The National Election Dominates the Discussion at the 2016 NASF Washington Forum

 

It was mid-April in Washington, D.C. and time for the annual NASF Washington Forum. An essential NASF conference for the surface finishing industry to get the latest on important legislative and regulatory matters, the meeting also offered attendees the opportunity to make their voices known in the halls of Congress. 

But it was anything but normal. Dominating the proceedings from beginning to end was the 2016 election, right during the week of the New York primary. Arguably an election season that no fiction writer could possibly have conceived, its November outcome would clearly set the tone for our industry for years to come. As NASF Executive Vice-President Christian Richter noted in his opening remarks, “Interesting stuff happens in the fourth quarter.”

The Economy

For the opening keynote, Dr. Peter Morici, Professor of International Business at the R.H. Smith School of Business at the University of Maryland, discussed the outlook for the U.S. and global economies. He was upbeat about the general outlook for the country. His optimism came from a number of factors.  Clearly, current low energy prices contributed. Inexpensive capital, in terms of greater abundance, efficient use and advantageous intellectual capital were influences. Improved logistics, growing use of the Internet and the emergence of new materials have lowered production costs. Technological advances continue unabated.

He said that the United States was well positioned vis-à-vis the economies of other important economies, including Japan (hindered by xenophobia, low birthrate), Germany (hampered by dysfunctions in the European Union) and China (troubled by slow reforms and foreign policy posture).

The drivers for consumers in growing our economy were stronger household finances, improved job security and urbanization, the shift to cities. For business growth, he cited increased residential construction, rebuilding cities, continued migration of internet communications to mobile devices, and growing opportunities in urban infrastructure, including mass transit and schools

Nonetheless, Dr. Morici noted that all of this was subject to risks and issues that tempered some of this optimism. Among these concerns were the China transition, currency misalignment, trade agreements, education costs squeezing out R&D, environment and climate change, monopolization of banks, airlines, etc., burdensome regulations, banking dysfunction, costly regulations, and terrorism.  If any of these factors were to move to the forefront, the story would be different.

The Election

As noted before, the “elephant in the room” (and, for equal time, the donkey) was the 2016 election, in particular the presidential election. The Washington Forum was fortunate to have two highly regarded political commentators on hand. The Luncheon Keynoter was Mr. Stu Rothenberg, editor and publisher of the Rothenberg and Gonzales Political Report and political analyst for numerous publication and media outlets. Wrapping up the speakers’ roster was political affairs expert and Forum regular Andy Friedman, principal at The Washington Update.

At the time of the Forum, the possibility of a contested Republican convention was still in the air, but the feeling was that Trump would be the nominee. The consensus among the pundits was that Hillary Clinton was likely to be elected the 45th President of the United States, the Democrats had a good chance to win the Senate and the Republicans were likely to hold onto the House of Representatives. 

Mr. Friedman discussed what the Clinton or Trump presidencies might bring to the country.  A Clinton administration likely would be more pragmatic on Wall Street regulation, and no entitlement reform would be forthcoming. With a Republican House of Representatives, another legislative stalemate would preserve the status quo of the last few years. With Trump in office, the perceived unpredictability would likely be of great concern to the financial markets, and any moves toward trade protectionism could hurt U.S. business. Lower taxes and increased military and entitlement spending would increase the deficit.  In sum, Mr. Friedman felt that the resulting short-term economic jolt would lead to problems later.

Legislative and Regulatory matters (Chemical)

The opening words from Dr. Hudson Bates, of the Nickel Producers Environmental Research Association and popular speaker at the Washington Forum, could not have been more fitting for the surface finishing industry today, “Some issues just don’t go away.”  He noted several issues confronting the nickel arena, old and new - reproductive toxicity, nanoparticulates, ambient water quality, sediment toxicity.  The persistent theme however, was that of agencies having yet another look at issues long thought to be settled.  Nickel water quality was being challenged again in Europe.  Canada was interested in revising standards.  A huge number of regulations are being considered around the globe, and as regulations increase, the limit values continue to go down.

