Would you like to see the latest advanced technologies exhibited and explained for your benefit, all without leaving your office? The NAM’s Manufacturing Leadership Council’s virtual plant tours provide just such an opportunity, taking you inside cutting-edge processes and complex systems at manufacturing facilities across the country. Most recently, the MLC dropped in on Nexteer Automotive, where tour participants got to see its innovative Digital Trace Manufacturing™ (DTM) System in action.
Who they are: Nexteer specializes in electric and hydraulic power steering systems, steering columns and driveline systems, as well as advanced driver assistance systems and automated driving-enabling technologies. The company serves more than 60 customers around the world, including BMW, Ford, GM, Toyota and Volkswagen.
What is DTM? Nexteer’s DTM System connects and standardizes the company’s entire operations—including thousands of data-production components in 27 manufacturing plants around the world. To showcase the system’s capabilities, Nexteer took tour participants inside its Saginaw, Michigan, site, which includes six manufacturing plants comprising 3.1 million square feet of manufacturing floor space.
Tour highlights: Participants learned about the complexities of running a large-scale automotive component manufacturing plant, as well as how Nexteer uses the DTM System to maximize efficiency.
- Nexteer team members explained how they design and program machines for data processing, showing how they determine where data will be sent and how they use barcode scanners and other methods to track components’ serial numbers.
- Participants also got a virtual walk-through of Nexteer’s tracking system, which follows material from receiving and shipping through the production line with single-box precision. They also learned how Nexteer uses its Center of Analysis to correct any issues that arise.
Why it matters: It’s one thing to have a large system collecting data, and it’s another to be able to use that data effectively. The Nexteer virtual plant tour provided participants with practical takeaways, which will help them adopt similar innovations at their own facilities—for the benefit of employees, customers and shareholders alike.
Coming soon: Don’t miss the MLC’s upcoming tour of Johnson & Johnson’s facility on Wednesday, Dec. 1, from 11:00 a.m. to 1:00 p.m. EST. You will see how Johnson & Johnson uses mobility tools, advanced robotics and material handling and adaptive process controls to improve its operations. After the tour, stay for the panel discussion on how to scale advanced manufacturing technologies to create a sustainable, reliable and adaptable product supply. Sign up here.
The NAM is pushing back against scheduled and proposed tax changes that would limit tax deductions for interest on business loans and make it more difficult for manufacturers to invest in growth.
Why it matters: Debt financing is critical to the manufacturing industry because it allows businesses of all sizes to invest in equipment and facilities. These investments spur job growth and help manufacturers compete in a global marketplace. Reducing or limiting manufacturers’ ability to deduct interest will make borrowing more expensive, making it more difficult for manufacturers to support America’s economic recovery and invest in future growth.
The provisions: There are three proposed tax changes, including one that is set to take effect at the end of this year and two put forward by the House Ways and Means Committee that have been proposed to help pay for the Build Back Better agenda.
- A new EBIT standard: The 2017 tax reform law limited the business interest deduction to 30 percent of earnings before interest, tax, depreciation and amortization. Starting in 2022, the deduction will be further limited to 30 percent of earnings before interest and tax. Excluding depreciation and amortization would reduce the amount of interest businesses can deduct, making it more expensive for manufacturers to finance capital equipment purchases. The NAM is leading the Coalition for America’s Interest to oppose the change, and we’re championing a bipartisan bill that would preserve the EBITDA standard.
- New interest deductibility limitation: The House Ways and Means Committee’s budget reconciliation bill includes a new limitation on the deductibility of interest. The bill would impose a worldwide leverage test, disallowing interest deductions on top of the scheduled EBIT change. In fact, companies impacted by both this provision and the EBIT change would be forced to abide by whichever standard was the most limiting. This change would make the United States an outlier compared to other industrialized countries.
- New carry-forward restrictions: Manufacturers are currently allowed to carry forward unused interest deductions into future years, ensuring that they can deduct interest over time. The House bill would cap carry-forwards at five years, which could permanently deny some interest deductions and ultimately result in a net tax increase for many businesses.
Speaking out: All told, limiting interest deductibility makes it more expensive for manufacturers to invest in growth, which is why the NAM has vocally opposed these changes.
