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Manufacturers are counting on Congress to preserve tax reforms that acted as “a shot in the arm” but are now at risk of expiring, Sukup Manufacturing Co. President and CEO Steve Sukup told the House Ways and Means Committee recently.

What’s going on: The committee held a field hearing at the Iowa State Fair in Des Moines last month to hear from local companies about the impact of the 2017 Tax Cuts and Jobs Act on their businesses.

• At Sukup—the world’s largest family-owned and -operated maker of grain storage, drying and handling equipment—tax reform is credited as the single biggest driver of growth in recent years.
• “Sukup has grown over the past several decades, but nothing compares to when the Tax Cuts and Jobs Act was signed into law,” Sukup told committee members. “For example, thanks to the lowering of the corporate rate to 21%, Sukup grew our workforce by a third, adding roughly 200 well-paying manufacturing jobs to our community.”

A business boon: The 61-year-old company was able to make several key investments thanks to tax reform.

• Among these is Sukup’s Safe T Homes, quick-assembly houses made from the company’s grain bins and created after the 2010 earthquake in Haiti to provide people with much-needed shelter. One of the homes was on display at the fairgrounds.
• Another undertaking made possible by tax reform was the world’s largest free-span grain bin, two corn storage containers made for an ethanol plant in Mason City, Iowa. Each bin has a record-breaking capacity of 2.2 million bushels.
• Tax reform’s accelerated depreciation schedule allowed the business to go “from roughly $5 million in capital spending to almost $15 million,” Sukup told committee members.

What’s in jeopardy: The expiration of key tax provisions in 2022 and 2023—with more tax increases scheduled for the end of next year—has made it far more difficult for Sukup to put money back into the business.

• For example, tax reform’s pro-growth interest deductibility standard expired in 2022, making debt financing more expensive. “An accountant once told me, if you don’t have debt, that means you’re not coming up with new ideas,” Sukup said. “Many manufacturers like us borrow funds to finance essential long-term investments,” which are now more costly.
• Sukup is also monitoring looming changes to the estate tax. He called on Congress to protect family-owned manufacturers from the estate tax “so that I can ensure the third and fourth generations of Sukups can continue in our family business.”

Keep it going: Sukup ended his testimony by reiterating the advantages tax reform brought to his business and emphasizing the need for Congress to preserve tax reform in full.

• “Because of these policies, we’ve been able to not only maintain our business, but to provide a great living, health benefits and soon expanded child care for our employees and the community—even as we aid those in need around the globe,” he concluded.
• “I urge you to help us keep that growth streak going. Maintaining the 21% corporate rate, as well as the tax provisions I just described, is so important to manufacturers everywhere.”

The NAM has launched a new wave of ads in D.C. and nine states, extending its seven-figure campaign urging policymakers to reign in pharmacy benefit managers, underregulated middlemen who drive up the costs of prescription medications for manufacturers and manufacturing workers.

A quick refresher: PBMs sit in the middle of the health care industry, negotiating with employer health plans, insurers, biopharmaceutical manufacturers, pharmacies and other players to determine what prescriptions employees can access and what they pay for them. While their job is ostensibly to reduce the costs of medicines, often they do the exact opposite.

• PBMs have been found to steer patients toward pricier options, inflict steep mark-ups and hidden fees and even pocket large portions of the rebates that biopharmaceutical manufacturers intend for American workers and their families.

NAM in action: The NAM has been a staunch voice supporting PBM reform on Capitol Hill, recently laying out manufacturers’ concerns for the House Committee on Oversight and Accountability.

• The committee conducted its third hearing on PBM overreach in July, when it also released a highly critical report on PBMs that echoed many of the NAM’s concerns.
• In addition, the NAM is supporting several key measures to increase oversight of PBMs’ business models and reform their pricing strategies, including the DRUG Act and the PBM transparency provisions in the Lower Costs, More Transparency Act.

What Congress should do: The NAM is advocating for three major reforms to the PBM system, including:

• Increasing transparency in PBMs’ business models, including how their compensation influences health care decisions and how their policies dictate a medicine’s cost and formulary placement;
• Rebate pass-through, which will ensure health care savings are passed directly to manufacturers and their workers rather than being pocketed by PBMs; and
• Delinking PBMs’ compensation from a medicine’s list price, removing their incentive to put upward pressure on list prices to maximize their own profits.

Benefits for all: The NAM is calling on Congress to enact these reforms in the commercial insurance market, not just in government programs like Medicare and Medicaid, so that all Americans can enjoy lower-cost health care benefits.

What to watch: The NAM is calling on Congress to act on this issue during the lame-duck session following the election.

