Member Briefing October 5, 2023
JOLTS: Manufacturing Job Openings Rise in August
The number of manufacturing job openings in the U.S. rose in August, with both durable and nondurable goods manufacturers reporting higher numbers of postings, according to the Bureau of Labor Statistics. There were 616,000 manufacturing job openings in August, up from 544,000 in July. Here are some more details:
- Manufacturers hired 402,000 workers in August and had 391,000 separations.
- Manufacturing’s net hiring (hiring minus separations) was 11,000, an improvement from July’s 10,000. The first eight months of 2023 saw essentially flat hiring in the sector.
- Quits fell in August, to 229,000 from July’s 259,000.
August’s layoffs-and-discharges number matched that of May, at 142,000.
“Overall, these data continue to reflect a labor market that remains solid despite cooling over the past year, with manufacturing job openings above pre-pandemic levels,” said NAM Chief Economist Chad Moutray.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- 'Everything for the Front': Russia Allots a Third of 2024 Spending to Defense – Reuters
- Russian Journalist Who Protested Ukraine War on Live TV Given 8½-Year Sentence - WSJ
- Russia Says it Has Foiled a Major Ukraine Drone Attack - AP
- Russia’s Crimean Red Line Has Been Erased – Foreign Policy
- EU Estimates Ukraine Entitled to €186bn After Accession - EuroNews
- Machinery from New York-Based Company Used to Build Russian Weapons - PBS
- EU, Russia and US Held Secret Talks Days Before Nagorno-Karabakh Blitz - Politico
- Biden Says He Will Deliver 'Major' Speech on Ukraine - NBC
- 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
MEMA Survey: UAW Strike Has Caused Nearly 30% of Suppliers to Lay Off Workers
The Motor & Equipment Manufacturing Association (MEMA) Original Equipment Suppliers recently surveyed its members on the impact of the UAW strike against the Detroit Three. Key takeaways from the September 29, 2023, survey, according to MEMA, include:
Nearly 30% of surveyed vehicle suppliers have laid off some direct labor employees as a result of the strike.
Additional suppliers will initiate layoffs with more than 60% expecting to begin layoffs by mid-October.
70% of vehicle suppliers have concerns about their sub-suppliers’ ongoing financial viability.
More than 50% of idled suppliers indicated they need at least one week to return production to pre-strike levels.
Vehicle suppliers employ over 900,000 workers, over six times more than the 146,000 UAW Detroit Three autoworkers, according to MEMA. Additionally, suppliers contribute 2.5% of the U.S. Gross Domestic Product (GDP).
ISM: Service Sector Stumbles but Remains in Expansion
Service sector activity expanded at a slower pace in September. The overall ISM services index slipped to 53.6 last month. While that is down from a month earlier, it remains higher than its past six-month average and is still broadly consistent with expansion. The measure of current activity rose to 58.8, suggesting a faster pace of growth. But there were some signs of caution within the other components.
For starters, the new orders component slumped 5.7 points to 51.8, or the lowest in nine months, signaling a loss of demand (chart). Twelve of 18 industries did report an expansion of orders, but selected comments referenced “slightly lower number of new projects” and “decreased guest traffic" demonstrating somewhat of a slowdown. Order backlog also jumped 6.8 points, but at 48.6, remained consistent with a contraction in backlog. The employment component came in at 53.4, which is consistent with a more moderate pace of job growth in September. When the full Employment Situation report is released on Friday, we expect to see employers added workers at a slower clip last month.
COVID Update - FDA Authorizes Novavax’s Updated Covid Vaccine
A third COVID-19 vaccine, made by Novavax, will soon be available in pharmacies and doctor's offices. The Food and Drug Administration Tuesday authorized use of the Novavax vaccine, which is based on a different type of technology than the other two available vaccines. Both types of shots train the immune system to identify and target the spike protein found on the surface of the SARS-CoV-2 virus. The Pfizer-BioNTech and Moderna vaccines use messenger RNA technology, while the Novavax vaccine uses a protein to do the same thing.
Protein-based vaccines have been around for a long time, used to prevent hepatitis B, pertussis, pneumonia and meningococcal disease, among other diseases. But they typically take longer and are more complicated to manufacture. It takes about four months for Novavax, which makes its vaccines in insect cells, to transform from a genetic sequence of a viral variant to a vaccine. The FDA authorization enables the Novavax shot to be used as a booster in people ages 12 and up.
