Policy and Legal

Policy and Legal

Labor Department Announces Contractor Rule

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The U.S. Department of Labor announced a rule that would classify gig workers as contractors rather than employees, according to The New York Times (subscription).

The rule: The new rule identifies two main factors as determinants of whether a person should be classified as a contractor or an employee.

  • The first is how much a company controls the way a worker performs his or her job.
  • The second is how much a worker can profit based on initiative, as opposed to earning a steady salary regardless of performance.

The upshot: The rule could likely shift the employment status of millions of Americans, including many in manufacturing. If they use contractors, companies do not have to pay the minimum wage, overtime, a portion of social security taxes, or unemployment insurance and workers’ compensation insurance.

A word from the NAM: “When finalized, the rule could solidify the use of independent contractors, including in manufacturing. Independent contractor arrangements benefit companies and workers by increasing flexibility and streamlining the human resources processes,” explains NAM Director of Labor and Employment Policy Drew Schneider. He adds:

  • “Manufacturers are currently operating under a confusing patchwork of state and federal laws that have defined independent contractors in numerous ways, causing legal uncertainty and unnecessary compliance costs.”
  • “Manufacturers and their business partners will benefit from a clear and updated independent contractor standard that protects this important business practice and allows NAM members to focus on producing America’s essential goods and services.”
Policy and Legal

The SEC Brings Sense to the Proxy Process

The Securities and Exchange Commission changed an important standard for publicly traded companies today—the amount of stock that a shareholder must have to put proposals on the proxy ballot (which the full shareholder base votes on every year).

It might sound like a small thing, but this “threshold” is a big deal. NAM Director of Tax and Domestic Economic Policy Charles Crain broke it down in a recent interview.

The previous standard: Previously, any shareholder holding $2,000 in stock for one year could put a question on the ballot, Crain explains. Since that’s a relatively low number, activists would go to dozens of companies and buy $2,000 of stock at each—not because they were interested in the companies’ performance, but because they wanted a platform on which to debate political issues.

Here’s a data point that illustrates the extent of the problem: In 2019, just three people sponsored 38% of all shareholder proposals at Fortune 250 companies, Crain says.

The resubmission problem: Once something was on the proxy ballot, it was also easy to resubmit it the following year, adds Crain. A ballot question only needed 3% support among shareholders to stay on the ballot for a second year. If it was voted down a second time, it had to get 6% to move forward the next year and just 10% after that. “Ninety percent of shareholders could reject a measure forever, and it could still get resubmitted every year,” Crain says.

What’s changed? The SEC’s new rule creates tiered thresholds, which will give more power to long-term shareholders.

  • To submit a proposal after holding stock for just one year, an investor now needs to hold $25,000 in stock.
  • If an investor holds stock for two years, the threshold drops to $15,000.
  • If an investor holds stock for three years, it drops to $2,000.

The rule also changes resubmission thresholds to 5% after one vote, 15% after two votes and 25% after three votes to keep a failing question on the ballot in consecutive years. Some measures take time to gain support, and the rule allows for that while taking a more commonsense approach, Crain says.

Why it matters: Holding repeated proxy votes can be time- and resource-intensive for companies, says Crain, and politically motivated proposals distract businesses and investors from the real issues that drive long-term value creation for shareholders.

The NAM’s actions: Crain says, “The NAM has called for proxy reforms for years, and we’ve engaged with both Congress and the SEC to highlight the need to modify the proxy ballot thresholds. Last November, NAM President and CEO Jay Timmons praised the SEC for proposing a rule to combat activists that ‘pressure manufacturers to focus on political issues at the expense of company growth,’ and our comments on the proposal helped lead to today’s final rule. We’ve pushed for this outcome for years—and we’re glad the SEC has come down on the right side.”

Policy and Legal

Rural America Needs Better Broadband

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With so many people working from home, access to high-speed internet has become more important than ever, according to The Wall Street Journal (subscription). Still, some people—and particularly those living in rural areas—continue to struggle to connect.

Some higher speeds: On average, internet speeds have gotten faster. According to data from WhistleOut, which compares broadband and wireless internet plans, home internet speeds across the United States have increased from an average of 84.9 megabits per second in March to 94.6 megabits per second in July. The minimum broadband service speed, according to the FCC, is 25 megabits per second.