Rep. Earl L. “Buddy” Carter (R-GA), a staunch advocate for health care reform and a community pharmacist by profession, visited RYAM’s manufacturing facility in Jesup, Georgia, in August to discuss manufacturers’ health care and tax policy priorities.

During the visit, Rep. Carter emphasized the critical need for pharmacy benefit manager reform as well as tax policies that support manufacturers’ growth and competitiveness.

The visit: Clay Bethea, RYAM’s Jesup plant general manager and vice president of U.S. wood procurement, led Rep. Carter on a tour of the cellulose specialties manufacturer’s facility, where he observed how pulp is dried and finished into sheets and rolls. Bethea highlighted the significant challenges the company faces due to rising costs in health care, particularly those driven by PBMs, and the looming expiration of key tax provisions in 2025.

• “We are proud to be a part of this community, creating jobs and driving economic growth,” Bethea said. “However, the rising costs of health care, particularly due to PBMs, and the uncertainty around critical tax provisions like R&D expensing and accelerated depreciation, are growing concerns for both our business and our employees. Reforming PBMs and maintaining tax policies that allow us to invest for the future are crucial to our ability to remain competitive globally.”

PBM reform: Rep. Carter has long been vocal about the need to hold PBMs accountable for their role in inflating health care costs.

• “PBMs have become powerful middlemen, often driving up drug prices while squeezing independent pharmacies out of the market,” Rep. Carter said during the tour. “It’s time for Congress to bring transparency and fairness back to the system.”
• Carter has introduced and supported several pieces of legislation designed to reform PBM practices, including a bill aimed at delinking PBM compensation from drug prices, improving PBM payments to pharmacies and increasing transparency.

Tax challenges: In addition to health care, Rep. Carter addressed the pressing issue of preserving tax reform.

• “The expiration of accelerated depreciation, R&D expensing and favorable tax rates could significantly hamper the manufacturing industry’s ability to grow and remain competitive globally,” Rep. Carter warned.
• “These tax provisions have been crucial for manufacturers like RYAM, enabling them to make significant investments in their operations and workforce. Losing them would not only impact these companies’ ability to innovate but also jeopardize jobs and economic growth in communities across the country.”

NAM in action: The NAM has long advocated for both PBM reform and the preservation of essential tax policies that drive the manufacturing industry.

• “PBMs are a significant driver of the rising costs of health care, and reform is essential to ensure that manufacturers can provide affordable benefits to their workers,” said NAM Vice President of Domestic Policy Charles Crain.
• “Congress also needs to act with urgency to prevent devastating tax increases scheduled for next year that will impact manufacturers across the country.”

The state-level view: Lloyd Avram, president and CEO of the Georgia Association of Manufacturers, echoed Rep. Carter’s concerns.

• “Manufacturers across Georgia are facing unsustainable health care expenses, and the uncertainty surrounding federal tax provisions only adds to the challenges,” Avram said. “Action on PBM reform and tax policy is essential to helping our industry remain competitive and continue providing good jobs in our communities.”

The bottom line: “Reducing health care costs and increasing transparency in the PBM system are crucial steps in lowering the overall cost of doing business in the U.S.,” said Rep. Carter. “However, to truly compete in the global economy, it’s important that we preserve the policies that have empowered manufacturers to innovate, expand and sustain jobs. Otherwise, the U.S. risks becoming a less attractive place for manufacturing investment, ultimately threatening our economic leadership on the world stage.”

The NAM has a new chief economist.

Victoria Bloom, who was most recently the economist for the Senate Commerce, Science and Transportation Committee minority staff, joined the NAM and its 501(c)3 workforce development and education affiliate, the Manufacturing Institute, this summer. She had worked on Capitol Hill since 2017.
 
Our view: “Manufacturing in the U.S. is a life-changing force for good, providing well-paying jobs and career opportunities and products that improve the quality of life for everyone,” NAM President and CEO Jay Timmons said. “Victoria will help us tell this story with compelling data, which will demonstrate the real impact of policy decisions and illustrate the modern manufacturing resurgence.”

• Added MI President and Executive Director Carolyn Lee: “With the addition of Victoria to the MI team as the head of research, we look forward to expanding our portfolio of studies on the key workforce and competitiveness issues facing manufacturers.”

Legislative chops:  Bloom, who holds a bachelor’s degree in economics from Louisiana State University and a master’s degree from George Mason University, previously worked for Sen. David Perdue (R-GA) and Rep. Gary Palmer (R-AL), in addition to her work on the Senate Commerce Committee.

• As Senate Commerce Committee economist, she served as lead economic and budgetary adviser to Ranking Member Ted Cruz (R-TX) and the minority committee staff. 

