Made In Arizona

Why manufacturers are optimistic

Glenn Hamer

June 23, 2017

Energy and confidence defined the latest National Association of Manufacturers annual summit held earlier this week in Washington, D.C.

The right mix of policy reforms and executive and legislative branch leadership has put optimism among manufacturers at a 20-year high.

The Arizona Manufacturers Council, an entity of the Arizona Chamber of Commerce & Industry, serves as NAM’s state affiliate for Arizona. I attended the summit on the AMC’s behalf and came away more excited than ever about what’s in store for this sector.

Manufacturing produces over $2 trillion in economic output and over 13 million jobs. In Arizona, we’re leaders in aerospace, defense and semiconductors. We also manufacture items ranging from golf clubs – PGA-tour-event-winning equipment by Karsten Manufacturing’s PING, for example – to the world’s best refrigerators from Sub-Zero and Wolf.

The sector is defined by cutting-edge technology and innovation, and it’s growing in jobs and output.

Summit speakers included Vice President Mike Pence and Speaker of the House Paul Ryan. Leadership at the highest levels is behind manufacturing now more than ever, a vital sector for economic growth.

We need to convert this attention and energy into the passage of NAM’s legislative agenda. The four top legislative priorities highlighted at the summit:

Tax reform. Speaker Ryan called this a once-in-a-generation opportunity. The vice president also stressed the importance of tax reform. The keys to this effort are to reduce the U.S. corporate tax rate – the world’s highest rack rate – to 15 percent, and to reduce the personal income tax rate, which applies to two-thirds of manufacturers as well.

We need to move to a territorial tax system and eliminate the death tax that harms capital intensive family businesses. Maintaining and even enhancing the permanent research and development tax credit and reducing taxation on capital expenditures are also important for our efforts to accelerate innovation.

Infrastructure investment. Manufacturers need a modern infrastructure to move goods efficiently from shop floor to market. Complex supply chains and just-in-time inventory management require no less. For Arizona, a key here is to build out Interstate 11, which would connect Las Vegas and Phoenix, the nation’s largest cities not currently connected by an interstate.

Regulatory reform. This is an area where much progress is being made, and necessarily so. A 2014 NAM study pegged the cost of regulations for manufacturers at a whopping $19,564 per employee.

Speaker Ryan spoke of implementing reforms in waves.

The first wave was to use the Congressional Review Act to reverse regulations enacted at the end of the previous administration. This mechanism has been used now a record 14 times. Executive orders and other administration activity is also moving at a feverish pace to undo some of the overregulation of the past eight years. The reversal of the punitive gainful employment regulations for higher education is one example.

The next wave is a two-out, one-in approach to any new regulations. It’s not a gimmick. NAM found in a 2016 study that manufacturers face 297,696 restrictions on their operations from federal regulations. If any sector could stand some regulatory relief, it’s manufacturing.

More difficult, but also important, is to pass into law regulatory reform bills that require more robust cost-benefit analyses to justify their necessity.

Workforce development. Skills, skills and skills. Both the vice president and speaker stressed this area. NAM is putting muscle behind legislation that would reauthorize and improve the Perkins Act, which covers career and technical education and vocational programs.

There was also excitement at the summit about the president’s apprenticeship announcement, intended to create a new workforce development program that other countries have used successfully to prepare willing workers for available jobs. As we enter what some are calling the fourth industrial revolution, workforce readiness is critical.

NAM’s work on international trade is also important. It has been a privilege to serve on NAM’s NAFTA Task Force led by Linda Dempsey, NAM’s vice president for international economic affairs. Linda is one of Washington’s most important players when it comes to the NAFTA modernization effort. NAM understands that a new and improved NAFTA is critical to our continent’s highly integrated manufacturing supply chains and our ability to sell products marked Made in the USA to the 95 percent of consumers who live beyond our borders. Let’s modernize and improve NAFTA and hold it up as a model for future trade agreements.

The energetic NAM president and CEO, Jay Timmons, cheerfully told the summit crowd, “This is our time.”

He’s right. Manufacturers have every reason to be excited.

