Table 2. OSHA Estimated Costs for Engineering Controls and Ancillary Development NAICS
Engineering Industry 331511 Iron foundries
331512 Steel investment foundries 331513 331524
Steel foundries (non-investment)
331525 331528 Various
Aluminum foundries Copper foundries
Other nonferrous foundries
Captive foundries Total
controls (includes abrasive blasting)
$11,372,127 $3,175,862
$3,403,790 $5,155,172
$1,187,578 $914,028
$6,993,368 $32,201,925
in 1971. OSHA has sought to update the standard because the current one is based on research from the 1960s and uses complicated formulas. Te ultimate goal is to protect workers from silico- sis, lung disease and kidney disease. Te new standard is one of the most significant and comprehensive health rulemakings undertaken by OSHA. To comply with the new standard,
metalcasting facilities face two major challenges: economic impact and technical feasibility. A wide gap of disparity between OSHA assumptions and industry assumptions on cost and feasibility makes for a potentially con-
Respirators
$645,546 $179,639
$193,194 $291,571
$67,272 $51,701 n/a
$1,428,925
Exposure assessments
$2,612,775 $739,312
$794,973
$1,220,879 $309,403
$212,778 n/a
$5,890,120
Medical
surveillance $223,005
$62,324 $67,027 $101,588
$23,668 $17,937 n/a
$495,549
tentious comment and hearing period for the proposed silica standard. OSHA estimates the cost for
additional controls for the metalcasting industry to comply with the lowered PEL to be $32 million a year. Te met- alcasting industry estimates the cost to be closer to $1.5 billion a year—more than 46 times OSHA’s estimate. In addition, OSHA’s ancillary cost estima- tion of $9 million a year is much lower than the industry’s estimate of more than $90 million a year (Tables 1-2). Perhaps the largest issue is that it
is going to be difficult for metalcasters to meet the OSHA proposed PEL.
Training
$216,228 $58,892
$65,679 $97,006
$23,448 $16,949 n/a
$478,202
Regulated areas
$241,133 $67,110
$72,174 $108,935
$25,095 $19,314 n/a
$533,761
Total
$15,310,814 $4,283,139
$4,596,837 $6,975,151
$1,636,464 $1,232,707 $6,993,368
$41,028,480
According to OSHA’s data, a portion of the metalcasting industry already exhibits noncompliance with the cur- rent PEL (Table 3). More than 40% of facilities are noncompliant with the current 100 µg/cu.m limit in three job categories: cleaning/finishing opera- tors, sand system operators and abrasive blasting operators. More than 30% are noncompliant in furnace, knockout, pouring and maintenance operation. Te lack of compliance stems largely from the lack of a ready, cost-effective solution. OSHA’s cost analysis esti- mates include only the cost to reduce PEL from 100 µg/cu.m to less than
OTHER PRIORITY METALCASTING ISSUES IN U.S. GOVERNMENT Tax Extenders Legislation
This spring, both the U.S. House and Senate finally turned their attention to the ”tax extenders,” a group of more than 60 temporary tax provisions that expired at the end of 2013. Despite some forward movement in the House however, extending these popular tax provisions still remains far from the finish line.
Rather than moving a whole package of extenders, the House currently is focusing on making individual extenders permanent. By a vote of 274-131 in May, the House approved legislation (H.R. 4438) that would both strengthen and make permanent the research and development credit. Based on informal reports, the House will continue looking at individual provisions with the next bill, which would make permanent an “enhanced” Sec. 179, during the June work period. Section 179 of the IRS tax code allows a business to deduct the full purchase price of financed or leased equipment. On the Senate side, moving a package of tax extenders is a high priority for Sen. Ron Wyden (D-Ore.), the new Chair of the Finance Committee. His committee approved a two-year extenders package in early April with bipartisan support. The Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 includes the R&D credit, enhanced Section 179 expensing and 50% bonus depreciation. Although
the full Senate took up the legislation in late May, the bill failed to garner the necessary 60 votes to pass a procedural hurdle, largely because of a debate over Senate procedure and partisan politics. It is unclear when the Senate will make another attempt at passing the EXPIRE Act. In the meantime, lack of action on these tax provisions is leaving manufacturers and other busi- nesses up in the air.
Last In, First Out
The last-in, first-out (LIFO) accounting method repeal was included in the U.S. House Ways & Means tax reform proposal issued in early 2014. The president also has called for LIFO repeal, which would significantly harm many metalcasting facili- ties that utilize this accounting provision.
The policy underlying LIFO is to preserve capital (through reduced taxes) in order to enable a company to replace the inventory that it has sold, when the cost of the replacement goods exceeds that of the goods that have been sold. As the maxim is frequently observed, “most companies have their entire profit tied up in inventory.” Taxing that inventory profit when a company still has that profit invested in its inventory will simply erode a company’s capital and force it to reduce the scale of its operations. This result is hardly intended by funda- mental tax reform.
June 2014 MODERN CASTING | 25
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