MANUFACTURING UPDATE

- July 2015 -

1. LATEST POLICY

==================================

Sens. Warner, Blunt Lead Coalition in Introducing Bipartisan Infrastructure

Legislation

U.S. Sens. Mark R. Warner (D-VA) and Roy Blunt (R-MO) led a bipartisan coalition of eleven Senators in
introducing legislation to establish a new infrastructure financing authority to help states and localities
better leverage private funds to build and maintain the nations outdated infrastructure. The Building
and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act helps to address
the nations alarming investment shortfall in maintaining and improving our transportation network,
water and wastewater systems and energy infrastructure. The legislation would provide an additional
financing tool for states and localities to create new jobs here at home while also increasing our nations
economic competitiveness.
The American Society of Civil Engineers (ASCE) estimates that we need to invest an additional $1.6
trillion in our nations infrastructure to bring it to a good state of repair. For example, as of 2012, of the
more than 600,000 bridges in the U.S., 24.9 percent were either functionally obsolete or structurally
deficient. Nationally, our bridges are, on average, 42 years old, and need an estimated $76 billion to
repair and replace. Similarly, the average age of the 84,000 dams in the country is 52 years old, and the
Association of State Dam Safety Officials estimates that aging and high-hazard dams require an
investment of $21 billion to repair.
To help address this funding shortfall for our nations transportation, water and energy infrastructure,
the BRIDGE Act will establish an independent, nonpartisan financing authority to complement existing
U.S. infrastructure funding. The authority would provide loans and loan guarantees to help states and
localities fund the most economically viable road, bridge, rail, port, water, sewer, and other significant
infrastructure projects. The authority would receive initial seed funding of up to $10 billion, which could
incentivize private sector investment and make possible $300 billion or more in total project investment.
The authority is structured in a way to make it self-sustaining over time without requiring additional
federal appropriations.
More: Warner Release

Senate Passes Murphy Buy American Amendment to Boost American

Manufacturing

The U.S. Senate passed US Senator Chris Murphys amendment to the National Defense Authorization
Act that will increase Congressional oversight of the U.S. Department of Defense (DoD) by requiring
more transparency about DoDs overuse of Buy American Act waivers through the overseas use
loophole in the law. This Buy American Act loophole currently allows federal agencies to use American
taxpayer dollars to purchase goods or services from foreign companiesmore than $5 billion worth last
yearto the detriment of American businesses.
More: Murphy Release

Peters, Stabenow, Alexander Introduce Vehicle Innovation Act

U.S. Senators Gary Peters (D-MI) and Debbie Stabenow (D-MI), along with Lamar Alexander (R-TN),
introduced the bipartisan Vehicle Innovation Act (VIA) to promote investments in research and
development of clean vehicle technologies that will create more fuel efficient vehicles, reduce our
nations dependence on foreign oil, and support American auto manufacturers.
The Vehicle Innovation Act reauthorizes the Department of Energy's Vehicle Technologies Program,
which works with light duty automobile and medium and heavy duty commercial truck manufacturers
and suppliers to conduct research and development to improve fuel efficiency in vehicles.
The bill directs the Department of Energy to partner with public and private sector entities to promote
technology-neutral research and investment which will include a diverse array of technologies, including
hybrids, battery electric vehicles and natural gas-powered vehicles, that will reduce our dependence on
imported oil, support domestic research and development, and grow our advanced manufacturing
industry in the United States.
More: Peters Release

Schakowsky, Durbin and Brown: Tax Credits should go to Companies that Invest
in American Workers, Not Ship Jobs Overseas

Rep. Jan Schakowsky (IL-09), Sen. Dick Durbin (IL) and Sen. Sherrod Brown (OH) introduced the Patriot
Employer Tax Credit Act, a bill that would provide a tax credit to companies that provide fair wages and
good benefits to workers while closing a tax loophole that incentivizes corporations to send jobs
overseas. The loophole costs the U.S. Treasury approximately $50 billion each year at a time when
outsourced jobs and stagnant wages force more American families to turn to safety net programs to
make ends meet. The bill is cosponsored by Representatives Raul Grijalva (AZ-03), Keith Ellison (MN-05),
Bobby Rush (IL-01) and Senators Jack Reed (RI), Elizabeth Warren (MA), Bernie Sanders (VT) and Tammy
Baldwin (WI).
More: Schakowsky Release

