by Gary Mintchell | Dec 13, 2016 | Commentary, News
Well, we have a new US President coming into power in January. What impact will President Trump along with a Republican House and a Republican Senate have on manufacturing? Even at this point with a month until inauguration, we are getting a glimpse, but it’s still a guessing game. Trump and Congressional leaders are not on the same page on all matters of policy, so this will be interesting to see play out.
Robert McCutcheon, Partner, US Industrial Products Leader, with PwC called yesterday to discuss a paper he has written—Five post-election topics on the mind of domestic manufacturers . This paper, part of a broader series of research and reports from the firm, looks specifically at five areas of policy that will impact manufacturers. These are Tax, Infrastructure, Military, Regulation, and Trade.
Of these, McCutcheon told me that manufacturers are most interested not surprisingly in Tax and Regulation policies. These can have quick and direct impact on manufacturers’ bottom lines. A close third is Trade policy. I’m watching the dance that Trump has started around China—both the Taiwan issue and the Trade Pact (where the US stands to lose influence in all of Asia). So I was curious especially for McCutcheon’s analysis on these.
What follows are taken directly from the paper. If anyone wants to share their wishes or concerns specifically about manufacturing policies (not about politics in general), the comments are open.
Five Post-Election Manufacturing Topics
Undoubtedly, there will continue to be significant questions about the future of domestic manufacturing post-election. With Republican control of both the White House and Congress, one thing seems clear: Change is coming. Here are the five key policy discussions that could have significant implications for domestic manufacturing over the next four years:
Tax
The results of the 2016 election will have significant impact on the direction of tax reform over the next four years. President-elect Trump has stated that one of his top priorities is comprehensive tax reform to significantly lower individual and business tax rates. Under his proposed plan, the top individual tax rate would be lowered from 39.6 percent to 33 percent, and the US corporate tax rate would be lowered from 35 percent to 15 percent. Owners of partnerships, S corporations, and other “pass-through” business entities could elect to be taxed on their pass-through business income at a flat rate of 15 percent, rather than under the regular individual tax rates. US-based manufacturers also would be allowed to elect full expensing of plant and equipment (with no deduction for interest expense). President-elect Trump also has proposed a 10 percent “deemed” repatriation tax on the foreign earnings of US-based companies.
President-elect Trump’s call for action on comprehensive tax reform is expected to receive strong support from Republicans in Congress, but the divisive nature of the 2016 elections could mean there will be no “honeymoon” period for the new president. House Republicans have been drafting statutory language to advance the tax reform “blueprint” that they released earlier this year, which differs in some important respects from Trump’s tax proposals. House Speaker Paul Ryan (R-WI) has said a Republican-controlled Congress could advance tax reform in 2017 by using “budget reconciliation” procedures that allow legislation to be approved in the Senate with a simple 51-vote majority, instead of the 60 votes generally needed to advance legislation.
Infrastructure
President-elect Trump has made it clear that there will be significant infrastructure investments that will undoubtedly bring benefits to the manufacturing industry in the engineering and construction sector, especially now that Trump has announced his plan to spend $1 trillion over the next decade to upgrade the nation’s roads, bridges and waterways. Lawmakers on both sides of the aisle are now hopeful they could reach agreement on at least one bipartisan matter. His plan vows to reduce bureaucracy and government red tape and to rely principally on public-private partnerships and private financing supported by the use of federal tax credits for private financiers. We should also see upstream benefits in the supply chain as infrastructure spending generally results in a significant increase in economic activity from the materials, goods and services consumed in these projects.
Trade
Trade was one of the cornerstones of Trump’s campaign, promising a radical trade agenda, and vowing to withdraw from the Trans-Pacific Partnership trade deal and renegotiate with the North American Free Trade Association. This has led many of America’s top manufacturers to urge President-elect Trump to scale back on his trade initiative and pursue a more nuanced approach to trade with China and Mexico. In an open letter to Mr. Trump, chief executives from more than 1,100 US companies warned of “an urgent need to restore faith in our vital economic and government institutions.” Many of these business leaders have expressed concerns about economic uncertainty and trade threats.
Some industries, however, may feel that a change in the US position around trade will benefit them. The steel industry, for instance, has been hit hard with anti-dumping and “unfair trade” cases for many years. A new stance on trade tariffs could significantly benefit domestic steel producers. The question regarding the ramifications of these changes, and how they will not only impact imports and exports, but also overall trade relations, remains.
Military spending
We anticipate an impact for the aerospace and defense sector as a result of the proposed increase in military spending. Plans include an increase in the Army’s active force to 540,000 troops, the Navy building a 350-ship fleet and the Air Force increasing the fighter fleet to 1,200 combat-coded aircraft. Estimates vary, but these proposals could increase the defense budget by hundreds of billions of dollars over the next four years, impacting defense contractors as well as their supply chains.
Regulation
President-elect Trump’s plans include asking all department heads to submit a list of every wasteful and unnecessary regulation, reforming the entire regulatory code in an effort to keep jobs and wealth in America, declaring a temporary moratorium on new agency regulations that are not compelled by Congress or public safety, and canceling hundreds of existing executive orders.
