AED Washington Insights Newsletter
January 2010
Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team
In this Issue:
San Antonio equipment distributors tell Congress: Get to work on the highway bill so WE can get back to work!
On Jan. 20, Start Us Up USA! made its fourth stop in four months in San Antonio as part of the 2010 AED Summit and CONDEX. At a rally in front of the Henry B. Gonzalez Convention Center, construction equipment industry leaders said Congress' failure to renew the federal highway program has real economic consequences for Texas and the rest of the country.
The event was part of an ongoing national grassroots campaign called Start Us Up USA! by AED and the Association of Equipment Manufacturers
(AEM). Prior events were held in Las Vegas, Chicago, and Washington, D.C.
Following the rally, a caravan of trucks carrying large pieces of construction equipment – idled by the industry depression and draped with banners— made its way through the streets of downtown San Antonio.
AED and AEM are seeking to draw attention to the economic crisis facing construction equipment distributors and manufacturers, as well as the consequences of Congress' failure to reauthorize federal highway and transit programs. According to a recent study by IHS Global Insight, since 2006 the U.S. equipment industry has lost 37 percent of its workforce and 40 percent of its economic output. All indications are that construction industry business conditions are getting worse and what is happening – or not happening – in Washington, D.C., is only adding to the misery.
SAFETEA-LU, the most recent federal surface transportation law, expired at the end of September. Distracted by health care reform and climate change legislation, neither the U.S. House of Representatives nor the Senate has made headway on a reauthorization bill. As a consequence, the highway program is operating under a series of short-term extensions that have added to historic volatility in the construction markets.
"States can't plan and contractors don't know how much work will be coming down the pike," AED President & CEO Toby Mack said. "As a result, they're sitting on their hands and not investing in new equipment. That's killing our industry."
"We're not asking for a handout like the ones Congress gave the auto industry or the financial services sector," AEM President Dennis Slater said. "We're just asking Congress to do its job and make highway reauthorization a priority."
Bennett Closner, president and CEO of Closner Equipment Co., Inc., a San Antonio dealer, provided a local perspective on the national crisis. Closner, who was the 2009 national chairman of AED, said that since 2006 Texas has lost more than $11 billion in economic activity because of the equipment industry downturn, the biggest loss of any state. And Texas is second only to California in equipment industry-related job losses, with more than 53,000 layoffs in three years.
"I've listened to friends and colleagues agonize over the difficult decisions they've had to make about their businesses. Almost all have had to lay off valued workers, many have closed one or more of their facilities, and some companies have shut their doors altogether after several generations in business," Closner said.
Allyn Archer, president and COO of San Antonio-based Holt CAT, told rally attendees that local equipment dealers have experienced a 70 percent
drop in new machine sales from 2008 levels. He said that the most debilitating impact of the downturn for his company has been a 25 percent reduction in employment.
"Our remaining employees have made sacrifices in pay and benefits to enable us to stay profitable, and plans for several new store locations were canceled," Archer said.
According to Archer, the economic crisis and uncertainty surrounding the highway bill are also taking a massive toll on local contractors. "Our customers who do highway construction have laid off thousands of employees. Many contractors are still reducing their workforces and their equipment fleets. The rapid drop in value of used equipment has also had a drastic affect on the equity of most contractors, resulting in a reduction of both borrowing and bonding capacity," he said.
Other speakers at the rally included Texas State Senator Jeff Wentworth (R-District 25); Dean Word, III of Dean Word Company (New Braunfels); and 2010 AEM Chairman Craig Paylor, who is president of JLG Industries, a manufacturer of mobile aerial work platforms based in Maryland. They pointed to the broad social and economic consequences of infrastructure investment, or rather Congress' failure to invest enough.
To view video of the rally and idle equipment caravan visit: http://www.youtube.com/startusupusa.
The San Antonio rally was well covered by local and trade media, including San Antonio television stations. Here are links to some of the stories that we generated:
"Road-work plea takes to the streets", San Antonio Express News
"Construction equipment dealers rally in Alamo City for more highway funding", San Antonio Business Journal
"San Antonio Equipment Distributors Tell Congress to 'Get to Work'", ForConstructionPros.com
"Caravan to highlight local impact of federal highway bill delays", Pit & Quarry
"Start Us Up USA event in Texas", OEM Off-Highway
"Construction Suppliers Rally for New Fed Transpo Bill", OnTheMoveBlog.com
"Equipment Distributors Urge Congress on Highway Bill", Rock Products
So what's next for Start Us Up USA!? We're going to be continuing our aggressive advocacy on Capitol Hill for a multi-year highway bill, water infrastructure legislation, capital investment incentives, and improved credit conditions for the construction industry. We're also looking to our members around the country to pick up the ball and start organizing rallies and caravans themselves. We need everyone's help to keep up the momentum and make sure your congressional delegation knows that we've got a lot of work left to do to get the construction industry back on track.
