Timmons Gives NAM State of Manufacturing Address
Manufacturing has a leading role in the U.S. economy—but there is still a great deal more to do. That was the message at this year’s NAM State of Manufacturing Address from NAM President and CEO Jay Timmons.
Timmons spoke to a gathering of manufacturing team members and the media at Husco in Waukesha, Wisconsin. In his remarks, he laid out the NAM’s view of where the industry is and where it’s going.
The program: The event began with a message from Kurt Bauer, president and CEO of Wisconsin Manufacturers & Commerce, followed by an introduction from NAM board member Austin Ramirez, president and CEO of global engineering and manufacturing company Husco.
- “Wisconsin manufacturers contribute to the vitality of our state through their innovation, productivity and commitment to customer satisfaction,” said Bauer. “While we face many challenges, we are also in the enviable position of controlling our destiny—as long as we work together to create a shared vision of prosperity and an action plan to achieve it.”
- “We are here to shine a light on the amazing, life-changing work that manufacturers do every day,” said Ramirez. “We are the backbone of the American economy, and we are proud of it.”
The state of manufacturing: Timmons spoke about Russia’s invasion of Ukraine, the importance of the manufacturing industry’s support for the Ukrainian people and the larger struggle between freedom and tyranny.
- “Despite everything happening around us, like the threat of a recession and global conflict, manufacturers are still leading the way forward,” said Timmons.
- “And although our industry and our country will need to make audacious and sometimes uncomfortable changes to adapt to economic, political and global challenges … I’m confident in reporting that the state of manufacturing in America remains steadfast and resolute.”
Manufacturing solutions: Timmons cited a variety of manufacturing challenges, then detailed the NAM’s plans to fight for manufacturers across the United States.
- Supporting immigration: “For so many manufacturers in America right now, there are more open jobs than there are people to fill them,” said Timmons. “One of the many ways we fill those jobs and keep our economy moving is welcoming immigrants into our workforce … just like we have in the past to build a stronger, more prosperous America.”
- Promoting permitting reform: “Permitting reform means making it easier to get permission to build that new road or power plant, or for manufacturers to build new facilities,” said Timmons. “If Washington could just cut through the bureaucracy and streamline processes, like you do in your businesses every single day, we could do more for this country.”
- Fighting for tax fixes: “The NAM is determined to get Congress to restore incentives for R&D and get our business tax rates and structure back on track to enable us to compete globally,” he said. “And then, let’s lock in competitive rates for small businesses … so that you can plan confidently for the future.”
- Competing with China: “If we’re going to counter China, then we must hold China accountable for the trade commitments it has already made to the U.S.,” said Timmons. “And we have to forge ambitious, cutting-edge trade agreements with our allies. Other countries aren’t waiting around. So, let’s think big. And let’s be bold.”
- Pushing back on new EPA rules: “We’re going to tell the EPA that manufacturers are already leading [in cleaning] our air,” said Timmons. “The government shouldn’t enact rules that, however well-intentioned, would make it more difficult to achieve our environmental goals, slow our economic growth and push us closer toward recession.”
The last word: “History shows us that as long as manufacturers lead the way, America and our democracy will remain that beacon of freedom and hope for people around the world,” said Timmons. “Manufacturers have been, and always will be, in word and deed, the arsenal of democracy. And working together, I know we will keep making this a manufacturing decade.”
NAM to FAR Council: Rescind Proposed Climate Rule
A draft rule to force federal contractors to make specific and detailed climate disclosures is burdensome, unrealistic and costly to manufacturers. It should be rescinded completely, the NAM told the Federal Acquisition Regulatory Council this week.
The background: In November, the FAR Council—which is composed of the Defense Department, the General Services Administration and NASA—proposed a rule to require climate disclosures from federal contractors, many of whom are manufacturers. The proposed rule would require contractors with more than $50 million in annual federal contract obligations to:
- Disclose their greenhouse gas emissions, including so-called Scope 3 emissions (those attributable to the suppliers and customers throughout a company’s value chain);
- Set targets to reduce their greenhouse gas emissions within a decade (including Scope 3 emissions) based on standards set forth by a third-party nonprofit organization, the Science-Based Targets initiative, and get the targets validated by SBTi; and
- Disclose their climate-related financial risks pursuant to a framework written by a second nonprofit group, the Task Force on Climate-Related Financial Disclosures, and submit those risk disclosures to yet another nonprofit (CDP, formerly the Carbon Disclosure Project).
