- 06 January 2006 -
Review & Forecast: Preparing for Regulatory Challenges and Opportunities
By Jeffery S. Hannapel, Vice President, The Policy Group
The surface finishing industry enters 2006 with a mix of caution and intrepidation that is characteristic of the philosophical approach of job shops. The challenges facing the industry include burgeoning globalization, increased operating expenses and regulatory requirements, advancing technology and the changing business climate for U.S. manufacturing. The industry's government relations (GR) program continues its efforts to identify the best ways for surface finishers to respond to the challenges in 2006.
State of the Industry: Where Do We Stand? |
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Global impacts: From large, diversified corporations to small, family-owned businesses, all U.S. operations feel the impacts of today’s global economy. While globalization has promoted worldwide economic growth, it has led to substantial business and job losses in the U.S. manufacturing sector. The price/cost squeeze from Asia and initiatives to restrict chemical use from Europe are the primary sources of pressures from the new global economy.
The relatively high operating costs incurred by domestic facilities make competition in global markets more difficult for U.S. manufacturers and their service providers such as surface finishers. For example, high labor costs, increased raw materials expenses (i.e., high metal prices), escalating energy costs, expanding regulatory requirements, and rising insurance premiums add greater pressures for U.S. surface finishers. This is especially true because many global competitors, particularly those in Asia, do not face the same scope and magnitude of such operating costs.
Regulatory requirements: Regulatory compliance has always been a relatively high percentage of operating expenses for the surface finishing industry. Over the past decade of working cooperatively with regulatory agencies, the industry has found ways to maintain productivity and reduce its environmental footprint. Nonetheless, new regulatory requirements continue to push the limits on environmental controls and costs associated with them.
The GR program has had some success in reducing these regulatory expenses, but continues to face new regulatory challenges on several fronts. For example, the regulatory flexibility in 2005 from amendments to the requirements for controlling air emissions of hazardous air pollutants (i.e., the Chrome MACT standard); permanent deferral of federal air permit requirements; and streamlining the pre-treatment requirements for wastewater discharges will save surface finishing operations thousands of dollars annually in reduced regulatory costs. In addition, regulatory relief for the management of wastewater treatment sludge in an upcoming EPA regulation could also reduce costs for most surface finishing operations.
The industry also faces new potential regulatory requirements with OSHA's proposed workplace exposure standard for hexavalent chromium (which is expected in early 2006) and new requirements for small sources of air emissions from plating and polishing operations. The industry has devoted significant time and resources in working with OSHA and the federal family to develop an appropriate standard that protects workers’ health while, at the same time, preserving the benefits to society produced by these industry sectors using hexavalent chromium responsibly.
Technology advances: Advancing technology in manufacturing sciences and product applications can also make existing surface finishing work practices and processes at an accelerated pace. It is critical that the surface finishing industry position itself to respond effectively to the evolving demands of new technology and market conditions. By tapping the vast technological resources of industry experts, the GR program, through the Future of Finishing project, has been collecting information on new and emerging surface coating technologies, as well as opportunities to improve the efficiencies of existing processes
Review & Forecast compiled by Greg Valero, Editor and Publisher.
