The internet may be saving our sanity (somewhat) with animal videos and Zoom chats . . . but there is a downside. With so much more happening online—such as retail and banking, not to mention all that working from home—hackers have a lot more targets.
The data depressingly bears that out:
- Large data breaches have skyrocketed by 273% in the first quarter of 2020, according to data from cloud computing company Iomart.
- Ransomware is up 90%, according to VMware, while attacks that destroy data or networks have risen 102%. And last, “island hopping,” in which criminals infiltrate one company in order to reach its partners or clients, is up 33%.
And here’s a worrying wrinkle: according to Iomart, manufacturing is one of the hardest-hit sectors.
There can be a grim benefit to cyberattacks, in that companies can learn from others that have already survived. To that end, aluminum manufacturer Norsk Hydro’s experience with a massive ransomware attack last year provides a number of (very) hard-earned lessons. From Bloomberg Businessweek (subscription):
- After the attack, the company had to make sure its employees got paid—but banks wouldn’t connect digitally with the company due to fears of cyber infection. So one executive, at Hydro’s Brazilian location, copied the previous month’s paychecks from their external payroll system, weeding out employees who had left or been fired.
- At a Pennsylvania plant, which lost access to corporate email and to the software that organizes its orders, employees received orders on their personal accounts. Then, having dug some old computers out of storage, they printed out the forms and distributed copies on the floor.
- At headquarters, Hydro had to rebuild their entire network. They were so worried about keeping these plans safe that they barred cleaning staff from coming into the room.
Hydro’s leaders consider themselves lucky to have only lost $60 million to the attacks, which unfortunately tells you a lot.
NAM with a plan: Though manufacturers should certainly prepare for the worst, they can also take many steps to minimize, if not eliminate, the danger. The NAM provides many cyber-related resources for members, including most recently a new cyber-insurance program called NAM Cyber Cover.
And here’s good news: the NAM’s Cyber Forum, cosponsored by PwC and eSentire, is on for the fall, in a virtual format. It will be from 11:00 a.m. to 1:00 p.m. EDT on four Thursdays in a row: Oct. 1, 8, 15 and 22. To learn more, email [email protected].
After a year of pushing back on an IRS rule that would have made it more difficult for manufacturers to invest in new equipment, the NAM can declare a win, according to Bloomberg Government (subscription).
Here’s a recap:
- Before 2017, businesses could pretty much subtract their full interest payments on debt—but the 2017 tax reform law limited the business interest deduction to 30% of earnings before interest, tax, depreciation and amortization (EBITDA) for tax years starting in 2018.
- Starting in 2022, the deduction was limited even more, to earnings before interest and tax (EBIT). Excluding depreciation and amortization would make it more expensive for businesses like manufacturers to finance capital equipment purchases.
- Here’s where it could’ve gotten worse: The Treasury Department had proposed a rule that would have effectively imposed the EBIT standard now instead of two years from now.
For a capital-intensive industry like manufacturing, where businesses use debt to finance important investments in critical technology, that was going to cause a lot of strain even before COVID-19. Throw in a pandemic and a tough economic environment, and that proposed rule looks even worse.
The NAM aggressively pushed back, leading more than 80 trade associations to oppose that change. On Tuesday, the Treasury Department released its final rules—without that provision.
The NAM says: “Congress’s goal in reforming our tax system was to help businesses invest and grow, but the proposed rule would have had the opposite effect,” said NAM Vice President of Tax and Domestic Economic Policy Chris Netram. “We are pleased that Treasury did the right thing, helping support the men and women who make things in America.”
The bottom line: Because of this rule, it will be easier for manufacturers to invest in their business, their employees and their communities.
The bad news is that GDP cratered in the second quarter of 2020, falling by a record 32.9% (on an annualized basis). The good news is . . . it wasn’t as bad as expected? Not much of an upside, but true: economists were expecting a 34.7% drop. Neither the Depression nor the Recession—nor, in fact, any economic slump in two centuries—caused such an extreme, sudden decline.
Meanwhile, the officers of the Federal Reserve met yesterday, and things pretty much went as expected, according to CNBC.
- The Fed stuck with its low interest rates, holding its overnight lending rate around 0%.
- It also said it would maintain bond purchases, as well as a range of lending and liquidity programs that have been part of its response to COVID-19.
- Their statement said the rate would stay where it is until officials are “confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
The bottom line: While the state of growth has improved over the worst months of the COVID-19 pandemic—when businesses were shut down across the country—we’re still well below the level of economic activity and employment at the beginning of the year.
Have you ever thought about how many people touch an airplane catering cart before you get served? It’s quite a lot. That’s why airlines employ security seals—if someone along the way tampers with the cart, thereby breaking the seal, the airline will see the evidence. But COVID-19 has created another reason to be suspicious of touch: it can spread the virus.
That’s why one manufacturer upped its game. Cambridge Security Seals makes tamper-evident closures that are used on everything from ballot boxes to fire extinguishers to trucks transporting goods—and yes, on your plane’s meal and beverage carts. To protect all those people who handle a seal along a box or cart’s journey to its final destination, Cambridge created its A-MVB™ line of antimicrobial, antiviral and antibacterial seals.
