Member Briefing November 7, 2023
US Factory Employment Fell in October – Wages Continue to Rise
Manufacturing employment fell 35,000 in October. Strikes in the automotive industry accounted for the bulk of that decline, with employment in the motor vehicles and parts sector off by 33,200. At the same time, hiring has been quite sluggish this year among manufacturers, with the sector losing 14,000 workers year to date. There were downward revisions to the data in recent months. With that said, there were 12,960,000 workers in October, down from 12,995,000 workers in September, which was the best reading since November 2008.
The average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.2% to $26.68 in October, with 5.1% growth over the past 12 months. This continues to point to a solid overall labor market, with wages rising strongly despite signs that manufacturing hiring has softened year to date.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- Israeli Military Begins Push Into Gaza City - WSJ
- Few Reasons for Optimism After Antony Blinken's Diplomatic Dash - BBC
- Over 300 Americans Escape Gaza In Recent Days, White House Says - Forbes
- Hamas Hostages: Who Are the People Taken From Israel? - BBC
- Irish Girl, 8, Who Was Reportedly Killed by Hamas Now Believed to be a Hostage in Gaza - NYT
- Jordan Airdrops ‘Urgent Medical Aid’ Into Gaza As UN Agencies Demand Immediate Humanitarian Ceasefire - Forbes
- The UN is in Disarray Over the Israel-Hamas War – Politico
- Netanyahu suspends Minister Who Suggested Dropping Nuclear Bomb on Gaza – The Hill
- Israel-Hamas War in Gaza: What is the History of the Conflict? – Reuters
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Moscow Bombs Odesa After Ukraine Destroys Russian Warship in Crimea - Politico
- Zelensky Says Israel-Gaza Conflict Taking Focus Away from Fighting - BBC
- Zelensky’s Top Aide Slams West Over ‘War Fatigue’ - Politico
- US Exhausts $18B Ukraine Support Fund - Reuters
- Russian Olympic body launches sport court appeal against IOC suspension: CAS - SportStar
- Russia's Military Suffers Blow As Ukraine Deploys New Weapons - Newsweek
- Russia Finds Damage to its Baltic Sea Telecoms Cable - Politico
- EU weighs advancing Ukraine's membership bid as Russia war drags on – Reuters
- Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Janet Yellen, U.S. Treasury Secretary, Will Meet With Chinese Counterpart
US Treasury Secretary Janet Yellen and her Chinese counterpart will hold two days of talks in San Francisco this week, a step toward more-normal ties ahead of a long-anticipated meeting between the leaders of the world’s two largest economies. Yellen and Chinese Vice Premier He Lifeng — the nation’s top economic official — will meet on Nov. 9-10, the Treasury Department said in a statement Monday. That’s just before the US hosts a week of gatherings in the California city that will bring together leaders and senior ministers from some 21 Pacific Rim economies, under the auspices of the Asia-Pacific Economic Cooperation group.
The US has said it doesn’t seek to decouple from China, though it has been looking to “de-risk” and diversify, partly through strengthening economic ties with allies in the Indo-Pacific region, a strategy that will be a key theme for the Biden administration during the upcoming APEC summit. The diplomacy is “designed to further stabilize the relationship and make progress on key issues,” Yellen wrote in an opinion piece being published in the Washington Post on Monday.
In The Digital Era, Manufacturers Must Make Securing Their Operational Technology A Priority
In this new digital manufacturing era, from edge computing and robotic process automation to artificial intelligence and machine learning, firms have never enjoyed as many opportunities to increase efficiency, boost effectiveness and enhance customer experiences. But these heightened capabilities carry heightened cybersecurity risks, too — and not just from an information technology (IT) perspective.
The majority of today’s manufacturing plants are multi-generational, featuring machines and devices that were in place far before anybody started talking about Industry 4.0. Many are simply not designed to protect against the dangers of a modern, interconnected operating landscape. As they embrace the potential of these new digital tools, firms can therefore not rely on retrofitting their existing IT security solutions for their plants and production facilities. Instead, they require a custom-designed strategy to safeguard their operational technology (OT) against growing threats.
COVID Update – At Least 14% of Americans Have Long COVID, Research Suggests
One in seven people in the US reported having had long COVID by the end of 2022, suggests a large-scale investigation of long COVID and symptom prevalence by academics at UCL and Dartmouth. Having had long COVID is associated with anxiety and low mood, as well as an increased likelihood of continued physical mobility problems and challenges with memory, concentration or understanding, according to the findings published in PLOS ONE.
The researchers reviewed data from 461,550 people who responded to the US Census Bureau's Household Pulse Survey from June to December 2022. They were comparing people who said they had never had COVID-19, with those who had had a COVID-19 infection without lingering symptoms, and those who currently or previously had long COVID. The researchers found that nearly half (47%) of people surveyed reported having had COVID-19 at some point, while 14% of the total had had long COVID at some point, half of whom (7% of the total) still had long COVID symptoms when answering the survey.
