The Hardwood Federation Newsletter

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Hardwood Federation April 2021 Newsletter

From the Executive Director:  On the Road Again

The spread of Covid-19 has kept many people from traveling further than their local grocery store for way too many months.  Members of Hardwood industry seem to have had a bit more flexibility as mills and yards continued to operate…and it’s hard to cut and sell lumber from your makeshift kitchen table office.

Fortunately, it seems there is light at the end of the very long tunnel with the distribution of effective vaccines and falling infection rates.  It was very exciting to be at the Hardwood Manufacturers Meeting at the end of March and to be able to once again interact with the industry in person…although mostly masked and eating from plastic containers.  The Federation also participated in the Kentucky Forest Industries Association and the Indiana Hardwood Lumbermen’s Association meetings in April. 

The key message I took away from these meetings is that the U.S. hardwood industry deserves its reputation as a resilient one.  Although supply issues were of concern (both of raw materials and employees), everyone I spoke to is positive about the potential of 2021…and eager to get back to some sort of normal.  Seeing business colleagues and customers outside of the confines of a computer screen is one big step.  Congratulations to the Associations, their Boards, their Executives and their staff that made it happen.

The Hardwood Federation team is continuing to work hard in D.C. to make sure that the Biden Administration and Congressional leadership understand the great benefits the industry brings, certainly to the U.S. rural economy, but also in terms of the environmental priorities and goals set by the President.  Making sure that policies and legislation support business growth for our sector is always OUR number one priority.  The Administration is setting an aggressive pace…announcements of major initiatives with wide ranging impacts are coming fast and furious.  Parsing the positive from the concerning and figuring out how to communicate our perspectives is keeping us busy. In fact, the Federation recently submitted comments to the U.S. Department of Agriculture outlining our priorities and highlighting the importance of hardwood manufactured goods in the ongoing discussion of carbon accounting and what activities and products help to reduce atmospheric carbon.

I hope to see you soon, live and in person, at an upcoming event.  In the meantime, Cary, Pat, and I will be working on your behalf in our nation’s capital.

 

Hardwood Federation PAC Chair Bob Miller and Hardwood Federation Board Chair Matthew Smith at the IHLA Meeting.

 

Issues

OSHA Covid ETS – OSHA Expected to Release Long-Rumored Emergency Temporary Standard

The National Association of Manufacturers (NAM) is reporting that the long-expected Occupational Safety and Health Administration (OSHA) Emergency Temporary Standard (ETS) for COVID-19 safety in the workplace is set to be finalized as soon as the first week of May and would take effect immediately.  The ETS will lay out a series of mandates that a company must adopt to protect workers from COVID-19. While the specific requirements are not yet known, it may include the establishment of a COVID-19 prevention plan, which would require manufacturers to conduct hazard assessments, identify measures to limit transmission, adopt absence policies that don’t punish employees for staying home when they’re sick and ensure that COVID-19 policies and procedures are communicated to all workers, regardless of fluency in English.

HF will update the hardwood community as information becomes available.

The American Families Plan – President Biden Announces Latest Prong of His Infrastructure Push and Raises New Tax Questions

Two huge spending and tax proposals have come from the White House in the last Month.  Just before Easter the Biden Administration unveiled a $2.25 trillion infrastructure package titled the American Jobs Plan, a broadly focused proposal to infuse funds into our nation’s transportation pathways—namely highways, bridges, ports and mass transit as well as other foundational elements of the nation’s economy.   The proposal was coupled with a measure titled the Made in America Tax Plan that seeks to raise over $2 trillion in the next 15 years to help pay for investments envisioned under the American Jobs Plan.  

All that has been made available at this point is a 25-page summary document which describes at a high level all of the proposals that the Administration would like to see included in comprehensive infrastructure legislation to be considered by Congress in the coming months.

On the infrastructure front, Biden’s plan targets $621 billion to repairing roads and bridges across the country.  Out of this amount, $115 billion is dedicated to modernizing bridges, highways, roads and main streets in need of critical repair.  The proposal also specifies that funds be used to modernize 20,000 miles of highways and to fix the most economically significant large bridges in need of reconstruction. In addition, 10,000 smaller bridges would be targeted for repair, including those that provide critical connections to rural and tribal communities.  The measure would also spend $17 billion on improving inland waterways, coastal ports, land ports of entry and ferries.

