Industry Insight

Fed Reports Increase in Industrial Production

After declining in three of the past four months, the Federal Reserve reported recently that overall industrial production rose a solid 0.5 percent in June, the fastest pace since July 2007. This increase reflects rising production in mining and utilities, as well as a temporary surge in motor vehicle production. Though the manufacturing sector edged up 0.2 percent, the first increase in three months, this increase was due to a 5.4 percent surge in motor vehicle production (a likely result of a strike ending in May). Outside of motor vehicles, manufacturing production declined by 0.1 percent, the third consecutive monthly decline. For the quarter overall, manufacturing production declined at an annual rate of 3.5 percent, the largest quarterly decline since the fourth quarter of 2001.

Administration Proposes Americans with Disabilities Act Regulations

The Department of Justice (DOJ) issued a notice for proposed rulemaking to rewrite current standards for accessibility enforcement under Title III of the Americans with Disabilities Act (ADA). This proposed rule is separate from efforts currently underway in Congress that address recent court decisions impacting employment issues related to the ADA. The DOJ intends to adopt the accessibility guidelines proposed under the "ADA and Architectural Barriers Act Accessibility Guidelines" (ADAAG 2004). This proposed revision to the ADAAG and expanded requirements for work areas will impact all work areas and office space—including factory and warehouse floors. More detailed information of this proposal is available by clicking here.

IndustryWeek Notes Rise in U.S. Manufacturing Domestic Production

In its August cover story, "Welcome Back U.S. Manufacturing," IndustryWeek notes, "It's too early to tell whether high fuel prices and the falling dollar will be enough to bring offshored operations back home, but some recent moves suggest it's possible." The magazine recounts the case of Desa LLC, which offshored much of the production of its residential heaters to China, but began "shift[ing] manufacturing operations for the product back to the United States after shipping costs spiraled out of control." Still, Desa's story is "still largely the exception. The more likely scenario for manufacturers trying to stave off higher operations costs overseas is an increase in U.S. production capacity or more 'near-shoring' to Mexico." A recent survey of manufacturing executives by AMR Research showed "that 21 percent plan to increase manufacturing activities in the United States over the next year, while another 21 percent expect to increase near-shore production." Another strategy IndustryWeek highlights is the outsourcing of production to U.S. suppliers. "More U.S. manufacturers are considering [these] sourcing models as the dollar's value continues to fall, according to a recent survey by MFG.com Inc."

Government Contractors Required to Use E-Verify System

President Bush has issued an Executive Order (click here: Executive Order ) requiring all contractors working with the federal government and agencies to use the E-Verify system. Subsequently, the Department of Defense, the General Services Administration and NASA issued a joint proposed rule in the Federal Register (click here: Proposed Rule ) to amend the Federal Acquisition Regulation to comply with the Executive Order. The proposed rule requires federal contractors to enroll in and use E-Verify for all employees working on the contract and all new hires during the life of the contract.  Written comments to the proposed rule are due by August 11, 2008. 

Rising Oil Prices Lead to a Renewed Interest in Coal

The Los Angeles Times reported that "[a]s the global price of oil and natural gas soars, some customers are taking a new look at other fuels -- including coal." Colombia will see its coal shipments "rise to 80 million tons this year, 10 percent more than last year and double the amount just five years ago. The value of Colombia's coal exports in 2008 will surpass $5 billion, up 40 percent from last year and 10 times what it was six years ago, a reflection of the increased price." The increased demand is pushing up prices, too. "Coal has more than doubled in price to $100 a ton in a year." And, "generating energy from coal costs a third as much as from natural gas in Japan, and half to two-thirds as much in Britain." As a result of these "favorable" economic conditions, "several U.S. utilities [are] build[ing] new or expand[ing] coal-fired power plants." A mining association predicts that "about 54 percent of all U.S. electric power will be coal-fired" by 2030.

Texas tops CNBC ranking of state competitiveness

The San Antonio Business Journal reports that "CNBC Inc. ranked Texas as the best all-around state economy and the No. 1 state to do business in America in 2008." The CNBC study considered 10 measures, including the "cost of doing business; economy; education; quality of life; technology and innovation; transportation; cost of living; business friendliness; and access to capital," to rank states on competitiveness. "Texas boasts over half of the nation's new jobs created in the past 12 months, and has added over 1.2 million net new jobs in the past five years, more than any other state."

The Indianapolis Star explained that, "with input from business groups including the National Association of Manufacturers, [CNBC] weighted the categories based on how frequently each is cited in state economic development marketing materials." Arkansas was ranked at number 32. CNBC published the full ranking on their website.