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.”
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.
Manufacturers face a minefield of legal and compliance issues every day—and too often, in-house counsel are forced to navigate some of the biggest issues affecting the industry alone.
The NAM’s Legal Center sought to change that dynamic at the first-ever Manufacturing Legal Summit, which took place Nov. 15–16 in Washington, D.C., where in-house counsel from manufacturing companies across the nation had a unique opportunity to convene and learn about the latest pressing challenges across the legal and regulatory landscape.
“The summit offered real-world, practical advice that will help in-house manufacturing counsel deal with their legal and regulatory challenges,” said NAM Chief Legal Officer and Corporate Secretary Linda Kelly.
Kelly and NAM Deputy General Counsel for Litigation Erica Klenicki told us more.
Exploring issues: The summit covered a range of topics, including the following:
- National Labor Relations Board: A session led by NLRB board member John Ring and labor law experts from Fisher Phillips provided critical insights on the priorities and activities of an aggressively pro-labor NLRB, and how manufacturing employers can prepare for the many significant legal changes coming in the weeks, months and years ahead.
- Supply chain: A panel centered around supply chain challenges, featuring the perspectives of GE Appliances’ vice president and general counsel and including an array of experts from the law firm Foley & Lardner, covered issues like supply chain due diligence and drafting contracts to prepare for inevitable supply chain bottlenecks.
- ESG: A panel of experts from McDermott, Will & Emery that also included Brunswick Corp. Executive Vice President, General Counsel, Secretary and Chief Commercial Officer Chris Dekker explored how the ever-evolving concept of ESG is affecting both public and private companies—including what manufacturers should expect from the Securities and Exchange Commission’s forthcoming climate disclosure and human capital management rules.
- Supreme Court: Another session covered the impacts of last year’s Supreme Court decisions and the likely outcomes of this year’s cases on issues of importance to manufacturers and the general public alike.
- Product liability: This panel featured in-house counsel from Johnson & Johnson, The Sherwin-Williams Company and Toyota North America, along with experts from the law firm Shook, Hardy & Bacon, discussing recent efforts by the trial bar to circumvent the traditional limits of product liability law. The panelists laid out the types of bad-faith product lawsuits that manufacturers often face—and how manufacturers should approach them.
- Drugs in the workplace: Especially at a time of legal ambiguity around marijuana, it can be challenging for employers to make and enforce rules about drug use. This session led by workplace legal expert Matt Nieman of Jackson Lewis laid out helpful approaches to creating a modern drug-free workplace.
- Cybersecurity: As cyberattacks against manufacturers rise, it’s important for lawyers to understand their responsibilities around protecting confidential company information and preventing breaches. Thanks to the expertise of representatives from Miller Johnson, a member of the Meritas network, participants learned about these topics through the lens of an attorney’s ethical obligations.
Building relationships: In addition to practical and engaging content, the event also offered participants opportunities to connect with one another and with the NAM legal team.
- “One of the many goals was to build a network, and there was a lot of enthusiasm for that,” said Kelly. “The event also brought greater visibility to the work of the Legal Center and helped show the legal departments of member companies how the NAM can be an effective partner.”
Convening talent: More than 120 participants registered for the event, comprising in-house counsel representing large and small manufacturers from every industrial sector, as well as legal experts from top law firms across the country.
- “This is the first time this group was in a room together,” said Klenicki. “It’s a group that faces a lot of the same pressures, so having everyone in the room together thinking through these issues was extremely valuable.”
A representative reaction: “The event brought together a terrific collection of manufacturing CLOs and senior law department leaders to discuss legal issues of importance to manufacturers,” said Dekker. “The informative and timely content was presented primarily by panels that included outside attorneys and in-house counsel ensuring the advice was actionable and practical.”
An annual affair: The Manufacturing Legal Summit will return Nov. 7–8, 2023, in Washington, D.C.
- “Being in the nation’s capital, where law and policy unfold, hearing from experts on these issues—it’s an exciting experience,” said Klenicki.
Though some midterm races remain uncalled, the NAM is preparing the next phase of its competitiveness agenda. Last Thursday, it offered members a breakdown of the election results so far and what they mean for manufacturing policies and priorities in the United States.
The briefing: Hosted by NAM Vice President of Government Relations Jordan Stoick, the conversation provided members with an overview of the NAM’s key issue areas, presented by several of the NAM’s policy experts.
- Tax: According to NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram, the NAM is pushing Congress to approve key tax incentives for manufacturers in a year-end package, including the reversal of a harmful change in the treatment of R&D expenses that took effect earlier this year and an extension of 100% bonus depreciation. Beyond the lame-duck session, the NAM will be fighting to make tax reform permanent, he added.