Why it’s a problem: Compliance with the proposed rule would be difficult, if not wholly unfeasible, prohibitively expensive and time-consuming, NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram told the FAR Council. It would also impact small businesses within federal contractors’ supply chains given the rule’s focus on Scope 3 disclosures and target setting.
- “The proposed rule would impose significant costs on manufacturers as they work to meet the complex—and in many cases impractical or impossible—requirements of the rule,” Netram said.
- “As a result, manufacturers providing critical goods and services to the federal government, as well as the businesses throughout their supply chains, will be directly and adversely impacted … The national security of the United States could likewise be harmed, as critical contractors could be disqualified from supplying the military, and the required disclosures could expose sensitive information to America’s adversaries.”
What can be done: The FAR Council should rescind the proposed rule in its entirety, Netram said, but if it is intent on making changes, “it must re-propose a rule with substantial revisions to make its requirements more cost-effective and workable for federal contractors and more narrowly tailored to the actual climate-related risks to which the federal government is exposed.”
Timmons: Debt Ceiling Uncertainty Will Derail Manufacturing Growth
Manufacturers Call on Administration and Congress to Act Swiftly
Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement regarding negotiations to raise the debt ceiling:
“It is imperative that Congress and the administration reach a resolution to the debt limit issue as swiftly as possible. Waiting to act until extraordinary measures are exhausted constitutes dangerous brinkmanship that would inject uncertainty into the global economy and increase the risk of a default that would derail manufacturing growth in America, tank markets and put jobs at risk.
“We did not become the greatest nation in the world by shirking our responsibilities. Manufacturers have been working overtime to rebuild our economy, strengthening supply chains, creating jobs at record rates and helping defend against threats from around the world. All of those achievements will be erased if the United States does not find a path forward on the debt limit and fiscal responsibility. Let’s rise above this challenge so that manufacturers can do what we do best: improve lives and livelihoods here and around the world.”
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.9 million men and women, contributes $2.81 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
NAM Continues Fight for SEC Proxy Advisory Firm Rule
Washington, D.C. – On Friday, the National Association of Manufacturers filed its opening brief before the U.S. Court of Appeals for the 5th Circuit in NAM v. SEC, appealing a lower court ruling dismissing its challenge to the Securities and Exchange Commission’s unlawful rescission of the 2020 proxy advisory firm rule. NAM Chief Legal Officer Linda Kelly released the following statement on the appeal:
“As we said in district court, the SEC engaged in arbitrary and capricious rulemaking in rescinding this commonsense rule. The Administrative Procedure Act requires federal agencies to explain the basis for significant policy reversals, rely on logical reasoning and allow interested parties a meaningful opportunity to provide comment—standards the SEC clearly failed to meet.
“The NAM Legal Center will continue to fight to preserve the 2020 rule in full and protect manufacturers from the SEC’s dramatic about-face.”
The NAM has long called for increased oversight of proxy advisory firms. In July 2020, the SEC issued final regulations to enhance transparency and accountability for proxy firms, a move NAM President and CEO Jay Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.” The NAM has been the leader in protecting the 2020 rule in court:
- In October 2020, the NAM filed a motion to intervene in ISS v. SEC (ISS’s attempt to overturn the 2020 rule) in support of the SEC’s authority to regulate proxy firms. That case, with the NAM as an intervenor-defendant, is pending before the U.S. District Court for the District of Columbia.
- In June 2021, the SEC announced that it was suspending enforcement of the 2020 rule; the NAM filed suit against the SEC in October 2021 challenging this unlawful suspension. The U.S. District Court for the Western District of Texas ruled for the NAM in September 2022, overturning the SEC’s suspension of the 2020 rule.
- In November 2021, the SEC proposed to rescind critical portions of the 2020 rule. The SEC finalized the rescission in July 2022—and the NAM quickly filed suit, saying that “the SEC’s arbitrary actions to rescind this commonsense regulation clearly violate its obligations under the Administrative Procedure Act.” In December 2022, the U.S. District Court for the Western District of Texas granted summary judgment in favor of the SEC, failing to engage with the substance of the NAM’s APA claims.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.9 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
“We’re Gonna Get Hit Hard”: How an R&D Tax Policy Change Hurts Manufacturers
This story can also be found within the NAM’s R&D action center.
