The Fabricator - January 2016

By Stephen Barlas, Contributing Writer

“Buy America” provisions in the federal highway funding bill Congress passed in December have drawn both positive and negative attention from manufacturers.

Passage of the bill will be good news, in general,
because it establishes a six-year program with con-
sistent—though not higher compared to previous
years—funding for highway, bridge, railway, bus,
and other construction projects. Also, the bill cre-
ates a new grant program for nationally significant
freight and highway projects, beginning with $725
million in the 2016 federal budget year and increas-
ing over two years to $750 million a year. This new
grant program is expected to create a lot of work for
metal fabricating companies.

The bill increases the domestic content of rolling stock procured with Federal Transit Administration funds from 60 percent to 70 percent. It also codifies Buy America requirements for Railroad Rehabilitation & Improvement Financing (RRIF) loans. The American Public Transportation Association has opposed the increase from 60 percent to 70 percent, arguing it won’t result in more American jobs.

The highway bill also contains provisions requiring railroads to upgrade some tank cars. Edward R. Hamberger, president and CEO of the Association of American Railroads, said provisions in the bill address safety shortcomings with the Pipeline and Hazardous Materials Safety Administration’s tank car rule enacted in May. The new highway bill calls for increased thermal blanket protection for new tank cars, restricts the use of older DOT-111 tank cars that move flammable liquids, and requires top fittings protection on tank car retrofits.

Domestic Manufacturers
Worry About TPP

A congressional vote on the Trans-Pacific Partnership (TPP) could come as early as March. It will have significant ramifications for manufacturers of all stripes, particularly suppliers to the auto industry, which includes plenty of metal formers.

The trade agreement would reduce and then eliminate tariffs for the 12 countries that have signed the agreement. (The 11 TPP signatories besides the U.S. are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.) When those tariffs are eliminated, certain manufacturing sectors may find themselves hurt by new price competition from overseas competitors.

A second issue, important only to U.S. export-
ers, is the reduction of nontariff trade barriers. The
auto industry has been the biggest opponent of the
agreement because of “rules of origin,” which dic-
tate how much of a product’s components can be
sourced outside a TPP country and still qualify for
tariff relief. The deal stipulates that only 45 percent
of a vehicle will have to be sourced from within the
TPP, down from a comparable 50 percent-plus level
under the two-decade-old North American Free
Trade Agreement rules, which are credited with
driving an auto industry boom in Mexico. It sets a lo-
cal sourcing threshold of 35 percent to 45 percent
for individually traded auto parts.
On Nov. 30, the U.S. Business and
Industry Council announced the
start of a media campaign directed
at Congress aimed at highlighting
the lack of enforceable currency
provisions in the TPP. The National
Association of Manufacturers is on
the fence with regard to the TPP. It
says the TPP agreement “has the
potential to reverse” weak job gains
in the U.S. if the deal “levels the
playing field and improves the com-
petitiveness of manufacturers and
their workers in the United States.”
An NAM spokeswoman did not reply
to a query asking whether the NAM
has decided to support or oppose
the TPP.

Association of American Railroads, www.aar.org National Association of Manufacturers, www.nam.org Pipeline and Hazardous Materials Safety Administration, www.phmsa.dot.gov U. S. Business and Industry Council, www.americaneconomicalert.org

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