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Business Operations

One Small Manufacturer Battles Thousands of Counterfeits

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If you can buy anything online, how can you make sure that what you’re buying is genuine?

That’s a problem facing consumers and manufacturers alike. According to the NAM’s research, fake and counterfeit products cost the United States $131 billion and 325,000 jobs in 2019 alone—and estimates suggest that global trade in counterfeits exceeds $500 billion per year. The explosive rise of counterfeit goods has heavily impacted manufacturers, requiring them to fight back on a range of fronts.

For Clint Todd—the chief legal officer at Nite Ize, Inc., a manufacturer of mobile, pet and key accessories, as well as hardware, lighting and other products—that challenge is very real and only getting worse.

“In 2019, we took down 75,000 counterfeit listings and websites,” said Todd. “And we’re a small business, so you can guess how large the problem is countrywide.”

Why it’s happening: First, the online nature of e-commerce makes it more difficult to ensure accountability. Many counterfeit products are purchased through third-party sellers that may or may not provide real contact information.

  • In practice, many platforms have not been held liable for counterfeit products sold on their platforms by these third-party sellers, even as they facilitate their sale. That means there’s often little manufacturers can do beyond asking the platforms to remove the listing.
  • Second, a large proportion of the sellers of counterfeit goods are located in China and Hong Kong, making it much more challenging for U.S. companies to bring effective lawsuits, even if they do have accurate seller contact information.

“You have this odd confluence of laws and tech development and the involvement of another country that has driven this exponential increase in counterfeits,” said Todd. “You don’t have to be a rocket scientist to see how the inability to fight the problem has been detrimental to U.S. businesses.”

How manufacturers respond: Manufacturers and others have been forced into a piecemeal strategy that includes using software tracking services to find fraudulent trademarks and images; working with third-party sites to remove listings for knockoff merchandise; bringing lawsuits against counterfeiters where possible; and coordinating with the International Trade Commission. That strategy is challenging for lots of manufacturers but is particularly hard on small and medium-sized companies that may have fewer resources yet can be devastated when their products are ripped off.

What we need:  The NAM’s report, “Countering Counterfeits,” details solutions for the federal government and the private sector, including:

  • Requiring e-commerce platforms to reduce the availability of counterfeits;
  • Modernizing enforcement laws and tactics to keep pace with counterfeiting technology;
  • Streamlining government coordination;
  • Improving private-sector collaboration; and
  • Empowering consumers to avoid counterfeit goods.

As Todd put it, “It’ll take a multi-stakeholder approach. It’s not just the government. It’s not just manufacturers. It’s not just the online platforms. It has to be a coordinated approach with all those stakeholders to get to the heart of the matter.”

What the NAM is doing: The NAM is leading the effort against counterfeiting and has already made significant headway with policymakers. Among its recent highlights:

  • After years of NAM advocacy, the Department of Homeland Security has implemented the Synthetics Trafficking and Overdose Prevention (STOP) Act of 2018, which steps up screenings for international mail shipments—one way in which counterfeits get into the U.S.
  • In late 2020, Congress also implemented several NAM recommendations, including bolstering federal oversight at U.S. ports; cracking down on scammers and other bad actors exploiting the pandemic by producing fake goods or engaging in price gouging; and allowing the FDA to seize and destroy dangerous counterfeit medical devices.
  • Both the Senate and House have seen the introduction of bipartisan bills that incorporate NAM recommendations on addressing the sale of counterfeits through online platforms.

The last word: “People need to understand the scope of the problem and how pervasive it has become,” said Todd. “Everyone needs to know how often counterfeits and knockoffs are affecting U.S. companies and how expensive and difficult it is to combat the problem with the tools we have at our disposal now.”

Policy and Legal

NAM Pushes Back on Global Minimum Tax Increase

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The NAM is fighting against congressional efforts to increase the minimum tax on U.S. companies’ foreign earnings above the rate recently reached by a global minimum tax deal—thereby putting globally engaged manufacturers at a significant disadvantage.

The context: For a number of years, the Organisation for Economic Co-operation and Development has been leading global tax negotiations that would fundamentally reshape the current international tax system. A centerpiece of the effort is a 15% global minimum tax that more than 130 countries signed off on earlier this month. The deal is intended to be implemented in 2023.

The U.S. angle: The United States already has a global minimum tax, called the global intangible low-taxed income tax, or GILTI, which operates as a minimum tax on the foreign earnings of U.S. multinational corporations. Now, Congress is considering increasing it as part of the reconciliation legislation. In particular, the pending House reconciliation bill would increase the GILTI rate from the current 13.125% tax rate to 17.4%—above the proposed global minimum tax rate.