Miltec UV operates at the cutting edge of the manufacturing industry, developing new UV lamp systems for curing inks and coatings for everything from optical fiber to soup can lids. But after a tax law change went into effect in 2022, the Maryland-based manufacturer found that R&D became much more expensive—hampering its investments and tamping down its growth.
- Until the beginning of 2022, businesses could deduct 100% of their R&D expenses in the same year they incurred the expenses. Starting this year, however, a tax law change requires businesses to spread their deductions out over a period of five years, making it more expensive to invest in growth and innovation.
We spoke with Miltec UV President Bob Blandford to understand how the change was impacting his company and consumers in the United States and around the world.
The impact: Because the law changes the way businesses have handled investments for decades, companies like Miltec UV are having to grapple with a significant new cost that they had not anticipated previously.
- “Absent congressional action, we’re gonna get hit hard,” said Blandford. “Our taxes are going to go up dramatically. That’s cash getting sucked out of the business. So that’s going to get pretty ugly.”
A critical moment: Miltec UV is facing this challenge at a time when its leaders believe an exciting new opportunity is right around the corner. The company has developed a new technology for lithium-ion batteries, which could be used for next-generation electric vehicles.
- Over the past 11 years, Miltec UV has developed manufacturing electrodes used in these batteries, which will allow manufacturers to reduce costs and eliminate the toxic solvents used in existing battery manufacturing processes.
Yet, the new tax change threatens to place significant burdens on their development of this technology.
- “The problem is in the auto world; once they say go, it’s about a five-year process,” said Blandford. “They have to prototype, prove it, test it, then make the batteries. And during that time, we need to support R&D and support the business. So amortizing R&D over five years is a showstopper.”
- “We’re at a critical place now—we’re so close to commercializing it—and now we’re having to pay more taxes out,” said Blandford. “It hurts.”
A burden for employees: If not reversed, the harmful tax change will eat into profits, which Blandford is concerned may impact important benefits for employees. Earlier this year, Miltec UV signed on to the NAM Manufacturers Retirement program—an association-wide 401(k) retirement and savings plan—as a way to improve benefits for employees. The program, which has resulted in cost savings for employees, has proved extremely popular, he added.
- However, “The tax change will have a tremendous negative impact on cash flow, so everything will be on the table,” including retirement benefits, Blandford said.
- “Our team is important to us, and the last thing we want to do is have a negative effect on paychecks and benefits,” said Blandford. “This absolutely will have a spillover effect on every part of the business.”
The last word: “Miltec funds 100% of the company’s R&D costs through the profits of its commercial business as opposed to outside investment,” Blandford said.
- “Spreading the R&D deduction over a five-year period means that each year we will now face a higher tax burden due to the inability to immediately deduct R&D expenses. That is real money that is desperately needed to stay competitive with employee salaries, benefits and even to support new R&D positions that we now are trying to fill.”
Get involved: The NAM has deployed a digital R&D Action Center that manufacturers can visit for critical R&D policy updates, industry stories and an opportunity to engage directly with their members of Congress: https://www.nam.org/protect-innovation/
NAM, KAM Win on SEC Bond Rule Interpretation
In response to advocacy by the NAM and the Kentucky Association of Manufacturers, the Securities and Exchange Commission has granted privately held companies temporary relief from a punishing new rule interpretation that would have required them to expose confidential financial information to the public.
The background: In 2020, the SEC finalized a rule designed to increase disclosure obligations for companies issuing over-the-counter equity securities (“penny stocks”). The following year the SEC published a new interpretation of the rule, to take effect in January 2023, which broadened the disclosure requirement to include private companies issuing corporate bonds.
- Late last month, following an emergency petition for interim relief from the NAM and the KAM, the SEC granted a two-year stay of the new interpretation—so private companies will not face the new public disclosure obligations until January 2025.
- Corporate bonds can only be purchased by large institutional investors (which already have access to issuers’ financial information), not retail investors, so the risks of fraud that spurred the 2020 rule are nonexistent in this market.
A victory—for now: “This is a win for private and family-owned manufacturers raising capital for job-creating investments and planning for growth,” NAM Senior Director of Tax and Domestic Economic Policy Charles Crain said.
