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Marlin Steel Wire Products spent its first 30 years making bagel baskets. When Drew Greenblatt bought the custom wire and metal fabrication company in 1998, he thought it would be making bagel baskets for the next 30 years as well—but soon, international competition changed the math.

“Suddenly, China started manufacturing bagel baskets and shipping them to New York City for cheaper than I could get the steel,” said Greenblatt, Marlin’s president and owner. “But then, we got a phone call from an engineer at Boeing who needed an innovative, customizable basket. And that was the eureka moment.”

The shift: Greenblatt recognized that innovation would help him outcompete foreign companies that could manufacture products more cheaply.

• “We realized we couldn’t thrive in a commodities market,” said Greenblatt. “We had to come up with novel ways to make a basket so that it would make no financial sense to buy from China or Mexico.”
• “We wanted to be able to say to buyers, you must buy from the American innovative company, because we’re coming up with such slick ideas that our product blows the competition away.”

The growth: Today, Marlin Steel is nearly 30 times larger than it was when Greenblatt bought it and heavily invested in research and development.

• “Today, Marlin is 15% degreed mechanical engineers,” said Greenblatt. “We have chemical engineers. We’re coming up with the most innovative racks and systems out there.”
• “People are showing us their operations and asking us to reverse-engineer solutions that will work for them. And we’re doing it.”

However . . . A recent tax change threatens to throttle the company’s progress. Until about a year ago, businesses could deduct 100% of their R&D costs in the same year they incurred those expenses.

• But since last year, a tax policy change now requires businesses to spread their R&D deductions out over a period of five years, making it much more expensive to invest in innovation.

The impact: “Our taxes will be $600,000 higher than they should have been this year—we’ll pay four and a half times more on taxes,” said Greenblatt.

• “What that means is that it makes sense for us not to hire six more engineers. Not to buy three more press brakes [machines for bending metal parts] or hire people to work them. It’s incredibly shortsighted, a horrible policy screwup, and the ripple effects are massive.”

The scope: Greenblatt also emphasizes that the tax change will harm many small businesses.

• “People tend to focus on the bigger companies and how it will hurt them—and it will hurt them—but it will also hurt the little guy,” said Greenblatt. “And the little guy is the job creator in America.”

The last word: “American innovation—that’s our secret sauce,” said Greenblatt. “That’s how we’re going to grow jobs and pay people well and give good benefits and steady employment without layoffs. That’s how we’re going to beat a recession. We need to have the coolest, most innovative products in the world. For us, innovation is key.”

The Environmental Protection Agency’s recently issued rule governing regulation of “navigable waters” is unnecessary, confusing and inconsistent—and the 51�Թ��� stands ready to work with Congress to overturn it.

The background: In December, the EPA and the U.S. Army Corps of Engineers announced the new regulation, which repealed the Navigable Waters Protection Rule and altered the definition of “Waters of the United States.”

• This month, House Transportation and Infrastructure Committee Chairman Sam Graves (R-MO) introduced a of disapproval of the rule under the Congressional Review Act. An identical measure was introduced in the Senate.
• The 51�Թ��� this week hailed the congressional moves. “Manufacturers welcome action from Congress to challenge the EPA’s proposed WOTUS Rule,” 51�Թ��� President and CEO Jay Timmons.

What’s going on now: Ahead of a Transportation and Infrastructure Committee hearing Wednesday, 51�Թ��� Senior Director of Energy and Resources Policy Nile Elam urged the “educat[ion of] the public and policy stakeholders regarding the immense permitting regulatory efforts necessary under local and state jurisdictions, and the need for a complementary WOTUS rule that advances permitting protections at the federal level while providing certainty for the regulated community.”

• Though many Supreme Court decisions have “touched on” the definition of navigable waters, neither the court nor the EPA has clarified sufficiently, Elam told Water Resources and Environment Subcommittee Chairman David Rouzer (R-NC) and Ranking Member Grace Napolitano (D-CA).
• The new rule also “expands federal jurisdiction beyond traditional navigable waters,” Elam said. “Because of these expansions and ambiguous terms, the careful balance between local and state regulators is unpredictable and can leave permit seekers with little guidance, aside from the need for more time and money to achieve their permitting requests.”

What should come next: Congress must work with stakeholders, the EPA and the Corps on creating clear, predictable and common-sense WOTUS regulations, Elam told the committee. Doing so will “enhanc[e] manufacturers’ ability to deliver their goods, expand their operations and grow their workforce.”

