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Policy and Legal

Increased Production, Not Regulations, Will Lower Gas Prices

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Policymakers can help alleviate the pain Americans are feeling at the pump and elsewhere—but by increasing domestic energy production, not through ill-conceived legislation, the NAM told U.S. House leadership this week.

Missing the mark: On Thursday, the House narrowly approved a measure that “gives the President the power to issue a declaration making it unlawful for energy companies to increase prices that are ‘unconsciously excessive,’ and authorizes the FTC to enforce those violating the act,” according to CNN.

  • “[M]anufacturers oppose H.R. 7688, the Consumer Fuel Price Gouging Prevention Act; it misses the mark,” NAM Vice President of Energy and Resources Policy Rachel Jones wrote to the House leaders on Thursday. She added that price gouging is already illegal in most states and comes under Federal Trade Commission investigation.
  • The new measure “does nothing to address the real drivers of rising energy costs and only adds additional regulatory red tape that could drive prices even higher,” Jones continued.

What will work: Instead, legislators should focus on increasing production of energy here at home, which will lower inflation and pump prices, as well as make the U.S. more competitive globally, Jones wrote.

“That starts with opening our diverse resources on federal lands, approving responsible exploration and production, supporting sustainable permitting and quickly building out more energy infrastructure.”

Business Operations

How Manufacturers Compete in the Labor Market

Manufacturing companies are increasing wages to stay competitive in attracting and retaining workers, according to a new study conducted by The Manufacturing Institute and Colonial Life.

Tight labor market: Of the survey respondents, 93% had unfilled positions in their companies that they were struggling to find qualified applicants for.

  • Nearly 90% said they have increased compensation and incentives to pursue and retain employees.
  • Seventy-three percent of respondents felt that increasing compensation helped their company stay competitive.

The big picture: Average hourly earnings for production and nonsupervisory workers in manufacturing climbed to $24.78 in March, up 5.5% from one year ago.

  • Despite significant wage increases, the labor force participation rate was below pre-pandemic levels at just 62.2% in April.

Other benefits: Hourly wages and salaries were most important for attracting and retaining workers, but other benefits were also effective.

  • Manufacturing companies have also attracted employees with health, dental and vision insurance, bonuses and/or additional income opportunities, paid vacation and sick time, contributions to a 401(k) or retirement plan and flexible work hours.

What the MI is saying: “We continue to see record growth in wages, and many of the companies we spoke with are offering even more generous benefits packages to try and differentiate themselves from other sectors struggling to find talent in a tight labor market,” said MI President Carolyn Lee.

  • “We’re averaging more than 800,000 open jobs in manufacturing a month, and the MI is focused on equipping manufacturers with tools and strategies to overcome this challenge so we can reach our full potential.”

Learn more: Looking for retention strategies you can use right away? The MI will be hosting a retention workshop on June 7–8. Find out more and register here.

Policy and Legal

NAM Drives Conversation on Innovation and Competition

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The NAM is urging Congress to bolster American innovation and make the U.S. more competitive with China.

The big picture: NAM Senior Vice President of Policy and Government Relations Aric Newhouse wrote to Congress, “we urge the completion of a strong, bipartisan agreement that strengthens domestic manufacturing, increases our global competitiveness and provides opportunities for the more than 12.7 million people who make things in America.” The NAM’s recommendations include the following:

  • Semiconductor manufacturing: Newhouse emphasized the NAM’s support for the $52 billion provided to bolster domestic semiconductor manufacturing in both the Senate’s United States Innovation and Competition Act (USICA) and the House’s America COMPETES Act.
  • Supply chain resilience: 88.1% of manufacturers report supply chain issues as their primary business challenge, which is why the NAM supports the creation of the Manufacturing Security and Resilience Program and the $45 billion investment to support supply chain resilience included in the America COMPETES Act.
  • Shipping: The Ocean Shipping Reform Act, which has passed both chambers of Congress in some form, is aimed at increasing port efficiency, reducing shipping delays and decreasing transportation costs through the improvement of ocean shipping standards and implementation of better oversight mechanisms.
  • R&D: The NAM recommends reversing a new provision in the tax code that requires companies to deduct research and development expenses over a period of years rather than the year the costs are incurred—a provision that effectively makes R&D and innovation more expensive and more difficult for American companies.
  • Eliminating card check: “Manufacturers are strongly opposed to the labor and card check provisions included in the America COMPETES Act,” wrote Newhouse. “Implementing ill-considered labor and card check provisions would upend decades of labor precedent with an anti-competitive, anti-democratic process that abolishes the secret ballot and eliminates appropriate oversight.”