Sen. Markey & Rep. Neal Partner to Create Jobs Rebuilding Crumbling
Infrastructure, Boost Investment in Local Projects

Senator Edward J. Markey (D-Mass.) and Rep. Richard Neal (D-Springfield) today introduced the
Bolstering Our Nations Deficient Structures (BONDS) Act, legislation that would create jobs helping to
rebuild Americas crumbling infrastructure. The BONDS Act provides financing tools to state and local
governments to help build bridges, roads, schools and other local critical infrastructure projects.
Patterned after the successful Build America Bonds program created in 2009 as part of the American
Recovery and Reinvestment Act, the BONDS Act would allow a state or local government to issue a bond
to make a public investment while the federal government provides a subsidy to that state or local
government to help pay the interest on the bond. The BONDS Act will revive the Build America Bonds
program and make it permanent.
More: Markey Release

Hirono Authors Clean Energy Legislation

Senator Mazie K. Hirono introduced a package of energy bills this week that highlight her commitment
to spurring innovation and investment in clean energy in Hawaii and across the country.
Included in this package is the Clean Energy Technology Manufacturing and Export Assistance Act (S.
1263)that will help small and medium sized clean technology businesses find new markets in the United
States and around the world by creating a Clean Energy Technology Manufacturing and Export
Assistance Fund administered by the International Trade Administration. The Clean Energy Technology
Manufacturing and Export Assistance Fund will assist clean technology firms with export assistance,
including finding and navigating foreign markets to export their goods and services abroad.
Furthermore, the bill will expand domestic clean technology manufacturing industry by promoting
policies that will reduce production costs and encourage innovation, investment, and productivity in the
domestic clean energy technology industry, which will help domestic companies increase demand and
create jobs. Congresswoman Doris Matsui has (CA-6) introduced the Clean Energy Technology
Manufacturing and Export Assistance Act in the U.S. House of Representatives.
More: Hirono Release

Kaine Reintroduces Middle STEP Act to Create CTE Pilot Program in Middle
Schools

U.S. Senator Tim Kaine, co-chair of the Senate Career and Technical Education (CTE) Caucus, along with
U.S. Senators Mark Warner, Barbara Boxer, Sheldon Whitehouse, and Bob Casey, introduced the Middle
School Technical Education Program (Middle STEP) Act that would expose middle school students to CTE
programs focused on career exploration.
The Middle STEP Act would establish a pilot program that allows middle schools to partner with
postsecondary institutions and local businesses to develop and implement CTE exploration programs
that give students access to apprenticeships or project-based learning opportunities, which are
traditionally not available to students until high school or postsecondary programs. Kaine introduced an
earlier version of the legislation in the 113th Congress. Kaines intention is to have the Middle STEP
ACT included as an amendment to the Every Child Achieves Act of 2015, which reauthorizes
the Elementary and Secondary Education Act (ESEA) and is currently being debated on the Senate floor.
More: Kaine Release

Merkley, Cartwright Introduce Bill to Create Green Jobs, Boost Manufacturing

Today, Oregons Senator Jeff Merkley and Representative Matt Cartwright (D-PA) announced the
introduction of the Job Creation through Energy Efficient Manufacturing Act in both the U.S. Senate and
the U.S. House of Representatives. The bill would create jobs and save money for manufacturers by
putting people to work retrofitting manufacturing facilities to be more energy efficient.
Energy efficiency investments are job multipliers. Because retrofitting work cant be outsourced and
more than 90% of the materials used are made in the United States, energy efficiency investments help
to grow American jobs and the economy.
More: Merkley Release