Damaging effect: The NAM recently released a study showing the significant economic damage that would result from forcing private businesses to disclose confidential and proprietary financial information publicly. Among the key findings:
- The U.S. economy would lose 30,000 jobs per year in the early years after the new interpretation takes effect, rising to 50,000 lost jobs per year after five years and 100,000 lost jobs per year after a decade.
- Companies would face decreased liquidity and higher capital costs, including an increase in borrowing costs of up to 13%.
What we’re doing: The NAM and the KAM have filed a petition for rulemaking calling on the SEC to reverse course by clarifying—either by rule or exemptive order—that corporate bond issuers are not required to make public financial disclosures.
- The NAM and KAM have also asked Congress to protect manufacturers from the damage the new interpretation would cause.
The last word: “A two-year delay is a step in the right direction, but the SEC must act to permanently reverse this novel and misguided rule interpretation,” Crain said. “Especially at a time of rising interest rates, the bond market needs stability and manufacturers need low-cost and efficient access to capital.”
Manufacturers Release New Economic Analysis Pushing Back on SEC Bond Rule Interpretation
NAM and Kentucky Association of Manufacturers File Rulemaking Petitions to Protect Private Companies from Harmful Public Disclosure Mandate
Washington, D.C. – The National Association of Manufacturers released a new economic analysis on the damaging impact of the Securities and Exchange Commission’s attempt to force private companies to disclose financial information publicly.
The SEC’s new rule interpretation would apply to private companies that raise capital via corporate bond issuances under SEC Rule 144A. If the new interpretation takes effect as scheduled in January 2023, these businesses will face decreased liquidity and increased borrowing costs—leading to significant job losses and a decline in U.S. GDP.
These impacts will be felt across the economy, resulting in 30,000 jobs lost each year over the first five years the new interpretation is in effect. The job losses will increase over time—rising to 50,000 jobs lost each year after five years and 100,000 jobs lost each year after 10 years.
These job losses are attributable directly to the decreased liquidity and increased borrowing costs associated with the SEC’s new interpretation.
NAM Speaks Out:
NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement:
“At a time of rising interest rates and economic uncertainty, manufacturers cannot afford for the SEC to roil the bond markets arbitrarily. With tens of thousands of jobs at stake, the SEC must act by year’s end to reverse this misguided interpretation.”
Today, the NAM and the Kentucky Association of Manufacturers are filing two petitions for rulemaking with the SEC seeking to stop the harm this new rule interpretation would cause.
The NAM and the KAM are calling on the SEC to reverse course by clarifying—either by rule or by exemptive order—that Rule 144A issuers are not required to make public financial disclosures. The NAM and the KAM are also seeking emergency interim relief to prevent the new interpretation from taking effect in January.
- SEC Rule 15c2-11 requires broker dealers to ensure that key information about issuers of over-the-counter equity securities is current and publicly available prior to quoting those issuers’ securities freely.
- SEC Rule 144A allows for resales of securities (primarily corporate debt issuances) to qualified institutional buyers—large financial institutions that own or manage more than $100 million in securities. Retail investors cannot purchase Rule 144A securities. Notably, under Rule 144A, issuers are obligated to make their financial and operational information available to QIBs.
- In September 2021 and December 2021, the SEC’s Division of Trading and Markets issued no-action letters applying Rule 15c2-11 to Rule 144A debt; the new requirements take effect in January 2023. This decision contradicted the historical application of Rule 15c2-11 to OTC equity securities and bypassed important rulemaking safeguards required by the Administrative Procedure Act.
- The NAM has weighed in with the SEC and Congress seeking to reverse this damaging interpretation.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.9 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
What Manufacturers Want Out of an Immigration System
Generations of immigrants have enriched and strengthened manufacturing in the United States. That’s why the NAM has long focused on supporting an immigration system that offers opportunity for workers, support for businesses and certainty for our economic future.
Our priorities: The NAM is interested in immigration rules that prioritize national security and address workforce realities, while also dealing compassionately with the people seeking to come here for a better life.
- That means establishing a safe and secure border, making reforms to the legal immigration system, offering opportunities to attract and keep talent in the U.S., addressing uncertainty in immigration status and clearing immigration backlogs so that new cases can be addressed efficiently.
Our solutions: To accomplish these goals, the NAM has offered a series of solutions for national policymakers and other leaders, including:
- Fund border security via consistent appropriations;
- Increase employment-based immigration;
- Reform nonimmigrant visas and temporary worker programs to reflect employer needs, including a fund to support domestic STEM education programs;
- Provide a permanent and compassionate solution for people facing uncertainty, including Dreamers (people brought here as children); and
- Reform asylum and refugee programs for a more orderly and humane system.
