Input Stories

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.”  ​​​​​​​

Industrial production and retail sales both rose in September and exceeded growth expectations, according to MarketWatch and CNBC.

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.
 

Economists polled by The Wall Street Journal (subscription)—including NAM Chief Economist Chad Moutray—say they now believe that the U.S. will likely avoid a recession.

What’s going on: “In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year.”

• Economists on average expect gross domestic product to increase 2.2% in Q4 of this year from a year earlier, which is “a sharp upward revision” from the last survey.

Why it’s happening: Playing a role in the revised outlook are declining inflation, an interest rate that the Federal Reserve has held steady at its past two meetings, a robust job market and surprisingly strong recent economic growth.

A “soft landing”: While that growth and job creation are both expected to weaken in the first half of next year, “the latest forecasts suggest confidence in the Fed’s ability to achieve a so-called soft landing, in which inflation falls without a recession.”

• However, recent events—such as the Israel–Hamas war—could alter the accuracy of these predictions, given the potential effect on energy prices.

Our take: “Despite weaknesses in manufacturing demand and production and a multitude of challenges globally, consumers and businesses continue to spend, providing resilience to the U.S. economy,” Moutray told us.

• “Even with recent cooling, the labor market and wage growth remain solid, and firms continue to make investments in the domestic market. While real GDP is likely to slow in the next few quarters following a very strong Q3, the ‘soft landing’ scenario has become more probable in recent months.”

The Justice Department has reached an agreement with the American Civil Liberties Union that would give benefits to thousands of migrant families separated at the border under the previous administration’s policies, according to ABC News.

What’s going on: “Under the proposed agreement, the Justice Department says, new standards would be established to limit migrant family separations in the future. The settlement would prohibit separations unless there are concerns regarding the wellness of the migrant child, national security issues, medical emergencies or in the case of criminal warrants.”

• The deal—on which a federal judge must still sign off—would also cover any medical costs incurred because of the separations.
• If approved, it would stay in effect for six years. 

Why it’s important: “[U]nder the settlement, more than 3,900 children and their families would be eligible for temporary relief from future deportation for up to three years, with a chance to renew. Members of those families would also be granted work authorizations.”

• More than 75% of the originally identified families that were separated have either been reunited or given the information they need to reunite, according to a Biden administration official.
• “The agreement further expands the number of families that will be eligible for humanitarian parole and reunification, meaning that the ACLU and other organizations will be receiving information on separated families that was previously unknown,” according to ABC News.

Previous policy: A policy in place for four months in 2018 “mandated prosecutions for all suspected illegal border crossings, which led to parents being deported while their children stayed in U.S. custody or were placed in foster care.”

The last word: “The NAM has long called for policy that explicitly prohibits the separation of minor children from their parents, which is what we lay out in ‘A Way Forward,’ our immigration-policy document,” said NAM Director of Domestic Policy Julia Bogue.

Logistics companies are increasingly using “flexible workers” to fill open positions, according to The Wall Street Journal (subscription).

What’s going on: More operators, competing with other employers that allow workers to make their own hours, are offering scheduling and shift flexibility.

• They’re using specialized software to do it, one source told the Journal, adding that the practice is one of the ways logistics firms are hiring in the runup to the holiday season.

Why it’s important: This “flexibility in a field known for rigid schedules and grueling workloads is a sign that the practices of app-driven operators are seeping into more traditional workplaces, particularly in a tight market for blue-collar workers.”

Vetted and ready: Not just anyone can fill a warehouse-worker slot, in part “because industrial jobs require specific training and expertise, logistics experts say.”

• To ensure those they bring on are qualified, logistics companies have begun using warehouse-tailored gig-worker apps, in which “[w]orkers set their availability in advance … and go through a background screening process” with the app company.
• Logistics companies often use traditional staffing agencies “particularly for the peak holiday season. But some are looking to fill jobs when they need people in a more targeted way, such as Monday mornings to catch up with e-commerce orders that came in over the weekend.”

A supplement, not replacement: Even companies that plan to stick with full-time employees are seeking ways to use the gig model to their advantage.

• “PepsiCo is testing a platform that allows warehouse workers to easily swap shifts from their smartphones, among other functions, said John Phillips, senior vice president of customer supply chain and global go-to-market.”

What sort of computer can evaluate 67 million potential solutions in 13 seconds? Only a quantum computer. But what sort of problem has 67 million solutions to begin with?

Many manufacturing challenges do, from optimizing supply chain logistics to finding the most efficient way to load millions of pallets. In recent years, another mind-bendingly complex problem has begun to occupy the industry: how to get potentially dangerous chemicals in a category known as PFAS out of use and out of our environment.

