News

So-called “march-in” rights that would enable the federal government to seize manufacturers’ intellectual property are “a major threat to manufacturers in America,” according to a new seven-figure ad campaign launched by the NAM.

What’s going on: Last month, the Biden administration issued a proposal that would allow the government to take over privately held patents if those patents had been developed in part with federal research dollars.

The problem: Undermining companies’ IP rights would roll back the progress made under the Bayh-Dole Act, which allowed for commercialization of federally funded research and “unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money,” according to a recent op-ed in The Hill.

• Because the government is “inviting march-in petitions on every patented technology that benefited from even modest federal grants,” the proposal could “decimate American innovation [and] … stifle investment in climate change, sustainable agriculture, advanced computing, energy, medicines” and more, according to the op-ed writers, two former undersecretaries of commerce for intellectual property.
• In addition, the proposal is “putting American jobs at risk,” according to the NAM’s new ad.

The NAM says: “This radical new proposal is a major threat to manufacturers in America and counter to the president’s goals of growing the sector,” NAM President and CEO Jay Timmons said.

• “Empowering the government to march in and seize the rights to private-sector patents and technologies threatens American innovation and R&D, putting millions of well-paying manufacturing jobs at risk. Policymakers must protect manufacturers’ intellectual property rights and stop this government overreach.”

On Tuesday, Congress took an important step toward restoring three of manufacturers’ top tax priorities, as key congressional leaders unveiled a bipartisan tax agreement long sought by the NAM.

What’s going on: The $78 billion Tax Relief for American Families and Workers Act—a compromise between House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR)—would restore immediate R&D expensing, return to a pro-growth interest deductibility standard and reinstate full expensing (also known as 100% accelerated depreciation) for businesses’ capital investments.

• The framework also includes disaster tax relief and $33 billion to partially extend a child tax credit expansion from 2021.

The background: For nearly seven decades, the tax code allowed businesses to deduct R&D costs immediately. But starting in 2022, a change required companies to amortize the costs over a period of years.

• Also in 2022, a stricter interest limitation—which acts as a tax on investment—went into effect. And last year, full expensing began to phase down.

The NAM’s role: The NAM was instrumental in the deal, having made the business case for the tax provisions’ reinstatement to lawmakers for many months, including via an ad campaign, “Keep America Resilient.”

What’s next: The NAM is urging congressional leadership to schedule a vote on the tax deal. Manufacturers can add their voices at the NAM’s Tax Action Center.

Our take: “Manufacturers appreciate Chairman Smith and Chairman Wyden’s work to reach a bipartisan tax deal with key provisions to advance U.S. economic competitiveness and support manufacturing job creation,” NAM Managing Vice President of Policy Chris Netram said in a social post Tuesday.

• “Congress must move this legislation forward immediately. The time to act is now.”

NAM in the news: Bloomberg Tax (subscription) cited the NAM’s support of the legislation, while Punchbowl News reported on the NAM’s ads in multiple Kentucky papers and Louisiana’s Shreveport Times urging support of the legislation.

On Thursday, members of Congress took to the House floor to show their strong support for manufacturers’ top tax priorities.

• The NAM is waging an all-out campaign to restore these pro-growth provisions, and key House members added their voices by calling on congressional leadership to schedule a vote as soon as possible.

What’s going on: Yesterday evening, a group of House members lined up for short speeches urging their peers in the chamber to join them in making three immediate tax changes: reinstating immediate R&D expensing; loosening a strict interest limitation; and returning to full expensing (also known as 100% accelerated depreciation) for capital investments.

• Kevin Hern (R-OK) highlighted the harm to America’s competitiveness caused by Congress’ failure to act, asking, “How can we expect to compete with China when it is more expensive to invest, innovate and grow here in the United States of America?”
• Jodey Arrington (R-TX) echoed that message, saying Congress can “supercharge America’s competitiveness” by giving businesses the certainty to plan job-creating investments.

Why it’s important: Without the restoration of immediate R&D expensing, a pro-growth interest deductibility standard and full expensing for capital investments, manufacturing jobs, R&D and competitiveness will all be in jeopardy.

• In the NAM’s Q4 2023 Manufacturers’ Outlook Survey, 89% of respondents said higher tax burdens on manufacturing activities would make it more difficult to expand their workforces, invest in new equipment or expand their facilities.

Take action: Manufacturers’ voices are crucial during the ongoing negotiations. Visit our Tax Action Center to send your own message about these tax priorities directly to Congress.

Norway voted Tuesday to open its waters to deep-sea mining, the process of harvesting valuable metals from the ocean floor, CNBC reports.