- Trade: According to NAM Vice President of International Economic Affairs Policy Ken Monahan, the NAM will be advocating reauthorization of the Miscellaneous Tariff Bill. Going forward, priorities will include guarding against the TRIPS waiver at the World Trade Organization (which would harm manufacturers’ intellectual property rights), defusing regulatory and market access challenges in Mexico and promoting a robust market-opening agenda overall.
- Energy: NAM Vice President of Energy and Resources Policy Rachel Jones said energy security is likely to remain a key focus of policymakers. She highlighted permitting reform as a possible area for bipartisan progress and noted that implementation of new climate incentives and programs will likely come with heightened oversight from the new Congress next year.
- Infrastructure: NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling noted that supply chain challenges are the most difficult issue facing manufacturers at the moment. She also provided an update on rail negotiations, addressed the National Labor Relations Board’s robust pro-labor agenda and spoke out in favor of the NAM’s commonsense immigration approach, among other issues.
The outlook: “The good news is that regardless of the outcome, the NAM remains uniquely positioned to continue to effectively advocate on your behalf with the Biden administration and with both parties, whoever’s in control on Capitol Hill,” said Stoick.
- “We’ve worked successfully with the administration and the current Congress over the past two years to achieve important policy wins on things like infrastructure and the CHIPS semiconductor and competition bill. And we’ve been successful at pushing back on harmful policies and overreach, including stopping what should be considered some of the worst parts of the tax increases that were proposed over the past two years.”
Washington, D.C. – Today, the National Association of Manufacturers released the following statement calling for passage of the Respect for Marriage Act:
“Manufacturers know that individuals truly thrive in their careers when they can bring their authentic selves to work and feel confident that their families will be safe from discrimination or worse in the places they have chosen to live. The Respect for Marriage Act would ensure that the legal protections around which so many Americans, including manufacturing workers, have ordered their lives will not be suddenly rolled back. Codifying federal protections for interracial marriages and same-gender marriages with appropriate protections for religious liberty will help keep all families equal under the law and ensure that manufacturers can continue to hire and retain a diverse and talented workforce. It will deliver families and businesses the certainty they need and deserve.”
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
Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement as negotiators work to reach an agreement between Class I railroads and all labor unions representing the freight rail workforce. Several organizations have not yet ratified the deal tentatively agreed to by union leadership and rail industry representatives in September that delayed the possibility of a strike.
“Manufacturers are urging congressional leaders to be prepared to bring stability and predictability to the economy if a rail strike and shutdown occurs. We already face economic turmoil with rising costs, product shortages and high inflation. Any nationwide rail strike or shutdown will cause even more economic pain. Manufacturers urge all parties to work rapidly—for the good of the country—to conclude this collective bargaining process.”
Background: A rail strike could begin as soon as 12:01 a.m. EST on Saturday, Nov. 19. Currently, the majority of the unions representing the rail workers have agreed to extend that deadline to Friday, Dec. 9, though a unanimous decision to maintain the status quo is required for that extension.
On Thursday, Oct. 27, the NAM joined hundreds of other associations in calling on President Biden to ensure a swift resolution and reiterating support for the work of the Presidential Emergency Board, which has aided in the talks.
Currently, the American freight rail network accounts for nearly 40% of total freight volume, and a strike or delay in finalizing a long-term contract would have devastating impacts across surface supply chain networks and economic output.
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 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.
With the possibility of a national rail strike looming in the near future, the NAM is working with association members, congressional leadership and the White House to urge all parties toward a final resolution. On Monday, the NAM held a members-only briefing with remarks from senior leadership of the Association of American Railroads and personnel involved in the ongoing collective bargaining process.
- NAM members in attendance had the opportunity to hear about the state of play directly from representatives of the rail industry, and the message was consistent with the NAM’s own: that the situation is critical, and that a lack of an agreement would be devastating for railroads, for manufacturers and for the wider U.S. economy.
The background: For nearly three years, railroads and their unions have been discussing the outlines of a new long-term contract.
- Two months ago, U.S. Class I railroads and the various labor unions composing the rail workforce agreed to a deal brokered in part through efforts led by the Biden administration that temporarily averted a strike, pending ratification votes by each union’s rank-and-file membership.
- Although more than half of the unions involved have now ratified the agreement, at least two unions have voted to reject it—raising the likelihood of a strike.
The situation: Seven unions have ratified the proposed agreement, two have rejected the deal, and three have yet to vote. As it stands now, the hard deadline for unanimous agreement by all unions is 12:01 a.m. on Saturday, Nov. 19, at which point a strike could be called.
The outlook: During the NAM’s event, the speakers acknowledged that Class I freight rail companies will have to begin making decisions about possible disruptions and metering rail service as soon as this weekend.
- Leading up to the Nov. 19 deadline, manufacturers may receive notifications that some products cannot be moved on certain rail lines.