The US has already undergone a shale revolution which positively impacted the manufacturing sector including, but not limited to, the chemicals industry. By lifting some of these regulations, we may see more economic activity in the manufacturing sector overall. The President-elect’s pledge to reduce regulation could lead to exploration and new development as well as new pipeline projects that could not only benefit the oil and gas industry but also the downstream industries that consume much of this output as feedstock into their manufacturing processes. This could contribute to a more cost competitive domestic manufacturing environment.
Final Word
There is a lot of uncertainty around how the election results will ultimately affect domestic manufacturing. No doubt the new Trump administration, with Republican control of Congress, will result in change. We will continue to monitor policies as they develop across all five of these categories over the coming months. Stay tuned as we assess the potential impact on jobs and growth for industrial products companies in the US.
by Gary Mintchell | Sep 29, 2016 | Uncategorized
Join me along with representatives of PwC and The Manufacturing Institute for a Twitter Chat next Tuesday at 1 pm EDT. #MFGTalent
How does all this digital technology we talk about affect manufacturing jobs? What will the future look like.
by Gary Mintchell | Jun 16, 2016 | Leadership, News, Workforce
Here is another one of those cool PwC research reports regarding manufacturing workforce. As always when talking about the present and future workforce, there is good news, bad news, and idle speculation.
We must remember that many of us are filling roles that didn’t exist ten years ago. How many jobs will exist in ten years that we can’t even imagine!
Executives’ Split Opinions on Manufacturing Workforce
PwC, along with the Manufacturing Institute, surveyed 120 US manufacturers, and found that many are still split on the issue of talent shortage – 31% of manufactures believe there is no manufacturing skills shortage now, but there will be in 3 years, while 29% believe there is one and it will only get worse.
Other stats surveyed and topics discussed in the report include:
- 75% of factory floor jobs (R&D, engineering, prototype design) are being filled by those with post-second school education
- 74% of manufacturers are training in-house to raise employee advanced manufacturing skills, with 40% recruiting local STEM students
- While millennials are of focus, what about Gen Z?
- Can manufacturers attract the gaming generation using virtual reality as a draw?
- Wild cards – the maker generation and the gig economy, & the rise of the freelance class
Upskilling manufacturing: How technology is disrupting America’s industrial labor force placed special emphasis on how advanced manufacturing technologies are impacting workforce dynamics. “What we found is that while there is indeed some jitteriness over skills gaps, manufacturers are working to close those gaps. But we’re still in the early stages.”
- Skills shortages are not uniformly felt today: 33% of manufacturers say they have no or only a little difficulty in hiring talent to exploit advanced manufacturing technologies, while 44% have ‘moderate difficulty.’
- The worry is that it will worsen: 31% of manufacturers see no manufacturing workforce skills shortage now but that there will be one in the next three years; 26% say it’s already peaked and is behind us; and 29% said it exists and will only worsen in the next three years.
- The most common strategy to upskill employees in advanced manufacturing is to train in-house, followed by recruiting local STEM students and offering outside vocational training.
- Robots are not stealing manufacturing jobs: 37% believe that the adoption of advanced manufacturing technologies will result in their hiring additional employees; 45% said it will have no impact on hiring; and 17% said it will result in hiring fewer employees.
- But advanced tech is changing job requirements and descriptions: Nearly three-quarters of non factory floor manufacturing jobs are given to candidates with a four year or advanced degree.
Click bait and People As An Asset
I wonder how much of the worry is caused by idle speculation from the press searching for page views? Bad news hyped is as good a formula as “10 ways to attract the opposite sex” for getting clicks to your site. The fact that so many are taking immediate steps to “upskill” their workforce is gratifying.
Too often we forget that people are the most important asset. They come not only with two hands, but they also come with a brain. The more we encourage them to develop and use that brainpower, the more successful our enterprise will be.
by Gary Mintchell | Apr 20, 2016 | Workforce
Many people are concerned about recruiting the next generation industrial workforce. Not only must we recruit younger people, attracting young women into the industry in a variety of professions would be great.
Klein Tools just sent the results of a survey—its second annual “State of the Industry” one. This year, Klein Tools took a new direction with the survey focusing on family and asking more than 200 union and non-union electricians about their experiences getting into the field and on the jobsite.
As a sixth-generation family business, Klein Tools wanted to know how much support electricians get at home, which helps Klein create programs to better support future electricians and their families. The survey also specifically focused on women in the electrical industry, finding how many regularly work on jobsites with union and non-union electricians.
Family Ties & Influence
The Klein ‘State of the Industry’ survey found family and friends have important influence over those deciding to join the industrial workforce and specifically become electricians, particularly among union members. In fact, they may be the strongest factor in determining if someone will apply for an apprenticeship and commit to a career as an electrician.
- Three in ten electricians (30%) have one or more other electricians in the family, with union members (39%) significantly more likely than non-union members (23%) to have another electrician in their family.
