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Hardwood Federation September 2019 Newsletter

From the Executive Director:  Despite Tough Times, the HF Fly-In Continues to Be Great

As a regular reader of the Hardwood Federation Newsletter, you know how important the Fly-In to Washington D.C. is to our efforts on behalf of the industry in our nation’s capital.  And you may have considered joining us. Last year was our most well attended Fly-In in HF history and this year we just did not know what to expect when preparing.  It is no secret that business is down and global economic conditions are affecting the whole industry.  However, the deep concerns surrounding the ongoing U.S. trade dispute with China within the industry seemed to have spurred on the need to act and we had one of the biggest participation totals in our history.

 

The Fly-In brought hardwood industry leaders from across the country to Washington to tell their stories and relate the industry’s message directly to the Members of Congress that draft and vote on legislation impacting their bottom line.  More importantly this year, we encouraged Congress to use their powers of persuasion to reach out to the Trump Administration on our behalf.  This year, 66 hardwood representatives attended events held from September 17th through the 19th.  Our participants were a great mix of knowledgeable Fly-In veterans and eager new faces.  Together we stormed the Hill in small groups and visited as many congressional offices as possible to make a real difference!

 

Participants attended almost 120 meetings with Members of Congress and staff.  In total our groups met with 35 Senate offices – over one third of the entire Senate – and almost a fifth of all Representatives…quite an impressive showing!

 

As in years past, the Hardwood Federation PAC sponsored social events for Republicans and Democrats during the Fly-in.  Twenty-two (22) Republican Members attended our Wednesday evening reception – and in a room with almost 70 industry folks the walls could barely hold us in! The next morning a record twenty (20) Democrats joined us for breakfast.  In total HFPAC contributed nearly $50,000 to deserving Members of Congress during the events.  These numbers, and the effort by Members of Congress to attend the events, continue to prove that Hardwood Federation and the HFPAC maintain a solid reputation and significant clout on Capitol Hill.  These events also provide us with an outstanding opportunity to reconnect with friends on the Hill and establish new relationships as this was the first Fly-In after the 2018 elections.

 

We also heard from two outstanding Members of Congress who completely tuned into our issues and are joined with us in efforts to provide relief to the industry while the trade dispute continues.  Congresswoman Ann Kuster (D-NH) spearheaded a letter to Secretary of Agriculture Sonny Perdue encouraging him to include hardwoods in agricultural relief efforts. She gave a terrific pep talk the night before our Hill meetings, focusing our energy for the long day ahead.  Congresswoman Jackie Walorski (R-IN) gave a fiery keynote to wrap up our Hill Day, encouraging continued action and sharing insight gleaned from her significant efforts communicating with the Administration, up to and including the President, on our behalf.

  

This year’s Fly-In was all about Trade.  Whereas we have covered as many as 5 issues in past years, in 2019 it was really all about China and the USMCA, with a little bit of Transportation and Biomass Carbon Neutrality in the mix.

 

Our message on trade was simple:  Trade is having a devastating impact on hardwood sawmills and we asked that the Trump Administration find a resolution as soon as possible. The hardwood industry relies on export markets for its survival and the ongoing trade dispute has caused sever market disruption and tremendous damage to hardwood companies up and down the supply chain, across the country.  Prior to the levying of the tariff’s in September 2018, China purchased 50% of U.S. grade lumber exports valuing out at approximately $2 billion.  Since the imposition of the tariffs and resulting counter-tariffs hardwood exports to China have decreased by 43% and the value of these exports has fallen by $615 million.  Our ask to offices and the Administration is that we find an end to the tariffs, but in the meantime include hardwoods in USDA financial relief packages that have been provided to other agricultural products so that we can survive until negotiations are concluded.

 

Regarding USMCA, Canada and Mexico are the second and fourth largest markets for U.S. hardwoods and the agreement would maintain open access for our products with strong language to combat illegal logging.  The timely passage of this agreement would be an excellent move in the right direction regarding Trade.

