MANUFACTURING UPDATE

- MARCH 2014 1. LATEST NEWS

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Sen. Cantwell (D-WA) held a hearing of Senate Subcommittee on Aviation Operations, Safety, and Security on March 13. The hearing focused on challenges facing the U.S. aviation industry, and what steps the U.S. can take to maintain its leadership in the global market and create American jobs. Sen. Cantwell called for five steps to boost U.S. competitiveness: 1. Increase investment in STEM education and apprenticeship programs to ensure a robust supply of skilled workers; 2. Use the WTO to challenge unfair subsidies provided by foreign governments; 3. Continue export financing through the Export-Import Bank; 4. Modernize the nations air traffic control system by implementing the NextGen satellitebased system; 5. Invest in R&D for composite materials. Representatives of Aerospace Industries Association, Airlines for America, the AFL-CIO, and Boeing testified. More: Cantwell press release | Hearing video 1 | Hearing video 2

Hearing -- Aviation Competitiveness

Sen. Franken recently toured E.J. Ajax Metal Forming Solutions, where he spoke with representatives from local technical colleges, local business, and HIRED, a Twin Cities provider of job skills training for disadvantaged job seekers. More: National Skills Coalition

News -- Franken tours E.J. Ajax Metal Forming Solutions

Members of the American Small Manufacturers Coalition came to Congress to meet with Sen Coons (D-DE) and Rep Kelly (R-PA) to discuss the Manufacturing Extension Partnership on March 4th and 5th. More: ASMC

News -- Sen Coons and Rep Kelly meet with small manufacturers

News -- DuPont hosts engineering events to inspire young people

DuPont recently hosted two local events to highlight the impact engineers can have on society and encourage young people to consider the STEM professions. During DuPonts sponsorship of national Engineers Week, the company invited middle school students to present a model of a city they had designed during a nationwide competition called Future Cities. More: News Journal

Michael Tamasi, CEO of AccuRounds, recently spoke with Fox Business about what is needed to boost hiring, highlighting the importance of skills training. More: Fox Business

Interview -- The importance of skills training

News -- Precision Plus hosts student manufacturing day

Mike Reader, CEO of Precision Plus in Elkhorn, WI and a member of the Precision Machined Products Association (PMPA) recently produced a student Manufacturing Day Panel at Elkhorn Area High School. Over 200 students from five area schools listened to local manufacturing companies describe the opportunities and their personal insights on local manufacturing. 2.7 million U.S. manufacturing workers are set to retire in the next 3-5 years, and there is a huge deficit in the number of young people applying for jobs in manufacturing. More: PMPA

Report -- Ontario Made: Rethinking Manufacturing in the 21st Century

A new paper by the University of Toronto examining Ontarios manufacturing sector provides useful international comparisons for U.S. policymakers. The authors recommend a focus on advanced manufacturing through a focus on investments in skills, R&D, equipment, and information technology. More: Mowat Centre

Report -- What jobs are being offshored, and where are they going?

A new working paper from economists at UC Berkley and MIT used new data to look at the type of jobs that are being offshored, and where those jobs are going. The paper finds very few companies offshore their core competencies, but that large manufacturers tend to do so at a significantly higher rate than other sectors. The majority of offshoring tends to go to locations with costs comparable to the U.S., contrary to popular perception. More: IRLE | The Economist

A blog post from Robert Atkinson of the Information Technology & Innovation Foundation looks at the implications of the Presidents Budget for American manufacturers. The blog post finds that the budget contained positives, such as funding for NNMI, and shortcomings, such as slower growth in R&D funding. More: Industry Week

Report -- Why you should care about the federal budget

A report from the Information Technology & Innovation Foundation describes the impact of the corporate income tax on the economy and analyzes the major issues involved in creating tax reform that both increases economic growth and reduces the burden of federal debt. More: ITIF

Report -- Assessing U.S. corporate tax reform in an age of global competition

2. SECTOR DATA

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Purchasing Managers Index (PMI)

February PMI was 53.2, an increase of 1.9 from Januarys 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 February, Inventories read 52.5 (+1.9 on January), Supplier Deliveries read 58.5 (+4.2), Employment read 52.3 (unchanged), Production read 48.2 (-6.6), and New orders read 54.5 (+3.3). This data is in chart form below. March figures will be released on Apr. 1, 2014. Change on prior month PMI 53.2 +1.9
Inventories Supplier deliveries Employment Production New orders 52.5 58.5 52.3 48.2 54.5 +8.5 +4.2 0.0 -6.6 +3.3

More: ISM

Preliminary estimates by the Bureau of Labor Statistics show that manufacturing employment rose by 6 thousand employees in February, to a seasonally adjusted 12.065 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.

Employment

Manufacturing employees, millions

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

Month-on-month change, thousands +35 +7 +6 +6 +3 +18

Sep Oct Nov Dec Jan Feb

'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. 98 77 76.5
Manufacturing capacity utilization
97 97.2 76

96 Sep Oct Nov Manufacturing production

75 Dec Jan Feb 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 conditions continued to improve for New York manufacturers, though activity grew slowly. At 5.6, the general business conditions index was little changed from last month. More: NY Fed Philadelphia Fed (eastern PA, southern NJ, and DE) Manufacturing activity rebounded in March The surveys broadest indicators for general activity, new orders, and shipments increased and recorded positive readings this month, suggesting a return to growth following weather-related weakness in February. [T]he diffusion index of current activity increased from a reading of -6.3 in February to 9.0 this month. More: Philly Fed Richmond Fed (DC, MD, NC, SC, Virginia & most of WV) Fifth District manufacturing activity remained soft in March. The composite index of manufacturing dipped to a reading of -7 following last months reading of -6. 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 April 28, 2014. More: Chicago Fed Kansas City Fed (western MO, NE, KS, OK, WY, CO & northern NM) Growth in Tenth District manufacturing activity increased in March The month-over-month composite index was 10 in March, up from 4 in February and 5 in January. More: Kansas City Fed Dallas Fed (TX, northern LA and southern NM) Texas factory activity increased for the eleventh month in a row in March The production index, a key measure of state manufacturing conditions, rose from 10.8 to 17.1, indicating output grew at a stronger pace than in February. More: Dallas Fed

January U.S. manufacturing technology orders totaled $365.1 million, down 25.2% from December but up 1.3% when compared with January 2013. With a year-to-date total of $365.1 million, 2014 is up 1.3% compared with 2013. These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTO program. The chart below shows year-over-year change and total orders on a national and regional basis. Year-over-year Dec change (%) orders ($m)
Total Northeast Southeast North Central-East North Central-West South Central West -18.2 na +93.7 -9.5 +1.3 +7.8 +8.9 365.1 na 37.4 92.8 55.7 51.6 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.