How legislation, politics affect automation, manufacturing

Siemens lobbyists explain how current politics and legislation influence manufacturing, automation, and controls, and how they’re trying to help make it easier for businesses to partner with clients. Collaboration to overcome uncertainties would be good for business. Discussions of taxes, trade, cyber security, Smart Grid, and other policies, follow.

07/27/2012


From left, Doug Todd, director of governmental affairs, Siemens Corp.; David McIntosh, vice president for federal lobbying and governmental affairs, Siemens Corp.; and Raj Batra, president, Industry Automation Division, Siemens Industry Inc. CFE Media phoU.S. federal policy makers could help business and manufacturing if they collaborate and overcome political differences to decrease uncertainties related to automatic deadlines and expirations. These were among topics in an overview of the manufacturing automation legislative/political landscape that was given to the media by Siemens Corp. lobbyists and Raj Batra, president, Industry Automation Division, Siemens Industry Inc., at the Siemens Summit 2012, June 26-28, in Washington, D.C., with the Capitol dome in the background.

From a large stone conference table at Siemens Corp. U.S. headquarters, David McIntosh, Siemens Corp. vice president for federal lobbying and federal government affairs, explained how current laws are helping or hampering businesses and how proposed legislation may, or may not, help businesses partner with their clients.

McIntosh, formerly a political appointee with the Obama administration at the U.S. Environmental protection agency, said energy, healthcare, cyber security, and tax policy are among topics that may be hot in Congress within 12 to 18 months. Normally, few contentious legislative topics would be addressed until after the November election, but some circumstances differ this time around, he said.

“An unprecedented number of expirations” in current laws are due soon, McIntosh said. Failure to address or renew some laws (like tax-cut expiration), or compromise before the year-end automatic budget cuts (put in place after the last-minute debt-ceiling fray), may cause a fair amount of uproar, calamity, and late-night drama.

Suggesting that current Democrat versus Republican battles are a “statutorily and fiscally burdensome” way to create policy, McIntosh (without pointing fingers at one side or another) suggested that things certainly could be better for business and manufacturing with less gridlock and more collaboration to alleviate uncertainties.

Doug Todd, director of governmental affairs, Siemens Corp., concurred that current political methods in Washington are “detrimental to policymaking.” Todd, with the Siemens industry sector for 12 years, follows issues including motors and drives, Smart Grid, building energy management, and lighting, and helps with cyber security.

Reasons to collaborate

There’s little political will for short-term decision-making because of the long-term cost of many decisions (including paying back a $16 trillion federal debt, still growing because of inability to reduce spending or balance budgets). In general, no one wants to give the other major party a chance to point fingers at tough decisions that need to be made; in many cases, delay has made things worse as challenges go unaddressed, they suggested.

Many expiration deadlines are now grouped together from December to March, they said, which is difficult timing because of the election and possibility of a new political mix in Congress after the election. Other issues that may come up, they noted, include defense- and non-defense-related spending, payroll, Medicare payments, energy production tax credits for wind, and the highway bill.

Pessimistic observers predict the conflagration of events will overwhelm Congress’s ability to function. Optimists say so many expirations coming together could be a recipe for a grand bargain that could create results, move toward balancing the budget, and decrease uncertainty for a longer period of time, which would be good for business.

U.S. manufacturing has been growing modestly, and manufacturers want to produce more. Lean, smart, and high technologies (which Siemens provides) can help business and manufacturing be more profitable and self-reliant, Todd and McIntosh noted.

Some federal legislation has been moving forward, such as a farm bill, lending limits, surface transportation, and cyber security—those generally deemed necessary to help the economy and make people safer.

Cyber security uncertainties

Cyber security incidents continue, they said, and various bills address cyber security issues. One point of possible impasse between the Republican-controlled House and the Obama administration is over liability related to information sharing about cyber security vulnerability. If companies tell the government about a risk, then companies may have a responsibility to tell shareholders about that risk. Companies want the ability to receive information and then decide what to do about it. Now, if companies get information, they may have to do more than what makes sense at the moment because of liability issues. More guidance is needed.