The problem: The NAM has made clear that the United States shouldn’t move forward with any changes to GILTI before other countries implement a minimum tax, and that the U.S. shouldn’t have a minimum tax regime that results in a higher tax burden than the rest of the world. Such a burden on globally engaged companies would make it more difficult for these companies, including manufacturers, to compete and succeed in the global marketplace.

What we’re saying: “If Congress adopts a harsher tax regime than the rest of the world, it would tilt the scales against manufacturers and manufacturing workers in the U.S.,” said NAM Vice President of Tax and Domestic Economic Policy Chris Netram. “A harsher regime would harm manufacturers, reducing their ability to compete around the world and invest in high-paying jobs here at home.”

Learn more: One NAM study showed that proposed harmful changes to the GILTI regime could cost up to 1 million U.S. jobs.

Business Operations

How Cloud Computing Could Help Chip Manufacturers

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One small component is creating big delays in global supply chains: the ubiquitous semiconductor or chip. These components are not only essential to our phones, laptops and other electronics, but to the production process in just about every sector of the manufacturing industry. So, what would help us produce more of these desperately needed parts? According to Birlasoft Vice President and Global Business Head of Communications, Media & Technology Nitesh Mirchandani, the answer is cloud computing.

Why the shortage? As COVID-19 unfolded, millions of consumers purchased new laptops, smartphones, game consoles and other devices as they spent more time at home. This shortfall was compounded by the existing high demand for chips brought on by the growth in smart products—everything from thermostats and appliances to robot vacuum cleaners and GPS-enabled dog tags. COVID-19 also caused a wave of semiconductor factory closures that also exacerbated the problem. The result? A shortage that industry experts say could last through 2022.

Why the cloud? Cloud computing is the on-demand delivery of resources like data storage, software, networking and other services via the internet. Users either purchase a set subscription or pay by their level of usage—both cheaper and more flexible options than maintaining an on-site IT team for all needs. Cloud computing has several advantages for semiconductor manufacturers, according to Mirchandani:

  • It speeds up time to market through swifter design and development. Because they can be accessed anywhere, cloud services enable teams to connect and collaborate more easily. Development cycles become quicker as teams connect better internally and with other parts of the business, including partners and suppliers.
  • It enables data-driven business decisions. Thanks to the faster processing and analysis of cloud computing, manufacturers can get instant information on things like factory performance, supply disruptions or customer demand. Likewise, workers can be alerted to a machine that needs maintenance or to potential defects in materials or products.
  • It provides service continuity. Internal IT teams often have limited resources. Cloud infrastructure is managed by specialists who can ensure uninterrupted service, so in-house IT teams don’t need to continuously maintain software through updates and patches.

Why it matters: Semiconductor shortages threaten to drag down the economy just as recovery is getting underway. Businesses rely on chip-enabled technologies for creating products, managing operations and maintaining the flow of goods and services. Consumers rely on them for smarter, safer homes and connections to work or school. Unless chip manufacturers can shore up production to meet demand, the ripple effect will create added distress for many sectors of the economy.

Press Releases

Manufacturers: Powell Led with Heart and Guided by Conscience

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on the passing of General Colin Powell:

“A soldier statesman and trailblazer whose biography is filled with ‘firsts,’ General Colin Powell led with his heart and was guided by his conscience. As he rose through the ranks, he was a source of inspiration for an ever-growing number of Americans—demonstrating what principled leadership could look like and what was possible in the United States for a child of immigrants.

“As both a general and a diplomat, he understood well the role that manufacturing plays in securing our national defense. And in both public and private life, he advanced those values that manufacturers know make America exceptional: free enterprise, competitiveness, individual liberty and equal opportunity.

“Sadly, his death is also a stark reminder of just how vicious COVID-19 can still be—and that Americans must remain ever vigilant as we fight the pandemic.

“Service to his country was his life’s work, and as we mourn his passing, our country is grateful for his decades of leadership. Manufacturers extend our deepest condolences to his wife, Alma, his children and his entire family.”

-NAM-

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 12.4 million men and women, contributes $2.52 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector 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.

Workforce

Heroes MAKE America Keeps Growing

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The Manufacturing Institute’s Heroes MAKE America hasn’t let COVID-19 slow it down. To the contrary, it has expanded and added new features in 2021 in order to prepare more members of the military community for manufacturing careers.

“The work we’re doing aligns so well with what our manufacturers are prioritizing,” says MI Vice President of Military and Veterans Programs Babs Chase. “We are continuing to serve a community that has sacrificed so much and will continue to sacrifice. We truly appreciate the manufacturers that are standing beside us.”