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It’s Manufacturing Month. Here are five things you need to know.

  by Dawn Grove

October 6, 2016

Commentary from a manufacturing perspective

It’s October,which means it’s the season for the annual celebration of manufacturing. For the Arizona Manufacturers Council, this is our time to shine.

Think of this time of year as the annual manufacturing checkup. We get to remind policymakers why Arizona should continue to advance public policy that encourages manufacturing, discuss how we can attract more of these good-paying job creators, and make the case as to why we should grow a sector that is on the leading edge of technological innovation. We also showcase our manufacturing facilities, share best practices and make the connections that strengthen all of us.

Here are five things you need to know about manufacturing and Manufacturing Month.

1)      Manufacturing means jobs. Manufacturing employs 12.3 million Americans and over 150,000 Arizonans. Our state’s total manufacturing output is $23.77 billion, according to the National Association of Manufacturers (NAM). And manufacturing means good, career track jobs. NAM reports manufacturing jobs in Arizona pay over 75 percent above Arizona’s average annual compensation. Plus, every manufacturing job births additional service and supplier jobs, and innovation, research and development eventually follow manufacturing wherever it goes.

Next time someone tells you that America’s best manufacturing days are behind it, point to the tremendously positive impact manufacturing is making on Arizona.

2)    Arizona manufacturing is world class. What does manufacturing look like in Arizona? Forget the caricature of sparks flying on a grimy shop floor. Manufacturing in Arizona today is defined by technologically advanced, environmentally conscious, world-class companies turning out products that improve the lives of people around the world.

Think of high tech manufacturers like Intel in Chandler, which employs nearly 11,000 Arizonans who are making products that will define our future. Or our aerospace and defense manufacturers like Boeing or Raytheon, who are equipping our men and women in uniform with the tools to ensure they emerge victorious in the toughest battles and come home safely. And I’m incredibly proud of Karsten Manufacturing and PING, which makes premium, custom fit golf equipment. Our clubs are in the hands of tournament-winning professionals and weekend duffers alike, in each case helping golfers putt, chip and drive their best.

3)      We’re preparing our talent pipeline for tomorrow’s jobs. The Arizona Manufacturers Council was strongly supportive of the Legislature’s and Governor Doug Ducey’s work in the 2016 legislative session to bolster funding for career and technical education, otherwise known as CTE.

States are in a pitched battle for good-paying manufacturing jobs. If we’re going to win the jobs of tomorrow’s economy, we must grow the talent pipeline to meet employers’ needs. That’s why CTE, which prepares high-school students with the skills and credentials they need to be successful in fields like manufacturing, is so critical.

CTE also sets the stage for students to move on to even more advanced training. According to a report from Georgetown University’s Center on Education and the Workforce, two-thirds of tomorrow’s jobs will require some sort of post-12th grade industry certification or credential. That doesn’t necessarily mean a bachelor’s degree, but it does mean further education. To that end, Governor Ducey recently launched Achieve60 AZ, which seeks to increase to 60 percent (from the current 42 percent) the number of Arizonans with post-high school training. This is the right move at the right time for Arizona’s economy.

4)  Manufacturing thrives when we cut red tape. An onerous regulatory environment negatively affects all businesses, but it’s like kryptonite to our manufacturing heroes.

Those of us in manufacturing are dealing with the same federal regulations that all job creators are confronting: anti-employer labor rules, mandates affecting wages and employee leave that discourage hiring, and a legal environment that forces many to spend more time worrying about lawsuits than growing their businesses.

But Arizonans are disproportionately affected by environmental regulations coming from Washington, D.C. Beltway bureaucrats are issuing rules that, in the name of improving air and water quality, are thwarting job creation while having almost no positive effect on theenvironment. Thankfully, leaders like Arizona Attorney General Mark Brnovich are standing up to Washington’s regulatory overreach.

5)  October 21, 2016 is our Manufacturer of the Year Summit and Awards Event. I hope we’ll see you Oct. 21 at the Arizona Biltmore for the AMC’s annual Manufacturer of the Year event.

This year we’re proud to welcome both Senator John McCain and Senator Jeff Flake, who will give us an inside look at what’s happening on Capitol Hill and how what’s happening at a federal level affects Arizona’s manufacturing sector. We’ll also have discussions on preparing Arizona’s workforce for the careers of tomorrow, how recent changes in Internet governance may affect manufacturers, and honor our large and small manufacturer winners for innovation, sustainability and overall excellence.

