Priority Issues Facing the Industry
The metalcasting industry has annual U.S. sales of $44 billion, an economic impact of $110.5 billion, and boasts accounts for 490,000 jobs, either directly, indirectly, or through induced impacts. Public policies have a major influence on metalcasters’ ability to produce castings, and as the industry’s leading association, AFS advocates full time for a positive business climate. AFS and its members regularly share information and policy recommendations with key policymakers.
Key policy victories by AFS can be found at www.afsinc.org/afs-advocacy-achievements. In May, metalcasters convened in Washington, D.C., to continue discussions with their Congresspersons about many issues facing the industry: achieving and maintaining a strong workforce, boosting American competitiveness globally, and bolstering the nation’s energy security.
Provide Incentives to Help U.S. Metalcasters Recruit, Train, and Retain Workers
U.S. metalcasters continue to face critical workforce challenges, specifically the ability to attract and retain a qualified workforce, from production, maintenance, and technician positions, to machinists, electricians, patternmakers, metallurgists, and foundry engineers. In the AFS Metalcasters 2022 Quarterly Outlook Survey, nearly 86% of responding metalcasters reported unfilled positions at the time of the survey.
In fact, over the past 12 months, job openings in the manufacturing sector have averaged nearly 865,000. The number of job postings continue to be well above pre-pandemic levels as companies ramped up production and looked for more workers to meet the additional capacity. The persistent shortfall of workers and a skills mismatch for the metalcasting sector slows down economic growth and hurts competitiveness.
AFS is urging lawmakers to support passage of the following initiatives to modernize the nation’s job training, strengthen workforce development programs, and reduce costs associated with training:
- Expand Pell Grant eligibility to high-quality, short-term workforce programs—Short-term certificate programs allow students to quickly gain skills and credentials for jobs in the manufacturing sector. The JOBS Act (H.R. 2037/S. 864) is a bipartisan proposal that would expand Pell Grant eligibility to students enrolled in high-quality job training programs that are at least eight weeks in length and lead to industry-recognized credentials and certificates. Under current law, Pell Grants (needs-based grants for low-income and working students) can only be applied toward programs over 600 clock hours or at least 15 weeks in length. The House version of the pending China competition bill, the America COMPETES Act (H.R. 4521), was amended to include language similar to the JOBS Act, but the companion senate bill does not. AFS is asking Congress to include short-term Pell in the final competitiveness package.
- Expand tax credits for employers that provide training to employees.
- Create and expand tax benefits to incentivize individuals to pursue training and technical education—The Internal Revenue Code Section 127 currently allows for just $5,250 of educational assistance to an employee be excluded from an employee’s gross income. AFS believes this amount should be adjusted to $11,500 to increase participation in approved training programs.
- Increase investments in technical and community colleges—The Perkins Basic State Grant program is the principal source of dedicated federal funding for career and technical education (CTE). Increasing Perkins funding will expand access to high-quality CTE programs to a greater number of secondary, postsecondary, and adult learners. Therefore, AFS urges Congress to increase funding for the Perkins Basic State Grant program in FY 2023.
Boost U.S. Manufacturing Competitiveness & Innovation
Supply chain resilience continues to be tested by a range of factors, from COVID to geopolitics to container shortages, congested ports, and truck driver shortages. The pandemic exposed what many have understood for years: American workers and consumers—and thus the American economy—depend on a robust supply chain bolstered by American manufacturers. To maintain and extend the United States’ economic and innovation leadership, AFS urges investment in research, growth in talent pipelines, and accelerated development of key technologies that are foundational to strengthening the nation’s manufacturing sector.
Congress is debating legislation aimed at easing supply chain distress. In fact, the House of Representatives and Senate have begun a formal conference to consider differences between the America COMPETES Act (H.R. 4521) and the United States Innovation and Competition Act (USICA) (S. 1260). These measures are aimed at bolstering U.S. investments in research, technology, and manufacturing to counter increasing economic competition from China and to help address ongoing supply chain challenges.
AFS is asking lawmakers to reach a bipartisan agreement that strengthens domestic manufacturing and increases U.S. global competitiveness, and to support the following priority areas in a final China competition bill:
- Strengthen Domestic Semiconductor Manufacturing—AFS supports funding contained in both the Senate’s USICA and the House’s America COMPETES Act to bolster domestic semiconductor manufacturing. Metalcasters supply key castings to a wide range of sectors where semiconductor chips play a central role, including but not limited to cars, buses, trains, planes, appliances, tractors, motorcycles, and machinery. Over the past two years, several foundry customers have suspended their operations due to chip shortages for weeks at a time, which also impacts metalcasting operations.
- Bolster Supply Chain Resilience—AFS supports the Manufacturing Security and Resilience Program and other critical provisions included in the supply chain resilience subtitle of the House-passed America COMPETES Act (Sec. 20201 through 20211 of H.R. 4521). This program would provide for supply chain resilience, including the development of new technologies and re-tooling of industrial equipment via grants, loans, and loan guarantees. The America COMPETES Act empowers the U.S. Department of Commerce to conduct comprehensive supply chain mapping and monitoring.