House Closed for the Week - What Happens Next in the House Speaker Race
A Republican Party still reeling from the sudden ouster of Kevin McCarthy is now rushing to find a new leader who could unite a fractured conference and be elected speaker as soon as next week. After a chaotic day of voting toppled McCarthy, Speaker Pro Tempore Patrick McHenry (R., N.C.)—running the House temporarily—closed the chamber to give colleagues time to find their next leader. He said Republican hopefuls would make their pitch next Tuesday with the goal of a vote the following Wednesday. House business, including efforts to fund the government before a November deadline, was put on hold until then.
McCarthy’s final affront, in the eyes of most of his GOP critics, was the decision last weekend to push off a government shutdown in favor of short-term spending deal that Democrats supported. The new speaker will have to wrestle with the same questions, as the federal government is only funded through Nov. 17. The person will also need to balance widely held GOP priorities such as border security with demands from the right flank, stepping up the impeachment investigation into the Biden family’s finances, and sharply cutting government spending. The next speaker will have to navigate pressure from the Biden administration and Senate leadership to send more aid to Ukraine, despite shriveling support from House Republicans.
UAW Strike Has Cost GM $200 Million — But Could Plunge Into Billions if Strike Continues
General Motors estimated the cost of the United Auto Workers strike to be about $200 million during the third quarter and the company this week said it filed for additional credit of up to $6 billion in case of ongoing and expanded labor troubles. GM is basing the $200 million cost figure on lost vehicle production from two of the three GM assembly plants affected by the strike, said GM spokesman Jim Cain. When GM builds a vehicle and ships it to a dealer, that’s when GM records the revenue associated with the production of the vehicle. With the plants down, all the revenue and profit from those vehicles never happens so that is how it figures out the cost.
"It’s noteworthy, but not a lot of damage because most production is not shut down yet and $200 million on several billion of quarterly (earnings before interest and taxes) is not a large proportion," Morningstar Auto Analyst David Whiston told the Detroit Free Press. "As more plants get added, it of course gets worse, especially once full-size SUVs and full-size pickups get added." Whiston estimated that a complete shutdown of GM's plants in the U.S. would cost it "well over $100 million per day so about $10 million per day for now is not terrible, but not good either."
Read more at the Detroit Free Press
Hochul: Nearly 400 State Businesses Seeking to Hire 18,000 Venezuelan Migrants
New York is facing dual crises, according to Gov. Kathy Hochul: An influx of migrants severely straining government resources and a workforce shortage vexing employers.On Monday, Hochul announced the initial success of a strategy to address those problems jointly. Speaking in New York City, Hochul said that a state-run jobs portal – seeking to connect employers with asylum-seekers – had already received responses from nearly 400 employers, who have 18,000 jobs available.
On Sept. 20, President Biden’s administration announced plans to grant temporary protected status to an estimated 472,000 Venezuelans who arrived in the country by July 31. The status allows those Venezuelan migrants to live and work in the United States for 18 months. They may begin applying on Tuesday for that status. According to Hochul, while over 50% of the employer responses came from New York City, many employers from upstate also are seeking to hire asylum-seekers. Of the 400 total employers, 25% are from the hospitality sector, 21% from health or social services, 10% from manufacturing, 5% retail and 5% construction.
9 Cybersecurity 'Musts' to Include in Your IIoT Strategy
Despite the clear benefits of IIoT, the path to its full integration isn't without hurdles. Given the interconnected nature of IIoT devices, they are potential gateways for cyber threats. The essence of IIoT, built on openness and interconnectivity, can, paradoxically, introduce new vulnerabilities to illicit information harvesting, data leaks, and intellectual property theft. Staggeringly, on average, upwards of 75% of organizations are only dipping their toes into the waters of IoT cybersecurity risk mitigation practices and technologies, with their efforts still at the experimental or pilot stages.
The solution? It is crucial to incorporate robust cybersecurity protocols and adhere to secure-by-design principles from the outset of any IIoT strategy. Here are the nine solutions - ordered by the extent of their impact:
Rivian’s Quest to Build the Ultimate Truck Burns Through Billions, But They Look Cool
Rivian Automotive set out to build the ultimate electric vehicle for American consumers—a pickup truck with sports-car handling and a dizzying array of features. Engineers gave the truck a beefy underlying metal frame for higher crash-test ratings and one of the most complicated suspension systems on the market for a smoother ride on- and off-road. It can go from zero to 60 miles an hour in 3 seconds. Rivian added pop-out flashlights stored away in the doors and a portable Bluetooth speaker.