- One-half of electricians (51%) were encouraged to become an electrician. More than nine in ten electricians (92%) would encourage someone to become an electrician.
- Two-thirds of electricians (64%) would encourage their children to become an electrician.
- Three in ten electricians (30%) would specifically encourage their daughter to become an electrician.
“Family is what Klein Tools is based on and it’s important apprentices have family support when deciding to become an electrician,” said Mark Klein, president of Klein Tools. “We know not all students receive the support they need when considering trade schools and we are actively working with apprenticeship organizations to ensure students have access to the resources, tools, information and leadership necessary to be successful in this industry.”
Women on Jobsites
According to the U.S. Department of Labor, in 2014 women represented only 2.4 percent of the electrician workforce. Klein Tools wanted to know how often women worked on job sites in the past year and was pleased to find the majority of jobsites had women regularly working on them.
- More than three-fifths of electricians (62%) report having worked with one or more women on job sites in the past year.
- Union members (78%) are significantly more likely than non-union members (51%) to have worked with one or more women on job sites in the past year.
“This is a good start, but is still markedly lower than what we believe it should be,” said Mark Klein, president of Klein Tools. “With numerous talented tradespeople expected to retire in the coming years, we need more trained electricians filling in the ranks and we support anyone who wants to contribute to this ever-changing and challenging industry.”
The Klein Tools ‘State of the Industry’ survey was conducted by Russell Research, an independent survey research firm, which conducted 200 online interviews from January 27 – February 5, 2016, to secure a nationally significant representation. Forty percent of respondents were union members and 60 percent were not.
by Gary Mintchell | Jan 21, 2016 | Automation, Operator Interface, Technology
Apps are so last year. Now the topic of the future appears to be bots and conversational interfaces (Siri, etc.). Many automation and control suppliers have added apps for smart phones. I have a bunch loaded on my iPhone. How many do you have? Do you use them? What if there were another interface?
I’ve run across two articles lately that deal with a coming new interface. Check them out and let me know what you think about these in the context of the next HMI/automation/control/MES generations.
Sam Lessin wrote a good overview at The Information (that is a subscription Website, but as a subscriber I can unlock some articles) “On Bots, Conversational Apps, and Fin.”
Lessin looks at the history of personal computing from shrink wrapped applications to the Web to apps to bots. Another way to look at it is client side to server side to client side and now back to server side. Server side is easier for developers and removes some power from vertical companies.
Lessen also notes a certain “app fatigue” where we have loaded up on apps on our phones only to discover we use only a fraction of them.
I spotted this on Medium–a new “blogging” platform for non-serious bloggers.
It was written by Ryan Block–former editor-in-chief of Engadget, founder of gdgt (both of which sold to AOL), and now a serial entrepreneur.
He looks at human/computer interfaces, “People who’ve been around technology a while have a tendency to think of human-computer interfaces as phases in some kind of a Jobsian linear evolution, starting with encoded punch cards, evolving into command lines, then graphical interfaces, and eventually touch.”
Continuing, “Well, the first step is to stop thinking of human computer interaction as a linear progression. A better metaphor might be to think of interfaces as existing on a scale, ranging from visible to invisible.”
Examples of visible interfaces would include the punchcard, many command line interfaces, and quite a bit of very useful, but ultimately shoddy, pieces of software.
Completely invisible interfaces, on the other hand, would be characterized by frictionless, low cognitive load usage with little to no (apparent) training necessary. Invisibility doesn’t necessarily mean that you can’t physically see the interface (although some invisible interfaces may actually be invisible); instead, think of it as a measure of how fast and how much you can forget that the tool is there at all, even while you’re using it.
Examples of interfaces that approach invisibility include many forms of messaging, the Amazon Echo, the proximity-sensing / auto-locking doors on the Tesla Model S, and especially the ship computer in Star Trek (the voice interface, that is — not the LCARS GUI, which highly visible interface. Ahem!).
Conversation-driven product design is still nascent, but messaging-driven products are still represent massive growth and opportunity, expected to grow by another another billion users in the next two years alone.
For the next generation, Snapchat is the interface for communicating with friends visually, iMessage and Messenger is the interface for communicating with friends textually, and Slack is (or soon will be) the interface for communicating with colleagues about work. And that’s to say nothing of the nearly two billion users currently on WhatsApp, WeChat, and Line.
As we move to increasingly invisible interfaces, I believe we’ll see a new class of messaging-centric platforms emerge alongside existing platforms in mobile, cloud, etc.
As with every platform and interface paradigm, messaging has its own unique set of capabilities, limitations, and opportunities. That’s where bots come in. In the context of a conversation, bots are the primary mode for manifesting a machine interface.
Organizations will soon discover — yet again — that teams want to work the way they live, and we all live in messaging. Workflows will be retooled from the bottom-up to optimize around real-time, channel based, searchable, conversational interfaces.
Humans will always be the entities we desire talking to and collaborating with. But in the not too distant future, bots will be how things actually get done.