A few rough patches: Still, plenty of people are being left out. A study from Microsoft suggests that up to 150 million people across the country have slow or unreliable internet connections.

Why it matters: Broadband doesn’t just make it possible to work from home; it’s also important for COVID-19 response measures like contact tracing.

The NAM’s angle: In April, the National Association of Manufacturers released the “American Renewal Action Plan,” which calls for historic investment in our nation’s infrastructure, including digital infrastructure, to spur economic renewal and competitiveness. The NAM’s “Building to Win” strategy also includes a focus on broadband buildout along with other forms of infrastructure critical for manufacturing.

The word from NAM: “Connectivity was already a key issue for manufacturers before this crisis as they embraced digital transformation,” said NAM Director of Innovation Policy Stephanie Hall. “The importance of universal broadband for our industry and communities is even clearer now as we turn to technology solutions for work, school and nearly every aspect of daily life.”

Policy and Legal

How Trade Route Shifts Are Affecting Ports

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West Coast ports are being impacted by changing trade patterns, losing imports to the East Coast and Canada, among other competitors, according to The Wall Street Journal (subscription). Some of that shift began in 2017, after infrastructure work made it possible for larger vessels to use the Port of New York and New Jersey. Meanwhile, West Coast ports aiming to move goods east must use networks of trains and trucks that run on crumbling U.S. infrastructure.

The breakdown: Ports on the West Coast took in less than 40% of seaborne imports during the first seven months of the year, with ports on the East Coast racking up a little bit more than half.

  • Asian imports are still leaning to the West Coast, but the makeup is beginning to change. Last year, Los Angeles moved 9.4 million containers compared to 7.5 million containers for New York and New Jersey. Still, the New York/New Jersey East Coast port did become the second-busiest port in the country, bumping Long Beach, California, out of the runner-up spot.
  • Canadian ports are also getting into the game, offering cheaper transportation services that undercut U.S. costs.

Related: West Coast freight networks—including railroads and trucks—are struggling to handle demand after limiting personnel and operations in the face of COVID-19, according to The Wall Street Journal (subscription).

The NAM’s angle: The NAM has urged Congress for years to enact infrastructure reform, laying out its priorities in its “Building to Win” blueprint.

Most recently, during United for Infrastructure (formerly Infrastructure Week), Sen. Rob Portman (R-OH) spoke to NAM members at an event co-hosted by Nucor Steel about Congress’s response to the COVID-19 pandemic and the importance of infrastructure investment. During the event the senator noted, “The most sustainable path forward on surface transportation authorization is a one-year extension of the Fixing America’s Surface Transportation (FAST) Act.”

Press Releases

Manufacturers’ Timmons on the Passing of “Fervent Defender of Equal Opportunity” Justice Ginsburg

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement after the passing of Supreme Court Justice Ruth Bader Ginsburg.

“A true trailblazer, a fighting spirit, a fervent defender of equal opportunity and equal justice, Justice Ruth Bader Ginsburg challenged America to be better both in her career before the court and in her service on the court,” said Timmons. “She is without doubt, and perhaps like no justice before her, an inspiration to countless women and men. We honor her profound legacy best when we dedicate ourselves to breaking down barriers for others so that they may participate more equally in our democracy and in our society. We indeed have an obligation to carry on her commitment to those highest ideals.

“Many hearts are heavy in America tonight, and we extend our deepest condolences to her family, to her colleagues and to all of her loved ones. Justice Ginsburg served this nation until the very end. And it is that dedication that makes her a legend to a grateful country.”

-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 12.1 million men and women, contributes $2.36 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Press Releases

Manufacturers Survey Finds Broad Usage of PPP, Main Street Lending Programs

As Challenges Remain, Optimism Begins to Rebound

Washington, D.C. – The National Association of Manufacturers has released its third quarter Manufacturers’ Outlook Survey, which shows strong use of liquidity programs like the Paycheck Protection Program and Main Street Lending Program.