“These scheduled and proposed changes to interest deductibility would disproportionately impact companies in the manufacturing sector,” NAM Vice President, Tax and Domestic Economic Policy Chris Netram wrote in a letter to Congress. “Following tax reform’s passage in 2017, manufacturing capital spending grew by 4.5% and 5.7% in 2018 and 2019—but limiting the deductibility of interest would threaten the sector’s progress and harm manufacturers’ ability to invest for the future.”
Manufacturing is the engine of U.S. economic growth. That’s why, when the Federal Reserve Board hosted a virtual Fed Listens event to discuss the economic recovery from the COVID-19 pandemic, it asked NAM Chief Economist Chad Moutray to share his perspective.
In his remarks, Moutray gave an overview of activity in the manufacturing sector and laid out his expectations for the road ahead. Here are some of the highlights.
A positive outlook: “Manufacturers are experiencing very strong demand as the U.S. and global economy recovers from the steep declines in activity seen last year at the beginning of COVID-19,” said Moutray. “Indeed, the most recent NAM Manufacturers’ Outlook Survey found that 87.5% of respondents were positive about their company’s outlook, which—while down from the three-year high seen in June—remained a healthy figure.”
Concerns on the horizon: “At the same time, manufacturing leaders cited rising raw material costs as their top concern for the third straight quarter, followed closely by challenges with attracting and retaining enough workers, with supply chain disruptions, and with logistics and transportation issues,” said Moutray. “Interestingly, 81.5% of those completing the survey said that workforce shortages were the biggest downside risk to their economic forecast, closely followed by supply chain disruptions, increased cost pressures and the continued spread of COVID-19, including the delta variant.”
Supply chain struggles: “While manufacturing growth remains solid, supply chain bottlenecks are significant, holding back even stronger expansions in the sector,” said Moutray. “Manufacturers continue to cite the backlog of cargo at the ports, the shortage of truck drivers and soaring shipping costs as significant impediments. In a just-in-time production environment, this poses a serious challenge to production and capacity—and the shortage of workers is not helping either.”
A look ahead: “These supply chain and logistics issues are likely to extend into at least the first half of 2022, at least based on my conversations with manufacturing executives,” said Moutray. “While pricing pressures are likely to stabilize as we move into 2022—assisted by a more-favorable base comparison—it is also clear that some costs will remain elevated relative to pre-pandemic levels, and core inflation might run hotter than we had become accustomed to.”
Dive Deeper: Read more about the economic outlook in the NAM’s 2021 3rd Quarter Manufacturers’ Outlook Survey.
One day last year, when schools were closed due to the pandemic, President and CEO Marcus Sheanshang brought his kids to work with him at JBM Packaging of Lebanon, Ohio. And he knew exactly who should train the kids on the company’s envelope and packaging machines: Amanda Hall, one of the company’s star employees.
But Hall isn’t just a star; she’s a star with an unusual background. As Sheanshang put it, “We were having dinner that night, and I said to the kids, ‘Do you know something very interesting about Ms. Amanda? … Ms. Amanda was in prison a few years ago.’ They said, ‘No, there’s no way.’ They wouldn’t believe me.”
A factory for fair chances: In fact, Hall’s story is almost the rule, not the exception, for JBM. One-quarter of JBM’s employees are what the company calls “fair chance” hires, or those who have been involved with the criminal-justice system. Sheanshang expects that proportion to grow to half the workforce in the coming years.
How it began: Sheanshang instituted the hiring program, in which the company actively recruits future employees from 30 correctional institutions and halfway houses, about five years ago when looking for creative strategies to address labor shortages.
- “We don’t have people applying for jobs,” Sheanshang said, referring to the manufacturing industry’s long-time struggle to find enough skilled employees. “Fair chance hiring really plugged that hole for us and allowed us to grow and get the right team members on our team who share our values. When they get out of prison, they have a spot here at JBM.”
How it works: While JBM won’t bring on anyone who has been charged with sex crimes, crimes against women or crimes against children, the company is committed to hiring and supporting all others who want and are eligible to work.
- JBM has an on-staff change coach who works with all JBM employees to help them find housing, purchase a car and more. Her success with the employees has been so profound that JBM is looking to hire another such coach, Sheanshang told us.
