Managing Automation - August 2008 - (Page 35)

must define a comprehensive strategy that will ensure energy security and sustainability. Unfortunately, the topic has not so far taken center stage in the presidential campaign rhetoric. But now that the race has narrowed, the two nominees are shaping their energy messages. Sen. John McCain focuses on expanding domestic oil drilling on the outer continental shelf (OCS), while Sen. Barack Obama advocates investing heavily in developing renewable energy sources (see sidebar, p. 36). Both political parties appear to understand that an energy crisis has serious implications for manufacturers, which must raise prices to absorb their costs and, in many cases, send production —and jobs — offshore. Manufacturers, lobbyists, and industry experts agree that something must be done to lower the cost of doing business, regain a competitive foothold, and create more jobs in this country. First, however, the industry wants clarity on policies and, second, it wants assurances that any policy put into place will allow businesses to operate freely and profitably. Manufacturers responding to a recent Managing Automation/Thomas Publishing reader poll on U.S. industrial competitiveness expressed concern that too many regulations might create yet another obstacle to overcome. For example, of the more than 2,000 survey respondents, about 49% said they would like to see a reduction in regulations in order to ease the burden on industry. That same mind-set may be applied to energy issues. “Legislation is inevitable,” says Paul Hamilton, energy efficiency program vice president at Schneider Electric. “Now we just have to manage what that legislation is, and we have to manage it to be sensible so we can get policies we can implement and that don’t hurt business.” Everyone seems to agree it’s time to find alternative sources of energy — be they drilling offshore for oil, building nuclear plants, or turning to biofuels. “We have to reduce our reliance on foreign oil and tap into our own abundant resources in the U.S.,” says Laura Narvaiz, spokeswoman for the National Association of Manufacturers. “It is the only legitimate long-term strategy to deal with the energy crisis.” But, as she says, that is a long-term goal. For example, NAM strongly recommends expanding nuclear power generation, which is a clean, affordable energy resource that doesn’t emit greenhouse gas, Narvaiz says. But a nuclear plant can take seven to 12 years to get up and running. What manufacturers recommend most highly to the next administration is shortterm relief in the form of tax credits. Specifically, Congress allowed the R&D tax credit to expire in December 2007, removing an important incentive to spur research and fund wages for highly skilled employees. “Today, the way it is structured, you don’t have the incentives to make the investments, whether you are a utility company or a corporate user of energy,” says Craig Giffi, chairman of the Global Manufacturing Industry Practice of Deloitte Touche Tohmatsu. “The general consensus is that something has to be done to create incentives that will move us from yesterday’s technology to tomorrow’s technology, and that is inhibited by the current tax code.” The industry also needs metrics for measuring energy usage and carbon footprint. “Until there is a benchmark in the mainstream and we have data so that companies can compare themselves, once again, it’s hard to take action,” Giffi says. These things will happen outside of an energy policy, of course, “but we think it is critical for business leaders to put something on the table to say, ‘This is what we are going to do.’ ” “One thing to keep in mind is that saving energy is much like a Six Sigma process,” says Schneider Electric’s Hamilton. “It needs to be measured, audited, controlled, and improved.” Both presidential candidates suppor t a cap-and-trade system, similar to one adopted in Europe, allotting compaKEY RECOMMENDATIONS nies credits associated with carbon ● Lift the legislative ban on offshore drilling emissions. If a company finds innovaon the outer continental shelf. tive ways to reduce its emissions, it ● Extend the R&D credit, which Congress can sell its extra credits. But before allowed to expire on Dec. 31, 2007, to such as system is installed, there needs expedite development of advanced energy to be a way to measure emissions. and fuel technologies. “The caveat is that you don’t get ● Encourage each industry to create a credit for closing factories and movbenchmark for measuring a company’s energy footprint and carbon footprint. ing to China,” says John Nesi, vice ● Expand nuclear power generation in the president of market development at United States. Rockwell Automation. “There has to ● Streamline the site and permit process of be improvements in emissions. Peonew and expanded domestic refineries. ple ought to anticipate how they will ● Coordinate state, regional, and federal track and account for their emissions.” policies. This is where manufacturers need ● Devote more resources to K-12 educato take a leading role, Nesi says. And tion to encourage students to enter the some companies have started to do energy field and provide employers a way so. For example, the Council on Comto invest in the workforce, such as offering on-the-job training to build new skill sets. petitiveness, a non-partisan, non-government organization comprising 35 August 2008

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Managing Automation - August 2008 Contents Take 1 After 18 Months, the Oracle/SAP Suit Has Little Effect on Maintenance Sales At 100, Foxboro Reinvents Around Its Customers New Private Equity Firm Eyes Software A Software Suite Just for Manufacturers i2 Chief Focuses on Services Plan Notes It's Time for Action Examining U.S. Competitveness Leveling the Field An Unhealthy Situation Exploring Alternatives Math and Science: Key to the Future Product Scan Advertiser Index Next

Managing Automation - August 2008

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