Next steps: It will be critical for stakeholders to press Congress and the administration either to work with unions to extend the Nov. 19 deadline, or to intervene with legislation that puts in place an agreement like the one recommended in September by the Presidential Emergency Board.
What we’re saying: “Manufacturers are urging congressional leaders to be prepared to bring stability and predictability to the economy if a rail strike and shutdown occurs,” NAM President and CEO Jay Timmons said today.
- “We already face economic turmoil with rising costs, product shortages and high inflation. Any nationwide rail strike or shutdown will cause even more economic pain. Manufacturers urge all parties to work rapidly—for the good of the country—to conclude this collective bargaining process.”
The Treasury Department and the IRS can help the U.S. meet its climate goals—if both agencies “can leverage private sector ingenuity, expertise and capital” both transparently and inclusively, the NAM told Treasury late last week.
What’s going on: This year’s reconciliation legislation contains advanced manufacturing, clean energy and climate incentives to invest $369 billion in actions that will address climate change, including $270 billion via direct tax incentives.
- These measures can be successful if “Treasury and the IRS quickly address the critical details of how each of these incentives will work in tandem with clean energy and advanced manufacturing projects that have already begun and those that have yet to be conceived,” NAM Vice President of Energy and Resources Policy Rachel Jones told the agencies.
- Treasury must also work to ensure the incentives are used “in a way that quickly brings new private capital to bear” while keeping projects on schedule.
Manufacturers’ input needed: Engagement with manufacturers should help the agencies develop their rulemaking, Jones said.
- “To meet our shared goals, including achieving meaningful emissions reductions, Treasury and the IRS should maintain an open line of communication with the NAM’s members of all sizes and sectors,” she said.
- “Without thoughtful engagement with manufacturers, the clean energy and climate incentives could have the opposite of intended results, and in some cases projects could stall, communities will face further disappointment, energy security will be jeopardized and climate goals will go unmet.”
What’s not needed: “It would be shortsighted to implement guidance and rules that exclude or indirectly penalize manufacturers that are already making significant capital investments in clean energy projects,” Jones said.
Teamwork—and plain language: The NAM also urged Treasury and the IRS to make clear their definitions and qualifications when it comes to clean energy and climate tax credits.
- Jones recommended cooperation across the “entire federal family” to combat climate change—from the Nuclear Regulatory Commission to the Department of Defense to the Federal Energy Regulatory Commission and many more.
NAM about town … The NAM participated in a Treasury roundtable yesterday where it shared the specific concerns and constructive input from manufacturers more directly.
As the world’s leading energy producer, the U.S. is poised for long-term energy independence and competitiveness in the global marketplace—but only with the right policies in place.
The right recipe: That’s the theme of the NAM’s energy and natural resources advocacy in its policy blueprint, “Competing to Win,” and it’s the recipe for continued success for all manufacturers in the U.S.
- Manufacturers lead the way in finding new means of harnessing our abundant sources of energy, but to make long-term investments and continue to innovate, policymakers should draw up and stand by a comprehensive framework for a secure energy future.
Keep us competitive: The NAM calls on legislators to take specific actions to keep energy manufacturing in the U.S. competitive. These include:
- Streamlining regulations that slow access to our rich supply of energy, minerals and other natural resources;
- Expediting the regulatory and legal processes involved in developing clean energy technologies and promoting energy and energy technology trade;
- Fixing the broken permitting process for energy production and infrastructure projects;
- Promoting access to federal lands and waters for environmentally responsible mineral, energy and resource exploration;
- Supporting measures to enhance development and deployment of energy-efficient technologies;
- Backing domestic critical mineral extraction, recycling and processing; and
- Expanding the useful life of critical minerals components using federal programs and funds.
Focus on the environment: Energy produced in the U.S. is cleaner and more responsibly sourced than energy produced in other nations.
- When U.S. policies fail to encourage production here at home, they encourage production in other parts of the world, where there is far greater adverse impact to the environment.
Security through innovation: Sound, thorough and competition-focused energy policy will give energy manufacturers in the U.S. the stability they need to invest for the long term.
- Innovation, energy security and greater affordability—not just for the U.S., but for other countries as well—will follow.
The last word: “The future of the manufacturing industry and our country’s resource security rely on clarity and certainty from policymakers that strengthens our competitiveness,” said NAM Vice President of Energy and Resources Policy Rachel Jones.
- “With a renewed commitment to increasing domestic energy production and delivery, to focusing on critical mineral and material supply chains and to advancing new technologies, the United States can continue to lead the world for decades to come.”
After a tax law change went into effect in 2022, manufacturers across the country found themselves facing new obstacles to investment in research and development. For Vermeer Corporation—a manufacturer of industrial and agricultural equipment based in Pella, Iowa—the change is causing real concern.