Grand opening: In July, the packaging business opened a second plant, this one in downtown Cincinnati. While the company’s success made this expansion possible, JBM was also aiming to move closer to its fair chance employees and potential new hires.
- “We noticed there’s a fair number of barriers in the Lebanon area [regarding] housing and transportation,” Sheanshang said. The downtown Cincinnati location offers more transportation resources “for folks looking to get back on their feet.”
Triumph over tragedy: Sheanshang is proud of the successes that fair chance employees have achieved. He shared the story of Brian, a fair chance hire who started out as a production worker and now is on the path to becoming a quality control supervisor. Another fair chance employee, Justin, also began at JBM at entry level. He is now on track to become a trainer of other employees.
- “This is not stuff that’s given to them,” Sheanshang said. “This is stuff that they’re earning.”
The last word: “I would say to any CEO or other business owner, really take a hard look at fair chance hiring,” Sheanshang said. “When it gets down to brass tacks, this is a great strategy. If you have the systems in place to help fair chance hires, this will work.”
The Manufacturing Institute recently launched its second chance hiring initiative, which helps companies recruit and retain individuals with criminal records, just as JBM does. Learn more about this initiative here.
INX International, a global manufacturer of high-performance printing inks and coatings, has a strong and growing presence in the U.S. thanks to tax reform.
The company’s success has been made possible in part by tax reform’s lower corporate tax rate and a foreign-derived intangible income (FDII) deduction, which encourages companies to develop and keep intellectual property in the U.S. by providing a lower tax rate for foreign sales based on U.S. IP. These reforms have helped manufacturers like INX invest in their U.S.-based facilities and employees—and INX has done exactly that.
Manufacturers wanted: From 2017 to today, the company has hired 89 people—a 7% increase in personnel. And even with the significant increase in workers, INX has been able to use its tax savings to pay good wages and benefits for all its employees.
- “We have not had one year since 2017 without raises or an increase in benefits,” said INX Vice President of Tax and Finance David Rossi. “That’s because the company has been doing pretty well—reaping the benefits from the economy and tax reform.”
Facilities expanded: INX has also worked to build new production capabilities, financed in part by the 2017 changes to the tax code.
- “The FDII deduction gave us $1.1 million in 2020 alone,” said Rossi. “That’s two-thirds of a solid equipment buildout for a new location. That number is significant to us.”
IP kept local: Provisions like the FDII deduction have made it possible for INX to keep their intellectual property in the United States, rather than moving critical production to facilities in other countries where labor and production costs might be lower.
- “We’re brick-and-mortar manufacturing in the U.S., and we keep our IP here; we keep our R&D here,” said Rossi. “Our ideas are here. Everything is developed here in the United States and kept in the United States.”
Continued benefits: The highly competitive labor market means that INX is also using its tax reform savings to attract and retain workers—making stability and certainty around these tax rules even more important.
- “We have dramatically increased starting wages, due to competition for manufacturing workers,” said INX CEO John Hrdlick. “Employees hired last year are also getting an increase. We’re offering incentives for referrals for new positions and spending a fair amount of money to recruit and keep people and stay ahead of our competition. If we weren’t in a strong position now, we wouldn’t be able to do that.”
The road ahead: The team at INX is concerned about what might happen if tax reform were to be rolled back and their tax burden were to increase. Especially with ongoing shortages of labor and materials—and with delays in shipping and freight transport—higher taxes would make it more difficult to continue the kinds of investments they have made.
- “Right now, any savings get invested into our people and our operations,” said INX Chief Financial Officer Bryce Kristo. “Any loss will negatively affect that.”
- “If there’s change, you’re talking about smaller facilities, less expansion or no expansion at all,” said Rossi.
The last word: “We are in a very competitive industry and an important industry,” said Hrdlick. “We’re almost a $500 million company, but given the high competitiveness, we are in single-digit operating income. All these proposed tax increases will pull some of that away. Everything we get, we invest in our people—and if that number is dramatically impacted, that’s going to be a problem for us.”
The NAM and The Manufacturing Institute took the Creators Wanted Mobile Experience for a test-drive in advance of a nationwide launch designed to inspire, educate and empower the next generation of creators.
