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Manufacturers are working constantly to develop energy approaches that reduce emissions and promote sustainability—and hydrogen energy is an important part of that mix. But upcoming decisions from the U.S. Treasury Department may make it more difficult for manufacturers to achieve their goals.

That’s why the 51�Թ��� has been advocating for guidance that implements a hydrogen tax credit in a manner that supports manufacturers’ investments in this technology. ��

The background: Through the Inflation Reduction Act, Congress established this tax credit, called 45V, to incentivize companies to develop, produce and use clean hydrogen.

• “Hydrogen is the Swiss army knife of decarbonization—you can use it for nearly everything you can use natural gas for,” said 51�Թ��� Vice President of Domestic Policy Brandon Farris. “And this credit can be the most significant tool across the globe to bring down the cost of clean hydrogen.”

The problem:��As the U.S. Treasury Department finalizes rules around the use of the tax credit, their decisions may undercut manufacturers’ ability to take full advantage of it. Three provisions in particular are at the center of the 51�Թ���’s advocacy.

Additionality:��The Treasury Department is considering a policy called “additionality,” which would mean that only hydrogen power created through the use of new renewable energy would be eligible for the credit.

• Meanwhile, clean hydrogen energy created with renewable energy that is already on the grid would not qualify—a real problem as our permitting system can often take half a decade or more to add additional clean power to the grid.
• “We have a lot of renewables on the grid already to spur the hydrogen industry. Using existing clean generation should qualify for the credit,” said Farris.

Time matching:��Treasury may also impose a provision called “time matching,” which would mean companies would only receive the tax credit if they produce hydrogen energy at the exact same time that they are producing renewable energy.

• According to Farris, this rule misunderstands the energy production process. A company might only produce solar power for a few hours during the day when the sun is shining, for example, but it could still continue to produce clean hydrogen energy overnight using the grid. Yet under the time matching rule, they would be unable to claim a tax credit for the full amount.
• “This provision would create such tight restrictions that it would chill investment and innovation,” said Farris.

Carbon capture:��According to the IRA, clean hydrogen created using natural gas with carbon capture also qualifies for the credit.

• However, the IRA also says taxpayers applying for the credits should have a mechanism to demonstrate that their feedstocks are lower in carbon intensity—yet has not specified what that mechanism will be.
• “Taxpayers applying for the credits should be able to prove that their feedstocks have less carbon,” said Farris. “The law says the less carbon they produce, the higher the credit they should receive. We’re just asking for a mechanism that allows taxpayers to prove it.”

The bottom line:��Investments in clean hydrogen energy could be a game-changer for America’s energy future, but only if manufacturers have the opportunity to make them. That’s why the 51�Թ��� has been urging the Treasury Department to create a flexible credit that rejects the additionality and time matching provisions and provides a mechanism that supports carbon capture.

• “Hydrogen is one of the most promising decarbonization technologies available,” said Farris. “If we can make these changes, we can achieve greater hydrogen production and more significant infrastructure investments and expedite decarbonization efforts across hard-to-abate sectors.”

So-called “right-to-repair” policies undo many of the federal and state laws designed to protect consumers and manufacturers—and they could result in “steep cost[s] to quality, performance, consumer safety, the environment and the broader U.S. economy,” according to a new 51�Թ���-commissioned .

What’s going on: “The Economic Downsides of ‘Right-to-Repair,’” by Capital Policy Analytics’ Ike Brannon and Kerri Seyfert, finds that enacting right-to-repair laws could disrupt supply chains, leave manufacturers open to intellectual property theft, drive up costs for consumers and manufacturers and increase greenhouse emissions in the atmosphere.

• Right-to-repair policies, currently in place in more than 30 states, generally require manufacturers to make all tools, guides and parts required to repair their devices available to everyone, including independent repair outfits.
• A federal right-to-repair law “would ultimately alter how manufacturers operate their businesses, and there is no guarantee that consumers would benefit, as manufacturers would be forced to change the way their products perform,” according to the study.

Why it’s important: “There is a wide range of unintended and potentially harmful consequences that would arise if the most commonly introduced versions of ‘right-to-repair’ go into effect,” Brannon and Seyfert write.

