Two issues of significant concern to forgers have returned to the headlines in Washington recently, and the Forging Industry Association (FIA) is actively engaged in shaping the outcome of both.

    On June 25, President Obama reignited the energy debate with a major policy speech outlining proposals to cut greenhouse-gas emissions dramatically from coal-fired utilities, promote clean alternative-energy sources and lead international efforts to address climate change. Recognizing that many of these proposals would meet substantial resistance in Congress, particularly from the Republican majority in the House of Representatives, the President plans to implement his proposals largely through executive orders.

    Not surprisingly, the President’s plan met with strong criticism from Republicans in Congress and business leaders, who argued that the proposals would raise energy costs and make U.S. businesses less competitive.

    Interestingly, FIA’s President testified before Congress on June 20 about the positive impacts on the U.S. forging industry from increased supplies of natural gas and the potential benefits to the industry from continued exploration and development of energy supplies, including the proposed Keystone Pipeline.

    Simon Ormerod, president and CEO of Ajax Rolled Ring & Machine in York, S.C., testified before the House Committee on Small Business’ Subcommittee on Agriculture, Energy and Trade. In his prepared remarks, Ormerod pointed out that the forging industry is well suited to comment on this topic.

    “Because we produce parts for the energy supply chain and are heavily dependent on adequate supplies of competitively priced natural gas and electricity, forgers like Ajax are in a unique position to comment on the overall benefits to the economy created by the increased supplies of domestic natural gas and oil we are now enjoying in the U.S,” Ormerod said. “Increased exploration for oil and gas is not only beneficial to our cost structure, through lower-priced energy, but also leads to increased demand for our forgings.”

    Ormerod concluded by urging that U.S. policymakers “be very cautious in enacting regulatory barriers to increased domestic supplies of oil and gas. Policies that artificially increase prices or restrict supplies would certainly have a direct negative effect on the entire oil and gas supply chain regardless of company size. But they would also negatively affect hundreds of small manufacturers like Ajax and others in the forging industry supply chain that provide critical components to almost every industry you can imagine.”

    On the tax reform front, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), chairman and ranking minority member of the Senate Finance Committee, respectively, sent a “Dear Colleague” letter to all Senators outlining an approach to tax reform that assumes a “blank slate” – that is, a tax code that does not include “special provisions in the form of exclusions, deductions, credits and other preferences that some refer to as tax expenditures.”

    From that point, Sens. Baucus and Hatch plan to consider proposals to add back in “special provisions” that help grow the economy, make the tax code fairer or effectively promote other important policy objectives. The letter asks Senators to submit detailed proposals by July 26 on both corporate and individual tax provisions that meet these criteria and should be part of a revised tax code. That input will be used to develop the Finance Committee’s comprehensive tax reform approach.

    In April, FIA submitted comments to the House Ways and Means Committee in support of lowering the top rate for all taxpayers to no more than 25% while broadening the overall tax base to maintain current revenue levels and moving to a territorial system of taxation for corporations with global operations. However, FIA also emphasized that support is based on the assumption that all manufacturers will be treated alike under the new system. Many FIA members are organized as pass-thru entities, and we are stressing the importance of all manufacturers being treated equally in our Capitol Hill efforts. 

Laurin M. Baker, Founder & President • The Laurin Baker Group, LLC. Washington, D.C. • FIA Washington Representatives