The NAM is the voice of the manufacturing industry in the United States, speaking out on issues that matter to the men and women who make things in America. As times change, new issues arise, and to stay up to date with the needs of its members, the NAM updates its policy position documents accordingly.
That process—now underway for 2023—takes place with our member companies every four years under the guidance of the NAM Board of Directors. Here’s what you need to know.
The timeline: Proposed changes have been distributed from the NAM policy teams to the respective policy committees, and members have until Oct. 31 to provide their feedback.
- Shortly after Oct. 31, NAM policy committees will convene to consider the proposed changes and any subsequent suggested edits. If needed, working groups will be organized to consider new or revised language on specific issues.
The result: The NAM policy committees will recommend new policy language to the NAM Board based on their engagement with member companies.
- At the February 2024 board meeting, the NAM Board will finalize and approve the policy positions that will guide the NAM for the next four years.
How to participate: Member companies can choose which policy committees they serve on, so as the policy update process commences, companies should contact their membership directors to ensure they are aware of the various policies and committees that may be most important to their own businesses.
The last word: “Our member companies are at the center of this policy update process,” said NAM Managing Vice President of Policy Chris Netram. “The NAM fights every day for a policy agenda that supports manufacturing growth, and this is a critical opportunity for manufacturers across the country to have their say on the issues that matter to them.”
The economic impact of allowing a stricter interest deductibility limitation to remain in effect could be devastating, according to a new EY analysis prepared on behalf of the NAM.
What’s going on: Failure to reverse the stricter limitation that went into effect in 2022 could result in the following losses in the U.S., according to the study:
- 867,000 jobs
- $58 billion in employee compensation
- $108 billion in gross domestic product
More costly every year: Those figures have roughly doubled since the 2022 EY analysis released last year.
- Last year, EY estimated that leaving the stricter limitation in place would result in 467,000 lost jobs, $23.4 billion in lost employee pay and $43.8 billion in lost GDP.
The background: Prior to 2022, companies could deduct interest of up to 30% of their earnings before interest, tax, depreciation and amortization (EBITDA).
- However, since 2022, the deduction has been limited to 30% of earnings before interest and tax (EBIT), a significant change that disproportionately affects manufacturers, given their capital-intensive investments.
What can be done: “A stricter interest expense limitation restricts manufacturers’ ability to invest in new equipment and create jobs,” said NAM Managing Vice President of Policy Chris Netram.
- “Even more, the study finds that manufacturers and related industries bear 77% of the burden of this policy. Congress must act by year’s end to restore a pro-growth interest deductibility standard and allow manufacturers to continue to invest for the future.”
NAM in the news: POLITICO Pro’s Morning Tax newsletter (subscription) covered the study’s release.
Further reading: Visit the NAM’s interest deductibility page to learn more about this issue and how the NAM is taking action.
The world must add or replace nearly 50 million miles of transmission lines in the next 17 years to allow countries to meet climate goals and achieve energy security, according to a new report by the International Energy Agency covered by CNBC.
What’s going on: The amount of transmission line needed—49.7 million miles—“is roughly equivalent to the total number of miles of electric grid that currently exists in the world, according to the IEA.”
- The undertaking “will require the annual investment in electric grids of more than $600 billion per year by 2030,” double current global investment levels in transmission lines.
- Countries must also make changes to the way they operate and regulate their grids.
Why it’s important: Investment in global transmission lines has not kept pace with the growing appetite for renewables, and without replacements and additions to transmission lines, power bottlenecks will become “ever larger.”
Growing gridlock—and demand: “There are currently 1,500 gigawatts of renewable clean energy projects in what the IEA calls ‘advanced stages of development’ that are waiting to get connected to the electric grid around the world.”
- Meanwhile, demand for electricity will only rise as more of the globe moves to electric power.
- But building new transmission lines takes time, owing to lengthy permitting processes—which is why the NAM has long advocated speeding the process in the U.S.
Our view: “The NAM has identified building additional transmission lines as a top priority for the next round of permit reform negotiations,” said NAM Vice President of Domestic Policy Brandon Farris.
- “We will continue to fight to break down barriers to building new projects, including manufacturing facilities, energy generation, transmission lines, bridges, roads and more.”
Sales of existing homes fell to their lowest level in 13 years in September, according to Reuters (subscription).