2. OTHER NEWS

Competitiveness Caucus Launches: Bringing Congress Together to Make America

More Competitive in the 21st Century

The hallmark of our nations economy has long been the ability of anyone with creativity, ambition and a
good work ethic to realize their dreams and move America forward. From the light bulb to the iPhone,
the legacy of American invention has shone brightly throughout the world. Yet while our culture of
innovation and entrepreneurial spirit remain strong, the policy framework that empowers that spirit to
flourish is losing its competitive edge.
For years, enabling our nations innovative drive was an economic system unparalleled around the world
from competitive tax laws to public investments in research, infrastructure and education. Weve
long understood something many other countries havent: For innovation and the entrepreneurial spirit
to thrive, we need a strong, competitive economic ecosystem. There simply is no single silver bullet
for economic growth.
We now find ourselves at a competitive inflection point. We can either do more to nurture and take
advantage of our strengths only some of which weve mentioned or we can fall behind in the 21st
century. In order to support our competitive strengths, were launching the bipartisan Senate
Competitiveness Caucus, a forum to bring together Democrats and Republicans to address the most
pressing issues facing our economy. Weve worked together before on important bills such as the
STARTUP Act and MLP Parity Act, which would make it easier for innovative small companies and cleanenergy projects to access financing and grow quickly. The Council on Competitiveness, a nonpartisan
organization that brings together leaders from every corner of our economy from industry to
academia, to labor to government will be a key partner in the effort to advance the caucus and find
solutions to Americas biggest competitiveness challenges.
More: Roll Call

Export-Import Bank's Cloudy Future Raises Worries of Job Losses

To kill the Export-Import Bank, all that House Republican leaders opposing it have to do is let the bank's
charter expire Tuesday and they are leaving Friday for the Fourth of July recess without even holding
a vote to reauthorize it.
The 81-year-old federal agency that helps companies sell their products abroad has been a prime target
of conservatives, who want to reduce the size of government and eliminate what they call crony
capitalism.
Shutting the bank's tap, though, also would eliminate tens of thousands of jobs, say business executives,
trade groups and the Obama administration.
More: LA Times

How Best to Measure an American-Made Auto?

This week, Cars.com released its annual American-Made Index, which rates you guessed it just how
Made in America many popular car models are.
What ranked at the top? The Toyota Camry, which is assembled in Kentucky and Indiana.
That stands in contrast to another list, produced by American Universitys Kogod School of Business, that
attempts to answer the same question. The 2015 Made in America Auto Index determined that the most
American-made car out there was a six-way tie between a number of GM models the Buick Enclave,
Cadillac CTS, and Chevrolet Corvette among them.
So why the discrepancy? The difference is in the details.
More: Alliance for American Manufacturing Post

Five Contentious Issues In Upcoming UAW Talks

Contract talks between the Detroit automakers and the United Auto Workers union get underway next
week. Here are five contentious issues to watch as the talks head toward a Sept. 14 contract expiration
date.
More: Manufacturing.net

Dont Blame the Robots for Lost Manufacturing Jobs

In a recent blog we described new research by George Graetz and Guy Michaels that shows the impact
of automation technology in productivity statistics. So now there is good evidence that robots are a
driver of economic growth.
However, this new evidence poses a question: Has productivity growth from robots come at the cost of
manufacturing jobs?
More: Brookings Institute

The Skills Gap? More Like the Grand Canyon

These days, getting accepted into Harvard University is slightly easier than finding an industrial
maintenance technologist to troubleshoot a complex machine communication problem.
In 2013, according to U.S. News and World Report, Harvard had an acceptance rate of 5.7 %. But if you
put to work all recent industrial technology maintenance grads, youd only fill 5.5 % of the available jobs
in five of the leading manufacturing states, says James Wall, executive director of the National Institute
for Metalworking Skills (NIMS).
More: Industry Week

3. SECTOR DATA

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Purchasing Managers Index (PMI)

The May PMI was 52.8 percent, an increase of 1.3 percentage points from the April reading.
The PMI is a widely watched measure of aggregate manufacturing strength. PMI is based on a survey
that asks purchasing managers if Inventories, Supplier Deliveries, Employment, Production, and New
Orders have gone up or down that month. Results above 50 indicate growth.
For May, Inventories read 51.5 (+2% on February), Supplier Deliveries read 50.7 (+0.6%), Employment
read 51.7 (+3.4%), Production read 54.5 (-1.5%), and New Orders read 55.8 (+2.3%). This data is in chart
form below.
Change on
prior month
PMI
52.8
+1.3
Inventories

51.5

+2.0

Supplier
deliveries

50.7

+0.6

Employment

51.7

+3.4

Production
New orders

54.5
55.8

-1.5
+2.3

More: Institute for Supply Management

Employment

Preliminary estimates by the Bureau of Labor Statistics show that manufacturing employment was up
7,000 in May, at a seasonally adjusted 12.335 million.