Growth during a pandemic: Heroes, which works with local technical colleges to provide certification and career-readiness preparation, increased its impact in the past year and has now placed graduates with more than 250 companies in 42 states.

  • Training programs at Fort Riley in Kansas, Fort Hood in Texas, Fort Bragg in North Carolina and Fort Campbell in Kentucky continue to grow, and Heroes will soon launch a new training site in Georgia.
  • In August, Heroes graduated the first class of its new Fort Hood mechatronics training program, which combines electrical and mechanical engineering and computer technology with advanced manufacturing.

Going virtual: This month, thanks to the support of the Caterpillar Foundation, Heroes is officially launching a fully remote training program in a synchronous model that will incorporate hands-on simulations using virtual reality.

  • The new program is a partnership with Texas State Technical College and New York City–based tech startup TRANSFR, and will allow transitioning service members, veterans and military spouses to participate in Heroes regardless of their physical location—so long as they have access to Wi-Fi.

Connecting with Heroes: 2021 is also the second year of Heroes Connect, the program’s direct response to COVID-19. This virtual platform facilitates introductions between the manufacturing industry and military-community members seeking jobs.

  • In-person tours have always been a cornerstone of the Heroes program, and Heroes Connect provides another avenue for those essential introductions to manufacturing leaders and veterans already in the industry. Even as Heroes restarts in-person tours, Heroes Connect will remain a vital part of the initiative, says Chase.

As she put it, “Heroes Connect is continuing to break down barriers around physical location, showcasing manufacturers all across the country for Heroes participants as well as the greater military community.”

Diversity data: By the end of 2021, more than 625 students will have graduated since Heroes’ inception in 2018. These students are as diverse as the career opportunities available in manufacturing:

  • The graduates represent more than 136 different military occupational specialties.
  • Nearly half of all graduates (47%) come from minority populations.
  • Approximately 16% are women.
  • Only 47% of alumni have any post-secondary education.
  • Forty-one percent of graduates were in the military for 10 years or more.

Success stories: The Heroes program boasts too many success stories to recount in one place, but here are just two:

  • Former U.S. Marine Zachary Willis came to Heroes after health issues led to his departure from the military. “It’s been amazing,” said Willis, who earlier this year began a manufacturing job at Hodgdon Powder Company. “The ability to reach out and connect with other employers all around the country—from smaller companies to huge international corporations—is something you don’t see in very many places. I wish more people took advantage of programs like this.”
  • Then there’s Hugo Hinojosa, who served 22 years in the U.S. Army before starting the Heroes program. He now works as a business partner in the human resources division of WestRock Company, and says, “I’m working in a place where the values are in line with what I was brought up with in the military—integrity, respect, accountability and excellence.”

The final say: “For our team, serving the military population is crucial,” Chase said. “But equally vital is our service to manufacturers—and they recognize the value that this population brings to their teams.”

Workforce

NAM Launches Manufacturers Retirement & Savings Plan

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Are you looking for a retirement plan that fits your needs and workforce? There’s good news: the NAM is rolling out the Manufacturers Retirement & Savings Plan—a 401(k) plan designed specifically for manufacturers across the country.

The scope: The Manufacturers Retirement & Savings Plan is a multiple employer plan available to all NAM members, designed to cover more than 14,000 companies and associations. Companies of all sizes can participate, creating new financial opportunities and offering retirement security to the millions of men and women who make things in America.

The provider: The NAM selected Principal Financial Group® and HUB International LLC as the service providers. Principal Financial Group® is one of the largest retirement solutions providers in the United States, and HUB International is a leading North American insurance brokerage. Together, they will offer business owners and employees access to dedicated professionals who can offer guidance and assist with the day-to-day management of retirement plans.

The benefit: Offering benefits like 401(k) plans is a critical way for manufacturers to attract and retain talented employees, especially at a time of unprecedented job openings. But creating and operating a retirement plan can be expensive and time-consuming, imposing barriers for small and medium-sized companies. By creating an association-sponsored plan, the NAM is helping members across the board ensure efficiency, reduce risks and manage costs effectively all while improving retirement outcomes for employees and helping employers free up time and money. And with National Benefit Services engaged to administer the new plan, transitioning is simple as well.

What we’re saying: “Manufacturers want their employees to feel safe and secure about their financial well-being and to have confidence that they will be able to retire when they are ready,” said NAM President and CEO Jay Timmons. “But operating a 401(k) plan can be challenging—especially for smaller companies. We can help with this—I’m proud that the NAM now offers our members access to best-in-class benefits for their teams.”