What’s going on: “Existing home sales fell 2.0% last month to a seasonally adjusted annual rate of 3.96 million units, the lowest level since October 2010, the National Association of Realtors said on Thursday. They are counted at the closing of a contract, and last month’s sales likely reflected contracts signed in August, when the rate on the popular 30-year fixed mortgage vaulted above 7%.”
- Sales fell 1.1% in the South, 4.1% in the Midwest and 5.3% in the West. They rose 4.2% in the Northeast.
Anemic inventory: There was 3.4 months’ worth of unsold existing home inventory for sale in September, a decline of more than 8% from a year ago.
- “A four-to-seven-month supply is viewed as a healthy balance between supply and demand.”
Why it’s happening: Mortgage rates have spiked recently, “mostly because of expectations that the Federal Reserve will keep interest rates higher for longer in response to the economy’s resilience.”
The Biden administration announced broad updates to restrictions on U.S. exports of advanced computing and semiconductor-making equipment to China, according to Reuters (subscription).
What’s going on: “The measures are designed to prevent China from acquiring the cutting-edge chips needed to develop AI technologies such as large language models, which power applications such as ChatGPT but that U.S. officials say also have military uses that present a national security threat.”
- The updated interim final rules announced on Oct. 17 will go into effect Nov. 17 and will “reinforce the October 7, 2022, controls to restrict [China]’s ability to both purchase and manufacture certain high-end chips critical for military advantage,” according to a press release from the Commerce Department’s Bureau of Industry and Security.
Why it matters: “These controls were strategically crafted to address, among other concerns, [China]’s efforts to obtain semiconductor manufacturing equipment essential to producing advanced integrated circuits needed for the next generation of advanced weapon systems” and other technologies that “present U.S. national security concerns,” according to the BIS.
- In an effort to control a wider range of chips, Tuesday’s rules will focus on computing power only and will require companies to notify the U.S. government when they sell chips that come in just under restriction limits.
“Chiplets”: The rules also seek to address “chiplets,” in which small portions of a chip are spliced to make a full chip.
- “Analysts had expressed concern that Chinese firms could use such technology to acquire chiplets that stayed within the legal limits but that could later be assembled in secret into a larger chip that would break the rules,” according to Reuters.
The last word: “By imposing stringent license requirements, we ensure that those seeking to obtain powerful advanced chips and chip manufacturing equipment will not use these technologies to undermine U.S. national security,” said Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler.
The number of new homes being built “showed a substantial rebound” in September, while the number of permits to build declined, according to Markets Insider.
What’s going on: “The Commerce Department said housing starts spiked by 7.0 percent to an annual rate of 1.358 million in September after plunging by 12.5 percent to a revised rate of 1.269 million in August.”
- At the same time, permits—an indicator of future demand for housing—dropped by 4.4% to an annual rate of 1.475 million, following a surge in August.
Less than predicted: Economists had predicted that September housing starts would spike to a rate of 1.380 million from the previous month.
Why it’s important: Mortgage rates have risen to record highs recently, pushed by the Federal Reserve’s still-elevated interest rate target.
- Higher rates have led to a decline in home sales and prices.
Companies’ health care costs are rising steeply, leading finance chiefs to look for alternative ways of attracting and retaining employees, according to The Wall Street Journal (subscription).
What’s going on: “Health-insurance costs, which are among the largest expenses for many U.S. companies, are projected to rise around 6.5% for 2024, according to consulting firm Mercer.”
- “The surge … may add significantly to costs for employer plans that Mercer said already average more than $14,000 a year per employee. Many companies are expected to take on most of the increases … ”
Why it’s happening: In addition to inflation and higher interest rates, rising health care price tags are the result of a combination of higher labor costs in hospitals and elsewhere in the health care system, a rise in elective care (which declined during the global pandemic) and a demand for new drugs.
The response: Finance officers are largely seeking ways to manage the growing costs without “add[ing] pressure to employees’ budgets as health care costs rise,” according to the Journal.
- Whether that will be possible in the longer term will depend mainly on the state of the labor market and how high prices rise.
- Some companies are considering sharing the increased cost burden with employees, while others are pushing preventive care as a way to save money down the road.
The last word: “Manufacturers feel a deep commitment to providing high-quality health care to their employees despite the increased costs of doing so,” said NAM Director of Domestic Policy Julia Bogue.
- “The NAM recently released ‘Manufacturers on the Front Lines of Communities: A Deep Commitment to Health Care,’ which details industry-wide health benefits and trends, as well as federal policy proposals that could jeopardize manufacturers’ ability to continue offering health care plans.”
