Wanna support American workers? Buy imports. So says a new report, which claims that a cheap, robust imports marketplace not only helps American workers and families, but local farmers, manufacturers, and small businesses as well. You may not have noticed, but last week was promoted as something called “Imports Work Week.” The celebrate the importance of imports in the U.S., a group of business associations led by the National Retail Federation (NRF) has released a study showing the many ways that imports benefit American consumers and businesses alike. Cheaper prices are the most obvious benefit. “In the past decade, the price of television sets sold in the United States has dropped 87 percent. Computers have gone down 75 percent, toys 43 percent and dishes and flatware by a third,” the NRF’s Jon Gold explains in a blog post. “Why? The answer is easy – imports.” (MORE: Bangladesh Factory Collapse: Is There Blood on Your Shirt?) But the benefits don’t stop there, according to the study, which runs down how imports also help farmers, mom-and-pop businesses, working-class Americans, and even U.S. manufacturers. Here are a few of the groups that should love what imports do for them, per the report: • Imports improve American families’ standard of living. They help families make ends meet by ensuring a wide selection of budget-friendly goods, like electronics we use to communicate and many clothes and shoes we wear, and improve the year-round supply of such staples as fresh fruits and vegetables. • Imports support more than 16 million American jobs. A large number of these import-related jobs are union jobs, held by minorities and women, and are located across the United States. • More than half the firms involved in direct importing are small businesses, employing fewer than 50 workers. • American manufacturers and farmers rely on imports including raw materials and intermediate goods to lower their production costs and stay competitive in domestic and international markets. Factories and farms purchase more than 60 percent of U.S. imports. (MORE: Patriotic Consumer’s Dilemma: Hard to
MUMBAI, India — Global clothing brands involved in Bangladesh‘s troubled garment industry responded in starkly different ways to the building collapse that killed more than 600 people. Some quickly acknowledged their links to the tragedy and promised compensation. Others denied they authorized work at factories in the building even when their labels were found in the rubble. The first approach seems to deserve plaudits for honesty and compassion. The second seems calculated to minimize damage to a brand by maximizing distance from the disaster. Communications professionals say both are public relations strategies and neither may be enough to protect companies from the stain of doing business in Bangladesh. Such experts say that with several deadly disasters and fires in Bangladesh’s $20 billion garment industry in the past six months, possibly the only way retailers and clothing brands can protect their reputations is to visibly and genuinely work to overhaul safety in Bangladesh’s garment factories. A factory fire killed 112 workers in November and a January blaze killed seven. (MORE: Bangladesh Factory Collapse: Is There Blood on your Shirt?) “Just public relations is not going to do it,” said Caroline Sapriel, managing director of CS&A, a firm that specializes in reputation management in crisis situations. Over the past decade, major players in the fashion industry have flocked to Bangladesh, where a minimum wage of about $38 a month has helped boost profits in a global business worth $1 trillion a year. Clothing and textiles now make up 80 percent of Bangladesh’s exports and employ several million people. Yet the country’s worker safety record has become so notorious that the reputational risks of doing business there may have become too great even for retailers and brands that didn’t work with factories in the collapsed Rana Plaza building or the Tazreen Fashions factory that burned late last year. “I don’t think it’s enough anymore to say ‘We’re not involved in these particular factories,’” Sapriel said. Many clothing brands were quick to distance themselves from the five factories that were housed in Rana Plaza.
Joe Nocera (NYT) and Rana Foroohar (Time) join Charlie Herman (WNYC) on Money Talking discuss if the just what kind of manufacturing renaissance we’re seeing in the U.S. – is it for real and what types of jobs will it create. Last week, Rana wrote the cover story for Time magazine on the topic and Joe just visited a company making baby spoons that might represent the future of manufacturing.