Register online today. I look forward to seeing you there.

There are many great events occurring around the state for Manufacturing Month. Watchtwitter.com/AZManufacturing or contact Christine Martin to find a tour and join in on the action.

Dawn Grove is Corporate Counsel for Karsten Manufacturing Corporation, parent company of PING, Inc. and the Chairman of the Arizona Manufacturers Council.

The Arizona Manufacturers Council within the Arizona Chamber is the state affiliate of the National Association of Manufacturers (NAM). For more on manufacturing and NAM, visit www.nam.org.

The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans. For more information visit www.azchamber.com.

 

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Arizona Manufacturers Council Reloaded

by Steve Macias
September 8, 2015

As football season is upon us, it is often said that schools like Alabama and Oregon don’t rebuild, they just reload, and so it is with the Arizona Manufacturing Council (except without the chrome helmets).

As we plan forward for the 2016 legislative session, there are many issues to address for manufacturing and our economy and the AMC is poised and ready to help the state move forward and stay on track with our economic recovery.

Governor Doug Ducey has been a whirling dervish of engagement and promotion since he hit the ground running in January and his activity on a state, regional, national, and international level is already starting to pay dividends as companies take notice that Arizona is open for business.  The Governor’s ability to put together a coalition in pursuit of a goal is a valued skill that will serve the state well in our quest for quality jobs and economic development, and the AMC is ready to help.

But looming large is the funding issue of Career and Technical Education (CTE) as well as the Joint Technical Education Districts (JTEDs).   The recent economic downturn resulted in some tough funding decisions throughout the state budget, but the cutbacks in these programs will cause a time bomb of unprepared workers moving into the economy at the exact period when it is imperative to have those skills and those workers available.  If Arizona is to expand the technical and manufacturing sector, young people coming from the JTEDs and with CTE training will be critical for that expansion.

However, counter to that expansion and what appears to be the new trend, federal agencies such as the EPA and the NLRB continue to throw sand into the gears of economic expansion, and that is another front the AMC looks to address.  It is now to the point that I tell my youngest son not to splash water out of the bath for fear the EPA will determine my house a critical waterway.  Our three boys have already burned us by declaring my wife and I “Joint Employers” and demanding more steak, less school, and higher allowances, so we can already imagine the effect the NLRB rulings will have.

Fortunately the key to addressing these national issues is being able to work with our elected federal representatives, and from our most recently elected congressmen and women to our senior senator; they are taking the reins on problems ranging from Veterans Affairs to protecting the A-10 and the defense assets of our state.  Though their social and ideological stances may vary significantly, our current group has shown a willingness and eagerness to work together on matters affecting and benefitting Arizona that I have not seen in my years of experience, and it is hugely appreciated.

Wrapping this all together is a renewed focus and spirit within the AMC itself.  Mark Dobbins (SUMCO USA), our newly elected Chairman Emeritus, will be at the forefront of many issues, the JTED and CTE ones being chief amongst them.  Our spiritual lead and figurative cup of coffee is Dawn Grove with Karsten Manufacturing, maker of PING golf clubs. Dawn brings a passion and excitement for manufacturing that we look forward to unleashing on the general population, so get ready for some fun.

Now let’s all go out and build something, literally or otherwise, we’ll take all the help we can get!

 Steve Macias is the president of Pivot Manufacturing and the chairman of the Arizona Manufacturers Council

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Special Announcement, Call to Action

by Mark Dobbins
September 1, 2015

I’m baaack!  It is with great excitement that I’ve accepted Chairman Steve Macias’s invitation and the AMC Board’s approval to return to a leadership role as Chair Emeritus of the AMC.  It has always been a fact of life that state policy is an issue of life or death for manufacturers, and now we have the federal government seemingly doing all in its power to de-throne the U.S. as the world’s innovation and manufacturing leader, too.  Believe me, there are so many, big issues facing the manufacturing sector that there’s plenty of work to go around!

Now, I can’t resist something personal .  Today, my wife and I are taking a day off to babysit our wonderful, 2-year-old granddaughter.  As I write, I wonder, “Will we leave her the same opportunity as an American, as an Arizonan, to be all she can be as an adult?”

