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NAM Archive

Manufacturers in the United States produce great products desired across the globe each and every day. But our single greatest export remains America’s values – values which include free enterprise, competitiveness, individual liberty and equal opportunity, and a willingness to lead by example.

That has never been clearer to me than it was during my recent trip to Cuba when I took eight manufacturers there to engage in discussions with government officials and engage in a dialogue with the Cuban people.

Times have changed. The tense days of Kennedy, Castro, and the Cuban missile crisis are behind us. I witnessed a nation in transition, whose citizens want to adapt their economy and expand their opportunities.

The decision to normalize diplomatic relations with that isolated island was controversial in some quarters, but a recent national survey found that nearly three-quarters of U.S. adults favor ending the U.S. trade embargo against Cuba. They also favor lifting the restrictions on travel to the island. Based on what I saw during my visit, clearly the time is right for positive interactions between the United States and Cuba.

Cuba May 2017

Economic engagement will benefit both countries. But in the case of Cuba, it will launch its citizens on a trajectory of greater prosperity, opportunity, and freedom.

To get there, we need to do more.

Just 90 miles from the United States, Cuba is well-positioned to become a market for U.S. goods and services. With normalized trade, American exports of goods to Cuba could reach an estimated $4 billion per year.

While the United States has eased some of the restrictions on travel, trade and investment, lifting them completely is up to Congress.

The U.S. government has made allowances for some exports to Cuba and issued changes to facilitate authorized travel to the island. There remains, though, a long road ahead for both countries to expand trade and investment opportunities.

Manufacturers are committed to sharing with the Cuban people American values that will enrich the lives of all. Congress needs to listen, and to take action by repealing the trade embargo and lifting restrictions on travel once and for all.

The Cuban government should reciprocate by allowing U.S. companies to trade directly with the emerging Cuban private sector and by continuing market-oriented reforms that facilitate foreign investment.

I encourage you to communicate with your representatives in Washington. Expanded economic engagement means new opportunities for us, and greater prosperity and freedom for Cubans. It is time to demonstrate our American values in action.

The post American Values, Manufacturing Have a Place in Cuba appeared first on Shopfloor.

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts were disappointing in April, down for the second straight month. New residential construction fell from an annualized 1,203,000 in March to 1,172,000 in April, its first reading below 1.2 million units since November. Housing starts had been predicated to rebound from March’s weather-influenced lull, with a consensus expectation of 1.25 million units. Indeed, we did see a rebound in housing starts in both the Midwest and West, but the decline in March stemmed largely from a drop in activity in the Northeast and South. In terms of unit size, the highly-volatile multifamily segment eased for the second month, down from 371,000 in March to 337,000 in April. In contrast, single-family activity inched up from 832,000 to 835,000, but that figure remained down from February’s 877,000-unit pace.

The latest figures suggest that new residential construction has gotten off to a slow start so far in 2017. That seems to be supported by the year-over-year data, as well, with housing starts up just 0.7 percent since April 2016. Yet, that seems to be skewed by a sharp year-over-year decline of 15.1 percent for multifamily units, which can often have large month-to-month swings. More encouragingly, single-family starts have risen 8.9 percent over the past 12 months.

Meanwhile, housing permits were also slightly lower, down from 1,260,000 to 1,229,000 in this release. Permits represent a proxy of future activity, and as such, this news provides mixed comfort. While the April data were off by 2.5 percent from March, it was also the eighth consecutive month with permits exceeding 1.2 million. Accordingly, we should expect better housing starts data moving forward. In this release, multifamily permits edged up from 434,000 to 440,000 units, but single-family activity dipped from 826,000 to 789,000.

Overall, new residential construction permits have moved higher over the longer term. Over the past 12 months, housing permits have risen 5.7 percent since April 2016, with single-family and multifamily activity up 6.2 percent and 4.8 percent, respectively.

The post Housing Starts Were Disappointing in April, Down for the Second Straight Month appeared first on Shopfloor.

The Federal Reserve said that manufacturing production rebounded strongly in April after pulling back in March. Output in the sector rose by 1.0 percent, led by a significant recovery in motor vehicles and parts production, up 5.0 percent, among others. It was the sixth time in the past seven months that manufacturing production has increased. While the sector continues to have some lingering challenges, this report is yet another sign that the sector has turned a corner and is moving in the right direction. Indeed, manufacturing production has increased 1.7 percent over the past 12 months, its strongest year-over-year pace since January 2015. Similarly, manufacturing capacity utilization jumped from 75.2 percent to 75.9 percent, a level not seen since December 2014.

Digging into the underlying data, durable and nondurable goods output were both up by 1.0 percent in April, mirroring the manufacturing sector as a whole. Beyond automotive, the largest gains in the sector were seen in the following segments: petroleum and coal products (up 2.5 percent), electrical equipment and appliances (up 1.8 percent), miscellaneous durable goods (up 1.8 percent), food, beverage and tobacco products (up 1.6 percent), textile and product mills (up 1.4 percent), printing and support (up 1.0 percent), machinery (up 0.9 percent), plastics and rubber products (up 0.9 percent) and paper (up 0.8 percent). In contrast, there was reduced production for the month in the nonmetallic mineral products (down 1.0 percent), aerospace and miscellaneous transportation equipment (down 0.7 percent), primary metals (down 0.6 percent) and apparel and leather (down 0.1 percent) sectors.

