WELCOMENAM 2014 Spring Board of Directors Meeting

Wednesday, March 12 2:30 p.m. – 5:00 p.m. Monarch Ballroom 3

Small and Medium Manufacturers (SMM) Meeting

Al Lubrano President, Materion Technical Materials and NAM SMM Chair

6:00 p.m. – 7:00 p.m. Pacific Lawn

SMM Directors Reception

7:00 p.m. – 9:00 p.m. Pacific Ballroom 3

SMM Directors Dinner

Al Lubrano President, Materion Technical Materials and NAM SMM Chair

9:00 p.m. Wine Room and Terrace

SMM After Party

Entertainment courtesy of Kellie and Gary Johnson, ACE Clearwater Enterprises

Thursday, March 13 8:00 a.m. – 9:30 a.m. Aegean (Breakfast available at 7:30 a.m.)

NAJI Breakfast Meeting (optional)

“Unfair Competition: How Software Piracy Affects Your Business”

9:30 a.m. – 11:30 a.m. Monarch 3

Manufacturing Institute Trustees Meeting (optional)

12:00 p.m. – 1:00 p.m. Pacific Ballroom 3

Opening Lunch

Doug Oberhelman Chairman and CEO, Caterpillar Inc. and NAM Chair Mitch Daniels President of Purdue University Former Governor of Indiana

1:15 p.m. – 1:45 p.m. Pacific Ballroom 1 & 2

President’s Report Jay Timmons President and CEO NAM

1:45 p.m. – 2:30 p.m. Pacific Ballroom 1 & 2

Workforce Discussion

Chip Blankenship President and Chief Executive Officer, GE Appliances Chair, NAM Workforce Task Force

2:30 p.m. – 3:30 p.m. Pacific Ballroom 1 & 2

Managing Global Risk in a G-Zero World Speaker sponsored by Teradata Corporation

Ian Bremmer Author President, Eurasia Group

3:30 p.m. – 4:15 p.m. Pacific Ballroom 1 & 2

The Latest on Healthcare

Douglas Holtz-Eakin President American Action Forum

4:30 p.m. – 5:20 p.m. Pacific Ballroom 1 & 2

The State of Politics

Fred Davis CEO, Strategic Perception James Carville Political Commentator Moderated by: Ron Saxton Executive Vice President JELD-WEN Chair, NAM-PAC

5:30 p.m. – 6:00 p.m.

Wine Room

New Directors Reception

6:00 p.m. – 7:00 p.m.

Pacific Promenade & Terrace

Board Reception

7:00 p.m. – 9:00 p.m.

Pacific Ballroom 1 & 2

Board Dinner

Gen. Claude (Mick) Kicklighter Director, DOD Vietnam 50th Anniversary Commemoration Program

Friday, March 14

8:00 a.m. – 9:00 a.m.

Executive Committee Meeting

8:00 a.m. – 9:00 a.m. Pacific Ballroom 3

Breakfast

No program

9:15 a.m. – 10:15 a.m. Pacific Ballroom 1 & 2

A Journalist’s View of Washington

Bob Woodward Author and Journalist

10:15 a.m. – 11:15 a.m. Pacific Ballroom 1 & 2

U.S.-Asia Relations

Josette Sheeran President, Asia Society

11:15 a.m. – 12:15 p.m. Pacific Ballroom 1 & 2

Board Business Meeting

Doug Oberhelman Chairman and CEO, Caterpillar Inc. and NAM Chair

12:15 p.m. – 1:15 p.m. Pacific Ballroom 3

Lunch No program

Ian Bremmer, Ph.D.

Ian Bremmer is the founder and president of Eurasia Group, a global political risk research and consulting firm. His company provides financial, corporate and government clients with information and insight on how political developments move markets.

Dr. Bremmer’s own analysis focuses on global macro-political trends and emerging markets, which he defines as “those countries where politics matter at least as much as economics for market outcomes.” He provides strategies that help minimize both long- and short-term risk by taking into account both the political and economic factors that affect the global business environment.

Dr. Bremmer created Wall Street’s first-ever global political risk index

and has authored several books, including The J Curve: A New Way to Understand Why Nations Rise and Fall (Simon & Schuster, 2006), The Fat Tail: The Power of Political Knowledge for Strategic Investing (Oxford University Press, 2009) and The End of the Free Market: Who Wins the War Between States and Corporations? (Portfolio, May 2010). His most recent book, Every Nation for Itself: Winners and Losers in a G-Zero World (Portfolio, May 2012), illustrates a historic shift in the international system and the world economy—and an unprecedented moment of global uncertainty.

Dr. Bremmer is a contributor for the Financial Times’ A-List and Reuters.com and writes “The Call” blog on ForeignPolicy.com. He has also published articles in The Wall Street Journal, The Washington Post, The New York Times, Newsweek, Harvard Business Review and Foreign Affairs. He appears regularly on CNBC, Fox News Channel, National Public Radio and other networks.

Dr. Bremmer has a Ph.D. in political science from Stanford University (1994) and was the youngest-ever national fellow at the Hoover Institution. He teaches at Columbia University and has held faculty positions at the EastWest Institute and the World Policy Institute. In 2007, he was named a Young Global Leader of the World Economic Forum. Dr. Bremmer grew up in Boston and now lives in New York and Washington, D.C.

James Carville

James “The Ragin’ Cajun” Carville is one of America’s best-known political consultants. His long list of electoral successes evidences a knack for steering overlooked campaigns to unexpected landslide victories and for remaking political underdogs into upset winners. His winning streak began in 1986, when he managed the gubernatorial victory of Robert Casey in Pennsylvania. In 1987, Mr. Carville helped guide Wallace Wilkinson to the governor’s seat in Kentucky. Mr. Carville continued his winning streak with wins in New Jersey with Frank Lautenberg elected to the U.S. Senate. He next managed the successful 1990 gubernatorial campaign of Georgia’s Lieutenant Gov. Zell Miller, including a tough primary win over Atlanta mayor Andrew Young, and in 1991, Mr. Carville drew national attention when he led Sen. Harris Wofford from 40 points behind in the polls to an upset

landslide victory over former Pennsylvania Gov. and U.S. Attorney General Richard Thornburgh. His most prominent victory was in 1992 when he helped William Jefferson Clinton win the presidency. In 1993, Mr. Carville was honored as “Campaign Manager of the Year” by the American Association of Political Consultants for his leadership of President Clinton’s “War Room” at campaign headquarters in Little Rock. Mr. Carville was also the focus, along with George Stephanopoulos, of the feature length Academy Award–nominated documentary The War Room. In recent years, Mr. Carville has not been a paid political consultant for any domestic politicians or candidates for office, instead focusing on campaigns in more than 20 countries around the globe, including leading Ehud Barak to victory in his campaign to become the prime minister of Israel in 1999. Along with pollster Stanley Greenberg, Mr. Carville founded Democracy Corps, an independent, nonprofit polling organization dedicated to making government more responsive to the American people. Democracy Corps has conducted more than 200 national, congressional and local surveys, interviewing more than 220,000 American voters during the past 10 years. Mr. Carville is a frequent political commentator and contributor and can be seen on networks worldwide and is a columnist for The Hill newspaper, which publishes daily when Congress is in session. He serves as a professor of practice at Tulane University in New Orleans, where he lives with his wife Mary Matalin and their two daughters.

Governor Mitch Daniels

Mitchell E. Daniels, Jr., became Purdue University’s 12th president in January 2013 at the conclusion of his term as governor of the State of Indiana. Gov. Daniels was elected as the 49th governor of Indiana in 2004 in his first bid for any elected office. He was reelected in 2008 to a second and final term, receiving more votes than any candidate for any public office in the state’s history. Gov. Daniels came to the governor’s office from a successful career in business and government, holding numerous top management positions in both the private and public sectors. His private-sector experience includes CEO of the Hudson Institute and President of Eli

Lilly’s North American Pharmaceutical Operations. In the public sector, he served as chief of staff to Sen. Richard Lugar, senior advisor to President Ronald Reagan and director of the Office of Management and Budget under President George W. Bush. Gov. Daniels’ first legislative success created the public–private Indiana Economic Development Corporation. In its first four years of existence, the agency created thousands of new jobs in the state and was associated with more than $18 billion of new investment. In 2008, Site Selection Magazine and CNBC both named Indiana as the “Most Improved State for Business” in the country. In 2012, Indiana became the 23rd Right-to-Work state. Indiana is now near the top of every national ranking of business attractiveness and is the top job-creating state in the nation. Gov. Daniels’ innovations include the 2006 lease of the Indiana Toll Road. This large privatization of public infrastructure generated nearly $4 billion for Major Moves, the state’s 10-year transportation and infrastructure program. The Healthy Indiana Plan was enacted in 2007 to provide health care coverage for uninsured adults, and comprehensive property tax reforms in 2008 resulted in the biggest tax cut in Indiana history. Today, Indiana has the lowest property taxes in the nation. Both initiatives received overwhelming bipartisan support. In 2011, under his guidance, Indiana passed education reforms that are dramatically expanding charter schools, revising teacher evaluations and expanding full-day kindergarten funding. In 2010, he established WGU Indiana, a partnership between the state and Western Governors University aimed at expanding access to higher education and increasing the percentage of the state’s adult population with education beyond high school. Gov. Daniels, the author of the best-selling book Keeping the Republic: Saving America by Trusting Americans, earned a bachelor’s degree from the Woodrow Wilson School of Public and International Affairs at Princeton University in 1971 and his law degree from Georgetown University in 1979. Gov. Daniels and his wife Cheri have four daughters.

Fred Davis III

After a 20-year career in the “real advertising” world—representing clients ranging from oil companies to 7-Eleven—Fred Davis III has spent the past 20 in the world of political campaigns and public affairs. In 1972, at the age of 19, Mr. Davis took over his father’s three-man Tulsa, Oklahoma–based public relations firm. By the time Mr. Davis was in his mid-20s, the firm had more than 50 employees handling corporate advertising and image development; headquartered in California. In 1994, he received a call from his uncle, then-Oklahoma Congressman James M. Inhofe, to help rescue his campaign for the U.S. Senate. Hired three months prior to the election—when polls

showed Inhofe as a 15-point underdog to Congressman Dave McCurdy—Inhofe won the election by 15 points, a 30-point swing in 90 days. A 30-second television commercial depicting hardened, grizzled convicts taking dancing lessons while wearing pink ballerina tutus won Davis the top “Pollie Award” from the American Association of Political Consultants in Washington, D.C., as best of the year, and the “Best of Show Addy” in the American Association of Advertising Agencies’ competition. In the summer of 2008, Mr. Davis was brought in as chief creative consultant to John McCain’s presidential campaign. SPI produced perhaps the most publicized TV spot of the cycle, featuring Barack Obama as “the biggest celebrity in the world,” comparing him to Paris Hilton and Britney Spears. The spot surpassed 1 million YouTube views in just 24 hours and instantly changed the national dialogue in that race. The RNC retained Mr. Davis as creative director for the 2008 Republican National Convention, which involved every element from the low-key set design to the writing, shooting and production of more than 100 high-definition video backgrounds and 24 films. By the end of the convention, McCain was tied or in the lead on most national polls. Mr. Davis lives in Hollywood and Santa Barbara, Calif. He served two years as chairman of the Southern California board of JA Worldwide (formerly Junior Achievement) and is a former member of its national board of directors. He serves on the national advisory board of the Dream Foundation.

Douglas Holtz-Eakin, Ph.D.

Douglas Holtz-Eakin has a distinguished record as an academic, policy adviser and strategist. Currently, he is the president of the American Action Forum, and most recently, he was a commissioner on the congressionally-chartered Financial Crisis Inquiry Commission. He recently established The Center for Health and Economy, a nonpartisan research organization focused on providing accessible analysis on the outlook of the U.S. health care system. During 2001–2002, he was the chief economist of the President’s Council of Economic Advisers (CEA). At CEA, he helped to formulate policies addressing the 2000–2001 recession and the aftermath of the terrorist attacks on September 11, 2001. From 2003–2005, he was the sixth director of the nonpartisan Congressional Budget Office, which

provides budgetary and policy analysis to Congress. During 2007–2008, he was director of domestic and economic policy for John McCain’s presidential campaign. Following the 2008 election, Dr. Holtz-Eakin was the president of DHE Consulting, an economic and policy consulting firm providing insight and research to a broad cross-section of clients. Dr. Holtz-Eakin has held positions in several Washington-based think tanks. He was senior fellow at the Peter G. Peterson Institute for International Economics (2007–2008) and the director of the Maurice R. Greenberg Center for Geoeconomic Studies and the Paul A. Volcker chair in international economics at the Council on Foreign Relations (2006). He has also been a visiting fellow at the American Enterprise Institute, Heritage Foundation and American Family Business Foundation. Dr. Holtz-Eakin built an international reputation as a scholar doing research in areas of applied economic policy, econometric methods and entrepreneurship. He began his career at Columbia University in 1985 and moved to Syracuse University from 1990 to 2001. At Syracuse, he was trustee professor of economics at the Maxwell School, chairman of the Department of Economics and associate director of the Center for Policy Research. Dr. Holtz-Eakin serves on the boards of the Tax Foundation, National Economists Club and the Research Advisory Board of the Center for Economic Development.

Lieutenant General Claude “Mick” Kicklighter (Ret.)

Mick Kicklighter served in the Army for over 35 years; he commanded every level from platoon through Army Division. His last two assignments on active duty were Director of the Army Staff and was Commanding General of the U.S. Army, Pacific. He served for more than 17 years in senior civilian assignment, one of which was Inspector General of the Department of Defense (DoD), 2007 and 2008. In October 2005 he was selected by the Secretaries of State and Defense to establish and direct the Iraq/Afghanistan Joint Strategic Transition Planning Group. In 2003, he was Director of DoD’s Iraq Transition Team that, together with the Department of State, planned the inactivation of the Coalition Provisional Authority and the establishment of the new U.S. Mission Baghdad. He had two tours of

duty in Vietnam.

