MANUFACTURING UPDATE

- APRIL 2014 1. LATEST POLICY

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The Senate Finance Committee cleared a tax extenders package out of Committee on a bipartisan voice vote, advancing it towards the Senate floor. The package includes many tax provisions important to manufacturers, including the R&D tax credit and bonus depreciation. More: Chairmans Statement | Modified Chairmans mark

Finance Committee passes vital tax provisions

The Senate Finance Committee included the Startup Innovation Credit Act (S. 193) in tax extenders by a bipartisan voice vote. The bill allows startup manufacturers to claim the R&D tax. Startups businesses generally have the highest potential for growth and generate the most jobs. S. 193 was introduced by Sens. Coons (D-DE) and Enzi (R-WY), and co-sponsored by Sens. Schumer (D-NY), Rubio (R-FL), Blunt (R-MO), Moran (R-KS), Stabenow (D-MI), and Kaine (D-VA). The provision was introduced as an amendment to tax extenders by Sens. Roberts (R-KS) and Schumer (D-NY). More: Coons press release | Schumer press release | Schumer / Roberts modified amendment

Finance Committee adopts Coons/Enzi tax credit for startup manufacturers

The Senate Finance Committee passed key provisions of the Innovators Job Creation Act (S.192) by a bipartisan voice vote. The provision allows small business owners to claim the R&D tax credit against their Alternative Minimum Tax liability. The bill was introduced by Sens. Roberts (R-KS) and Coons (D-DE), and is cosponsored by Sens. Enzi (R-WY) and Schumer (D-NY). It was included in the amendment offered by Sens. Roberts and Schumer. More: Coons press release | Schumer / Roberts modified amendment

Finance Committee passes Roberts/Coons tax credit to help small manufacturers

The Revitalize American Manufacturing and Innovation Act of 2013, sponsored by Sens. Brown (D-OH) and Blunt (R-MO), was advanced out of the Senate Commerce Committee. This bill will create a network of regional hubs bringing together businesses, universities, and government to promote manufacturing innovation and workforce development. More: Commerce press release | Blunt press release | Brown press release

Commerce Committee advances vital manufacturing hubs bill to the floor

Commerce Committee includes National Manufacturing Strategy in hubs bill

Sens. Pryor (D-AR), Kirk (R-IL), and Coons (D-DE) applauded the Senate Commerce Committee's passage of their American Manufacturing Competitiveness Act, which requires the President to submit a National Strategic Plan for Advanced Manufacturing to Congress every four years, and is part of the Manufacturing Jobs for America initiative.

While there are numerous programs spread throughout several federal departments and agencies aimed at supporting manufacturing, there is no cohesive national strategy to ensure these programs are working together toward the unified goal of revitalizing American manufacturing. This legislation was passed as an amendment, offered by Sen. Pryor, to the Revitalize American Manufacturing and Innovation Act of 2013. The amendment was based off of S. 1709, The American Manufacturing Competitiveness Act, introduced by Sens. Kirk and Coons, cosponsored by Sens. Blunt (R-MO), Brown (D-OH), Stabenow (D-MI), Graham (R-SC) and Harkin (D-IA). More: Kirk press release | Coons press release

Provisions of Sens. Klobuchar (D-MN) and Hoevens (R-ND) Innovate America Act (S.1777) were included in the hubs bill during the Senate Commerce Committees markup. The amendment: Requires the Secretary of Commerce to conduct a study on the top 20 exporting industries in the U.S., domestic regulatory and policy barriers to increasing exports, foreign barriers to doing business abroad, and recommendations on how to address these barriers; Clarifies that manufacturing hubs should consider workforce recruitment as part of their functions; and Encourages applications from new centers to emphasize how they will impact global and domestic competitiveness.

