Economists are often criticized for saying "on the one hand" and then "on the other hand." Last week's economic indicators provided another opportunity to weigh both sides, as results were mixed overall. While some measures saw improvement, the larger perspective is one of weakness. The Bureau of Economic Analysis revised its estimate of second-quarter 2011 GDP up to 1.3 percent, but such slow growth is hardly enough to crow about.
The chart above shows the average of the composite measures of manufacturing activity from the Dallas, Kansas City, New York, Philadelphia and Richmond Federal Reserve Banks. The result is a real trend, with a major deterioration in production activity in the past few months and some of the surveys indicating contraction. While the most recent sentiment surveys show a modest improvement, the overall indicator remains in contraction.
Of course, this is not the full story. As the Federal Reserve's Beige Book showed a few weeks ago, manufacturers in the Midwestern and Western regions are faring better than those located on the East Coast. Reports from Chicago and Kansas City last week, for instance, showed an expanding sector, with a notable rebound in the auto sector helping to lift these results. The Dallas Federal Reserve Bank also found a modest expansion in production, new orders, employment and capital spending. These surveys serve as a contrast to the Richmond one, which noted continued weaknesses. In that region, new orders contracted further – a discouraging sign moving forward.
Like their manufacturing counterparts, American consumers remain anxious about the economy. Two surveys of consumer sentiment were released last week, with both of them reporting a modest increase in confidence. Yet, it is also clear that individuals are more pessimistic than they were just a few months ago, with bad economic news and recent market volatility weighing heavily on respondents' minds. Uncertainty is never a good thing for economic growth. Consumer spending rose a modest 0.2 percent in August (partly by dipping into savings), and durable goods purchases were slightly lower. Moreover, new home sales were down 2.3 percent in August, continuing to challenge a housing market that remains depressed.
I am predicting that real GDP will grow by 1.4 percent in 2011. This suggests two things: there will not be a double-dip recession and real output will rise around 2 percent in the second half of this year. On the one hand, this suggests some modest improvements in the economic environment for manufacturers. Expectations for future growth in the industry remain positive even in these uncertain times. On the other hand, such slow growth is paltry at best and will continue to provide a number of headwinds, including slow employment growth. Moreover, this forecast assumes that European policymakers will be able to stem their fiscal and financial challenges.
This week, we will learn about employment growth for the month of August, both from ADP on Wednesday and from the Bureau of Labor Statistics on Friday. A few of the surveys suggest slight improvements in manufacturing employment intentions, so it will be interesting to see how these translate into real figures. Given that July saw no growth in overall nonfarm payrolls, any gain would be an improvement. Nonetheless, the unemployment rate is expected to remain around 9 percent.
Chad Moutray
Chief Economist
National Association of Manufacturers
KEY PRINCIPLES OF EFFECTIVE PRODUCT COST MANAGEMENT
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TECH FIRMS DOMINATE 'MOST VALUABLE' LIST
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IEA: STOP SUBSIDIZING FOSSIL FUELS
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The International Energy Agency wants world governments to curb state subsidies for fossil fuels as a way to help the environment and boost economies ... continue
BIG 3 SALES UP IN SEPTEMBER ON BIG TRUCKS
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GM's sales rose 20 percent compared with last September, and Chrysler saw its overall sales jump 27 percent ... continue
MANUFACTURING GROWTH PREVENTS STOCK HEMORRHAGING
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MANUFACTURERS IN THE COURT:
Labor Law
NAM challenges unauthorized NLRB union notice rule.
Early in September, the NAM filed suit against the National Labor Relations Board's (NLRB) new rule requiring that employers subject to the National Labor Relations Act (NLRA) post a notice about employees' rights. These rights include organizing into unions, bargaining collectively, discussing wages, benefits and working conditions, jointly complaining, striking and picketing. The rule creates a new unfair labor practice—failing to post the required notice—and would allow the NLRB to assume that an employer has an anti-union motive by failing to post the notices, which in turn could result in more complaints being issued against employers and a broader range of penalties under other NLRB requirements. It also allows the Board to waive the statute of limitations for bringing all other unfair labor practice charges if an employer does not post the notices. The rule also requires foreign language posting if 20 percent of the workforce speaks another language. Posting would be mandatory for almost all private employers by November 14, 2011. The NAM contends that the posting requirement is beyond the NLRB's authority under the NLRA and is asking the court prohibit the Board from implementing, enforcing and applying the rule. On September 28, we moved for a preliminary injunction and an expedited hearing to resolve the case prior to its effective date. NAM v. NLRB (D.D.C.).
Environmental
Ozone regulation still alive, despite recent victory.
While it is true that EPA is backing off its plan to further tighten the ozone National Ambient Air Quality Standard (NAAQS), the existing regulations are still the subject of an NAM suit challenging their legality. The regulations, adopted in 2008, are the subject of litigation that has been on hold for 2½ years, and EPA asked the appeals court in September to resume briefing, as we had asked nearly 2 years ago. We anticipate that the court will agree, and that the legality of the current regulation will be fully briefed by mid-2012. An environmental group recently sued EPA, alleging the agency has not moved quickly enough to implement the current .075 parts-per-million standard. Mississippi v. EPA (D.C. Cir.).
New evidence supports NAM's greenhouse gas challenge.
Our litigation against EPA over 4 regulations that together act to regulate greenhouse gases found significant support in a report issued by the EPA's Inspector General on September 26. The report found in part that EPA did not make an independent assessment of key scientific evidence that it relied on in issuing its endangerment finding. We have notified the court that the report is directly relevant to EPA's claim that it exercised independent judgment when reviewing the scientific evidence. Our final brief is due Oct. 17. NAM v. EPA (D.C. Cir.).
NAM fights new local restrictions on solid waste.