Manufacturers have long led the way in efforts to reduce air pollution and improve air quality. Yet, new proposed regulations from the federal government will work against these efforts instead of bolstering them, stymying critical progress and destabilizing economic growth at a time when both are more important than ever.

The challenge: The Environmental Protection Agency is considering a new rule that would impose stricter air standards on particulate matter known as PM2.5 (i.e., particles that measure two and a half micrometers or less in diameter). This rule would enact significant top-down restrictions, forcing manufacturers to change their operations abruptly and without any support.

The reality: For years, manufacturers across all sectors have been developing smart, innovative ways to use energy, water and other resources more sustainably—all while boosting economic growth and creating good jobs at the same time.

• Today, manufacturing in the U.S. is cleaner and greener than at any other time in history, largely due to a revolution in how manufacturers produce, use and recycle energy and resources.
• Across the board, levels of major pollutants have declined dramatically over the past few decades. Thanks to existing regulations and a culture of innovation, the U.S. is far outpacing global competitors in environmental stewardship.

By the numbers: According to the EPA, the U.S. reduced six common pollutants covered by National Ambient Air Quality Standards, including PM2.5, by 78% between 1970 and 2020. In fact, PM2.5 levels alone have dropped a full 44% since 2000.

The impact: These new regulations could be devastating for manufacturers and for the climate. Here are just a few of the negative repercussions:

• An additional regulatory burden on businesses will drain resources from innovative manufacturers, posing additional hurdles to the investment in research and development that fuels progress in energy efficiency and climate action.
• Making permitting harder could also jeopardize new clean energy projects that America needs to address climate change.
• The standards will hinder onshoring, resulting in continued manufacturing abroad—which is less clean than manufacturing in the U.S. The EPA’s proposal undercuts U.S. competitiveness and will not further the goal of global emissions reduction.
• New regulations could damage an already-slowing economy, increasing costs and constraining job growth at a time when Americans are grappling with record inflation.

Our view: Rather than imposing new and unnecessary obligations on manufacturers, the federal government should focus on enforcing the strong regulations that are already in place and give manufacturers the space to find better solutions.

• “The EPA’s announcement . . . [about reconsidering] the PM 2.5 standard will only further weaken an already slowing economy,” said 51�Թ��� President and CEO Jay Timmons. “Let manufacturers do what they do best: innovate and deploy modern technologies to protect the environment, while creating jobs and strengthening the economy.”

51�Թ��� in action: The 51�Թ��� is rallying manufacturers to speak out against the EPA’s proposal and calling on Congress to oppose these harmful regulations.

• Manufacturers can show their support by sending an email to decision makers in Washington, explaining the real impact of this damaging proposal and urging them to stand up against unnecessary regulations.

Join in: There is an����to discuss the proposal on Feb. 21. To participate, be sure to sign up soon—the registration deadline is Feb. 16.

About people in the United States have a rare disease, according to the National Institutes of Health, which equates to about one in every 10 individuals. Approximately 95% of these rare diseases have no treatment at all—and Ultragenyx, a biopharmaceutical company focused on new and effective therapies for patients with rare and ultra-rare diseases, is working to change that.

• “In the aggregate, rare is not that rare,” said Ultragenyx Executive Director of Public Policy and Public Affairs Lisa Kahlman. “Half of those 30 million people are children. It’s a huge unmet medical need.”

Founded in 2010, Ultragenyx has four commercial products, with about 20 more in pre-clinical and clinical development. But a new change in tax policy poses a very real threat to Ultragenyx’s ability to develop as many treatments for rare diseases as possible.

The issue: Until a year ago, businesses could deduct 100% of their R&D expenses in the same year they incurred the expenses. Starting in 2022, however, a tax policy change requires businesses to spread their R&D deductions out over a period of five years, making it more expensive to invest in growth and innovation. For research-heavy companies like Ultragenyx, that change could divert funds intended for the development of therapies toward tax obligations.

• “Ultragenyx is different,” said Kahlman. “There are a lot of companies that do some work in rare diseases, but usually that’s only a fraction of what they do. We’re exclusively built to focus on rare and ultra-rare diseases, and that requires research.”

The impact: As a small, largely precommercial start-up company that focuses on research, Ultragenyx spends about 70% of its total operating expenses on R&D. In 2021, Ultragenyx spent approximately $497 million on R&D—nearly $150 million more than it earned in revenue.