Klobuchar and Hoeven Innovate America Act passed by Commerce Committee

The Defense Department announced it will require that service members purchase Americanmade shoes when using Department funds. Previously, recruits had received a Department stipend with which to purchase shoes, but no Berry Amendment-compliant athletic footwear was available. Based on feedback from Members of Congress and shoe manufacturers, the Department determined American manufacturers could manufacture compliant footwear, and will begin requiring that recruits use their stipends to purchase American-made shoes. More: Brown press release | Levin press release

Defense Department announces plans to purchase U.S. made athletic footwear

2. OTHER NEWS

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Speech -- King & Coons floor colloquy on manufacturing innovation hubs

Sens. King (I-ME) and Coons (D-DE) recently came to the Senate floor to urge support for manufacturing innovation hubs.

Sen. King stated that manufacturing is the basis of wealth creation, arguing that somebody somewhere has to make something. Sen. Coons stated that we can win in manufacturing. We can learn from our competitors. We can strengthen our workforce. We can strengthen our access to foreign markets. We can strengthen our access to credit. All of these we can do, and we can compete and win in advanced manufacturing in the United States. More: King speech | Coons speech

Sen. Donnelly recently visited Ultra Electronics - UnderSea Sensor Systems, Inc. (USSI), in Columbia City, IN. USSI manufactures the sonobuoys that were used by the Australian air force in their search for MH370 as part of a joint-venture with Sparton Corporation, based in Schaumburg, IL. More: Donnelly press release

News -- Donnelly visits local manufacturer

Sens. Gillibrand (D-NY) and Schumer (D-NY) wrote to Commerce Secretary Pritzker calling for approval of the city of Rochesters application for the Investing in Manufacturing Communities Partnership (IMCP) Program. If approved, Rochester and the Finger Lakes region would be designated as a manufacturing community spurring innovation, job creation and revitalization of the local manufacturing industry. Manufacturing has powered the Rochester and Finger Lakes economy for decades, and now is making even greater strides in high-tech, optics, and other innovative manufacturing sectors. This designation would cement Rochesters reputation as a hub of manufacturing growth, said Sen. Schumer. Regions designated as a federal Manufacturing Community receive preferred consideration when applying for an estimated $1.3 billion in future federal economic development grant funding. More: Gillibrand press release | Schumer press release

News -- Gillibrand, Schumer call for designation of Rochester as a federal Manufacturing Community

The Boston Consulting Group (BCG) issued a new study of the 25 biggest exporting countries, the BCG Global Manufacturing Cost-Competitiveness Index. The report finds that the U.S. is now the second most competitive manufacturing nation globally, and that the U.S. manufacturing will be less expensive than China by 2018 if current trends continue. According to BCG, manufacturing cost competitiveness around the world has changed dramatically over the past decadeso dramatically that many old perceptions of low-cost and high-cost nations no longer hold. More: BCG press release | BCG presentation

Report -- U.S. has risen to #2 in global manufacturing competitiveness

Sen. King recently embarked on a multi-day tour of Maine manufacturers to highlight the importance of reviving the American manufacturing sector. The Senator toured Hardwood Products, which makes sample collection devices and high-quality woodenware; FHC, which makes metal microelectrodes; Tech Tex, which manufactures textile and aerospace products; and Jones & Viking, which manufactures advanced composites. More: King press release 1 | King press release 2

News -- King embarks on multi-day manufacturing push

Sens. Markey (D-MA) and Warren (D-MA) and Representative Lynch (D-MA) applauded the Presidents announcement of a $4.9 million grant to Jobs for the Future through the Youth CareerConnect program. The grant will be used to support students in acquiring critical careers skills. More: Markey press release

News -- Training grant to Jobs for the Future

The Association for Manufacturing Technology sent a letter to Congressional leadership calling for action on a bipartisan manufacturing agenda in 2014. The letter urges leadership to consider legislation where there is common ground and points to several initiatives with bipartisan support that would strengthen U.S. manufacturing if enacted into law. More: AMT press release | AMT letter

News -- Association for Manufacturing Technology urges action on a bipartisan manufacturing agenda in 2014

Robert Atkinson of the Information Technology and Innovation Foundation (ITIF) highlights the Senate Commerce Committees mark-up of the hubs bill as a positive and important first step, [that] also highlights how far behind we are as a nation at promoting manufacturing innovation and competitiveness. The author also highlights the lack of a national U.S. manufacturing strategy and calls for Congress to develop such a plan. More: BCG press release | BCG presentation