The American Jobs Plan also includes provisions to assist the manufacturing sector including one that dedicates $52 billion to support existing capital access programs, particularly those that fund rural manufacturing and clean energy.  Another $50 billion is set aside to create a new Department of Commerce office dedicated to domestic industrial capacity.  The measure also authorizes a financing program to bolster debt and equity investments in the manufacturing sector, specifically those that increase supply chain resiliency.

To promote building projects and jobs in the construction sector, the plan authorizes $20 billion in new federal tax credits to spur the construction and rehabilitation of 500,000 homes for low- and middle-income homebuyers.

In the workforce space, the American Jobs Plan dedicates $48 billion to bolster American workforce development infrastructure and worker protection. This includes registered apprenticeships and pre-apprenticeships, creating one to two million new registered apprenticeships slots, and strengthening the pipeline for more women and people of color to access these opportunities through successful pre-apprenticeship programs such as the Women in Apprenticeships in Non-Traditional Occupations.

The aspect of the plan that has been getting the most attention from business trade associations and advocacy groups in D.C. is the tax title.   A number of revenue raisers are included in the measure that affect the business community.   Recall that the corporate tax rate was lowered in the Tax Cuts and Jobs Act (TCJA) to 21 percent.  Biden’s plan would raise that rate to 28 percent.   The proposal is silent on treatment of S-corporations and other pass-through entities that are popular in our sector.   TCJA also lowered the effective tax rates for businesses in this category and we expect that a tax increase on businesses utilizing these tax structures will be on the table as negotiations commence. 

Following up on this proposal, the Administration unveiled earlier this week the American Families Plan, a $1.8 trillion package that the President highlighted in his speech to the joint session of Congress Wednesday evening.  Among other items, the plan seeks to do the following:

  • Make pre-kindergarten and community college free across the country.
  • Extend the child tax credit through 2025.
  • Make permanent an expansion of the earned income tax credit to childless adults with low incomes.
  • Provide direct support for childcare, teacher training and create a national paid family leave program.

To pay for these initiatives, the measure specifies the following revenue raisers among many others:

  • Increasing capital gains taxes to 39.6% from 20% for those earning $1 million or more.
  • Killing the long-standing capital gains tax break on inheritances known as “step-up in basis,” which allows tax payers to use the market value of assets at the time of inheritance rather than the actual purchase price as the cost basis for capital gains when the holdings are sold.  The first $1 million of gains is exempt from this adjustment.

We expect other revenue raisers to surface as well, namely an increase in the estate tax and the elimination of capital gains treatment for standing timber—a pay for that has surfaced in years past that was a top priority for the forest landowning community.

The Hardwood Federation team remains close to the action on all of these developments and is communicating with Capitol Hill offices about our concerns about the impact of increased taxes on our sector.   The National Association of Manufacturers hosted a presentation a couple of weeks ago to share findings of a recent economic analysis that NAM commissioned on what these tax increases would mean for the manufacturing economy.  The two Rice University professors who conducted the study concluded that about 1 million jobs in the manufacturing sector alone would be lost following the first two years after enactment.

Carbon Markets – Bipartisan Legislation Dropped, HF Looking for Tweaks

Earlier in April, the Senate Agriculture, Nutrition, and Forestry Committee approved bipartisan carbon market legislation known as the Growing Climate Solutions Act (S. 1251). The bill, led by Senate Ag Committee Chairman Senator Debbie Stabenow (D-MI) and joined by Senator Mike Braun (R-IN), would authorize a program at the U.S. Department of Agriculture to help farmers and forest landowners participate in private, voluntary carbon markets and benefit from emerging new sources of revenue. The bipartisan legislation currently has 42 cosponsors in the Senate.

The Hardwood Federation team has been in discussions with Senator Stabenow’s staff that are working on the bill and expressed overall support for the concept, but noted that there is nothing in this legislation addressing markets for traditional wood products—the engine that keeps working forests working and continuing to siphon carbon from our atmosphere.   Committee staff acknowledged our concerns and pledged to work with us as this legislation moves through the legislative process.  We will keep you apprised of our progress in securing changes to this legislation.