When Carrie Shapiro began her career as an engineering student at the Georgia Institute of Technology, she didn’t expect to work in manufacturing—but the moment she walked into a manufacturing facility near her school for an interview, she was hooked.
“I’ve had so many opportunities in manufacturing that I never wanted to leave,” said Shapiro. “From the very beginning, I was able to keep learning and growing and making better relationships.”
Today, Shapiro serves as the vice president of sourcing execution at Georgia-Pacific—a pulp and paper company—where she guides procurement and uses her expertise in supply chain operations to benefit the company’s 110 facilities. As a leader in the industry, she’s also focused on helping potential creators understand all that manufacturing has to offer.
A changing world: Shapiro’s role has been especially important over the past few years, as the COVID-19 pandemic and its aftermath forced companies to adjust their supply chains and react to shortages in real time. For Shapiro, that process required rethinking risks, using data effectively and focusing on achieving stability before optimization.
- “The mistake that we often make is we try to optimize something that’s not stable,” said Shapiro. “If you’ve got chaos in your supply chain, you have no business trying to optimize it. You have to stabilize first.”
A need for humans: As Shapiro notes, data has become more readily available than ever before, and new tools are helping organizations make smart adjustments in real time. Yet, human decision-making and critical thinking still have a vital role at the center of manufacturing.
- “Tools are great, software is great, tech is great—but it should be an enabler and not a magic wand,” said Shapiro. “You still have to know your process, understand your current state and know your capabilities across the supply chain to make effective decisions. Tools don’t absolve you from doing the real work of continuous improvement.”
Read the full story here.
A planned offshore wind farm whose developers are billing it as the largest in the world has produced electricity for the first time, according to CNBC.
What’s going on: “Located in the North Sea, over 130 kilometers off England’s northeast coast, the Dogger Bank Wind Farm still has some way to go before it’s fully operational, but the installation and powering up of its first turbine is a major feat in itself. That’s because GE Vernova’s Haliade-X turbines stand 260 meters tall—that’s higher than San Francisco’s Golden Gate Bridge—and have blades measuring 107 meters.”
- Once the installation is complete, the ship will have 277 Haliade-X turbines.
Why it’s a game-changer: “Described by Dogger Bank as the ‘largest offshore jack-up installation vessel ever built,’ in many ways, it’s the pinnacle of an extensive supply chain involving numerous businesses and stakeholders.”
- Thanks to four legs that allow the vessel to lift itself above the water’s surface, the wind farm will be able to operate in depths of up to 80 meters—some 30 meters deeper than fixed-foundation wind farms.
Power producer: Once fully up and running, project developers say the Dogger Bank Wind Farm will have a capacity of 3.6 gigawatts, enough “to power as many as 6 million homes per year.”
- For the sake of comparison, the U.K.’s fully operational Hornsea 2—considered a major wind farm—has a capacity of just over 1.3 GW, according to another CNBC piece.
A complex project: The totality of the undertaking is “huge,” according to one source, and being made more complex “by the use of next-generation turbines and a next-generation installation vessel.”
- Given the immense size of the Haliade-X turbines, “we use a number of specially designed pieces of equipment to transport” them, a GE Offshore Wind spokesperson said.
The NAM’s view: “Offshore wind can be an important part of an all-of-the-above energy strategy that helps meet energy security and decarbonization goals,” said NAM Vice President of Domestic Policy Brandon Farris. “Manufacturers keep leading the way with investments in the next generation of energy technologies—and the NAM will continue to advocate energy policies that provide manufacturers affordable, reliable energy.”
What’s going on: Industrial production increased 0.3% for the month, above the 0.1% gain expected, MarketWatch reports.
- Meanwhile, retail sales rose 0.7% for the month, more than twice the 0.3% rise estimated by Dow Jones, according to CNBC.
The details: In industrial production, “[m]anufacturing rose 0.4% and motor vehicle production rose 0.3%, held down by the ongoing strike against three automakers,” MarketWatch reports.
- For retail, “the biggest increase [was] at miscellaneous store retailers, which saw an increase of 3%. Online sales rose 1.1% while motor vehicle parts and dealers saw a 1% increase and food services and drinking places grew by 0.9%, good for a yearly increase of 9.2%, which led all categories,” according to CNBC.
What it means: The retail numbers “indicate that consumers more than kept up with price increases,” CNBC said, though that could change as employment growth is expected to slow.