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The NAM met with North American trade ministers last week in Cancun, Mexico, where it urged them to take up key trade priorities for manufacturers.

What happened: The NAM led a delegation from the American business community, which participated in a roundtable discussion ahead of the third United States–Mexico–Canada Agreement “Free Trade Commission” on July 7 in Cancun.

• Attendees at the roundtable event included NAM President and CEO Jay Timmons, U.S. Trade Representative Katherine Tai, Canadian Minister of Small Business, Export Promotion and International Trade Mary Ng, Mexican Secretary of the Economy Raquel Buenrostro and business executives from the three countries, including Rockwell Automation Chairman and CEO Blake Moret.

Shared values: The NAM underscored the importance of an investment climate underpinned by core democratic principles, such as transparency and the rule of law.

• “We believe in democracy,” Timmons said. “However imperfect, this system fosters free enterprise, competitiveness, individual liberty and equal opportunity. These values make manufacturing strong in our countries.”
• He added that each year North American manufacturers contribute $3 trillion to the U.S., Canadian and Mexican economies.

What must be done: Though the USMCA already creates advantages for North American manufacturers, the agreement’s full potential can only be realized if the three countries work together to address certain key challenges, Timmons told the attendees. Some of the main hurdles include:

• Mexico’s power-generation policies, which have long favored Mexican state-owned energy companies and led to higher bills for manufacturers that must use existing energy-supply contracts;
• Permitting delays for U.S. projects in Mexico that undercut American firms and reduce energy supply to North American manufacturers and consumers;
• Mexico’s expanded food-labeling requirements and bans on the sale of some U.S. foods and nonalcoholic beverages to minors, which unjustly restrict U.S. exports;

Read the full story here.

The explosive growth of artificial intelligence is leading semiconductor makers to move quickly to create “designs that stack chips together like high-tech Lego pieces,” according to The Wall Street Journal (subscription).

What’s going on: “‘Chiplets’ can be an easier way to design more-powerful chips, according to industry executives who call the technology one of the most significant advances since the dawn of the integrated circuit more than 60 years ago.”

• The technology has the potential to deliver more powerful, cost-effective semiconductors, sources told the Journal.
• Last year, some of the world’s largest technology companies, including Qualcomm and Intel—which recently announced products containing chiplets—formed a coalition to craft chiplet-designing standards.

How it works: “A typical consumer device such as a smartphone contains many types of chip[s] for functions including data processing, graphics processing, memory, telecommunications and power control.”

• “The chips are delicately tethered to minuscule wires and ensconced in a protective plastic casing, forming a package that can be fixed to a circuit board.”
• “With the new chiplet packaging, engineers have found ways to bolt together pre-existing chips, the equivalent of using a few Lego pieces to build a toy car.”

The caveats: Chiplet manufacturing is not cheap, however, and the technology requires its own performance-verification process.

• What’s more, chiplets “aren’t suited to every function,” and lend themselves better to high-end desktop computers than mass-marketed cell phones.

China’s role: It is estimated that China controls 38% of the semiconductor assembly, testing and packaging market, a fact that “poses two potential risks for the U.S. While many American companies have been working with factories in China to handle these specialist chip-making roles, the supply chains could be tangled by a geopolitical crisis or another pandemic.”

• “In addition, the U.S. has imposed export controls on advanced semiconductor technology and could seek to expand controls in the future.”​​​​​​​

Manufacturers across the United States are driving economic expansion while also supporting sustainable business practices, enhancing diversity in the workforce and combatting climate change. Yet, politically motivated activists threaten to slow this progress by insisting on their own narrow agendas. Recent actions by the Securities and Exchange Commission will empower these groups and divert resources from manufacturers’ investments in job creation and business growth.

As the Financial Services Committee in the House of Representatives begins a monthlong hearing series on environmental, social and governance topics and other issues related to the proxy process, NAM President and CEO Jay Timmons is calling on Congress to rein in the SEC’s regulatory overreach and keep activists out of the boardroom.

Depoliticizing corporate governance: Activists on the left and right are increasingly abusing the proxy ballot to advance narrow social and political agendas. The SEC has taken steps in recent years to support and empower these activists.

• The NAM is suggesting reforms to the rules governing shareholder proposals that will prevent activists from hijacking the proxy ballot in pursuit of political agendas unrelated to long-term business growth and shareholder value creation.

Reining in proxy advisory firms: Despite their significant conflicts of interest, errors and lack of transparency, proxy firms exercise outsized influence on corporate governance. More oversight and accountability are needed to protect manufacturers and Main Street investors from these powerful actors.