Meanwhile, total industrial production also increased by 1.0 percent in April, its fastest monthly gain in just over three years. In addition to manufacturing, mining and utilities output were higher for the month, up 1.2 percent and 0.7 percent. Over the past 12 months, total industrial production has risen 2.2 percent. Much like the manufacturing data described above, that was the highest year-over-year rate since January 2015, and it was a definite improvement from the -1.7 percent year-over-year rate seen one year ago. Mining production has increased 7.3 percent year-over-year, but utilities output was off by 0.5 percent since April 2016. Capacity utilization rose from 76.1 percent to 76.7 percent, a 20-month high.

The post Manufacturing Production Rebounded Strongly in April appeared first on Shopfloor.

Blog written by Barry Pennypacker, President and CEO of The Manitowoc Company, Inc.

At Manitowoc’s crane manufacturing facility in Shady Gove, Pennsylvania, countless truckloads of material come in and out our facility every day. Interstate I-81 is a central outlet for those trucks, and any problem with that highway is a problem for our business, our customers and our workers.

And I-81 has problems.

The interstate is a major freight corridor that moves manufactured goods and materials to and from the Appalachia region and the Northeast. Regionally, I-81 also serves as the primary linkage between West Virginia, Virginia, Maryland and Pennsylvania, functioning as a long-distance truck bypass around major areas of urban congestion in the Baltimore and Washington, DC, metro regions.

To say it’s essential to our company’s strength is an understatement. It’s essential to our country’s economic strength. And as anyone who’s traveled on it can tell you, we need a bigger highway.

In Maryland, the existing four-lane highway carries some of the highest freight volumes in the nation by lane mile, averaging nearly 20,000 trucks per day. An accident in Hagerstown, Maryland, can cause severe congestion and delays near my plant in Pennsylvania. Widening the I-81 corridor is necessary to facilitate current traffic volumes and expected increases.

In Pennsylvania, construction is ongoing to widen key sections throughout the state. Maryland and West Virginia have each set aside millions of dollars to widen I-8I between U.S. 11 in West Virginia and Lappans Road in Williamsport, Maryland. At the end of 2016, Maryland commenced construction to expand the four lane highway to six lanes on a 2.5 mile segment that includes four bridges.

While this project has been initiated, manufacturers need the corridor as a whole to support freight movements. Specifically, expansion needs to be completed from West Virginia into Pennsylvania.

In 2016, the Maryland-West Virginia expansion project was one of 212 applications for just one federal highway program, but the I-81 project was denied along with 194 other viable project applications. States and private enterprises cannot take on this project alone. Additional federal funds are necessary. If not, congestion will get worse, and it will be even harder to get my company’s products to our customers is a timely, cost-efficient way. Higher costs or lost business, in turn, mean it’s harder for me to hire or to give employees raises—directly effecting the livelihoods of working families.

The need is clear, and on this Infrastructure Week, I’m urging our leaders in the federal government to invest in this project and the many, many more like it across this country.

It’s the right thing to do.

The post Manufacturers are Only as Strong as American Infrastructure appeared first on Shopfloor.

Written by Fluor Chairman and CEO/NAM Board of Directors Vice Chair David Seaton.

There is widespread consensus that America’s infrastructure needs help. It ranks 11th in the world, and the American Society of Civil Engineers has repeatedly graded it a D+.

As noted in the NAM’s Building to Win infrastructure plan, “Without immediate action on the infrastructure crisis, the United States will lose more than 2.5 million jobs by 2025 and more than 5.8 million by 2040.” We have a big job ahead of us; the estimated funding needs exceed $1 trillion. So how do we pay for it?

Everyone has a role to play—the federal government, states and localities. But one important tool in our toolkit is public-private partnerships (P3). While not a silver bullet for every situation, the P3 is an option of growing significance that is enjoying more interest and will continue to provide a means to accomplish big things that governments can’t do on their own.

When most people think about public-private partnerships, they usually picture a toll road. However, public-private partnerships can take on many forms. Many states have used availability payments, which allow a private entity to pay the up-front costs of an infrastructure project while the state will pay back the project costs over time. Think of it as a mortgage for a bridge or highway, except that the mortgage is only paid if the road or bridge is available for use.

Frequently, a public-private partnership contract will arrange for a private entity to operate and maintain the project for a period of time such as 30 years for instance. These maintenance agreements can include performance metrics accompanied by expensive fines that the private entity must pay if it fails to meet the standards. As a result, the government receives a new road, highway, bridge, public building or other infrastructure asset that is in prime condition. Too often, uncertain state and federal budget limitations starve public infrastructure assets for resources. Under a public-private partnership model, the state receives a first-class, well-maintained project. Another key feature of the P3 model is that the very structure of the contract demands innovation throughout the value chain ensuring that the public entity does not receive a low quality asset requiring extensive maintenance costs. Lastly, this contracting approach enables states and other government agencies to make larger investments that have a more positive immediate impact rather than incremental investments that take significant time to make the asset available to the public.