For more information about the Start Us Up USA! campaign and to get involved visit www.startusupusa.com.
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Brown's stunner shakes up Washington
On Jan. 19, Republican Massachusetts State Senator Scott Brown turned the political world upside down by defeating Democratic State Attorney General Marsha Coakley in a special election to fill the Senate seat held by Ted Kennedy for 46 years. Many are calling Brown's victory one of the biggest upsets in political history.
Nobody gave Brown a chance to win until he raised $1.3 million in one day on Jan. 11. Even after a huge fundraising day and weeks of Brown closing the huge gap between him and Coakley in the polls, most political observers refused to believe a Republican could win statewide in Massachusetts. After all, Kennedy won election to the Senate in 1962 to replace his brother, John F. Kennedy after he won the presidency. Additionally, President Obama beat Senator John McCain by over 25 percentage points in the Bay State in 2008.
However, running a simple campaign based on opposition to the Democrat's health care reform legislation and on out-of-control government spending, Brown pulled off the upset and has shaken up Washington. Comprehensive health care reform is off the table for the foreseeable future. Climate change legislation, which was already on life support, is delayed indefinitely. The Democrats in the Senate must now secure one Republican senator to avoid filibusters, dealing a huge blow to the Obama administration agenda.
Brown's victory has also sparked the talk of retirement among several moderate Democrats representing majority Republican districts. Forced by their leadership to take tough votes on health care reform and climate change legislation, House Democrats are particularly vulnerable. After Brown's win, Rep. Marion Berry (D-AR), joined fellow moderate Democratic Reps. Vic Snyder (D-AR), John Tanner (D-TN), Bart Gordon (D-TN), and Dennis Moore (D-KS) in deciding not to seek re-election. Rumors are flying that others, possibly even Senate Majority Leader Harry Reid (D-NV), might not seek another term.
The events in Massachusetts have been a boon for Republicans recruiting quality candidates to challenge incumbent Democrats in November. Additionally, prominent Democrats have decided not to run for open seats. Beau Biden, son of Vice President Joe Biden, who was the heir apparent to his father's Senate seat, has declined to run against Republican Congressman Mike Castle in Delaware.
The uncertainty in Washington is a great opportunity for AED members. The one thing that Congress and the administration should have learned from Brown's win in Massachusetts is that Americans, Republican and Democrat, want legislation to create jobs and restore prosperity. There is legislation ready to go, such as highway and water infrastructure bills, to get the economy back on track and put people back to work.
Now is the time let your Senators and member of Congress know what they need to do to keep their jobs in November. Visit www.startusupusa.com to find out how you can get involved.
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Senate expected to introduce jobs bill in the near future
With the midterm elections quickly approaching in November and Scott Brown's triumph in Massachusetts (see article in this edition of Insights), congressional Democrats are scrambling to enact legislation that will create jobs quickly.
Before adjourning for the holiday season, on Dec. 16 the House of Representatives approved the Jobs for Main Street Act (HR 2847). The legislation cleared the House, 217-212, with 38 Democrats joining a unified Republican caucus in opposition to the bill.
Designed to build upon the American Reinvestment and Recovery Act (ARRA or "stimulus bill") enacted in early 2009, the bill uses Troubled Asset Relief Program (TARP) funds to provide $37.3 billion for transportation programs, including $27.5 billion for highways and $8.4 billion for transit. The legislation also includes $2 billion for water infrastructure ($1 billion for the drinking water state revolving fund (SRF) program and $1 billion for the wastewater SRF program) and $500 million for the Airport Improvement Program (AIP).
Additionally, HR 2847 incorporates the Surface Transportation Extension Act of 2009, which extends the core highway, highway safety, and transit programs through Sept 30, 2010, at $53.3 billion, the level assumed in the FY 2010 budget resolution. The long-term authorization for these programs, SAFETEA-LU, expired on Sept. 30, 2009. Since then, these programs have been extended on a short-term basis at a funding level that is significantly below the FY 2009 authorized level. H.R. 2847 will increase funding by $10.7 billion, nearly to the FY 2009 authorized level.
The bill also includes provisions to stabilize the Highway Trust Fund. It restores $19.5 billion in interest payments foregone on the Trust Fund's previous cash balances, and lifts the ban on the Trust Fund receiving interest payments in the future. This will increase the Trust Fund's balance by an estimated $500 million to $1 billion annually, in the near-term.
Finally, the bill calls for the General Fund, rather than the Highway Trust Fund, to support long-standing fuel tax exemptions, such as those provided to state and local governments. This provision will increase Trust Fund balances by about $1.7 billion annually, for a total of $9.8 billion over six years.
