As we roll into the new year, this edition of the Manufacturing Industry Advisor takes a look at some of the key regulatory issues that manufacturers will be facing in 2015. Based on recent discussions with key legislative and industry association figures in D.C., below we provide a summary on how the following regulatory areas may significantly impact manufacturers this year: tax reform, trade policy, skilled workforce policies, and increased administrative activism.
Tax Reform. The last Congress, including excellent work from outgoing Ways and Means Chair David Camp (R-Michigan), started the important spade work on federal tax reform but this work has not yet borne fruit. With Republican majorities in both houses, tax reform is expected to be an important issue in 2015 which becomes more challenging to tackle deeper into 2015, as the 2016 Presidential elections loom. Manufacturers should stay engaged in and attuned to these issues as they progress, especially those with global footprints and attendant tax issues.
Trade Policy. Interest and momentum continues to build around the pending trade talks with Asia and Europe. These talks are designed to improve market openness, intellectual property protection, enhance regulatory certainty and other trade barrier reductions. Manufacturers should anticipate and try to weigh in on the development of these agreements and policies as legislative and industry association figures work through the process. The overall sluggishness of the global economy and its impacts on many of the affected countries, and differing regulatory approaches and competencies, will likely continue to pose challenges to the completion of these trade deals.
Talent/Immigration/Skilled Trades. Increasingly, federal, state and local governments are looking at ways to help employers fill the “skills gap” in the manufacturing sector. (Michigan Governor Rick Snyder, for whom I served as Chief Regulatory Officer for two years, has stated this is one of the top priorities of his second term.) Congress appears to be considering ways to promote skilled trades education, to support the “maker’s movement,” and to address gaps in STEM and skilled trades graduates including related affordability issues. The immigration debate is likely to continue in 2015, with many business groups supportive of the provisions that would help address some of these STEM issues. Much of the activity here will continue to be non-governmental and non-regulatory, with manufacturers individually and collectively engaging in “self help” to address their business needs. This is a big and long-term issue, exacerbated by demographics, with no easy or quick solutions.
Increased Administrative Activism and Resultant Litigation. We have seen and will continue to see increased administrative activism (including the expanded use of Executive Orders) in many federal regulatory areas, including at the NLRB (union election rules and other areas), the EPA (Clean Air Act/greenhouse gas issues and Clean Water Act/navigable waters issues), the SEC (conflict minerals reporting) and OSHA (enhanced reporting), and other reporting and blacklist issues impacting manufacturers who do business with federal contracting agencies. We have reported on some of these trends before in the Manufacturing Industry Advisor. Expect this regulatory activism to continue in 2015, with resultant challenges from business and industry groups where regulations exceed legislative authority, violate due process or other constitutional protections, or are otherwise inconsistent with existing law or statutory intent. As an example, this week business groups commenced a challenge to the NLRB’s recent regulatory actions on union organizing efforts, on corporate free speech and other grounds.
Now more than ever, U.S. manufacturers are faced with regulatory challenges that burden their businesses and impact U.S. competitiveness in the global markets. 2015 may indeed become the year of the Regulatory Lawyer, which no manufacturing client should look forward to! Unfortunately, company engagement and activism as necessary is better than bad policy and lower competitiveness, so this will be a fight worth participating in for many manufacturers.