Johnson Embraces Deficit Fight, Setting up Battle Over Medicare, Social Security
Democrats and progressive advocacy groups are homing in on Speaker Mike Johnson’s (R-La.) past support for steep cuts to entitlements, as the new speaker embraces a deficit commission that could spotlight the issue in the runup to the 2024 election. Johnson’s fervent support for trillions of dollars in cuts during his time as chairman of the Republican Study Commission (RSC) could be a blueprint for GOP budgets if they win control of the government. Social Security, Medicare and Medicaid currently make up nearly half of the entire federal budget, with a total annual price tag of $2.7 trillion.
“The greatest threat to our national security is our nation’s debt,” Johnson said during his first speech in the House chamber after he was elected Speaker. Johnson promised to establish a bipartisan debt commission “immediately,” and indicated at a press conference this past week that he was close to naming members. Entitlements have long been a political third rail, but some in the GOP wanted to use the debt ceiling negotiations to extract promises to reduce entitlement spending.
The GOP Majority Runs Through New York
The New York gang that brought the expulsion resolution against Rep. George Santos—including Reps. Nick LaLota, Marc Molinaro, Brandon Williams, and Mike Lawler—has often been in the news as Santos’ biggest Republican critics. But those members are center-stage in the current Congress for another big reason. As some of the 2022 midterms’ biggest close-contest victors, each of whom won in a district President Joe Biden carried in 2020, they’re largely responsible for helping Republicans eke out their current four-seat majority—and they’re among House Democrats’ top targets as they try to turn the tables in 2024.
Williams and Molinaro hail from upstate districts, while Lawler, LaLota, and D’Esposito represent chunks of the sprawling New York City suburbs on Long Island and in the Hudson Valley—fruitful territory for the GOP’s bedrock 2022 messaging about the cost of living and crime. But in 2024 they won’t be riding the coattails of former Rep. Lee Zeldin, who mounted an unexpectedly strong challenge to Gov. Kathy Hochul in last year’s governor’s race. Instead, each will face the headwinds of a Biden reelection contest.
Maersk Cuts 10,000 Jobs as Shipping Demand Falls
One of the world's biggest shipping firms is to cut 3,500 more jobs due to lower freight rates and demand. AP Moller-Maersk already cut 6,500 roles earlier this year as part of "rigorous cost containment measures" but said more redundancies were needed. The firm, which transports goods for major retailers such as Nike, said profits had plunged by 92% in its most recent quarterly results. It said "worsening" prices for shipping by sea required further job cuts.
The cost of shipping goods soared in the first year of Covid when lockdowns lifted and businesses began to resume trading, increasing their orders for stock. Such high demand led to congestion and logistical problems at UK ports. There was also a shortage of shipping containers in Asia, which helped drive up inflation. More recently, however, high inflation and rising interest rates have curbed spending and dampened demand. "Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base," said Maersk chief executive Vincent Clerc.
Siemens to Spend $150 Million on Electrical Equipment Factory as Part of $500 Infrastructure Wave
As part of an international play to invest in high-tech infrastructure internationally, Siemens AG announced November 3 it would build a new, $150 million manufacturing plant in the Dallas-Fort Worth area to build electrical equipment for data centers. The new plant will be the latest of Siemens’ U.S. infrastructure investments, including a new electrical equipment factory in nearby Grand Prairie, Texas, another in Pomona, California, and a rail manufacturing plant in Lexington, North Carolina.
All told, the company expects the new investments, which total $500 million, to create a total of 1,700 U.S. jobs. Siemens says production at the newly announced Fort Worth facility will start in 2024 to meet strong demand: The company said it expects demand for data-center equipment to grow by 10% annually through 2030. The U.S. investments are part of a global strategy announced by Siemens in June to invest in high-tech factories and infrastructure around the globe, including in the U.S., Southeast Asia, China, and Europe.
Parker-Hannifin, Ingersoll Rand Execs Sustain Optimistic Notes on Demand
Amid a rather dour earnings season and during a week featuring middling-to-poor data points from the Institute for Supply Management and the Bureau of Labor Statistics, investors and market watchers looking for optimism could find nuggets in the conference calls from industrial bellwethers Parker-Hannifin Corp. and Ingersoll Rand Inc. After reporting quarterly results and forecasts that helped their shares climb nearly 10% Thursday and Friday, executives of both companies said they still see global demand for their products broadly holding up, even accounting for some customers’ focus on trimming their inventories as well as several Asian economies’ inability to gain traction.
The upbeat commentary and outlook from Parker and Ingersoll executives fit with the nonresidential construction picture painted by the Associated Builders and Contractors. Their more optimistic assessment is reflected in the Census Bureau’s index of manufacturers’ new orders, which turned positive year-over-year in August for the first time since April and moved up solidly in September.