Making progress: Already, we’ve seen important success. Recently, after NAM President and CEO Jay Timmons pressed Department of Homeland Security Secretary Alejandro Mayorkas about the need to reduce the visa backlog to ensure the industry can get the workers it needs, U.S. Customs and Immigration Services announced that it is on track to disburse all available green cards this year.
- “Addressing the green card backlog and providing green cards to hardworking and talented immigrants in the manufacturing workforce is an important step to address the current workforce crisis and support a stronger economy,” said Timmons.
- “With the workforce crisis contributing to inflationary pressures and economic uncertainty, we truly cannot afford to let more green cards go to waste and leave talented individuals who contribute to our economy on the sidelines.”
Learn more: The NAM recently released an updated version of its immigration policy roadmap “A Way Forward.” You can also find more information in “Competing to Win”—the NAM’s blueprint for policies that support manufacturing in America.
Manufacturers Unite to Protect Intellectual Property
Manufacturing associations across almost 40 states joined with the NAM in calling on the White House to safeguard intellectual property at the World Trade Organization.
What’s happening: The WTO is considering waiving IP rights for COVID-19-related vaccines and treatments—an action that would harm American manufacturers that have led the fight against COVID-19.
What we’re doing: The NAM has previously pushed back aggressively on the proposal, and alongside manufacturers nationwide, we are stepping up our work. In a letter addressed to Secretary of State Antony Blinken, United States Trade Representative Katherine Tai and other senior Biden administration officials, the NAM joined nearly 40 state manufacturing organizations in arguing that waiving these IP rights will negatively affect American manufacturing—as well as the overall fight against COVID-19.
- “This proposal would weaken critical global rules for IP protections that support innovation in a range of manufacturing sectors by including not only broad new categories of COVID-19 products, but also their upstream supply chains. Furthermore, an expanded waiver allows commercial rivals like China to unfairly seize American innovation to benefit their domestic economies.”
The importance of IP: Those manufacturing associations argue that IP gives an incentive for manufacturers to broaden research and development and a reason to invest in expanding industries. American manufacturers are concerned that the IP waivers would expose them to unfair competition from foreign rivals and would take away employment opportunities from Americans.
The last word: “Our organizations strongly urge the Biden administration and Congress to stand with manufacturers and workers to firmly oppose an expanded IP waiver at the WTO. We stand ready to work with you and your agencies in support of real solutions to the pandemic and future health crises—and to advance U.S. leadership in manufacturing and innovation.”
Manufacturers Notch a Critical Victory in Washington Alliance of Technology Workers v. DHS
Following Intervention by the NAM and Other Business Groups, D.C. Circuit Upholds STEM OPT Program
Washington, D.C. – Following a 2–1 decision by the D.C. Circuit affirming the validity of a program that provides hundreds of thousands of skilled workers for manufacturers and other American businesses, National Association of Manufacturers Chief Legal Officer Linda Kelly released the following statement:
“The NAM Legal Center is incredibly proud of today’s victory, which helps ensure the continued availability of hundreds of thousands of highly skilled workers for manufacturing roles. As manufacturers continue to experience significant labor shortages, the STEM OPT program remains a critical talent pipeline, providing opportunities for high-skilled graduates to enhance their education through hands-on work. Today’s win builds on the NAM’s impressive track record of defeating unlawful restrictions and meritless attacks on critical visa programs.”
Without the STEM OPT program, manufacturers would be unable to fill critical positions requiring specialized training in science, technology, engineering and math. So, in 2018, after an anti-immigration activist group brought a lawsuit against the Department of Homeland Security seeking to invalidate the entire STEM OPT program, the NAM and two other business groups moved to intervene as defendants in the case. That motion was granted, and in December 2020, the District Court for the District of Columbia granted the NAM and its co-intervenor defendants’ motion for summary judgment, ruling that DHS acted within its statutory authority and in accordance with the Administrative Procedure Act by continuing the STEM OPT program. The plaintiff activist group appealed to the D.C. Circuit, and today, the court issued its decision—rejecting the plaintiff’s bases for invalidating the STEM OPT rule and affirming the lower court’s judgment.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.