News and Analysis
Comeback: Why the Future of Industry is in America
The Atlantic’s cover story this month describes “The Insourcing Boom” that is just starting and holds great promise for the U.S. and Ohio economy.
The magazine uses General Electric’s Appliance Park in Louisville as its feature: “After years of offshore production, General Electric is moving much of its far-flung appliance-manufacturing operations back home. It is not alone. An exploration of the startling, sustainable, just-getting-started return of industry to the United States.”
A big reason for the insourcing boom is today’s short cycle product life and the need for quick and nimble product innovation: “In fact, insourcing solves a whole bundle of problems—it simplifies transportation; it gives people confidence in the competitive security of their ideas; it lets companies manage costs with real transparency and close to home; it means a company can be as nimble as it wants to be, because the Pacific Ocean isn’t standing in the way of getting the right product to the right customer.”
Judge French Appointed to Ohio Supreme Court
On Thursday, Governor Kasich appointed Judge Judi French of the Tenth District Court of Appeals to the Ohio Supreme Court. Judge French replaces Justice Evelyn Lundberg Stratton, who is stepping down at the end of the year.
Judge French has been an appeals court judge since 2004.Judge French is well-known to the OMA. She will make an excellent justice.
Manufacturing’s New Era
New from the McKinsey Global Institute:
“Timken, the iconic manufacturer of bearings, came into being in the era of Henry Ford and the birth of the US automobile industry. For much of the company’s 113-year history, it made a single product. But in the past ten years, under CEO James Griffith, Timken has transformed itself into a $5 billion diversified industrial corporation and built virtually all its new plant capacity in Asia, and in the last year the company exported $660 million worth of products from the United States to emerging markets.
“We have had to change the markets that we serve, we’ve had to change the products we’ve served, we’ve had to change the geographies we’ve served—and that’s required a radical change in the human face of the company,” Griffith says.
Timken’s journey is a microcosm of the dynamics and risk-and-reward opportunities facing manufacturers of all stripes in a new manufacturing era marked by the surging growth of emerging markets and their middle-class consumer base.”
Watch the McKinsey video interview of Jim here.
NAM Works to Avert Port Labor Strike
National Association of Manufacturers (NAM) President and CEO Jay Timmons issued this statement regarding the labor talks between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX):
“A labor strike of the East and Gulf Coast ports would be a devastating blow to manufacturing supply chains and halt exports of U.S.-manufactured goods. This spells bad news for manufacturers and the millions of men and women who work directly in manufacturing and heavily depend on trade to remain competitive and to support jobs.
While there is no good time for a strike along our nation’s ports, the economic damage could be even more profound as we face the uncertainty of the fiscal cliff. In the event of a strike, the NAM urges President Obama to invoke provisions under the Taft-Hartley Act. The President has appointed a federal mediator, and we are urging both sides to come to a resolution as quickly as possible to avoid further damage to our economy and to protect our exports.”
NAM’s Joe Trauger urges manufacturers to share with him any information about the impacts to your company from this labor uncertainty, such as anticipated costs of holding additional inventory, diverting cargo, lost opportunities and other impacts. The strike threatens to halt all containerized and roll-on/roll-off cargo processed at East and Gulf Coast Ports. According to the Journal of Commerce, bulk, break-bulk, cruise and military ships covered by local ILA agreements would not be impacted.
Nucor’s Brenda Schultz to Lead Ohio Steel Council
Brenda Schultz, Controller of Nucor Steel Marion, this week was elected as Chairman of the Board and President of the Ohio Steel Council. She has served as treasurer of the council, which was created in 2011 to serve as the voice of Ohio’s strong steel industry.
Schultz steps into the shoes of Sal Miraglia, President, Steel Business, The Timken Company. Miraglia is retiring after a long and distinguished career at Timken, where he worked for 40 years and 8 months. He was the founding Chairman and President of the council.
Congratulations, Brenda and Sal!
Sal said this week’s Monday was his last Monday, not just in work but in his life: All the weeks in his future will be six Saturdays and one Sunday!
Manufacturing the Future
McKinsey & Company recently released “Manufacturing the future: The next era of global growth and innovation,” which finds manufacturing is “entering a dynamic new phase.”
