India Makes Manufacturing Gains to Participate in a Global Economy

John Mitchell, IPC president and CEO, discusses the state of the manufacturing industry in India.

Department of Labor Releases RFI to Seek Information on Overtime Regulations

By Ken Schramko, government relations director

This week, the Department of Labor (DOL) released a Request for Information (RFI) to gather additional feedback from the public on the overtime regulations, which define and delimit exemptions from the Fair Labor Standards Act’s minimum wage and overtime requirements for certain executive, administrative, professional, outside sales and other employees.

The rule, released under the Obama Administration, would have doubled to $47,000 the maximum salary a worker can earn and still be eligible for mandatory overtime pay under federal wage law, and was supposed to take effect in December 2016. However, it was blocked by a judge and a group of 21 states and business groups challenged the rule in a lawsuit filed last year.

The RFI includes questions about the role the duties test plays with respect to the salary threshold, what is the proper methodology, and whether there should be multiple salary levels to reflect different regional economies, sizes of employers, and exemptions.

From the initial release of the overtime rule, IPC had serious concerns with it. These included:

1. Compression on Other Exempt Classifications
The impact of the overtime rule will affect many of our members’ broader employee population as compliance will force compression on other exempt classifications. In other words, companies will need to raise the wages for many others as a result to preserve differentiation in compensation. This will have a significant impact on overall cost structure and international competitiveness as our members compete globally and are under constant pressure to lower costs.

2. Flexible and Unusual Work Hours
Many employees in our industry with exempt classifications work unusual hours due to the global nature of our industry. Employees willingly work these hours on behalf of the company and their own future careers. These are not “clockable” hours, which of course, leads to the reason for their exempt classification. Furthermore, the exempt classification provides employees with greater flexibility over their schedules. Rather than creating jobs, the new rule will very likely trigger a review of the mid-range jobs and if companies are better suited to limit the salaried exempt positions in lieu of hourly, and unfortunately will limit the career opportunities for many.

3. Regional Differences
Another major issue with the new rule is that it does not take into account the regional differences. Many of our members generally work with consistent salary classifications across the company, but focus on maintaining salary competitiveness in the local area of their facilities. The blanket approach by the DOL does not take these regional differences into account and neglects differentials to pay a locally competitive wage/salary.

IPC believes that the DOL effort to address job classification and overtime was well-intended, but it failed to consider the vast differences across the nation as the final rule takes a “one-size-fits-all” approach that will put significant economic strain on businesses.

IPC encourages its members who have concerns or issues with the overtime rule to review the RFI and submit comments to DOL. IPC is a member of the Partnership to Protect Workplace Opportunity (PPWO) coalition, which is dedicated to advocating for the interests of its members in the regulatory debate on changes to the Fair Labor Standards Act (FLSA) overtime regulations. PPWO will submit comments to DOL regarding the RFI and IPC plans to be a signatory with other members of the coalition. The RFI is available here and the comment period ends on September 25, 2017.

IPC Welcomes Executive Order on Strengthening the U.S. Defense Industrial Base

By Ken Schramko, government relations director

Last Friday, President Trump signed an executive order on “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.”

According to Nextgov, Peter Navarro, Deputy Assistant to the President and Director of the White House Office of Trade and Manufacturing Policy (OTMP), said the order will determine whether there are enough U.S. manufacturers to supply “everything from submarine propeller blades to circuit boards and military-grade semiconductors,” and whether there are enough skilled workers to work in the field.

In a press conference, Navarro explained Trump’s executive order will launch a cross-government study to find “points of failure” that government policies can address. By next April, the heads of various departments including Homeland Security, Commerce, and Labor must issue a report on the health of the defense industrial base.

Because electronics are at the heart of so many of today’s critical defense systems, IPC has long been engaged in policy discussions of how to ensure an adequate defense industrial base.

During the recent IMPACT Washington, D.C. 2017, IPC’s annual advocacy week in Washington, D.C., member company executives discussed this subject with Alexander Gray, Deputy Director of OTMP for the Defense Industrial Base; and Robert Irie of the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics.

And during IPC APEX EXPO APEX 2017, IPC’s annual conference and exhibition last February, IPC members were briefed on an ongoing study being done by the Department of Commerce on the health of the domestic printed circuit board industry.

IPC welcomes these efforts to understand the role that electronics manufacturing plays in U.S. and international security, and we will continue to be actively engaged in this issue.

EU Governments Reach Agreement on Spare Parts Under RoHS

On 21 June, the European Commission, the European Parliament and Council agreed on proposed amendments to the RoHS Directive. These amendments will permit secondary market operations, such as reselling of electrical and electronic equipment (EEE) and spare parts containing prohibited substances beyond the current 2019 deadline, in order to promote a circular economy by facilitating the reuse and recycling of spare parts.

