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Manufacturing and consumer-facing costs are 'a constant balancing act': NAM president

National Association of Manufacturers CEO and President Jay Timmons joins Yahoo Finance Live to discuss manufacturing jobs, the CHIPS Act, Micron's new plant in New York, and more.

Video transcript

SEANA SMITH: The manufacturing sector getting a boost from two major names in tech, Apple and Micron, as the industry reshapes its supply chain in the aftermath of the pandemic. Now the Wall Street Journal reporting that some of Apple's suppliers are adding manufacturing operations in the United States, especially focusing on California. And chipmaker Micron is set to invest $100 billion in Central New York State for a semiconductor factory in Syracuse.

Joining us now, we want to bring in Jay Timmons. He's the National Association of Manufacturers CEO and president. Jay, it's great to see you. So obviously, jobs coming and many of them, tens of thousands of jobs coming, in the manufacturing sector. The JOLTS report out this morning, showing 795,000 manufacturing job openings in the month of August. From your conversations that you're having, from leads within this sector, I guess, what's your assessment just on the state of manufacturing right now and the dire need to hire?

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JAY TIMMONS: Well, it's good to see you as well. And I have to tell you, manufacturing is running very strong right now. As you said, 800,000 approximately jobs are open in the sector. That's on top, though, of about 30,000 jobs we've been filling every single month for the last year. So as you can see, we still have-- we have a lot of room to go to bring people on.

We're keeping our promises that we made in 2017, when those tax cuts were put into place, to invest in America, to hire workers in America, and to raise wages and benefits. That legislation, plus the Chips and Science Act, are really supercharging manufacturing in America.

SEANA SMITH: Jay, what does this do to cost? Because I think that's a big question for consumers out there. Is it going to substantially bring down costs, the fact that we're focusing on manufacturing here in the US?

JAY TIMMONS: Well, I think that's a piece of it. Look, there are so many things that go into inflationary pressures-- monetary policy, fiscal policy, the massive amount of debt that was signed into law in the last administration, and then at the beginning of this administration, to deal with the pandemic because we didn't know what else to do. So those things have all gone into increasing a lot of money in the system and a lot of demand by consumers when manufacturers can't keep up with supply. And one of the reasons we can't do that is because the jobs that we do need to fill.

Having said that, you're right. When we do things here in this country, when we make things here in this country, that can reduce the cost of doing business, and therefore, the cost of those goods to consumers, as long as we don't impose additional costs. And by that, I mean, undue regulatory burden costs or additional tax costs. So we've got to keep that all balanced. And it's a constant balancing act that business and the government has to be focused on.

RACHELLE AKUFFO: And we're certainly think Micron investing in that future with pledging up to $100 billion for the semiconductor factory in New York. But as we mentioned there, you still have all these job openings. But obviously this is coming as a result of the chip sector wanting to get more of these jobs here. What do you think of the momentum that we've seen since the CHIPS Act and what this means for the pipeline of, perhaps, training and jobs that are still needed to fill some of these skills gaps?

JAY TIMMONS: So I just think it's so exciting to see the results of-- I want to call it post-partisan. A lot of people call it bipartisan. I want to call it post-partisan. We put politics aside to get the Chips and Science Act into place. Micron CEO Sanjay Mehrotra said that this was a big reason that they're making this massive investment in New York.

It's another reason that we saw Intel making their massive investment in Ohio or letting that investment to go forward. I was really pleased to be there for the groundbreaking with President Biden just last month. So I think you're going to see more and more of this happening in this country, which is good news. We don't want to rely on Asia.

We don't want to rely on either hostile or potentially hostile foreign regimes to supply critical inputs to manufactured products, or energy, for that matter. That's another cost input. And you're right. This will also-- the Chips and Science Act will also provide some training dollars that are so necessary to upskill and futureproof the jobs of manufacturing for manufacturing workers.

SEANA SMITH: Jay, supply chain issues, rising costs, two of the big challenges facing manufacturers today. Any improvement there? And I guess, when do you expect to see substantial improvement?

JAY TIMMONS: Yeah, I look at the supply chain challenge like a frozen pipe in the winter. When is it going to thaw? And what we are seeing-- and I will say this anecdotally because it's through those conversations that I have with many of the CEOs who are members of my board of directors at the National Association of Manufacturers. They're starting to see a slight thaw in the supply chain bottleneck. And I think that's good news for us.

These types of investments that you see, again, for chip fabrication facilities here in this country will also help that supply chain crisis ease, but of course, that's many years in the future. So we're going to see incremental progress. And we'll start to see the supply chain ease, that will help with inflation. That will also help, I think, with, obviously, the shortage of certain products around the country.

RACHELLE AKUFFO: And obviously, Jay, manufacturing isn't a monolith. We're seeing sort of different areas recovering at different paces. Of the millions of men and women who are part of the Manufacturers' Association, what are some of the best performing sectors? And what are some of the ones that could really still use some help or that are going through a bit of difficulty?

JAY TIMMONS: Well, look, I think to be very frank about it, I think the entire sector has just done amazingly well, given some pretty difficult conditions. So I put inflation in that bucket. I put our workforce shortage in that bucket. And then of course, I put the supply chain crisis in that bucket. They all kind of feed each other. So when you can't get the input supplies you need, you can't supply the demand that's out there. That increases price pressures. You also don't have enough people doing the job if you do get those products supplied to be able to build the final product.

So I think all sectors have done phenomenally well. One that I think we all probably are watching very carefully, given the global situation, is the food and beverage manufacturing sector. Russia has destabilized, or they're attempting to destabilize, the entire world to get the world to bend to the will of the Communist regime under Vladimir Putin. And the world has to hold Vladimir Putin accountable for the war crimes that he's committed in Ukraine.

But those war crimes, I think, are even broader than that. They're causing disruptions to the food chain and the food supply. And I hope-- as well as energy, of course, in Europe, which has an impact all around the world. So I hope that we're going to see the rest of the world holding Russia accountable for what they're doing to destabilize economies globally.

SEANA SMITH: Well, Jay, mentioning that geopolitical risk factor there, there was a KPMG survey out saying 91% of CEOs predict a recession in the next 12 months, talking about some of that uncertainty. 66% saying that it's not going to be mild, and it's not going to be short. That's pretty alarming. What are you hearing from your CEOs?

JAY TIMMONS: So we did a study-- pardon me-- a survey of our members, as we do every quarter. 2/3 also believe that we're probably headed for a recession next year. But I'm not sure that anybody really knows what that recession is going to look like. And I think one of the reasons for that is, I don't think any of us would have predicted kind of how the economy would have responded over the course of the last few years, given all of the factors that are out there, whether it's inflation or interest rates or unemployment.

All of these things are a little bit out of balance for those of us who have been around a long time, like I have. You look back to the 1970s, and you saw the triple whammy of high unemployment, high inflation, high interest rates. We haven't had that unemployment component, although it does look like, based on this last JOLTS report, that the economy is cooling a tad.

The question is, can we land this plane gently? Or is it going to be a bumpy landing? And I think, obviously, the Fed wants to have it be a gentle landing. Obviously, the business community wants it to be a gentle landing. And I think every American wants it to be a gentle landing. So perhaps we are headed toward that. And let's just all hope so.

SEANA SMITH: We certainly do hope so. Jay Timmons, thanks so much for taking the time to join us once again. Great to see you.