Change was afoot in Europe last week, as both the Greek and Italian governments had leadership changes. Two economists – Mario Monti in Italy and Lucas Papademos in Greece – are in the process of setting up new governments as the premiers of their respective nations. The tasks before them are monumental, and it is clear that Europe's challenges are far from over. Fears of recession on the continent persist, with many commentators suggesting that Europe is already in a recession. Nonetheless, worries of a larger financial collapse eased by week's end – a sign that markets were mollified by these political changes, at least for the time being.
Fears of a recession in the United States also lessened in the past few weeks. On Friday, the Wall Street Journal reported that economists in its survey cut the chance of a recession from 1 in 3 in September to 1 in 4 today. Improved optimism was also observed for consumers by the University of Michigan and Thomson Reuters and for small business owners by the National Federation of Independent Business. While respondents continue to cite concerns about the economy and sentiment indices remain subpar overall, sentiment is moving in the right direction. In addition, the Census Bureau observed higher wholesale sales and a lower trade deficit in September, with manufactured goods exports up 15 percent over the past year.
Many of the indicators released last week were mixed. On the employment front, the Bureau of Labor Statistics said that job openings were up over the past year, with 10,000 new job postings in manufacturing in September (of which 9,000 were in the durable goods sectors). Yet, net hiring among manufacturers was negative for the month, with 7,000 more separations than hires. Job creation continues to be a challenge.
Perhaps reflecting economic uncertainties, the Federal Reserve reported that lending demand for commercial and industrial loans was lower in October, reversing gains in demand observed in past surveys. On the other hand, consumer debt rose, particularly for nonrevolving credit accounts such as auto and student loans. Recent data also indicated a falling savings rate – which could hinder consumer spending growth moving forward.
This week, we will receive new data on industrial production as regional measures of manufacturing activity from Federal Reserve Banks in New York and Philadelphia. Given recent data, each of these should continue to see improvement. Meanwhile, the Bureau of Labor Statistics will note price changes at the consumer and producer level for October. While inflationary pressures have eased since the spring, manufacturers continue to cite elevated raw material prices as a major concern, especially as producer prices for manufacturers' final goods have risen 9 percent over the past year. Finally, new housing starts data will give us a sense of whether last month's improvements in residential construction activity were short-lived or the beginning of an upward trend.
Chad Moutray
Chief Economist
National Association of Manufacturers
SEPTEMBER TRADE DEFICIT NARROWS
Today in Manufacturing
U.S. trade deficit fell to the lowest point this year as foreign sales of American-made autos, airplanes and heavy machinery pushed exports to an all-time high ... continue
HOW TO CONFRONT THE TALENT CRISIS IN MANUFACTURING
Quick Manufacturing News
The manufacturing skills gap is reaching threat levels. While manufacturers recognize the importance of recruiting and developing talent, many continue to depend on outdated, informal approaches for finding talent, developing skills, and improving performance. Click to continue
MANUFACTURERS: ADMINISTRATION’S DRILLING PLAN MISSES OPPORTUNITIES FOR JOB CREATION
NAM Capital Briefing
On Tuesday, November 8, the Department of Interior announced its proposed five-year plan for oil and gas leasing on the Outer Continental Shelf (OCS). The new plan makes available several lease sales in the central and western Gulf of Mexico and includes two new sales in the eastern Gulf. The plan also will open two sales in the Arctic off the coast of Alaska.
This approach is a good step toward opening more leases to drilling and exploration, but it does not go far enough.
Manufacturers use one-third of our nation’s energy supply, which makes energy access vital to their ability to compete. In addition, it is 20 percent more expensive to manufacture in the United States compared to our major trade partners.
In a press release announcing the plan, Interior Secretary Ken Salazar said, “Expanding safe and responsible oil and gas production from the OCS is a key component of our comprehensive energy strategy to grow America’s energy economy, and will help us continue to reduce our dependence on foreign oil and create jobs here at home.”