What it is: The Creators Wanted Mobile Experience features an escape room mounted in a mobile unit, with a series of challenges intended to help bust myths around manufacturing and show young people and their parents the exciting opportunities available in the modern manufacturing industry. The program is designed to travel to schools and community centers nationwide.
What we did: The NAM and the MI brought three groups to Dallas, Texas, to test out the Creators Wanted Mobile Experience: students aged 15–17, students aged 18–22 and parents who have children aged 15–22. The groups first had conversations about career interests and perceptions of manufacturing, followed by a walk-through of the Creators Wanted Mobile Experience and another conversation about perceptions of manufacturing and career expectations.
What we learned: The Creators Wanted Mobile Experience completely changed participants’ view of the manufacturing industry, showing them the benefits of a career in modern manufacturing and making them excited about the opportunities manufacturing offers. While most participants had previously been skeptical about the industry’s ability to offer good, rewarding career paths, individuals who went through the Creators Wanted Mobile Experience came to appreciate manufacturing as an industry that offers diverse opportunities and workforces, high-end careers, competitive wages, job security, the chance to have an impact and careers that instill pride.
Our take: “We have a record of nearly 900,000 open jobs in modern manufacturing today, and 4 million jobs to fill, according to The Manufacturing Institute and Deloitte, by 2030,” said NAM Vice President of Brand Strategy Chrys Kefalas. “We knew we had to try something different to recruit and excite the next generation. We’re about to hit the next phase of our campaign to bring more of these rewarding opportunities to more people—and now we can be even more confident that we have the right approaches and messages to get the job done for manufacturers and for our country.”
Don’t take our word for it: Read the endorsement of the Creators Wanted campaign in The Dallas Morning News.
- “Creators Wanted is a clever approach that teens will enjoy. We encourage parents and guidance counselors to consider it. But the larger point here is about the pipeline of workers needed to ensure our economy can continue to grow. NAM has taken the initiative to improve that pipeline, putting them ahead of the competition for now. We hope to see others join that race soon.”
As Congress reconvenes this fall, the NAM will continue to make sure manufacturers’ priorities are front and center, driving the legislative conversation and shaping America’s future. We spoke with the NAM’s policy leaders to get a sense of the agenda going forward and discussed two bills in particular that are on manufacturers’ radar.
Bipartisan infrastructure reform: The $1.2 trillion investment would fund roads and bridges, as well as upgrades of the electric power grid and energy infrastructure, passenger and freight rail, public transit, airports, water systems, broadband and other critical priorities. Many of the bill’s investments were also initially highlighted in the NAM’s Building to Win framework—the NAM’s plan to invest in America’s infrastructure. The NAM will continue to work with Congress and President Biden to help move this bill across the finish line and ensure we can build the world-class infrastructure manufacturers deserve.
- “It’s critical that this moves forward,” said NAM Senior Vice President of Policy and Government Relations Aric Newhouse. “The bipartisan infrastructure reform bill would create transformative change—and every day that passes without it is a lost opportunity for manufacturers.”
- “We are using our influence to call on Congress to finalize this bill and move it to the president’s desk,” added NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling. “We also intend to stay engaged after it’s signed into law. This is a significant federal investment, with a lot of new programs and opportunities—and the NAM will be here to help steer our members through the implementation process.”
Reconciliation: Democrats are considering a multitrillion-dollar reconciliation bill that would supplement the bipartisan infrastructure reform bill with additional priorities in areas like health care, climate change and labor rules. As this bill moves ahead, the NAM is focused on preventing changes in corporate taxes, individual taxes, estate taxes and international tax policy that could harm manufacturers; blocking policies that could damage the employer–employee relationship; and standing up against efforts to stifle innovation in the pharmaceutical sector.
- Taxes: The bill proposes more than $2 trillion in tax increases that could hit every segment of the manufacturing economy. Proposed changes could affect big corporations through corporate taxes; globally engaged firms through changes to the Global Intangible Low-Taxed Income (GILTI) provision, the Base Erosion and Anti-Abuse Tax (BEAT) and a more limited incentive to locate intellectual property in the U.S.; family-owned businesses through estate tax reforms and increases to the capital gains rate; and small and medium manufacturers through changes to the tax system for pass-through entities. The bill would also make it harder to finance new equipment purchases through new limitations on the deductibility of interest on business loans.