 

As was mentioned, Transportation and Biomass are also important issues that we don’t want to fall to the wayside with all of the attention on Trade and elsewhere.  Trucking is a major component for the hardwood industry, which is threatened by looming driver shortages and weight limits.  HF supports efforts to increase the safety and efficiency of the trucking system.  We are all for the Safe Routes Act (H.R. 2453/S. 1509) which allows trucks carrying raw forest products at the max gross vehicle weight on state roads to access the interstate highway system at the higher weights.   Many states have weight limits higher than the 80,000 pound limit for the interstate highway system.  Trucks must take small, two lane secondary roads to move logs from forest to mill.  We also are in support of programs to Establish a pilot allowing 91,000-pound rigs (up from 80,000 lbs) with six axles on interstate highways.  Existing truck weight pilots in Maine and Vermont demonstrate lower accident and fatality rates under this scenario.  With regards to Biomass, it is simply that a 2017 directive mandates that federal agencies recognize the carbon neutrality of wood based biomass and we support legislative action that will extend existing biomass carbon neutrality directive through 2020.

 

It cannot be emphasized enough how impactful personal stories of what the trade war is doing to your business, your employees and your state and local economy.  It is not too late to make some noise…call, write or tweet your Member of Congress and Administration officials…tell them what you are thinking in your own words.  Our Contact Congress outreach tool makes it easy….you may access it here: https://www.votervoice.net/THF/campaigns/68663/respond.

 

We hope everyone enjoyed their time on the Hill, learned something new, and came away with a new appreciation of how their engagement can make a difference on public policies made in Washington.  I encourage everyone reading this to join us for next year’s Fly-In so we can reach more offices, be even more effective, and set even more new records!  We hope you can join us!

 

Issues

Trade Update – Talks Resume and More Set for October

Following the US-China trade talk breakdowns of May/June 2019 the summer months were an extremely frustrating stretch of a devastating time.  However, there may be some glimmer of hope emerging as both the US and China have temporarily delayed the proposed tariff increases and re-started talks.  In the past few weeks there has been continued phone contact and a meeting of deputy level negotiators, which has moved the ball far enough down the field for another high level meeting of the principal negotiators on October 10th-11th in Washington  By all accounts there is still a long way to go, but this is more positive news than not talking and throwing barbs through the media for the past 3 months.

Additionally, the nine - democratic member House USMCA working group and USTR continue to try and come to an agreement on the proposed USMCA language that was announced almost a year ago.  Negotiations between they two factions are progressing with Dems laying out issues, which USTR responded to and now settle back into more detailed negotiations.  It has yet to be seen if the freshly announced Impeachment proceedings will throw enough of a wrench into the rest of the policy world that it will completely torpedo this bi-partisan effort.

Appropriations Update - Hardwoods Included in FY2020 Interior Appropriations Request

Just before Congress left town for a two week recess, the Senate Appropriations Committee unanimously approved a Fiscal Year 2020 Interior, Environment and Related Agencies appropriations bill.   Included in the committee report that accompanied the bill is the following language: 

The Committee urges the Department of Agriculture to include, domestic timber products on the list of agriculture commodities covered for tariff relief.

We were very pleased to see this directive in the committee report which was included at the request of Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV).  It is important to note that while this is very helpful in continuing our efforts to secure relief funding from the Administration, this language is NOT part of the official budget bill.  Rather it is a recommendation for the Administration to consider.  Report language is not, by a long shot, any guarantee for consideration.  But it is an important tool to add to our toolbox.

Biomass Update - Biomass Included in Senate FY20 Interior Bill

Also included within the FY 2020 Interior appropriations bill is a Hardwood Federation-supported provision that directs federal agencies to recognize the carbon neutrality of forest-based biomass energy in their regulatory policies.  This directive is already part of existing law thanks to successful advocacy the by the Hardwood Federation, our members and allied forestry and forest products groups.  However, since this provision was enacted in 2017 as part of an appropriations measure, it needs to be reauthorized each year. 

Last week’s development was a positive one, but there is more work to do on this issue.  The House Interior appropriations legislation does not include our provision which sets up a negotiation between House and Senate leaders at some point to reconcile the competing versions.   Our goal is to have the Senate’s version prevail in any final deal that is reached between the two chambers.  

