Industry Insight

Industry Insight

February 2009

 

Obama Signs Stimulus

In Denver last week, President Obama signed his economic stimulus measure into law. The Wall Street Journal said Obama's speech "was largely upbeat, with less emphasis on the nation's economic troubles and more focus on the good things ahead." Obama "touted the measure's investments in health care, infrastructure, energy, education and, most importantly, job creation, as well as a variety of tax cuts."

The Los Angeles Times reported Obama "was introduced in Denver by Blake Jones, chief executive of Namaste Solar, a Boulder-based solar electricity company." The Times added that "with Obama and Vice President Joe Biden standing behind him, Jones said his company had seen business prospects stall as the economy worsened. Passage of the stimulus will 'open up markets again,' he said, and help the company preserve jobs that might have been lost." The Washington Post said "enthusiasm" similar to Jones' "was evident among other businesspeople who came to witness the signing."

The New York Times reported, "In his second consecutive week of taking to the road for campaign-style appearances to build support for his agenda, Mr. Obama signed the measure here in [Denver] where he was nominated, and delivered a speech that signaled in part the White House effort to gain political advantage." Even as Mr. Obama "was signing the bill, Republicans were denouncing it as a waste of money."

 

-back to top-

 

Labor Markets, Consumer Spending Continue Slump

 

Huge employment losses in January, including a 207,000 drop in manufacturing employment, show that the labor market continues to deteriorate. Consumers continue to cut back on spending not just in the United States but around the world, pointing toward further declines in U.S. exports. There is some reason to believe that the pace of the economic decline may be starting to moderate. While expectations for employment did not change much, improvements in new orders, production and general business activity in the January Institute for Supply Management surveys are a sign that the initial impacts of the financial crisis may be easing a bit. While this does not mean that the economy will start to recover anytime soon, it does indicate that conditions may be in the early stages of starting to stabilize.

 

-back to top-

 

Card Check: Where Are We Now?

 

The Employee Free Choice Act (EFCA), also known as “Card Check,” is an undemocratic proposal that seeks to advance union interests by taking away workers’ rights to a secret ballot vote in union elections. The proposed Act also takes away workers’ and employers’ rights to refuse unfavorable proposals during contract negotiations by allowing a government arbitrator to set the terms of contract if an agreement cannot be reached after 120 days.

 

Most Americans believe that the secret ballot is a fundamental tenet of our country’s democratic process, and many agree that EFCA would have a negative impact on the country’s already sagging economy.

 

Despite these views, lawmakers continue to push for the legislation. EFCA passed easily in the House in 2007, but was held up in the Senate when a vote for cloture failed. It’s expected to resurface again soon—some estimates project as early as next month—and President Obama has promised to sign the Act if it reaches his desk.

 

Unions have a small place in Arkansas , but Arkansas Senators Blanche Lincoln and Mark Pryor are important to the debate as either one may cast the deciding vote.

 

Individuals, groups and companies have come forward in opposition to EFCA. The State Chamber/AIA continues its efforts to defeat it through the coalition “Arkansans for the Secret Ballot: Protect Your Privacy at Work” and the scheduled “Washington Fly-In” in April.

 

Contact Senators Lincoln and Pryor and your district representative today and ask them to vote “no” on cloture as well as no on the bill. For additional information or to become part of the Coalition against EFCA, contact Coalition Coordinator Natalie Smith at (501) 975-8344 or e-mail her at info@yoursecretballot.com.

 

-back to top-

 

Decline of U.S. Manufacturing Seen as Greatly Exaggerated

The AP reported, "It may seem like the country that used to make everything is on the brink of making nothing." However, "manufacturing in the United States isn't dead or even dying. It's moving upscale, following the biggest profits, and becoming more efficient." The U.S. "remains the world's leading manufacturer by value of goods produced." The article also noted that "several trends have emerged over the decades." Among them are that U.S. manufacturers "have shifted toward high-end manufacturing as the production of low-value goods moves overseas," and the U.S. "makes things that other countries can't." The article pointed out that some U.S. manufacturers have struggled in the past, "but other American manufacturers - and workers - have adapted," and remain successful.

 

-back to top-

 

Movement Grows to Promote Manufacturing as Viable Career Option

Reliable Plant Magazine reported, "There is a burgeoning movement to motivate students in America to consider careers in the unlikeliest of places – the factory floor." U.S. manufacturers "have great concern about the growing shortage of young skilled labor needed to make products used in industries ranging from aerospace and medical devices to alternative energy and infrastructure improvements." The "outreach to students and educators is taking two parallel tracks in response to the challenge. One dispels the negative image many have of factories as dark, dingy and dangerous, and such work as unfulfilling" and the second "highlights the chance to use fun, high-tech, computer skills and the opportunity to secure a career that pays well and offers advancement."

-back to top-

 

State Chamber/AIA Planning to Publish Arkansas Manufacturers Directory

 

The State Chamber/AIA is planning to publish the Arkansas Manufacturers Directory in June.  This publication will contain in-depth company profiles of more than 4,000 industrial businesses. Each Arkansas business will be profiled in detail, providing company facts essential to identifying and contacting Arkansas manufacturers and their decision makers.

The Arkansas Manufacturers Directory will also serve as a valuable resource if you are looking for suppliers here in the state. Copies of the Directory will be distributed to State Chamber/AIA members, membership prospects and manufacturers throughout Arkansas .

 

The Directory will have a one-year shelf life and be a good marketing vehicle for you to promote your services among our members, membership prospects and manufacturers throughout the state.

