SmartBrief on Leadership
Too many companies treat innovation as a tool to meet whatever challenge a senior executive decides is most pressing, writes Jeffrey Phillips. That makes it harder for researchers to come up with the kind of paradigm-shifting breakthroughs that create radical new products and processes, Philips argues. "Please remember that innovation is, first and foremost, an act of discovery, often of things you may not have intended to discover," he writes. Innovate on Purpose
Daily Pulse - Michael O'Malley, Marketing and Communications, USTAR
The ability of nanotechnology to fabricate and optimize materials and processes should prove to have a great impact on our transition to a new energy economy, says University of Utah USTAR researcher Ling Zang, Ph.D. Zang has edited a new book entitled "Energy Efficiency and Renewable Energy through Nanotechnology."
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POLICYMAKERS MUST STAY FOCUSED ON THE ECONOMY
NAM Capital BriefingMuch of the talk the last few days has centered around the expectation that tomorrow's jobs numbers will decline and that our economy is not growing at the rate it should be. These expectations coupled with recent economic indicators suggest that manufacturing is cooling after months of growth.
On Tuesday, the Institute for Supply Management's Purchasing Managers' Index (PMI) showed a dramatic drop in manufacturing's growth. The PMI fell almost seven points from April to May, dropping to 53.5 last month; numbers over 50 signify growth. So, while manufacturing is still increasing output, growth has slowed.
Additionally, after nine straight months of job creation, manufacturers shed 9,000 jobs in May, according to a recent ADP National Employment Report. Numbers across the whole economy were down, as only 38,000 nonfarm payroll jobs were added last month, well below expectations.
Despite these disappointing numbers, manufacturers remain optimistic. Recent surveys suggest that many expect increases in sales and hiring as well as in investment back into their own businesses.
Amid this economic uncertainty, Congress continues to debate what to do about our debt limit and spending. The NAM is very concerned about the country's fiscal path and continues to put pressure on policymakers to act on both issues. Manufacturers believe that we need to raise the debt ceiling in order to meet our financial obligations and to maintain the confidence of investors around the world. At the same, we believe that Congress needs to address the spending crisis, including reform of the tax code and entitlement programs.
On Tuesday, May 31 the House of Representatives rejected an effort to raise the debt limit without reducing spending on an overwhelming bipartisan vote. This vote signals that members of both parties recognize the need to address unsustainable federal spending. Treasury Secretary Tim Geithner has said that Congress has until August 2 to raise the debt limit above its current $14.3 trillion level.
As Congress continues its discussions and considers possible fiscal reforms, the NAM urges members to pay particular attention to the economic recovery. The NAM's Manufacturing Strategy contains a number of proposals that would spur economic growth and thus, in conjunction with spending reforms, help reduce annual budget deficits.
CONGRESS TAKES STEPS ON CRITICAL MINERAL LEGISLATION
NAM Capital BriefingOn May 26, Senator Lisa Murkowski (R-AK) introduced a bipartisan bill that deals with critical minerals. Senator Murkowski drafted the legislation in April with input from the NAM. The bill focuses on promoting interagency communication to speed up the permitting process; restoring a domestic supply chain of critical minerals; and establishing a wider international market for the minerals. In the House, Representatives Lamborn (R-CO) and Johnson (D-GA) have introduced bills to address the shortage of rare earth and other critical minerals. Representative Lamborn's bill would evaluate the nation's critical mineral resources, needs, and the ability to meet those needs. Details: Mahta Mahdavi, (202) 637-3176.
ENVIRONMENTAL PROTECTION AGENCY RELEASES ITS REGULATION REFORM
PRIORITIES
NAM Capital BriefingIn response to President Obama's executive order that calls on federal agencies to identify regulations that are inefficient or too costly, the Environmental Protection Agency (EPA) released its regulatory reform priorities in its Preliminary Plan for Periodic Retrospective Reviews of Existing Regulations. The plan outlines the rules and regulations the agency is planning on reviewing and updating in the coming months. The priority list includes measures relating to fuel economy, water quality, and pesticide regulations. The EPA did not include some of the more onerous existing regulations for manufacturers - such as the agency's regulation of greenhouse gas emissions from stationary sources. The plan can be viewed here. The NAM responded to the EPA's request for public feedback in April; the submitted comments and concerns can be found here. Details: Alicia Meads, (202) 637-3174 and Mahta Mahdavi, (202) 637-3176.