Other recommendations: Newhouse also expressed the NAM’s support for policies that reduce emissions and promote sustainability to make the U.S. a global leader in energy efficiency. The letter recommends the reauthorization of the Miscellaneous Tariff Bill, the implementation of strong anti-counterfeiting legislation to protect consumers and small businesses and federal investment to improve the domestic critical mineral supply chain.

Take action on these issues and more at Manufacturers United

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Manufacturing Supply Disruptions Could Last into 2023

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Supply chain disruption could continue for more than another year, according to the newest Resilient M4.0 Supply Chain survey conducted by the NAM’s Manufacturing Leadership Council. The MLC is the digital transformation arm of the NAM.

What’s the holdup? A combination of factors is causing fundamental shifts in supply chain approaches across the industry. These include pandemic lockdowns, blocked shipping lanes, container scarcity, material and component shortages, extreme weather events, rising prices and military conflict.

What manufacturers are doing about it: Supply chain organizations are reassessing traditional supply chain strategies, reducing network complexity and integrating key functions.

  • They are also redesigning processes and harnessing the power of digital tools to transform their supply chain ecosystems.

Universal disruption: Even supply chain structures with some local or regional networks have been affected by recent events, according to the MLC’s survey.

  • Ninety percent of respondents reported suffering either significant (52.5%) or partial (39%) disruption in the past two years. Just 0.5% said they had seen no disruption

Improving resilience: While many manufacturers have taken action to reduce supply vulnerabilities, 73% of companies said their current supply chains are not fully protected, and 12% said they believe their supply chains lack resilience.

Integrated supply chains: While today just 19% of companies said their supply chain structures are fully integrated, this proportion is set to more than double (to 47%) within the next two years.

  • The number of companies that remain dependent on siloed operations is set to fall from 14% to 4% over the same period.

Digital opportunities: The race to fully digitize more supply chain operations is picking up speed.

  • In nearly every supply chain function, companies said they are planning significant increases in digital adoption in the next two years to streamline their supply chain organizations.

Obstacles to progress: Many obstacles to future supply chain development involve issues with industry partners. Among the challenges cited by manufacturers in the survey were the following:

  • Differences in digital maturity among partners (54%)
  • A lack of common data platforms (53%)
  • Problems transforming traditional supply chain processes (29%)
  • Upgrading legacy equipment (26%)
  • A lack of skilled employees (22%)

Review the data: Click here to review the data in detail and read manufacturer responses to survey questions.

Policy and Legal

NAM Mobilizes on SEC Climate Rule

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As the U.S. Securities and Exchange Commission works to finalize a new rule requiring climate disclosures by public companies, the NAM is mobilizing to defend manufacturers.

The background: Manufacturers have long been leaders on climate solutions, working to create the products and technologies necessary to face the challenge of climate change.

  • Manufacturers also regularly provide climate-related information to their investors, including via corporate sustainability reports, third-party reporting frameworks and SEC filings.
  • At the beginning of the Biden administration, however, the SEC made clear that it was interested in creating a rule to enhance and standardize these disclosures.
  • In the months since, the commission has taken steps toward that goal—and the NAM has stepped up to protect manufacturers.

In March 2021, the SEC issued a request for information on climate disclosures. The NAM responded, urging the SEC to adopt a flexible, principles-based framework that allows companies to provide investors with material information about climate risks in a consistent and comparable manner.

In September, the SEC’s Division of Corporation Finance issued new guidance calling into question companies’ existing climate disclosure practices—including the common practice of supplementing SEC filings with a sustainability or corporate social responsibility report.

  • The NAM pushed back against the guidance, cautioning the division against setting new standards without a formal rulemaking process.

In October, the division released guidance drastically limiting the ability of companies to exclude climate-related shareholder proposals from the annual proxy ballot—even if those proposals are unrelated to a business’s operations.

  • The NAM pushed back, emphasizing the importance of company-specific decisions for protecting manufacturers and their long-term shareholders.

The new rule: The SEC released a proposed rule in March that would significantly expand public companies’ climate disclosure obligations.

  • First, the rule would require qualitative descriptions of companies’ climate-related risks and any efforts to respond to those risks.
  • It also would require quantitative reporting of companies’ greenhouse gas emissions and institute a new mandate that companies conduct quantitative climate impact analysis within their consolidated financial statements.
  • You can read more about the specifics of the rule here.

