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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.

New plans from internet providers are part of the Biden administration’s effort to increase access to broadband and reach more users, according to The Wall Street Journal (subscription).

What’s happening: “Twenty internet providers, including AT&T Inc. [and] Comcast Corp. … agreed to improve subsidized high-speed internet plans they offer to millions of unconnected households.”

• The move is part of the Affordable Connectivity Program that was launched as part of last year’s bipartisan infrastructure plan.
• The infrastructure plan allocated $14 billion to the program as part of the effort to bolster America’s broadband network.

The goal: The Affordable Connectivity Program has failed to reach most of its eligible subscribers because people most in need have no access to the internet and aren’t aware that they’re eligible for a major discount. An important part of the new plans is ensuring that they’re accessible to the most users.

• “Many of the companies, which cover more than 80% of the U.S. population, agreed Monday to either boost the internet speeds that they offer through the program or to cut their rates to $30 a month for low-income and other households that qualify.”

Who’s eligible: An estimated 48 million households are eligible for the subsidy. According to the Federal Communications Commission, about 11.5 million households have already signed up for the subsidy.

• The Biden administration has launched a new website, GetInternet.gov, to provide information to Americans about signing up for the subsidies.

The NAM’s view: The NAM has been a strong supporter of expanded access to broadband for years, citing its importance in the policy blueprint “Building to Win.”

Wyoming is partnering with Battelle Energy Alliance to “‘collaborate in the research, development, demonstration and deployment of advanced energy technologies and approaches,’” including nuclear power, according to The Casper Star-Tribune (subscription).

What’s happening: Wyoming Gov. Mark Gordon intends for the state to “establish a nuclear industry and a sophisticated and advanced manufacturing capacity using Wyoming uranium, Wyoming technology and Wyoming workers,” according to a statement.

• Wyoming is the chosen home for the planned Natrium project, an advanced nuclear reactor to be developed by TerraPower.
• Battelle operates the Idaho National Laboratory.

Memorandum of understanding: A five-year memorandum of understanding between the Wyoming Energy Authority and the Idaho National Laboratory “specifies 14 shared areas of interest,” many of which are related to nuclear and hydrogen power.

Common goal: “According to the memorandum, the shared target is to ‘collaboratively develop a path to global leadership in a carbon-constrained economy ’ and place the state ‘at the forefront’  of the advanced energy sector.”

Owing to Beijing’s “Covid Zero” policy, China’s economy may be facing slowed growth that mimics a recession, according to The Wall Street Journal (subscription).

What’s happening: “Millions of new graduates are struggling to find a job. Business confidence has fallen. Imports have plummeted, and nervous Chinese are socking away more savings.”

• Purchasing manager indices released last weekend by China’s government showed contractions in factory and service-sector activity for April, the second straight month of declines.
• Also dropping are cement production, smartphone shipments and intra-country sales of excavators.
• Youth unemployment is reported at 16%.

Beyond lockdowns: Fallout from the war in Ukraine has increased costs for Chinese businesses and led to less demand for China’s exports.

• Meanwhile, “[r]eal estate, a primary driver of the nation’s economy, went into free fall last year as developers buckled under heavy debts and home sales slumped.”

Why it matters: Long-term slowdowns in China are felt internationally.

• “China was projected to account for a quarter of global economic growth in the five years through 2026, according to data released by the International Monetary Fund last year.”

How to fix it: Loosened “Covid Zero” policies, which have hamstrung supply chains and kept consumers home, would be likely to jumpstart a partial recovery, according to the Journal.

• However, “Chinese officials are pledging to get the economy back on track, without abandoning their tough Covid-control policies. President Xi Jinping … has called for an all-out campaign to rev up growth through more infrastructure spending.”

As most of the world grapples with inflation, China is facing deflation that could push it into “an economic trap,” according to The Wall Street Journal (subscription).

What’s going on: “Prices charged by Chinese factories that make products ranging from steel to cement to chemicals have been falling for months. Consumer prices, meanwhile, have gone flat, with prices for certain goods—including sugar, eggs, clothes and household appliances—now falling on a month-over-month basis amid weak demand.”