A county ballot initiative in California restricts the volume of solid waste that can be hauled in from other counties. Such flow-control limits have been struck down under the Commerce Clause in other cases, but the unique intrastate question in this case presents a new wrinkle. The NAM and other groups filed an amicus brief September 6 urging the court to recognize that city and county regulations like this interfere with interstate commerce and could be used by thousands of jurisdictions against many other goods and services. Sierra Club v. County of Solano (Cal. Ct. App.).
Product Liability
Duty to warn about hazards of another manufacturer's products.
A respirator manufacturer was sued by a party alleging that the company had a duty to warn individuals who clean or otherwise handle the equipment about asbestos hazards from products made, sold or supplied by third parties. The trial court rejected the claim, and the NAM recently filed an amicus brief in this appeal supporting that result. Our brief explained the adverse impact that expanding liability rules would have on companies already being sued as part of the wave of asbestos litigation. Macias v. Saberhagen Holdings, Inc. (Wash.).
CONGRESS ADDRESSES CHINESE CURRENCY MANIPULATION
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PERSONAL PROTECTION EQUIPMENT
by Greg Summerhays – Workers Compensation Fund
Personal protective equipment (PPE) is designed to protect employees from serious workplace injuries. As an employer, you must perform a hazard assessment of your workplace to determine if hazards are, or are likely to be, present that require the use of PPE. You should not rely on the use of PPE alone to provide protection against these hazards. Engineering controls and/or sound manufacturing practices must first be utilized to eliminate the hazard.
When PPE is necessary, you must:
- Select, provide and require the appropriate PPE for each affected employee.
- Instruct employees in the proper use of PPE.
- Communicate PPE selection decisions to each affected employee.
- Select and provide PPE that properly fits each affected employee.
Examples of required equipment to be provided by the employer include welding or wire mesh gloves, respirators, hard hats, specialty glasses and goggles, specialty foot protection such as metatarsal shoes and lineman's boots with built-in gaffs, face shields, rubber gloves, blankets, cover-ups, and hot sticks and other live-line tools. In the past, there has been confusion concerning whether employers or employees must pay for the required PPE. OSHA has made it clear that failure of an employer to pay for PPE that is not commonly used by the employee away from the job is a violation.
Examples of PPE that may be provided by employees include non-specialty safety glasses, safety shoes, and cold weather outerwear such as that worn by construction workers. However, the employer must pay for shoes or outerwear that cannot be safely worn off site due to contamination by carcinogens, or toxic or hazardous substances.
A hazard assessment to assess the need for PPE or a survey of the workplace must be conducted. The purpose of the survey is to identify the sources of hazards to employees. Injury and accident data (OSHA logs, first aid logs, and workers compensation injuries) should also be reviewed to help identify problem areas. Consideration should be given to each hazard category and the potential source of the hazard.
Basic hazard categories include:
- Impact - head, eye or foot.
- Penetration - foot, hand or body.
- Compression (roll-over) - foot or body.
- Chemical - splashes to eyes, face or body, and exposures to hands and arms.
- Heat - burns to skin or eyes.
- Harmful dust - eye or lung damage.
- Light (optical) radiation - eye or face burns.
PPE Determination
- Identify the potential hazards and the type of PPE that is available and what protection it provides.
- Compare the capabilities of various types of PPE with the hazards associated with the environment.
- Select PPE that provides a level of protection greater than the minimum requirements.
- Select PPE that will properly fit each employee. Employee Training
OSHA provides the following tips on training your employees on how to properly use PPE.
At a minimum, each employee must know:
- When and what PPE is necessary.
- Which PPE has been selected for each process.
- How to properly put on, wear, adjust and take off PPE.
- What the limitations are of the PPE.
- When the PPE is defective and should no longer be used.
- How to replace defective PPE.
- How to care for, maintain, store and dispose of PPE.
In some cases workers must shield most or all of their bodies against hazards in the workplace, such as exposure to heat and radiation as well as hot metals, scalding liquids, body fluids, hazardous materials or waste, and other hazards. Workers exposed to harmful substances through skin absorption, severe cuts or lacerations, severe abrasions, chemical burns, thermal burns, and harmful temperature extremes will benefit from hand protection.
Wearing earplugs or earmuffs can help prevent damage to hearing. Exposure to high noise levels can cause irreversible hearing loss or impairment as well as physical and psychological stress. Earplugs made from foam, waxed cotton, or fiberglass wool are self-forming and usually fit well. Clean earplugs regularly, and replace those you cannot clean.
Hard hats can protect your employees from head impact, penetration injuries, and electrical injuries such as those caused by falling or flying objects, fixed objects, or contact with electrical conductors. OSHA regulations require employers to ensure that workers cover and protect long hair to prevent it from getting caught in machine parts such as belts and chains.
In addition foot guards and safety shoes can help prevent injuries by protecting employees from hazards such as falling or rolling objects, sharp objects, wet and slippery surfaces, molten metals, hot surfaces and electrical hazards.
Besides spectacles and goggles, PPE such as special helmets or shields, spectacles with side shields, and face shields can protect employees from the hazards of flying fragments, large chips, hot sparks, optical radiation, splashes from molten metals, as well as objects, particles, sand, dirt, mists, dusts, and glare.
When engineering controls are not feasible, workers must use appropriate respirators to protect against adverse health effects caused by breathing air contaminated with harmful dusts, fogs, fumes, mists, gases, smokes, sprays, or vapors. Respirators generally cover the nose and mouth or the entire face or head and help prevent illness or injury. A proper fit is essential, however, for respirators to be effective.
Employees must be retrained whenever:
- Workplace and type of PPE changes render the previous training obsolete.
- You observe inadequacies in an employee's knowledge or use of PPE.
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