February 10, 2009

TEXAS MANUFACTURERS EMBRACE PRINCIPLES TO PROTECT JOBS
Association Focuses on Energy, Environment, Workforce, Taxes as Manufacturing Faces Historic Challenges

Austin, TX – The Texas Association of Manufacturers (TAM) today announced its 2009 legislative priorities, which are rooted in the associations’ policy principles designed to protect and grow high quality jobs in an industry facing unprecedented challenges.

“Texas manufacturing – a keystone of the State’s economy – is an industry under duress. Eight-thousand Texas manufacturing workers lost their jobs in December and national manufacturing employment levels have hit a 63-year low,” said Luke Bellsnyder, executive director of TAM. “Texas leads the nation in manufacturing and exports and we need to act with precision to protect these distinctions – and more than 930,000 Texas jobs – as we face the worst economic crisis of this generation.”

“Continued economic resilience in Texas depends on sound public policy designed to fortify our economy, attract new opportunities, and protect high quality manufacturing jobs,” he said. “We look forward to working with lawmakers who have already offered many innovative ideas to help keep Texas strong. Together we must see around corners, ferret out opportunity and avoid unintended consequences that could threaten jobs and stifle economic growth.”

TAM legislative priorities focus on energy, workforce development, environmental policy (including air, water and climate change proposals), taxes, transportation, civil justice and employer issues. (A detailed list of TAM legislative priorities and policy principles follows.)

With regard to energy, TAM is interested in policies that promote the development of market-based and cost effective generation sources including renewable sources. “Carefully crafted fuel diversity is necessary for Texas’ future and we are encouraged to see several promising proposals filed so far,” said Bellsnyder. “However, as Texas lawmakers investigate ways to diversify our fuel mix, we urge them to keep reliability and affordability at the forefront of their discussions. Increasing energy costs in the current economic climate would cost Texas jobs and should be avoided.”

Other energy priorities address shared transmission infrastructure costs (including limits on the scope of Competitive Renewable Energy Zones (CREZ) transmission line costs), incentives for carbon sequestration, and accurate consumer cost fiscal notes for energy related initiatives and proposals.

TAM has also taken an expansive policy position on workforce development issues. “Even in a down economy, manufacturing jobs for skilled workers go unfilled because of a lack of qualified candidates,” said Bellsnyder. “Texas must increase flexibility for students best served by a career and technology graduation plan. Relevant coursework and hands-on experience will prepare these students for the high quality jobs that await them.”

In describing TAM’s environmental priorities, Bellsnyder said, “Manufacturers are leading innovators in energy efficiency, conservation, and emission reduction technologies. Quality policy will encourage continued long-term investment in innovations to increase energy efficiency and reduce emissions through market-driven measures rather than mandates. Lawmakers can avoid diverting near-term, and increasingly scarce, resources by resisting mandates that demand technologies that do not yet exist.”

Among others, TAM supports important air quality programs that offer grants and other financial incentives for NOX emission reductions and those that provide low-income Texans with repair service and assistance in purchasing newer, cleaner vehicles, to reduce mobile source emissions in our state’s non-attainment areas. “Air quality has improved dramatically in the last 15 years thanks to efforts by manufacturers and innovative programs like these,” Bellsnyder said.

TAM supports the establishment of a sales tax exemption on research and development (R&D) materials and equipment. “Manufacturers are responsible for 70 percent of all private sector research and development and an R&D sales tax exemption would make Texas even more attractive to new employers,” according to Bellsnyder.

TAM also supports maintaining the structural integrity of the new margins tax while seeking some technical clarifications. “We urge the Legislature to resist changing fundamental components of the carefully constructed tax,” he said.

Additional legislative priorities and policy principles listed below address transportation, civil justice and employer issues.

Texas Association of Manufacturers
2009 Legislative Principles

ENERGY
Manufacturers are by far the largest consumers of electricity in the State of Texas. The rising cost of energy continues to play a pivotal role in capital investment location decisions across the nation and the globe.

TAM supports policy initiatives that:

• Encourage the development of market-based and cost effective generation sources that will provide Texas with greater fuel diversity; including market-based, cost-effective renewable sources.

• Expand Texas natural gas supplies through exploration and other means (such as liquefied natural gas).

• Require an appropriate sharing of transmission infrastructure costs between producers and consumers of electricity. TAM will seek limits to or cap the current scope of the Competitive Renewable Energy Zones (CREZ) transmission line costs.

• Streamline the generation facility permit processes to encourage more timely expansion of cost-effective energy supplies.

• Remove barriers for and encourage the development of market-based, cost-effective load response programs.

• Rededicate the “System Benefit Fund” for its statutory purpose.

• Provide accurate consumer cost fiscal notes for all energy related initiatives and proposals.