For example, my company, Fluor, is the managing partner of the Denver Eagle commuter rail project. We are responsible for the financing, design, construction, testing and commissioning, and operations and maintenance of the 36-mile Eagle Commuter Rail Network. We agreed to meet operational performance metrics, and when routine mechanical issues disrupted service, Fluor and its partners have paid for it, not the taxpayers. These agreements give our companies an incentive to build a better asset for the government and to keep it in good working order. And finally, this project provided about 1,400 craft jobs during the construction peak, which translated into another 7,500 jobs in the Denver area.

In Virginia, Fluor received multiple recognition awards for our I-495 and I-95 Express Lanes projects. We’re also involved in the Purple Line rail project in the Washington, D.C., area. In each of these projects, the partnership between the government and the private sector allowed us to leverage private financing, minimize public risk on complex projects, and apply our decades of expertise to meet deadlines and budgets.

While public-private partnerships are great tools, they are not the lone solution for every project, and they are not free. Investors must eventually be repaid. As the NAM has outlined in Building to Win, advancing a 21st-century infrastructure system in the United States will require using a wide variety of public funding and private financing mechanisms, which is why we need to see action from our elected leaders, especially in Washington, D.C., to tackle these urgent challenges. A major investment in infrastructure will spur economic growth, create jobs and increase global competitiveness so that we remain the world’s leader.

The post Infrastructure: But How Do We Pay For It? appeared first on Shopfloor.

As part of President Trump’s March 31 Executive Order on trade, the Commerce Department and Office of the U.S. Trade Representative are examining the role trade deficits play in key trading relationships. The NAM provided this detailed submission last week and I am testifying today about opportunities and challenges that trade presents for U.S. manufacturing.

For those seeking the Readers Digest version consider the top four takeaways.

    1. Exports are critical to today’s manufacturing success. Indeed U.S. manufactured goods exports now represent more than half of U.S. manufactured output, supporting more than 6 million manufacturing job across the country – jobs that pay substantially more than non-export related jobs. The U.S. manufacturing sector must have opportunities to expand sales – at home and abroad – to continue to add jobs.
    2. Manufacturing is growing around the world, creating new middle-class consumers and new partners, but also new competitors. More than $11 trillion in manufactured goods are traded annually as markets have been opened and trading costs reduced. In some cases, imports compete directly with manufacturers in the United States, just as U.S. exports compete with manufacturing overseas and many manufacturers require inputs not domestically available. Unfortunately, however, some import competition is fueled by foreign market-distorting and discriminatory trade practices that create unfair advantages for foreign manufacturing production at the expense of manufacturers, workers and communities in the United States. Under these circumstances, the NAM has long supported robust U.S. government action to address the underlying causes of the distortions and full enforcement of trade agreements and trade rules.
    3. The trade deficit arises as a result of several factors. Overall domestic economic conditions and standards of living, domestic consumption and purchasing compared with savings rates, the price of goods in the market, exchange rates, domestic structural issues (e.g., taxation, regulation) and openness to international trade all impact the trade deficit. In the United States, trade deficits expand as the U.S. economy grows and fall during periods of economic weakness. At the same time, however, when the U.S. economy expands, more workers are employed and unemployment falls, we see that the trade deficit actually increases.
    4. As manufacturers see it, many indicators are relevant in assessing the strength and weaknesses of U.S. trading relationships with particular markets. These factors include the existence and implementation of trade agreements, the size of the trading relationship compared to the size of the foreign economy, the growth of exports over time, the U.S. share of the country’s worldwide imports, foreign direct investment, U.S. content in imports into the United States and overall tariff rates. The chart below shows that Canada and Mexico are outsized purchasers of U.S. manufactured goods compared to other sources of imports and given the size of the countries’ economies.

 

 

Conclusion:

As the administration considers next steps, the NAM urges that it prioritize work to address existing distortions and barriers to improve U.S. competitiveness globally through (1) the negotiation of advanced trade agreements that open markets and set strong rules; (2) the modernization of U.S. trade tools to boost U.S. global competitiveness, from improving export financing options to eliminating self-inflicted barriers that impede U.S. manufacturing; and (3) the implementation of more robust trade enforcement consistent with the international rules system to ensure that trade agreement commitments are honored, our innovative technologies are not stolen and U.S. trade rules are effectively enforced. Where trade agreement rules are not keeping up with new challenges and distortions, manufacturers urge U.S. leadership and efforts to develop new internationally agreed-upon rules and frameworks to raise standards and promote a more open and competitive market-driven global economy.

Learn more about manufacturers’ priorities for trade policy by clicking here.

The post Manufacturing, Trade Deficits and Opportunities for Growth appeared first on Shopfloor.