The NAM Legal Center stood up for manufacturers in federal court this week, arguing that the Securities and Exchange Commission unlawfully suspended a rule governing proxy advisory firms.
A quick refresher: Proxy advisory firms advise institutional investors, like retirement fund managers, on how to vote on the policies of public companies in which the funds invest. This gives the firms significant power over public companies.
The fight: The NAM secured a significant victory in 2020 when the SEC finalized a rule increasing oversight of proxy advisory firms, which had long operated without SEC oversight.
- Manufacturers strongly supported the 2020 rule, which was designed to increase transparency, highlight conflicts of interest and provide accurate and decision-useful information to investors.
- At the beginning of the Biden administration, however, the SEC’s new leadership announced that it would not enforce the rule—without engaging in notice-and-comment rulemaking, a clear violation of administrative law.
Our move: Shortly after the SEC announced it wouldn’t enforce the 2020 rule, the NAM Legal Center filed a challenge to prevent the agency from abdicating its responsibilities. Put simply, a new administration cannot set aside lawfully promulgated rules that it happens to disagree with—and the NAM is standing up for that principle in court.
Our case: Arguing before the U.S. District Court for the Western District of Texas this week, the NAM made clear that the SEC acted unlawfully by suspending the compliance date of the proxy firm rule indefinitely without going through the required public notice-and-comment process to amend or repeal it.
- The SEC, in turn, argued that the agency hasn’t technically suspended the rule, but rather that SEC staff has made a nonbinding and “informal” recommendation not to enforce it—an action that has the same effect as an official suspension and one which the SEC’s own lawyers have described as providing “relief” to proxy firms.
Our take: “The SEC is attempting to end-run its legal obligation to enforce this rule,” said NAM Deputy General Counsel for Litigation Erica Klenicki. “We are in court fighting for manufacturers and their investors across the United States, who deserve protection from the outsized influence of proxy firms and who depend on the SEC, and all federal agencies, to adhere to the rule of law.”
How is digitization changing manufacturing? What can manufacturers do to stay competitive in a fast-shifting world? What does the future look like—and how can leaders prepare for success?
Those are the kinds of questions being asked and answered by the NAM’s Manufacturing Leadership Council—a member-driven global business leadership network focused on the intersection of manufacturing and technology. We spoke with David R. Brousell, MLC co-founder, vice president and executive director, who gave us more insight into what the MLC is, how it works and why it matters today more than ever.
An early start: The idea for the MLC was born nearly two decades ago, when manufacturers began turning to consumer technologies to strengthen their businesses.
- The convergence of these technologies with traditional operational technologies on factory floors sparked an idea. Brousell, who was running a publication called “Managing Automation,” recognized the trend—which he called “Progressive Manufacturing”—and founded an annual conference for manufacturers to discuss new approaches and best practices for the future.
- By 2008, that conference had given rise to a council designed to offer useful programming for manufacturers on the future of digitization. Ten years later, the council became a part of the NAM.
- “We realized that digitization was not a tactical or small change—it was a fundamental change in the industry,” said Brousell. “It was clear that manufacturers needed an informational resource or organization to bring them together to deal with what we now call Manufacturing 4.0 in a systematic way.”
A systematic approach: Today, the MLC represents what Brousell calls “the digital transformation arm of the NAM,” helping manufacturers meet future needs and address ongoing trends—through changes in technology, organization and leadership.
- “The transition to the digital model of manufacturing is only one part technical,” said Brousell. “The harder part is changing the organizational structure to be more collaborative and decentralized and making the leadership approach digital-first. We’re probably the only organization that has looked at it this way, in a systematic way, beyond technology alone.”
A critical focus: Every year, the MLC lays out a member-approved set of critical issues involved in the transition to Manufacturing 4.0 and offers resources and programming from thought leadership to plant tours to the Rethink Summit.
- This year’s critical issues include topics like factories of the future; transformative technologies, including AI and machine learning; augmented reality and virtual reality; Manufacturing 4.0 cultures; and cybersecurity.
A broad view: Digitization isn’t just an issue for individual manufacturers. Because manufacturing is so vital to economic and societal growth, it’s also important to the future of the United States and the world.
- “Manufacturing is one of the fundamental drivers of social and economic prosperity,” said Brousell. “Its growth will lead to a better life for people. No other industry can say that. And I believe that the countries whose companies are most successful in making the transition to the digital model are going to be the powers of this century. There’s a lot riding on this.”
Sign up: Come learn from leading manufacturers at the Rethink Summit, June 27–29, in Marco Island, Florida. It’s the premier event for senior operational executives and their teams as they continue to navigate disruption.
“I’ve attended the IRI Annual Conference many times,” says Dr. Martha Gardner, “and I have taken many things that I’ve learned back to my company.” Gardner is the executive quality leader for process improvement at GE Aviation. She plans to attend this year’s IRI Annual Conference in person.