Glad to be here:  “After years of working on Capitol Hill and lending my economic expertise to policy debates, I am excited to focus my efforts on the 13 million people who make things in America,” Bloom said.

If enacted, the broad constitutional amendments being pushed by outgoing Mexican President Andrés Manuel López Obrador would put the special U.S.–Mexico trade relationship at serious risk, according to the NAM.

What’s going on: Last week, Obrador froze Mexico’s relationships with U.S. and Canadian embassies following concerns voiced by those countries’ ambassadors about the proposed reforms, which include sweeping changes to the Mexican judiciary and the elimination of several important state regulatory and oversight agencies.

• Mexico is America’s largest trading partner, with the volume of trade between the two nations coming in at $900 billion last year.
• Obrador’s proposed revisions led investment bank Morgan Stanley to issue an “effective ‘sell’ recommendation on Mexico” late last month (Reuters, subscription).

Why it’s a problem: “We’re concerned that some of the reforms as proposed could harm Mexico’s standing as an attractive place to do business,” NAM Vice President of International Policy Andrea Durkin said on the “Imagen Empresarial” (“Corporate Image”) podcast last week. “Manufacturers pay attention to how banks are factoring these potential changes to the constitution into Mexico’s risk profile.”

• Indeed, “[i]nvestors see independent judiciaries—sheltered from politics—as a sign of strong rule of law,” one emerging markets expert told The Wall Street Journal (subscription).
• Several planned revisions also appear to violate Mexico’s obligations under the U.S.–Mexico–Canada Agreement, which is due for review by all three nations in 2026. Moving forward with the reforms could jeopardize the continuation of that deal.

What’s next: Incoming Mexican President Claudia Sheinbaum, who takes office Oct. 1, “supports the judicial changes, but executing the overhaul might take up most of the energy of her new government, leaving her little bandwidth for her own agenda, which includes an expansion of social programs that need foreign investment,” according to the Journal.

 The Interior Department is seeking to close hundreds of thousands of acres of land in Wyoming to traditional and renewable energy development, a plan that would cut crucial natural resource development off at the knees (POLITICO Pro, subscription).

What’s going on: Though the Bureau of Land Management’s plan, released Thursday, scales back from previous iterations the acreage recommended for conservation, it still considerably “throttles back how much of the federally administered area’s 3.6 million acres is in play for different forms of energy development.”

• The final announcement, part of the BLM’s proposed Resource Management Plan for the Rock Springs Field Office, is tantamount to “pushing Wyoming off an economic cliff with nothing more than a tattered parachute,” said John Barrasso (R-WY), ranking member of the Senate Committee on Energy and Natural Resources. “This plan isn’t designed to manage Wyoming’s natural resources. It is designed to suffocate them. … [It] directly jeopardizes Wyoming’s economy and our way of life.”

What it would do: If approved, the blueprint would replace its 27-year-old predecessor document and prohibit drilling on nearly 1.08 million acres—almost twice the number currently off-limits to new oil leases.

• It would “also [exclude] 494,350 acres from wind and solar power development and [close] 536,018 acres for geothermal power projects.”

Why it’s important: The plan could reduce economic activity in Wyoming’s oil and gas sector by some $907 million each year and cost the state nearly 3,000 jobs, according to estimates by several energy groups (Cowboy State Daily).

The NAM says: “This latest move by the Interior Department undermines U.S. energy security by needlessly restricting access to available domestic sources of critical natural resources as part of an all-of-the-above energy future,” said NAM Director of Energy and Resources Policy Michael Davin. “We urge the agency to reexamine and revise its plan.”

Many people imagine that a job in manufacturing requires working on a shop floor to create products. Joseph Fields—a human resources professional at MGX Equipment Services—knows that isn’t the case.

“Working in MGX, there’s cranes and welding and engineering—but there’s also HR, and finance, and payroll, and employee health and safety,” said Fields. “There are lots of opportunities you can lean into.”

The background: Fields spent eight years as a yeoman in the U.S. Navy before he transitioned into a civilian role in 2000. Over the course of the next two decades, he worked in human resources at a variety of companies. However, he was laid off in October 2023 after a six-year stint when his employer downsized.

• A few days later, he attended a virtual career fair sponsored by Heroes MAKE America—a Manufacturing Institute program that builds connections between the military community and the manufacturing industry—and found his new role.

• “I wasn’t planning to go to the HMA career fair, because I had zero experience with manufacturing,” said Fields. “But I saw it on LinkedIn, and at the time, I hadn’t interviewed with anyone in six years. I figured this would be a good opportunity to talk about myself and get some feedback.”