What’s going on: Having approved a government proposal Tuesday to allow exploration in its waters, “Norway is poised to become one of the first countries in the world” to allow deep-sea mining.

• The parliament formally agreed to allow exploration of just more than 108,000 square miles of Arctic seabed between Norway and Greenland.
• Companies will be required to “submit proposals for licenses,” which will be granted on a case-by-case basis.

Why it’s important: “Advocates say removing metals and minerals from the ocean’s seabed is necessary to facilitate a global transition away from fossil fuels,” CNBC reports.

• Many of the critical minerals needed for electric vehicles—including cobalt, copper and nickel—are present in large quantities on the seafloor.
• The move by Norway sets it apart from the United Kingdom and the European Union, “which have pushed for a temporary ban” on deep-sea mining, citing environmental concerns.
• In the U.S. last year, lawmakers introduced legislation calling for a deep-sea mining moratorium pending further research into the method’s environmental impacts, according to Honolulu KHLN.

The NAM says: “Norway’s vote should be a wake-up call to the U.S. that other nations are doing everything possible to secure their own sources of critical minerals. We need to do the same,” said NAM Vice President of Domestic Policy Brandon Farris. “That means first reforming our antiquated permitting system.”

Jacqueline Cooley spends her days coaching manufacturing employees and helping them build better lives. So when she was looking to improve her professional skills and career trajectory, she knew it would be valuable to find her own coach or mentor.

Cooley found a great match through the Women MAKE Mentorship Program, a free initiative run by the Manufacturing Institute (the NAM’s workforce development and education affiliate), which aims to strengthen women’s careers in the industry by connecting them with peer advisers.

She recently told us about her experience with the program and what it has meant for her career so far.

A better life: Cooley is a better life coach at JBM Packaging, an “eco-friendly, flexible packaging” manufacturer in Lebanon, Ohio, which prioritizes hiring and supporting those who have been involved with the justice system. These “fair chance” hires make up about half the company’s approximately 160-person workforce.

• “I haven’t really found anybody else who does what we do,” said Cooley, whose job entails management of the fair chance program and its participants. “We have life coaching, financial coaching, our Wheels [car leasing] program. We do parental coaching; there are loans [employees] can take out. It’s holistic.”

A coach finds a coach: “I saw [the mentorship program] on the MI’s website and was immediately interested because I’d been looking for a mentor,” Cooley told us.

• “It has been really good. My mentor and I both work in human resources. She’s someone I can bounce ideas off.”
• “I’m at a point in my career where I wanted somebody else’s guidance, wanted to get [the benefit of] their experience in the HR world and learn the steps they took to get to the next level,” she added.

How it works: The MI pairs its mentors—all of whom are volunteers—with mentees based on personal and professional goals and interests, communication style and a dozen other criteria provided through a self-assessment.

• Cooley’s mentor—who works in human resources for another manufacturer—has already helped Cooley fulfill one of her primary goals: to broaden her network in the industry and meet more people.
• “My mentor has been in HR for 20 years or so, and she has a lot of contacts in the [Cincinnati] area and is well-connected,” said Cooley. “She’s invited me to her [workplace], had me talk to other people there, invited me to other [events]. I’ve met a lot of people through her.”

What’s next: Cooley, who said she is considering becoming a mentor herself once she finishes the nine-month program, said more women in manufacturing should participate.

• “It’s a great way to make connections with other women,” she said. “Don’t sell yourself short by thinking you don’t have anything to offer. The mentor can learn from the mentee as well as vice versa. It will open up opportunities for you.”

Dive deeper: To learn more about the MI’s free Women MAKE Mentorship Program, click here or contact the team at [email protected].

The higher tax burden being levied on manufacturers continues to hit home.

That’s the message from respondents to the NAM’s just-released Q4 2023 Manufacturers’ Outlook Survey.

What’s going on: Historically low levels of optimism persisted among small and medium-sized manufacturers—which compose the majority of the manufacturing sector—in the final quarter of 2023, according to the survey, which was conducted from Nov. 14 to Dec. 1, 2023.

• Among firms with fewer than 50 employees, 65.9% reported feeling positive about their own company’s outlook, while 63.0% of companies with between 50 and 499 employees reported the same.
• Overall, 66.2% of respondents felt either somewhat or very positive about their company’s outlook, edging up slightly from 65.1% in the third quarter. It was the fifth straight reading below the historical average of 74.8%.

Burdensome taxes: Some 89% of respondents said higher taxes on manufacturing activities would make it more difficult for them to hire additional workers, invest in new equipment and/or expand their facilities.

