thumbnail group

Connect With Us:

Manufacturing Engineering Media eNewsletters

ME Channels / Newsdesk
Share this

NewsDesk: Production Tax Credit Extended

 

The renewable energy industry kicked off the New Year with celebration after Congress passed the American Taxpayer Relief Act of 2012 in the first days of 2013. The law averted a fiscal cliff of automatic spending cuts and extended the popular tax credits.

The federal renewable electricity production tax credit (PTC) is a per-kilowatt-hour tax credit for electricity generated by qualified energy resources. While wind and ethanol producers are the big winners, the PTC also covers other power sources such as types of landfill gas, biomass, hydroelectric, geothermal electric, municipal solid waste and others.

The green energy sector has been clamoring for more stability in its support from policymakers, after being whipsawed by the PTC since it was enacted in 1992. The PTC has been allowed to expire multiple times, including in 1999, 2001 and 2003. While it has always been reinstated for one- or two-year terms, the off years typically cause industry jobs and investment to plummet. It has also caused manufacturers to treat this area with caution.

The PTC was most recently renewed by the American Recovery and Reinvestment Act of 2009.

Keeping the PTC alive has also been increasingly important, experts have said, because the oil and gas boom in North America has been driving down energy prices and the incentive to develop renewable sources of energy.

The extension was heralded by those working to develop renewable energy sources.

Production Tax Credit Extended

"America’s 75,000 workers in wind energy are celebrating," the American Wind Energy Association (AWEA) said in a statement issued Jan. 1. "The extension ... will allow continued growth of the energy source that installed the most new electrical generating capacity in America last year, with factories or wind farms in all 50 states." AWEA said that as many as 37,000 jobs were in immediate jeopardy if the PTC was not renewed.

The American Council On Renewable Energy (ACORE) added that the extension gave the market more certainty. It further complimented language in the law that allows renewable energy projects that "start construction" in 2013 to claim the PTC. ACORE said the change in deadline is critical to the wind industry, as well as the hydropower, geothermal, biomass and waste-to-energy industries as it takes into account the time required to complete projects.

And although the PTC extension was a significant accomplishment, ACORE said it believes there is much left to be done in 2013 to ensure the renewable energy industry continues to drive declining costs, expand market opportunities, gain greater access to low cost capital, and obtain the opportunity to compete with all energy sources on a level playing field.

AWEA, for example, notes that "many subsidies for new, clean energy technologies are temporary, while many for older, polluting energy technologies are permanent."

While the PTC extension brought some relief to the sector, the threat of the expiration had already begun to have a chilling effect on the industry. It’s unclear whether its renewal will cause an immediate ramp up of demand. AWEA noted that layoffs had already begun, as companies idled factories because of a lack of orders for 2013.

Indeed, Siemens Energy Inc., which makes wind turbine blades and other equipment, laid off 615 workers in Iowa, Kansas, and Florida in September in part because Congress had not renewed the tax credit, the Associated Press reported. While it said the renewal of the PTC was a step in the right direction, many customers had ramped up wind farm projects in 2012 in case the PTC wasn’t extended. That could have eaten into demand for 2013.

With the race to build wind farms before the expiration of the PTC, wind set a new record in 2012 by installing 44% of all new electrical generating capacity in America, according to the Energy Information Administration, leading the electric sector compared with 30% for natural gas, and lesser amounts for coal and other sources. ME

  

Economic Outlook

The Institute for Supply Management (IMS; Tempe, AZ) on Jan. 2 reported that economic activity in the manufacturing sector expanded in December, following one month of contraction, and the overall economy grew for the 43rd consecutive month. The information is based on the latest Manufacturing ISM Report On Business, which surveys the nation’s supply executives.

Source: Institute for Supply Management

The PMI registered 50.7%, an increase of 1.2 percentage points from November’s reading of 49.5%, indicating expansion in manufacturing for only the third time in the last seven months. Readings below 50 indicate contraction, while those above 50 indicate expansion. This month’s PMI reading moved manufacturing off its low point for 2012 in November.

