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Member Briefing August 28, 2024

August 28, 2024

Posted By: Harold King in Daily Briefing,

Top Story

U.S. Durable-Goods Orders Rise Moderately In July — Excluding Volatile Transportation Sector

Orders at U.S. factories for long-lasting goods, such as new cars or machinery, jumped 9.9% in July, the Commerce Department said Monday. Economists had forecast a 4% rise in orders for durable goods — products made to last at least three years. Orders have risen in five of the last six months. They dropped 6.9% in June on weak aircraft orders. Excluding the volatile transportation sector, orders were up 0.2% in July after a 0.1% gain in the prior month. Another measure in the report seen as a bellwether for business investment — core capital-goods orders, which exclude volatile sectors like transportation and defense — slipped 0.1% last month after a 0.5% rise in June. Business investment has fallen 1.4% over the past year.

Shipments of core goods, which are factored into GDP, fell 0.4% in July.

Orders for new cars and trucks rose 34.8% in July after a 20.6% drop in the prior month.

Excluding defense, orders rose 10.4% in July.

Orders for computers and electronics fell 0.7%, while machinery orders were flat.

Activity has been treading water due to high financing costs and uncertainty over future trade policies, economists said. Hopes of a rebound in the sector this year have faded but a likely Federal Reserve rate cut could begin to rekindle activity.

Read more at Reuters

Consumers More Confident in August, But Still Worried About the Jobs Market

Consumers grew more confident in August. The Consumer Confidence Index rose to 103.3, notching the highest level in six months, and July's data was revised slightly higher. Household views on current conditions as well as expectations around the future improved, though as seen in the nearby chart both remain well-off pre-pandemic levels. Despite the more recent improvement, overall confidence has moved within a narrow range so far this year.

There is some divergence under the surface and the accompanying release noted a drop in confidence for those earning less than $25K versus higher-income households, those making over $100K, still the most confident income group. This is consistent with other data that suggest lower-income and younger households are growing more vulnerable. Consumers' assessment of their labor market prospects did little to improve in August. The labor differential, or the share of consumers who report jobs as "plentiful" less the share reporting jobs as "hard to get" declined to 16.4% in August from 17.1% in July (chart). The differential has been in a trend decline since reaching an all-time high about two years ago, and it has fallen 15.3 percentage points since January.

Read more at Wells Fargo

Manufactures Alliance Calls for Support of Nuclear Technology to Strengthen Reliability, Meet New York Climate Goals

The member manufacturing associations of the Manfuacturing Alliance of New York are calling on NYSERDA to support a Nuclear Power Alternative to help the State achieve its carbon reduction goals while maintaining strong baseline generation. In a sign on letter to NYSERDA President Doreen Harris alliance partners are “writing in support of your efforts to bring greater awareness around the significant role nuclear power would play in meeting the mandates set forth by New York's Climate Leadership and Community Protection Act (CLCPA). As you have stated, nuclear power produces nearly zero greenhouse gas emissions and is more dependable, providing power even during harsh weather conditions.”

The letter further states we “support the need for a reasonable and attainable approach - one that would allow manufacturing companies and other businesses statewide to keep operations running and people employed. A powerful resource in meeting the state's growing need for accessible, affordable, and reliable energy is nuclear power.

Council members can add their voice by signing the letter here

Global Headlines

Middle East

Ukraine

Other Headlines

Policy and Politics

Another Ukraine Supplemental ‘Likely’ Needed If War Continues On Current Trajectory: DoD Comptroller

While the Pentagon is not yet ready to request a new supplemental spending bill to cover funding in Europe and the Middle East, a top DoD official tells Breaking Defense that barring the sudden conclusion of the conflicts in Ukraine and Israel, the department will “likely” need another funding package from lawmakers. “After a long, hard road we got the [previous supplemental] at the end of April, so we’re still on that. Of course, we are not, at this time, working on one for FY25, which hasn’t started yet. But if nothing changes, we will need to,” DoD Comptroller Mike McCord said in an interview at the Pentagon.

Accordingly, McCord said officials will likely begin crunching the numbers for another supplemental at some point in the future, just so that they can be ready in case they’re called upon. “It would take a big change for us not to still be in that line of work and wanting to restock our inventories and all that,” McCord said of aid for Ukraine. Supplemental spending for Israel, he reasoned, is a less certain need, since factors like a hostage deal could potentially help ease hostilities.