How it’s made: Taking inspiration from metal-lined and infused products that help post-surgery patients ward off infections, Cambridge worked out a way to blend a silver additive into its products. When done correctly, the silver permeates the whole seal, creating a totally inhospitable environment for the virus.
How it works: The silver in the seals prevents bacteria, which the virus clings to, from flourishing on their surface. As Cambridge CEO Elisha Tropper suggests, it’s less like sending in a football team to beat another squad, and more like canceling the game entirely.
Walking the walk: Cambridge is also taking steps to keep its facilities safe and virus-free, including:
- Social distancing to prevent illness from spreading;
- Reimagined workstations to keep employees separated;
- Temperature checks to identify anyone entering the facility who might be sick; and
- Face coverings to prevent particles from circulating.
A modest innovator: Tropper is humble about Cambridge Security Seals’ accomplishment. “We’re not talking about a revolutionary idea,” he says. “The additive we’re using has FDA approval. The science has been validated. We didn’t split the atom—we solved a problem by building on and further developing existing formulations until we were able to successfully mold them into this application. We knew the advantages would be significant.”
How many lawsuits have been filed over alleged COVID-19 exposure at businesses? That’s not the real question, say the NAM’s legal experts. The real question is: how many will be filed over the next three to five years?
A recent legal analysis shows that only 5% of lawsuits filed since March fall into the category of COVID-19 liability—but don’t be misled by that, says NAM Vice President of Legal and Deputy General Counsel Patrick Hedren.
Here are some pertinent facts to keep in mind:
- The vast majority of states have a two- or four-year statute of limitations period for bringing tort lawsuits.
- No state has a limitation of less than one year, and some allow lawsuits after four or even six years. Which means . . .
- The flood of COVID-19-exposure litigation isn’t expected until spring 2022 when these claims start to expire.
In other words, focusing on today’s numbers obscures a coming wave that could overwhelm businesses at a time when they can least afford it.
And here’s the case for targeted liability protections, says Hedren:
- Business leaders have been doing the best they can with the information they have in an evolving situation.
- Guidelines from the early days of the pandemic have been refined, rewritten and sometimes replaced.
- In many cases, local, state and federal guidelines have all conflicted with one another, creating a no-win situation for businesses that could face trouble no matter what they do.
The solution: Legislation offered by Senate Republicans—and vigorously pursued by the NAM—actually gives teeth to evolving safety measures by shielding businesses from liability if they make reasonable efforts to follow public health guidelines. (In many ways, it seems that Senate Majority Leader Mitch McConnell (R-KY) is reading from the NAM’s liability playbook.) If businesses engage in “gross negligence or willful misconduct that caused an actual exposure to coronavirus,” they remain open to lawsuits.
The last word: “The way to deal with safety is through thoughtful guidance that can stay fresh as the science evolves—not through a mess of court cases in thousands of jurisdictions across the country,” said Hedren. “Businesses across the country need commonsense liability protections that depend on adherence to safety standards, promote certainty and strengthen their ability to serve their community and the country.”
U.S.–China relations are at a low ebb, after a matched pair of consulate closings in recent days. Last week, the U.S. ordered the Chinese consulate in Houston to be closed, whereupon the Chinese closed the U.S. consulate in Chengdu.
That’s the headline story, but a number of other stories are important for evaluating U.S.–China relationships—and Chinese strength—going forward. Here are some recent data points.
A potential catastrophe: First, there’s another horrible development for 2020: China’s massive Three Gorges dam is under some strain, thanks to the worst rains the surrounding region has seen in decades. Though Chinese officials assure the public and the world that the dam is holding, its reservoir is alarmingly full. Tens of millions of people have already been affected by severe flooding.
COVID-19 returns? On Sunday, China reported its highest rate of infections since March 6. (Though the emphasis there should probably be on reported).
Meanwhile, on the diplomatic front . . .
Human rights abuses: The United States has sanctioned 11 Chinese companies for involvement in the persecution of Muslim minorities, including for the use of forced labor. The sanctions forbid U.S. companies from selling parts or technology to these Chinese companies, not from purchasing anything. But in practice, The New York Times (subscription) says, American firms are likely to forgo doing business with them entirely.
Competition over rare earths: In a bid to find sources for rare earths that aren’t in China (which now supplies 80% of what the United States uses), the U.S. Department of Defense is funding Lynas Corp.’s rare earths processing plant in Texas—slated to be completed by mid next year.
And lastly . . .
Now that’s just weird: Bewilderingly, many Americans are receiving unsolicited packets of unidentified seeds in the mail—sent from China. Several states have had to warn residents not to plant them.
With the end to the COVID-19 pandemic nowhere in sight, all eyes are on the Federal Reserve as officials meet today.
The Fed is expected to stick with its low interest rates, according to Yahoo! News. This week’s meeting could give us a clue about how long rates are likely to remain where they are and what the Fed’s approach will be as infections increase around the country.