Of the 82.7% of respondents who say COVID-19 had or will have a negative impact on their cash flow, 72.1% noted they had obtained funds through the Paycheck Protection Program, Main Street Lending Program or other liquidity programs—especially small manufacturers. More importantly, of those firms taking advantage of such programs, 91.6% reported that those funds helped keep their business afloat, retain their workforce or meet other necessary expenses. Knowing how critical this was for the industry, the NAM called for these programs and subsequent expansions in its “COVID-19 Policy Action Plan Recommendations” and “American Renewal Action Plan.”

Manufacturing optimism has also rebounded to 66% since the second quarter of 2020, when it had the worst reading since the Great Recession. Still, the outlook remains below the historical average of 74.4%, and 62% of manufacturers expect their firm’s revenues will not get back to pre-COVID-19 levels until 2021 or later.

“Congress and the administration have acted on more than five dozen of the policy provisions that the NAM made in our ‘American Renewal Action Plan’ and other recommendations,” said NAM President and CEO Jay Timmons. “Without the bipartisan relief legislation signed into law earlier this year, this rise in optimism would not have been possible. But for our industry to truly recover and to keep our economy growing, further bipartisan congressional action is needed.”

Read the full survey results here.

Background: In March, the NAM released its “COVID-19 Policy Action Plan Recommendations,” which guided earlier relief legislation. In April, the NAM released its “American Renewal Action Plan,” and Congress and the administration have acted on many of its provisions. To date, 60 provisions from the NAM’s plans have been adopted.

-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 12.1 million men and women, contributes $2.36 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Policy and Legal

Senate to Vote on COVID Relief Package

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The U.S. Senate is expected to vote on a Republican-backed relief bill after a long series of negotiations between Senate Republicans and the Trump administration, according to The Hill.

What it covers: The proposed legislation likely will include the following elements:

  • A federal unemployment benefit
  • Another round of Paycheck Protection Program funding
  • More funding for COVID-19 testing and for schools
  • Liability protections

What it (probably) doesn’t include: The package is expected to come in at around $500 million, which is far short of the $1 trillion bill Republicans supported at the end of July and even further short of the $3 trillion bill the House approved. This version likely won’t include the following elements:

  • More funds for state and local governments
  • Another round of $1,200 stimulus checks, which had been included in the last Republican plan

What’s next: The vote could happen in the Senate as early as Thursday, but this package is unlikely to get the 60 votes it needs to be filibuster-proof. Democrats have said the bill is much too narrow.

A word from the NAM: “Manufacturers continue to help lead the way in the COVID-19 recovery and renewal, and so we appreciate seeing a number of our priorities in this legislation, including liability protections for manufacturers, another round of Paycheck Protection Program funding and resources for additional testing and vaccine research,” said NAM Vice President of Government Relations Jordan Stoick. “In the coming days and weeks, the administration, House and Senate have a real opportunity – and a responsibility – to put partisanship aside in order to find a consensus that helps manufacturers and all Americans.”

Policy and Legal

A Rocky Relationship Between the U.S. and China

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The U.S. is considering cracking down further on Chinese human rights abuses in Xinjiang, while President Trump had tough words about the U.S.–China relationship. Here’s an update on some important recent developments.

Human rights: The Trump administration is considering a ban on some or all products that include cotton from Xinjiang, the region where China has carried out the mass detention of mostly Muslim minorities. The order could have a substantial impact on global apparel makers.

Technology: The administration is also considering sanctioning China’s largest chipmaker, SMIC. The Department of Defense may add it to the “Entity List,” thereby restricting the company’s purchases of equipment made in the U.S. Beijing, as you might imagine, was not happy.

“Decoupling”?: In a Monday press briefing, President Trump discussed the possibility of “decoupling” the U.S. from China. “If we didn’t do business with [China], we wouldn’t lose billions of dollars. . . . It’s called decoupling. So you’ll start thinking about it,” he said.

A data security standoff: As the U.S. continues to crack down on Chinese telecommunications companies, claiming that they pose national security threats, China has developed its own set of “global standards on data security,” reports the WSJ (subscription). It’s trying to prevent the U.S. from convincing other countries to restrict Chinese access to or construction of key networks.