• In addition to making product repair more difficult, such policies could drastically increase compliance costs for manufacturers and drive up prices for consumers.

Pharmacy benefit managers—companies that were first established to manage the cost of prescription drugs—are now driving up pharmaceutical prices for employers and patients, the 51�Թ��� the House Committee on Energy and Commerce this week.

What’s going on: While manufacturers remain committed to providing health benefits to their workers, PBMs are “[c]ontributing to the increasing costs of health care,” said 51�Թ��� Vice President of Policy Chris Netram on Monday, ahead of the committee’s markup of 44 pieces of legislation.

• These measures included the Protecting Patients Against PBM Abuses Act and the Medicare PBM Accountability Act.

Why it’s important: PBMs operate with a virtual monopoly, as just a few of them now control up to 89% of the prescription drug market, Netram continued.

• PBMs operate with limited federal oversight and frequently steer business toward pharmacy networks owned by their parent firms.

What should be done: Congress should pass legislation aimed at changing the PBM model.

• “The complex formulas and opaque business practices of PBMs must come to an end,” the 51�Թ��� wrote in a Tuesday. “Congress must address PBM reform to increase transparency, ensure pharmaceutical savings are passed to the plan sponsor and patients and delink PBM compensation from the list price of drugs.”

In related news: CVS Health “will move away from the complex formulas used to set the prices of the prescription drugs it sells, shifting to a simpler model that could upend how American pharmacies are paid,” (subscription) reports.

The president of Connecticut-based outdoor lighting manufacturer Penn Globe recently oversaw the launch of a long-awaited passion project: the Manufacturing and Technical Community Hub, or MATCH, a New Haven, Connecticut–area nonprofit contract manufacturing organization and training program designed to fill job openings in the sector.

Seeing a need: “I am a manufacturer, and one of the things I saw missing from the various workforce training programs available was the manufacturers themselves,” LaFemina said. “They weren’t reaching [the participants] in these training programs. So I was a bit frustrated, but that frustration was good … because it led us to create a program with manufacturers training people for actual manufacturing jobs.”

• In 2021, LaFemina and MATCH co-founder Lindy Lee Gold, senior regional manager of the Connecticut Department of Economic and Community Development, secured funding from partners including Lee’s agency, the city of New Haven, the Connecticut Department of Labor and numerous nonprofits.
• This past June, after LaFemina—now MATCH board chair—and the rest of the organization’s board of directors signed a lease on a building, MATCH was born.

How it works: MATCH begins with a two-week, earn-as-you-learn program, offered in both English and Spanish.

• The organization offers training in everything from basic welding to CNC machining, allowing participants to choose the type of manufacturing that interests them most.
• Then, depending on the complexity of their chosen specialty, they may spend up to six additional weeks in paid, on-the-job training before being placed in jobs with local manufacturers.

Meeting the moment: Unlike job-training offerings that expect a certain level of familiarity with an industry, MATCH starts from scratch.

• “Some places say, ‘Let’s test you on something you know nothing about,’” LaFemina told us. “We want to meet the moment. … We’re asking you to come in, give us two weeks and we will pay you minimum wage for the time that you’re here learning.”
• “We’ll figure out what you like and what you’re good at, and as long as we have the workload to make things, you’ll have a job,” she continued.

Being accessible: MATCH also prides itself on seeking out potential employees, instead of waiting to be found.

• “We wanted a building in a specific neighborhood in New Haven,” LaFemina said. “It’s where the majority of the social agencies are, the immigration services, the reentry services. I’d been hearing for two years about how people have [training] programs but couldn’t get participants because [the program locations] were difficult to get to. This one isn’t.”

Family friendly: One of MATCH’s main goals is to reach parents, many of them women, who have left the workforce due to difficulty securing child care. The program’s core hours are 9:00 a.m. to 2:00 p.m., Monday through Friday, in sync with those of most schools.

• MATCH partners are already considering using the program’s New Haven facility as a training site for day care providers, to help alleviate the shortage of workers in that sector.
• In addition, the program’s first cohort of students came from the New Haven project, one of several local initiatives with which the organization has ongoing relationships.

