Manufacturing industry groups are tracking a number of key policy issues this year that could have a variety of implications on their West Michigan members.
Those issues range from overarching concerns about health care costs to industry-specific issues such as the use of fire retardants in the office furniture industry to unmanned aerial vehicle (UAV) legislation.
In particular the Michigan Manufacturers Association (MMA) is focusing its efforts on the Health Insurance Claims Assessment (HICA) tax.
The HICA levies a tax on health insurance claims in Michigan and is used to support Medicaid coverage for low-income residents. However, Mike Johnston, vice president of government affairs at MMA, said the legislation unfairly impacts manufacturers and makes Michigan less competitive compared to surrounding states.
The law was set to expire in 2018, but lawmakers extended the HICA sunset date to 2020 as part of a recent set of bills that were spurred by the federal government’s push for states to stop the practice of applying use taxes on managed care organizations, which had contributed to Medicaid funding.
As this story went to press, the legislation was headed to Gov. Rick Snyder’s desk for approval.
In conjunction with the amended legislation, the MMA is also working with lawmakers to form a committee to find an alternative to HICA as a means to fund the state’s Medicaid program.
In addition to health care costs, the MMA is also tracking efforts to combat the so-called “talent shortage” in the state as unemployment levels reach 10-year lows. With manufacturers struggling to find talent, the organization supports Gov. Snyder’s focus on continuing to develop grant dollars to fund talent training funds, Johnston said.
“The talent challenge is very real and driven by the demographics of society. The baby boomers (are) getting ready to retire and there’s not enough bodies, let alone well-trained workers, to fit the field,” Johnston said.“We’re supportive of (Governor Snyder) continuing to deliver on funds to get more skilled workers out there into the workforce.”
On a national level, the Precision Metalforming Association (PMA), which is based in Ohio but maintains an office in West Michigan, opposes the Environmental Protection Agency’s Clean Power Plan to reduce power plant emissions. While the EPA finalized the plan in August 2015, the U.S. Supreme Court delayed its implementation pending judicial review. The plan is set to reach federal court by June 2.
“We understand we have to have clean air and a good living environment, but we also need to make sure we remain competitive globally,” said Bill Gaskin, president of the PMA. “Our view on it is that it hasn’t been thought through well enough yet. We need a better understanding of what the impacts are going to be.”
Under the plan, power plants would be required to decrease carbon emissions 32 percent compared to 2005 levels by 2030.
The following are key policy concerns specific to manufacturing sectors, according to executives from a handful of key Michigan industry groups.
One of the most awaited policy decisions in the automotive industry, the mid-term review for the 2025 Corporate Average Fuel Economy (CAFE) standards, is set to begin the first phase of public comment in June 2016. Automakers, suppliers and other industry stakeholders will have the opportunity to talk to regulators about the regulations and their ability to meet them.
However, it’s likely that regulators won’t budge from the 2025 standard, which calls for fleet-wide average fuel economy of 54.5 miles per gallon, said Richard Wallace, director for transportation systems analysis at the Ann Arbor-based Center for Automotive Research (CAR).
“We think you’ll see a lot of stakeholders step up,” he said. “They’re are all going to stake their positions and call on their political allies, and my best guess is that you’ll see no change at all. The outcome will likely be no change at all, perhaps a slight delay.”
The final determination on the mid-term review will be made in April 2018, according to the EPA’s website.
Outside of the CAFE standards, Wallace also expects to see legislation from the National Highway Traffic Safety Administration (NHTSA) mandating the implementation of vehicle-to-vehicle safety systems — known as V2V — by May 2016. The technology would allow vehicles to communicate with each other to avoid accidents.
Elsewhere, West Michigan’s cadre of aerospace manufacturers could also be impacted by legislation regarding the operation of unmanned aerial vehicles (UAV), especially as the so-called drones gain acceptance in the commercial sector, said Gavin Brown, executive director of the Michigan Aerospace Manufacturers Association (MAMA).
In particular, MAMA is watching Michigan Senate Bills 699 and 700, which define regulations for operating UAVs and open up their use in the airspace above private property. The bills were introduced in early January 2016 by Sen. Mike Nofs, R-Battle Creek, and Sen. Patrick Colbeck, R-Canton.
Brown said UAVs have the potential to create a growth market for Michigan manufacturers, but that potential hinges on how they are regulated.
“This is a whole new world where those (manufacturers) who can provide the value at the starting line can gain business immediately,” Brown said. “(But) the only way that is commercially viable is when entry into the airspace is settled.”
This year, office furniture manufacturers will be busy advocating for legislative policies that repeal the requirement for fire retardants in the their products, said Brad Miller, director of advocacy and sustainability at Grand Rapids-based Business Institutional Furniture Manufacturers Association (BIFMA).
BIFMA is working with other industry stakeholders to advocate for California’s updated Technical Bulletin 117-2013 to be incorporated on either a federal or state-by-state basis. Unlike the old requirement, the new technical bulletin does not mandate the use of flame retardant chemicals. Instead, fabric and furniture must only pass an updated smoulder test instead of an additional open flame test.
The California regulation comes after studies have shown that the materials off gas the flame retardant chemicals during normal use and that the chemicals are released if the products burn, Miller said.
Sidebar: Policy - Manufacturing
- Health Insurance Claims Assessment (HICA) Tax: Manufacturing industry groups like Michigan Manufacturing Association oppose the current HICA tax on all health care claims made by Michigan companies. Instead, the MMA is working with state lawmakers to cut the tax, which helps fund Michigan’s Medicaid program, and find an alternative funding source.
- Clean Power Plan: The EPA’s Clean Power plan has the potential to significantly increase costs for businesses by requiring a 32-percent decline in carbon emissions from power plants by 2030 compared to 2005 levels, according to the Precision Metalforming Association (PMA). The PMA opposes the plan, which is set for federal judicial review in June 2016.
- 2025 CAFE Mid-term Review: Beginning in June 2016, automakers, suppliers, industry groups and other stakeholders will be able to comment on the 2025 Corporate Average Fuel Economy standard. Industry groups expect the standard mostly to remain the same as a result of the review.
- Vehicle-to-vehicle safety: Automakers should also expect initial language for legislation requiring vehicle-to-vehicle safety technology in vehicles by May 2016.
- Unmanned Aerial Vehicles: Michigan Senate Bills 699 and 700, introduced in January, would set regulations for the operation of drones in the state and could spark opportunities for Michigan’s aerospace manufacturers.
- Flame Retardant Materials: Grand Rapids-based Business Institutional Furniture Manufacturers Association is advocating for federal or state-by-state adoption of California’s Technical Bulletin 117-2013 by 2016. The regulation would stop requiring manufacturers to use flame retardants in their products.