Josette Sheeran

Josette Sheeran is the seventh president and CEO of the Asia Society. In this position, which she assumed in June 2013, she is responsible for leading and advancing the organization’s work throughout the United States and Asia and across its disciplines of arts and culture, policy and business and education. Ms. Sheeran is former vice chair of the World Economic Forum, which hosts the annual Davos gathering of world leaders. In this position, she helped advance global initiatives and global, regional and industry agendas, such as Grow Africa, which has attracted $4 billion in investment commitments to end hunger and malnutrition in Africa. She recently served at the Harvard Kennedy School as a Fisher Fellow in the Future of Diplomacy.

Prior to her tenure at the World Economic Forum, Ms. Sheeran was executive director of the United Nations World Food Programme (WFP), appointed by U.N. Secretary-General Kofi Annan in 2006. There she was responsible for managing the world’s largest humanitarian organization, leading a team of 13,000 people in more than 70 countries and managing an annual budget of more than $3 billion—including $1 billion in Asia. Ms. Sheeran has held senior positions in the U.S. government, and in those positions, she conducted high-level diplomacy with virtually every nation in Asia. As U.S. under secretary of state for economic, business and agricultural affairs, she led new State Department initiatives, which supported economic transformation and reconstruction in Afghanistan and Central Asia and with APEC and ASEAN. Earlier, she served for five years as deputy U.S. trade representative, conducting negotiations across Asia, including with China, Australia, Singapore, India, Korea and Japan. In 2011, Forbes named Ms. Sheeran the world’s 30th most powerful woman; Foreign Policy has listed her among its top 100 women on Twitter; and Ms. Sheeran’s TED Talk on ending world hunger has been viewed more than 1 million times. Ms. Sheeran is a member of the Council on Foreign Relations and has served on its Washington Advisory Board. She was awarded Japan’s Niigata International Food Award; named Commandeur de l’Ordre du Mérite Agricole by the government of France; and received Brazil’s highest civilian award, the Grand Official Order of the “Rio Branco,” from President Lula Da Silva. Ms. Sheeran was also honored by The Huffington Post with its Game Changers Award in 2011.

Bob Woodward

Bob Woodward is regarded as one of America’s preeminent investigative reporters and nonfiction authors. Since 1971, Mr. Woodward has worked for The Washington Post where he is an associate editor. He and Carl Bernstein were the main reporters on the Watergate scandal for which The Post won the Pulitzer Prize in 1973. Mr. Woodward was the lead reporter for The Post’s articles on the aftermath of the September 11 terrorist attacks that won the National Affairs Pulitzer Prize in 2002. In 2004, Bob Schieffer of CBS News said, “Woodward has established himself as the best reporter of our time. He may be the best reporter of all time.” Called “the best pure reporter of his generation, perhaps ever” by The

Weekly Standard, Mr. Woodward has authored or coauthored 17 books, all of which have been national nonfiction best sellers. His most recent best-selling book, The Price of Politics, is based on 18 months of reporting and is an intimate, documented examination of how President Obama and the highest profile Republican and Democratic leaders in Congress attempted to restore the American economy and improve the federal government’s fiscal condition. Mr. Woodward was born in Illinois. He graduated from Yale University in 1965 and served five years as a communications officer in the U.S. Navy before beginning his journalism career at the Montgomery County (Maryland) Sentinel, where he was a reporter for one year before joining The Post.

Small and Medium Manufacturers (SMM) Group

Wednesday, March 12, 2014

2:30pm-5:00pm

Monarch Ballroom 3

AGENDA

Welcome Al Lubrano President

Materion Technical Materials NAM SMM Chair

NAM President’s Welcome Jay Timmons

President and CEO NAM

Tax Policy Update Dorothy Coleman

Vice President, Tax and Domestic Economic Policy NAM

Workforce Discussion Sandy Westlund-Deenihan CEO/Design Engineer

Quality Float Works, Inc. Chair, NAM Education and Workforce Committee

Advocacy Update Tiffany Adams Vice President, Public Affairs NAM Members’ Roundtable Al Lubrano President

Materion Technical Materials NAM SMM Chair

Adjourn

Board of Directors Business Meeting

Friday, March 14, 2014 11:15 a.m. – 12:15 p.m. Pacific Ballroom 1 & 2

AGENDA

Call to Order Doug Oberhelman Approval of Minutes Chairman and CEO Caterpillar Inc. NAM Chair Finance and Audit Committee Reports Gregg Sherrill 2014 Budget Approval Chairman and CEO Tenneco NAM Vice Chair Finance and Audit Committees Chair Approval of Board Slate Doug Oberhelman Approval of Bylaws Change SMM Meeting Report Al Lubrano

President, Materion Technical Materials NAM SMM Chair

Executive Committee Report Doug Oberhelman NAM-PAC Update Ron Saxton Executive Vice President JELD-WEN Chair, NAM-PAC Approval of Policy Changes David Farr Trade Chairman and CEO Emerson International Economic Policy Vice Chair Energy Ron Saxton Executive Vice President JELD-WEN Energy & Resources Policy Vice-Chair Policy Updates Aric Newhouse Senior Vice President Policy and Government Relations NAM Adjourn

NAM Board of Directors Meeting Mayflower Renaissance Hotel

Washington, D.C.

October 3, 2013 Minutes

Doug Oberhelman, Chairman and CEO of Caterpillar Inc. and NAM Chair, convened the annual meeting of the Board of Directors. The slate of new directors was presented and unanimously approved. There was no new business and the annual meeting was closed. Mr. Oberhelman convened the Board of Directors meeting. Minutes of the March 2013 Board of Directors meeting were approved. Gregg Sherrill, Tenneco Chairman and CEO, NAM vice chair, and chair of the Audit and Finance Committees, reported that John Lundgren, Chairman and Chief Executive Officer of Stanley Black & Decker, Inc, was appointed by the NAM Chair to serve on the Audit and Finance Committees. Mr. Sherrill reported a clean audit from the Audit Committee and the approval of Johnson Lambert LLP. He reported that the association is in a very strong position financially, with a growth in the dues base from $30.6 m. to 32.9 m. He discussed an annual reserve fund review by the CFO using a formula that could allow for a shift of certain funds from reserves to association advocacy and litigation efforts. Al Lubrano, President of Materion Technical Materials, and NAM SMM Chair, reported that 22 SMM directors had agreed to serve on a Membership Taskforce with the goal of growing NAM membership. The October 1st meeting of the SMM Group had included a roundtable discussion of advocacy efforts and a brainstorming session on how to increase those efforts. Mr. Oberhelman reinforced the importance of NAM SMMs to advocacy efforts. Doug Oberhelman reported on the Executive Committee meeting. He noted the impressive growth and the importance of that growth to manufacturers’ advocacy in Washington. Doug Oberhelman introduced bylaws changes that had been sent to all Board directors in August. The changes were approved unanimously. The Chair announced the formation of a Board-level workforce task force, chaired by NAM Board member from GE, Chip Blankenship. The purpose of the task force is to develop better alignment between the Manufacturing Institute and the NAM. Jay Timmons introduced Linda Kelly, the NAM’s new General Counsel, who provided an overview of the new Center for Legal Action which will focus on three activities: third party litigation, amicus briefs, and developing a network of general counsels to share information. Dave Hoover of Ball Corporation and Chair for International Economic Policy, introduced a resolution of support for Trade Promotion Authority (TPA), which was approved unanimously. Aric Newhouse, NAM VP of Policy, then gave an overview of energy and workforce issues. The meeting was adjourned.

Finance Committee Report

Board of Directors Meeting March 2014

To: NAM Board of Directors

From: Rick Klein

Subject: Financial Results – Year-ended December 31, 2013

Date: March 13, 2014

Attached is the Flash Report and accompanying statements for the year-ended December 31, 2013 for your review. Please note that we had a very good year with highlights as follows:

Budget Summary

o The NAM ended the period with net operating income of $2.4M, $2.4M favorable to budget.

o Revenue was favorable to budget by $2.7M primarily due to: Portfolio Gains of $1.9M, $1.9M favorable to budget. Dues revenue being $438K favorable to budget.

o Expenses were unfavorable to budget by $280K, with material variances as follows:

Personnel & Related expenses were unfavorable by $665K

primarily due to the award and payment of additional incentive compensation for achieving results in excess of goals.

Office expenses were $183K favorable to budget primarily due to lower printing expense associated with the shift to digital communications.

Professional & Legal expense was favorable by $69K primarily in the consulting area. Travel, Entertainment and Meetings expense was favorable to budget by $72K primarily

due to lower travel costs.

Dues Base

o The dues-base grew $2.5M or 8.2% in 2013 from $30.6M to $33.1M (see chart below).

Member Count

o Total member count grew by 750 companies from 12,200 to 12,950. Dues paying members grew by 28 from 4,283 to 4,311 Subsidiaries of Dues paying Members (zero-subs) grew by 722 from 7,917 to 8,639.

Companies Dues Base

12/31/12 12,200 30,639,542$

YTD Paying New Members 390 1,620,802$

YTD Zero-sub New Members 3,169

YTD Dues Increases 3,214,083$

YTD Paying Resignations (362) (1,865,825)$

YTD Zero-sub Resignations (2,447)

YTD Dues Reductions (483,903)$

YTD Net Company/Dues Base Increase/(loss) 750 2,485,157$

12/31/13 12,950 33,124,699$

* Does not include affiliate members

Actual Budget Variance

Revenue (operating) $ 36,354,221 $ 33,699,500 $ 2,654,721

Expense (operating) $ 33,979,347 $ 33,699,500 $ (279,847)

Net Operating Income/(Loss) $ 2,374,874

$ -0-

$ 2,374,874

Cash Flow/Liquidity

o Unrestricted cash from operations increased by $5.6M from 12/31/12 due to: Operating income of $2.4M. Other ordinary changes in balance sheet items with a net cash increase totaling $3.2M.

o Restricted cash increased by $1.7M from 12/31/12 due to:

Coalition assets/deposits increasing by $1.3M. Deferred compensation (restricted) assets increasing by $381K.

Bottom Line

o Net Income from operations for the period was $2.4M. o The dues base increased in the period by $2.5M. o Unrestricted cash increased by $5.6M. o The Pension Liability on the balance sheet decreased by $7.2M.

Outlook

o Positive; we are moving into 2014 with momentum. o The $2.5M increase in the dues base will positively affect revenue recognition into 2014.

Please let me know if you have any questions or need further information.

YTD YTD Annual YTD YTD Annual

Actual Budget Variance $ Budget Actual Budget Variance $ Budget

NAM CATEGORY VIEW

Revenue

Dues - Field $25,514,239 $24,975,000 $539,239 $24,975,000 $24,012,829 $24,038,000 ($25,171) $24,038,000

Dues - National 6,573,484 6,675,000 (101,516) 6,675,000 6,177,102 5,874,000 303,102 5,874,000

Affiliation Fees 641,356 587,000 54,356 587,000 498,414 498,000 414 498,000

Investment Income 2,233,314 250,000 1,983,314 250,000 1,312,244 250,000 1,062,244 250,000

Member Program Revenue 202,185 245,000 (42,815) 245,000 235,021 275,000 (39,979) 275,000

Sponsorships 227,500 300,000 (72,500) 300,000 191,500 180,000 11,500 180,000

Publications 24,034 30,000 (5,966) 30,000 20,743 15,000 5,743 15,000

Revenue Producing Meetings 398,478 302,500 95,978 302,500 273,002 250,000 23,002 250,000

Other Income 539,631 335,000 204,631 335,000 561,899 260,000 301,899 260,000

Total Income $36,354,221 $33,699,500 $2,654,721 $33,699,500 $33,282,754 $31,640,000 $1,642,754 $31,640,000

Expenses

Personnel & Related $24,060,574 $23,395,270 ($665,304) $23,395,270 $22,713,295 $22,015,400 ($697,895) $22,015,400

Facilities & Related 3,296,768 3,327,200 30,432 3,327,200 3,031,695 3,108,000 76,305 3,108,000

Office Expenses 1,350,823 1,533,350 182,527 1,533,350 1,556,437 1,549,225 (7,212) 1,549,225

Professional & Legal 2,832,386 2,901,714 69,328 2,901,714 2,503,447 2,733,400 229,953 2,733,400

Travel & Entertainment & Meetings 2,070,388 2,141,966 71,578 2,141,966 1,941,761 2,083,975 142,214 2,083,975

Depreciation 368,408 400,000 31,592 400,000 282,143 150,000 (132,143) 150,000

Total Funded Expense $33,979,347 $33,699,500 ($279,847) $33,699,500 $32,028,778 $31,640,000 ($388,778) $31,640,000

Net Operational Income/(Loss) $2,374,874 $0 $2,374,874 $0 $1,253,976 $0 $1,253,976 $0

12/31/13 12/31/12 12/31/13 12/31/12

ASSETS LIABILITIES

Cash & Investments - Unrestricted (at market) Accounts Payable & Accrued Expenses 1,144,947$ 1,805,130$

Operating accounts $7,205,087 $3,807,767

Investments 19,351,359 17,141,771 Deferred Rent 2,627,598 1,485,336

26,556,446 20,949,538

Accrued Compensation 3,631,083 1,542,537

Accrued Retirement

Cash & Investments - Restricted (at market) Additional accrued pension liability 5,254,273 12,542,790

Coalitions and Advocacy 4,577,311 3,297,037 Deferred retirement 2,977,417 2,619,239

Deferred Compensation 3,098,944 2,717,808 Post-retirement benefits 370,089 415,375

7,676,255 6,014,845 8,601,779 15,577,404

Accounts Receivable Deferred Income

Dues 1,696,107 1,970,433 Unearned dues 14,451,944 14,325,714

Manufacturing Institute 108,215 94,798 Other 119,754 73,005

Security Deposits - Office Leases 437,799 875,098 14,571,698 14,398,719

Other 365,913 544,533

2,608,034 3,484,862 TOTAL LIABILITIES 30,577,105 34,809,126

Fixed Assets (less accumulated depreciation) 2,023,936 1,998,992

NET ASSETS

Deferred Charges Unrestricted 3,875,388 (5,514,077)

