “Ratification of this six-year contract provides manufacturers with the supply chain reliability they need for operational planning and stability,” said NAM Director of Infrastructure and Labor Policy Ben Siegrist.

• “NAM members have overcome countless shipping challenges over the past few years and were at the forefront of calling for this resolution. We are pleased the contract has been ratified.”

The federal permitting process for major transmission lines should soon get a lot easier to navigate, according to POLITICO’s ENERGYWIRE (subscription).

What’s going on: Last Thursday, the Department of Energy proposed “completing environmental reviews and other federal approvals for electric power lines within two years.”

• In addition, “DOE would be the lead agency conducting environmental impact statements and other federal reviews for transmission projects so that developers wouldn’t need to go through multiple federal agencies.”
• Once finalized, the framework will be called the Coordinated Interagency Transmission Authorization and Permits Program.

Why it’s important: The draft revision—a response to the recent debt-ceiling deal—could slash the time it takes to get long-distance power lines built and operational.

• This “could help integrate more solar and wind into the U.S. energy resource mix,” according to ENERGYWIRE.
• Though Congress authorized the DOE as lead federal agency in reviewing electric power lines, this proposal marks the first time the authority has been “formally proposed,” a source told the news outlet.

Developers’ role: The proposal details what developers would have to do under the new process.

• “For example, DOE would require developers to complete resource reports about potential environmental impacts from construction or operation of their projects. Applicants would also need to submit plans for engaging with communities affected by a new transmission line.”

However … CITAP wouldn’t cancel the need for local and state permits.

• “Rather, the goal is to ensure that developers have a clearer and smoother process for obtaining necessary federal permits.”

The NAM’s take: “This is a step in the right direction,” said NAM Vice President of Domestic Economic Policy Brandon Farris. “As part of our push for permitting reform, the NAM has long advocated for a lead federal agency to run point and streamline the permitting process.”

• “The NAM will continue to work with Congress and the administration to make the permitting process more predictable and consolidate the many complex layers of review so the U.S. can continue to build on our shared goals of boosting domestic manufacturing.”

A new COVID-19 vaccine is set for a September release as cases of the new virus variant “Eris” rise nationwide, according to Reuters (subscription).  

What’s going on: “Some public health experts hope that Americans will welcome the new shot as they would a flu jab. But demand for the vaccine has dropped sharply since 2021 when it first became available and more than 240 million people in the U.S., or 73% of the population, received at least one shot.”

• Health care providers and pharmacies will begin offering the updated shots—which target XBB.1.5, “a sub-lineage of the still dominant Omicron variant”—in the second half of next month.
• The new vaccines still need authorization by the U.S. Food and Drug Administration and recommendation by the Centers for Disease Control and Prevention.

Why it’s important: Though the COVID-19 public health emergency ended in May and the private sector has taken on “much of the duty of vaccinating America,” virus-related hospitalizations are up 40% from June’s lows.

• “CDC Director Mandy Cohen said last week in a podcast that … Americans should view these shots as an annual measure to protect oneself, in line with the annual flu shot.”

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.”