May 9, 2011
A number of last week's economic indicators reinforced the viewpoint that manufacturing is growing, increasing in both output and employment. According to the Labor Department, the unemployment rate in April was 9.0 percent, up from 8.8 percent in March. That figure remains stubbornly high, but there were also signs of progress. The economy gained 244,000 nonfarm payroll jobs for the month, including 29,000 in manufacturing. As further proof that we are moving in the right direction, manufacturers have hired 250,000 new workers since December 2009.
Manufacturing output and productivity are rising. The Institute for Supply Management reported last week that its Purchasing Managers' Index (PMI) was 60.4, which, while lower than March, shows the industry continuing to expand. The Census Bureau observed that new factory orders grew 3 percent, led primarily by durable goods, and shipments increased 2.7 percent for the month.
Stronger manufacturing output is also leading to significantly higher productivity gains, with output per hour for all persons in the sector rising 6.3 percent in the first quarter of 2011. As such, this report shows that manufacturers are bucking a trend, as total nonfarm productivity grew just 1.6 percent, a decline from the previous quarter. For manufacturers, the overall productivity gains should reinforce the need for additional hiring in the sector over the coming months. Other surveys have suggested that manufacturers have stepped up their hiring recently.
This week, we will closely follow reports on international trade, inventories, and inflation. Given that markets overseas represent such a huge opportunity for manufacturers, we will be looking for continued growth in exports. Moreover, Thursday's release of the Producer Price Index will probably highlight inflationary pressures, especially if these numbers mirror other recent surveys that show rising raw material and energy costs squeezing manufacturers.
While this past week's numbers highlighted a lot of positives in the economy, we must not lose sight of barriers that might prevent manufacturing from growing faster in the months ahead, possibly hampering our ability to generate new employment and output. For instance, manufacturers use one-third of the nation's energy supply, and as prices continue to increase, there will be a drag on the sector and the economy.
Chad Moutray
Chief Economist
National Association of Manufacturers
Today in Manufacturing
Here are eight reasons why Perry Sainati is wrong to call China the biggest dog on the manufacturing block ... continue
Quick Manufacturing News
Average pay was $9.3 million Click to continue
Quick Manufacturing News
Few companies place a strategic imperative on managing operational risk, even though operational and financial performance are closely linked. Click to continue
Quick Manufacturing News
Germany posts record exports in March Click to continue
Quick Manufacturing News
The right dust collection system not only will prevent hazardous situations, but also can improve worker comfort and productivity. Click to continue
Carter Wood NAM ShopFloor
The Senate Finance Committee has a hearing scheduled for Thursday, “Oil and Gas Tax Incentives and Rising Energy Price,” to which executives of a select few oil companies have been invited.
“Frankly, we are an attractive target,” said Ken Cohen, ExxonMobil’s vice president of public and government affairs. “I think the term I used was ‘irresistible’ right now for politicians to whale away.”
Cohen and Jaime Spellings, ExxonMobil’s vice president and general tax counsel, spoke this morning on a conference call for bloggers organized by the American Petroleum Institute. Much of the discussion centered on the issues of profits and taxes Cohen detailed in a recent post at ExxonMobil’s Perspectives blog, “ExxonMobil’s U.S. taxes and U.S. earnings – Some relevant numbers for Washington.”
Oil companies are today’s target, but other industries and the public at large should be concerned, Cohen argued.
I just hope that we can have at some point … some rational discussion of what the country’s tax policy should be. And other large industries should also take note, or actually any industry. (continue reading…)
Carter Wood – NAM ShopFloor
The Senate Judiciary Committee on Thursday is scheduled to vote on S.623, the Sunshine in Litigation Act, to force open sealed settlement agreements and documents closed under a judge’s order if the documents have an impact on public safety or health. Long promoted by trial lawyers, the bill would dramatically raise the costs of litigation and give the plaintiffs’ bar another weapon to pressure the businesses into out-of-court settlements.