With 9 percent unemployment, the NAM believes the government should look at all avenues to grow jobs and boost investment—that includes opening additional areas for leases.
The Interior Department’s plan does not come close to maximizing our nation’s full potential in terms of OCS oil and gas reserves. Allowing these reserves to be tapped would create thousands of jobs and aid our struggling economy. Manufacturers urge the Interior Department to include potential lease sales in the Mid- and South Atlantic, which were included in the previous five-year plan. Manufacturers also would like to see a more robust plan that would include additional lease sales in the Eastern Gulf of Mexico, Atlantic or Pacific.
This plan does not reflect the energy needs we have as a country.
“The recovery is struggling to gain traction and jobs are badly needed; now is not the time to limit our options and tie our hands when it comes to access to affordable energy. Less than 4 percent of the OCS is currently under lease. Secretary Salazar’s proposed five-year plan is profoundly disappointing,” said NAM Vice President for Energy and Resources Policy Chip Yost.
The drilling proposal comes as manufacturers await a decision from the Administration on the Keystone XL pipeline—a project that will provide manufacturers access to affordable energy and will create as many as 20,000 jobs during its construction. Further, the Perryman Report estimates that the project will create an additional 118,000 indirect jobs.
On Monday, November 7, it was reported that President Obama may delay the decision on the pipeline until late 2012, after the elections. The State Department had set a deadline of year’s end to determine whether the pipeline is in the national interest. The Keystone XL, which would run from Canada to the Texas Gulf Coast, needs a permit from the State Department because it crosses a national border.
Manufacturers are looking to Washington for policies that will help them grow and compete. OCS drilling and the Keystone XL pipeline are real tools in working toward economic security, job creation and prosperity. Click here to view the full report from the Department of Interior, and here for the NAM’s statement on the Keystone XL delay.
SENATE TAKES UP RESOLUTION TO NULLIFY UTILITY REGULATIONS.
NAM Capital Briefing
On Wednesday, November 9, the NAM key-voted a resolution to disapprove the Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR). A Senate vote is expected on Thursday, November 10. Issued on July 7, 2011, the CSAPR sets stringent emission limits for 27 states and calls on both states and affected facilities to comply with the new rules by January 1, 2012. Manufacturers are concerned that the new rules will trigger higher energy prices, compromise grid reliability and lead to more job losses, threatening global competitiveness. S.J. Res. 27, introduced by Sen. Rand Paul (R-KY), would provide manufacturers and utilities with the regulatory certainty necessary to create jobs and lead our economic recovery.
SENATE PANEL CLEARS TWO-YEAR TRANSPORTATION PROPOSAL.
NAM Capital Briefing
On Wednesday, November 9, the Senate Committee on Environment and Public Works unanimously approved a two-year surface transportation reauthorization proposal. The Moving Ahead for Progress in the 21st Century Act (MAP-21, S. 1813) would allocate funds at current levels—$85.3 billion over two years—for surface transportation construction and maintenance projects. The Senate still must find $12 billion not covered by the Highway Trust Fund, and the Senate Committees on Finance, Banking and Commerce must each approve certain provisions of the proposal within their jurisdictions before the bill is eligible for consideration by the full Senate. The bill would create a new core program, the National Highway Performance Program, by consolidating several current programs charged with federal highway and bridge construction and maintenance. Overall, the bill would consolidate the number of federal surface transportation programs from about 90 down to less than 30. The proposal also emphasizes improved freight movement through the creation of a new program called the National Freight Network Program. Under the program, the Department of Transportation would be required to establish a primary freight network and develop a National Freight Strategic Plan.
