Influencing Direction to Create Industry Opportunities

To make an understatement, we’re in challenging and yet exciting times.

While most everyone is faced with economic challenges, the historical opportunities that may be created by the economy (stimulus package) as well as a new administration, represents exciting opportunities for the electrical industry as well as the potential for significant trepidation for distributors and manufacturers.

Much of these changes will be addressed in the very near future by “your” elected representatives. There are a number of legislative initiatives on the docket that may impact your revenues and profits!

To help affect the direction of their business, distributors (and reps) need to team with their manufacturers to influence corproate and business development policy.

Distributors, through NAED, should consider how they could embrace, and support, NEMA’s lobbying efforts as well as NAW’s efforts. One of the roles of an association is to represent its members on macro issues.

NEMA is trying to influence governmental action as it relates to energy efficiency and infrastructure as noted in Evan Gaddis’ recent letter to Congressional leaders. Specific areas that could generate revenucs for the electrical industry include:

Existing authorized programs that need funding:

• Energy Efficiency and Conservation Block Grants, EISA 2007 Sec. 541. These grants help state and local governments to improve energy efficiency and reduce greenhouse gas emissions. Desired funding is $2 billion / year through 2012
• Energy Sustainability and Efficiency Grants and Loans, EISA 2007 Sec. 471.
  These grants and loans help institutions such as universities, public schools, or local
  governments to pursue projects that improve energy efficiency, utilize renewable generation. Funding is $250 million in grants and $500 million in loans annually through 2013
• Solid State Lighting Research and Deployment, EPACT 2005, Section 912. Fully fund the research, development, demonstration, and commercialization activities for solid state lighting. $50 million annually 2012

New / Additional Programs

• Accelerated Depreciation for Clean Energy Equipment Investments. NEMA recommends accelerated depreciation for NEMA Premium motor-driven systems using adjustable speed drives and for deployment of new utility electrical distribution equipment.
• Efficient Motors Tax Credits. As included in the Food and Energy Security Act of 2007 (Section 12409), this tax credit would speed adoption of highly-efficient electric motors. Funding is less than $100 million total through 2010.
• Efficient Distribution Transformers Tax Credit. A tax credit for 15% of the purchase price would speed adoption of highly-efficient distribution transformers.
• Extension of Bonus Depreciation. The Economic Stimulus Act of 2008 provided for a fifty percent (50%) first-year bonus depreciation for business assets contracted for in 2008 and placed in service in 2008, or, for assets with an expected lifetime of 10-20 years, placed in-service in 2008 or 2009. Many companies have found it difficult to make large capital decisions before the expiration of the provision. Expected cost: $7 billion
• Federal and Military Facility Efficiency Improvements. A fund for federal agencies and the military would help them install energy efficiency and clean distributed energy in federal buildings, required by provisions in EISA 2007
• Clear the $1.3 Billion Pipeline of ESPC Projects. The new Administration should direct FEMP to clear the project backlog of $1.3 billion in Energy Service Performance Contracts, which provide agencies with efficiency upgrades and retrofits in return for a share of the energy savings.
• Energy Efficient Lighting Fixtures and Bulbs in Public Buildings. EISA 2007, Sec. 323, directs GSA to equip public buildings with, to the maximum extent feasible, energy efficient lighting fixtures and bulbs. Cost: $500 million
• Energy Efficient Commercial Buildings Tax Deduction. An increase in the tax deduction for efficient technologies would appropriately address the slowdown in commercial building construction. The current Energy Efficient Commercial Building Deduction now in effect through December 31, 2013 should be increased from the current $1.80 per square foot to a minimum of $2.25 per square foot, with $3.00 preferred.

Click here for the full letter.

Distributors need to support this and write letters to their elected officials in support of these bills.

Similarly, distributors should consider involvement in NAW. NAW focuses on broader corporate issues relating to equal pay, carding, estate taxes, corporate taxes, income for those over $250K (which is probably more senior management and owners), insurance and more. Some current issues include:

• The Lilly Ledbetter Fair Pay Act
• The Paycheck Fairness Act
• Card Checking

Plus NAW can represent a differnt type of best practice networking for progressive distributors as a cross-section of types of distribution attends NAW meetings.

NAED should be cozying up to these organizations to support its members, and the industry. Additionally, IMARK, with its recent merger with Equity/EDN has the ability to replace (or supplement) NAED as an electrical distribution influential engine on the legislative front. The combined organization represents 40% of the electrical distributors in the industry (although only 18% of revenues). Mobilizing this group to contact elected officials in support of NAW and NEMA initiatives could be important to the entire industry. A-D should similarly encourage its members to act.

Perhaps, given the economic times, NAW and NEMA could offer inducements to facilitate new electrical distributor members (and possibly reps for NEMA). Electrical distributors can join NEMA as affiliate members (essentially the same status that manufacturers have with NAED). At some point, having one electrical voice makes sense

After all, if the new administration wants to focus on infrastructure and energy efficiency, what better place than to start with the electrical industry (plus then you can answer the question “what has the government done for you?” Your answer: “My tax dollars are helping drive my business!”