So let me ask you:  Are we are the right track?  Are we doing all we can do to train our kids for today’s and tomorrow’s jobs?  Have we created a business-healthy environment, based on a skilled, career-trained workforce?  If the golden goose has the answer to these questions, I encourage all of you to get involved more heavily in the basics and help find the answers.  As it stands now, we are firmly on a path to destroying the goose.

If there has ever been a critical time for us to be involved in the solutions, it’s now.  It’s time to bring together the things that so many across this great state have initiated as good and successful:  practices and policies that prepare our workforce to be ready for employment, whether it’s for the 30% of manufacturing posts that require a four-year degree or the 70% that are bolstered by post-high school training.

So, we have a job to do, and we need you to help us do it.  Come join the effort for our future.

Mark Dobbins is senior vice president and secretary of SUMCO Phoenix Corporation; chair emeritus of the Arizona Manufacturers Council; co-chairman of Arizona Manufacturing Partnership; member of the board of directors for the National Association of Manufacturers; and a past chairman of the Arizona Chamber of Commerce and Industry

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Don’t pull the rug out from under Arizona manufacturers

by Steve Macias
May 5, 2015

Manufacturing provided a bright spot in Arizona’s economy that helped carry our state through the Great Recession.  Now, 2015 looks as if it will be the year that our economy finally starts hitting on all cylinders again and economists agree that manufacturing is poised to be one of the biggest growth industries in Arizona.

But I’m concerned that if some in Washington have their way, the rug could be pulled out from under our economic recovery.

That is because many small and medium manufacturers in Arizona rely on the Export-Import Bank to help them sell their products to overseas customers. Unless Congress acts, the Ex-Im Bank is set to expire on June 30, putting countless jobs at risk.  For many businesses coming out of the Great Recession, this would be akin to Andy Dufresne finally about to dig through the last scoop of dirt to freedom out of Shawshank Prison, and discovering to his horror that Warden Norton had back-filled the escape pipe with cement.

Since 1934, when the Ex-Im Bank was founded, it has helped exporters by providing financing and insurance to American companies exporting goods and services. The Bank has and continues to play a critical role, ensuring that goods stamped “Made in America” are available across the globe.

While no government agency is perfect, Ex-Im should be held up as a model of a government program that works. Since 2007, Ex-Im has supported $291 billion in exports. Ninety percent of its transactions have benefited small and medium size businesses. Many of those businesses wouldn’t be able to access the global marketplace without Ex-Im’s support. Because Ex-Im is financed by interest payments and user fees, it doesn’t cost taxpayers a dime. In fact, over the past several years, Ex-Im has returned $2.7 billion to the U.S. Treasury, which has helped reduce the federal deficit.

Gilbert-based Competitive Engineering, Inc., which produces environmentally sustainable fertilizers that revitalize soils and grow healthy crops, was a company of 10 employees five years ago. Thanks to the help from Ex-Im, they have been able to compete with some of the largest agriculture companies in the world, and have expanded to over 40 employees today as they sell their products around the globe.

Phoenix’s ServerLift moved its manufacturing from China to the United States, doubling the number of U.S. employees, thanks in part to Ex-Im’s support for American-made goods.

These are just two examples of Arizona success stories, where small businesses were able to create American jobs thanks to Ex-Im’s support. These kinds of success stories are why Ex-Im has enjoyed broad, bi-partisan support. Republicans such as New Mexico Gov. Susana Martinez and Oklahoma Gov. Mary Fallin have been among the strongest advocates for reauthorizing the Bank because they know it works. Conservative luminary Hugh Hewitt has been a forceful voice calling for the Bank’s reauthorization.

The Bank’s opponents say that Ex-Im isn’t necessary, that the private sector should fill the role of the Ex-Im Bank. But the Ex-Im is barred from competing against the private sector. Its resources can only be used after commercial financing has been proven to be unavailable.

If the Ex-Im shutters, countries around the world are ready to fill the gap to the benefit of their companies and to the detriment of U.S. companies.  European and Asian countries provide much greater export financing and in some cases direct subsidies to their companies. We don’t want to give our foreign competitors a huge advantage, resulting in businesses and jobs moving overseas.