What it is: The IRI Annual Conference is where innovation leaders of all industries come together to share key emerging trends, technologies, critical skills and best practices. This year’s agenda includes four tracks:
- Strategic leadership practices for next-generation innovation managers
- The future of work
- Operationalizing sustainability strategies
- Digitalization of business and industry
Relevant content: “One reason to go is certainly the content,” Gardner says. “I leave with best practices, information on building future-ready leaders and more. The content is really relevant for the things I’m thinking about right now.”
- If possible, Gardner attends with multiple team members: “You can cover concurrent sessions. This year, there’s a breakout session on domestic supply chain resilience, which I will definitely attend. But there are other breakouts at the same time that will have useful nuggets for my company.”
Valuable networking: Connecting with peers is also a big reason Gardner attends. “I’m looking forward to the extra networking we get from being there in person,” she explains. “I’ve missed this during the virtual events of the past few years. There are people like me who have gone for several years, and there are always new people. I always get different points of view.”
Fresh perspective: Gardner believes the IRI Annual Conference is well worth her time away from the office: “It gives me perspective to think about the future and what I would like to drive differently in my organization. I use some of the takeaways to develop new strategies.”
How to participate: The 2022 IRI Annual Conference takes place June 7–9 in New Orleans. Innovation leaders from across companies and industries are welcome to attend. You do not need to be a member of the IRI to participate. Click here to view the agenda and to register.
How are manufacturers developing a workforce for a fast-changing industry in a fast-changing decade? Recently, Manufacturing Institute President Carolyn Lee sat down with leaders at Union Pacific Railroad and the Caterpillar Foundation to find out.
Union Pacific Senior Vice President of Corporate Relations and Chief Administrative Officer Scott Moore discussed his company’s efforts to recruit more women and young people to the manufacturing industry. Caterpillar Foundation President Asha Varghese weighed in on Caterpillar Foundation’s efforts to support training opportunities for the military community and introduce high school students to innovative manufacturing careers.
What Union Pacific is up to: The Union Pacific and MI partnership is centered around a program called Careers on Track. This three-year, $3 million initiative is aimed at changing perceptions of the rail industry and encouraging women and youth to pursue careers in the field.
- As part of Careers on Track, Union Pacific and the MI developed Future Creators, a digital STEM curriculum focused on transportation, distribution and logistics.
- Future Creators has been used in more than 24,000 middle schools across the country with 80% of students increasing their knowledge of STEM careers.
How they’re doing it: The MI and Union Pacific created a 3D digital experience of a Union Pacific yard and locomotive that is designed to help women and young people explore technical fields interactively.
- Their other outreach efforts include 30-second PSA-style videos that showcase female employees and their stories to highlight career paths at Union Pacific and events hosted through the MI’s STEP Women’s Initiative.
- Union Pacific has reached more than 250,000 women through this content, demonstrating what women just like them can achieve in the manufacturing industry.
Union Pacific says: “We’ve always known diversity is key at Union Pacific, and to achieve that, there are deliberate things we need to do,” said Moore. “We’re going to have to reach people. Around 90% of our workforce is union, primarily in the field, across 23 states and 7,000 communities. We have to get in those communities—and The Manufacturing Institute gave us the tools to do that well.”
What Caterpillar is doing: The Caterpillar Foundation’s partnership with the MI is investing in workforce readiness and building an empowered and skilled manufacturing workforce.
- This partnership is expanding the MI’s Heroes MAKE America program, which provides certification and career-readiness training to transitioning service members, veterans, military spouses and others who work in or with the armed services.
- One of the partnership’s first efforts was to create a fully virtual program to further Heroes’ reach regardless of physical location.
- The first 100% virtual Certified Production Technician training program was launched in late 2021, in partnership with Texas State Technical College and TRANSFRVR.
In addition, the Caterpillar Foundation is also working with the MI’s FAME program—a 21-month apprenticeship program founded by Toyota that grants certifications and prepares young people for high-skilled jobs in the manufacturing workforce.
- Most recently, the MI and the Caterpillar Foundation created a new FAME chapter in Seguin, Texas.
Caterpillar says: “Caterpillar Foundation focuses on resilient communities, and we understand the importance of investing in local communities in order to ensure that we’re providing them with the right resources, with the right services and with the right skills for employability,” said Varghese. “What really attracted us to the MI is first and foremost that strategic alignment…focusing on that untapped talent.”
The last word: “As a nonprofit, the MI depends on the investments of corporate and philanthropic leaders to tackle the workforce crisis in manufacturing with innovative, exciting workforce solutions,” said Lee. “The MI’s work has expanded to include a full collection of initiatives that not only train individuals for rewarding careers but also provide the thought leadership, best practices and learning networks that manufacturers need to address their workforce issues.”
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.”
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.
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.
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.
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.”
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.”