• The NAM is pressing Congress to ensure that proxy firms are regulated appropriately by the SEC—including by requiring that the firms disclose and manage their conflicts of interest and allow companies to review their draft recommendations.

Read the full story here.

California’s port system will get a $1.5 billion upgrade, according to Sourcing Journal (subscription).

What’s going on: “The Port of Los Angeles has been awarded $233 million in grants, while the Port of Long Beach received $383 million. The Port of Oakland got $119 million in funding, and the Port of Hueneme received $80 million.”

• “$1.2 billion will go to 15 projects designed to increase the capacity to move goods throughout the state’s global trade gateways while lessening environmental impacts on neighboring communities.”
• At Los Angeles, grant-funded improvements are set to include “a project that augments an existing partial roadway that directly serves 10 percent of all waterborne containers entering and exiting the entire United States.”

The background: The investment announcement by California Gov. Gavin Newsom late last week came less than a month after the Pacific Maritime Association and the International Longshore and Warehouse Union—dockworkers and their employer, respectively—reached a tentative six-year labor agreement at all 29 West Coast ports.

Why it’s important: The grants will decrease port congestion, boost business, add jobs and help operations use more zero-emissions energy, sources told the publication.

What we’re saying: “These types of congestion- and capacity-focused upgrades will ensure that ports across California remain operationally sound for years to come,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.

• “As with the historic investment funded by the bipartisan infrastructure law, these improvements will keep products flowing and manufacturing lines open.”

To learn how sectors and businesses are using artificial intelligence, The Economist (subscription) created an index of firms in the S&P 500—and the results show that “even beyond tech firms the interest in AI is growing fast.”

What’s going on: “We looked at five measures: the share of issued patents that mention AI; venture-capital (VA) activity targeting AI firms; acquisitions of AI firms; job listings citing AI; and mentions of the technology on earnings calls. … [C]lear leaders and laggards are already emerging.”

The findings: In the past three years, approximately two-thirds of the companies examined by The Economist have placed a job ad that refers to AI. One of the sharpest increases in such mentions has been among chipmakers.

• The number of registered AI-related patents rose between 2020 and 2022.
• This year, about 25% of venture deals by S&P 500 companies involved AI start-ups, an increase from 19% just two years ago.

Outside Silicon Valley: While the index found that the most “enthusiastic” users of AI are technology companies, “[b]eyond tech, two types of firms seem to be adopting AI the quickest.”

• Data-heavy sectors, including insurance, pharmaceutical and financial-services companies “account for about a quarter of our top 100.” In this category, Abbott is building AI-powered medical tools.
• The other category of company quickly adopting AI includes “industries that are already being disrupted by technology,” such as automakers, telecom, retail and media. Among these are Ford and General Motors, which are using AI in electric-vehicle manufacturing.

The last word: AI use may have some drawbacks, including cybersecurity risks, potential legal liability and possible inaccuracy of results. However, these “must be weighed against the potential benefits, which could be vast.”

The Federal Energy Regulatory Commission granted all remaining permits to the Mountain Valley Pipeline project in Virginia and West Virginia on Wednesday, allowing it to resume construction after a pause of more than a year, E&E News’ ENERGYWIRE (subscription) reports.

What’s going on: “In a unanimous order issued Wednesday, the commission said that all work on the 303-mile pipeline could proceed. … The commission also authorized FERC’s Office of Energy Projects to approve any future modifications to the Mountain Valley project as proposed by its sponsors—as long as the director of the office finds them ‘to be needed to complete construction.’”

• FERC approval comes just days after the project received its final water-crossing permit from the Army Corps of Engineers.
• The debt-ceiling deal signed into law this month by President Biden contained provisions requiring approval for the MVP, which the agency first approved in 2017.

Why it’s important: “The pipeline has been described by [supporter and West Virginia Sen. Joe] Manchin and others in Congress as a poster child for … the nation’s inefficient energy permitting system.”

• The MVP—the only natural-gas project under development in Appalachia—will help deliver clean, affordable energy from Appalachian shale reserves to customers in the eastern U.S.

A win for timely permitting: “In its order Wednesday, FERC also said it was setting aside its policy of generally considering requests for rehearing before allowing construction.”

What’s next: Developers plan to restart construction “shortly” and finish this year.

The U.S. economy grew more robustly in Q1 of 2023 than previously calculated, according to a large upward revision from the Commerce Department on Thursday, CNBC reports.

What’s going on: “Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.”

Why it’s important: The news may indicate that the U.S. is not headed toward economic recession.

• A separate report released this week shows that layoffs were below expected levels, “indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points.”
• Unemployment claims were down last week, too, according to the Labor Department.