 

For information on ad rates and specifications, contact Jeff Thatcher at (501) 210-4205 or jthatcher@arkansasstatechamber.com, or Susie Marks at (501) 210-4206 or smarks@arkansasstatechamber.com. 

 

-back to top-

 

Producer Prices Rebound In January

The Wall Street Journal reported, " U.S. producer prices rebounded last month for a wide range of products from energy and automobiles to prescription drugs, easing concerns of a deflationary spiral of lower prices and spending." According to the Labor Department's statement last Thursday, "the producer price index (PPI) for finished goods rose 0.8 percent...reversing some of December's 1.9 percent plunge." The index "was down 1 percent from a year earlier. The core PPI, which excludes food and energy, advanced 0.4 percent last month, well above expectations for a 0.1 percent rise. That was up 4.2 percent from a year ago."

 

-back to top-

 

SBA Planning Underway for Broadest, Quickest Small Business Impact

 

The American Recovery and Reinvestment Act contains a package of loan fee reductions, higher guarantees, new U.S. Small Business Administration (SBA) programs, secondary market incentives, and enhancements to current SBA programs that will help unlock credit markets and begin economic recovery for the nation’s small business sector.

 

 “There’s a lot to digest in the legislation, and SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements, and new program launches authorized by the President and Congress,” said Acting Administrator Darryl K. Hairston.

 

The bill provides $730 million to SBA and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help.  The funding includes:

·             $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans

·             $255 million for a new loan program to help small businesses meet existing debt payments

·             $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to micro lenders

·            $20 million for technology systems to streamline SBA’s lending and oversight processes

·            $15 million for expanding SBA’s Surety Bond Guarantee program

·            $25 million for staffing up to meet demands for new programs

·            $10 million for the Office of Inspector General

 

The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms, and expands leverage capability for Small Business Investment Companies.

 

The stimulus bill takes a comprehensive approach and attacks several problems facing small businesses at once by reducing fees, guaranteeing a greater share of certain loans, expanding capacity in the Microloan program, providing new loans to help small businesses keep their doors open through economic hardship, as well as new mechanisms to help unfreeze the secondary markets for SBA-backed loans.

 

For additional information, click here.

 

-back to top-

 

Automakers' Restructuring Plans Would Boost Costs to $39 Billion

As required by the initial Federal Government loans, General Motors (GM) and Chrysler submitted their restructuring plans to the Treasury Department last Tuesday. The plans would increase the carmakers' total assistance request to $39 billion, which media reports suggest was a reflection of the ongoing economic downturn's impact on sales.

The Wall Street Journalreported, "General Motors Corp. (GM) and Chrysler LLC told the federal government they may need up to $21.6 billion more combined in bailout loans to put them on the road to recovery, and outlined extensive bankruptcy contingency plans even while continuing to lobby against the option." The recovery plans presented "to the U.S. Treasury would cement GM's fall from the top of the global auto industry to a smaller, more flexible car company relying less on its core U.S. market for sales. Chrysler, meanwhile, appears to be steering itself toward being the North American arm of Fiat SpA."

The New York Timesadded that "the two companies also promised to make further drastic cuts to all parts of their operations, in the hope that they can eventually strike a balance between their bloated cost structures and a dismal market for new car sales." G.M., for instance, "said it would cut 47,000 more of its 244,000 workers worldwide; close five more plants in North America, leaving it with 33; and cut its lineup of brands in half, to just four: Chevrolet, Cadillac, GMC and Buick."

According to the Washington Post, the two companies said "that the decline of the U.S. economy has outpaced their bleakest expectations of just two months ago." As a result, "once-popular lines such as GM's Hummer and Saturn will be spun off or, failing that, eliminated. Saab is up for sale. Chrysler will stop production of the PT Cruiser, Aspen and Durango by the end of the year."

-back to top-


EPA Will Soon Propose Carbon-Dioxide Regulations

The Wall Street Journal reported, "President Barack Obama's climate czar said the EPA will soon determine that carbon-dioxide emissions represent a danger to the public and propose new rules to regulate emissions of the greenhouse gas from a range of industries." Carol Browner said "in an interview Sunday that the EPA is looking at a 2007 Supreme Court ruling that requires the agency to determine whether carbon dioxide endangers public health or welfare. And the agency 'will make an endangerment finding,' she said." Administration officials have said "they would limit regulation to facilities over a certain size. But legal experts say designating carbon dioxide a public danger could open up any emitters to legal challenge." The U.S. Chamber of Commerce and NAM "have been lobbying the EPA for months against trying to regulate greenhouse gases under the Clean Air Act, warning that such action would lead to costly new regulations affecting not only coal plants and large manufacturers but also schools, apartment buildings and hospitals."

The New York Times editorialized, "Less than a month into the job, and with only a skeleton staff, Lisa Jackson, the new administrator of the EPA...has pledged to reverse or review three Bush administration directives that had slowed the government's response to global warming." Jackson has indicated that it is "only a matter of time before she complied with the Supreme Court's nearly two-year-old decision ordering the EPA to address the effects of greenhouse gases from vehicles and regulate them if necessary." Then Jackson said "she would reconsider a Bush administration declaration that the law did not allow it to regulate carbon dioxide emissions from new coal power plants." Just as "obeying the Supreme Court decision could lead to the first nationwide limits on carbon dioxide from vehicles, this latest decision could lead to the first greenhouse gas limits on utilities." The Times added, "These would be major changes in regulatory policy affecting, all told, more than half the greenhouse gas emissions emitted in this country."

 

-back to top-