The background: Until the beginning of this year, businesses could deduct 100% of their R&D expenses in the same year they incurred the expenses. Starting in 2022, however, a change in the tax law required businesses to spread deductions over a five-year timeframe. That change is making investment more expensive and preventing some companies from putting their resources into critical innovation.
Constant innovation: As a company that makes a variety of diverse products for fields like agriculture, mining, utility construction, forestry and renewable energy, Vermeer is always working at the cutting-edge of new technology, and that requires significant investment in R&D.
- “Vermeer designs and builds specialized equipment—and it has to be innovative,” said Vermeer Corp. Senior Director of International Business Development and Government Affairs Daryl Bouwkamp. “We have to push that leading edge constantly. The history of Vermeer is a history of invention and innovation.”
Vital competition: According to Vermeer, R&D is also vital to the ability of manufacturers in the United States to compete with foreign companies.
- “We’re not the only company that’s innovating around the world,” said Vermeer Vice President of Finance Ryan Agre. “There’s pressure from companies in countries that are producing products like ours.”
Immediate impact: The new tax law has already had a serious effect, according to Agre.
- “It’s a material, meaningful impact,” said Agre. “It’s millions in additional tax that we will incur at Vermeer just next year—and that’s the one-year impact, so it’ll be even more significant over a five-year implementation period. We’re actively having to harvest cash elsewhere to offset this impending change.”
Pushing back on China: The U.S. tax law change also stands in stark contrast with policies from countries like China, according to Vermeer.
- “When you look at the generosity of foreign support, especially China’s, versus the United States, it’s so lopsided,” said Bouwkamp. “China is trying to drive behavior toward R&D—and that’s something we’re lacking.”
The big picture: Agre also noted that making R&D more expensive can make companies like Vermeer risk-averse—more likely to direct the investments they do make toward smaller or more incremental innovations, and less willing or able to invest in the kind of ambitious research that can offer truly transformative results.
- “We don’t know what we haven’t discovered yet,” said Agre. “We have a history of being innovative in new spaces, and that requires individuals to have funding and freedom of thought to go out and experiment. When you’re trying to create something that doesn’t exist today, you’re going to hit some home runs—but you’re also going to strike out a bit. When you need more certainty, you start cutting out uncertainty and making fewer investments in big ideas. That impacts not just Vermeer but the whole economy.”
Manufacturers of all sizes must be able to compete in a global economy—and that means selling not just to consumers in the U.S., but also to the billions of consumers who live around the world. That’s why the NAM is standing up for a robust U.S. trade policy that advances strong rules and partnerships that promote open markets, improve competitiveness, increase business predictability and boost manufacturers’ ability to reach new customers abroad.
Our priorities: The NAM is interested in a U.S. trade agenda that supports open global markets so that manufacturers can benefit globally from the same principles that we value at home: nondiscrimination, fairness, equal opportunity and competition.
- It is also focused on pushing back against foreign practices that harm manufacturers and their employees in the U.S. and holding countries like China accountable. Ultimately, the NAM is committed to improving U.S. global competitiveness, supporting innovation, growing the economy and strengthening the industrial base.
Our solutions: To accomplish these goals, the NAM has offered a series of solutions for national policymakers and other leaders, including:
- Implementing the CHIPS and Science Act and pursuing additional legislation to strengthen supply chains and support a STEM workforce;
- Negotiating cutting-edge trade agreements and enforcing existing trade rules;
- Comprehensively enforcing existing U.S. trade agreements, including full implementation of the United States–Mexico–Canada Agreement;
- Standing firm in support of strong global intellectual property protections;
- Accelerating efforts toward a clear, comprehensive U.S.–China strategy that promotes fairness, accountability, enforcement and business certainty;
- Reforming international trade rules and institutions, such as the World Trade Organization;
- Bolstering U.S. export promotion and financing tools and reforming export control policies;
- Modernizing customs operations to cut red tape; and
- Updating the U.S. tariff code, including through enactment of the Miscellaneous Tariff Bill.
What we’re saying: “Manufacturers believe that strong U.S. global economic leadership and engagement with our allies—including by forging strong, enforceable U.S. trade agreements—are critical to tackling shared global challenges, expanding export opportunities, diversifying sources for trade, ensuring supply chain resiliency and promoting American values,” said NAM Vice President of International Economic Affairs Ken Monahan.
- “Without such trade deals, manufacturers in the U.S. risk being left behind our global competitors, many of whom are actively negotiating new agreements that exclude us. The time is now for the U.S. to get back in the game.”
Learn more: Find out more about the NAM’s priorities around trade in “Competing to Win”—a blueprint for policies that support manufacturing in America.
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
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