NAM in action: The NAM has spent the past several months connecting with manufacturers across the country to understand the real-world impact of the SEC’s proposal.

  • Through a range of webinars, listening sessions and roundtables, we have been able to explain the proposed rule, gather vital feedback and map out the way forward.

What’s next: The NAM intends to provide comments to the SEC in June, highlighting provisions within the proposed rule that are impractical, costly, overly prescriptive, confusing for investors or not reflective of current climate disclosure practices.

  • The NAM will call on the SEC to make targeted changes to its proposal to increase flexibility, focus on material information for investors and reduce costs, burdens and liability for companies.

What we’re saying: “Manufacturers are the leaders in America’s fight against climate change—and in order to continue that work, we need climate disclosure practices that support sustainability, rather than increasing costs for companies and confusing investors,” said NAM Senior Director of Tax and Domestic Economic Policy Charles Crain.

  • “Any SEC climate disclosures rule needs to be less prescriptive, more flexible and solely focused on materiality in order to accurately reflect current practices.”
  • “The bottom line is that a climate disclosures rule can’t just sound good; it has to actually work in the real world.”
Policy and Legal

U.S. and Allies Announce New Sanctions on Russia

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The U.S. and its allies continue to apply sanctions and other measures against Russia in response to the country’s war in Ukraine. The sanctions specifically target Russian oil, corporate services within Russia and Russian manufacturing.

New U.S. sanctions: Recently, the U.S. announced new actions designed to punish Russia. The new sanctions will take effect in a variety of areas, including: 

  • Industry: The US announced new sanctions on wood products, industrial engines, boilers, motors, fans and ventilation equipment, bulldozers and other items with industrial uses.
  • Visas: The U.S. has placed visa restrictions on 2,600 Russian and Belarusian officials and created a new policy that restricts visas for Russian military officials and authorities.
  • Nuclear licenses: The U.S. Nuclear Regulatory Commission suspended licenses for exports of nuclear material to Russia.
  • Key services: The U.S. cut off Russian access to U.S. accounting, management consulting and trust and corporate formation services.

 U.S. allies and partners have also imposed additional sanctions:

  • G7 countries: The G7 committed to phasing out or banning Russian oil imports while also working together to ensure that global energy supply remains stable.
  • European Union: As part of its sixth package of sanctions against Russia, the EU will phase out Russian crude oil within six months and refined oil products by the end of 2022. The EU also committed to removing Sberbank and two other Russian banks from the SWIFT system and banning the use of European accounting and consulting services by Russian companies.
  • United Kingdom: The UK announced new sanctions on Russia and Belarus targeting 1.7 billion euros worth of trade. Among the specific targets are Russia’s manufacturing and heavy machinery industries.

The NAM’s actions: On Friday, representatives from the U.S. Department of Commerce joined the NAM’s weekly Trade Forum for a discussion with NAM member companies on the U.S. response to Russia’s unlawful invasion of Ukraine. The discussion focused on the implications for U.S. exporters and other businesses, as well as U.S. government resources that can help NAM members stay informed.

  • “Last week’s special meeting with the Commerce Department was a vital opportunity for manufacturers to underscore our support for efforts by the Biden administration and bipartisan congressional leaders to hold Russia accountable and bring peace to Ukraine,” said Ken Monahan, Vice President of International Economic Affairs.
  • “As the NAM Board of Directors declared in a resolution approved unanimously on March 8, manufacturers stand with the people of Ukraine, and our industry is committed to sustaining and safeguarding democracy and democratic institutions not only here at home, but also abroad.”
Policy and Legal

“A Win-Win-Win”: How Tax Reform Transformed Pivot Manufacturing

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Today, Pivot Manufacturing is a far cry from the shop it was just five years ago.

Starting small: “For the first 15 or so years of our existence, we were a company that did small-run prototypes, R&D work,” said company co-owner Steve Macias of his Phoenix machining and mechanical assembly services firm, which he started in 2000 with longtime friend Jack Cuddihy.

  • “We wanted to get into production because that’s how you grow a company in this industry,” said Macias. “But our equipment didn’t lend itself to that work, and we couldn’t [afford new equipment].”

The transformation: That all changed in 2017 with the passage of tax reform legislation. “We had already started thinking, ‘We’re going to have to change something.’ We didn’t want to be a little R&D shop forever,” Macias recalled.