What’s next: MATCH is on track to be financially self-sustaining in three to five years—and LaFemina predicts big growth after that.

• “I see multiple MATCHes down the road,” she said. “There’s already a call for more. My biggest goal is in a few years all of us older people, who leveraged our connections to make this happen, will turn it over to a younger group that will turn it into something even better than it already is.”

The Environmental Protection Agency is considering a rule that would change the way power plants operate in America—but without significant adjustments, it could have devastating consequences.

The background: Right now, about 60% of America’s power generation comes from a combination of coal and natural gas.

• The EPA’s proposed rule would require coal and natural gas–fired power plants to deploy either carbon capture technology or hydrogen power within 10 years to lower emissions.
• If unable to deploy these technologies at the scale required in that timeframe, these power plants would be forced to shut down.

The problem: While carbon capture and hydrogen power technologies are vital to decarbonization, the required scale and timeline make implementing this rule difficult.

• “Carbon capture and hydrogen are tremendously promising—and manufacturers are leading the way in developing these technologies. But neither have been deployed at the scale needed to support 60% of our entire power generation within a short timeframe,” said 51�Թ��� Vice President of Domestic Policy Brandon Farris.

The timeline: The EPA’s proposed 10-year timeline leaves little room for flexibility when it comes to implementing the order. According to Farris, environmental impact studies alone could take more than four years.

• “We’re talking about 10 years to essentially retrofit more than half of our power generation,” said Farris. “You would need this permitted, installed and operational within those 10 years, which would be difficult even if the technology was available today at scale.”

The impact: The rule would require plants that do not meet the new standard in 10 years to shut down entirely. As a result, many plants would have to shift resources immediately to plan for a likely shutdown.

• “The big hammer is these plants having to shut down in 10 years if these technologies are not installed,” said Farris.
• “So you’ll see a lot of money spent and not a lot of progress made because this technology isn’t ready at scale, and we have only a few years to permit, install and operate.”

The next steps: The 51�Թ��� has submitted on the rule, and the EPA is working on a final version now.

• “We’ve emphasized that the timeline is not workable,” said Farris. “You would need to have a longer off-ramp and a way to ensure that the technologies required are proven at scale.”

The 51�Թ��� secured a critical win Monday when the Securities and Exchange Commission issued an order reversing course on a novel rule interpretation that would have forced private companies to disclose proprietary financial information publicly, (subscription) reports.

What’s going on: In 2021, the SEC adopted a novel reinterpretation of SEC Rule 15c2-11, imposing the rule’s public disclosure requirements on private companies that raise capital via corporate bond issuances under SEC Rule 144A—without giving manufacturers the opportunity to provide comment on the damaging impacts of such a consequential change.

• The 51�Թ��� and the Kentucky Association of Manufacturers pursued multipronged litigation and advocacy efforts arguing to the Commission and to the courts that the SEC’s actions were both procedurally improper and substantively indefensible.
• Rule 15c2-11 requires public disclosures for the protection of everyday investors in publicly traded companies that issue so-called “penny stocks.”
• But in 2020, the SEC expanded the rule to apply to privately held companies issuing corporate bonds to large institutional investors under Rule 144A.
• For decades prior, Rule 144A permitted trades in private companies’ fixed-incomes securities without public disclosure of the issuers’ financial information. Indeed, the SEC’s entire purpose for adopting Rule 144A was to allow companies to access the debt markets without public disclosure of their financial and business-strategy information.

51�Թ��� in the news: The SEC took the rare step of reversing its position on Monday, that “it is appropriate in the public interest and consistent with the protection of investors” to exempt Rule 144A fixed-income securities from the requirements of Rule 15c2-11.

• “The order comes after industry groups petitioned the agency to provide relief to certain corporate debt issuers. The 51�Թ��� and the Kentucky Association of Manufacturers, which sought such relief in November 2022, also sued the agency in September, arguing that the SEC’s policy was enacted without public input and could harm job-creation efforts, given how many private companies rely on 144A bonds,” Law360 reports.
• (subscription) also covered the news.