Prepaid expenses 165,133 143,849 Restricted 4,577,311 3,297,037

165,133 143,849 8,452,699 (2,217,040)

TOTAL ASSETS 39,029,804$ 32,592,086$ TOTAL LIABILITIES & NET ASSETS 39,029,804$ 32,592,086$

2013 Prior Year Comparative Results

CONFIDENTIAL CONFIDENTIAL

Board of Directors Report

As of December 31, 2013

NAM Budget Status

NAM Balance Sheet For the periods ending

2014 Budget

MEMORAND UM

To: Board of Directors

From: Jay Timmons Rick Klein

Subject: Proposed 2014 Budget

Date: March 13, 2014

2014 promises to be challenging for manufacturers and an opportunity for the NAM to lead on a number of fronts. We will be aggressively defending member interests on the regulatory front, on the Hill and in the courts. The budget outlined here supports a vigorous policy agenda and is aligned with the goals in our Strategic Plan. It’s important to note at the outset that our overall approach and financial strategy will be shifting in 2014 reflecting an increased emphasis on issue advocacy and litigation. Therefore, our budgeting and reporting will be reflective of the change. More specifically, in 2014 our “consolidated” operating budget and financial presentations will now have three components:

1. Core operating 2. Issue Advocacy 3. Center for Legal Action

As we do each year, we began the process by taking a careful look at where resources are being allocated in order to ensure we are appropriately focusing our efforts while remaining flexible and aggressive with our initiatives. The budget also is reflective of our tenets of Growth, Presence and Advocacy. While there are now three separate components, they are built to support and enhance each other. The following summarizes the three components. The Core Operating component of the budget is very similar to what we viewed in prior years as our operating budget and includes the revenue and expense categories we have used in prior budgets. It should be viewed as the foundation for NAM activities. Our baseline revenue assumption for the core operating budget contemplates an overall dues base gain of $1.8M translating into 2014 dues revenue of $34,400,000. Note that our Strategic Plan dues revenue goal for 2014 was $33.5M in 2014 and we are projecting and budgeting to exceed that goal by $900K. Issue advocacy efforts have become increasingly important to our efforts and we are reshaping our strategy to reflect the change. In 2014 we are dedicating significantly increased resources to afford us the ability to leverage our efforts to grow the program, enhance our effectiveness, and respond more quickly to emerging opportunities. This year we will be investing cash resources that are deemed to be in excess of those needed for adequate reserves into our issue advocacy and Legal Center initiatives as approved by the Finance and Executive Committees in October. We are also budgeting to use a portion of the restricted issue advocacy funds we currently have in house (similar to what we’ve done in prior years). We have organized our 2014 efforts into nine distinct campaigns which group similar legislative issue concerns. Each of these nine campaign groups are generally organized along the existing NAM policy staff structure. Under each issue group there are defined strategies and estimated costs targeted to address narrowly focused sub-issues.

The Center for Legal Action is arguably part of our issue advocacy initiative although it will be viewed as separate with its own team and fundraising goals. Threats that manufacturers face today are occurring much more frequently in both the regulatory arena and in the courts. We’ve now built out the staff and the infrastructure for the center to meet the challenges in that area and developed a plan that expands our efforts in direct party litigation as well as in our amicus efforts. Importantly, the Center’s activities will be closely coordinated with and support our issue advocacy initiatives. In summary, the consensus is that we expect a challenging environment in 2014 from a number of perspectives. Economic activity is expected to remain anemic and investment returns modest. At the same time we expect significant challenges for manufacturers on the regulatory front and legislatively. From an NAM membership perspective, we will be dealing with these challenging conditions working hard to demonstrate the NAM value proposition and overall member ROI while aggressively defending member interests. The following tables show the proposed 2014 operating budget, consolidated on the first page and then arrayed in the three components and showing the total on the far right on the second page. Note that the net operating loss shown of $1.75M is funded by the use of $1.135M from existing cash resources and $617K from currently restricted issue advocacy funding. Please let me know if you have any questions.

2013 Approved 2013 Estimated 2014 ProposedBudget Actual Operating Budget

Revenue

Membership Dues

Field $24,975,000 $25,525,000 $27,225,000

National 6,675,000 6,615,000 7,175,000

Total Membership Dues $31,650,000 $32,140,000 $34,400,000

Affiliation Fees $587,000 $619,000 $647,000

Issue Advocacy/Litigation Center Contributions $5,700,000

Investment Income - (not including investments gain & loss) $250,000 $275,000 $275,000

Member Program Revenue $245,000 $195,000 $200,000

Sponsorships $300,000 $232,000 $427,500

Publications $30,000 $24,000 $15,000

Revenue Producing Meetings $302,500 $403,000 $422,000

Administrative Fees $250,000 $250,000 $285,000

Other Income $85,000 $242,000 $0

Total Revenue $33,699,500 $34,380,000 $42,371,500

Funded Operational Expenses

Personnel & Related

Salaries, Wages & Bonus 16,006,400 16,410,000 17,837,000

Commissions 1,945,000 1,875,000 1,736,000

Overtime 37,900 47,000 54,500

Temporaries/Interns 13,400 220,000 49,300

Payroll Taxes 1,130,000 1,020,000 1,200,000

Employee Benefits/Admin Fee 2,258,000 2,015,000 2,620,000

Pension Expense 1,650,000 1,650,000 1,600,000

Recruitment 235,970 245,000 150,000

Training 118,600 102,000 139,600

Total Personnel & Related $23,395,270 $23,584,000 $25,386,400

Facility & Related

Rent 3,112,200 3,078,000 3,137,000

Insurance 170,000 164,000 190,000

Personal Property Taxes 45,000 48,000 45,000

Other - 2,000 0

Total Facility & Related $3,327,200 $3,292,000 $3,372,000

Office Expenses

Equipment Lease & Maintenance 331,800 380,000 438,600

Telecommunications 334,500 290,000 308,470

Printing 319,190 270,000 351,725

Postage 119,925 80,000 99,825

Supplies 87,475 60,000 141,100

Subscriptions & Miscellaneous 340,460 327,000 367,855

Total Office Expense $1,533,350 $1,407,000 $1,707,575

Professsional & Legal

Consultants

General 666,454 650,000 3,691,800

President 300,000 300,000 300,000

Research 200,000 90,000 950,000

Issue Advocacy 200,000 400,000 2,332,000

Outside Services 403,250 508,000 689,100

Grants & Contributions 270,000 262,000 241,500

Memberships/Dues 218,210 194,000 335,135

Legal & Accounting

General 125,000 111,000 119,000

Litigation 200,000 100,000 1,200,000

Marketing & Advertising 168,000 216,000 562,500

Honoraria 7,500 11,000 37,500

Bank Fees & Credit Card Fees 76,300 96,000 100,700

Payroll & Actuarial Fees 67,000 60,000 80,000

Total Professional & Legal $2,901,714 $2,998,000 $10,639,235

Travel & Entertainment & Special Events

Staff travel, entertainment & special events 1,312,966 1,080,000 1,576,290

Board meetings 450,000 465,000 480,000

Total Travel & Entertainment & Special Events $1,762,966 $1,545,000 $2,056,290

Revenue Producing Meeting Expenses $379,000 $461,000 $512,000

Depreciation - CapX $400,000 $400,000 $450,000

Total Funded Operational Expenses $33,699,500 $33,687,000 $44,123,500

Net Operational Income $0 $693,000 ($1,752,000)

Additional Funding

Funds from Unristricted Cash n/a n/a $1,135,000

Funds from Restricted Advocacy n/a n/a $617,000

$1,752,000

Cash Funded ( at Budget) $0 $693,000 $0

Proposed 2014 Operating Budget

Consolidated - Expense Category View

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Core Issue Legal Total Operating

Operating Advocacy Center Budget

Revenue

Membership Dues

Field $27,225,000 $0 $0 $27,225,000

National 7,175,000 0 0 7,175,000

Total Membership Dues $34,400,000 $0 $0 $34,400,000

Affiliation Fees $647,000 $647,000

Issue Advocacy/Litigation Center Contributions $5,000,000 $700,000 $5,700,000

Investment Income - (not including investments gain & loss) $275,000 $0 $0 $275,000

Member Program Revenue $200,000 $0 $0 $200,000

Sponsorships $427,500 $0 $0 $427,500

Publications $15,000 $0 $0 $15,000

Revenue Producing Meetings $422,000 $0 $0 $422,000

Administrative Fees $285,000 $0 $0 $285,000

Other Income $0 $0 $0 $0

Total Revenue $36,671,500 $5,000,000 $700,000 $42,371,500

Funded Operational Expenses

Personnel & Related

Salaries, Wages & Bonus 17,837,000 0 0 17,837,000

Commissions 1,736,000 0 0 1,736,000

Overtime 54,500 0 0 54,500

Temporaries/Interns 49,300 0 0 49,300

Payroll Taxes 1,200,000 0 0 1,200,000

Employee Benefits/Admin Fee 2,335,000 250,000 35,000 2,620,000

Pension Expense 1,600,000 0 0 1,600,000

Recruitment 150,000 0 0 150,000

Training 139,600 0 0 139,600

Total Personnel & Related $25,101,400 $250,000 $35,000 $25,386,400

Facility & Related

Rent 3,137,000 0 0 3,137,000

Insurance 190,000 0 0 190,000

Personal Property Taxes 45,000 0 0 45,000

Other 0 0 0 0

Total Facility & Related $3,372,000 $0 $0 $3,372,000

Office Expenses

Equipment Lease & Maintenance 438,600 0 0 438,600

Telecommunications 308,470 0 0 308,470

Printing 351,725 0 0 351,725

Postage 99,825 0 0 99,825

Supplies 141,100 0 0 141,100

Subscriptions & Miscellaneous 367,855 0 0 367,855

Total Office Expense $1,707,575 $0 $0 $1,707,575

Professsional & Legal

Consultants

General 1,016,800 2,675,000 0 3,691,800

President 300,000 0 0 300,000

Research 0 950,000 0 950,000

Issue Advocacy 0 2,332,000 0 2,332,000

Outside Services 689,100 0 0 689,100

Grants & Contributions 241,500 0 0 241,500

Memberships/Dues 335,135 0 0 335,135

Legal & Accounting 0 0

General 119,000 0 0 119,000

Litigation 0 1,200,000 1,200,000

Marketing & Advertising 562,500 0 0 562,500

Honoraria 37,500 0 0 37,500

Bank Fees & Credit Card Fees 100,700 0 0 100,700

Payroll & Actuarial Fees 80,000 0 0 80,000

Total Professional & Legal $3,482,235 $5,957,000 $1,200,000 $10,639,235

Travel & Entertainment & Special Events

Staff travel, entertainment & special events 1,566,290 10,000 0 1,576,290

Board meetings 480,000 0 0 480,000

Total Travel & Entertainment & Special Events $2,046,290 $10,000 $0 $2,056,290

Revenue Producing Meeting Expenses $512,000 $0 $0 $512,000

Depreciation - CapX $450,000 $0 $0 $450,000

Total Funded Operational Expenses $36,671,500 $6,217,000 $1,235,000 $44,123,500

Net Operational Income $0 ($1,217,000) ($535,000) ($1,752,000)

Additional Funding

Funds from Unristricted Cash $0 $935,000 $200,000 $1,135,000

Funds from Restricted Advocacy $0 $282,000 $335,000 $617,000

$1,752,000

Cash Funded ( at Budget) $0 $0 $0 $0

Proposed 2014 Operating Budget

Three Component - Expense Category View

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Evelyn Angelle Senior Vice President of Supply Chain Halliburton Steve Antry Chairman and Chief Executive Officer Eagle Energy Exploration, LLC Vik Bansal Group President -- Global Infrastructure Segment Valmont Industries, Inc. Pamela Beall Senior Vice President, Corporate Planning, Government and Public Affairs Marathon Petroleum Corporation Robert B. Crain Senior Vice President and General Manager, North America AGCO Corporation John W. Eaves President and Chief Executive Officer Arch Coal, Inc. John J. Ferriola Chairman, President and Chief Executive Officer Nucor Corporation Dante O. Fierros President Nichols Precision Jeff French Partner Grant Thornton LLP Tom Gibson President and Chief Executive Officer American Iron and Steel Institute Sherri Hotzler President and Chief Executive Officer Vantec, Inc. Mark L. Kolkhorst President, Milling and Cocoa Archer Daniels Midland Company Mike Lind Vice President of Operations Pella Corporation

Robert A. Livingston President and Chief Executive Officer Dover Corporation Thomas Loewald Senior Vice President and President, Analytical Instruments Thermo Fisher Scientific, Inc. John Mingé Chairman and President BP America, Inc. Scott C. Morrison Senior Vice President and Chief Financial Officer Ball Corporation Osamu (Simon) Nagata President and Chief Executive Officer Toyota Motor Engineering & Manufacturing North America Jay Pittas President and Chief Executive Officer Remy International Robert P. Powers Executive Vice President and Chief Operating Officer American Electric Power Quentin Roach Chief Procurement Officer and Senior Vice President, Global Supplier Management Merck & Co., Inc. W. Anthony Will President and Chief Executive Officer CF Industries Holdings, Inc. Michael S. Williams Senior Vice President, Strategic Planning and Business Development United States Steel Corporation

Change to NAM Bylaws

For Approval by the NAM Board of Directors

Background

Currently, the NAM Corporate Secretary is required to send a first class mail notice to

every association member to announce the annual meeting, held at the Fall Board

meeting. A recent change in NY State law, where the NAM is incorporated, allows for

electronic notification of the annual meeting of members.