The result: Fields didn’t just get feedback, he was offered a job with MGX, one of the manufacturers in attendance.

• “I met with lots of great companies, including a manager at MGX, and we had a great conversation,” said Fields. “She called me the next day and asked if I was interested in an HR position. They offered it to me the week after Thanksgiving.”
• “We are very thankful we found Joseph through Heroes Make America. He attended our virtual career fair and visited our breakout room. After listening to our presentation a few times, he still stayed in our room,” said MGX Director of HR Ashley Barkdoll. “I could tell he would be a great fit for our team after having a few conversations with him.”

The program: Heroes MAKE America provides integrated certification, career-readiness training and job-searching support in partnership with local technical and community colleges to prepare transitioning service members, veterans, National Guard members, reservists and military spouses for rewarding careers in the manufacturing and supply chain industries.

• Heroes also offers virtual and on-site career fairs—like the one where Fields found his new position—for members of the broader military community.

The other side: Today, Fields is paying it forward by working with Heroes MAKE America to find veterans and others with military affiliations to interview with MGX. He’s especially grateful for the support that Heroes gives to graduates and other job seekers throughout the hiring process.

• “I like that Heroes MAKE America not only promotes organizations that focus on veteran hiring, but also that they do the follow-up to make sure people get hired,” said Fields.

Advice to veterans: Fields wants other veterans to know that manufacturing offers a broad range of opportunities, with something for everyone—and that Heroes MAKE America can help them find it.

• “It’s not about finding a manufacturing job; it’s about finding a job in a manufacturing company,” said Fields. “There are so many different kinds of roles and opportunities.”
• “If you’re unsure about finding a job in manufacturing, attending the virtual career fair is a great option to meet with companies to see what they have to offer, even if you think this industry isn’t something that you would normally consider,” added Barkdoll.

Advice to manufacturers: Fields encourages other employers to connect with the Heroes MAKE America program and see everything that a veteran brings to the table.

• “Some of us may not have hands-on experience for the position you’re trying to fill, but we’re trainable,” said Fields. “So ask yourself: Can I train up for this position?”

The last word: “Take a chance on a veteran,” said Fields. “You’ll get a great employee out of it.”

The Federal Trade Commission does not have the authority to enact the sweeping noncompete ban it finalized in April, a federal judge ruled Tuesday (The Wall Street Journal, subscription).

What’s going on: “U.S. District Judge Ada Brown ruled that the commission’s authority to police unfair methods of competition couldn’t be used to issue substantive regulations that ban an entire category of conduct. ‘The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do,’” she wrote, adding that the ban was “unreasonably overbroad without a reasonable explanation.”

• The rule—which had already caused companies’ costs to increase in anticipation of the Sept. 4 effective date—sought to prohibit noncompete agreements between employers and their employees.

The NAM’s role: In May, the NAM’s Legal Center filed an amicus brief asking Brown’s court to stay the rule on the grounds that a ban on noncompete agreements would “hamstring innovation in the manufacturing sector and damage the competitiveness of American industry.”

• Brown issued a limited stay in July. Her ruling this week—echoing the NAM’s argument that the rule is  “not reasonably explained”—prohibits enforcement of the FTC rule nationwide.
• “The NAM expressed concerns throughout the rulemaking process, and a 2023 NAM survey showed that a broad noncompete ban would disrupt most manufacturing operations in the U.S.,” NAM Director of Transportation, Infrastructure and Labor Policy Max Hyman said following Brown’s ruling this week.

What’s next: The FTC is considering an appeal of the decision, a spokeswoman told the Journal.

• But “[i]f lower courts remain split as the litigation moves through the legal system, the matter might ultimately fall to … [the] Supreme Court, [which] has taken a dim view of government agencies invoking new regulatory powers from long-ago statutes.”

This post has been edited. 

Rep. Dusty Johnson (R-SD) recently visited Smurfit Westrock’s facility in Sioux Falls, South Dakota, to speak with local business leaders and NAM representatives about the importance of maintaining pro-growth tax policies for manufacturers.

The tour: Smurfit Westrock Plant General Manager Gerald Loftin led Rep. Johnson through their state-of-the-art packaging facility, showcasing the company’s innovative solutions and highlighting its role as a major employer in the community, supporting local jobs and economic growth. Smurfit Westrock, a global leader in sustainable paper and packaging, operates in 40 countries with more than 500 packaging converting operations and 63 paper mills.

• “Smurfit Westrock’s success directly benefits the community, providing employment and contributing to the local economy,” Loftin said. “We are proud to be a part of this region and to support the growth and well-being of the area.” 