Read More at Breaking Defense

Student Behavior and Mediocre Pay Have Teachers Burning Out on the Job

Students are showing up to school in much of the country this week. Their teachers are already demoralized and exhausted. Student behavior problems, cellphones in class, anemic pay and artificial-intelligence-powered cheating are taking their toll on America’s roughly 3.8 million teachers, on top of the bruising pandemic years. The share of teachers who say the stress and disappointment of the job are “worth it” has fallen to 42%, which is 21 points lower than other college-educated workers, according to a poll by Rand, a nonprofit think tank. As recently as 2018, over 70% of teachers said the stress was worth it.

In surveys and interviews, teachers are most often pointing to a startling rise in students’ mental-health challenges and misbehavior as the biggest drivers of burnout. In the Rand survey, student behavior was the top source of teachers’ job stress. Teaching has long been a relatively low-paid profession that comes with job stability, a decent retirement and a sense of purpose. More teachers no longer feel that is a good deal.

Read more at The WSJ

MTA Deploys Attempts To Stomp Out Fare-Beating As Nearly Half Of NYC Bus Riders Don’t Pay

Fare evasion is so rampant on city buses that almost half of all riders aren’t paying — as scrambling transit officials deploy a new crew of enforcers to catch the freeloaders.The Metropolitan Transportation Authority’s unarmed “fare inspectors” will be stationed in buses and at bus stops after fare evasion skyrocketed from 21% in 2020 to roughly 50% in the first quarter of 2024 — costing estimated millions in lost revenue every year.

“The MTA uses your fares to hire more bus operators and mechanics, expand and modernize our fleet, and improve frequency and reliability,” the MTA said in a statement. “When you pay your fares, you are helping us deliver better service to the over 2 million New Yorkers who rely on buses every single day.” Bus-hopping has cost the transit system $312 million in 2022 alone, according to the agency — sapping a pool of money that helps fund about a quarter of the system’s budget.

Read more at The New York Post

Health and Wellness

Dr. Anthony Fauci Contracts West Nile. Here's What To Know About The Virus

As the U.S. enters peak mosquito season, a prominent figure in public health said his bout with West Nile virus felt like he'd “been hit by a truck.” Dr. Anthony Fauci, the former director of the National Institute of Allergy and Infectious Diseases and a leader of the nation’s early response to the COVID-19 pandemic, made this comment after spending several days hospitalized for West Nile, a mosquito-borne virus.

On Saturday, Fauci's spokesperson told news outlets, including USA TODAY, that the 83-year-old immunologist contracted West Nile and had spent six days in the hospital. He has been recovering since. Fauci's was a rare case. Most people infected with West Nile by mosquitoes don’t develop symptoms, although rare cases can result in lasting neurological issues and even death. The U.S. has seen a surge in human infections beginning with about 66 cases in 2001 and rising to more than 4,100 recorded cases in 2002. There were 284 deaths from West Nile that same year. In 2003, 9,862 people were infected and 264 died in the U.S. Cases are now highest in the central and western U.S.

Read more at USA Today

Election 2024

Industry News

IBM Is Pulling Its Research And Development Programs Out Of China

IBM is shutting down its China research and development department, the latest retreat from the country by top U.S. technology companies. The company is moving its China R&D functions to other overseas facilities, Jack Hergenrother, an IBM executive, told employees at a virtual meeting on Monday morning, according to employees who attended. Hergenrother said IBM faced intensifying competition in China with its infrastructure business declining in the past few years, the employees said. Geopolitical tensions between the U.S. and China have led many multinational companies to reassess their business in China, with some laying off employees and relocating operations to other countries.

Hergenrother said IBM plans to concentrate its R&D in several regions, the employees said. IBM has told some employees it is adding engineers and researchers in places outside China including in Bengaluru, India, according to employees who were briefed. The closure will affect more than 1,000 people, most of them working for the company’s R&D labs and focusing on the development and testing of products such as enterprise software, the employees said. In a statement, IBM said it “adapts its operations as needed to best serve our clients,” without giving details. The changes won’t affect IBM’s ability to support clients in China, it said.

Read more at The WSJ

Global Steel Output Drops

Global steel output fell to 152.8 million metric tons in July, down -5.6% from June and -4.7% from July 2023 – apparently as a result of a significant cut in Chinese steel production. The latest monthly total reported by the World Steel Assn. brings 2024’s cumulative production volume to 1.1 billion metric tons, essentially even (-0.7%) with the comparable total for January-July 2023. The World Steel monthly now forecasts that 2024 global consumption will rise just +1.7% to 1.793 billion metric tons over 2023, about 19 million metric tons less the outlook report issued late last year.