I’m hopeful that Arizona’s delegation and the rest of Congress won’t pull the rug out from under Arizona manufacturers. We need to reauthorize the Export-Import Bank.

Steve Macias is the president of Pivot Manufacturing and the chairman of the Arizona Manufacturers Council

 

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Second Annual Manufacturing Month

For the second year in a row, Governor Brewer has proclaimed that October is “Manufacturing Month”.  For the entire month of October, the AMC will be hosting events that highlight different types of manufacturing in Arizona, including food manufacturing, defense, sports and much more.  In addition to our signature event, the Arizona Manufacturing Summit, and tours around the state, the AMC has partnered with the Arizona Commerce Authority, the Arizona Tooling & Machining Association, the Arizona Tech Council and the Arizona Manufacturing Partnership in a “Celebration of Manufacturing” to close out the month.  The celebration will be held at PADT in Tempe and all are welcome to attend.  Information about Manufacturing Month can be found on our AMC website, www.azmanufacturerscouncil.com or on the Manufacturing Month website, www.manufacturingrevolution.com.

 

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EXIM Chairman Visits Arizona

The AMC hosted the Chairman and President of the Export Import Bank, Fred Hochberg, for a roundtable discussion about the reach and effect of the Ex-Im Bank and the need to have Congress press for its re-authorization. Often considered a tool utilized primarily by large OEMs, the actual bulk of the contracts funded by the bank are, in fact, benefitting small business, including some right here in Arizona.  These small businesses count of financing from the Ex-Im Bank in order to sell their goods abroad.  Many of these small companies have quality products to sell on an international level, but are too small for some of the larger banks to attract their attention.  

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Manufacturing ready to grow if skilled workers are available

by Mark Dobbins
May 30, 2014

Six hundred thousand. That’s the number of unfilled manufacturing jobs in the U.S. because employers can’t find the right people with the right training to hire.

A new study by The Manufacturing Institute and Accenture finds that while 50 percent of the companies surveyed plan to increase U.S.-based production by at least 5 percent in the next five years, more than 75 percent of those firms report a moderate to severe shortage of skilled resources, costing them 11 percent annually in lost earnings.

Why are available jobs not matching up with training?

For the last several years, I have been working through the Arizona Chamber of Commerce and Industry on various approaches to match up education with manufacturing sector needs. It’s an endeavor akin to herding cats. Terrific cats, and even excellent cats, but try herding them, and you’ll find that it takes a special skill set to move forward with change.

What I have discovered in my own personal cat-herding experience is that the landscape is covered with good people, good schools and good intentions. It is also covered with changing times, bureaucracy and resistance to change.

In a recent meeting of a national focus group I attended, the governor of Oklahoma suggested that state legislatures believe there is no money when you talk about school reform. But we do have money. We have money that could be spent on getting us to the leading edge of workforce development and not funding for the sake of funding; not funding traditional formulas whose effectiveness is questionable.

Here in our state, we’ve formed a group called the Arizona Manufacturing Partnership. It brings manufacturing and education together to understand the puzzle facing our workforce development efforts and to solve it.

There’s a difficult job ahead of our group as we butt up against preconceived notions about post-secondary education. Do you want your kids to be the first to go to college in the family? Then let’s help assure they don’t earn a degree that is unlikely to open career opportunities in this 21st century global economy. Do you want your kids to be the first in a few generations not to go to college? Why not? Well over half of the best-paying jobs in Arizona do not require a four-year degree, but do require post-high school skill education and training.

I once heard an education professional say, “We don’t train people for jobs; we educate them.” If that’s the case, we should inform students and their parents up-front that our education system will not be a direct link to a career and the American dream. We should be able to say just the opposite.

Working together we can grow the Arizona economy for all by training a qualified workforce. The Arizona Manufacturing Partnership is dedicated to achieving a statewide focus on the best path for Arizona.

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Mark Dobbins is chairman of the Workforce Arizona Council; a past chairman of the Arizona Chamber of Commerce and Industry; the co-chairman of the Arizona Manufacturing Partnership; and a member of the board of directors of the National Association of Manufacturers.

 

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