Revised Bylaws Language

The text of the relevant NAM bylaws section with the change underlined:

Section 3.04 Notice of Meetings

The Secretary of the Association shall send written notice of a meeting of the members,

setting forth the time, place and purpose of the meeting, to each member of the

Association entitled to vote at the meeting as of the record date by first class or

electronic mail not less than ten (10) nor more than fifty (50) days before the meeting is

to be held.

Recycling Policy Statement

For Approval by the NAM Board of Directors

Approved on February 11, 2014 by the NAM Environmental Committee

The Statement was drafted by a working group consisting of 61 NAM member organizations,

representing industries throughout the recycling value chain. Recycling is a critical part of

manufacturing as it can increase efficiencies and lower input costs. This policy statement is

consistent with the NAM’s commitment to free market principles and recognizes that different

commodities and industries may require different approaches or solutions when it comes to

recycling. Until this effort was undertaken, NAM did not have a policy on recycling, which made

it difficult to engage on recycling issues on the Hill and at federal agencies. This policy

statement fixes the problem and provides proper guidance to NAM policy staff.

PROPOSED STATEMENT

2.16. Recycling

Recycling continues to be an environmental, economic and societal success story led

by manufacturers, many of which utilize recycled materials on a daily basis to make new

products that add value to the economy. The private and public sectors have invested billions

of dollars in infrastructure enabling citizens and businesses to reduce, reuse and recycle

efficiently. Recycling helps numerous industries reduce their energy use, along with

greenhouse gas (GHG) emissions. Recycling conserves non-renewable natural resources

and raw material supply, creates jobs, contributes to the economy and offers consumers an

efficient method to reduce their environmental footprint.

The NAM supports the collection, processing and subsequent reuse of recyclable

materials. The NAM supports the principles of sustainable materials management, consistent

with sections 2.0 and 2.05 of the NAM Environmental Quality and Sustainability Policy. The

NAM supports life cycle thinking as a key tool for manufacturers making informed decisions

and understanding the impacts of products including end of life options.

No one-size-fits all approach works in recycling. Different commodities may require

different approaches or solutions when looking at opportunities to initiate and/or increase

recycling. The NAM supports initiatives to identify and promote best practices in capturing

recyclable materials. Policies should recognize and, when appropriate, credit manufacturers

for their use of renewable and recyclable materials in the manufacturing process. The NAM

supports additional public education to help raise recycling rates and quality.

Market forces should guide recovery and recycling systems:

- As with other goods and commodities, the NAM supports international free trade

and open markets for recycling activities and materials.

- Voluntary actions can and should be part of the solution.

- The NAM supports policies that recognize the value of recyclable materials as

economic commodities and that promote investment in recycling infrastructure.

1

Amendments to International Trade Policy

For Approval by the NAM Board of Directors

Approved on February 20, 2014 by NAM International Trade Policy Committee 1. Cross-Border Data Flows/Server Localization

For manufacturers in the United States, innovation and new information and communications technology (ICT) products and services are advancing their ability to grow and reach new markets more efficiently, including many small and medium-sized businesses. As well, new technology, known as “machine to machine” (M2M or the Internet of Things) transfer data remotely between machines that can do everything from locating lost devices and machines through GPS-driven navigation and tracking to providing key information regarding product usage, yield, performance and maintenance. As these technologies have advanced, however, countries around the world are setting up barriers that will impede the ability of manufacturers to move data across borders or make decisions on where to store data. The proposed additional language seeks to highlight this growing and important threat and the importance of addressing it in future negotiations.

PROPOSED UPDATE

1.01c. Bilateral and Regional Negotiations The NAM also supports mutually-beneficial and comprehensive bilateral and regional trade negotiations that will reduce tariff and non-tariff barriers to U.S. exports, expand bilateral commercial relations and provide for WTO-plus trade relationships. Such negotiations should establish a strong set of rules that govern and protect trade and investment, reflect the realities of modern supply chains, address trade-distorting practices of state-owned and state-influenced enterprises, and result in the United States obtaining concessions that are at least equivalent to the concessions granted by the United States. With the growth of new technologies, trade agreements must also include commitments to liberalize cross-border data flows of information and access to digital products and services, and prohibit related localization requirements, such as requirements to use local data information infrastructure and storage. Impartial reviews of the effectiveness of these agreements should be conducted periodically.

2

2. Trade Secrets

Protecting trade secrets from increasingly sophisticated physical and electronic theft and ensuring adequate and effective enforcement is a growing challenge for manufacturers. Trade secrets form a critical part of the intellectual property portfolios of businesses small and large, but one U.S. government estimate valued losses from economic espionage between $2 and $400 billion. Trade secret protection and enforcement is still inadequate or non-existent in many countries and regions, including countries with which the United States is currently negotiating trade agreements. The following proposed update would continue the NAM’s focus on strong trade secret protection and enforcement while providing further detail to guide its engagement in ongoing trade negotiations. The proposed update was reviewed by the International IPR Task Force and is consistent with its current activities.

PROPOSED UPDATE

1.03. Intellectual Property Rights (IPR) Protection (…) Trade secrets are increasingly important for U.S. manufacturers, but they receive inadequate protection in many markets. The NAM supports actions to strengthen trade secret protection and to ensure effective civil and criminal enforcement at home and abroad, including Ffull implementation of WTO provisions and inclusion of “gold standard” commitments that expandsion of protections in ongoing and future trade agreement negotiations. Such actions must help ensure fair treatment for U.S. firms and prevent the forced disclosure of proprietary information as a condition of market access, ensure fair and consistent treatment and provide effective enforcement. Further, the NAM commends the USTR to include in its pending and future negotiations a provision for trade secret owners to pursue a cause of action within our trading partners’ central government-level judicial systems

3

3. Illicit Trade

Illicit trade is a significant and growing concern for manufacturers of a wide range of products. Customs authorities in many countries do not have sufficient authority to seize illicit products in transit or in free trade zones. Organized criminals identify and exploit such loopholes to the detriment of manufacturers in the United States. Estimates of the worldwide scale of illicit trade range from $650 billion to as much as eight to 15 percent of global GDP. The following proposed update would enable the NAM to more effectively confront this challenge by appropriately focusing its International Trade Policy on both facilitating trade and strengthening customs enforcement. The proposed update is consistent with text previously approved by the International Trade Committee and relevant task forces.

PROPOSED UPDATE

1.10 Improving Trade Flows at U.S. Borders Trade Facilitation and Enforcement The NAM supports efforts to facilitate legitimate trade, reduce costs and streamline procedures at U.S. borders, without in any diminishing trade, customs and other law enforcement. The NAM believes that increased security at our borders and the efficient flow of goods across our borders are not mutually exclusive objectives. While fully recognizing the need for enhanced security, the NAM believes it is important to seek better balance of trade and security objectives at U.S. borders. Effective measures are needed to combat illicit trade, including through free trade zones. Every year, illicit trade in counterfeit and pirated goods and other products costs governments and legitimate businesses billions of dollars in lost sales and revenue, while jeopardizing public health and safety, diminishing manufacturers’ intellectual property rights and contributing to organized criminal enterprises. The NAM supports system-wide action to combat illicit trade, involving cooperation across national government agencies and international organizations. The United States should seek commitments in trade agreements requiring partner governments to adopt and maintain laws providing for strong cooperation and enforcement procedures and deterrent penalties.

-NAM-

Upcoming Board of Directors Meeting Dates

2014

NAM Board of Directors Meeting

October 2-3, 2014 The Ritz Carlton Washington, DC

2015

NAM Board of Directors Meeting March 2-3, 2015 The Phoenician

Scottsdale, Arizona

MEMORANDUM TO: Members of the NAM Board FROM: Chad Moutray, Chief Economist DATE: January 22, 2014 RE: Manufacturing Economic Update In preparation for the NAM Board meeting, the following are some trends that I am currently seeing for your consideration. Please note that additional data will be released before the meeting, possibly revising some of the statistics below.

Manufacturing activity picked up starting in the third quarter of 2013, and there is cautious optimism about demand and production for 2014.

The Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) averaged 56.3 in the second half of 2013, up from 51.5 in the first half of the year. One of the strongest elements in the ISM manufacturing report continues to be the sales component. The index for new orders exceeded 60 for five straight months, from August to December, with the production index also reflecting strong growth.

Manufacturing production rose 2.6 percent in 2013, slowing from the 3.5 percent and 3.2 percent growth rates experienced in 2011 and 2012, respectively. Yet, the lower 2013 figure stemmed largely from weaknesses in the first half of the year, with manufacturing output up an annualized 4.2 percent in the second half.

Respondents on a number of sentiment surveys have been mostly upbeat about new orders, shipments, exports and even hiring over the coming months—which is definitely good news.

Manufactured goods exports continue to be sluggish even as we have seen some stabilization in overseas markets. Yet, there is hope that exports will accelerate in 2014.

Through the first 11 months of 2013, U.S.-manufactured goods exports rose roughly 2.0 percent relative to the same time period in 2012, which has been a disappointingly slow pace. This pace fell below the 15.8 percent and 5.7 percent growth rates for manufactured goods exports in 2011 and 2012, respectively.

Nonetheless, the JPMorgan Global Manufacturing PMI has exceeded 50—the threshold for growth—for 12 straight months, up from 53.1 in November to 53.3 in December. This suggests modest growth overall. Measures of manufacturing activity have shown notable improvement since the summer months.

Looking at the top 10 markets for U.S.-manufactured goods exports, all of them had expanding PMI values in December, up from six in September.

There are signs that Europe’s recession is coming to an end and China’s

recent slowness is stabilizing. Both have seen improvements in

manufacturing activity lately. China’s manufacturing sector still has some

weaknesses, and Europe’s real GDP growth is only barely positive. Yet,

better figures of late have boosted sentiment in both regions.

The economy should expand by at least 3.0 percent in 2014, up from 2.5 percent growth in 2013.

The U.S. economy grew a surprisingly strong 4.1 percent in the third quarter of 2013. While inventory replenishment accounted for a large portion of this increase, consumer and business spending continue to boost overall economic activity.

I expect real GDP growth of 2.5 percent in the fourth quarter, essentially the same pace for 2013 as a whole. For 2014, the economy should expand by 3.0 percent, which would be the first year since 2005 that the annual average would grow by that amount.

The NAM/IndustryWeek survey shows an improved outlook among manufacturers.

In the most recent NAM/IndustryWeek (NAM/IW) Survey of Manufacturers, 78.1 percent of respondents were either somewhat or very positive about their own company’s outlook. This figure has edged higher each quarter in 2013—a feat made easier by the fact that we were grappling with the prospect of the fiscal cliff at this point last year.

As we move into 2014, manufacturing leaders anticipate mostly modest growth in a number of indicators, with an average sales increase of 3.0 percent expected over the next 12 months. While this estimate remains well below the 4.7 percent annual increase predicted in the first quarter of 2012, the good news is that the underlying data are consistent with a pickup in activity in the first half of this year.

Manufacturers continue to worry about the effects of rising health insurance costs, a perceived unfavorable business climate and persistent uncertainties stemming from the government. On the topic of the Affordable Care Act (ACA), more than three-quarters of manufacturers have had their insurance costs increase by at least 5 percent for 2014, with an average increase of 8.76 percent. This held true even after many firms took steps to lower premium increases by raising employee copays (58.6 percent), reducing coverage (27.7 percent) and/or changing insurance providers (17.6 percent).

Hiring among manufacturers has improved; yet, some firms remain hesitant to add new workers.

Manufacturers added 9,000 net new workers in December, its fifth month of positive gains. From August to December, the sector has averaged 16,000 additional hires each month. In contrast, the average from March to July was a net decline of 8,000 per month. This is generally consistent with the pickup in manufacturing activity noted earlier.

Manufacturers added 77,000 net new workers over the course of 2013. This was the slowest pace of hiring growth since 2009. Manufacturing sector employment rose by 109,000 in 2010, with 207,000 and 154,000 more workers added in 2011 and 2012, respectively. As such, manufacturers have added 557,000 more jobs since December 2009.

The most recent NAM/IW survey said that 50 percent of manufacturers did not plan to change their employment levels over the next 12 months.

It is possible that the unemployment rate might hit 6.5 percent by mid-2014, and nonfarm payroll growth should pick up to 200,000 to 250,000 per month on average this year. Note, though, that the participation rate remains at its lowest point since February 1978.

Pricing pressures remain extremely modest, at least for now.

Core inflation is below the 2 percent stated target of the Federal Reserve Board, with year-over-year producer prices up just 1.4 percent in December. Overall low inflationary pressures have allowed the Federal Reserve Board to pursue expansionary monetary policies to attempt to stimulate economic growth.

The Fed will continue purchasing long-term and mortgage-backed securities through mid-2014, tapering its purchases gradually from the current $65 billion per month. Short-term interest rates are expected to be near zero at least at least until the beginning of 2015.

EXTERNAL RELATIONS The NAM’s External Relations team has been proactively advancing the manufacturing agenda as we move through an extremely busy legislative and political season. Highlights include the following:

NAM Annual Public Affairs Conference The 2014 Annual Public Affairs Conference will be held March 30–April 1 at the St. Regis Monarch Beach Resort in Dana Point, Calif. This year’s conference theme is “The Power of the Coalition” and will feature a number of informative sessions focusing on advocacy efforts, political involvement, public policy and election activity. This meeting provides members of the business community an opportunity to outline an effective blueprint for successful coalition strategies. Conference attendees include heads of corporate and association public and government affairs, Washington representatives and public relations, PAC and grassroots professionals. National Public Affairs Steering Committee The National Public Affairs Steering Committee met September 11–12, 2013, in Washington, D.C. This meeting gave the committee an opportunity to hear from the NAM’s International Economic Affairs Department, view the NAM’s Trade Toolkit and examine practical ways to eliminate foreign trade barriers and to create new markets for American products. Attendees also heard from Reps. Tom Reed (R-NY-23) and Tim Ryan (D-OH-13)—co-chairs of the House Manufacturing Caucus—and Commerce Department Chief of Staff for the Office of the Secretary Bruce H. Andrews. The Manufacturing Summit

Please mark your calendars for the 2014 Manufacturing Summit June 10–11! The NAM will play host to more than 400 manufacturers from across the country in Washington, D.C., for two days of meetings with legislators on Capitol Hill to advance the manufacturing agenda. Last year, NAM members participated in more than 210 meetings with members of Congress and congressional staffers. We are also working on an outstanding program of keynote speakers for the plenary sessions and will once again

host a congressional reception to provide our members and policymakers an informal venue in which to interact.