• If the tax change stands, the company’s financial statement losses, which approximate decreases in the company’s cash reserves, will be adjusted for tax purposes to reflect significant taxable income, resulting in very large tax liabilities over a short period of years.
• This will occur during late stages of the company’s development programs just when costs escalate quickly. Altogether, money will be diverted to taxes and away from critical development programs at precisely the wrong time.

The human cost: If Ultragenyx and other research-heavy biotech companies that are focused on developing treatments for rare diseases must divert funds away from development and toward covering tax obligations, patients living with rare diseases will have even more limited options.

The bottom line: “The therapies we’re developing are really transformational, but in some cases, there might be only about 200 patients in the developed world with one of these diseases—so if we don’t have the money for R&D, there won’t be any incentive for anyone else to develop treatments,” said Kahlman. “For these patients, there is no alternative.”

Our move: At the 51�Թ���, we’re pushing Congress to reverse this change and allow manufacturers to invest in jobs, communities and innovation. Learn more and take action at www.nam.org/protect-innovation.

Innovation is getting more expensive—and that should worry all of us.

Until recently, businesses could deduct 100% of their R&D expenses in the same year they incurred those costs. But a tax law that took effect at the beginning of 2022 requires businesses to spread their deductions out over five years instead, driving up the cost of the innovations that keep our economy strong.

At International Paper—an American supplier of renewable fiber-based recyclable packaging and pulp products—that change is causing serious challenges. We spoke to Vice President of Finance and Corporate Controller Holly Goughnour and Senior Director for Government Affairs Kaitlin Sighinolfi to learn more.

Why it matters: “Our company invests in R&D for two main reasons: making better products for our customers and creating safer, more efficient and sustainable manufacturing processes,” said Goughnour.

• “We spend a lot of time and money working to make a better performing, more sustainable and more durable product, but innovation is about more than the product—it’s also about improving the safety and efficiency, and reducing the environmental impact, of our operations.”

The scale: International Paper devotes a significant portion of its resources to innovation, and as a result, the change in tax law has an outsized impact.

• “Much of our free cash flow goes to R&D activities,” said Goughnour. “The change in tax law has resulted in a significant amount of additional cash taxes in this first year, reducing the amount of capital available to invest back into our business, including additional R&D.”

The competition: Goughnour and Sighinolfi also emphasized the need for a tax system that helps manufacturers in the U.S. to compete with companies abroad. According to Goughnour, the new tax change does the opposite.

• “The new tax law enables European and Chinese competitors to accelerate their R&D faster than us,” said Goughnour. “We’re in a global marketplace, and the new tax law puts U.S. manufacturers at a competitive disadvantage.”
• “Almost nobody else in the world has this policy,” said Goughnour. “R&D is an absolute growth engine for the U.S. economy. Why would we have a tax policy that discourages investment in R&D? It makes no sense.”

The last word: “Ours is a supply chain story,” said Sighinolfi. “Innovation should be part of the overall manufacturing value chain, but the new law reduces the value of innovation, slowing investment in innovation and ultimately hurts American businesses, employees and consumers.”

51�Թ��� President and CEO Jay Timmons joined CBS Mornings today to discuss manufacturing’s number one challenge: finding enough skilled workers to fill available jobs.

With 200,000 people transitioning out of the military annually, in addition to veterans, reservists and military spouses, the military population represents a highly skilled talent pool that manufacturers are eager to tap. But how should they go about doing so?

At a recent , the Manufacturing Institute—the 51�Թ���’s 501(c)3 workforce development and education partner—brought together veterans who have transitioned successfully out of the military into manufacturing careers, as well as manufacturers who have prioritized attracting and retaining military talent. The panelists discussed how companies can leverage this talent, and here’s some of what they had to say.

A great fit: “If you look at manufacturing, a large part of the job is doing things well, day after day after day—and that’s essentially what happens in the military. It’s that military discipline. It’s one of the most compelling reasons why we should be aggressively hiring military veterans,” said Dow Global Business Director Greg Bunker.

• “We’ve got three principles in our organization that we call ROI: responsibility, operational excellence and innovation. We know that veterans bring each of these to the table,” said UnitedHealth Group Director of People Analytics Troy Vandenberg (formerly director of people analytics at Smithfield Foods).

Networking matters: Transitioning from the military to the civilian workforce can be difficult, but veterans who make direct connections with manufacturers often land excellent job offers. The MI’s Heroes MAKE America program facilitates those connections, offering veterans opportunities to meet manufacturers as well as support in the job search process.

