A monthly round-up of the MAPI resources available to NFPA members through NFPA's membership in MAPI.

Issues in the Brief

EPA’s “December to Remember” for Manufacturers

The Environmental Protection Agency’s Christmas gift came early this year in the form of President Obama’s reelection. His victory paved the way for more stringent industrial environmental policies, and EPA’s eagerness to impose them means it will most likely be a “December to Remember” for the manufacturing industry.  EPA currently has 98 environmental regulations it’s preparing for implementation. Five of these rules are projected to be finalized by the end of 2012, and at least another five are set for 2013. What should manufacturers expect from this snow globe–like flurry of activity? More regulations, increased expenditures, and the potential for lost jobs—a real joy to the manufacturing world.

 Beyond the Fiscal Cliff—We Need a Grand Bargain

Last week saw the opening bids in negotiations over a grand bargain to solve the short-term issue of the fiscal cliff and stabilize the long-term deficit-to-GDP ratio. The president wants half the entitlement cuts the Republicans prefer. Both sides, however, would cut the 10-year deficit by roughly the same amount. The president calls for $2 in revenue for every $1 in spending cuts and the Republicans are offering to agree on the opposite—a $1 tax revenue increase for every $2 in spending cuts. Last week’s announcement was only the opening positions in the public debate over a grand bargain.

 Update on the SEC Office of the Whistleblower

The Securities and Exchange Commission’s Office of the Whistleblower (OWB) recently issued a report reviewing the activities of its initial year of operations. In addition, OWB Chief Sean McKessy has made public remarks indicating that the SEC has been tracking the conduct of employers whose employees have filed whistleblower complaints with the OWB. The OWB’s activities should be of significant interest to companies that are subject to the jurisdiction of the SEC, because the office may often be processing whistleblower complaints of securities violations that companies have not become aware of through their internal reporting processes, especially hotlines.

 U.S. Oil Consumption Declines

While the recent attention paid to rising U.S. oil production clearly is warranted, the other side of the coin—the trend in U.S. petroleum consumption—also deserves recognition because it is no less dramatic, especially against the backdrop of long-term forecasts made just a few years ago.  It once appeared inevitable that economic growth would be accompanied by increased consumption of oil and petroleum products. Now, long-term projections of relatively flat growth in petroleum consumption coupled with projections of increasing oil production (which will add to the diversity of world oil supplies) point to an improvement in the U.S. energy balance. As petroleum imports fall, the U.S. trade deficit will decrease. Further, slower consumption growth will put less pressure on world oil markets, thereby helping to moderate increases in the price of oil due to rising petroleum consumption in developing countries.

 Economic Review

 Manufacturing Activity December 2012

Donald A. Norman, Ph.D., senior economist

In this audiovisual presentation, Don reviews the most recent manufacturing data and discusses the volatility in U.S. manufacturing output growth due to Hurricane Sandy. Fortunately, 20 out of the 25 industry groups showed an increase in output in November, indicating broad gains throughout manufacturing. He summarizes MAPI's manufacturing growth forecast for 2013 and concludes with a discussion of the impact of the slowdown on manufacturing employment growth.

 Economic Report

 Global Outlook Report Dec. 2012: Are regional challenges escalating into a global risk?

As the protracted saga of world economic troubles that began in 2007 persists, there is growing concern that a wide range of regional economic vulnerabilities could morph into a global risk, which might be difficult to control with policy ammunition so low in many key countries. U.S. economic sluggishness, a renewed recession in the unstable eurozone and sharp slowdowns in the growth rates of major developing economies have created a risk-averse world business climate, with negative implications for capital investment activity in the developed and developing blocs.

 U.S. Industrial Outlook -- Sluggish growth ahead for industrial activity in 2013

Our forecast for 2013 is that 14 of the 24 industries for which our modeling allows a detailed forecast will grow, 4 industries will be flat and 6 will decline. We believe concerns over business prospects in Europe, the uncertainties about the U.S. fiscal cliff and federal deficit reduction negotiations and an increase in worrisome regulations have encouraged businesses to sit on the sidelines and wait to see what happens. We forecast that manufacturing production will increase 2% in 2013 and 3.2% in 2014, and then average 3.6% growth from 2015 to 2017.

 European Industrial Outlook: Manufacturing Held Back By Uncertainty, Prolonged Eurozone Crisis

The Eurozone is back in recession. This second downturn is wide-ranging and we see little support of aggregate demand. Regional differences in manufacturing performance persist, and total industrial output fell 2.3% in the third quarter in the Eurozone and 2.7% in the EU27. In the Eurozone, intermediate goods and consumer durables bore the brunt of output attrition in the third quarter. Somewhat surprisingly, production of capital goods has softened only slightly over the past year, buoyed by external demand from Asia and the Middle East.

 Manufacturing Facts: A New MAPI Production, is a collection of the key facts and figures that define the state of the U.S. manufacturing industry.

 Manufacturing Facts: U.S. Dominance in Product Innovation Begins to Slip

The manufacturing sector has long been a catalyst for U.S. strength in disruptive, breakthrough innovations. But as developing countries with export-oriented growth strategies have begun to embrace innovation as a means to competitiveness in high-technology product markets, U.S. dominance has been challenged. During 2011, U.S. inventors were awarded 48% of all U.S. utility patent grants, well below the 60% seen in 1980.

 Manufacturing facts: The U.S. has a structural cost disadvantage

Since 2003, MAPI and The Manufacturing Institute have tracked the excess burden of structural costs -- corporate tax liability, employee benefits, tort litigation, regulatory compliance and energy -- of U.S. manufacturers relative to their counterparts in our nine largest trading partners. Taken together, 2011 structural costs were 20% higher than for our major competitors, up from 17.6% in 2008.

 

Manufacturing facts: Industry's share within countries declines

The share of an economy's value-added that is generated by manufacturing has been on the decline in the developed world for decades. In a nutshell, consumers increasingly demand services and producers make the necessary accommodations. But manufacturing in the United States plays a significantly reduced role in the economy relative to most of its industrial trading partners. Today, Germany's and Japan's manufacturing output relative to GDP stands some 7-8 percentage points higher than the American equivalent.

 Manufacturing facts: Despite rhetoric, regulations are as burdensome as ever

More than any other sector, manufacturers bear the highest share of the cost of regulatory compliance. Many regulations have benefits for society, yet few people understand their costs and their impact on companies facing intense competition with overseas firms that often do not have similar costs. Manufacturers spend an estimated $192 billion annually to abide by economic, environmental and workplace safety regulations and ensure tax compliance -- equivalent to an 11% "regulatory compliance tax."


Notice

Available for NFPA member companies’ exclusive, confidential, internal use only. No one may make or distribute copies or reuse all or any part of this report without the written permission of NFPA.
Disclaimer
This report is made available by NFPA as a service to the fluid power industry and contains information provided by companies in the industry. NFPA does not recommend or endorse any particular use of this report. NFPA, its directors, members and employees are not responsible for errors or omissions in the report or for loss arising from its use and disclaim all warranties and guarantees, express or implied, with respect to the information in this report.