Weak demand from manufacturing and construction sectors has constrained steel output for the past two years – particularly in China, the world’s largest steel producer and steel consumer. As a result, Chinese producers have apparently increased their efforts at exporting steel, and that has resulted in dumping charges against China from India, Thailand, and other regional competitors. Through seven months of 2024 China’s steelmakers have produced 613.7 million metric tons of raw steel, -2.2% less than in the first seven months of 2023. U.S. raw-steel production during July totaled 6.9 million metric tons (7.6 million short tons), 2.9% more than June and -3.8% less than July 2023.

Read more at American Machinist

Aviation Sector Attempts To Balance Growth, Sustainability

As the aviation industry grapples with how to achieve its ambitious sustainability targets, the path forward remains complex and multifaceted. The challenge is not just about reducing emissions and minimizing the industry’s environmental footprint; it’s also about doing so in the face of expected rapid growth in air traffic, an increase in the number of aircraft, and evolving usage patterns. It has been suggested that the solution likely lies in a combination of factors: New energy sources and hybrid technologies are all critical components.

Aircraft construction, advancements in aerodynamics, and the optimization of air traffic control systems and ground infrastructure are set to play significant roles. Digital technologies, including predictive maintenance and better route optimization are essential in enhancing fuel efficiency and reducing emissions. There’s significant investment in new materials, aerodynamics, and digital technologies, all aimed at speeding up the design and production of the next generation of aircraft. Although, given that an aircraft’s useful life spans 30 to 40 years, much of what will shape the industry in 2030 is already in motion with the current fleet and orders. This is why short-term improvements, particularly in the use of sustainable aviation fuel (SAF), are crucial. The industry needs to see a dramatic increase in SAF usage—perhaps by 50-60 percent annually—to meet the ambitious targets set for 2030 and 2050.

Read more at Air Cargo Week

Eli Lilly Releases New Form Of Weight Loss Drug Zepbound For Half The Price To Boost Access, Supply

Eli Lilly on Tuesday released a new form of its weight loss drug Zepbound for roughly half its usual monthly list price to reach millions of patients without insurance coverage for the popular injection, such as those with Medicare. The move also aims to expand the supply of Zepbound in the U.S. as demand skyrockets, and to ensure eligible patients are safely accessing the real treatment as cheaper copycat versions gain traction. The company is now offering 2.5-milligram and 5-milligram single-dose vials of Zepbound for $399 per month and $549 per month, respectively, through its direct-to-consumer website.

Patients typically start treatment with a 2.5-milligram dose, gradually increase the amount and later take so-called maintenance doses to keep the weight off. Patients need to use a syringe and needle to draw up the medicine from a single-dose vial — the version of Zepbound Eli Lilly is releasing Tuesday — and inject themselves. That differs from single-dose autoinjector pens, the currently available form of all Zepbound doses, which patients can directly inject under their skin with the click of a button. Eli Lilly has said the vials will create additional supply capacity because they are easier to manufacture than autoinjector pens.

Read more at CNBC

China Exported $4.6B Worth Of Vehicles To Mexico - What That Means for the US

Blocked from the U.S. by tariffs, Chinese electric vehicle makers have looked elsewhere to sell their high-tech cars. But as Mexico has emerged as a hot spot for Chinese EVs, Washington officials worry the country may be used as a “backdoor” to the U.S. market. Last year, China was the leading car supplier to Mexico, exporting $4.6 billion worth of vehicles to the country, according to the Mexican Ministry of Economy. Some Chinese EV makers, including BYD, have been looking for a further foothold in North America by exploring factory sites in the Mexican states of Durango, Jalisco and Nuevo Leon. The foreign investment would be an economic boost for Mexico. BYD has claimed that a plant there would create around 10,000 jobs.

But U.S. officials worry this could be a part of a larger strategy by Chinese automakers to skirt trade restrictions and enter the American market. “Mexico is an attractive production platform, not only for Chinese companies, but for other companies as well, in part because of that free trade access that it has to the American market,” said Scott Paul, president of the Alliance for American Manufacturing. “And it can do something that in trade terms is called circumvention.”