Why it’s important: Expansion of Rule 15c2-11 would have meant higher borrowing costs and less liquidity in the market—and resulted in more than 100,000 job losses a year, according to recent prepared on behalf of the 51�Թ���.

Our take: The SEC’s action not only restores private companies’ ability to access the debt markets, but also exemplifies why the 51�Թ��� litigates—as a last line of defense, to force an agency’s hand.

• “This order from the SEC is a landmark victory for manufacturers and a powerful affirmation of the 51�Թ��� Legal Center’s ability to rein in regulatory overreach,” 51�Թ��� Chief Legal Officer Linda Kelly Tuesday. “We are thrilled that the Commission has reversed course on this unlawful attempt to impose a novel, onerous and wholly unjustified regulatory mandate on private companies.”
• Added KAM President and CEO Frank Jemley: “We applaud the SEC’s decision to withdraw its ill-conceived proposal. American business and free enterprise are best served when government respects the boundaries of its authority, which the SEC clearly did not do in this matter.”

For two decades, the Manufacturing Leadership Awards have recognized outstanding manufacturing companies and their leaders for their groundbreaking use of advanced manufacturing technology. What started out in 2005 as a modest 50-person gathering in New Orleans has evolved into one of the industry’s most exciting celebrations.

This past June, the honored an impressive 163 projects and leaders, in front of an electrified crowd of 450 guests. The program’s growth is a testament to the momentum of technologies and their success in creating performance improvements and boosting competitiveness.

With more manufacturers adopting digital and data-driven methods every day, there is still much to celebrate. The program’s 20th season is now , with expectations running high for another amazing show in 2024.��

A proud heritage: Past winners from the Manufacturing Leadership Awards include companies and leaders from nearly every industry, from 10-person shops to multinational enterprises, located all around the world.

• Each entry is reviewed by a judging panel made up of industry experts with extensive experience in technology transformation. The top-scoring projects are selected as category finalists, and the category winners are revealed at the awards gala.
• Finalists and winners report that the awards have helped them gain new customers, boosted employee morale and team camaraderie and encouraged their executive leadership to continue investing in digital technology initiatives.
• Since the program’s inception, more than 1,000 leaders and projects have been honored for their achievements.

A wide range of candidates: The awards program welcomes submissions from small and medium-sized enterprises, as judges look for the overall level of impact that projects have had on a company’s operations—not the dollar amount of their investments.

• If technology has measurably helped a company improve its operational performance, upskill employees or enter new business markets, those projects are excellent candidates for award nominations.

The categories: Over the years, the awards have encompassed an evolving list of categories, currently at .

• Project categories include AI and Machine Learning, Collaborative Ecosystems, Digital Network Connectivity, Digital Supply Chains, Engineering and Production Leadership, Enterprise Integration and Technology, Operational Excellence, Sustainability and the Circular Economy, and Transformational Business Cultures.
• Individual categories include Digital Transformation Leadership, for established manufacturing operations executives who lead Manufacturing 4.0 initiatives, and Next-Generation Leadership, for up-and-coming operations leaders aged 30 or younger.

Get involved: All manufacturers in any location and of any organizational size are eligible and encouraged to apply. Program details, rules and instructions for how to submit a nomination are available on the . Entries are due Jan. 17, 2024.

Permanent restoration of R&D expensing is a top priority for manufacturers in Minnesota and the U.S. in general. That’s why Rep. Pete Stauber (R-MN) plans to sign onto the American Innovation and R&D Competitiveness Act as a cosponsor, he recently told the 51�Թ���.

What’s going on: Rep. Stauber discussed the importance of competitive R&D tax policy, along with the regulatory onslaught targeting manufacturers and the need for permitting reform, during a recent 51�Թ���-organized facility tour of Clow Stamping Co. in Merrifield, Minnesota.