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ENVIRONMENT
Texas manufacturers have been working diligently over several decades to improve air quality in Texas and are leading innovators in technologies to protect and improve the environment.

AIR
TAM supports policy initiatives that:

• Maintain current, ongoing initiatives which have dramatically improved air quality in Texas and do not interfere with enforcement of existing, effective state and federal air quality standards.

• Encourage continued industry investment in technologically and economically feasible emission reduction solutions through market-driven measures rather than mandates.

• Maintain automobile fleet turnover programs such as Low-Income Repair Assistance Program (LIRAP) that promote cleaner automotive usage and dramatically reduce mobile emissions.

• Maintain cost-effective programs like Texas Emissions Reduction Plan (TERP) that are critical to reduce air emissions.

• Make air quality attainment requirements feasible to avoid unrealistic plans that risk Texas transportation funding, halt road construction and accelerate manufacturing job loss and relocation.

• Promote market-driven efforts and incentives to sequester CO2.

WATER
TAM supports policy initiatives that:

• Promote cost-effective solutions to meet the state’s water needs by proportionally distributing any costs in developing water infrastructure statewide among all users.

• Promote water reuse incentives and sustainability initiatives developed in collaboration with innovative manufacturing partners to reduce the burden on the proposed water infrastructure.

CLIMATE CHANGE
TAM supports policy initiatives that:

• In the event of federal climate change legislation, support a uniform approach and avoid an inefficient hodge-podge of state-by-state regulations.

• Embrace the twin goals of protecting the environment and safeguarding the driving forces of the economy.

• Encourage investments in long-term innovations to increase energy efficiency which will reduce green house gases, rather than diverting resources in the near-term toward demands for technologies that do not yet exist.

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TAXES
Manufacturing has been an important contributor to economic growth and tax receipts at all levels of government, contributing one-third of all corporate taxes collected by state and local governments.

TAM supports policy initiatives that:

• Maintain the structural integrity of Texas’ margins tax while seeking legislative and administrative technical changes and/or clarifications to create greater clarity and fairness in the new business tax.

• Establish a sales tax exemption on research and development (R&D) materials and equipment.

• Oppose attempts to further distinguish tax roles of residential and commercial entities, such as appraisal caps.

• Oppose increases in local option sales taxes beyond the current cap.

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TRANSPORTATION
The manufacturing sector depends on a reliable and efficient multi-modal transportation system in order to move goods.

TAM supports policy initiatives that:

• Promote a market-driven, cost-effective transportation infrastructure that allows efficient and competitive transport through seaports, land ports, roads, railroads and pipelines of Texas.

• Expedite the permitting process to include timely response to permitting requests so manufacturing construction and investment can move forward in a reasonable and timely manner.

• Encourage expeditious flow, which improves the environment, promotes efficiency and benefits consumers through reduced costs.

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WORKFORCE DEVELOPMENT
The manufacturing sector has historically been a primary source for middle-class jobs, especially for workers without a college degree; while also employing an extremely large number of highly educated workers in engineering, chemistry, high-tech and aerospace fields. Even in a down economy, manufacturers are struggling to find skilled workers to meet their workforce needs.

TAM supports policy initiatives that:

• Foster an effective, efficient and standards-based education system that meets the needs of the Texas manufacturing industry and its wide array of employment opportunities.

• Provide an incentive to public school districts, public and private universities, community colleges and technical schools to increase the number of graduates in critical fields such as engineering, math, science and career and technologies.

• Encourage rigorous yet flexible high school graduation pathways that lead to post-secondary success; including accountable and relevant programs to meet diverse manufacturing workforce needs.

• Directly attempt to address the drop-out rate by providing relevant and meaningful secondary opportunities for high school students who are disinclined to attend a four year university.

• Ensure that the state public education system supports and rewards local school districts wishing to offer career and technology courses that help meet their local employment demands.

• Ensure that career and technology courses offered by school districts contain applied math and/or science components and qualify for credit for math and/or science toward flexible degree plans.

• Ensure that career and technology courses offered by school districts with applied math and/or science components are offered as an alternative course to the existing 4x4 plan and not as “enrichment” electives.

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LAWSUIT REFORM AND EMPLOYER ISSUES
Texas Association of Manufacturers and its members are committed to sustaining economic growth and defending against attempts to rollback more than two decades of landmark legal reform.

TAM supports policy initiatives that:

• Support a fair and equitable civil justice system that promotes a sound business environment capable of attracting and retaining manufacturing jobs.

• Ensure that Texas manufacturers continue to have the right as employers to set terms of employment and rules for their workplace related to prohibition of firearms on their private property or other safety measures.

Contact: Gretchen Fox, 512-694-4326