WASHINGTON — A survey shows U.S. manufacturing activity expanded more slowly in March than February, held back by weaker growth in production and new orders. But factories hired at the fastest pace in nine months, an encouraging sign ahead of Friday’s report on March employment. The Institute for Supply Management said Monday that its index of factory activity slipped to 51.3 percent. The index fell from 54.2 percent in February, which was the fastest growth since June 2011. A reading above 50 indicates expansion. The index has signaled growth for four straight months. But the drop in March growth was bigger than economists expected. (MORE: Think There Are a Lot of Craft Breweries Out There Now? Just You Wait) Jennifer Lee, senior economist at BMO Capital Markets, said in a note to clients that the March decline might be the first sign that companies are worried about federal spending cuts that took effect on March 1. But Joshua Shapiro, chief U.S. economist at MFR Inc., cautioned that the index’s drop last month might just be a one-month blip. Combined, the ISM reports for the first three months of 2013 “suggest that the manufacturing sector is now making moderate headway.” In addition to faster hiring, new export orders grew faster in March than February. The ISM said the index was consistent with an annual rate of economic growth 3.3 percent from January through March, up from a tepid 0.4 percent growth rate the last three months of 2012. Reports Monday showed manufacturing is on the upswing in China and Japan, the second- and third-largest economies in the world. Growth in China’s manufacturing picked up in March, according to a survey by the China Federation of Logistics and Purchasing. And Japanese manufacturers are more upbeat about business conditions than they were last year, according to the Bank of Japan’s “tankan” index for the March quarter. The U.S. economy has proven surprisingly resilient in the face of tax increases that took effect in January and federal budget cuts that began to kick in
U.S. manufacturing is back. That’s been the conventional economic wisdom now for several months, and there’s plenty of proof to back it up – rising factory output, strong manufacturing production gains, and lower labor costs that make American workers more attractive. Couple that with the natural gas boom underway in the U.S., which many experts believe will lower energy costs for U.S. manufacturers, and you’ve got a resurgence of a sector that has been shrinking as a percentage of the economy for several decades. “We are probably the most competitive, on a global basis, than we’ve been in the past 30 years,” says GE CEO Jeff Immelt. “Will U.S. manufacturing go from 9% to 30% of all jobs? That’s unlikely. But could you see a steady increase in jobs, over the next quarters and years. I think that will happen.” But at least one economic seer, Goldman Sachs’ chief economist Jan Hatzius, is throwing a bit of cold water on the idea. He recently released a report, which is getting a lot of attention on the web, arguing that the U.S. “manufacturing renaissance” is cyclical, not structural – meaning, the sector is doing as well as would have been predicted under any circumstances at this point in an economic recovery, and that the gains don’t point to a real seismic shift in U.S. manufacturing competitiveness. “Measured productivity growth has been strong,” admits Hatzius in the report, entitled “U.S. Manufacturing Renaissance: Fact or Fiction?” “But U.S. export performance – arguably a more reliable indicator of competitiveness—remains middling at best.” It’s a very interesting point, and it matters a lot to the broader economy. Nations that do better in manufacturing gain an edge in the global economy: For every $1 of manufacturing output in a community, there’s another $1.48 of wealth created. That’s why economic advisors to the President, like National Economic Council head Gene Sperling, have been pushing pro-manufacturing policies. But the Goldman report would seem to indicate that the strength in U.S. manufacturing output reflects more the relative weakness of
You’d think that Congress would have kept the fiscal cliff negotiations as simple and tight as possible. The size of the deficit, the threat of automatic spending cuts, and the need for a last-minute tax deal deserved everyone’s full attention. And yet, the Congressional Budget Office breakdown of the bill shows that there were all sorts of goodies buried in the fine print, benefiting everyone from filmmakers to rum distillers. The problem is so-called “tax expenditures,” which are basically ways to subsidize various kinds of activities through tax breaks (as opposed to direct payments). The fiscal cliff deal consists of three parts – personal taxes, business taxes and energy taxes – and each includes its own giveaways. Many of these were simply increases or extensions of tax expenditures that already existed. And some of them may be perfectly reasonable public policy. Perhaps it’s worthwhile to spend an additional $9.7 billion over the next 10 years on additional subsidies for student loans or $5.6 billion for adoptions, although both those figures seem like a lot considering that employer-provided childcare is getting only $209 million. More money is at stake in subsidies for various businesses, $46 billion, and for alternative energy, $18 billion. But even when those tax expenditures are justifiable, they merit separate and thorough discussion, rather than being mixed into what is supposed to be a debate over personal income tax rates. Moreover, there are plenty of lesser tax expenditures that seem to deserve some skepticism. Indeed, Senator McCain criticized such tax benefits last week, saying that “special-interest giveaways,” including a $15 million subsidy for asparagus growers, would feed cynicism at a time when tough choices have to be made about the deficit. Here’s a quick look at where some of the other small bequests are going: Railroad tracks. A special 50% tax credit for maintaining tracks is projected to cost $331 million over the next two years. Racetracks. Tax benefits for certain motorsport racing track facilities will cost more than $100 million over the next seven years. Native Americans. Business property on Indian reservations will receive
Over the last few years, the enterprise has been been quick to adopt cloud computing, but by and large, the cloud has found the most penetration in areas of the enterprise that aren’t mission critical. Yet, as Forbes wrote today, this has begun to change of late as companies that are handicapped by decades-old, legacy enterprise resource planning (ERP) system increasingly move from on-premise systems to those based in the cloud.