The NAM says: “While the latest NAM Manufacturers’ Outlook Survey  revealed that most manufacturers predict a recession in the next 12 months, it is also possible that the U.S. economy could achieve the ‘soft landing’ that the Federal Reserve and other policymakers have been seeking,” said NAM Chief Economist Chad Moutray.

• “This is particularly true if the labor market remains solid and if spending continues to hold up. The current outlook is for the U.S. economy to expand 1.7% in 2023, with 1.2% growth in 2024.”

For Fernando Torres, the vice president of operations at thermoplastics manufacturer Greene Tweed, the issue of immigration is personal. In 1996, at the age of 16, Torres immigrated to the United States. He was undocumented for a time, and he was forced to figure out how to stay afloat.

His story: Alone, without stable residency and barely speaking the language, Torres had a harrowing start in the U.S. But he worked his way through community college, where he excelled in math courses even though he wasn’t yet fluent in English. Torres attributes his love for math and science to his grandfather, who he says is the smartest man he’s ever met.

• “I had a difficult situation at the age of 16 in a new country without knowing the culture or the language, asking, what am I going to do?” said Torres. “Living in this country, it’s the country of opportunities, so I had to find ways to make it work and pursue the American dream.”
• “But, as an undocumented person, the jobs available were not pretty. Whether I was washing dishes at a seafood restaurant or cutting the lawns in Arizona in the middle of the 120-degree- weather summers, I just had to find a way to survive.”

Entering the industry: After community college, Torres was accepted into Arizona State University’s program for aerospace engineering—and eventually, he found a place in the commercial sector at Greene Tweed. Today, he’s a U.S. citizen, and he’s just as passionate as ever about the value of immigration.

Immigration and manufacturing meet: Torres has seen the skills gap in manufacturing firsthand, and he knows how difficult it is to fill critical jobs. That’s one reason why immigration is so important to the manufacturing industry, he pointed out.

• “There is a shortage of people,” said Torres. “Skilled laborers are very difficult to find in our country, and retirements are outpacing anyone that’s coming in. There’s not enough people to run our factories—and if we want the economy to grow, we need people to grow it.”

Read the full story here.

There was notable growth in energy-sector jobs last year, according to a new Department of Energy report cited by The Hill.

What’s going on: The number of positions in both traditional and renewable energy grew from 2021 to 2022.

• Jobs in renewables increased 3.9%, while conventional-energy jobs grew even more. Positions in natural-gas fuel rose 24%, those in coal fuel rose 22% and those in petroleum 13%
• “Overall, the energy sector grew by nearly 300,000 jobs, employing 7.8 million people in 2021 and more than 8.1 million in 2022.”

Outsize expansion: The energy sector’s job growth was more significant than that of jobs in general.

• “The report said jobs in the battery electric vehicle field had the most growth overall, expanding by 27 percent from 2021 to 2022.”

The NAM’s view: “The growth in energy-sector jobs demonstrates the strength of domestic energy production, but misguided regulations could undo all this momentum,” said NAM Vice President of Energy & Resources Policy Brandon Farris. “The NAM is working to achieve permitting reform and rein in unbalanced regulations so it doesn’t go to waste.”

The Federal Reserve will likely raise interest rates again in the near future, Chairman Jerome Powell said Wednesday, according to The Wall Street Journal (subscription).

What’s going on: Powell said that because the Fed lifted rates so quickly last year, the effects haven’t been fully realized yet.

• “‘Policy hasn’t been restrictive for very long … so we believe there’s more restriction coming,’ Powell said during a panel discussion with other central bankers at the European Central Bank’s annual symposium in Sintra, Portugal.”
• Core inflation will probably not reach the Fed’s target of 2% until 2025, Powell added.

The background: While central banks throughout the world have increased interest rates quickly in the past year in an effort to control inflation, they “have been astonished so far at the resilience of their economies to higher borrowing costs.”

• Earlier this month, the European Central Bank raised its rates a quarter percentage point. Last week, the Bank of England raised its key interest rate by a relatively aggressive half percentage point, citing a resilient economy, tight labor market and large pay increases for workers.
• At its meeting earlier this month, the Fed left the benchmark federal-funds rate at 5% to 5.25%, following 10 consecutive rate increases at prior meetings.

What it means: “Slowing down rate increases, including by possibly raising rates at every other meeting, represents an ‘effort to get more information from the data to see how much restraint is really coming,’ [Powell] said.”

What’s next: Most central banks—including the Bank of England—will probably raise rates again in the near future, according to the Journal.