Senate Jobs Bill to be Considered in Early February
While the Senate has yet to introduce its jobs legislation, some details are beginning to leak out to the public. The Senate, also using TARP funds, would provide $14 billion to highways, far less than the House bill's $27.5 billion. Unlike the Jobs for Main Street Act, the Senate is not expected to address the HTF or an extension of the highway program.
Word on the Hill is that the Senate proposal also includes $7.5 billion for public transportation, $2.5 billion for Amtrak, high-speed rail, and rail congestion relief, and $2 billion for airports. AED and other industry groups, including the Associated General Contractors and the National Utility Contractors Association, are advocating for the Senate to include $3 billion each for the wastewater and drinking water SRF programs.
All indications are that the Senate jobs bill will also include tax incentives to create jobs, including a 20 percent tax credit for companies with less than 100 employees that hire new employees. Additionally, AED is leading the charge in pushing for the extension of the bonus depreciation from ARRA, which allows businesses to write off 50 percent of new equipment purchase. The Obama administration is expected to support extension of the bonus depreciation.
Senate floor consideration of the proposal is expected in the beginning of February. However, Senate passage of a jobs bill is not a done deal. Republicans and moderate Democrats up for reelection in November (i.e., Sens. Blanche Lincoln (D-AR) and Evan Bayh (D-IN)) are going to find a jobs bill particularly tough to support as doubts still remain on the impact of ARRA. Also, Republicans oppose the use of TARP funds, preferring to use unspent ARRA monies.
While AED believes that the equipment industry will benefit from infrastructure stimulus, we are continuing to remind lawmakers that the best medicine for the ailing equipment industry is a multi-year highway bill with significant investment increases, which will restore contractor confidence in the future of construction markets.
To contact Congress on highway reauthorization, water infrastructure, and/or depreciation bonus extension, go to http://www.AEDaction.org.
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Give AED's Washington Office the tools we need to get the job done
AED members have come to regard the association's work in Washington to expand equipment markets and reduce distributor costs of doing business as one of the most valuable benefits of membership. Your contractor customers need the equipment and tools you provide to help them build roads, bridges, buildings, homes etc. Like them, we can't do our job without your help. We can't build support for AED's public policy goals on Capitol Hill if we don't have the right tools. That's why the AED Washington Education Fund (WEF) is so important.
Put simply, the AED WEF is the account that supports AED's lobbying and grassroots development activities. It pays primarily for:
- AEDaction.org (our online grassroots action center, which members used last year to send thousands of e-mails to Congress, the president, and governors)
- Our membership in the coalitions we help lead on water infrastructure, highways, LIFO repeal, card check, health care reform, and other issues, as well as our membership in the Business-Industry Political Action Committee (BIPAC)
- AED Washington staff travel to equipment industry local group meetings (we participated in more than a dozen last year)
This year, we've also shifted the costs of the AED's Spring Government Affairs Conference from the AED general budget to the WEF.
As of Jan. 27, we've received $12,000 in pledges from 16 AED member companies. While we're extremely grateful to the companies listed below for stepping up and supporting the WEF, we're a long way from our $35,000 fundraising goal.
No contribution is too small. Consider this: If 100 companies contribute at the $350/friend level, we'll meet our fundraising objective and be able to keep our advocacy and grassroots programs strong.
Please do your part and pledge your support today at http://www.aednet.org/government/wef.cfm.
Thanks to all the equipment industry leaders
who supported AED WEF so far in 2010:
Patron ($1,250)
Caterpillar Inc.
Kirby-Smith Machinery, Inc.
Unified Equipment Resources
Whayne Supply Co.
Donor ($750)
Cowin Equipment
Hoffman Equipment Co. ($1,000)
Michigan CAT ($1,000)
West Virginia Tractor Company
Friend ($350)
Alban Tractor Co. Inc.
Berry Companies, Inc.
H.O. Penn Machinery Company, Inc.
Leppo Rents/BobCat of Akron
Lowe Manufacturing Company, Inc.
McCann Industries, Inc.
Metrolift, Inc.
Power Equipment Co.
Rockland Manufacturing Co.
Vermeer Midsouth, Inc.
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Supreme Court ruling opens door to unlimited corporate, union ad spending
On Jan. 21, a divided U.S. Supreme Court changed the landscape of campaign finance in a decision relaxing limitations placed on corporations, labor unions, and nonprofit organizations. Those organizations will now be able to make unlimited independent expenditures encouraging support for and opposition to specific federal candidates.
The 5-4 decision in Citizens United v. Federal Election Commission negated a provision in the 2002 Bipartisan Campaign Reform Act (better known as the "McCain-Feingold Act") prohibiting corporations, labor unions, and nonprofit organizations from financing political advertisements in support or opposition to a political candidate within 30 days of a primary or 60 days of a general election. Justice Anthony Kennedy, who penned the majority opinion, stated that the restrictions in place under the McCain-Feingold Act were counter to First Amendment protections.