  • Thanks in great part to full expensing—a key pro-growth incentive in the new law that reduces after-tax costs by providing a 100% deduction for machinery purchases—Pivot was able to invest in the new equipment it needed to take on the more lucrative production orders.
  • “It really has been transformative,” Macias said of the 2017 legislation.

Five years on: For the past five years, the bulk of Pivot’s work has been with government contractors, including Raytheon and General Dynamics. These days, the average age of the manufacturer’s machines is 2.5 years; before tax reform, that number was 14.

  • “We were able to sell our old equipment, buy new high-speed CNC mills and start bidding jobs—and we got them,” Macias said. “Every year since, we’ve bought two or three machines. Our accountant was telling us, ‘If you guys can [keep] filling these machines up, keep doing it.’”

Growth mode: Pivot’s exceptional growth has enabled it to raise wages and increase benefits. The manufacturer pays its machinists above the going rate, Macias said, and offers its employees medical, dental and vision coverage in addition to a matching 401(k) program.

  • The shop has added talent since 2017, too, growing from around a dozen employees to 19 today.
  • In addition, the growth has enabled the firm to give back to the community. “Before [tax reform], we might write a couple of $500 checks,” Macias said. “Last year, we probably donated $10,000…to seven or eight charitable groups.”

What’s next: Pivot has been so successful in recent years that Macias and Cuddihy are in talks to purchase the building that houses their facility so they can expand even further.

  • The purchase could enable the company, which is already on track in 2022 to double its 2016 numbers, to more than double its current revenue.

The final say: “Tax reform was a catalyst,” Macias said. “Before, we knew what we had to do, but the law was what pushed us … to take a leap of faith. It’s been a win-win-win.”

Business Operations

Plant Tour Provides Firsthand Look at Digital Transformation

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On a recent tour of Intertape Polymer Group’s Tremonton, Utah, plant, manufacturers saw disruptive technology in action. From employing 3D printing to slashing parts-making time to programming floor equipment to identify and fix problems quickly, the Manufacturing 4.0 processes and technologies were on full display. The NAM’s Manufacturing Leadership Council hosted the tour and brought 70 MLC members to the paper- and film-based packaging maker.

Growth: IPG, a Montreal-based manufacturer whose products include the cling film StretchFlex, has seen its revenue double in the past six years, from $750 million to $1.5 billion.

  • The company now has approximately 4,000 employees across 34 locations, including 22 manufacturing facilities in North America.

What they saw: In addition to 3D printing and problem-solving floor equipment, tour participants got to see how IPG:

  • Manages parts more effectively with an automated storage system; and
  • Uses “hackathons” and employs a data-driven, digital-first mindset to find solutions to challenges.

Digital journey: In a briefing before the tour, IPG Vice President of Business Transformation Jai Sundararaman described why and how IPG undertook its digital transformation journey.

  • First, the manufacturer conducted an in-depth investigation. This included studying 20 different technologies, attending more than 10 industry conferences, hosting technology summits with vendors and engaging in more than 25 networking sessions with fellow members of the MLC.

Phased transformation: IPG’s phased approach to digital transformation focused on delivering business value. The company undertook the following schedule:

  • Phase 1: Align strategy and execution and “homogenize” operating culture. Upskill and retain talent with digital and process knowledge.
  • Phase 2: Drive revenue and margin growth by applying digital technologies at scale in other functions, such as customer engagement.
  • Phase 3: Leverage digital technologies for business model innovation.

M4.0 discussion: At the end of the IPG plant event, participants joined a panel discussion on data standards and analysis. Panelists discussed how to measure the return manufacturers get from implementing M4.0 technologies and how to get buy-in from employees and leadership.

Upcoming plant tour: Join the MLC’s next plant tour right from your desk on July 27. Participants will take a virtual look inside Accuray’s Global Manufacturing Center in Madison, Wisconsin. This virtual plant tour will highlight the challenges of a low-volume, high-complexity manufacturing and supply chain model. Register today to reserve your place.

Business Operations

Lilly Accelerates Innovation Under Mike Mason

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What is Lilly Diabetes President Mike Mason’s goal for people living with diabetes? The simple answer is to improve and simplify diabetes management so people can focus on living the life they want.

Forward-looking: Today, more than 537 million people across the world are living with diabetes. That’s why Mason and his Lilly Diabetes team are continuing to develop more innovative insulin and non-insulin medicines to help transform diabetes care.