Here’s something we do know: the Fed is extending its emergency lending programs until the end of the year. According to CNBC, a series of initiatives that were set to expire on Sept. 30 will now run until at least Dec. 31. Those programs include:
- Facilities for primary dealers and money markets;
- Corporate bond purchases on the primary and second markets;
- The Main Street Lending Program;
- The Term Asset-Backed Securities Loan Facility; and
- The Paycheck Protection Program.
Some good news: CNBC reports that June’s new orders for U.S.-made capital goods saw their biggest increase in nearly two years. Non-defense capital goods gained 3.3%—the biggest increase since July 2018. The rise was likely driven by renewed demand as businesses began to open after months of closures.
But it’s not all good news. While the U.S. manufacturing sector has been showing strength, the surge of COVID-19 cases across the country threatens to wipe out gains as businesses nationwide are forced to close or pause reopenings. That threat to the industry—and to the reopening—continues to spur the NAM’s PSA campaign. Take a look at the latest artwork making the simple but powerful point: #MasksEqualMoney.
Scrubbing CO2 out of natural gas power plant emissions just got easier, due to a breakthrough from scientists at the University of California, Berkeley, Lawrence Berkeley National Laboratory and ExxonMobil.
The bottom line: The new technology is six times more effective at removing CO2 than current technologies . . . hitting an impressive 90% capture rate, according to a writeup in Gas World.
How it works: “The new technique uses a highly porous material called a metal-organic framework (MOF), modified with nitrogen-containing amine molecules to capture the CO2 and low temperature steam to flush out the CO2 for other uses or to sequester it underground.”
But remember, it takes federal policies to support this kind of wholesale carbon capture. And speaking of which . . .
Sneak peek: The NAM is working on a raft of climate recommendations, which it will release later this year. Here’s a preview of what the report will recommend on carbon capture. Lawmakers should:
- “Finish clarifying the rules governing access to the Section 45Q carbon capture tax credit so that project developers have the certainty they need to make investments in CCUS projects”;
- “Develop a clear standard for the handling of long-term liability for CO2 transfers”;
- “Resolve pore space ownership issues”;
- “Correct barriers to CO2 storage on federal lands”;
- “Reform the class VI underground injection program to foster the build-out of underground CO2 storage projects”;
- “Increase funding for federal CCUS research, development and demonstration programs”; and
- “Ensure programs are authorized and reduce permitting barriers that delay construction of CCUS projects.”
Here’s some good news: Moderna’s final-stage COVID-19 vaccine test began on Monday, according to The Wall Street Journal (subscription). The company’s researchers intend to conduct a nationwide, 30,000-person trial of its experimental vaccine, with the goal of testing whether two doses of the product can safely protect against COVID-19.
The timeline: Moderna is hoping that, with positive results, a vaccine could be available as early as this fall.
And more good news: Pfizer and German biotech BioNTech have also started their 30,000-person trials, which will extend around the globe. Their timeline? To get the vaccine into regulatory review by the fall.
So once a vaccine is ready, what happens next? A whole bunch of logistical challenges is what. The Atlantic details some of the complications involved:
- A vaccine probably won’t offer complete protection, though it will prevent severe cases.
- Production will be a challenge, with manufacturers seeking to make hundreds of millions of doses in record time and jockeying for supplies like glass vials.
- Distribution will face major hurdles as federal and state governments are forced to coordinate vaccine delivery.
- One in five Americans say they will refuse to get a vaccine even if it’s available, while nearly a third say they haven’t decided.
And one last PSA: STAT News gives us a heads-up that these vaccines may create some physical discomfort. That may actually be good news—the reaction could be a sign of your immune system going to work—but it’s probably best not to expect an entirely pleasant experience from a potentially lifesaving vaccine.
As always, your best bet for now is to follow CDC guidelines, wash your hands, maintain social distancing and wear a face covering.
The next round of stimulus is in the works, with Senate Republicans releasing their proposal and Democrats meeting with White House officials yesterday, reports The Washington Post (subscription). Some highlights of the new proposal:
- Five-year COVID-19-related liability protections for businesses, health care providers and schools.
- $100 billion or more for the Paycheck Protection Program, which benefits small businesses.
- Another round of $1,200 checks for Americans and financial support for schools.
- A reduction in emergency employment benefits from $600 to $200 per week, until states can set up their own unemployment programs to pay 70% of income. (A reminder: the current benefits run out very soon.)
The NAM says: NAM Vice President of Government Relations Jordan Stoick points out some of the advantages of the plan for manufacturers:
- “Manufacturers were glad to see many of the priorities from our ‘American Renewal Action Plan’ included in this proposal, including targeted liability protections for manufacturers and other essential frontline businesses that have operated during the COVID-19 pandemic, and increased funding for the Paycheck Protection Program, which has provided critical liquidity for manufacturers.”
- “The proposal also includes more funding for testing as well as tax incentives for manufacturers that keep their employees on payroll during the COVID-19 pandemic and to help manufacturers invest in PPE and other safety measures to keep their facilities clean and their employees and customers safe.”
- “The NAM will remain fully engaged in the days ahead with members of the House and Senate to urge them to come together in a bipartisan way to finalize a plan that includes these important provisions.”