Other top challenges: The majority of respondents—61.1%—cited an unfavorable business climate as a top challenge to their company.

• Hiring and retaining quality employees was high on the list of challenges, too, with 71.4% of manufacturers calling it a primary concern.

A bright spot: Fewer manufacturers now expect a recession in 2024, at just over 34%. In Q3, the figure was 42.2%.

With tax bill negotiations left unfinished before lawmakers left for the holiday break, the NAM is hitting the ground running in 2024.

• The NAM continues to push for manufacturers’ top three tax priorities: immediate R&D expensing, a pro-growth interest deductibility standard and full expensing for capital investments.

What’s going on: Congress has just a few weeks to reach a government funding deal before a Jan. 19 deadline, “when funding for a range of government agencies is scheduled to lapse,” according to POLITICO. There is a second funding deadline on Feb. 2.

• The NAM has been calling on Congress to prioritize inclusion of the three tax provisions in any measure it passes.
• The NAM recently led a coalition of more than 1,300 businesses and associations in highlighting the urgent need for congressional action.

What’s needed: Congress must reinstate immediate R&D expensing; loosen a strict interest limitation; and return to full expensing (also known as 100% accelerated depreciation) for businesses, the NAM said.

Why it’s important: If these fixes aren’t made, manufacturing R&D, jobs and competitiveness could all suffer.

• Some 78% of manufacturers say the higher tax burden has decreased the funds available to expand their manufacturing activities within the U.S., according to the Q2 2023 NAM Manufacturers’ Outlook Survey.

The last word: “These tax provisions are some of the most critical issues facing manufacturers today,” said NAM Vice President of Domestic Policy Charles Crain.

• “Congress must act immediately to protect manufacturing jobs and maintain America’s competitiveness on the world stage.”

Act now: Visit the NAM’s Tax Action Center to send a message directly to Congress about these critical priorities.

No man is an island, and neither is any manufacturer. Indeed, local and regional ties have never been more important to the industry’s success, as companies seek to fill hundreds of thousands of open positions and secure a talent pipeline for the next decade.

That’s why building partnerships with local organizations, schools and leaders was a key topic at the Manufacturing Institute’s 2023 Workforce Summit in October.

• As MI President and Executive Director Carolyn Lee put it, “The current state of the economy calls for new ideas for solutions…. We’ll need to build more diverse talent pipelines and connect with our partners in the workforce ecosystem.”

The problem has changed: “The workforce challenges we are seeing are not transitory; they’re structural,” emphasized MI Vice President of Workforce Solutions Gardner Carrick. “Addressing these structural challenges are going to require local, regional solutions.”

• In this case, “regional” means approximately a 40-mile radius around a facility. Manufacturers should focus on sourcing the bulk of their workforce from this immediate area, said Carrick, since it is unlikely that workers outside of that radius would be willing to commute.
• Carrick noted that manufacturers will need other organizations to help their outreach. “We need to collaborate. This is not a problem that can be solved individually.”

Which partners? Manufacturers should seek out economic development boards, education partners and community-based organizations, as well as individual leaders within their local communities.

• “With every new partnership, identify the point person and the decision-makers,” Carrick advised. “Work with them to maximize the relationship. You want to build awareness and institutional memory of your company within that organization.”
• In addition, manufacturers can seek out regional chapters of the MI’s Heroes MAKE America, Women MAKE America and FAME USA initiatives—which help members of the military community, women and others find rewarding manufacturing careers.

Connecting industries: Manufacturers can also find partners within their industry sectors and create relationships with local schools.

• In another session at the summit, MI Director of Workforce Initiatives Pooja Tripathi pointed out that “A group of employers can sponsor a noncredit pathway—which is relatively inexpensive—at a community college, which can then use it to attract the workforce manufacturers are looking for.”
• Fresno Business Council CEO Genelle Taylor Kumpe added that manufacturers could work with high school counselors to challenge perceptions of manufacturing and the need for a four-year college degree. “We’ve seen internships and other short-term exposure programs work in attracting youth to the manufacturing industry,” she noted.
• Fresno Economic Development Corporation Vice President of Workforce Development Chris Zeitz gave general guidance on approaching industry partners: “Different manufacturers and organizations have different incentives and ropes to navigate. The speed at which different sectors like manufacturing, education and economic development boards make decisions and move can also vary.”

The final word: Caterpillar Foundation President Asha Varghese emphasized the importance of seeking local solutions for workforce challenges, a key element of the foundation’s efforts to strengthen communities nationwide. As she rightly noted, “A business cannot thrive unless the community is successful.”