The National Association of Manufacturers and other members of the Coalition to Protect Privacy, Property, Confidentiality, and Efficiency in the Courts sent a letter to the Judiciary Committee last week explaining business’ vigorous opposition to the proposal. Excerpt:
[The] bill would severely restrict existing judicial discretion to protect the privacy, property, and confidentiality of all litigants by requiring federal judges to make premature decisions about the masses of information produced in modern civil litigation.
Ultimately, S. 623 would increase the costs and burdens associated with civil litigation while stifling the federal court system. Finally, the bill would confer unfair tactical advantages on certain litigants at the expense of others.
Protective and sealing orders are invaluable litigation tools. These orders help ensure the confidentiality of valuable information produced in discovery. Severe restrictions on their availability would have a chilling effect not only on discovery and settlements but also on the commencement and defense of claims. (continue reading…)
Carter Wood – NAM ShopFloor
Bloomberg, “Manufacturing Booms as Deere Exemplifies Surge in Productivity“:
Once-ailing manufacturers are enjoying a robust rebound as cost-saving moves from job cuts to a greater reliance on technology help drive stronger-than-forecast growth. The shift has helped set the stage for a potential “manufacturing renaissance,” says James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management. He predicts the industry will set the pace for U.S. expansion and the American stock market during this decade, as technology did in the 1990s.
“Manufacturing is leading the whole economy,” said Paulsen, whose firm oversees about $340 billion. U.S. manufacturers “had to find religion. They’ve really cleaned up their balance sheets. What is left is the cream of the crop.”
Companies mentioned include Timken, the Canton, Ohio-based maker of roller bearings and steels; Materials Processing, Inc., the Logansport, Indiana-based metals-processing company; Siemens Corp., a subsidiary of the Munich-based Siemens AG; Boeing; Deere & Co.; Cooper Industries Plc, Deere & Co. and Kennametal Inc.
The story builds on recent data and reinforces what many National Association of Manufacturers member companies — other than the ones mentioned above — have been reporting. Economists are seeing the same thing; last Friday, The Wall Street Journal’s Real Time Economics blog rounded up the reaction of top economists, including Sung Won Sohn of the Smith School of Business and Economics. He said: (continue reading…)
Carter Wood – NAM ShopFloor
President Obama skirted federal law and established procedures to appoint Lafe Solomon to serve as Acting General Counsel of the National Labor Relations Board, Sen. Orrin Hatch (R-UT) charged this week, calling on the President to withdraw Solomon’s appointment in the wake of the NLRB’s unjustified and economically disastrous complaint against The Boeing Company.
Hatch took to the Senate floor Thursday to dissect and denounce the NLRB’s complaint against Boeing for locating new assembly facilities in South Carolina instead of Washington State. In a lengthy statement (available here), the Utah Republican analyzed the NLRB’s contravention of federal law labor, warned of the competitive consequences of bureaucrats making facility-siting decisions, and criticized the Obama Administration for putting the interests of organized labor before the nation’s.
NLRB's Lafe Solomon
Hatch also challenged the validity of President Obama’s June 21, 2010, appointment of Solomon to serve as Acting General Counsel, arguing that the President ignored the established procedures for such appointments under the National Labor Relations Act (NLRA). Instead, Hatch said, the President made Solomon his personal acting general counsel under “the more generous terms” of the Federal Vacancies Act, which is intended to apply to government vacancies in general.
Why did the President take this unusual step? Hatch:
Under the Vacancies Act, Mr. Solomon is allowed to stay in the job in an acting capacity, without Senate approval, for an initial 210 days—rather than the 40 days provided under the National Labor Relations Act—and then be reappointed again for another 210 days, and a third time for yet another 210 days, until the end of President Obama’s term.
This is yet another example of the President end running the law in order to ensconce in office individuals who would have a difficult time surviving the constitutionally required confirmation process—a process that ensures the people and their representatives have some meaningful oversight of the appointee.