Op-ed -- While America Sleeps Other Nations Bolster Manufacturing Sector

News -- 2014 Kogod Made in America Auto Index

American University Associate Professor Frank DuBois recently compiled the 2014 Kogod Made in America Auto Index, which helps illustrate which cars are truly American made. The index accounts for profit margin, labor, R&D, and location of production and assembly. American Automotive Policy Council President Matt Blunt stated: "Were proud to see the top 10 automobiles in this study are produced by the American automakers. U.S. auto manufacturers support millions of jobs throughout the country, conduct most of their R&D in the U.S., and are significant exporters of American-made vehicles. More: Kogod index | AAPC statement

2. SECTOR DATA

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Purchasing Managers Index (PMI)

March PMI was 53.7, an increase of 0.5 from Februarys 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 March, Inventories read 53.7 (+0.5 on February), Supplier Deliveries read 54.0 (-4.5), Employment read 51.1 (-1.2), Production read 48.2 (+7.7), and New orders read 55.1 (+0.6). This data is in chart form below. April figures will be released on May 1, 2014. Change on prior month PMI 53.7 +0.5
Inventories Supplier deliveries Employment Production New orders 52.5 54.0 51.1 55.9 55.1 0.0 -4.5 -1.2 +7.7 +0.6

More: ISM

Employment

Preliminary estimates by the Bureau of Labor Statistics show that manufacturing employment fell by 1 thousand employees in March, to a seasonally adjusted 12.079 million. 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 over the last six months in thousands. Both numbers are seasonally adjusted.

Manufacturing employees, millions

15 14 13 12 11 '04 '05 '06 '07 '08 '09

Month-on-month change, thousands +35 +18 +7 +8 +19 -1 Oct Nov Dec Jan Feb Mar

'10

'11

'12

'13

'14

More: BLS

Fed Data

Manufacturing production

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. 99 87 98.7 82 98 77 76.1 72 97 67
Manufacturing capacity utilization
96 Oct Nov Dec Manufacturing production 62 Jan Feb Mar Manufacturing capacity utilization

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. More: Fed

New York Fed (NY state, 12 northern NJ counties, and Fairfield County in CT) [B]usiness activity was flat for New York manufacturers. The headline general business conditions index slipped four points to 1.3. More: NY Fed Philadelphia Fed (eastern PA, southern NJ, and DE) Manufacturing activity in the region increased in April The surveys broadest measure of man ufacturing conditions, the diffusion index of current activity, increased from a reading of 9.0 in March to 16.6 this month, its highest reading since last September. More: Philly Fed Richmond Fed (DC, MD, NC, SC, Virginia & most of WV) Fifth District manufacturing activity improved in April. The composite index for manufacturing strengthened by 14 points to a reading of 7. 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 in 2014. The next release is preliminarily scheduled for November 26, 2014. More: Chicago Fed Kansas City Fed (western MO, NE, KS, OK, WY, CO & northern NM) Growth in Tenth District manufacturing activity moderated slightly in April after rising to a twoyear high in March The month-over-month composite index was 7 in April, down from 10 in March but up from 4 in February. More: Kansas City Fed Dallas Fed (TX, northern LA and southern NM) Texas factory activity increased for the 12th month in a row in April The production index, a key measure of state manufacturing conditions, rose from 17.1 to 24.7, reaching its highest level in four years and indicating stronger output growth. More: Dallas Fed

February U.S. manufacturing technology orders totaled $354.4 million, down 6.6% from January and down 6.2% when compared with February 2013. With a year-to-date total of $733.8 million, 2014 is down 0.6% compared with 2013. These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTO program. The chart below shows year-over-year change and total orders on a national and regional basis. Year-over-year Feb change (%) orders ($m)
Total Northeast Southeast North Central-East -25.2 North Central-West South Central West +93.7 -18.2 +17.6 na -6.2 +14.3 354.4 64.1 na 82.1 57.5 na na

U.S. Manufacturing Technology Orders (USMTO)

More: AMT

4. ABOUT THIS NEWSLETTER

================================== 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 jj_singh@coons.senate.gov or josh_boylan@coons.senate.gov.