• Nicole Rena, an Army veteran and now a shift operations manager at Smithfield Foods, applied to five jobs at Smithfield and didn’t hear back on any of them. But then the program manager at HMA contacted Smithfield’s talent acquisition department to ask if they could speak with Rena about why she wasn’t chosen, so she could be more successful moving forward.
• As Rena put it, “The first 15 minutes of the call was about what I could do better on my resume, but after talking about my background and what I was looking for, the talent acquisition lead said he was going to count this as my first interview.”
• She landed the job! In her 18 months at Smithfield, Rena has been promoted twice.

Language can be a barrier: Rena’s experience speaks to one of the disconnects identified by veterans and manufacturers alike—the language used in job descriptions and resumes. Veterans often do not know how to best describe their skills and experiences in a way that civilian employers can understand.

• To avoid missing out on great talent, the panelists advised, manufacturers should ensure that a leader with a military background is involved in the hiring process, to translate military lingo and skills into more familiar manufacturing terms.
• Manufacturers should also specify in their job descriptions whether they will accept military experience as equivalent to an associate’s or bachelor’s degree, Bunker advised.

Support is crucial: Once veterans have been hired, the company must ensure they are set up for success. “Transitioning is a really scary process for veterans. It’s very stressful. The support that a company can provide is huge,” said Meg Zehringer, a Coast Guard veteran and a corporate environmental engineer at National Gypsum.

• Employee resource groups are a great way to provide support to veterans while also serving as a platform to advocate for population-specific needs, the panelists agreed.
• To be most effective, ERGs should be run by employees, not human resources departments, noted Vandenberg. Bunker added that establishing connections between the ERG and company leaders is also key.

The last word: “Equally as important as the wording of your job descriptions and preferred skills is creating a culture that invites a diverse group of people. That’s going to play a huge factor in attracting veterans,” said Zehringer.

Get involved: If you are interested in learning more about HMA, its next will be a networking opportunity with Johnson & Johnson on Wednesday, Jan. 25.

• You can also tune in to (or share with interested veterans) this on how to use LinkedIn effectively, coming up on Thursday, Jan. 26.
• And last, HMA will be hosting a virtual hiring fair in late February. Keep an eye on the MI for updates!

AI is changing the way manufacturers do business—from the production line to the back office and across the supply chain. At the Manufacturing Leadership Council’s event last month in Nashville, Tennessee, panelists discussed how those sweeping changes would alter, and enhance, the manufacturing workforce.

A collaboration between the MLC (the 51�Թ���’s digital transformation arm) and the MI (the 51�Թ���’s 501(c)3 workforce development and education partner), the event provided key insights for manufacturers into how technology and workforce trends interact with each other. Here are a few key takeaways.��

Net positive: “The history of technology adoption is about improving the job quality of individuals on the shop floor. AI helps them to do the job better, provide them with better tools, gives them greater authority and ultimately increases the value-add of their jobs. All of that is a net positive for those individuals,” said MI Vice President of Workforce Solutions Gardner Carrick.

• By leveraging data and enabling greater efficiency, AI will improve communication, increase collaboration across disciplines and stimulate innovation, according to the panel.
• In addition, “AI can even inform the workforce’s creativity by working with it to design a new product or system,” said Jacey Heuer, lead, data science and advanced analytics, Pella Corporation.

Skills needed: While you might expect that implementing AI requires workers skilled in programming, data science and machine learning, manufacturers will also need to expand their bench of critical thinkers and problem-solvers. The panelists had a few tips to help companies along.

• Invest in upskilling programs to make the AI integration process at your company smoother and develop the talent you already have.
• Update job descriptions to reflect the skill sets the company will need in the next five to seven years.
• Consider recruiting for and teaching —skills that enable individuals to adapt easily to changing demands and environments—which can increase the flexibility of your workforce.
• Build partnerships with local schools, community colleges and technical and vocational schools to develop talent pipelines that will meet your needs.

The human-AI collaboration: While AI will take over monotonous, repetitive tasks, the panelists predicted that the industry will continue to center around human labor.

• “You can teach AI to do X. You can teach AI to do Y. [However,] combining the two may be really difficult for AI, while a human can do it better. You’re going to continue to see humans in roles that center on making decisions and telling stories,” said Asi Klein, managing director, industrial products and organization transformation, Deloitte Consulting.
• Meanwhile, AI adoption will likely lead to an increase in available jobs, as more skilled workers will be needed to guide and inform these new processes.