U.S. Customs and Border Protection has closed two critical rail ports in Texas in an effort to stem a surge of migration, according to CNBC.

What’s going on: Immigration authorities “announced rail operations would be halted at El Paso and Eagle Pass, Texas, beginning Monday in light of the surge of migrants crossing the border.”

• Officials said this temporary suspension of operations will enable the government to redirect personnel to assist Border Patrol with taking migrants into custody.
• “Collectively both railroads operate 24 trains daily at these crossings.”

Why it’s important: More than $200 million in goods, wages and transportation are lost each day the El Paso and Eagle Pass rail lines remain shuttered, according to Union Pacific.

• The closures are affecting international commerce, with mounting impacts on the agricultural, food, automotive, consumer goods and industrial commodity sectors, among others.
• A total of nearly 10,000 rail cars are being held on both sides of the U.S.–Mexico border, according to Union Pacific.
• “According to Bureau of Transportation Statistics data, El Paso and Eagle Pass accounted for $33.95 billion, or 35.8%, of all cross-border rail traffic from November 2022 – October 2023,” CNBC reports.

The backdrop: The developments come the same week Texas Gov. Greg Abbott “signed into law a measure giving state and local police authority to arrest and deport migrants caught crossing the border illegally,” according to The Wall Street Journal (subscription).

What we’re doing: The NAM is in communication with the White House, U.S. Customs and Border Protection and key Senate and House members on the issue, advocating for an immediate solution to the reopening of the rail ports.

• “Mexico is the United States’ largest trading partner, and enabling trade between the two countries is critical for North American economic competitiveness,” said NAM Director of Trade Facilitation Policy Ali Aafedt. “The NAM will continue to advocate for solutions that uphold our laws while also facilitating legitimate trade.”

The NAM is firing on all cylinders to accomplish manufacturers’ top tax priorities: restoring immediate R&D expensing, pro-growth interest deductibility and full expensing.

Time is running out, as Congress must act by early 2024 to allow manufacturers to benefit from these provisions for the 2022 and 2023 tax years. Here’s what the NAM is doing to reach the finish line and why it matters so much to the industry and to the economy as a whole.

What we’re doing: The Executive Committee of the NAM Board of Directors recently sat down with House Speaker Mike Johnson (R-LA) to emphasize the importance and urgency of these measures. The Executive Committee has also raised the issue directly with the White House, and the NAM’s members—90% of which are small and medium-sized firms—have been contacting legislators to urge immediate action since early this year.

• In addition, while pressing the case relentlessly with the White House and congressional leaders himself, NAM President and CEO Jay Timmons has met personally with House and Senate tax negotiators to make manufacturers’ case for these reforms.
• NAM experts have also hosted multiple briefings for key legislators and congressional staffers, featuring manufacturers who explained how the withdrawal of these policies has harmed their businesses.
• Ratcheting up the ante on air and online, the NAM has applied pressure publicly in key districts, running a new ad campaign urging congressional action that has garnered about 80 million impressions so far. It also launched an action center to help manufacturers contact their legislators and spotlight the numerous companies that will be hard hit if pro-growth policies are not reinstated.

Why it matters: All three of these tax provisions are crucial to manufacturers’ ability to innovate, invest in their employees and make the American economy more competitive.

• R&D: The U.S. is one of only two countries (the other being Belgium) that doesn’t permit immediate expensing of R&D costs, a vital incentive for innovation. China, on the other hand, gives companies a “super deduction” for R&D expenses.
• Interest deductibility: A recent tax policy change made it more expensive for manufacturers to make critical purchases for their facilities, by imposing a stricter standard for deducting interest. This is a particularly heavy burden for a capital-intensive industry like manufacturing, amounting to a tax on companies’ investments in their operations and workers.
• Full expensing: This provision allows companies to expense their equipment purchases in the year they are made, supporting manufacturers’ investments in their businesses. But the policy is set to be phased out soon and must be saved, as it is crucial for small and medium-sized manufacturers looking to expand their operations. 

The last word: “Manufacturing is the backbone of America, and the NAM is going all-out to make sure Congress acts on these critical priorities,” said NAM Managing Vice President of Policy Chris Netram. “Right now, leaders on Capitol Hill need to hear from manufacturers in their communities with a simple, clear message—act on our critical tax priorities now.” 

Take action: Congressional leaders, including Speaker Johnson, have recently pointed out a need to hear from more manufacturers. Lend your voice—check out the resources in the action center to learn more.