- “These changes would affect every manufacturer, increasing the burden on corporations and pass-through entities,” said NAM Vice President of Tax and Domestic Economic Policy Chris Netram. “And we intend to stand up for our members, so that big and small manufacturers alike can compete, invest and grow here in the United States and around the world.”
- Pharmaceutical innovation: The reconciliation bill also contains provisions that would introduce price controls on certain medicines and harm the capacity to innovate by making it more difficult for pharmaceutical companies to invest in research and development, potentially hampering the creation of new medications and treatments. The NAM is fighting against these provisions to ensure that pharmaceutical companies are able to robustly invest in lifesaving cures.
- “Congress must take the long view on innovation,” said Newhouse. “If we take steps that harm pharmaceutical companies’ ability to innovate today, fewer lifesaving drugs will be available in the future. We think that’s a mistake.”
- Labor: In addition, the reconciliation bill in its current form seeks to impose some of the provisions of the Protecting the Right to Organize Act, or PRO Act. The bill, which previously passed the House in 2020, has the potential to reshape the relationship between employers and employees. The NAM will work to ensure these changes are not included.
- “The PRO Act is so broad and so sweeping in terms of its changes to the employee–employer environment that it comes at the expense of the manufacturing sector,” said Boerstling.
- “We’re going to do everything we can to keep this out of reconciliation because we believe the existing employee–employer relationship is working,” said Newhouse. “Now is not the time to blow it up with antiquated approaches to labor policy.”
The bottom line: This fall promises to be a busy time for policymakers in Washington, and the NAM intends to keep them focused on the needs and priorities of manufacturers across the country.
When it comes to making strides in sustainability, Fortune Brands Home & Security knows the power of small, steady steps. The company works to improve sustainability in a wide variety of ways, from water conservation to the recycling of ocean plastics and wood. We talked to two of its leaders recently to get the inside scoop.
Mission Moen: In 2020, the company launched Mission Moen, its commitment to conserving 1 trillion gallons of water by 2030. To meet that goal, Moen has employed cutting-edge innovation, explained Fortune Brands Global Plumbing Group Chief Marketing and Innovation Officer Mark-Hans Richer.
- Its Flo by Moen, for example, is a “smart water security system” that, through a mobile app, standalone sensors, detectors and other tech, allows consumers to monitor their water usage—and detect leaks they may not even know about.
- “There is an immense amount of water that’s wasted every year in the United States … due to lack of knowledge,” said Richer. “Flo by Moen allows users to see where water use is any minute of any day.”
“The key to saving water is in small fixes,” Richer emphasized. For example, “a faucet that has a little bit more managed gallon-per-minute flow can add up over the course of its use … to some pretty substantial savings.”
Cleaning up the oceans: The second pillar of Mission Moen is the company’s commitment to cleaning up the world’s oceans—specifically, 2,000 tons of plastic that’s currently floating in them.
- “We’ve found a lot of very useful, interesting things” that can be made with ocean-recycled plastic, Richer said. These include product packaging and components in showerheads.
- “When you commit yourself to a large goal, then you start to look for ways” to meet that goal, he continued.
Recycled wood and plastic: FBHS’s dedication to conservation extends throughout the company. Recycled wood and plastic are used to create its Fiberon Balance composite decking, Fiberon President Fenton Challgren told us. It’s a complex process:
- First, there is an “intensive search … for the right plastic, which comes in bales by the truckload,” said Challgren.
- The company then must “sort the contaminants, contain them, grind them, get them into different extruders … and create a stable pellet” that can be used for the decking, he continued.
What should manufacturers learn from FBHS? Manufacturers seeking to reduce the size of their company’s environmental footprint should think of these efforts as a long-term investment, according to Challgren.
- “On the water recycling side, have a really robust filtration system,” Challgren urged. “Spend the money, get the technology. It’s a big investment, but if you’re doing any type of high-volume water usage,” it will be less expensive in the long run.
The last word: As Challgren summed it up, “The impact your company could have by going down this path … will be worth it both financially and for the greater good.”