Dr. Veronique Steukers, of the Nickel Institute echoed these sentiments in her report on nickel regulatory developments in Europe. REACH remained a priority but REACH continued to serve as a model for other agencies’ regulations. Australia, Canada, Korea, China and a number of U.S. states are all looking into such programs. Dr. Steukers noted that inclusion of one substance on a regulatory list can result in “copy and paste” to multiple lists before any good science can be communicated to correct a flawed impression - and the daunting prospect of doing it one agency at a time.

Key regulatory and legislative developments were reviewed by Jamie Conrad, of Conrad Counsel. He characterized the current Congress as “the biggest do-nothing Congress since the Truman era.” Nonetheless he expected a flurry of activity in the lame duck session to follow the November election. Most significant was a revised Toxic Substances and Control Act, which has passed both houses nearly unanimously, and only awaits reconciliation before sending the bill to the White House.

Janet Goodwin and Ahmar Siddiqui of the U.S. EPA were on hand to review the agency’s progress in re-evaluating the applicability of the existing 1983 metal finishing effluents guidelines to current industry practices. To be considered are changes in industry demographics, new technologies and changes in operations and pollution prevention practices.

Legislative and Regulatory matters (Business)

An interesting exchange of views was offered in the occupational health and safety arena from Ed Foulke, Assistant Secretary of Labor for OSHA during the Bush Administration and Jordan Barab, Deputy Assistant Secretary of Labor for OSHA in the Obama Administration. As expected their views coincided with those of their respective administrations. Mr. Foulke felt that the current agenda was to make law by increased rulemaking in the workplace. In Mr. Barab’s presentation, he stressed the need to bring OSHA into the 21st century.

A new issue, a Superfund insurance rule for metal finishing, was discussed by Tawny Bridgeford, of the National Mining Association. Already impacting the hardrock mining industry, such a rule could impact “downstream” industries such as metal finishing. Said by Ms. Bridgeford to be “an immense new financial obligation,” this regulation is meant to require financial responsibility consistent with the degree and duration of risk associated with the production, treatment, storage or disposal of hazardous substances. In essence, it could be “pollution insurance.”

Trade issues were discussed by James Smith, President of C&M International and former Ambassador to Saudi Arabia.  He discussed the pending Trans-Pacific Partnership (Asia) and the Trans-Atlantic Partnership (European Union), new agreements aimed to make trade more consistent. He noted that these agreements are being put forward in an atmosphere of revolt against global integration, and a tendency to return to isolationism. Mr. Smith noted that the ultimate outcome in the U.S. would depend on who is elected President. If approved during the lame duck period by Congress, Clinton would endeavor to modify it. Trump’s actions were less certain, ranging from altering it to imposing tariffs.

John Remy discussed a variety of labor issues, including overtime, wages and union representation. His message was that employers are becoming subject to new obligations, including issues of extended leave, pregnancy discrimination, mandated paid leave and paid family leave, among others.  He stressed the need to employ HR people who understand all of these issues.

Finally, on a more upbeat note, Laura Jones, of the Canadian Federation of Independent Business, discussed a Canadian model for regulatory reform. With the goal of cutting red tape, the British Columbia government in 2000 instituted a program to cut the number of regulations by 1/3 in three years. They exceeded that target, and a national principle was derived from all opf this. Now, for every new regulation, an equivalent existing regulation has to be eliminated. As Ms. Jones noted, they “changed the culture from regulation thinker to regulation manager.”

True to form, the NASF Washington Forum speakers provided a comprehensive look at the legislative and regulatory outlook for the surface finishing industry. The importance of the information provided at this meeting cannot be overemphasized. By the next NASF Washington Forum in 2017, the impact of the “interesting stuff” to happen in the fourth quarter will be much clearer, for better or for worse.  Regardless, the NASF will be active in bringing the story to the industry.