The New Orders Index remained at 50.3%, the same rate as in November. The Production Index registered 52.6%, a decrease of 1.1 percentage points. The Employment Index registered 52.7%, an increase of 4.3 percentage points, indicating a resumption of growth in employment following only one month of contraction since September 2009. Both the Exports and Imports Indexes registered 51.5%, returning both indexes to growth territory. ME

 

Mergers & Acquisitions

Deublin Company (Waukegan, IL ) on Dec. 1 acquired Barco Seals (Cary, IL). Both companies manufacture fluid power components used in a variety of equipment and process industries.

Founded in 1908, Barco developed swivels and ball joints for the railroad industry. Over the years, Barco developed and manufactured hundreds of rotating unions, plane and self-aligning swivel joints. Deublin was founded in 1945, and manufactures a broad range of precision components including rotating unions, steam joints and siphons, and electrical slip rings. Applications include machine tools, steel manufacturing, oil and gas exploration, paper and corrugating equipment, wind turbines, mining and more.

 

Partnerships

LUXeXceL Group B.V. (Goes, The Netherlands), manufacturer of optics for the LED lighting industry, has partnered with FX64 Software Solutions (Arzberg, Germany) for development of custom optics design tools to facilitate use of LUXeXceL’s patented Printoptical fabrication process. LUXeXceL manufactures optical solutions using their patented "Printoptical" 3D printing process which requires no use of molds, special tooling, or post processing.

 

Openings

Sandvik (Fair Lawn, NJ), a leading, global high technology engineering group, offering advanced products and services in cemented carbide and high speed steel cutting tools, materials technology, and mining and construction equipment; and its tooling division, Sandvik Coromant, the world’s leading producer of tools for the metal cutting industry, broke ground Dec. 3, on a location neighboring its current US headquarters in Fair Lawn, N.J. The new facility to be built there will serve as Sandvik’s U.S. head office and a hub for Sandvik Coromant’s Market Area Americas.

 

Expansions

Mazak Corp. (Florence, KY) in December announced its National Service Department and Training Department will move into the company’s expanded National Technology Center & Center for Multi-Tasking and Manufacturing Excellence in Florence, KY, effective Dec. 18. All customer training courses will be conducted in the new larger facility beginning the week of Jan. 7. The National Technology Center marks the second of three major expansions that will add significantly to Mazak’s Kentucky manufacturing campus, ultimately increasing its total floor space to 800,000 square feet and positioning it as one of the largest machine tool factories in the country.

 

Awards

For the second year in a row, the National Association for Business Resources (NABR) named Seco Tools (Troy, MI) one of the nation’s "Best and Brightest Companies to Work For."

Fanuc Corp. (Hoffman Estates, IL), the world’s most diversified manufacturer of CNC systems, robots and machine tools, has been named a top innovator by Forbes and Thomson Reuters in 2012.

 

Events

Registration is now open for EASTEC, the largest manufacturing exposition and conference in the Northeast, according to the Society of Manufacturing Engineers (SME; Dearborn, MI). EASTEC 2013 takes place May 14-16 at Eastern States Exposition in West Springfield, MA.

 

Anniversaries

In 2013, Mitutoyo America Corp. (Aurora, IL), the world’s largest provider of metrology solutions, will kick-off a year of celebration to commemorate 50 years of precision measuring success in America. Mitutoyo America was founded in New York City in 1963, as the first U.S. distributor of Mitutoyo Corp. of Japan products. In 1988, the company moved its headquarters to Aurora, IL, where Mitutoyo America continues to reside.

 

NewsDesk is edited by Editor-in-Chief Sarah A. Webster. Please email NewsDesk submissions to editorial@sme.org.

This article was first published in the February 2013 edition of Manufacturing Engineering magazine.  Click here for PDF


Published Date : 2/1/2013

Advanced Manufacturing Media - SME
U.S. Office  |  One SME Drive, Dearborn, MI 48128  |  Customer Care: 800.733.4763  |  313.425.3000
Canadian Office  |  7100 Woodbine Avenue, Suite 312, Markham, ON, L3R 5J2  888.322.7333
Tooling U  |   3615 Superior Avenue East, Building 44, 6th Floor, Cleveland, OH 44114  |  866.706.8665