• “Full expensing for R&D costs in the year in which they are incurred is essential for innovation and competition,” Rep. Stauber told the group, which included Pequot Tool & Manufacturing CEO Karlo Goerges in addition to 51�Թ��� representatives and Clow Stamping leadership. “It’s imperative that it be reinstated as soon as possible.”
• The American Innovation and R&D Competitiveness Act would restore immediate R&D expensing permanently for small businesses.
• “Full R&D expensing was instrumental in our growth until the law changed last year,” said Clow Stamping owner Reg Clow. “It’s definitely having an impact on us. Our expenses have gone way up.”

Workforce woes: Clow is nearing the end of a $20 million facility expansion that will add 107,000 square feet of floor space and at least 60 jobs—but finding enough workers to fill those jobs won’t be easy.

• By implementing automation in its shipping and receiving departments, the company will be able to both increase its shipping output without additional workers and channel its current hiring efforts toward filling open positions with the production departments, Clow said.
• This is a short-term solution, however, and manufacturers like Clow Stamping need policymakers’ help to ensure the industry has enough skilled workers for the decades to come.
• During the facility visit, the group discussed the importance of educating younger generations about the many opportunities available in manufacturing, via initiatives like . This award-winning perception campaign undertaken by the 51�Թ��� and its 501(c)3 workforce development and education affiliate, the Manufacturing Institute, aims to recruit 600,000 new manufacturing workers by 2025.

The last word: “Manufacturers account for more than 55% of all private-sector R&D spending in the United States,” said 51�Թ��� Managing Vice President of Policy Chris Netram.

• “Policies that encourage this innovation will allow the industry to continue to drive our economy forward. The 51�Թ��� thanks Rep. Stauber for his support of the American Innovation and R&D Competitiveness Act and calls on Congress to swiftly pass this bill.”

Last week, Saint Paul College in St. Paul, Minnesota, which boasts a student body that is 65% people of color, became the 19th stop of 20 for the Creators Wanted Tour, a joint project of the 51�Թ��� and the Manufacturing Institute, the workforce development and education affiliate of the 51�Թ���.

Over three days, with Union Pacific as the lead sponsor, the stop drew more than 600 visitors, from students to educators. Meanwhile, 42,000 online signups in Minnesota helped the campaign surpass 1.5 million nationwide from students and career mentors interested in modern manufacturing careers.

Twin Cities kickoff: Union Pacific Executive Vice President of Marketing and Sales Kenny Rocker gave the keynote address at the , emphasizing the reward of manufacturing careers. He was joined by MI President and Executive Director Carolyn Lee, Saint Paul College President Dr. Dee Dee Peaslee, Minnesota Chamber of Commerce President and CEO Doug Loon and Trane Technologies Vice President of Product Management Dave Molin.

• “When I talk about opportunities, I’m talking about really good-paying jobs … At Union Pacific, we’re talking jobs that are … averaging over $100,000 a year, and that’s without benefits, and so you just really have an opportunity to make an impact from that perspective,” said Rocker.

• “At Trane Technologies, our vision is to boldly challenge what’s possible for a sustainable world,” added Molin. “It is the engine of our company, and we live it every day. And to do that, we need bright minds and the best minds in the world. We need diverse thinkers, we need creators, and our doors are open to everyone.”

• Notably, leaders from key government business and workforce partner organizations attended the kickoff, including the Minnesota State Advanced Manufacturing Center of Excellence, Minnesota Black Chamber of Commerce, Minnesota Parent Union and St. Paul Area Chamber, representatives from the offices of U.S. Reps. Brad Finstad (R-MN-1), Angie Craig (D-MN-2), Dean Phillips (D-MN-3), Betty McCollum (D-MN-4) and Michelle Fischbach (R-MN-7), Mayor of South St. Paul Jimmy Francis and State Reps. Jon Koznick (R), Emma Greenman (D) and Samantha Sencer-Mura (D).

Experience and exploration: Students delved deep into immersive activities, from solving manufacturing-related puzzles in the Creators Wanted mobile experience to virtually navigating a locomotive through Union Pacific’s simulators. Equally captivating was the sight of the actual railroad track, which was complemented by insightful career anecdotes from Union Pacific professionals.

• Eighty-seven percent of students surveyed reported a significantly improved view of modern manufacturing careers after completing the immersive experience.