NAM SMM CHAIR TALKS RESEARCH AND DEVELOPMENT ON CAPITOL HILL
NAM Capital BriefingOn May 26, Small and Medium Manufacturers Group Chair Kellie Johnson participated in a congressional briefing in conjunction with the House Research and Development Caucus and the House Modeling and Simulation Caucus on May 26 to discuss how her company, ACE Clearwater Enterprises, has benefited from high performance computing modeling and simulation. She stressed how small and medium-sized companies can use this technology to provide better customer service and improve their bottom line. Johnson was joined by two NAM members, Dr. Stephen Wheat of Intel and Alice Popescu-Gatlan of John Deere. The session was co-hosted by the National Center for Manufacturing Sciences, an NAM member association that brings manufacturers together to collaborate on research and development and the use of advanced technology. To read the NCMS press release, click here. For more information about NAM's efforts in technology policy, contact Brian Raymond, (202) 637-3072.
NAM Briefing
Fed by a wave of negative economic reports, there is growing speculation in the media that the US is in danger of suffering a double-dip recession. The weak economic numbers received prominent coverage from the three networks last night -- nearly 15 minutes combined -- including a lead story on NBC Nightly News that suggested another recession may very well be in the offing. A secondary theme of the coverage last night and this morning is that the federal government is unwilling and/or unable to stimulate the economy any further due to widespread concerns about the mounting deficit.
Quick Manufacturing News
The Global Shippers’ Forum announced it will oppose any steps by the global shipping industry to impose a bunker levy on shippers as the means to fund an environmental compensation plan to reduce carbon emissions. Click to continue
Quick Manufacturing News
The slowdown was most pronounced in the manufacturing sector, attributed to a drop in orders and supply chain disruptions caused by the earthquake and tsunami in Japan earlier this year. Click to continue
Chad Moutray NAM Shopfloor Blog
This morning, the Bureau of Labor Statistics reported that nonfarm payroll employment rose by just 54,000 in May, its slowest pace in 8 months. The April nonfarm payroll numbers were also revised down slightly, with a gain of 232,000 (instead of 244,000) new jobs. The unemployment rate in May rose from 9.0 to 9.1 percent. Manufacturing employment dipped by 5,000, and with the accompanying revisions, we can now say that manufacturers have increased employment only by 243,000 since December 2009.
Today’s report clearly indicates that rising raw material and energy prices are taking a toll on the economy, particularly when you look at the sectors which are hardest hit. While overall manufacturing output continues to grow, there are definitely reasons for caution ahead.
Digging deeper into the manufacturing numbers, employment changes in durable goods industries gained 8,000 jobs on net, while nondurables lost 13,000.
Employment gains in sectors such as fabricated metal products (+6,500), machinery (+5,500), primary metals (+3,100), and furniture and related products (+2,200) were offset by losses in sectors such as transportation equipment (-8,800), food manufacturing (-7,000), printing and related support activities (-4,300), and paper and paper products (-2,500).
Average weekly hours in manufacturing remained relatively stable, going from 40.8 hours in April to 40.9 hours in May, with 3.2 hours of overtime on average in each month. Meanwhile, average weekly earnings also edged higher for manufacturing workers, up from $953.04 in April to $961.41 in May.
Other sectors in the economy were mixed. Some areas of strength include professional and business services (+44,000), health care (+17,000), transportation and warehousing (+8,000), and mining (+7,000). There was continued weakness in the following sectors, however: local government (-28,000), retail trade (-8,500), and leisure and hospitality (-6,000). Most of the other major sectors remained largely unchanged.
An important point to note is that the durable goods sector, with the exception of transportation, did relatively well, which we hope is a good sign moving forward. However, the uncertainty of the policies coming from Washington continues to weigh heavily on manufacturers.
Chad Moutray is chief economist, National Association of Manufacturers.
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