• China’s economy is growing, but slowly, and the government recently announced a series of stimulus programs to help.

Parallels with Japan: While most economists see China avoiding a prolonged recession, some “see alarming parallels between China’s current predicament and the experience of Japan, which struggled for years with deflation and stagnant growth” in the 1990s, following collapses in stock market and real estate value.

• If Japan’s fate were to befall China, the latter would face another hurdle: the usual methods for combating these problems would be either unpopular or toothless “due to the country’s heavy debt load.”

​​​​​​​ A mixed bag: A long period of lower prices in China could help bring down inflation elsewhere in the global economy, including the U.S.

• But … “[a] deflationary spell in China would also likely mean weaker Chinese demand for food, energy and raw materials, which big chunks of the world rely on for export earnings.”

Effects of uncertainty: And the longer that prices fall and stay down, the more entrenched deflation becomes—making debts “harder to bear and profits and incomes fall. Companies shed workers to fatten shrinking margins.”
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Manufacturing job openings inched down in June, U.S. Bureau of Labor Statistics data showed, and manufacturers continued to see business challenges in July, according to the ISM® Manufacturing Purchasing Managers’ Index®.

What’s going on: Open positions in the manufacturing sector declined approximately 4.28%, to 582,000 in June from 608,000 in May. Meanwhile, economic activity in the manufacturing industry declined for the ninth month in a row in July.

• While the Manufacturing Purchasing Managers’ Index was 46.4 in July, up from 46.0 in June, any number under 50 indicates contraction.
• In employment, durable goods job openings decreased to 356,000 in June from 379,000 in May. In nondurable goods, openings fell to 226,000 from 229,000 in the same period.

The details: New orders (up to 47.3 from 45.6) and production (up to 48.3 from 46.7) declined more slowly in July, according to the ISM®.

• However, employment fell to 44.4 from 48.1, and exports declined to 46.2 from 47.3.

Hiring: Manufacturing’s net hiring—hires minus separations—in June was 6,000, the same as the pace in May.

• Job openings in the sector remained above pre-pandemic levels.

A new Commerce Department office tasked with dispensing tens of billions of federal funding for domestic semiconductor manufacturing faces a challenging job, according to Roll Call.

What’s going on: “The experts at the CHIPS program office are charged with enticing the world’s largest chipmakers to the U.S. to fashion cutting-edge semiconductors used in weapons and supercomputers, as well as in more ordinary devices like thermostats. The goal is to break the dependence that many American manufacturers of missiles, spy satellites, telecom gear and medical devices have on suppliers primarily based in Taiwan and South Korea.”

• Congress allocated $52 billion for the effort last year.

Why it’s important: “Deploying taxpayer funds and the federal government’s power puts the department and the CHIPS office in a unique position of executing a novel industrial policy: one focused on both national security as well as economic well-being, and one that is expected to back manufacturing plants as well [as] research and development efforts.”

• In recent decades, the most successful U.S. industrial policy interventions have been similar to this one: funding for “high-risk, high-reward” R&D, according to a Peterson Institute study cited by Roll Call.

Making it count: Sens. Mark Warner (D-VA) and John Cornyn (R-TX) are adamant that the money must be doled out judiciously.

• “This is not an economic proposition,” Sen. Cornyn said. “It’s obviously important from an economic standpoint, but national security is the main reason why Sen. Warner and I undertook the legislation.”

​​​​​​​​​​​​​Keen interest:  The new office has received more than 400 statements of interest from semiconductor manufacturers. Preliminary applications will be accepted starting in September.

• Top chipmakers, including Intel and others, “have indicated they may invest as much as $400 billion in the U.S. provided they get some support from the government.”
• Six expert teams will review the applications and decide on the amounts each firm will receive. National security experts will weigh applications based on companies’ security measures and supply chain resiliency capabilities.

The NAM says: “Bolstering domestic chip manufacturing is a security and economic imperative for the U.S.,” NAM Director of Domestic Policy Julia Bogue said.

• “That’s why the NAM supported passage of the CHIPS and Science Act and continues to advocate for actions that will see the U.S. manufacturing more semiconductors.”