Published with the help of Martinelli Custom Publishing and printed by Maar Printing Services, HV MFG is intended to raise awareness of the manufacturing sector in the Hudson Valley region.  It focuses on the people and the technologies that make things in the region.  It also explores some of the many issues that are of concern to manufacturers including workforce development, innovation, public policy.

A digital version will soon be available as well.

USA Today (4/18, Davidson) says that while the report showed economic growth overall, activity in some regions was curtailed due to higher payroll taxes, higher gas prices, Federal spending cuts, and unusually cold weather.

The Wall Street Journal (4/18, Sparshott, Subscription Publication) quotes the report as stating, “Labor market conditions remained unchanged or improved slightly, and reports of hiring were more widespread in the manufacturing, residential construction, information technology and professional services sectors.”

Reuters (4/18, Bull) also says that according to the Fed, “Most districts said residential and commercial real estate improved markedly since the last report.”

• 60% of respondents reported difficulty filling current positions
• Most vacant positions are in the  areas of production, assembly and customer service which require only a high school degree.
• The next level position that is very difficult to fill – and key to the success of the firms – is at the engineer level.
• 64% of respondents believe the lack of skilled labor is having a negative affect on their business.  Of those 45% say that negative affect is very strong.
• 40% of respondents ranked “Making sure high school students are proficient in basic skills (reading, writing, math) was the most important thing the high schools could do to provide a skilled manufacturing workforce while 22% responded that internships/on-the-job training was the best way to prepare high school students.
  More to come as we sort through the data.

Adam Davidson Discussed the JOLTs Report

This past Tuesday, March 5th, the Manufacturers Alliance of New York joined the fray, though there are several differences with our group and the many others that are there. One difference is that w have no t-shirts, balloons or marching bands.  A second is that we pay our own way to be there, buy our own meals and don’t need to be scripted in what we say.  A third difference – we don’t ask for any money from the state government.  All we ask is for the state take a little less of our revenues and that it make the obstacles to production and growth a little less severe.

That is right, we ask for lower taxes and smarter regulations.

Were the state to accede to our request manufacturers across the state would very likely grow thus providing them with even more revenue to pay for the things all those other groups want – including more dollars for education, libraries, healthcare and the arts.

Our message is received, and even understood by many.  Perhaps in time the legislature will see that by helping us grow they will be able to help all the people they represent.

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Included in the Senator’s press release is this quote from your humble blogger:  “The Council of Industry commends Senator Gillibrand’s continued recognition of the important role manufacturing plays in our economy and we are pleased to support the Made in America Manufacturing Act,” said Harold King, Executive Vice President of the Council of Industry. “This Act, in conjunction with other initiatives such as renewing the R&D tax credit, will help our manufacturers compete in today’s global economy.”

In fact costs are most  pressing issue facing manufacturers today.  The cost of regulation, the cost of energy, the cost of tax increases the cost of new legislation.  At the Atlantic’s recent forum on manufacturing NAM president Jay Timmons articulated this point very well. Timmons argued that while infrastructure, immigration reform, and energy policy are all issues, the real one is taxes and regulation. A study from his organization found that it’s 20 percent more expensive to manufacture in the United States than anywhere else.

We hope Senator Gillibrand and Congressman Maloney will help get these costs under control.  That will really help ALL our members grow and add workers, not just the ones lucky enough to receive funding from the federal government.

The news that the US economy shrunk by 0.1% in the 4th quarter did not catch too many small and medium sized manufacturers by surprise.   They have been living the business roller coaster ride for several years and the last six months of 2012 included some extreme ups and downs.

“Late last year the National Association of Manufacturers released its Fiscal Shock study, which found that the fiscal cliff would reduce real GDP by 0.6% in 2012 from what it would have been without the fiscal cliff debate,” NAM Chief Economist Chad Moutray said. ”We saw manufacturers pulling back on spending and hiring at the end of last year as they worried about slowing sales and fiscal uncertainties.

Perhaps the biggest surprise in the GDP report was the size of the drop in federal spending -15 percent at an annual rate during the fourth quarter according to the Washington Post. Defense spending suffered an even bigger decline, dragging down growth by 1.3 percentage points. Many agencies began adopting contingency plans, instituted hiring freezes and delayed projects in anticipation of widespread budget cuts – all of which depress spending.” Still, the Post reports, “economists said the decline looks especially dramatic because government spending had jumped more than usual in the previous quarter. That may have been a reflection of government agencies and private contractors shifting spending earlier in the year in anticipation of budget cuts, boosting third-quarter growth at the expense of the fourth.”