Read more at CNBC

GM's Cruise Partners With Uber To Offer Self-Driving Ride-Hailing Service

General Motors' self-driving car subsidiary Cruise is partnering with ride-share company Uber Technologies Inc. in a multiyear deal, the companies announced Thursday. Once the service is launched, when an Uber rider requests a qualifying ride on the Uber app, they may be given the option of choosing a self-driving Cruise vehicle. “Cruise is on a mission to leverage driverless technology to create safer streets and redefine urban life," Marc Whitten, CEO of Cruise, said in a statement. "We are excited to partner with Uber to bring the benefits of safe, reliable, autonomous driving to even more people, unlocking a new era of urban mobility."

This new partnership with Uber is not the first time GM has partnered with a ride-hailing company. In 2016, GM invested $500 million in Lyft with plans to eventually develop a fleet of self-driving cars that could be hailed using Lyft’s mobile app. But by 2018, GM had decided to instead launch its own vehicles and network through Cruise.

Read more at The Detroit Free Press

The Plug-In Hybrid Car Starts to Win Over Buyers

The plug-in hybrid, long a fringe technology in the car business, is gaining some traction. As automakers slow-walk plans to roll out more fully electric vehicles in response to lighter-than-expected consumer interest, more are embracing plug-in hybrids, which run on battery power for about 20 to 40 miles before reverting to a gas engine. The technology has been on the market for more than a decade, but sales hadn’t taken off until recently. Some automakers shied away from offering them because of the added cost and engineering complexity—they essentially require two ways to power the car, packed under one hood. The relatively small number of models available also were pricier than gas-powered cars, limiting their appeal.

Car companies are finding more reasons to offer plug-in hybrids, which provide another path beyond full EVs to meet tougher U.S. tailpipe-pollution rules. Ford Motor F -1.42%decrease; red down pointing triangle said this past week that it canceled plans for a fully electric large SUV and instead will offer hybrid versions, potentially including plug-ins. The number of plug-in-hybrid models on sale in the U.S. has nearly doubled since 2019, to 47, according to automotive-research site Edmunds. These include well-known nameplates, such as the Toyota 7203 1.79%increase; green up pointing triangle RAV4 and Ford Escape compact SUVs.

Read more at The WSJ

Tesla Can Challenge Louisiana Direct Sales Ban, US Appeals Court Rules

A divided federal appeals court on Monday revived a lawsuit in which Tesla, the electric car company run by billionaire Elon Musk, challenged Louisiana's ban on direct vehicle sales to consumers. In a 2-1 decision, the 5th U.S. Circuit Court of Appeals in New Orleans reversed a lower court judge's dismissal of Tesla's constitutional due process claim, and vacated her dismissal of its antitrust claim. It upheld her dismissal of Tesla's equal protection claim.

Tesla had sued members of the Louisiana Motor Vehicle Commission, dealerships owned by individual commissioners, and the Louisiana Automobile Dealers Association in August 2022. It accused various defendants of exploiting their control of the motor vehicle commission to drive Tesla from the market by targeting its sales model, which does not use a network of franchised dealers. Tesla accused Louisiana officials of illegally banning direct sales since 2017 and restricting the leasing and servicing of its vehicles in the state. Circuit Judge Jerry Smith wrote that Tesla sufficiently alleged that the defendants had "plausible actual bias," citing emails from the commission's executive director assuring Tesla rivals that their complaints would be addressed.

Read More at Yahoo Finance

What’s the Best Way to Bring AI Into Engineering?

The hype and excitement surrounding advancements in artificial intelligence (AI) have far exceeded practical applications for incorporating AI into traditional digital engineering tools and business processes. Companies face real challenges in confidently iDurable good orders risemplementing AI in a way that provides real value. But another, possibly even more important, factor is how companies approach the use of AI in concert with their workers, so it is collaborative and retains the human decision process to ensure safe and reliable outcomes.

The collaborative approach is key to keeping human decision-making central, to ensure safe and reliable outcomes. Embrace the idea that repetitive or non-value-add work can be done by a machine. Sometimes it is hard to conceptualize the future, especially when it involves complex ideas that only the experts in a particular discipline truly understand. While some may be fearful of AI, this may be because they only see the simple use cases that potentially create harm. These concerns are certainly valid and must be governed if AI is to succeed, but understanding how AI can effectively prevent disasters is also a valid conversation to be had.

Read more at IndustryWeek

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