Both the Council and the European Parliament are in favor of the Commission’s approach not to widen the scope of the revision and to leave, as scheduled, the general review of the Directive for 2021. The European Parliament and the Council of Ministers are expected to formally vote on the proposed changes at the plenary session from 2-5 October.

IPC will continue to monitor this issue and will post updates as they become available.

H-1B Visas Enable Some Manufacturers to Recruit Needed Talent

by Sharon Starr, IPC market research director

As concerns about the U.S. skills gap and the debate over U.S. immigration policy continue, it is worth considering how these two issues are linked. The availability of H-1B visas is one way the government helps to ease the skills gap, especially as it relates to filling engineering and other technical professional positions in the electronics industry.

IPC’s recent study, Findings on the Skills Gap in U.S. Electronics Manufacturing, asked manufacturers about the impact of H-1B visas on their businesses. It found that a potential reduction in the availability of H-1B visas is not a concern for most of the surveyed companies. However, 28 percent believe a reduction in H-1B visa availability would make recruiting and retention harder and would be an obstacle to growth, in some cases handicapping their businesses.

 

California Publishes Q&A on New Prop 65 Warning Requirements

Last week, the California Office of Environmental Health Hazard Assessment (OEHHA) posted a new question and answer document on the new Proposition 65 Clear and Reasonable Warning regulations announced last year. The final rule, announced by OEHHA on September 2, 2016, will be effective on August 30, 2018.

The new rules include requirements for what constitutes a clear and reasonable warning under Proposition 65 and clarifies the warning responsibilities of retailers and manufacturers of consumer products. The new rules require that warning labels, for the first time, identify specific chemicals to which the consumer may be exposed.

IPC supports OSHA Proposal to Delay Reporting of Injury Tracking

Last week, IPC, along with 60 other organizations, submitted comments supporting an Occupational Safety and Health (OSHA) proposed rule to delay the compliance date for the reporting requirement under the final Improve Tracking of Workplace Injuries and Illnesses Regulation issued May 12, 2016.

The comments welcome OSHA’s proposal to delay the reporting requirement under the final regulation as a necessary first step to a more substantial revision or rescission of that regulation. The comments further encourage OSHA to stay the reporting requirement indefinitely while the administration reviews the regulation.

OSHA proposed the delay in the deadline for submission of 2016 Form 300A data in order to provide the new administration an opportunity to review the new electronic reporting requirements prior to their implementation and allow affected entities sufficient time to familiarize themselves with the electronic reporting system, which will not be available until August 1, 2017.

IPC opposed this regulation when it was proposed in November 2013, and when the supplemental rule was proposed in August 2014. Among our criticisms is that OSHA provided no evidentiary support for their assertion of benefits flowing from the regulation and the reporting requirement.

 

Court Strikes Down Part of the 2015 DSW Rule

Last week, in a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit struck down parts of the 2015 U.S. Environmental Protection Agency (EPA) Definition of Solid Waste (DSW) rule. IPC opposed the 2015 rule because it inappropriately regulates secondary materials that have been sent for recycling as hazardous wastes.

EPA’s original Definition of Solid Waste Rule, finalized in 2008, had the potential to provide regulatory relief by providing two conditional exclusions for secondary materials when recycled according to certain conditions. The EPA’s 2015 revisions undercut the 2008 rule by introducing many onerous and unnecessary requirements.

The court vacated the fourth factor of the “legitimacy test” codified in the 2015 rule, which would have required that the product of the recycling process be comparable to a legitimate product unless a recycler can show its product is legitimate by documenting that any incremental risk it presents is not significant to health and the environment.

The court also vacated significant parts of the 2015 Verified Recycler Exclusion which excludes reclamation of materials transferred to and reclaimed by a third-party from the definition of solid waste only if the third-party reclaimer possesses a Resource Conservation and Recovery Act (RCRA) permit (or interim status) or a RCRA variance. Instead, the court reinstated the Transfer-Based Exclusion contained in the 2008 rule, which allows for transfer of hazardous secondary materials to third parties so long as “reasonable efforts” are made to ensure that the materials will be properly handled.

The D.C. Circuit’s decision is just one step toward vacating the requirements of the 2015 rule. In states where EPA has delegated the RCRA program, the states had adopted laws implementing the 2015 DSW rule in order to comply with the requirement that their laws be no less stringent, than the federal requirements. These states may now remove or rescind the state laws, but because authorized states are allowed to have more stringent requirements than EPA, the D.C. Circuit’s decision will not automatically change the state laws.

The IPC Environmental, Health and Safety Committee will review the Court Decision and discuss additional advocacy efforts.

The “Skills Gap” – Meet People Where They Are!

By Julie Desisto, IPC government relations coordinator

A perennial concern in the U.S. electronics manufacturing industry is the lack of skilled talent in many parts of the country. According to a recent IPC member survey, most companies have a hard time recruiting qualified production workers, engineers, and other technical professionals.

In Washington, D.C. this week, the Manufacturing Institute hosted a symposium called “Manufacturing Workforce 4.0,” which focused on the skills gap facing the advanced manufacturing sector and ways the public and private sector can tackle the issue.