All that comes at a cost. Rivian vehicles sell for over $80,000 on average. Yet they’re so expensive to build that in the second quarter the company lost $33,000 on every one it sold. That’s roughly the starting price of a base model Ford F-150. In two years, Rivian has blown through half of its $18 billion cash pile, in part because it struggled to master the nuts and bolts of manufacturing. While production is now growing and losses have narrowed, Rivian still loses money on its vehicle sales. In an industry known for narrow margins and tough competition, Rivian pays too much for parts and produces too few vehicles to cover its costs.
Oil Extends Slump to Lowest in a Month on Slowdown Fears
Oil plunged $4 on Wednesday amid widespread malaise in global financial markets, with recent data adding to concern about the demand outlook for crude and gasoline.Crude’s second-half rally has halted on expectations that interest rates will remain elevated. Gasoline futures also tumbled as demand dropped to the lowest seasonal level in 25 years, signaling slower economic growth. West Texas Intermediate slipped below $86 a barrel to the lowest since early September.
The drop came even as OPEC+ leaders Saudi Arabia and Russia committed to sticking with production curbs of more than 1 million barrels a day until the end of the year. West Texas Intermediate slipped below $86 a barrel to the lowest since early September. Oil had rallied since mid-June as the alliance’s supply cuts tightened the market, with inventories shrinking and key timespreads indicating greater competition for prompt barrels. The surge has run into resistance in recent sessions as investors fret that the Federal Reserve may not be done raising interest rates, with a strengthening dollar making commodities more expensive for most buyers. Major gains in US Treasury yields have also hurt raw materials.
Companies Offer Retention Bonuses to New Hires Amid Recession Fears
Putting something on hold was once reserved for stores in the shopping mall. Increasingly, employers are doing the same with new hires, offering jobs to some candidates but delaying their start dates. A May survey of 1,000 M.B.A. students who were about to graduate learned that nearly one-third of those who found a full-time job won’t start until 2024. A retention-bonus or stay-bonus agreement is a lump sum of money—usually 10% to 25% of a person’s base salary—that a company pays an employee to stay with the company for a predetermined period of time.
The latest trend, which we briefly talked about here in the spring, involves offering new graduates these funds to start work later and encouraging them to pursue additional education and skill development in the interim. One oft-cited example is global consulting firm Bain & Co., which said it would pay M.B.A. hires $30,000 to $40,000 if they delay their start dates until April 2024 and work for a nonprofit, learn a new language or take relevant coursework in the meantime. Law firms courting new associates are in on the action too, with some such as Cooley providing hires with stipends of up to $100,000 to defer their start for a full year.
Boeing Sets Record 737 Production Goal for July 2025
Boeing (BA.N) plans to push production of its bestselling 737 narrowbody jet to a record of at least 57 per month by July 2025, reflecting rising orders and the company's recovery after the 737 MAX crisis, according to two sources with knowledge of the matter. The goal would hit the planemaker's unmet target from several years ago, which was scuttled in 2019 when the MAX was grounded globally following two deadly plane crashes.
The schedule targets 737 production to reach 42 jets a month by December 2023, affirming statements made by Boeing Commercial Airplanes head Stan Deal to Bloomberg TV in June. From there, monthly 737 production - which includes the 737 MAX as well as earlier models used for military planes - is set to grow to 47.2 jets in June 2024 and 52.5 jets in December 2024 before hitting a steady rate of 57.7 aircraft per month in July 2025.
Nobel Chemistry Prize Awarded for 'Quantum Dots' that Bring Colored Light to Screens
Scientists Moungi Bawendi, Louis Brus and Aleksey Ekimov won the 2023 Nobel Prize in Chemistry for their discovery of tiny clusters of atoms known as quantum dots, widely used today to create colours in flat screens, light emitting diode (LED) lamps and devices that help surgeons see blood vessels in tumous. The prize-awarding academy said that the research of the three U.S.-based scientists on quantum dots, which in size ratio have the same relationship to a football as a football to Earth, had "added color to nanotechnology."
"Researchers believe that in the future they could contribute to flexible electronics, tiny sensors, thinner solar cells and encrypted quantum communication," the academy said in a statement. One of the "fascinating and unusual properties" of quantum dots is that they change light color depending on the particle size, while keeping the atomic structure unchanged, said Johan Aqvist, Chair of the Nobel Committee for Chemistry.