A Democrat-sponsored version of cyber security legislation in the Senate creates a process within the Department of Homeland Security to identify facilities at risk, explain how a successful cyber attack could cause catastrophic impacts, and then identify which systems within facilities should addressed. Deciding which sites and technologies are critical is difficult. No one wants to name specific products. Yet, without being specific, how would there be compliance?

Failure to address or renew some laws or to compromise before the year-end automatic budget cuts may cause a fair amount of uproar, calamity, and late-night drama.

 

“There's only so much safety that industry has the power to provide. People shouldn't think that imposing new requirements on industry through legislation will eliminate the risks of cyber-attack, Todd said. The Senate version of the legislation doesn’t say what’s good enough, leaving that to agencies to decide. Other legislation creates non-mandatory standards to provide guidance.

“Cybersecurity legislation might not need to await the outcome of the impending fiscal drama, though it probably will need to wait for the next presidential term,” McIntosh said. President Obama endorsed the Senate Democrats' bill, though cyber-security legislation probably won't be enacted until we get either a re-statement of position from a newly reelected Obama or a statement of position from a newly elected Romney, McIntosh suggested, noting that some kind of legislation is likely to pass within the next three years. It will happen more quickly if a catastrophic U.S. cyber security incident comes to light, since politicians get elected by drawing attention to what’s hot, Todd observed. Also, cyber security crosses into various Congressional committees, which has caused delays. Plus industry generally doesn’t like mandatory standards, and privacy advocates don’t like the secrecy involved, so Congress is struggling.

Cyber security legislation is one of the things causing more senior executives within manufacturing enterprises to focus more attention on the computerized systems that automate and control their facilities, they noted. High-level attention is a positive development, independent of legislative effort.

Batra added that smart industrial policies and applications of new automation technologies can help no matter which version passes.

Productivity is a key driver of a robust economy, and applying advanced automation and controls technologies helps manufacturing productivity, Batra said. The digitization of manufacturing, unifying the lifecycle from design through operations, has been very important for discrete manufacturing, such as automotive and aerospace. The next boost will be in the industrial chemical industries. Integrated, modularized updates of process design and controls will lead to competitive differentiation for companies like Dow Corning, DuPont, UGS, Orsi, and others. Software tools like Siemens Comos can help. McIntosh noted there are many good reasons to modernize manufacturing no matter what government does.

Trade, taxes, Smart Grid

More companies are talking about reshoring manufacturing to the U.S. as production in China isn’t as inexpensive as it once was or once thought, Batra said. Customers are scrambling for resources, and that’s compounded by a lack of standardized systems. Dow Corning, for example, has 32 independent distributed control systems (DCS) in 26 plants, Batra said.

Cyber security legislation seems likely to pass within the next three years, more quickly if a catastrophic U.S. cyber security incident comes to light.

 

Todd said reforming the tax code could help bring additional manufacturing back to the U.S. Among stimulus funding, $2.3 billion helped with 183 U.S. manufacturing projects related to energy efficiency. The Obama administration has asked for another $5 billion for that same program. Some in Congress think the wind production tax credit should go away, which would eliminate smaller companies and leave large ones, like Siemens and GE, to compete for what’s left.

As for Smart Grid initiatives, NIST has released a few standards and is working on more. Todd said he didn’t think there’d be legislation until those were done, although energy service contractors continue working on retrofits related to energy efficiency.

“We’re partnering with customers to help them find more profitable ways to do business with resource productivity and energy efficiency,” Batra said.

- Mark T. Hoske, content manager CFE Media, Control Engineering, Plant Engineering, and Consulting-Specifying Engineer, can be reached at mhoske(at)cfemedia.com.

www.usa.siemens.com 



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