The ruling sparked both criticism and praise from the White House, Capitol Hill, and advocacy organizations. President Obama, along with prominent Democrats, denounced the decision as a blow to American democracy and a "green light" for special interest groups to play an influential role in future elections. Sen. Chuck Schumer (D-NY) went as far as calling the decision "un-American," fearing that corporate influence will drown out smaller voices. However, not all prognostications were as bleak. Both the U.S. Chamber of Commerce and the AFL-CIO lauded the decision, which effectively confirm their First Amendment rights. In addition, the ruling was welcomed by free speech advocacy groups.
Despite all the hoopla following the Supreme Court's decision, the ruling does not allow unfettered influence by corporations, unions, and nonprofits. Such entities are still barred from making direct contributions to candidates. The rules regarding corporate contributions to AED PAC and our organization's current political program remain unchanged. So, while the immediate reaction was that the sky is falling and the Citizens United decision is the end of the world, the real implications are not as far-reaching. The most likely result will be a few more annoying television advertisements during election season!
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Effective immediately – no texting while driving for CMV drivers
On Jan. 26, U.S Transportation Secretary Ray LaHood today announced federal guidance to expressly prohibit texting by drivers of commercial vehicles such as large trucks and buses. The prohibition is effective immediately and is the latest in a series of actions taken by the DOT to combat distracted driving since the Secretary convened a national summit on the issue last September.
"We want the drivers of big rigs and buses and those who share the roads with them to be safe," said Secretary LaHood. "This is an important safety step and we will be taking more to eliminate the threat of distracted driving."
The action is the result of the Department's interpretation of standing rules. Truck and bus drivers who text while driving commercial vehicles may be subject to civil or criminal penalties of up to $2,750.
"Our regulations will help prevent unsafe activity within the cab," said Anne Ferro, Administrator for the Federal Motor Carrier Safety Administration (FMCSA). "We want to make it crystal clear to operators and their employers that texting while driving is the type of unsafe activity that these regulations are intended to prohibit."
FMCSA research shows that drivers who send and receive text messages take their eyes off the road for an average of 4.6 seconds out of every 6 seconds while texting. At 55 miles per hour, this means that the driver is traveling the length of a football field, including the end zones, without looking at the road. Drivers who text while driving are more than 20 times more likely to get in an accident than non-distracted drivers. Because of the safety risks associated with the use of electronic devices while driving, FMCSA is also working on additional regulatory measures that will be announced in the coming months.
During the September 2009 Distracted Driving Summit, the Secretary announced the Department's plan to pursue this regulatory action, as well as rulemakings to reduce the risks posed by distracted driving. President Obama also signed an Executive Order directing federal employees not to engage in text messaging while driving government-owned vehicles or with government-owned equipment. Federal employees were required to comply with the ban starting at the end of last year.
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Agency seeks public comment on hours-of-service rule
The Federal Motor Carrier Safety Administration (FMCSA) held three public listening sessions in January seeking comments on a potential new "hours of service" (HOS) regulation. The HOS regulation places limitations on when, and for how long, commercial vehicle drivers may operate.
In November 2009, the FMCSA adopted a final rule instituting the "11-hour rule," which allows drivers to drive up to 11 hours within a 14-hour window from the beginning of the workday following at least 10 consecutive hours off duty. The rule also follows the "34-hour restart," which allows motor carriers and drivers to continue to restart calculations of the weekly on-duty limits after the driver has at least 34 consecutive hours off duty.
In addition, the rule includes a separate limitation on construction drivers, allowing a "restart" after 24 consecutive hours off-duty. AED and industry allies have protected the lower "restart" time for construction drivers during past revisions to the rule. The rule has a major impact both on equipment distributors and on our contractor customers.
The final rule was challenged in court, and as part of the settlement, the FMCSA must submit a new notice of proposed rulemaking (NPRM) on HOS before August 2010. These listening sessions will help the agency draft the NPRM.
Specifically, FMCSA is seeking information on reasonable rest and on-duty time periods for drivers, the viability of the "34-hour restart" standard, and the impact of HOS standards on shippers and receivers determining loading and unloading times. All comments from the listening sessions will be transcribed and placed in the rulemaking docket for the FMCSA's consideration.
Listening sessions were held in Arlington, Va., Dallas-Fort Worth, and Los Angeles.
For more information visit:
http://edocket.access.gpo.gov/2010/E9-31194.htm
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Bennett Closner, AED's 2009 Chairman and president and CEO of Closner Equipment, speaks at the Start Us Up USA! rally in San Antonio.
A piece of idle equipment is pulled by a flatbed truck through downtown San Antonio.