Michigan-based Plex Systems has emerged as one of the leaders in cloud-based enterprise resource planning, specifically by helping big manufacturers better manage the mission-critical areas of their day-to-day operations — from production and inventory to quality control and finances — while tracking and reducing operations expenses without requiring them to purchase hardware or software. Though the company competes with giants like SAP and Infor, manufacturing still makes up about 30 percent of the U.S. economy (which may come as a surprise to some), so there’s plenty of opportunity left in what is a sizable market. m
Today, manufacturing is a global market and the pace of business has accelerated to such a degree that many businesses struggle to keep up — to remain nimble and cost-efficient at scale. Maintaining that kind of cost efficiency and flexibility requires cloud software, but as ZDNet’s Dennis Howlett has said, traditionally, there have been few cloud vendors that have been able to meet the more robust demands of mid-sized and large manufacturers.
By catering to the giants of manufacturing with a browser-based resource management system that doesn’t require on-premise hardware, Plex has produced 30 percent year-over-year growth and has increased revenues for 20 consecutive quarters, Plex CEO Mark Symonds told VentureBeat. As the company estimates that only 10 percent of manufacturers have transitioned to SaaS systems to date, the addressable market seems to have plenty of up-side — something that hasn’t gone unnoticed among investors.
To help it capture more of that market, Plex announced today that it has raised $30 million in growth equity led by Accel Partners. As a result, Accel Partner Sameer Gandhi gains a seat on the company’s board of directors, joining Francisco Partners which acquired Plex Systems earlier this year.
Adding Accel as an investor could be auspicious for the company, as the Silicon Valley-based venture firm counts a number of successful online and software investments in its portfolio, including Facebook, Dropbox, Cloudera, Qlik and Kayak. And Gandhi himself has led investments in Spotify, Dropbox, BeachMint, Bonobos and StumbleUpon.
While these investments are impressive in that they represent some big names, you’ll notice that they’re all consumer-facing businesses. As such, it appears to provide further corroborating evidence for Fred Wilson’s recent claim that the money is shifting from consumer to enterprise.
“Momentum” and late stage investors have begun to cycle away from consumer-facing investments, Wilson said, which will likely make it tougher for young, early-stage consumer startups to get funding as early-stage investors adjust to what those downstream in the VC stack want to capitalize.
Accel’s launching a fund dedicated to big data and infrastructure investments is another example of a trend in which investors are looking to take advantage of what Alex recently called the “transformation of the database market,” as startups and enterprise players both face the reality of having to update their infrastructures to take advantage of scale out architectures.
As to Plex: With its new chunk of capital, the company will be able to fuel its customers — which represent some of the biggest players in the aerospace, automotive, electronics and food and beverage industries — transition to the cloud. Plex has been on a mission to focus on vertical markets, helping manufacturers within each sector streamline their core business processes, like storage, backup and development under one flexible infrastructure. Removing the need to dedicate tons of time and capital to IT systems administration is a key part of providing a value-add for its customers in comparison to on-premise solutions.
What’s more, with its new funding, the Plex Systems CEO told VentureBeat that the company will be looking to ramp up hiring in the first quarter of 2013, adding “16 new employees to its 260-person team,” alongside further investment in R&D. Although the company didn’t address the subject explicitly, it wouldn’t be surprising if its new funding also came to represent the first step toward an IPO.
WASHINGTON — U.S. factories rebounded in November from Superstorm Sandy, boosting production of cars, equipment and appliances. But after factoring out the impact from the storm, the broader trend in manufacturing remained weak. The Federal Reserve said Friday that factory output increased 1.1 percent in November from October. That offset a 1 percent decline in the previous, which was blamed on the storm. Auto production jumped 4.5 percent last month, the first increase since July. Production of primary metals, wood products, electrical equipment and appliances all showed gains. (MORE: For Most Consumers, Plenty of Holiday Shopping Left to Do) Total industrial output at factories, mines and utilities rose also rose 1.1 percent last month, after a 0.7 percent decline in October. Still, economists cautioned that the rebound in manufacturing was almost entirely related to Sandy. Sal Guatieri, senior economist at BMO Capital Markets, noted that when averaging data over October and November, industrial output and manufacturing both were up just 2.1 percent over the past year — less than half the growth rate from the start of the year. “Looking beyond Sandy’s impact, U.S. manufacturers continue to plod ahead,” Guatieri said. Many companies have delayed purchases of machinery and equipment this year because of uncertainty surrounding taxes and government spending. They are also worried about a slowdown in global growth that has weighed on U.S. exports. “The global slowdown will prevent a strong recovery” in manufacturing, predicted Paul Dales, senior economist at Capital Economics. U.S. manufacturing activity shrank in November to the slowest pace since July 2009, according to a closely watched index of manufacturing activity compiled by the Institute for Supply Management. (MORE: Cheaper Gas Drives Down U.S. Wholesale Price Index) China’s manufacturing activity rose to a 14-month high in December, adding to signs the world’s second-largest economy is recovering, a survey showed Friday. But export orders weakened. Economists say the U.S. economy is growing in the current October-December quarter at an annual rate below 2 percent. That would be slower than the 2.7 percent growth rate in the