The threat: NAM Vice President of Domestic Policy Charles Crain addressed the risks posed by expiring tax provisions. “Tax reform was rocket fuel for the manufacturing sector,” Crain explained. “It led directly to record levels of both job creation and wage growth in the years following the bill being signed into law.”

• Crain also emphasized the importance of preserving tax reform in full. “Essential tax reform provisions have already begun to expire—for example, full expensing, which has been crucial for our industry’s ability to invest in new equipment and expand operations, started phasing down last year,” Crain said. “Even more devastating changes are scheduled for 2025, the combination of which will significantly hamper manufacturers’ capacity to modernize and grow, directly impacting competitiveness and job creation.”

Calling on Congress: “Manufacturers are grateful to Rep. Johnson for supporting legislation earlier this year that would have revived immediate R&D expensing, a pro-growth interest deductibility standard and full expensing for capital investments,” Crain said. “We are looking to Congress for leadership and swift action as we work to prevent the harmful tax increases in store next year.”

Listening to manufacturers: Rep. Johnson emphasized his strong support for extending key tax provisions.

• “After seeing firsthand how these tax measures have benefited Smurfit Westrock and hearing about the negative impacts of their expiration, I’m more convinced than ever that we need to act swiftly to extend them,” he said.
• “Full expensing, R&D expensing and competitive tax rates are vital for the continued growth and innovation of our manufacturing sector. I’m committed to working with my colleagues in Congress to ensure we preserve these pro-growth policies before they expire, supporting jobs and economic development here in South Dakota and across the nation.” 

The bottom line: “Extending the 2017 tax reform is not just a priority, it’s a necessity for maintaining America’s competitive edge in manufacturing,” Rep. Johnson concluded.

Get involved: Manufacturers interested in sharing their perspectives on tax reform with congressional leaders or hosting facility tours for U.S. legislators can find more information through the NAM’s “Manufacturing Wins” campaign.

If you’re looking for insights on digital transformation, cultural change and what’s ahead for manufacturing, it pays to consult an industry leader. Dan Dwight, president and CEO of Cooley Group, fits the bill.

Dwight was named the 2024 Manufacturing Leader of the Year in the Manufacturing Leadership Awards, presented by the Manufacturing Leadership Council, the digital transformation division of the NAM. Additionally, Cooley Group won the Small/Medium Enterprise Manufacturer of the Year and the Manufacturing in 2030 Award.

Recently, Dwight sat down for an Executive Dialogue interview with the Manufacturing Leadership Journal to share his secrets to success. Below are excerpts from the interview.

What leaders need: When asked what qualities manufacturing leaders need in the digital era, Dwight says that they must be willing to undergo big changes, but must also keep their teams in the loop. 

• “Successful leadership in the digital era demands, among other things, a higher level of transparency,” he explained. “Your team needs to see the road map in front of them because successful and sweeping transformations are extremely time consuming with a lot of jagged edges that the leadership team needs to address.”

How cultures should change: As for the wider cultural changes that will help a company through its digital transformation, resiliency and adaptability are crucial, Dwight said.

• “Cooley’s digital transformation began with a cultural transformation built around becoming more agile and adaptable,” he noted. “Every decision we make places long-term resiliency and cross-functional collaboration as our operational North Star.”
• “Cooley decentralized our decision-making structures, eliminating hierarchal instruction and empowering team members to communicate transparently and more frequently,” he added.

Small manufacturers’ advantage: When asked whether small and medium-sized manufacturers are at a disadvantage in the era of digital transformation, Dwight says that Cooley has turned its small size into an asset.

• “Our longevity is built on using our size to our advantage. We are more resilient, more agile, more adaptable than our competitors who are often [much larger] because we constantly invest in pro-growth strategies regardless of the economic environment,” he explained.
• “Our investments in innovation generate consistent new product revenue of over 20%, and our investments in Manufacturing 4.0 digitization generate consistent, robust productivity dividends,” Dwight added.

What’s next? Cooley Group is looking ahead to further transformations, including in supply chain management, Dwight said.

• “Our business architecture and change management team leaders are working within their respective teams across the organization to build into our processes a more outward-looking focus,” he said.
• “For example, our M4.0 implementation leader has added supply chain resiliency to her leadership responsibilities. Her team seeks to build out Cooley’s end-to-end business resilience.”

MLC in action: Dwight says that Cooley Group has always been able to count on the MLC to find the insights that it needs for digital transformation and its Manufacturing 4.0 journey. As he put it recently, “When challenges do arise, the MLC can help us think through what the future might look like.”

Watch a full video of this interview for more insights.