- Implement Shipping Reform—Ocean freight rates more than tripled in 2021 and have been further elevated by other associated costs, such as detention, congestion fees, surcharges, a lack of available pier and storage space, substantial increases in transit times, shortage of truck drivers, and fuel prices. Metalcasters have faced significant delays in obtaining key foundry materials and minerals through U.S. ports. Metalcasters supported the Ocean Shipping Reform Act (H.R. 4996/S.3580) aimed at decreasing ocean transportation costs, reducing shipping delays, implementing more stringent oversight mechanisms, and improving ocean shipping service standards. President Biden signed the bipartisan bill on June 16.
- Strengthen Trade Remedy Laws & Maintain Section 301 Tariffs—The House-passed competitiveness bill includes the Eliminating Global Market Distortions to Protect American Jobs Act (H.R. 6121/S. 1187), which would update and modernize U.S. trade laws to ensure that domestic industries, including metalcasting, are able to pursue and rely upon remedies to address new and evolving unfair trade practices by China and other trade partners. China’s government continues to heavily subsidize its companies; many, in fact, are state-owned or controlled, which means they can price their goods far below fair market value. In addition, AFS urges consideration of legislation that would more effectively punish U.S. importers that mask the true country of origin of illegally imported products and their customers that repeatedly facilitate trans-shipment schemes.
- Ensure Strong Research & Development (R&D) Expensing—Restore immediate R&D expensing to incentivize long-term investments in innovation and technological breakthroughs by providing manufacturers with an opportunity to deduct research and development activities in the tax year that they occur. Starting this year, companies must amortize or deduct their R&D expenses over a period of years, which makes R&D more expensive. While not included in the base text of the competition legislation, a bipartisan group of 28 senators and 102 House members have signed on to legislation to address this change to R&D policy, and a Senate motion to instruct conferees on this issue was adopted in a 90–5 vote.
- Bolster Domestic Critical Minerals Supply Chain—Metalcasters support strong federal investment to support domestic critical mineral and material processing, recycling, extraction, and high-level supply chain mapping included in the America COMPETES Act. In particular, the increase in critical mineral funding for agencies like the National Science Foundation, as well as the directive to advance critical mineral mining processing and recycling technologies, will improve critical mineral lifecycles and scale these technologies for broad market use.
Strengthen the Nation’s Energy Security
The invasion of Ukraine—and its impact on the cost and supply of energy—highlight the importance of reliable and affordable energy, even as the world pursues the transition to cleaner energy. Americans are facing the highest inflation in generations, and skyrocketing natural gas and electricity prices have raised manufacturing and transportation costs across many sectors, including the U.S. metalcasting industry.
Furthermore, electricity rates are expected to continue to rise at a rapid clip given the higher cost of natural gas, and as power companies spend more on new transmission lines, batteries, wind turbines, solar farms, and other gear to reduce greenhouse gas emissions. In Florida, Hawaii, Illinois, and New York, rates are up about 15%, according to the Energy Department’s latest figures. Meanwhile, U.S. and Canadian refining capacity is less today than before the pandemic, as some refineries closed permanently, and others are being converted to refine renewable fuels rather than crude oil.
Pursuing climate progress and energy security are not mutually exclusive. AFS seeks policies that increase domestic production of oil and natural gas and accelerate the energy transition.
Manufacturers, including U.S. metalcasters, risk losing a global energy advantage if prices continue to rise and exacerbate supply chain constraints. Increasing energy production and mining critical minerals in the U.S. can drive down energy costs, lower inflation, support the country’s allies, and make manufacturers in America more competitive in the global marketplace.
AFS is committed to working with the Biden administration and leaders in both parties to help lead America through these ongoing crises, as well as to continue to produce vital castings for the oil and gas sector, electric vehicles, buses and trucks, as well as for renewable energy including wind turbines. AFS urges the president and Congress to implement the following key policies:
Promote Domestic Energy Production and Infrastructure Development to Enhance Energy Security—Reverse obstacles to domestic oil and natural gas leasing. That starts with approving responsible exploration and production, supporting sustainable permitting, and quickly building out more energy infrastructure, including electric vehicle charging and pipelines. Foundries produce vital castings for the oil and gas and renewable energy sectors.
Increase Production and Processing of Critical Minerals and Materials in the U.S.—The U.S. faces a shortage of minerals, materials, and processing capacity to support key sectors of the economy and the clean energy transition. It can take at least a decade to get a new American mine operation permitted. Materials such as copper, cobalt, nickel, lithium, graphite, and zinc are essential for renewable technologies. But mining and processing are dominated by China and other nations. In 2021, the U.S. produced just 6% of the global copper supply, 0.4% of global cobalt supplies, 0.67% of the world’s nickel, no global graphite, and about 5.7% of the world’s zinc.
In January, the administration canceled longstanding leases in northern Minnesota, which holds 95% of U.S. nickel reserves. And the only existing U.S. nickel mine, the Eagle Mine in Michigan’s Upper Peninsula, is set to close in 2025. Permitting has also been a deterrent to the development of a copper mine in Arizona, minerals exploration in Wyoming, and a lithium and boron mine in Nevada. Critical mineral mining and processing is needed here within the U.S., and it would create jobs, revive the mining industry, and help ensure the U.S. is independent of China and other hostile nations.
Institute More Efficient Permitting Processes—Project delays related to both energy security and the energy transition hurt our nation. America’s system for permitting the development of projects, particularly those that require a National Environmental Policy Act (NEPA) review, is broken. Projects of all kinds, such as renewables, electricity transmission, critical mineral mining, oil and natural gas, and pipelines face extensive delays and can even be halted due to unnecessarily lengthy NEPA reviews and associated litigation.