Learn more: Join us at one of two upcoming information sessions, Nov. 9, 2021 or Dec. 7, 2021.

Policy and Legal

NAM Sues SEC to Maintain Proxy Firm Oversight

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The NAM is stepping up to protect a hard-won victory on an issue critical to public company governance—oversight of proxy advisory firms.

The background: Proxy firms advise institutional investors (like retirement fund managers) on how to vote on the policies of the companies they invest in. The problem is that the two main proxy firms—ISS and Glass Lewis—have generally operated without any oversight, and as a result, their work has relied on questionable methodologies and ignored conflicts of interest. These issues have often caused problems for manufacturers and their shareholders given the power these firms wield.

  • Last year, following years of advocacy by the NAM, the Securities and Exchange Commission finalized a rule that provides targeted oversight of these firms. The rule requires that proxy firms disclose conflicts of interest and create procedures to give companies a chance to respond to their recommendations.

The problem: Following the change in presidential administrations, the SEC announced that it is taking steps to revise or rescind the rule that was finalized last year. On top of that, it has suspended enforcement of the rule during the review process and plans to prevent many provisions from going into effect as planned on Dec. 1.

Our move: The NAM is filing suit against the SEC for refusing to enforce the rule without going through the official process to change or replace it, as required under the Administrative Procedure Act. Agencies cannot set aside regulations they happen to disagree with, and the NAM is contending that the SEC has acted unlawfully by effectively rescinding the rule without inviting public comment on its impact on market participants, including manufacturers. Of course, the NAM also intends to fight any effort to revise or rescind the rule under normal procedures, but that comes later.

The stakes: If the NAM wins the suit, the SEC will have to leave the rule on the books until it comes up with substitute regulations through notice-and-comment rulemaking, and proxy firms will have to comply with the basic safeguards required under the rule.

The last word: “The SEC’s rule on proxy advisory firms was a victory for manufacturers, but also for accountability and transparency,” said NAM Senior Vice President and General Counsel Linda Kelly. “The NAM intends to stand up for this rule, to hold the SEC to its responsibilities and to ensure that manufacturers on the public market and manufacturing workers with retirement savings are protected from proxy firms’ outsized influence.”

Press Releases

Manufacturers Fight SEC’s About-Face on Proxy Advisory Rule

Washington, D.C. – The National Association of Manufacturers filed a complaint in federal court against the Securities and Exchange Commission for its nonenforcement of the lawfully adopted 2020 final rule on proxy advisory firms—unregulated third parties with outsized influence on shareholder votes and manufacturers’ corporate governance policies.

“The SEC is changing course, attempting to suspend a commonsense rule that enhances transparency into the work of proxy advisory firms without any opportunity for public comment by the NAM or anyone else,” said NAM President and CEO Jay Timmons. “When the SEC finalized this reasonable, light-touch regulation, manufacturers strongly supported these necessary reforms because they protect the interests of manufacturing workers, retirees and everyday investors. The NAM Legal Center is filing suit to protect manufacturers from this unlawful about-face and to ensure that this rule stays on the books.”

Background:

The NAM has long advocated increased oversight of proxy advisory firms—little-known, unregulated entities that exert enormous influence over publicly traded manufacturers. These firms have significant conflicts of interest and issue error-filled, one-size-fits-all proxy voting recommendations that can impact the direction of a business and the value of investors’ shares. In July 2020, the SEC issued final regulations limiting proxy firms’ outsized influence, a move Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.”

In October 2020, the NAM filed a motion to intervene in ISS v. SEC (ISS’s attempt to overturn the rule), followed by a motion for summary judgment outlining why the SEC’s lawful, reasonable and minimally invasive rule must be upheld. In June 2021, the SEC announced it was reviewing the rule and suspending enforcement thereof, at which point NAM Senior Vice President and General Counsel Linda Kelly made clear that the NAM would fight “any efforts to bypass the required notice-and-comment process to keep this lawfully issued rule on ice indefinitely.”

-NAM-

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 12.4 million men and women, contributes $2.52 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector 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.

Workforce

Creators Wanted Comes to Columbus

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The Creators Wanted campaign was created to recruit new talent, change perceptions about modern manufacturing and inspire the next generation of creators. Starting this week, the Creators Wanted Tour Live began visiting cities around the country to bring that message directly to Americans. The first stop: Columbus, Ohio.