Manufacturing Works The NAM’s Manufacturing Works advocacy center continues to provide all pro-manufacturing advocates with a user-friendly, interactive online headquarters where visitors can easily take action, connect with other advocates and stay updated on key issues. The site effectively helps the NAM unite current and potential members and industry supporters to amplify the voice of American manufacturing and give our efforts greater impact. Specifically, Manufacturing Works hosted the NAM’s Trade Toolkit action center, and it continues to promote the NAM’s social media platforms, “Get Out the Vote” tools and public affairs–related events information. Key Contact Recruitment The NAM continues to proactively recruit new Key Contact individuals to assist in our advocacy efforts. The long-term goal of the NAM’s Key Contact program is to elect pro-

manufacturing legislators and use our members’ influence with those legislators to promote more growth-oriented policies. Since Manufacturing Works launched in 2012, the NAM has been uncovering consistently which manufacturers have a solid working relationship with their elected officials. If a manufacturer personally knows his or her member(s) of Congress, the NAM will ask him or her, occasionally or at critical times, to make strategic contact with his or her legislator(s) and ask for support of key manufacturing issues. In 2012, we

recruited 118 NAM members with 295 relationships with members of Congress. In 2013, with a particular focus on recruiting small and medium-sized manufacturer members to grow the impact of this program, we boosted the NAM member total to 180 contacts, with more than 580 relationships with lawmakers. These Key Contacts were strategically deployed on such issues as immigration reform over August recess and most recently on key Trade Promotion Authority (TPA) legislation, making personal calls to their priority member(s) of Congress. Award Events The NAM will name the 113th Congress recipients of the NAM Award for Manufacturing Legislative Excellence in early fall 2014. We will once again work with NAM member companies to host award presentation events across the country and encourage members of the NAM Board of Directors to begin work with our team to identify where you have an interest in hosting.

Washington Briefings This year, the NAM began its Washington representative briefing series with NAM President and CEO Jay Timmons, who provided an open discussion on what to expect from the NAM in 2014. In February, attendees heard from Rep. James Lankford (R-OK-5), who provided attendees firsthand knowledge of what lies ahead this year for the 113th Congress, specifically on jobs and economic development. Briefings held throughout the year will allow the Washington representative community the opportunity to hear from key leaders and staff in the Administration and Congress. Congressional Dialogues The NAM Congressional Dialogue program is an ongoing, nationwide series of small-group roundtable discussions with members of Congress at manufacturing facilities in their districts. The program is a very powerful tool in the NAM’s advocacy arsenal, particularly for forging relationships with nontraditional allies in the House and Senate and introducing new members of Congress to the manufacturing community. So far, NAM members have hosted 13 Congressional Dialogues during the 113th Congress, with many more to come before the end of 2014. Congressional Dialogues will continue to be scheduled throughout the remainder of the 113th Congress. Trade Education Events This year, the NAM has launched a new program aimed at celebrating the role that trade plays in communities around the country. “Trade and the Manufacturing Economy” education events will be held in targeted congressional districts through the remainder of the 113th Congress and will include appearances by members of the House and Senate as well as Administration officials and manufacturing leaders. The purpose of these events is to raise the profile of robust trade policy as critical for manufacturing in the United States with local media, policymakers, workers and the general public. Get Out the Vote The NAM is expanding our “Get Out the Vote” program for manufacturers in this critical 2014 election year. Our newly redesigned Election Center has an overarching theme of “I am a manufacturing voter” that will be used throughout the year in all “Get Out the Vote” promotions. Our updated web design has innovative tools that the entire membership can use easily. With a major focus on encouraging your younger employees to vote, this new look mirrors the feel that fits with the 21st-century direction of the association.

Manufacturing Day 2014 With manufacturers facing a significant lack of a skilled workforce, the NAM is once

again supporting the third-annual Manufacturing Day on October 3. This is a national movement where manufacturers in the United States open their doors to demonstrate the current reality and long-term potential of 21st-century manufacturing and the career opportunities it offers. After a successful initial launch in 2012, and an impressive 2013 highlighting more than 830 events, Manufacturing Day continues to draw attention to issues hindering manufacturers by specifically showing that the manufacturing sector has

existing job opportunities that are not being filled due to a gap in skilled labor. Through the website www.mfgday.com, manufacturers can sign up to host open houses, and educational institutions can agree to sponsor field trips to manufacturing facilities. The effort is coproduced by the NAM, the Fabricators & Manufacturers Association, International, The Manufacturing Institute and the National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership. Planning is underway to continue the momentum and vast grassroots success for 2014.

Issue Advocacy/Campaigns TPA The NAM ran a month-long targeted TPA digital ad campaign in February to support our ongoing efforts to get this important policy passed. Immigration Reform The NAM ran digital ads during late February and March of this year to encourage all members of Congress to have comprehensive immigration reform passed this year. We had NAM members share their stories to serve as the voice of manufacturers. Greenhouse Gas Coalition (Partnership for a Better Energy Future) Partnership for a Better Energy Future is a coalition led by the NAM that launched on January 30 to ensure the Administration’s greenhouse gas regulatory actions do not harm American jobs or the U.S. economy. We built the NAM standalone website—www.betterenergyfuture.org—for the coalition, which includes more than 80 partners. Environmental Protection Agency’s Ground-Level Ozone Regulations This winter, the NAM educated our state partners and elected officials on why they should weigh in on the new Environmental Protection Agency’s ground-level ozone regulation that will impact 48 states. We created an infographic educational video and

began a social media campaign to encourage NAM, State Associations Group and Council of Manufacturing Associations members as well as state officials to get involved. Keystone XL Pipeline With President Obama’s looming final decision on the Keystone XL pipeline this year, the NAM is ramping up our efforts to put pressure on the Administration to finally approve it. We created several videos that will be used in an online campaign to show manufacturers’ support for this critical job creation and energy security issue. Regulatory Reform The NAM has been engaged in a comprehensive research project since 2013 on the subject of government regulations to determine whether a middle ground can be found between Republicans and Democrats on reform and, if so, how best to craft effective messaging on the subject. We have taken that research from Public Opinion Strategies and Greenberg Quinlan Rosner Research by implementing this effective new messaging in NAM external communications. Export-Import Bank The NAM has crafted and begun to implement a yearlong advocacy campaign to support the critical Export-Import (Ex-Im) Bank reauthorization. We plan to mirror our winning efforts from 2012 with a comprehensive “all-of-the-above” grassroots strategy that will include paid media. The Senate must reauthorize the Ex-Im Bank by September 30, and we plan to pull out “all the stops” to garner a bipartisan victory for NAM members. Council of Manufacturing Associations We’ve added six new Council of Manufacturing Associations (CMA) members since January 1 as we continue on our goal of 300 associations by the end of 2016. We ended 2013 with dues revenue up 32 percent over the prior year. This is the highest level on record. American Cleaning Institute President and CEO and CMA Chair Ernie Rosenberg is not only focused on continued membership growth but also on increasing member engagement.

Attendance at the 2014 CMA Winter Leadership Conference grew by 47 percent over 2013 and 60 percent over 2012. For 2013, 29 CMAs participated in the NAM’s amicus briefs, and we had 635 CMA staff members participating on NAM committees and task forces.

State Associations Group and Allied Associations Group Our state and regional association groups are a component of the NAM’s efforts to serve as an early-warning system for businesses by capitalizing on these associations’ local presence and expertise. Through them, the NAM has a mechanism to rally the business community quickly on emerging federal issues.

We began 2014 with the highest State Associations Group (SAG) membership in the group’s history. The SAG includes one member per state and consists of 50 independent state manufacturing associations, business and industry associations and state Chambers of Commerce located in 49 states and the Commonwealth of Puerto Rico. We have recently welcomed the following state partners:

o Alaska: Alaska Chamber President and CEO Rachael Petro o Hawaii: Chamber of Commerce of Hawaii President and CEO Sherry

Menor-McNamara o Wyoming: Manufacturing Works Center Director Larry Stewart

The NAM’s Allied Associations Group boasts member growth over the past year of 10 percent.

The NAM’s state and regional associations have been fundamental to our outreach on several NAM initiatives, including Manufacturing Day, Dream It Do It, the Alliance for Fair Trade with India, the National Alliance for Jobs and Innovation, and the Partnership for a Better Energy Future. They will serve as partners as we disseminate information regarding our voter guide and Election Center.

Register to host an open house at your companySign-up to visit other manufacturer’s open house eventswww.mfgday.com

Host An open House As a manufacturer it’s your opportunity to:

• Tell your company’s story

• Dispel outdated myths about manufacturing

• Inspire a new generation of manufacturers

• Connect with potential customers in your community

• Learn about manufacturing extension partnerships that can improve your efficiencies and work force skills and boost your profits

• Visit other manufacturers to initiate business relationships and learn what is being made in your community

The core element to Manufacturing Day is the schedule of manufacturer’s open houses. Manufacturing Day producers will promote the open house schedule through general and trade media campaigns which will alert thousands of people to visit manufacturers and see that American manufacturing is a vibrant career path and employers need skilled workers. The event will also make it possible for manufacturers to visit other participating companies in their region that may be potential business partners – either as customers or suppliers.

Manufacturing Day has been designed to expand knowledge about and improve general public perception of manufacturing careers and manufacturing’s value to the North American economy. In addition, manufacturers will learn about business improvement resources and services delivered through manufacturing extension partnerships.

Manufacturing Day 2014

Co-produced by:

Guest producer: Media partner:

AttenD An open HouseIf you are employed in a non-manufacturing service industry such as accounting, business and MRO supplies, business services, education, media or if you are a student or a parent,*

Visit manufacturers on Oct. 3, 2014 and learn:

• What modern manufacturing facilities are really like these days

• What the companies located in your community make and who they sell to

• What kinds of jobs are available in manufacturing

• What skills and education are needed to qualify for today’s manufacturing jobs

*Students under age 18 must be accompanied by an adult or participate with a school group.

Co-produced by:

Guest producer:

Manufacturing Day 2014

Register to host an open house at your companySign-up to visit other manufacturer’s open house eventswww.mfgday.com

Manufacturing Day has been designed to expand knowledge about and improve general public perception of manufacturing careers and manufacturing’s value to the North American economy. In addition, manufacturers will learn about business improvement resources and services delivered through manufacturing extension partnerships.

Media partner:

NAM’S KEY CONTACT SIGN-UP FORM America’s manufacturers face both challenges and opportunities when it comes to public policy. Manufacturing Works, the National Association of Manufacturers’ (NAM) advocacy program, brings us together to support American jobs, innovation, and competitiveness. Do you have a relationship with your member(s) of Congress? To help us achieve our goals,

please take a moment to inform us of any existing relationships you may have with your

federal elected officials. We will occasionally ask you to contact him/her and ask for specific support

of manufacturing legislative issues.

NAME: ___________________________________________________________ TITLE: ___________________________________________________________ COMPANY: ______________________________________________________ CITY, STATE, ZIP: ________________________________________________ EMAIL: __________________________________________________________

Elected Official Connections

i.e. U.S. Rep. Joe Smith (R-AZ) i.e. Hosted for an NAM plant tour; my college roommate; serve

on his fundraising committee, etc.

Please return to any NAM staff, or fax to 202-637-3182.

If you have any questions, please feel free to contact Tiffany Adams, NAM’s Vice President, Public Affairs, at

tadams@ @nam.org, or 202-637-3118. Thank you in advance for your support.

The National Association of Manufacturers Political Action Committee (NAM-PAC) As of December 31, 2013, the NAM-PAC has raised $17,700 from five donors. We made no expenditures toward fundraising events and made no contributions to candidates. NAM-PAC Events 2013 Report (13 Events)

Member of Congress Date Amount Raised

Sen. Chris Coons (D-DE) 6/18/2013 $16,000

Rep. Bill Shuster (R-PA-9) 7/10/2013 $12,000

Rep. Ed Whitfield (R-KY-1) 9/19/2013 $8,000

Rep. John Shimkus (R-IL-15) 9/20/2013 $14,000

Sen. John Cornyn (R-TX) 9/26/2013 $17,500

Sen. Mitch McConnell (R-KY) 10/29/2013 $22,500

Rep. Jim Matheson (D-UT-4) 10/30/2013 $11,500

Rep. Paul Ryan (R-WI-1) 11/14/2013 $36,000

Sen. Tim Scott (R-SC) 11/14/2013 $8,000

Rep. Fred Upton (R-MI-6) 11/15/2013 $21,500

Rep. Pat Tiberi (R-OH-12) 12/3/2013 $14,500

Rep. Mike Simpson (R-ID-2) 12/4/2013 $10,000

Rep. Dave Camp (R-MI-4) 12/12/2013 $28,000

TOTAL: $219,500

Winter 2014 NAM-PAC Events The NAM’s first fundraiser for the year was held on January 28 at NAM headquarters for Delegate Barbara Comstock (R) who is running for the open seat in Virginia’s 10th Congressional District. The event raised more than $70,000 for her upcoming campaign. Upcoming 2014 NAM-PAC Events Below is list of members of Congress who the NAM-PAC trustees have approved for the NAM to host events for in the 113th Congress. This list can be expanded with trustee approval.