Before Congress left town, they sent a Continuing Resolution to the President to fund the federal government past the September 30 end of the fiscal year and through November 21.  This will allow time for the Senate to continue work on the 12 FY 2020 appropriations measures.  If significant progress is not made on these bills, we may see a scenario in which Congress simply enacts a Continuing Resolutions into next year and possibly through September 2020.  If this scenario plays out, our biomass carbon neutrality directive would remain on the books as a CR simply extends existing government funding and all policies associated with it.   We will keep you apprised of our efforts on this critical issue.

IRS Depreciation Regs

On September 13, the Treasury Department and the Internal Revenue Service released final regulations and additional proposed regulations under section 168(k) of the Internal Revenue Code on the new 100% additional first year depreciation deduction that was authorized as part of the Tax Cuts and Jobs Act.  This provision allows businesses to write off most depreciable business assets in the year they are placed in service by the business.  Machinery, equipment, computers, appliances and furniture generally qualify.

The 100% additional first year depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property.

CLT – WV Division of Forestry Awarded Funds for Certification of Yellow Poplar for CLT

In a great step forward for the use of Hardwoods in Cross-Laminated Timber (CLT) panels the Appalachian Regional Commission (ARC) recently awarded $219,978 to the West Virginia Division of Forestry for the certification of yellow poplar in CLT technologies.  An additional contribution of $148,317 was awarded by the U.S. Department of Agriculture for the project.  Congresswoman Carol Miller (R-WV, 3) was quoted saying “This is great news for our logging and milling industry…Expanding West Virginia’s role as a national supplier of natural resources will create new jobs and grow our economy.” 

https://www.register-herald.com/news/money/arc-awards-more-than-to-state-lumber-industry/article_96b9a981-3ceb-5784-ad1d-fbb095ce1d0b.html

Happening in the Hardwood World

Hardwood Industry Articles on Tariffs and Trade

It was a busy month for the Hardwood Federation and our members and allies on many levels.  This includes numerous articles for different publications getting our stories out to the masses.  Below is a selection of some of the various media hits:

https://www.wsj.com/articles/its-a-crisis-lumber-mills-slash-jobs-as-trade-war-cuts-deep-11569490206

https://www.washingtonexaminer.com/policy/economy/timber-industry-pressing-to-be-included-in-trump-trade-war-assistance-for-farmers

https://www.foxbusiness.com/economy/trump-tariffs-cost-us-importers-a-record-6-8b-driving-up-consumer-prices

https://www.wbur.org/bostonomix/2019/09/24/hardwood-china-tariffs-lumber-sawmills

https://www.syracuse.com/politics/2019/09/trumps-trade-war-with-china-lands-blow-at-central-new-york-lumber-mill.html

https://www.syracuse.com/politics/2019/09/upstate-ny-business-owners-tell-congress-trumps-trade-tariffs-threaten-jobs.html

https://cheddar.com/media/u-s-china-trade-war-hacks-at-the-lumber-industry

Dana in Pennsylvania

Just because the Fly-In wrapped up, does not mean that Hardwood Federation outreach to the industry is done!  On the Monday immediately following the Fly-In, Dana traveled to State College, Pennsylvania to address both a gathering of Penn-York Lumbermen’s Club as well as the annual Pennsylvania Forest Products Association meeting.  Both were well attended and provided important information to the industry about a variety of topics…although, as seems to always be the case these days, trade dominated the conversation.  Thank you to both organizations for the opportunity to participate!

Cary in Virginia

While Dana traveled North of DC for some post-Fly-In association outreach, Cary traveled to Norfolk on Sept. 23-25 to take part in the HMA South Atlantic Regional Meeting.  It was an awesome couple of days highlighted by tours of Josey Lumber Co. in Scotland Neck, NC and Gates Milling in Gatesville, NC followed by a really cool presentation by Karen Matzko, the mid-Atlantic Are Manager for the Port of Virginia/Virginia International Terminals, LLC and Cary giving the latest on Trade and Tariffs.  It was great to see so many old friends and meet a lot of new ones.  Thanks to all of the fine folks at HMA and the participating companies for a really great event!


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