“By 2025, a new global consuming class will have emerged, and the majority of consumption will take place in developing economies. This will create rich new market opportunities. Meanwhile, in established markets, demand is fragmenting as customers ask for greater variation and more types of after-sales service. A rich pipeline of innovations in materials and processes—from nanomaterials to 3-D printing to advanced robotics—also promises to create fresh demand and drive further productivity gains across manufacturing industries and geographies,” McKinsey finds.
Against these opportunities is “an extremely challenging environment. In some low-cost labor markets, wage rates are rising rapidly. Volatile resource prices, a looming shortage of highly skilled talent, and heightened supply-chain and regulatory risks create an environment that is far more uncertain than it was before the Great Recession.”
Governor Proposes $1.5 Billion Turnpike Bonds
Governor Kasich this week proposed floating $1.5 billion in bonds secured by future toll revenue from the Ohio Turnpike. This proposal comes after a year-long study of the 241 mile long roadway by KPMG.
Ninety percent of the bond revenue would be used for road and bridge projects in northern Ohio. The turnpike would remain an asset of a renamed Ohio Turnpike and Infrastructure Commission.
KPMG summarizes how this new bonding revenue can be raised: “Currently, the OTC (Ohio Turnpike Commission) is not permitted to leverage the forecast growth in future revenues, due to restrictions incorporated into the OTC’s bond trust indenture, which calculates bonding capacity based on the previous year’s net available revenue. By revising such restrictions, the OTC may create additional borrowing capacity.”
Right to Work Not Governor Kasich’s Priority
As lawmakers in Michigan enacted right-to-work legislation, some Ohio political and business leaders offered reaction. Responding to media inquiries about similar legislation in Ohio in 2013, Governor John Kasich indicated that right to work is not a priority for his administration at this time. Echoing the governor were leaders of Ohio’s metro chambers of commerce. Meanwhile an organization known as Ohioans for Workplace Freedom is collecting signatures to push a constitutional amendment to enact right-to-work in 2013. Subscribe to OMA’s Government Affairs Community to follow this issue in 2013
General Assembly Completes Work: Heads Home
The 129th General Assembly completed business this week marking the end of the two-year legislative session, and will go sine die next week after Tuesday’s non voting session. Dozens of bills were advanced in the weeks since the November election, although only a few impacted OMA priorities.
An amendment was added to concealed carry legislation House Bill 495 to authorize firearms to be carried in the Statehouse parking garages; House Bill 510 was enacted to modernize taxation on financial institutions including finance arms of some large manufacturers; House Bill 601 would have imposed standard definitions and practices on municipal income tax codes but failed to gain any traction due to strong opposition from local government groups and sympathetic lawmakers.
Also: Republican sponsored health care mandate legislation requiring coverage of autism treatment (House Bill 598 and Senate Bill 381) stalled but looks poised for passage early next session; a resolution to revise the process of legislative redistricting cleared the Ohio Senate but died without House action; a lobbying reform ethics bill (Senate Bill 391) was finished by the Senate but not the House. The 130th General Assembly will convene in early January.
Brown and Portman Team Up on Steel Pipe Dumping
U.S. Senators Sherrod Brown and Rob Portman this week led a group of senators in urging “ the Department of Commerce to maintain the scope of antidumping (AD) and countervailing duty (CVD) orders on oil country tubular goods (OCTG) from China, and extend all efforts within your authority to prevent circumvention and evasion of these orders which have provided relief to the U.S. industry and American workers hurt by dumped and subsidized OCTG imports from China.”
The strongly pro-manufacturing Ohio senators wrote: “Unfortunately, these orders have been undermined by a variety of schemes designed to weaken them. These efforts include outright evasion and circumvention of the orders as well as less obvious but equally harmful attempts to narrow their scope. If successful, these ploys will enable Chinese companies to dump massive quantities of subsidized Chinese OCTG into the United States without paying the AD and CVD duties that they rightfully owe. The consequences are significant. Chinese actions will result in further injury to the thousands of American workers and businesses as well as the weakening of U.S. trade law.”