Live Q&A sessions: The stop also offered structured opportunities for students to learn about manufacturing organizations’ support for the next generation of talent, along with the importance of mentorship and personal development in shaping successful careers.

• The , featuring two Union Pacific senior managers—Amy Bang, Sr. manager of diversity and inclusion, and Ken Kuwamura, Jr., manager of talent acquisition—and Saint Paul College instructors, zeroed in on the crucial roles of mentorship, diversity and .
• The , with Jake Yernberg, automotive instructor, Saint Paul College; Caitlin Bundy, manager of corporate sustainability, Union Pacific; and Preeti Subramanian, senior product manager, Trane Technologies, accentuated the pivotal role of manufacturing in tackling global challenges. Panelists pointed out the advantages of the manufacturing sector, citing competitive pay and the sector’s potential in , such as sustainability and climate change.

Interactive Learning: Everfi^®, Ecolab and Schwan’s joined Union Pacific in bringing in representatives to give students career advice—and offer activities to spark their curiosity.

• Everfi^® showcased a new digital education program, “Future Creators,” co-developed with the MI and Union Pacific, to give middle and high school students a peek into STEM careers.
• Saint Paul College also took students on a tour of its robust Trades and Technical Education program.

Beyond the Tour: The Twin Cities event is a part of Union Pacific’s overarching initiative, which aims to inspire more women and youth to pursue modern industrial careers, and the sustained drive to enhance perceptions of manufacturing careers in the United States and empower more people to create the future.

The last word: “I want all of you out here, the students, to have an opportunity to go out there and win and compete and further your careers and do well in life,” said Rocker, echoing a theme the Creators Wanted Tour has promoted since its inception: manufacturers and manufacturing care about students and their future.��

Next up: The pioneering Creators Wanted Tour concludes next month, Oct. 17–21, at the in Circleville, Ohio.��

To restore a U.S. tax landscape that promotes manufacturing competitiveness, Congress should act quickly in advancing bicameral, bipartisan legislation that would ensure the tax code once again supports innovation.

That was the message from the 51�Թ��� and several manufacturers to lawmakers last week.

What’s going on: The 51�Թ��� and company leadership from manufacturers Westminster Tool and Brewer Science visited Capitol Hill last week to brief legislators on a harmful change to the tax treatment of research and development.

• The briefing was held by the 51�Թ���-led R&D Coalition in cooperation with the offices of Reps. John Larson (D-CT) and Ron Estes (R-KS) and Sens. Maggie Hassan (D-NH) and Todd Young (R-IN).
• Larson and Estes introduced the American Innovation and R&D Competitiveness Act in the House, while Sens. Hassan and Young introduced the American Innovation and Jobs Act in the Senate. These are the measures manufacturers are urging legislators to pass.

Why it matters: “We paid $26,679 per full-time employee in additional federal tax this past year” because of the change, Westminster Tool Chief Financial Officer Colby Coombs told lawmakers at the briefing.

• “This increased federal tax on R&D forced us to cancel a major aviation contract that would have added … new jobs in our community and forgo a significant capital investment. Without fixing this issue, in 2023, we expect an additional tax bill of almost $18,000 per employee,” he continued.
• Added Brewer Science Government Programs Director Doyle Edwards: “We have lost IP to China in the past, and fight[ing] that in the courts is a no-win situation. So the only way to win is to out-invent them. And that’s what we invest our money to do. However, with [the tax change] … we’re allowing China to actually catch up.”

The background: For nearly seven decades, manufacturers could deduct their R&D expenses fully in the year in which the costs were incurred. However, since the change last year, businesses must instead deduct these expenses over a period of years, making R&D more costly.��

Legislative fix: To protect manufacturers’ R&D, jobs and competitiveness, Congress should move immediately on bipartisan legislation to restore R&D expensing.

• “R&D is the lifeblood of advanced technology development for our company, for our industry, but really for the nation,” Edwards continued. “And so our message is, we need your help. We need your leadership to resolve this policy issue.”

Take action: Learn more about what the 51�Թ��� is doing to advocate for sound tax policy at our R&D action center.