Quantum computing firm D-Wave says that quantum holds the key, as its massive computing power could find new ways to remove or remediate the chemicals, or even help identify which of the thousands of chemicals in this class are indeed dangerous. We recently spoke to D-Wave Global Government Relations and Public Affairs Leader Allison Schwartz to get the details.

How it works: As Schwartz explains it, quantum is “a completely different form of computing.”

• “Due to superpositioning and quantum entanglement, quantum can look at all possibilities at once and come back with an answer very quickly,” she added.
• However, some of the best solutions are a product of both classic computers and quantum, an option known as “hybrid” applications. For example, Davidson Technologies collaborated with D-Wave to create a hybrid solution that produced the aforementioned 67 million scenarios in 13 seconds.
• “Classical computing alone can’t do that,” Schwartz observed.

When quantum meets PFAS: So how does this help with PFAS? Schwartz told us that there are two different types of quantum computing that would prove useful.

• The first, annealing quantum computing systems, are superior at providing optimized solutions. These systems can quickly run through millions of scenarios that model potential chemical spills, methods of remediating the chemicals, techniques for removing them from operations entirely and much more. These systems are commercially available today through the cloud.
• Meanwhile, gate model systems offer another avenue for dealing with PFAS—they can potentially invent alternative molecules that could substitute for the dangerous chemicals. However, gate-model systems are not large enough yet to tackle real-world problems.   

Doing the research: Quantum could also play a role in determining which chemicals are harmful in the first place, added Schwartz. There are thousands of PFAS chemicals out there, but so far, only a few hundred have been studied.

• To examine the effects of various chemicals, researchers and companies will have to undertake clinical trials. Quantum can help optimize the organization of those trials, as well as aid in analyzing the results—for example, by assisting with medical imaging reconstruction .

Read the whole story here.
 

The Creators Wanted campaign—an initiative of the NAM and the Manufacturing Institute aimed at driving excitement about modern manufacturing careers—is concluding the wildly successful run of its immersive experience with a significant finale at the Circleville Pumpkin Show, one of the largest annual festivals in the country.

By the numbers: Since it began last year, Creators Wanted has created quite a stir.

• More than 13,000 students, educators and community leaders have engaged with the tour directly.
• Online, 1.5 million students and mentors have signed up to explore modern manufacturing careers.
• A whopping 84% of tour participants now view manufacturing careers more positively.
• Positive industry perception among parents has jumped nationwide from 27% to 40%, thanks in part to the tour and associated MI programs.

Watch a recap of the tour featuring the voices of students, educators and parents who share their perspective on the tour’s impact.

Next week: From Oct. 17–21, half a million attendees, including families and students, will have a chance to experience the tour’s immersive setup, a featured event at this year’s show.

• Manufacturing team members from the Honda and LG Energy Solution joint venture (the tour stop’s sponsor) will be present, offering insights into modern manufacturing careers.
• The Creators Wanted online training program and jobs resource will be showcased, and the tour will engage with local schools, particularly STEM students, amplifying the opportunities in manufacturing.

The big picture: With industries vying for the best talent amid continued labor challenges, initiatives like the Creators Wanted Tour play an essential role in reshaping public perceptions and attracting the next generation into manufacturing over other potential career options.

What’s next: “Now, we know our work is far from over, and so our work goes on with the MI, building on this momentum, along with Creators Wanted digital resources, ” said NAM President and CEO Jay Timmons, who also serves as chairman of the board of the MI.

Prices paid by consumers for a variety of goods and services rose faster than expected last month, according to CNBC.

What’s going on: “The consumer price index, a closely followed inflation gauge, increased 0.4% on the month and 3.7% from a year ago, according to a Labor Department report Thursday. That compared to respective Dow Jones estimates of 0.3% and 3.6%.”

Core CPI: Core CPI, which excludes often-volatile food and energy costs, were in keeping with economist expectations, inching up 0.3% on the month and 4.1% year over year.

The details: Housing costs accounted for most of the inflation uptick.

• The shelter index—which composes about a third of the CPI weighting—rose 0.6% in September and 7.2% from September 2022.
• Food and energy costs rose 0.2% and 1.5%, respectively.
• Prices for services, “considered a key for the longer-run direction for inflation,” rose 0.6% excluding energy services.

What it means: “These data are not likely to change the trajectory of monetary policy, with the Federal Open Market Committee likely to pause [interest-rate hikes] once again at its Oct. 31–Nov. 1 meeting,” said NAM Chief Economist Chad Moutray. “Interest rates are not likely to see a cut until mid-to-late 2024.”