The last word: “Over the last 12 years, we’ve seen a lot of technology adoption, but we have not seen a lot of job loss. In fact, we’ve seen job gains,” said Carrick. “There is a lot of opportunity to reimagine jobs to add value that AI will help to illuminate.”

It’s time to think way outside the proverbial box, according to the Manufacturing Leadership Council, the 51�Թ���’s digital transformation arm. In fact, as we get closer to 2030, manufacturers are creating entirely new boxes—including new digital business models, products and services, revenue streams, ways to serve customers and opportunities to increase competitiveness.

Collaborative innovation: By 2030, metaverse technologies will provide rich virtual environments for the collaborative development of new ideas. These shared virtual spaces will enable contributors from multiple remote locations to collaborate in real time.

• These collaborations may include manufacturers, partners, academic institutions and research institutes.
• New concepts can be tested in a virtual world before moving to physical prototyping or production.

Outcome-based products and services: As digital platforms mature and products become increasingly smart and connected, the decade ahead may see a boom in more outcome-based services. This is where the customer doesn’t buy a physical product, but instead signs up to pay for the guaranteed outcomes that product or system delivers.

• This shift will require manufacturers to establish new infrastructure rich in predictive analytics, remote communications and consumption monitoring.
• It also requires a mindset change for traditional manufacturing, from a focus on units and costs to product lifecycles, performance levels and usage.

Blockchain networks: By 2030, blockchain could be leveraged for most world trade, helping to provide the secure traceability and provenance needed to prevent physical product counterfeiting, grey markets in medicines and even the adulteration of the global food supply chain.

• A blockchain is an electronically distributed ledger accessible to multiple users. Blockchains record, process and verify every transaction, making them safe, trusted, permanent and transparent.

• Blockchain technologies promise to be a viable solution to manufacturers’ need to automate, secure and accelerate the processing of key transactions across industrial ecosystems.

E-manufacturing marketplaces: Digitally empowered production-line adaptability, such as the kind that emerged during the pandemic, will provide a foundation for companies to offer spare production capacity to other companies in different sectors.

• This maximizes the return on a company’s production-line investments and can generate new revenue streams for the future.
• Combined with e-commerce, e-manufacturing will enable designers, engineers and/or smaller companies to more easily connect with a large pool of qualified producers to deliver and scale a final product.

Manufacturing in 2030 Project: New Boxes is just one of the industry trends and themes identified by the , a future-focused initiative of the MLC. For more details on megatrends, industry trends and key themes for Manufacturing in 2030, download the MLC’s new white paper “.”

Manufacturers are pursuing sustainability like never before.

That’s according to recent polling conducted by the Manufacturing Leadership Council, the 51�Թ���’s digital transformation division. The annual research survey seeks to determine the progress made in sustainable manufacturing.

Competitiveness: There has been a surge in the number of manufacturing executives who view sustainability as critical to the future of their businesses.

• 58% of respondents in 2022 believe sustainability is essential to future competitiveness compared to 38% in 2021.
• 68% of executives say they are implementing extensive, corporate-wide sustainability strategies. That’s up from just 39% in 2019.

What’s driving change: The motivations go beyond regulatory compliance and cost savings.

• 78% say sustainability is about better alignment with corporate values.
• 68% believe in creating a cleaner, healthier environment.
• 66% seek to improve company reputation with customers and investors.

Top corporate goals: More than half of survey respondents reported having specific sustainability goals and metrics across almost all key functions in the company.

• Goals were most apparent in manufacturing and production (79%), supply chain (69%) and product design and development (67%).
• Additional goals were cited in transportation and logistics (56%) and partner compliance (51%).

Energy efficiency is No. 1: The primary sustainability focus of manufacturers, according to survey results, is energy efficiency and reduction, combined with the transition to renewable energy sources. These efforts are linked intrinsically to meeting net-zero emissions goals.

• 45% of respondents report having announced formal net-zero goals.
• 30% aim to hit net zero by 2030.

Digital tech, employee training play a role: Also on the rise is the number of companies that recognize the importance of digital solutions in their sustainability efforts.

• These tools are being used to manage and monitor materials and energy consumption, optimize operations to improve efficiency and report sustainability progress.
• Respondents also say meeting sustainability targets must include engaging employees through education and training, as well as greening their supply chain.

The last word: An overwhelming 90% of all respondents agree that manufacturing has a special responsibility to society to become more sustainable and accelerate the transition to a future circular industrial economy.

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