MORE THAN ONE THOUSAND ORGANIZATIONS SIGN ON TO SUPPORT TAX EXTENDERS
NAM Capital Briefing
The NAM served a key role in sending a Broad Tax Extenders Group letter to Congress on Wednesday, November 9. The letter was signed by more than 1,500 businesses, associations, community development organizations and non-profit organizations. The tax extenders important to manufacturers include the Controlled Foreign Corporation (CFC) look through rules, deferral for active financing and the research and development (R&D) tax credit. If tax extenders are important to your company, the NAM urges you to send the letter to your members of Congress with a message about the positive impact associated with extending these temporary tax provisions before they expire. While many in Congress focus on much-needed tax reform, the letter makes a strong case for why these extenders cannot wait until lawmakers agree on how to revamp the tax code.
APPLICATIONS FOR UNEMPLOYMENT AID DROP TO 390,000
Today in Manufacturing
The number of people who applied for unemployment benefits last week fell to the lowest level since April... continue
PEAK SEASON HAS ALREADY PEAKED
Quick Manufacturing News
With most holiday season merchandise already on its way to store shelves, import cargo volume at the nation's major retail container ports has started to decline for the fall, and November is forecast at 1.9% below the same month last year, according to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates. Click to continue
A RENAISSANCE FOR MEXICAN MANUFACTURING?
Today in Manufacturing
Mexico is not far from breaking out as one of the key trading nations in the world, and there's much to gain from our cooperation ... continue
CONCERN OF ANOTHER RECESSION LESSENED BY RECENT DATA ON US MANUFACTURING
Bloomberg News
Bloomberg News reports, "Machinery stocks may outperform the market through the end of the year as new orders rebound, helping to defy concerns about another US recession." US "manufacturers booked $32.6 billion in new orders for machinery equipment in September, the most since July 2008, according to data from the Census Bureau released Oct. 26. The Standard & Poor's Supercomposite Machinery Index, which includes Caterpillar Inc. (CAT) and Deere & Co. (DE), has gained 26 percent since Oct. 3, while the S&P 500 has risen 13 percent." Ann Duignan, an analyst at JPMorgan Chase & Co., said that "there's 'no evidence' of a collapse in North American manufacturing as shipments still are growing."
EXPERTS CONCERNED BY DECLINE IN YOUNG AMERICANS MANUAL SKILLS
Dayton (OH) Daily News
According to the Dayton Daily News, "Young Americans are spending more time with electronic media and fewer hours working with their hands, according to several studies, possibly leaving them out of the running for well-paying, high-skilled jobs in the future." Experts believe that "the declining number of young people who are capable of working with their hands could create a shortage of skilled workers to replace an aging workforce in the US manufacturing industry. Some 2.7 million manufacturing employees are age 55 or older and likely to leave the labor force over the next 10 years, according to the National Association of Manufacturers."
FEATURE: THE SECRET TO A QUALITY PROCESS
Today in Manufacturing
Since mankind first began to craft tools or goods, we have faced the ever-present conundrum of balancing speed of execution with quality ... continue
REGULATIONS, CORPORATE TAXES 'STRANGLING' U.S. MANUFACTURING
Quick Manufacturing News
A forthcoming national manufacturing strategy developed by the Council on Competitiveness will urge Washington to address policies that 'are very unfriendly to 21st-century manufacturing in America,' council CEO says. Click to continue
ROBOTS CREATING JOBS FOR HUMANS
Quick Manufacturing News
One million industrial robots currently in operation have been directly responsible for the creation of close to three million jobs, a recent study concluded. Click to continue
JAPAN'S ECONOMY RISES OUT OF EARTHQUAKE SLUMP
Today in Manufacturing
The world's No. 3 economy expanded at an annualized rate of 6 percent in the July-September period, the first growth in four quarters ... continue
IMPLEMENTING A SUCCESSFUL QUALITY MANAGEMENT SYSTEM
Today in Manufacturing
All businesses need a Quality Management System, but many do not have one, and if they do, it may not be managed very well ... continue
US COMPANIES ARE FEELING IMPACT OF EUROPEAN CRISIS
Today in Manufacturing
Worries that Europe's crisis could worsen and spread are spooking investors and consumers just as the holiday shopping season nears ... continue
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