The Tour Live features a series of escape rooms mounted on a mobile unit, with challenges that are intended to show participants how modern manufacturing actually works—and to be fun at the same time. During its four days in Columbus this week, more than 350 students got to participate, from Canal Winchester High School, Horizons Science Academy, Mechanicsburg School (Entertainment Tech), Sunrise Academy, Marysville Early College High School, Southwestern Career Academy and Millennium Community School.

The tour stop in Columbus also featured a number of exhibits and demonstrations, including opportunities to:

  • Meet and ask questions of associates at Honda, the tour’s official mobility sponsor, as well as see some of its cutting-edge vehicles;
  • Try out augmented reality technology from PTC;
  • Explore activations by The Ohio Manufacturers’ Association, the Manufacturing Extension Partnership at Columbus State Community College and diversified metal manufacturer Worthington Industries;
  • Take part in a Creators Connect forum with creators at Honda, Abbott and Worthington Industries; and
  • Interact with Creators Connect, a new NAM and MI tool in beta testing, which matches people interested in manufacturing careers with pathways to achieve them.

A tour of the tour: The photos and videos from the Columbus events give you a taste of the excitement. Here, a few students begin the experience at the PTC AR demonstration:

Here are some students trying out the escape room and using the sort of creative thinking required for a manufacturing career:

Below, NAM President and CEO Jay Timmons takes a look at one of the Honda automobiles that were on display.

The satisfied “smizing” of some successful manufacturers-in-training:

NAM Vice President of Brand Strategy Chrys Kefalas, and the chief strategist of the campaign, caught up with some students to see what they thought of the experience.

The short answer?

Awesome indeed.

The reception: The tour stop in Columbus created a splash, receiving coverage in the press and attention from state and U.S. officials. Sen. Rob Portman (R-OH) put in a plug for Creators Wanted, encouraging students and parents to check out the tour.

Ohio Lt. Gov. Jon Husted spoke at one of the events, urging students to pursue creative careers:

Meanwhile, News 5 Cleveland, Cleveland.com (subscription) and ABC 6 Columbus covered the Creators Wanted stop, while Good Morning Columbus (FOX 28) and Good Morning Cleveland (ABC 5) broadcast segments about the events.

The reach: The digital and media campaign around the Columbus tour stop also had a big impact, with more than 404,000 impressions, 4,200 clicks and 111,000 video views. It’s also on its way to more than 10,000 email signups from individuals interested in manufacturing career paths.

The last word: As Manufacturing Institute Executive Director Carolyn Lee said at one of the events, “The challenge is significant: we have nearly 900,000 open jobs in manufacturing today—a new record. The promise is real: there can be many more people earning great livings and creating our future working in manufacturing in the United States.”

Business Operations

A Manufacturer Goes Lean and Wins Big

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Consumer goods manufacturer Church & Dwight found that it needed to boost performance to meet customer demand. To meet this goal, it embarked on an ambitious Lean initiative at all of its 13 production facilities.

“We look at all challenges through the lens of Lean manufacturing—it’s the only way that we can operate,” said Bruno Silva, vice president of manufacturing operations.

What’s Lean? Researchers James Womack and Daniel Jones first defined the concept of Lean manufacturing as “a way to do more with less … while coming closer to providing customers exactly what they want.” Many manufacturers see mastering Lean as an essential springboard to operational initiatives like digital manufacturing and other advanced production practices.

Setting the stage: In developing its Lean program, Church & Dwight first held a weeklong leadership summit to decide on standards and expectations. The company’s leaders came up with a Lean assessment system with 16 standards and a definition for achievement at the gold, silver and bronze levels. But the essential part was ensuring frontline employees were driving improvement from the bottom up—not the other way around.

  • “This is not corporate pushing it down,” said Felipe Vilhena, director of Lean manufacturing – global operations. “We help workers overcome challenges and give them the right tools to do that. We created a mindset and expectation that improvements are part of the work.”

Putting it into practice: Initially, each worker was asked to list five potential improvements at his or her site, and then go out and make them. The company provided training and support to help with these fixes, while managers kept employees fully informed of their progress according to key indicators.

  • Workers formed self-directed teams and continued to seek out improvements, which they began making more and more frequently. Thanks to the trust and autonomy that employees were given, engagement and retention measurably increased at the same time.

Receiving recognition: The company’s achievements have received recognition from its peers in the industry. One of its top-performing facilities in Green River, Wyoming, earned the company a 2021 Manufacturing Leadership Award in the Operational Excellence category from the NAM’s Manufacturing Leadership Council.

The last word: “It was important to create the right expectation and mindset,” Vilhena said. “From big to small improvements, we are seeing them happen every day.”

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