Members of Congress

Rep. Steny Hoyer (D-MD-5) Rep. Lee Terry (R-NE-2)

Rep. Richard Neal (D-MA-1) Rep. Tom Reed (R-NY-23)

Rep. John Boehner (R-OH-8) Rep. Richard Hudson (R-NC-8)

Rep. Eric Cantor (R-VA-7) Rep. James Lankford (R-OK-5)

Rep. Kevin McCarthy (R-CA-23) Rep. Greg Walden (R-OR-2)

Rep. Devin Nunes (R-CA-22) Rep. Jeb Hensarling (R-TX-5)

Rep. Peter Roskam (R-IL-6) Rep. Bob Goodlatte (R-VA-6)

Rep. Luke Messer (R-IN-6) Rep. Doc Hastings (R-WA-4)

Rep. Mike Rogers (R-MI-8) Rep. Cathy McMorris Rodgers (R-WA-5)

Rep. John Kline (R-MN-2) Rep. Dave Reichert (R-WA-8)

Rep. Ann Wagner (R-MO-2) Rep. Renee Ellmers (R-NC-2)

Board of Trustees Appointments In January, Caterpillar Chairman and CEO and NAM Board of Directors Chair Doug Oberhelman appointed Carolina Color Corporation Chairman and CEO Matt Barr and Irex Corporation President and CEO Kirk Liddell to three-year terms as NAM-PAC trustees. Next Board of Trustees Meeting The next meeting of the NAM-PAC Board of Trustees will be held at the St. Regis Monarch Beach Resort in Dana Point, Calif., on Friday, March 14, at 12:00 p.m., in conjunction with the NAM Board of Directors meeting.

Tax, Technology and Domestic Economic Policy Tax Reform: While manufacturers were deeply disappointed that comprehensive tax reform was not completed in 2013, the National Association of Manufacturers (NAM) continues to play a major role in the ongoing debate. Specifically, Senate Finance Chairman Max Baucus (D-MT) released several discussion drafts on components of tax reform, and the NAM formed ad hoc working groups to draft comments on the international and cost-recovery proposals. The NAM submitted these to the committee on Jan. 17, 2014. Even though Chairman Baucus will be leaving Congress to become Ambassador to China, many of the ideas in the proposals are expected to remain part of the tax reform debate moving forward. While the timetable for tax reform is unclear, House Ways and Means Chair Dave Camp (R-MI) and Sen. Ron Wyden (D-OR), who is expected to take over the chair position from Sen. Baucus, strongly support reforming the tax code and likely will continue to push for legislative action. The NAM will remain highly engaged in the effort and continue our robust advocacy efforts. Tax Extenders: The R&D tax credit and more than 50 other temporary tax provisions expired on Dec. 31, 2013. While there are discussions in the Senate about moving a bill to reinstate these provisions until the end of 2014, the House continues to signal that it will only consider extenders in the context of tax reform. While the NAM supports an enhanced and permanent R&D incentive, absent action on tax reform, we support a seamless extension of the credit and other lapsed tax provisions important to manufacturers as soon as possible. FY14 Budget Deal: The Bipartisan Budget Act, enacted in late 2013, was the first compromise budget plan negotiated by Congress since 2009. In addition to providing a pathway to fund the federal government for the rest of fiscal 2014 and avoiding a government shutdown, at least until October, the bill includes an NAM-supported provision that provides relief from the sequester’s across-the-board spending cuts in fiscal 2014 and 2015. During the negotiations on the budget deal, the NAM focused our messaging on the negative impact of the arbitrary cuts on the manufacturing supply chain and the broader economy. The $63 billion in relief is divided between defense and non-defense spending. The biggest negative in the budget deal for manufacturers is increased Pension Benefit Guarantee Corporation (PBGC) premiums, described below. Pensions: During the budget negotiations, the NAM led the business community’s opposition to additional PBGC premium increases. Premium increases—effectively a tax on companies with defined benefit pension plans—were increased significantly in 2012. Congressional interest in raising premiums stems from concerns with the solvency of the PBGC and the fact that premiums are considered “revenue raisers” that can be used to pay for other legislation. While the 2013 budget deal did include some $8 billion in premium hikes, the final premium increases were lower than earlier proposals, e.g., President Barack Obama’s FY14 budget proposed increase of $25 billion. Since Congress will continue to look for “revenue raisers” to pay for other legislative efforts in 2014, we will continue to advocate against further premium hikes. The NAM is leading a study on behalf of the Pension Coalition to assess the impact that PBGC premium increases have on manufacturers, jobs and the economy.

Derivatives: As a leader of the Coalition for Derivatives End-Users, the NAM continues to push for legislative and regulatory support for an exemption from burdensome and costly regulations for derivatives end-users like manufacturers. In December, the NAM presented at an end-user summit hosted by the coalition to discuss implementation concerns and potential impacts of upcoming regulations. The meeting underscored the need for legislative action on bills to exempt end users from margin requirements and to ensure that centralized treasury units in corporations that consolidate hedging activities are treated as financial affiliates of end users and not as separate financial entities. The NAM also spearheaded a coalition survey to gather updated data on the impact of these regulations on end users. The coalition will release the data in a report this winter and use it to build momentum for the legislation in the Senate. Company participation in these efforts is critical, and the NAM continues to coordinate opportunities for members to weigh in on these matters, which, if unaddressed, have the potential to add substantial costs to companies using derivatives to hedge commercial risk. Intellectual Property (IP) Protection: Manufacturers use patents to protect their IP, and the NAM is actively engaged in pending legislation to address abusive patent litigation. In these discussions, the NAM is highlighting to policymakers, the media and others how abusive lawsuits threaten manufacturers and increase the cost of doing business. The House of Representatives passed the Innovation Act in December 2013, which addresses a number of litigation-reform issues, and the Senate is now considering similar legislation. The NAM is aggressively advocating for full funding of the U.S. Patent and Trademark Office (USPTO) to be included in this legislation. NAM members broadly agree that the USPTO should be able to keep all of its user-fees to fund the office. NAM D.A.T.A. Center: With endorsements of more than 20 senior executives from NAM members, in October, the NAM launched its Driving the Agenda for Technology Advancement (D.A.T.A.) Center to highlight the intersection of manufacturing and technology. As technology has become an ever-present aspect of manufacturers’ products and processes, the technology policy decisions made in Washington impact all industry segments. Policymakers and the general public need a better understanding of the role technology plays in manufacturing and how manufacturers drive innovation for all industries. In 2014, the D.A.T.A. Center will host events, showcase companies, issue white papers and conduct research to educate all constituencies while simultaneously supporting our public policy objectives.

Human Resources Policy

Posting Requirement Lawsuit: On Jan. 2, 2014, the National Labor Relations Board (NLRB) backed down and accepted the 2013 ruling of the U.S. Court of Appeals, invalidating the notice-posting rule. The rule would have required manufacturers to post a notice in their workplaces informing employees of their right to organize and strike. Effectively, the NLRB admitted it overreached when it issued the rule. The rule is now officially null and void, except for federal contractors. The Office of Federal Contract Compliance Programs: Since 2010, the Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) has been enforcing a rule requiring federal contractors and subcontractors to post a notice of employee rights, similar to the NLRB’s attempt described above, which was ruled to violate an employer’s First Amendment rights. On Dec. 18, 2013, the NAM, along with the Virginia Manufacturers Association, filed legal action against the DOL challenging this rule in the U.S. District Court. The NLRB’s rule was considered compelled speech and outside the board’s authority. It is the NAM’s position that the OFCCP rule must be considered the same. NLRB Recess Appointees: The Coalition for a Democratic Workplace (CDW), of which the NAM is a leading member, filed a lawsuit in Noel Canning v. NLRB challenging President Obama’s three recess appointments, and the U.S. Court of Appeals found the appointments unconstitutional. The Supreme Court heard oral arguments on Jan. 13, 2014, and if it sides with the circuit court and invalidates the appointments, hundreds of decisions by the NLRB would be called into question. The Supreme Court is likely to issue a decision sometime late spring or early summer. DOL’s Persuader Rule: In June 2011, the DOL proposed sweeping changes to the rules under the Labor-Management Reporting and Disclosure Act. This new regulation seeks to drastically reinterpret longstanding requirements on how employers can seek advice or consult with legal counsel on certain labor laws. Under the proposed regulation, the definition of “persuader” activity would be expanded to include many activities recognized as labor law advice. The proposed changes would likely make it more difficult for employers, particularly smaller-sized manufacturers, to access legal assistance in navigating complex labor laws. The NAM is engaged with other business groups and will legally challenge the rule when it becomes final. OSHA’s Letter of Interpretation: The Occupational Safety and Health Administration (OSHA) issued a Letter of Interpretation (LOI) that effectively overturns decades of previously settled policy on whether third-party non-employees may accompany an OSHA inspector during the walk-around of a non-unionized facility. Under the current regulations, OSHA has permitted a non-employee to accompany an inspector only when the third party is part of the exclusive union representing the employees of a facility, or when technical assistance is needed from an expert, such as an industrial hygienist or safety engineer. Although the LOI is technically non-binding because it is not a rule, the letter has been distributed to all OSHA’s regional offices and will have the effect of being a binding document in practice. As a result, third parties (union officials or community organizations) will be allowed access to facilities. The NAM testified in February before the House Education and Workforce Committee to highlight the importance of this matter to manufacturers.

OSHA’s Crystalline Silica Rule: In September, OSHA published a proposed rule on respirable crystalline silica, which would cut the permissible exposure limit in half, from 100 to 50 micrograms per cubic meter of air over an eight-hour day. The rule would mandate engineering controls and restricted work areas and additional medical monitoring, training and record keeping. The NAM filed comments opposing the proposed change and encouraged affected members to do the same. The NAM will also participate in a hearing on the matter on March 18. OSHA’s Injury and Illness Recordkeeping Rule: In November 2013, OSHA proposed a new rule on how companies will have to report injury and illness incidents to the agency. Under the proposal, larger manufacturers must submit their reports quarterly, and all reports, which will be facility-by-facility rather than for an entire company, will now be posted by OSHA on the Internet for public consumption. The NAM participated in and spoke at a Jan. 9, 2014 public meeting about the rule and filed comments in opposition on March 8, 2014. Health Care: The Affordable Care Act went live on Oct. 1, 2013, and shined a spotlight on significant problems implementing the law. Drew Greenblatt, president of Marlin Steel and NAM board member, highlighted this in his testimony on November 20 before the Senate Small Business Committee about his ongoing problems with the law as a small business owner. The NAM also began a webinar series called “ACA University.” The first two webinars, held in September, covered the employer impact of the ACA as well as insurance reforms. The series will continue into 2014 detailing topics such as health care exchanges and tax implications. The NAM also detailed to policymakers the more than $22 billion in additional costs manufacturers will have to bear due to the law over the next three years. The NAM continues to comment on various regulations, such as the reinsurance fee and reporting requirements for employers. Workforce: In October, the NAM announced a board-level task force to address the ever-growing challenge of the skills gap. Appointed by NAM Chairman Doug Oberhelman and chaired by Chip Blankenship, president and CEO of GE Home and Business Solutions and NAM board member, the group of 17 executives from manufacturing companies of every size and in multiple sectors held their first meeting in February and will also meet at the March board meeting, where they will be seeking additional input from NAM board members. In addition, NAM Education and Workforce Subcommittee Chair Sandra Westlund-Deenihan testified before the House Commerce Subcommittee on Manufacturing about the skills gap and her activities to improve workforce training through local involvement and the use of industry-recognized credentials. Microsoft and Jennifer McNelly, president of the Manufacturing Institute, also testified. Immigration: In October, the NAM co-sponsored a fly-in of representatives from law enforcement and business and religious leaders to show the broad range of support for reform. NAM President and CEO Jay Timmons also headlined a press conference in November, where he highlighted the ethical and economic necessity to modernize immigration policy. Although the House has yet to vote on several immigration bills that moved out of committee in the spring and summer of 2013, there are positive signs legislation could move forward this year.

Energy and Resources Policy Greenhouse Gases: In January, the Environmental Protection Agency (EPA) proposed a greenhouse gas (GHG) regulation for new power plants that would substantially limit the sources of energy available to power U.S. manufacturing. The first of a suite of impending GHG regulations, the Administration’s proposal sets requirements that cannot be met with existing technologies. If the EPA continues down this regulatory path, it will lead to greater uncertainty and costs for U.S. manufacturers as both consumers of energy and the “next-in-line” for similar regulations. The NAM has unveiled a major campaign designed to lead the EPA to a more reasonable regulatory outcome on GHGs than it has proposed. The centerpiece of this campaign is a NAM-led multi-industry coalition, the Partnership for a Better Energy Future. The partnership’s membership includes more than 50 national, state and local organizations from a variety of sectors, united in support of responsible energy policies. This long-term coalition will advocate for reasonable energy regulations through direct engagement with the EPA, an active presence on Capitol Hill and outreach to affected states. For instance, Ross Eisenberg, the NAM’s vice president of energy and resources policy, testified on Nov. 14, 2013 before the House Energy and Commerce Subcommittee on Energy and Power at a hearing on EPA’s greenhouse gas regulations, their impact on manufacturers and legislation to make the regulations more reasonable. Greg Bertelsen, the NAM’s director of energy and resources policy, testified at an EPA listening session on GHG regulations on Nov. 7, 2013. The NAM led a delegation of members to a meeting on GHG regulations with EPA leadership on Jan. 15, 2014, where the manufacturers of carbon capture and storage (CCS) technologies explained to EPA that CCS—which EPA has proposed to make mandatory—was not ready for widespread commercial deployment. Ozone: As the Administration once again works toward issuing new, stricter ozone National Ambient Air Quality Standards (NAAQS), the NAM is leading a multi-industry effort to fight new regulations that could be the most expensive ever administered on manufacturers. The EPA is considering a range of regulatory options, the worst of which will be unachievable in most parts of the country and will halt manufacturing growth. The NAM continues to lead an education and advocacy campaign directed at both state and federal lawmakers informing of the severe impacts these regulations would have on manufacturers and the overall economy. Energy Exports: The NAM supports principles of free trade and open markets in the area of energy exports and has opposed efforts to impose market-distorting regulatory barriers to new coal and liquefied natural gas (LNG) export terminals. The NAM was a consistent voice in the debate over these projects in 2013. In November, the NAM released the report “LNG and Coal: Unreasonable Delays in Approving Exports Likely Violate International Treaty Obligations,” an analysis by Jim Bacchus, former chair of the Appellate Body of the World Trade Organization (WTO). In the report, Bacchus concludes that the delay in issuing export approvals for coal and LNG exports is, in and of itself, a potential violation of our international obligations under the WTO. Keystone XL Pipeline: The NAM continues to play a pivotal role in advocating to secure final approval of the Keystone XL pipeline. The State Department is close to finalizing the Environmental Impact Statement (EIS) and is currently reviewing