Solomon filed the NLRB complaint against Boeing on April 20, acting in support of the International Association of Machinists and Aerospace Workers, which represents workers at Boeing’s Washington facilities. Given the timing cited by Sen. Hatch above, Solomon’s appointment as Acting General Counsel should have expired on July 31, 2010, depriving Solomon of the authority to take the later action against the airplane manufacturer.
Hatch’s analysis carries extra weight because of the Senator’s status as a senior member on both the Senate Health, Education, Labor, and Pensions Committee – which oversees the National Labor Relations Act — and the Senate Judiciary Committee. In challenging Solomon’s authority, the Senator also reinforces an argument made by Boeing in its defense.
Boeing’s formal response to the NLRB filed on May 4 challenges Solomon’s status, the 14th and final item in the list of the company’s defenses: “The Complaint is ultra vires because the Acting General Counsel of the NLRBdid not lawfully hold the office of Acting General Counsel at the time he directed that the Complaint be filed.” Ultra vires means outside of one’s authority. (continue reading…)
Stephen Jacobs – NAM
A commonly held misperception that U.S. manufacturing companies investment abroad necessarily means the loss of jobs here in the United States. This misperception fails to understand the nature of U.S. foreign direct investment (FDI) abroad, which is mostly to serve the local market. Why else would nearly half of multinational manufacturers’ workers be located in high-wage Europe and Canada? In 2008, over 70 percent of U.S. manufacturing foreign direct investment by value was in developed countries, and only 4 percent of total FDI was in China.
Fewer than 10 percent of these overseas workers are in China. Even during the relatively high growth years from 2000-2008 manufacturing jobs at U.S. manufacturing multinationals’ foreign affiliates increased by only 314,000 – and more than a third of those were located in Europe.
Roughly 90 percent of these foreign manufacturing affiliates’ sales were to local markets, not to export back to the United States. Foreign affiliates are key export targets for U.S. manufacturing multinational companies. In 2008 alone these affiliates received nearly half ($240 billion) of their total U.S. parent’s exports.
In 2008 the U.S. exported 22 percent of U.S. manufactured products. U.S. manufacturing investments overseas are simply not the cause of the trade deficit. Taking a close look at the figures shows that, excluding petroleum and coal products, manufacturing multinational corporations actually produced a trade surplus in 2008 of over $100 billion! These are the facts about U.S. manufacturing investment abroad.
Stephen Jacobs is director of international business policy for the National Association of Manufacturers.
Chad Moutray - NAM
The Bureau of Labor Statistics reported this morning that the U.S. unemployment rate rose from 8.8 in March to 9.0 percent in April. Despite this, there were 244,000 additional non-farm payroll jobs, with gains widespread across a number of industries, including manufacturing.
Manufacturing employment increased 29,000 for the month, with 19,000 in durable goods industries and 10,000 in nondurables. The largest manufacturing employment gainers for April were food manufacturing (up 7,200), machinery (up 5,200), fabricated metal products (up 5,100), and computer and electronic products (up 4,000). Average hourly earnings in manufacturing also edged higher in April, from $23.56 to $23.60. Similarly, the index of average number of hours worked among manufacturers moved from 84.9 to 85.1. Overall, average weekly earnings in manufacturing are up 2.3 percent since last April.
This report is positive news for manufacturing, showing the recovery continues to move in the right direction with employment with 250,000 net new jobs created since December 2009. However, we are not seeing as large of employment gains as we would hope to at this point in the recovery, mainly due to uncertainty still facing businesses such as higher energy prices and increased regulation. Manufacturers use one third of our nation’s energy supply and as prices continue to increase it will only have a larger drag on the manufacturing sector and the economy.
Update: This version corrects an earlier error regarding the average number of hours worked.
Chad Moutray is chief economist for the National Association of Manufacturers.
No comments:
Post a Comment