Wes Bush, the chairman, CEO, and president of Northrop Grumman, said the core challenges are the same whether a company has 50,000 employees or just 50, but every company has unique strengths and resources to apply to the solution.

Among the challenges cited by a variety of speakers were:

• A perception that manufacturing jobs are low-skilled, low-paid, “dirty,” and disrespected, when in fact the reality is quite different in today’s advanced manufacturing facilities;

• The role of influencers such as parents, teachers, and school counselors who may steer youth away from manufacturing jobs and toward four-year college degrees;

• Appealing to members of the “millennial” generation, who have had the least exposure to today’s manufacturing realities but are most needed to offset the retirements of “baby boomers”;

• The constant challenge of retaining good employees;

• The “brain drain” that occurs when foreign-born students attend U.S. schools but cannot get visas or green cards to stay in the United States and are forced to return to their home countries; and

• Measures of performance of local public schools, which may be rated more highly for sending graduates to college than to technical schools and apprenticeships.

Conference participants generally agreed that all stakeholders must play a more active role, including businesses; universities and school systems; and government at all levels. And lasting change require more than public policy changes; companies can accomplish a great deal by taking a hands-on approach in their own spheres of influence.

Some of the solutions that were discussed were:

• To take on the skills gap directly. Companies can build partnerships between themselves and local educational institutions. For example, some companies offer “employee teach” sessions during evening and weekend hours – either at the company facility or in a local educational institution – where existing employees can share their knowledge and prospective employees can learn about a company and the skills required to work there.

• Some companies work with local faculty to develop the curriculum to teach needed skills, and some companies bring local teachers into their manufacturing facilities to help them refresh their knowledge during the summer months.

• Or take a look at your soon-to-be retirees, and think about structured ways they can pass along the knowledge they have accumulated over years on the job. This is a great way to build out an internship or apprenticeship program.

In all of these cases, the goal is to build relationships in the local community and engage educators and the community in building up locally needed skills.

To attack the problem of negative perceptions, companies can help educate local parents, teachers, and counselors that today’s manufacturing jobs offer challenging, rewarding, “clean” work, in a variety of creative and cutting-edge endeavors, with above average pay and benefits. Moreover, by taking advantage of the growing array of paid training and apprenticeship programs, students can embark on a promising career free of college debt.

Companies also can foster a two-way dialogue by asking their younger employees to act as “ambassadors” to other millennials in the community. Hiring managers can make great ambassadors to parents and school faculty.

Companies also can offer presentations and demonstrations inside the classroom; by offering in-person and virtual plant tours; and by engaging actively on social media platforms.

The annual observance of Manufacturing Day (MFG DAY), which takes place this year on October 6, offers a special opportunity to engage your local community on the skills gap. Supported by a group of industry sponsors including IPC, MFG DAY encourages companies to open their doors to show the public what manufacturing really is. Last year, more than 400,000 people attended 1,700 events across the country, and we are looking to make a bigger impact this year!

Just visit www.MFGDAY.com to learn how your company can get involved; or contact me at JulieDesisto@ipc.org or +1 202-661-8093 if you have any questions, or to let us know what you’re planning.

Also, don’t forget that IPC is a resource to you and a principal provider of education and training opportunities for the electronics industry. Specifically, we offer dozens of courses per year to train workers on industry standards, and we established IPC EDGE, an online education and training platform, to take those courses even further out into the world. For more information about IPC and our own workforce development initiative, visit our website at EDGE.IPC.ORG.

Finally, as part of its government relations program, IPC advocates for ambitious public policies to address the skills gap. For example, IPC supports the bipartisan Strengthening Career and Technical Education for the 21st Century Act, H.R. 2353, which is making its way through Congress and would provide federal support for career education programs. We are also engaged in an ongoing dialogue with the Trump administration to explore how we can support their apprenticeship and workforce development initiatives.

We are interested in learning what is your company doing to address the skills gap. Or what would you like to do if you could partner with others and get someone to help? Please let us know, and we’ll do our best to support and help publicize your efforts.

 

SEC Chair Jay Clayton Voices Support for Disclosure Reform; Could Include Conflict Minerals

According to a Reuters article, the new Chairman of the U.S. Securities and Exchange Commission (SEC), Jay Clayton indicated his support for reducing disclosure rules during a July 12, 2017 speech to the Economic Club of New York.

During the speech, Clayton laid out his regulatory philosophy and said the SEC staff was working to prepare proposals aimed at reforming the rules on disclosure. While he did not specify which regulations he would seek to reform, he did observe that lawmakers and regulators have “significantly expanded the scope of required disclosures beyond the core concept of materiality.”

Conflict minerals regulations, on which the SEC sought comments earlier this year, could be considered to fall within that description.

IPC filed comments on conflict minerals reform, and will continue to advocate for its members on this issue.