comments from other agencies. The final EIS is expected in the spring of 2014. At that point, the State Department will move to the “national interest” phase of the process, leading up to a final decision by the President. The NAM is moving forward with an aggressive advocacy campaign that will call for prompt approval of the project. For instance, on Oct. 9, 2013, more than 165 CEOs and business leaders signed a letter to the President urging approval of Keystone XL. The letter was organized by the NAM, the U.S. Chamber of Commerce and the Business Roundtable and made the point that the continued delay is acting as a deterrent to investment by other sectors. Oil and Gas: In September, the NAM sponsored a report by the research firm IHS that explores the positive impact unconventional oil and gas development has had on manufacturing. The report found that increased oil and gas production made possible by advances in shale technology is supporting millions of jobs, increasing household incomes, boosting trade and contributing to a new increase in U.S. competitiveness around the world. It also serves as a cautionary tale against poorly crafted regulations, such as the Bureau of Land Management’s in-process hydraulic fracturing rule, which, according to the study, could sharply limit potential jobs and economic growth. The report is another important tool in our advocacy efforts to drive commonsense energy policy on the Hill and within the Obama Administration. Energy Efficiency: The NAM has actively worked with Congress and the Administration to secure commonsense energy efficiency policies that benefit manufacturers. The NAM strongly supports the Energy Savings and Industrial Competitiveness Act, a bill introduced by Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH). The legislation came to the Senate floor in the fall but fell victim to a debate over non-germane amendments. NAM staff is working to secure a vote in the Senate and pass companion legislation in the House. The Shaheen/Portman bill is a set of low-cost measures that would create manufacturing jobs by spurring adoption of energy-efficient products and technologies in industrial, commercial and residential sectors. A recent economic analysis of the bill estimates that it could create as many as 152,000 new jobs by 2025, increasing to 174,000 jobs by 2030. The NAM also worked closely with the Administration on energy efficiency: on Dec. 19, 2013, the NAM released a report on President Obama’s Energy Savings and Performance-Based Contracting Investment Initiative to create $2 billion in energy savings, finding that it should be expanded to five years and $5 billion based on its successes. Toxic Substances Control Act (TSCA) Reform: The laws governing the manufacture and use of industrial chemicals are in need of reform. In the absence of a modernized federal statute, a patchwork of state regulations and initiatives are driving the nation’s chemical policies. In 2013, Sens. David Vitter (R-LA) and the late Frank Lautenberg (D-NJ) offered a legislative solution. Now championed by Sens. Vitter, Tom Udall (D-NM) and 23 other cosponsors, the Chemical Safety Improvement Act (S. 1009) represents a bipartisan compromise that would ensure the continued safety of consumers and the environment while protecting the competitiveness of manufacturers. While Senate Environment and Public Works Committee Chairman Barbara Boxer (D-CA)—whose committee has jurisdiction over TSCA reform—remains opposed to the bill, the NAM and others continue to educate Congress on its importance, building support for this important manufacturing issue.

Infrastructure, Legal and Regulatory Policy Infrastructure: Manufacturers continue to build on momentum established in 2013 as a result of a year-long advocacy effort in support of the Senate’s passage of the Water Resources Development Act of 2013 (S. 601) in May and the House passing its version (H.R. 3080) in October. While a House–Senate conference agreement remains pending, the FY14 Consolidated Appropriations Act provided the necessary funding to ensure continued investment in our inland waterways, ports and harbors, and other water resources projects that help keep manufacturers competitive. The diverse stakeholder outreach on WRDA issues and a strong manufacturing voice throughout the year sent a strong message that Congress must do its part to fund critical infrastructure. The current two-year legislation, Moving Ahead Progress for the 21st Century (MAP-21), expires later this year. According to the Secretary of Transportation, the Highway Trust Fund is anticipated to run low on funds before the MAP-21 expiration date of Sept. 30, 2014. Manufacturers will continue to emphasize that funding a long-term surface transportation authorization is essential to keeping the economy moving and that better infrastructure is required to ensure our global competitiveness. Consumer Product Safety: The U.S. Consumer Product Safety Commission (CPSC) experienced significant change at the end of 2013, with Chairman Inez Tenenbaum and longtime Commissioner Nancy Nord departing and Commissioner Bob Adler taking over as acting Chairman. In October 2013, the NAM led a coalition of industry representatives in a meeting with CPSC Commissioners Nord and Ann Marie Buerkle and key staff to discuss priority issues for manufacturers and retailers. Topics discussed included high-profile CPSC initiatives on the voluntary recall process, CPSC staff involvement in the voluntary standards development process and the process for applying penalties and referring cases to the Department of Justice. In February, Commissioner Buerkle addressed the NAM’s CPSC Coalition and discussed many of the key product safety issues affecting manufacturers. The NAM submitted comments on a CPSC proposed rule that seeks to change the voluntary recall process by removing a manufacturer’s ability to disclaim admission of a defect of potential hazard, directing the CPSC staff to include compliance programs as part of a company’s corrective plan and making those voluntary plans legally binding. The CPSC also seeks to make significant changes to the rules that dictate how the it can publicly disclose information identifying a manufacturer or private labeler of a product. Since manufacturers face significant reputational harm when consumer products are incorrectly identified as harmful, Congress required protections for manufacturers. The NAM continues to advocate against commission attempts to usurp those protections. Regulatory Reform: Jay Timmons met with Howard Shelanski, administrator of the Office of Information and Regulatory Affairs (OIRA), to discuss the Administration’s regulatory policy. Timmons discussed manufacturers’ concerns on regulatory issues including the social cost of carbon, ozone rules, international regulatory cooperation, risk assessment and benefits inflation. As the gatekeeper of federal regulations, OIRA holds considerable influence over agency rulemakings. In October, the NAM and Manufacturers Alliance for Productivity and Innovation (MAPI) cohosted an event on Capitol Hill to highlight the regulatory challenges facing manufacturers in the United States. The event featured remarks by Timmons, and NAM Senior Vice President of Policy and Government Relations Aric Newhouse led a panel discussion with former Gov. and Sen. George Allen (R-VA) and former Sen. Blanche Lincoln (D-AR) on ways to

achieve bipartisan support for regulatory reform. Allen and Lincoln serve as co-chairs of the Manufacturing Competitiveness Initiative, an NAM-led effort aimed at examining and highlighting the competitiveness challenges facing manufacturers. The event also included American Cleaning Institute President and CEO Ernie Rosenberg, who chairs the NAM’s Council of Manufacturing Associations (CMA). Rep. Tammy Duckworth (D-IL) concluded the event with remarks focused on the challenges facing manufacturers, including regulations, taxes and workforce education. Legal Reform: In November, the House passed two legal reform bills that are supported by the NAM. The Furthering Asbestos Claim Transparency Act (H.R. 982) would prevent fraudulent claims within the asbestos trust system by requiring trusts to disclose information on paid claims. The Lawsuit Abuse Reduction Act (H.R. 2655) reinstates mandatory sanctions for the filing of a frivolous lawsuit, providing judges the ability to reimburse lawsuit abuse victims and removing the ability for plaintiffs to withdraw such claims without penalty. The NAM key voted both bills and sent an action alert to NAM members asking them to contact their representatives. The NAM worked with a coalition of business interests in successfully opposing an amendment to the National Defense Authorization Act for Fiscal Year 2014 that would have created aiding and abetting liability under the Anti-terrorism Act. The amendment would have upended a successful outcome to a Supreme Court case limiting the applicability of the Alien Tort Statute, which was often used to sue manufacturers who did business with foreign governments. Disclosure of Corporate Political Activity: In October, Jay Timmons and the leaders of other business organizations sent a letter on political disclosure to public companies that are the targets of shareholder activism discouraging political participation. The letter provided an update on key issues and how companies can prepare for activities that seek to limit corporate political and lobbying activities through disclosure. Food and Beverage Manufacturing: The NAM’s Food and Beverage Group met on Nov. 14, 2013, and featured guest speaker Dr. Michael Kashtock, the lead Food and Drug Administration (FDA) official responsible for the sanitary transportation of food rule. Required by the Food Safety Modernization Act (FSMA), FDA’s rule will impact all firms responsible for ensuring a safe and available food supply for our citizens. The House and Senate successfully passed a new farm bill, making significant reforms to the nation’s farm programs. The final bill did not include a Senate provision opposed by the NAM that would have instituted production controls for dairy. It does, however, require a study on regulations designed to implement country of origin labeling (COOL) standards for meat. If those regulations are found to be WTO-noncompliant, a variety of manufactured products could face retaliatory tariffs. In October 2013, the NAM joined a coalition in a letter to the principal farm bill negotiators urging them to find a WTO-compliant solution to the COOL law. The NAM continues to advocate on behalf of manufacturers by joining other industry leaders in supporting federal policies on the labeling of food and beverages containing ingredients derived from biotechnology that will protect consumers and allow them to make the best choices for their families. The NAM opposes ill-advised policies that could saddle food and beverage manufacturers with significant compliance costs while providing limited, if any, benefits to consumers.

International Economic Affairs Policy Trade Promotion Authority (TPA) and Market-Opening Trade and Investment Negotiations: The NAM is actively working to promote a robust trade and investment negotiating agenda that will open new markets, eliminate barriers overseas and strengthen manufacturers’ global competitiveness:

Since the NAM Board of Directors adopted the TPA Resolution in October, the NAM has been actively engaging both House and Senate members, urging their support for TPA, both before and after the Jan. 9, 2013, introduction of new TPA legislation (the Bipartisan Congressional Trade Priorities Act of 2014) by Ways and Means Chairman Camp, Finance Chairman Baucus and Ranking Member Orrin Hatch (R-UT). The NAM has organized member-level House and Senate freshman TPA briefings and provided state data, as well as more general information, and talking points on the importance of TPA to all key offices. The NAM has also mobilized our state manufacturing associations, member companies and associations to reach out directly to Congress to voice support.

On the Trans-Pacific Partnership (TPP) negotiations, the NAM co-leads business efforts on investment, small business and regulatory coherence. The NAM has strenuously voiced the importance of the TPP providing concrete new market access, particularly by Japan, Malaysia and Vietnam and ensuring strong outcomes on issues from intellectual property and investment to cross-border data flows, state-owned enterprises and enforcement.

On the Transatlantic Trade and Investment Partnership (TTIP) negotiations, the NAM co-leads business efforts on intellectual property, investment, goods, customs and regulatory issues and has participated at recent negotiating rounds to emphasize NAM priorities.

On Bilateral Investment Treaties (BIT), the NAM’s BIT Task Force is collecting information on barriers to provide input to U.S. negotiators on priorities for the BIT talks with China.

Miscellaneous Tariff Bill (MTB): The NAM continues to lead business efforts to move the MTB process forward so that manufacturers can renew or obtain new tariff suspensions on imported inputs and products not produced in the United States. These tariff cuts help manufacturers of all sizes keep costs low and stay globally competitive. With strong NAM urging and the active participation of NAM members, discussions between House and Senate members have intensified since late 2013 and prospects for a bicameral agreement are now increasing. The NAM will continue to work to ensure passage of the MTB expeditiously in 2014. Conflict Minerals: The NAM’s Conflict Minerals Task Force continues working intensively to share compliance frameworks and templates for manufacturers throughout the supply chain. As part of that effort, the NAM joined in launching a web-based compliance training and resource center aimed at deploying understandable compliance tools across NAM membership and its suppliers and vendors. On the litigation front, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments by the NAM and the Securities and Exchange Commission (SEC) regarding the conflict minerals disclosure rule in January. The NAM focused on how the SEC’s regulatory decisions go beyond the scope of the statutory language of the Dodd-Frank Act; its failure to provide a de minimis exception; and its decision to compel speech in a way that violates the First Amendment

by forcing companies to stigmatize their own brands and products on their websites. A decision is expected prior to the May 31, 2014, SEC reporting deadline.