Lilly has played an important role in improving diabetes care for close to a century, starting with manufacturing and bringing to market the first commercial insulin, lletin, in 1923. Since then, there has been incredible innovation in insulin, shifting from animal-based insulin to recombinant DNA human insulin to today’s more modern analog insulins.

  • “Thanks to a century’s worth of scientific advancements and discoveries, I am proud that we can meet the diverse needs of people with diabetes in ways we only dreamed were possible,” Mason said.

More to be done: Still, only about half of people with diabetes are achieving their blood sugar goals—leaving them at higher risk for long-term cardiovascular disease and other diabetes-related complications.

  • For Lilly, that means keeping a “relentless focus” on the improvement of diabetes treatments and solutions, Mason said.
  • “Importantly, delivering breakthrough treatments is just the start of what we do. Lilly is deeply committed to doing what we can to ensure everyone who needs our products can access them,” he added.
  • Lilly offers a variety of affordability solutions through patient support programs and copay assistance across the major products of its portfolio. People with diabetes can contact the Lilly Diabetes Solution Center to learn about affordability solutions that best match their needs.

What’s coming: Lilly’s vision for the future is to maintain a relentless focus on raising the innovation bar for diabetes treatment, as well as in other serious metabolic conditions, including obesity, NASH and heart failure, to name a few.

  • “Our diabetes pipeline includes a once-weekly injection, currently under review by the FDA that represents a new class of medicines to treat type 2 diabetes,” Mason said. “In clinical trials, this therapy significantly lowered glucose levels and body weight—and even helped many participants reach a non-diabetes glucose range.”
  • “Our hope is to revolutionize how metabolic conditions are understood and treated, hopefully changing the way people manage conditions like type 2 diabetes and others,” he added.

Manufacturing support: Diabetes innovation is ultimately made possible by the people who work tirelessly to make life-saving medicines.

  • “I’ve witnessed our team start with an extraordinary idea and determine the science to make it possible, and it’s our manufacturing team that brings these products to fruition,” Mason said. “Our talented and dedicated manufacturing teammates make delivering life-saving medications to people with diabetes possible.”
  • Even at the height of the COVID-19 pandemic, Lilly employees in essential manufacturing and research jobs came to work each day “to make vital medicines for the world.”

 The last word: Lilly is “in an exciting period of growth,” Mason said, noting a recent announcement from the company that it planned to invest $1 billion in a North Carolina site to create an injectables-manufacturing facility.

The investment “underscores our commitment to delivering innovative medicines to patients around the world,” Mason said. “And it taps some of the brightest minds from the local labor force to bring it to life.”

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Finding Solutions for a Sustainable Manufacturing Future

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With increased pressure from customers, regulators and even shareholders, sustainable business practices are no longer optional for manufacturers. From reduced energy and materials consumption to lower emissions and ethical sourcing, manufacturers are expected to meet ambitious new goals. Luckily, the Manufacturing Leadership Council has established a new member working group devoted to helping manufacturers reach these objectives.

Support set-up: With five virtual meetings each year, the M4.0 Sustainability and Net Zero Decision Compass Group will explore key issues, best practices and challenges related to creating sustainable, compliant and environmentally friendly operating strategies.

  • At the first meeting, “Next Steps in Manufacturing 4.0 Sustainability,” on March 10, attendees heard from 3M Senior Vice President of Environmental Strategies and Fluorochemical Stewardship Dr. Rebecca Teeters and Lexmark International Chief Sustainability Officer John Gagel. Both speakers are also MLC board members.

Why the new group: The MLC decided to create the group after a survey of their more than 3,300 members revealed sustainability was a top member business concern.

  • “We decided that given the intensity of interest in sustainability and related subjects, such as net-zero and the circular economy, this was an opportunity to dedicate a whole new group to the topic,” said MLC Co-Founder, Executive Director and Vice President David Brousell.

Good for business, too: While manufacturers have been discussing and working toward sustainability for decades, recent growing concerns about climate change and other environmental issues are making the matter increasingly urgent.

  • Manufacturers that take on sustainable business practices are seeing competitive advantages ranging from cost savings to higher product quality to increased shareholder and employee satisfaction.

Lessons from manufacturing peers: The new Decision Compass group will share sustainability strategies, the real-world achievements of manufacturing companies, knowledge about the use and application of advanced technologies and timelines for implementation.

  • Participants will also be able to see how they stack up against other manufacturing companies.

Get involved: The MLC offers resources to help manufacturers improve their operations and learn about digital manufacturing. To learn more about the sustainability group or find out about MLC membership, email [email protected].

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