“Even with the fiscal cliff partially averted, many concerns remain.” Commented NAM’s Moutray. “There are no budget solutions over sequestration, which could cost a million jobs by 2014. At the same time, headwinds overseas have taken a toll on manufacturing exports. While there has been some recent optimism in the markets, the key driver for manufacturers will be when confidence rises and sales consistently pick up.”

The NLRB’s activist and aggressive actions in recent years have raised significant concerns, including challenges to the constitutionality of the Board’s composition. Today’s ruling gives strong confirmation to those concerns and is a significant rebuke of what has become an increasingly overreaching NLRB.  The appointments in question were made as recess appointments because the Senate was unwilling to confirm them because they are considered by many Senators to be radical in their thinking on the role of the Board and their intent to ignore its statutory authority.

If this ruling stands, Chairman Mark Pearce will be the only properly seated member of the NLRB until August when his term expires. This ruling speaks volumes about the way the Board has been constituted and throws a significant roadblock in its rule-making ability.

For manufacturers that have been forced to deal with increased burdensome regulations, this is an important moment—perhaps a sign that we may see an NLRB in the future that will exist to improve employer–employee relations in this country.

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The monthly report of manufacturing activity compiled by the Federal Reserve Bank of New York said the general business conditions index was still negative — indicating a contraction in manufacturing — and fell about three points to negative 8.1 this month.

The continued decline is a result of the global economic slowdown, as Europe and Japan enter recessions and Chinese commerce stagnates, said Pearl Kamer, chief economist of the Long Island Association.

Although some manufacturers — mainly in the downstate area — said the effects of Sandy brought down revenue in October and November, the storm was no longer expected to be a factor in December business.

The new orders index fell seven points to negative 3.7, after rising above zero last month for the first time since June. The negative reading points to a decrease in demand.

In 2012 “uncertainty” was the word that best described manufacturers’ thoughts on the economy.  Throughout the year we it seemed we were always waiting for one thing or another; the election results, action on tax and spending cuts, for a solution to the Euro crisis or for action by the Federal Reserve of the European Central Bank.

The calendar is about to turn to 2013 and what has changed?  Well, obviously very little, but here are a few things we can expect in 2013:

More Regulation – The EPA, Department of Labor, NLRB, and Health and Human Services all took a bit of a regulatory holiday at the end of 2012 slowing the amount of red-tape being issued prior to Election Day.  With the re-election of President Obama we can expect that holiday to end.  Indeed the implementation of the Affordable Care Act alone will require the promulgation of hundreds of new rules by HHS.  EPA is expected to continue its march against coal and the NLRB has already begun to tilt the playing field in favor of labor.

Debt and Deficit – We will clearly be dealing with debt, deficit spending and tax issues in the year ahead. Even if Congress and the Administration do agree on a solution, the final plan will likely do little to ease our burgeoning deficit. Once again, Washington will fail to give manufacturers—and business in general—the certainty we need.

Taxes – Will go up.

Trade – Perhaps one bright spot will be a greater emphasis on free trade agreements.  Russia, Pacific Rim, and even the EU are seen as places where progress might be made to make markets more accessible to American manufactured goods.  Exports have been a bright spot for our members these past few years and trade agreements could make them even brighter.

Labor – The NLRB will continue to be the focal point of controversial decisions.  With the President’s recess appointment tipping the balance of the Board in 2011 and a lawsuit challenging the legality of the appointment due to be decided this year we can expect lots of activism form the Board in the coming months.  The successes of Ohio and Wisconsin may also encourage other states to take up right to work legislation. And the looming longshoreman strike will certainly impact any manufacturer who imports parts or materials, or exports their products.

The Council of Industry will continue its efforts to influence public policy so as to promote the growth of small and medium sized manufacturers.  We will work with our National and Statewide partners to communicate with our elected officials and federal regulators how pending legislation and regulations might impact our members and constantly remind them of the vital role manufacturing plays in our economy. Of course once any legislation or rule is implemented, we will assist you in complying.

Manufacturing is Vital. The Council of Industry is vital to Hudson Valley manufacturers.