Export Control Reform: An outdated and ineffective U.S. export control system significantly undermines the competitiveness of high-tech sectors in the United States. While progress has been made in reconciling different control lists in the past few months, the NAM has increasingly focused on building support for more systemic reform. The NAM Export Control Subcommittee met with House Foreign Affairs Committee Chairman Ed Royce (R-CA) in December and shared key priorities for additional management reforms. The NAM is sharing these priorities with the Administration and other key Hill offices. International Financing: The U.S. Export–Import (Ex–Im) Bank is a vital tool to help grow U.S. exports and increase American jobs. The NAM is working to improve Ex–Im Bank operations and illustrate the importance of access to competitive financing on Capitol Hill, including through a December opinion piece jointly written by Jay Timmons and Ex–Im Bank Chairman Fred Hochberg to highlight the small-business benefits of the Ex–Im Bank. The NAM is continuing to spearhead—and expand—coalition efforts to secure an extension of Ex–Im Bank’s charter before it expires on September 30. The NAM is also pursuing statutory repeal of new policies that categorically prohibit Ex–Im financing for certain energy projects. Customs and Trade Facilitation: The NAM is working to enhance the competitiveness of domestic manufacturers through global and national initiatives to cut cross-border transaction costs and address regulatory hurdles abroad. The NAM welcomed the WTO Trade Facilitation Agreement, signed in December, that could add $1 trillion to the world economy and is working with the Office of the U.S. Trade Representative (USTR) to promote full implementation of that agreement. The NAM is also actively working with House and Senate committees to find a path forward for consideration of customs reform legislation in 2014 that will prioritize trade facilitation, strengthen intellectual property and trade enforcement, and support the Beyond the Border Action Plan that aims to facilitate U.S.–Canadian trade flows. Leveling the Playing Field in India: The NAM is combatting unfair trade barriers in India that are blocking exports and discriminating against manufacturing and jobs in the United States. Since founding and co-chairing the Alliance for Fair Trade with India (AFTI) to put India’s discriminatory practices at the top of the bilateral agenda, the NAM has continued efforts to hold India accountable and achieve concrete solutions. The NAM testified before and provided detailed briefs to the U.S. International Trade Commission and the USTR on India’s practices in February 2014. The NAM is also working with business groups in Europe to build broad support for change among India’s trading partners. Protecting Intellectual Property Rights: The NAM continues to champion strong intellectual property protection and enforcement in key overseas markets. Since December, it has been leading efforts to reverse recent TPP proposals that would undermine strong intellectual property protections. On TTIP, the NAM made a presentation on key objectives to U.S. and EU negotiators at the December round of talks and is working with EU business organizations for support on strong trade secret and other intellectual property protections. Since October, the NAM has worked closely

with Senate offices on new legislation on trade secret protection that will form the foundation for strong trade-agreement provisions. The NAM is also highlighting the need for strong intellectual property objectives in the current TPA bill.

Unfair Competition: How Software Piracy Affects Your Business Thursday, March 13

8:00 a.m. – 9:30 a.m.

Agenda

7:30 a.m. Breakfast Available 8:00 a.m. Welcome and Opening Remarks Unfair competition resulting from intellectual property (IP) theft harms jobs, innovation and economic growth. Unfair competition from the use of stolen intellectual property, whether it be through piracy, counterfeiting, or trade secret theft leaves manufacturers in the U.S. at a competitive disadvantage. We must combat IP theft from emerging markets.

Drew Greenblatt, President, Marlin Steel Wire Products: Chairman, National Alliance for Jobs and Innovation (NAJI) and Executive Committee Member, National Association of Manufacturers (NAM), Board of Directors

Fred Humphries, Vice President, U.S. Government Affairs, Microsoft Corporation and Board Member, National Association of Manufacturers (NAM) The NAM-NAJI Partnership The NAM has teamed up with the National Alliance for Jobs and Innovation (NAJI) to increase awareness and develop a winning strategy to level the playing field.

Brian Raymond, Director, Technology Policy and Domestic Economic Policy, NAM and Treasurer, National Alliance for Jobs and Innovation (NAJI)

Tiffany N. Adams, Vice President, Public Affairs, NAM

8:50 a.m. Increase awareness; level the playing field. IP is a key driver of U.S. economic growth and the creation of jobs. NAJI is actively encouraging enforcement of existing state unfair competition laws by State Attorneys General. Recent AG actions in Massachusetts, California, Washington, and Tennessee have been effective in encouraging foreign manufacturers to stop competing unfairly. We must do more.

Rob McKenna, President, National Alliance for Jobs and Innovation (NAJI) and Former Washington State Attorney General

Dan Abdun-Nabi, President & CEO, Emergent BioSolutions, Inc. and Board Member, National Association of Manufacturers (NAM) Call to Action 9:30 a.m. Adjourn

EXECUTIVE SUMMARY

ECONOMIC IMPACT OF SOFTWARE PIRACY FOR MANUFACTURERS IN THE U.S.William Kerr, Associate Professor of Business Administration, Harvard Business School and Dr. Chad Moutray, Chief Economist, National Association of Manufacturers (NAM)

The theft of intellectual property,

information technology and trade

secrets by firms in emerging

markets is a well-documented

problem. This study proves that

such theft harms both the owners

of this property and the entire

U.S. economy. Far too many

businesses in emerging markets

steal IT as a means to compete

unfairly with manufacturers who

follow the law, costing the U.S.

economy jobs, revenue and GDP.

Reducing global software

theft is an easy and direct

way to level the playing field

between manufacturers in the

U.S. and emerging markets.

Manufacturing Jobs Manufacturers U.S. economy

-42,220 -$239.9B -$69.6B -$6.7B

Cost of software piracy U.S. 2002-2012

manufacturing jobs lost Revenue lost by manufacturing in the U.S.

GDP lost lost in federal tax revenue

We have studied the economic impact of one such

practice, software theft in emerging markets, on

manufacturing in the U.S. sector. Weak rule of law in

emerging markets enables rampant piracy and is a form

of unfair competition. Software is essential in every stage

of the modern manufacturing process. Firms engaging

in this theft get business software at no cost, while their

competitors must pay significant up-front costs and

licensing fees. Software theft therefore results in an unfair

advantage allowing firms to charge lower prices than their

rivals, or invest in additional labor, capital, or research and

development (R&D).

In 2011, the global

commercial value

of pirated software

reached $63.4

billion, a record

high and more than

double the 2003

value of $29 billion.

Software is essential in every

stage of the modern manufacturing

process. Firms engaging in software

theft take business software at no

cost, while their competitors must

pay significant up-front costs and

licensing fees.

Opportunity for economic growth(2.5 percentage point change per year over 4 years)

Jobs Manufacturers U.S. economy

New manufacturing jobs

Revenue added by manufacturing in the U.S.

Added GDP Added federal tax revenue

+27,239 +$29B +$8.7B +$807M

Total impact of a 10 percentage point reduction in global piracy over 4 years

U.S. Industry Jobs created

Manufacturing (direct effect) 27,239

Manufacturing (spillovers) 13,075

Software/IT (direct and spillover) 25,431

Total 65,745

IDC reports that manufacturers in the U.S. spent $29.8 billion on packaged software in 2010.

As American University’s Professor Andrew Popper notes, “firms steal IT in order to gain a cost advantage, merit-based success in the marketplace is at risk and the motivation to create better and more efficient goods and services is in jeopardy.”

Software theft causes a potentially dangerous gap in innovation by both lowering pirating firms’ R&D costs and reducing the benefits to U.S. manufacturers from new innovations.

Over the past decade, the threat

to manufacturers in the U.S. from

software theft in emerging markets

has increased. First, globalization

means that manufacturers in the

U.S. compete more intensely with

emerging market firms engaging

in software theft. Second, the

increased importance of IT and

software in manufacturing has

increased the size of the cost

advantage from software theft.

These factors add up to heightened

unfair competitive pressure on

manufacturers in the U.S., who

rely on software and technology to

remain innovative and competitive

within the global market.

Source: http://www.nam.org/Statistics-And-Data/Facts-About-Manufacturing/Landing.aspx

www.naji.orgwww.nam.org

This study was commissioned by:

ECONOMIC IMPACT OF SOFTWARE PIRACY ON MANUFACTURERS IN THE U.S.

NAM MEMBER SURVEY

SURVEY RESULTS: SUMMARY Support for more action against IP theft

Over 90% of manufacturers in the U.S. support more

action by government and industry to combat IP theft

Attitudes and experience with IP theft

Over 90% of manufacturers in the U.S. are concerned

about the impact of global IP theft on their businesses

About one third of U.S. manufacturers report having been

victims of IP theft by competitors in emerging markets

Importance of IP and software

89% of manufacturers in the U.S. consider IP and

proprietary knowledge to be important to the success of

their business

79% of manufacturers in the U.S. consider software to be

important to the success of their business

Positive effects of action against IP theft

A majority (~60%) of manufacturers in the U.S. say they

are at least somewhat likely to hire more workers and

increase investment if government and/or industry took

significant action to reduce IP theft and level the global

playing field

About one third of manufacturers in the U.S. report being

very or extremely likely to increase hiring and/or investment

Manufacturers who consider software important to their

business, or who have been subject to IP theft, are more

likely than average to increase hiring and/or investment

OVER 90% OF MANUFACTURERS IN THE U.S. SUPPORT MORE ACTION TO COMBAT IP THEFT“The federal government should take more action to combat intellectual property and trade secret theft by manufacturers in direct competition with manufacturers in the U.S.”

93% of respondents agree that federal/state governments should take more action

“Federal or state government officials, industry groups or software publishers should take significant action to reduce the amount of IP theft internationally and level the playing field across the world”

91% of respondents support action by government, industry groups or software publishers

This question is almost identical to the above, but includes industry and software publishers as parties that can take action

DK/Refused

Strongly disagree

Somewhat disagree

Somewhat agree

Strongly agree

65.6%

27.6%

2.6%1.6% 2.6%

DK/Refused

Strongly disagree

Somewhat disagree

Somewhat agree

Strongly agree

57.1%33.9%

3.9%

0.5% 4.7%

THE VAST MAJORITY OF MANUFACTURERS IN THE U.S. ARE CONCERNED ABOUT IP THEFT, AND ONE THIRD HAVE BEEN DIRECTLY IMPACTED

How concerned are you about the theft of IP/proprietary knowledge by competitors outside the U.S.?

91% of respondents are concerned about the impact of global IP theft on their business

Have you personally had specific instances where emerging market competitors have stolen or misused your own IP, trade secrets or proprietary knowledge?

Approximately one third of respondents have been directly impacted by IP theft or related practices by emerging market competitors

DK/Refused

Not at all concerned

Not very concerned

Somewhat concerned

Very concerned

46.5%

44.4%

6.2%2.1% 0.8%

DK/Refused

No

Yes32.3%

47.5%

20.2%

THE MAJORITY OF MANUFACTURERS IN THE U.S. INVEST IN IP TECHNOLOGY TO GROW THEIR BUSINESS

How important are investments in technology and proprietary knowledge to the operation and success of your business?

89% of respondents consider IP and proprietary knowledge to be important to the success of their business

How important are industry-specific and general-purpose software to the success of your business?

79% of respondents consider software to be important to the success of their business

Not at all important

Not very important

Somewhat important

Very important

55.8%32.8%

11.1%

0.3%

DK/Refused

Not at all important

Not very important

Somewhat important

Very important

41.3%

37.5%

18.6%

2.3% 0.3%

A MAJORITY OF MANUFACTURERS IN THE U.S. WOULD BE LIKELY TO INCREASE HIRING AND INVESTMENT IF GOV’T/INDUSTRY TOOK MORE ACTION AGAINST IP THEFT

“If federal or state government officials, industry groups or software publishers took significant action to reduce the amount of IP theft internationally and level the playing field across the world, how likely would your business be to…”

0 10 20 30 40 50 60 70

Somewhat likelyVery likelyExtremely likely

Increaseexports

Invest incapital or R&D

Hire moreworkers

62%

60%

54%

Board of Trustees Meeting Thursday, March 13, 2014

9:30 a.m. – 11:30 a.m. Welcome and Introductions Ronald D. Bullock Chairman

Bison Gear & Engineering Corporation The Manufacturing Institute Chair

Business Agenda Approval of October 2013 Minutes New Trustees NAM Taskforce on Workforce Chip Blankenship (invited)

President and CEO GE Appliance

President’s Report Jennifer McNelly

President The Manufacturing Institute

Research Driving Direction Finance Committee Report Blake Moret

Senior Vice President, Control Products and Solutions Rockwell Automation The Manufacturing Institute Vice-Chair

Election of Institute Vice Chair Bob Ratliff

Chairman The Manufacturing Institute Nominating Committee

Passing of the Gavel Adjourn

January 2014

Board of Trustees

Chair of the Board Vice Chair of the Board

Ronald D. Bullock Chairman

Bison Gear & Engineering Corporation

Blake D. Moret Senior Vice President, Control Products and Solutions

Rockwell Automation

Trustees

Ms. Lin M. Chape Vice President, Global HR/OD Vermeer Corporation Dr. Henry J. Cialone President & Chief Executive Officer EWI Ms. Rebecca “Becca” Dernberger Vice President and General Manager Northeast Division Manpower Inc. Mr. Craig A. Giffi Vice Chairman, U.S. Leader Consumer and Industrial Products Deloitte LLP Mr. Stephen Gold President and CEO Manufacturers Alliance for Productivity and Innovation Mr. Michael Cully (nominee) Vice President, Government Affairs AGCO Corporation Mr. Eric Isbister Chief Executive Officer GenMet Corp. Mr. Jerry J. Jasinowski Former President The Manufacturing Institute and the National Association of Manufacturers

Ms. Kellie Johnson President and CEO ACE Clearwater Enterprises Mr. Robert W. McCutcheon Assurance Partner U.S. Industrial Products & Metals Industry Leader PricewaterhouseCoopers Ms. Jennifer M. McNelly President The Manufacturing Institute Ms. Latondra Newton Group Vice President Toyota Motor North America, Inc. Mr. T.R. Raimondo Chairman and Coach Behlen Mfg. Co. Mr. Robert Ratliff Immediate Past MI Chairman & Chairman, MI Nominating Committee Ms. Natalie Schilling Vice President of Corporate Human Resources and Chief Talent Officer Alcoa, Inc. Mr. Yannis Skoufalos Global Product Supply Officer The Procter & Gamble Company

January 2014

Mr. Glenn Slater Senior Vice President of Manufacturing and Supply Chain Operations Fresenius Medical Care North America Mr. Al Stimac President Metal Essence, Inc. Mr. Jay Timmons President and CEO National Association of Manufacturers Ms. Gina Vassallo Director of Order to Delivery Talent Management and Development Caterpillar Inc. Mr. Thomas H. Walsh Managing Director—Accenture Automotive and Industrial Equipment Accenture

Dr. Timothy R. Welsh Senior Vice President Apollo Education Group Ms. Sandra Westlund-Deenihan Chief Executive Officer & Design Engineer Quality Float Works, Inc. Ms. Mariam O. Wright Senior Vice President, Manufacturing Americas and Japan Cable Operations Corning Incorporated

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