Manufacturing aid programs on the cutting block

A 2018 federal budget that calls for more spending on defense and health care means that funding for manufacturing programs might be cut.

The failure of Congress to approve final fiscal 2018 budgets for federal agencies via appropriations bills has participants in one long-standing federal manufacturing aid program sitting on the edge of their seats.

President Donald Trump has proposed nearly eliminating the budget of the Manufacturing Extension Partnership (MEP), housed at the U.S. Department of Commerce, which received $130 million in fiscal 2017. The fiscal 2018 year started last Oct. 1, but Congress has passed a series of continuing resolutions that keep all funding of programs at 2017 levels, including the MEP. The Trump-proposed budget for fiscal 2018 has $6 million for the program, which would essentially end it.

The MEP funds 1,200 experts in all 50 states who are available to owners and employers of small and medium-sized manufacturing companies for business and operational process consulting. The 2017 MEP annual report published on Feb. 5 said the state offices served 26,000 manufacturers in 2017 and helped to create and retain more than 100,000 manufacturing jobs in 2017 alone. Clients also retained more than $12 billion in sales and realized more than $1.7 billion in cost savings, according to the report.

Normally, one wouldn’t expect Congress to phase out the MEP. After all, Congress “saved” the program when President George W. Bush proposed cutting it back significantly. But this year is different, with Congress set to increase defense and domestic spending significantly in the 2018 budget reconciliation bill signed on Feb. 9, which sets limits in general categories but not final budget numbers. That is what the appropriations bills do, and some agencies will see substantial cuts to compensate for big increases for defense and health spending in the Feb. 9 deal. The Departments of Commerce and Energy will be prime targets for budget cuts.

The Trump budget targets another Commerce Department-housed manufacturing program: the Manufacturing Innovation Institutes, a program started under President Obama. They received $25 million in fiscal year 2017. The 2018 Trump 2018 budget knocks it down by $10 million.

The Commerce Department funds one of the 14 manufacturing research institutes. The other 13 are funded by either the Department of Defense, the Department of Energy, or a combination of both. Neither of those two departments has a separate funding line; their contributions come out of existing funds. The Department of Energy will definitely be subject to budget cuts, meaning its five institutes could be in trouble.

Electricity Costs for Manufacturers at Issue in Rule Revision

The Environmental Protection Agency (EPA) has extended the deadline, for a second time, until April 26 for comments on its October 2017 proposed rule to repeal the Obama administration’s Clean Power Plan (CPP). If put into effect, the rule would force new electric power plants to reduce their emissions of carbon dioxide and other greenhouse gases.

The final rule was published in 2015 then subjected to numerous federal court lawsuits by industry groups before finally being held in abeyance by Trump’s executive order 13783. The executive order specifically directed the EPA to review and initiate reconsideration proceedings to “suspend, revise, or rescind” the CPP, “as appropriate and consistent with law.”

The Precision Machined Products Association (PMPA) submitted comments to the EPA in January. A survey of PMPA members conducted in 2017 showed that 68 percent of its members spend more than $100,000 on electricity annually.

“Even using the CPP’s low estimate of a 20 percent jump in electricity prices means that each PMPA member could see annual increases of over $20,000,” wrote Miles Free, PMPA’s director, industry research and technology.

He argued the EPA’s authority is limited to regulating emissions from existing sources within a specific source category—in this case, existing coal-fired electric energy generating units (EGUs). The CPP, however, reaches much farther than covering the designated category and requires reductions from the electricity sector in general.