Through a global pandemic, manufacturers have led the way on health and safety measures, helping keep Americans working—for the U.S. and the world. Now the manufacturing industry continues that leadership while recruiting and inspiring the creators of the future.
On the road: Creators Wanted, the workforce campaign of the NAM and the MI, is getting ready to hit the road. The campaign formalized its COVID-19 safety protocols and is employing state-of-the-art technologies, like Sphere Synexis, provided by legacy sponsor Trane Technologies, to continuously fight viruses, bacteria and other hazards in the air and on surfaces. The mobile experience, along with other programming events and new online resources, will bring the story of modern manufacturing to communities across the country.
- The experience, recently endorsed by The Dallas Morning News, is designed to capture the imaginations of students, teachers and parents and inspire the next generation of manufacturers.
- It will complement the upcoming release of the NAM and MI’s innovative online resources for those seeking a career in manufacturing.
Coming to a town near you: The NAM and MI released the following Creators Wanted Live tour dates and stops.
- Oct. 4–7: Columbus, Ohio
- Oct. 12–15: Charlotte, North Carolina
- Oct. 20–22: West Columbia, South Carolina
- Nov. 8–10: Pella, Iowa
- Nov. 16–18: Freeport, Texas
- Nov. 30 – Dec. 3: Dallas, Texas
Wait, there’s more! Community programming stops are also coming to Detroit, Michigan; Guthrie, Kentucky; Pittsburgh, Pennsylvania; and Carson City, Nevada. And a new suite of digital and online experiences and tools will bring the campaign to every state.
Thanks to strong support: “Our ability to mount this bold solution to the workforce crisis through the difficulties of a pandemic has been anything but certain,” NAM President and CEO Jay Timmons and NAM Board Chair Mike Lamach said in a joint message to NAM membership. “It has taken the unwavering and strong support of some of America’s leading enterprises and business leaders to keep this campaign alive.”
Neha Phadke is a long way from home. Originally from a small farming village in India, Phadke grew sugar cane, onions, wheat and watermelon to support her seven-person family while she completed her bachelor’s degree. She moved to the United States to earn her Ph.D. in organic chemistry when Texas Tech University offered her full funding.
Today, Phadke works as a senior process chemist at Covestro, a high-tech polymer materials manufacturer that makes products used in industries including automotive, construction, health care, cosmetics, energy, electronics and sports. It’s her responsibility to find ways to improve production while maintaining quality.
Focused on manufacturing: Even when she was studying organic chemistry as an undergraduate and grad student, Phadke knew that she was more interested in applied science than academia. Near the end of her Ph.D. program in 2015, she received an internship opportunity at Covestro, which was then called Bayer Material Science. That internship turned into a job offer, and she has been working at Covestro ever since.
- “I was asked if I wanted to go into research and academia or manufacturing, and I was 100% sure I wanted to go into manufacturing,” said Phadke. “I had a feeling that this was where I belonged.”
Everything’s bigger in Texas: Still, Phadke faced a learning curve when she shifted from academia to manufacturing, including the scale of the work she was doing.
- “I had never seen big plants and reactors,” said Phadke. “I had worked on my Ph.D. in milligrams, and here I’m making more than 30,000 pounds of material in the reactors. It was fascinating, and I enjoyed the experience, process and learning through the new challenges.”
Standing up: Phadke may work in an environment that’s traditionally been male dominated, but she has never let that stop her before. Even when she was growing up, she knew that her ability to succeed should have nothing to do with her gender.
- “I was always asked if I had a sibling, and I would say I have a younger sister—and I would get sympathy for not having a brother,” said Phadke. “As a kid, I wouldn’t understand why it should make any difference. And it pushed me to think: why can’t I do anything a guy can do?”
Serving as an example: The Manufacturing Institute recently selected Phadke as a 2021 STEP Ahead Award Honoree—an honor given to women leaders who have excelled both within their companies and in the industry as a whole. She encourages other women to get involved in manufacturing and says that, while the industry might seem daunting, she’s gotten plenty of support from her colleagues and her company.
The last word: “Anything is possible,” said Phadke. “Don’t let anyone stop you from doing what you believe is right. Wear your courage, face your fears, lead your path, follow your passion and inspire others.”
Learn more about the STEP Ahead program, including how to honor remarkable women on your team, here.