Manufacturing Construction Spending Slips in September – Off Record August High
Private manufacturing construction declined 0.4% from $199.25 billion at the annual rate in August to $198.45 billion in September. This remained not far from the record high in May, which was $199.73 billion. Manufacturing construction has soared dramatically, up 62.5% year-over-year, as the sector continues to make significant increases in the capacity in the United States. This should bode well for future growth in manufacturing in the U.S. moving forward. At the same time, private manufacturing construction activity has stalled somewhat more recently, albeit at an extremely elevated pace, averaging $196.83 billion over the past six months.
In September, total private construction spending rose 0.4%, with private residential construction up 0.6% for the month. Private single-family housing construction rose 1.3% in September, but multifamily construction inched down 0.1%. On a year-over-year basis, total private construction has risen 6.9% since September 2022, but with private residential activity down 2.2%. Private single-family residential construction has declined 5.9% over the past 12 months. Meanwhile, public construction spending increased 0.4% in September, with activity up 15.5% year-over-year.
Venture Capital Cools on Supply-Chain Tech Startups
Venture-capital firms that once provided supply-chain technology startups with hefty backing at gaudy valuations have been tightening their pursestrings this year, pushing some of the businesses to slash costs, cut staff and look for other ways to survive in a weak freight market. Thinning investor support contributed to the collapse of digital freight startup Convoy, which ceased operations in October just 18 months after topping out at a $3.8 billion valuation.
Venture firms concluded 404 deals totaling $5.7 billion for logistics companies in the first half of this year, down from 727 deals totaling $22.7 billion during the same period last year, according to PitchBook Data. VC funding for the sector skyrocketed to a peak of more than $62 billion in 2021, according to PitchBook figures, as supply-chain disruptions during the Covid-19 pandemic put a spotlight on tech companies touting tools to help solve widespread shortages.
The New Headache for Bosses: Employees Aren’t Quitting
The white-collar labor market is softening to a point that companies are encountering an issue that would have been unthinkable in the era known as the Great Resignation. These days, too few people are voluntarily leaving their jobs. Turnover has declined so steeply at some large employers that companies now find themselves over budget on certain teams, requiring leaders to weigh whether to postpone projects or to cut additional staff as the end of year approaches. Other bosses worry about how to keep star employees engaged when there are far fewer vacant positions internally, making it harder to move people into new roles.
The decline in quitting would seem a welcome development for bosses who spent years bemoaning high levels of job-hopping and rapidly rising salaries. But some executives said they have been caught by surprise at how quickly the labor-market dynamics flipped, posing new challenges.
Tesla Is Reportedly Planning To Build A Sub-$27,000 Car At Its Berlin Factory
Tesla is planning to build a new electric car model that will be priced at around $25,000 from its factory near Berlin, Reuters reported Monday, making it the company’s cheapest offering that could allow it to compete against budget EV makers from Europe and China. According to Reuters, Tesla is aiming for a $26,800 (€25,000) price point for the car, although it is unclear if it will be an entirely new model or a cut-down version of an existing one.
The plan to build this lower-priced car was reportedly discussed last week when Tesla CEO Elon Musk visited the Berlin-Brandenburg Gigafactory located in Gruenheide, which makes the Model Y. The company believes it is close to achieving a manufacturing breakthrough that would allow it to cast the underbody of its cars as a single piece, resulting in lower costs, the report added.Tesla’s current cheapest car in the EU is its Model 3, starting at $46,200 (€42,990).
Read more at Plastics Manufacturing and Machining
DoD Orders $420M Worth of Combat Vehicles
Oshkosh Defense, Oshkosh, Wis., was awarded a $208.9 million from an earlier contract to supply an unspecified number of Joint Light Tactical Vehicles, the “go-anywhere, do-anything light tactical vehicle,” developed for use by the U.S. Air Force, U.S. Army, U.S. Marine Corps, and Special Operations Command. The work will be performed in Oshkosh, Wisconsin, and is estimated to be complete by September 2025.
Separately, $211.47 million was assigned to BAE Systems Land & Armaments LP to supply 40 Amphibious Combat Vehicles (ACV.) The ACV is an assault vehicle developed for the USMC as a high-water-speed vehicle, but later reconceived as several types of amphibious-capable vehicles. ACVs are available in four variants; the Personnel variant – capable of carrying three crew members and 13 Marines, plus two days’ worth of combat equipment and supplies – will be delivered under the current order. BAE Systems Land & Armaments will carry out the work in York, Penn.; Aiken, S.C.; San Jose, Calif.; Sterling Heights, Mich.; and Stafford, Va., with an expected completion date of February 2026.
Read more at American Machinist