Canceled plans: About 100 official exchange forums between Chinese and U.S. officials have been canceled during the Trump presidency, reports Bloomberg. This means diplomats don’t know what the other side is doing on a long list of policy issues, from pharmaceuticals to tech and more.

Policy and Legal

A Recap on Rapid COVID-19 Tests

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As you probably saw last week, the Trump administration announced a deal with Abbott Laboratories to produce more than 150 million rapid COVID-19 tests, per CNBC. Abbott’s rapid tests cost about $5 to make and take just a few minutes to deliver results without lab equipment. Such antigen tests are not quite as accurate as molecular tests (which are conducted in a lab), and the FDA says that doctors might find it advisable to confirm a positive result with a molecular test.

Here are some more updates on the deployment of rapid tests, which is an important development in the COVID-19 response effort:

  • The Trump administration offered more details about the shipments this week, announcing that these rapid tests would start making their way to states in mid-September, according to CNN. Most of these tests are intended to go to first responders and to help schools and daycare facilities reopen.
  • The investment has also come with an employment bump, as Abbott Labs brings on new workers to help produce the test, the Daily Herald reports. Around 2,000 employees are needed to help meet demand, and no previous experience is required for jobs that will pay $15 an hour for the day shift and $18 an hour for nights, along with a $2,500 retention bonus.
  • Yahoo! Finance reports that another rapid test maker is seeking emergency FDA approval. Roche Holding AG will launch a rapid test in September in Europe and is hoping to get emergency authorization to roll it out in the United States, too.
Policy and Legal

How Manufacturers Can Work with the Government to Provide PPE

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Hospitals, businesses, schools and individuals will continue to need protective gear—but how much and for how long? The NAM has been working with the federal government to help manufacturers meet this urgent need, acting as a go-between to get millions of masks, gloves and more where they have to go. The NAM and The Manufacturing Institute’s Center for Manufacturing Research have an estimate of how many disposable face coverings America’s workforce needs every month.

As part of a recent Department of Defense seminar, Herb Grant, the director of the NAM’s Creators Respond effort, outlined how manufacturers can get involved. Here is a brief recap of the event.

How much? Here’s what we know:

  • As of July 9, the DoD had already procured nearly 3 million gowns, nearly 140 million medical gloves, nearly 18 million surgical masks and more than 5 million N95 respirators (according to the DoD’s Joint Acquisition Task Force).
  • The NAM has estimated the demand for facial coverings approaches 1.7 billion pieces per month—and that’s just for industries that don’t typically use PPE. Meeting that demand will require manufacturers to add capacity by investing in new or retooling existing production lines.

The DoD says that information helped clarify that the total demand is not fully understood, but it is far greater than previously thought.

How long? According to Grant, the deputy director of the White House Supply Chain Task Force expects the demand for PPE to continue beyond next year, and perhaps even through 2023.

How can manufacturers get involved? There are three major ways in which manufacturers can help, said Grant.

  1. Increase your capacity to produce PPE: Manufacturers should evaluate whether they can shift capacity or invest in new capacity—which may involve talking to Creators Respond about how the government can support those investments.
  2. Sell PPE to the government: Manufacturers can find out how their production lines up with the government’s needs and consider participating in various federal programs.
  3. Sell PPE to the industry: As the 1.7 billion per month demand estimate shows, industries across the country need the PPE that manufacturers are producing—and will keep needing more.

How to sell to the government: There are three things manufacturers need to do before selling products to the government, Grant advises.

  1. Get a DUNS number: A Data Universal Numbering System number is a unique ID that is required to register with the federal government for contracts or grants (you can obtain one here).
  2. Register with SAM: The System for Award Management consolidates the capabilities of existing federal procurement systems—and you can register at www.sam.gov.
  3. Check for contracting opportunities: The webinar covered a range of sites that offer contracting opportunities, including:
    1. Beta.sam.gov; 
    2. USAspending.gov; and 
    3. Dibbs.bsm.dia.mil. 

The last word: “The bottom line is the manufacturing industry, which has been on the front lines, will continue to lead our country through recovery and renewal,” said Grant.

Check out a full recording of the event here.

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