Manufacturing employees, millions

The below chart shows the total number of manufacturing employees over the last ten years in millions
of workers, as well as the month-on-month change in manufacturing employment for the last six
months (in thousands). Both numbers are seasonally adjusted.
Month-on-month change, thousands
+28
+10 +3 +6 +1 +7

15
14

Dec Jan Feb Mar Apr May

13
12
11
'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

More: Bureau of Labor Statistics

Federal Reserve Data

The Fed publishes monthly data on industrial production and capacity utilization. Industrial production
is represented as an index where the 2007 level equals 100. Capacity utilization is shown as percent of
capacity. The chart below shows these measures for the last six months.

Manufacturing
production

100

102

101.3
77.0

100
98

90
80
70
60

Dec
Jan
Feb
Manufacturing production

Mar
April
May
Manufacturing capacity utilization

Manufacturing capacity
utilization (%)

104

More: Fed

In addition to the Feds national data, six of the twelve Federal Reserve regional branches publish
monthly updates on manufacturing conditions in their region. Because each branch uses different
questions and methodology, interregional comparisons are not suggested.
New York Fed (NY state, 12 northern NJ counties, and Fairfield County in CT)
[B]usiness conditions worsened slightly for New York manufacturers. The headline general business
conditions index fell five points to -2.0, its second negative reading in the past three months.
More: NY Fed
Philadelphia Fed (eastern PA, southern NJ, and DE)
Manufacturing conditions in the region improved in June indicators for general activity, new orders,
and shipments remained positive and increased over their readings in May.
More: Philly Fed
Richmond Fed (DC, MD, NC, SC, Virginia & most of WV)
[M]anufacturing activity grew modestly in June, according to the most recent survey by the Federal
Reserve Bank of Richmond.
More: Richmond Fed
Chicago Fed (southern WI, IA, northern IL, northern IN, and southern MI)
The Chicago Fed Midwest Manufacturing Index is currently suspended, while it undergoes a process of
data and methodology revision. The next release is preliminarily scheduled for fall of 2015.
More: Chicago Fed
Kansas City Fed (western MO, NE, KS, OK, WY, CO & northern NM)
[M]anufacturing activity declined at a slightly slower pace, and producers expectations improved
modestly.
More: Kansas City Fed
Dallas Fed (TX, northern LA and southern NM)
Texas factory activity declined again in June The production index, a key measure of state
manufacturing conditions, rose to -6.5 but remained in negative territory, suggesting a fourth
consecutive month of contracting output.
More: Dallas Fed

U.S. Manufacturing Technology Orders (USMTO)

April U.S. manufacturing technology orders totaled $384.81 million, down 8.1% from March and down
1.0% from April 2014.
Right now capital equipment makers are feeling the effects of a stronger dollar, which creates a drag on
exports, and lower oil and natural gas prices, which means less spending on equipment investments
from the energy industry, said AMT President Douglas K. Woods. But what is a negative now should
help us later imported components for capital equipment are costing less, and businesses will
accumulate savings from lower fuel prices in the coming months, meaning more money for capital
investment. We believe investment in manufacturing will remain steady, and overall performance for
the year will be as strong as we saw in 2013 and 2014.
These numbers and all data in this report are based on the totals of actual data reported by companies
participating in the USMTO program. The chart below shows year-over-year change and total April 2015
orders on a national and regional basis. Fields marked n/a denote where, due to changes in the makeup of survey participants, an accurate reflection of the data is not available.
Year-over-year
change (%)
Total

384.8

-1.0

Northeast

+7.1

Southeast

66.0
33.8

n/a

North Central-East

127.6

North Central-West

+4.8

South Central
West

April
orders ($m)

n/a
-12.1

69.1
n/a
n/a

More: Association for Manufacturing Technology

4. ABOUT THIS NEWSLETTER

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This update is provided by the Office of U.S. Senator Chris Coons on behalf of the Manufacturing Jobs for
America initiative. For more information, visit coons.senate.gov/manufacturing or email
Riley_Ohlson@coons.senate.gov.