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Survey: Rising Energy and Raw Material Costs Dampen Optimism

A NAM/Industry Week Survey of manufacturers shows that many firms are predicting higher sales and employment in 2012, but that the rising costs of energy and raw materials are cause for concern.

Chad Moutray, chief economist for the National Association of Manufacturers, wrote in the last NAM/IndustryWeek Survey of Manufacturers released in December, “the percentage of manufacturers who were either somewhat or very positive about their business outlook jumped to 80%, up from 65% in the September survey.” Moutray wrote, “The outlook for growth this year improved with the revival in optimism at the end of last year. I am currently predicting 2.6% growth in real GDP in 2012, which is in line with other estimates.”

Moutray is also the author of the very popular “Monday Manufacturing Economic Report the Council of Industry circulates to its members each week.


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Skills Gap/Business Climate Dominated Discussions at Manufacturing Days

The fact that manufacturing is vital to the growth of the economy in New York, and to the corollary of improving the state government’s financial situation, seems to have sunk in to the legislators and administration officials who attended and participated in the Manufacturing Alliance of New York States annual Manufacturing Days March 5 and 6 in Albany. What should, and more importantly can, be done to help became the topic of discussion during the event.

Taxes (corporate franchise, energy, highway use) regulations (DOT,DEC, DOL) and other costs of doing business (energy workers’ compensation) remain the greatest impediment to the growth of the manufacturing sector in New York. Legislators participating on our panel discussion felt that the tide was turning on these issues. All believe Governor Cuomo is setting the right tone and moving the bureaucracy in the right direction on these issues.

Rising near the top of issues of concern to NYS manufacturers this year was the Skills gap. An aging workforce, fewer and fewer students pursuing careers in the sector, a secondary educational system tilted toward preparing students for college, and population under the misconception that manufacturing is fading in this country have all led to a dramatic shortage of skilled workers.Throughout the event in Albany manufacturing CEOs one after the other told of orders and growth foregone over the lack of workers to produce the goods.

Lawmakers are especially sympathetic to this issue.

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State Of the Union – Administrations Actions Don’t Match the Words

The NAM Press Release on the State of the Union and the Administration’s discussion of manufacturing is dead on.

Here is a sample:

“The Obama Administration must take action to put an end to the rampant overregulation and overreach by the National Labor Relations Board and the Environmental Protection Agency. We need action on comprehensive tax reform that will lower the corporate tax rate so that we can compete for investment across the globe. Tax reform must also lower the rates of the 65 percent of manufacturers that file as individuals for the good of the economy and jobs. An aggressive trade policy that opens new markets is essential so America does not stand idle while other nations move into those markets. As consumers of one-third of our nation’s energy supply, manufacturers embrace a true ‘all-of-the-above’ energy policy – not one subject to the political winds.”

Here is the Link:

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Empire State Manufacturing Survey Points to Growth

Manufacturing in the New York region expanded in January at the fastest pace in nine months, reflecting improving orders, sales and employment.
The Federal Reserve Bank of New York’s general economic index rose to 13.5, the highest level since April, from a revised 8.2 in December.
On a series of supplementary survey questions, 51 percent of respondents indicated that they expect their workforces to increase over the next six to twelve months, while just 9 percent predicted declines in the total number of workers—results noticeably more positive than in the June 2011 survey. The current results were slightly more positive for larger establishments (150 or more employees) than for smaller ones. High expected sales growth was widely deemed to be the most important factor among those who planned to add workers. When asked about anticipated changes in wages per worker, 80 percent of respondents indicated that wages would increase by less than 5 percent and almost all of the remaining 20 percent said wages would stay about the same. When asked about changes in benefits per worker, however, a sizable proportion, 37 percent, estimated that increases would exceed 5 percent.

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NPR Story Contrasts “Old” and “New” Manfuacturing

The Media is finally starting to understand not only the important role manufacturing plays in our economy, but also its high tech, high skill nature. In this article from NPR’s Morning Edition, Correspondent Adam Davidson visits Greenville South Carolina to discuss manufacturing’s past and future. Mr. Davidson was a guest at a Council of Industry Directors meeting in November of 2010 where we discussed this very thing. For manfuacturing to grow and lead our nation into economic prosperity we need to change the public perception of the sector from “Dumb, Dirty, Dangerous and Disappearing” to “Smart, Sustainable,Safe and Surging.”

Listen to the story:

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