Greenhouse Gas Regulations – Biden Administration Announces New GHG Goals

On the first day of the International Earth Day Summit, President Joe Biden announced a wide-ranging national commitment under the Paris Climate Accord to reduce U.S. greenhouse gas emissions 50 to 52 percent by 2030 compared to a 2005 emissions baseline.   These targets are in line with legislation pending in the House—the Clean Future Act that was unveiled by Democrat House leadership in March.

It is unclear at this point what this commitment will mean in terms of actual Administration policies.  The Hardwood Federation is working with our forestry and forest products association allies in gathering intelligence and coordinating advocacy efforts both with the Administration and on Capitol Hill.  

Trillion Trees Act – Rep. Westerman Drops New Iteration of his Trillion Trees Act

On April 19th HF and forest products industry champion Rep. Bruce Westerman (R-AR, 4) proudly re-introduced the bipartisan “Trillion Trees Act”.  The Act is co-sponsored by a total of 71 House members.  As mentioned in the release, The Trillion Trees Act is a bipartisan bill, supported by more than 30 stakeholder groups, that will solidify the United States as a global leader of the One Trillion Trees Initiative to conserve, restore and grow 1 trillion trees worldwide. Studies show that restoring 1 trillion new trees globally would sequester 205 gigatons of carbon, an amount equivalent to two-thirds of all manmade emissions remaining in the atmosphere today.  The Trillion Trees Act uses a three-pronged approach of regeneration, management and utilization to grow more wood and store more carbon globally.

Of the Act Rep. Westerman, the only trained forester in Congress, went on to say:

"Despite incredible improvements in technology, trees are still the most large-scale, cost-effective and environmentally-friendly carbon sequestration devices we have. Growing more trees to pull carbon from the atmosphere, scientifically managing our forests to mitigate catastrophic wildfires and incentivizing the use of wood products as renewable resources provides a comprehensive, practical solution to the climate issues we're facing today. I'm a licensed forester, and I've spent years studying the best way to utilize forests to improve our air and water quality, wildlife habitats and much more. The Trillion Trees Act accomplishes all of those goals. These are the kinds of free market driven environmental solutions that conservatism is all about, ones that incentivize economic growth without sacrificing a healthy, thriving environment. I'm proud to introduce the Trillion Trees Act again this Congress, and I'm grateful to my colleagues on both sides of the aisle who have joined the effort."

Forest Inventory and Analysis – HF Signs on to Letter Supporting Increased FIA Funding

HF signed on to a letter circulated by the Society of American Foresters (SAF) supporting the U.S. Forest Service Forest Inventory and Analysis (FIA) funding at $93.5 million for Fiscal Year 2022, with no less than $32.4 million in program funding. 

The FIA provides the information needed to assess America's forests.  The long history of scientifically credible FIA data provides critical status and trend information to resource managers, policy makers, investors, and the public through a system of annual resource inventory that covers both public and private forest lands across the United States.  FIA reports on status and trends in forest area and location; in the species, size, and health of trees; in total tree growth, mortality, and removals by harvest; in wood production and utilization rates by various products; and in forest land ownership.

The letter requests additional funding over last year’s amount to get the FIA program closer to a fully funded option that better incorporates timber products monitoring, improved carbon and biomass estimates, and additional remote sensing while maintaining the base FIA plot monitoring. It also requests direct budget line-item funding for salary and expenses to better track disbursement of funds at the various Forest Service Research Stations.

You may find the letter here.

Happening in the Hardwood World

The Heck is Going on with Lumber??

We probably don’t need to tell you, hardwood industry professionals, what is going on with lumber, lumber prices, and the world of building materials, but still, we can’t help but pass along this great rundown by our friends at Revel Woods.  Watch and enjoy.

CLT from Factory to Site

Take a closer look at how mass timber goes from the manufacturing site to building site.

Loggers and Environmentalists Save a Town…Together

A nice humanitarian NY Times piece on the forest products and environmental communities coming together for the benefit of an Oregon town.  Definitely worth a couple minutes.

And Another Great Article About a Lumber Town

While home for a quick in Traverse City, MI HF Executive Director Dana Lee Cole came across this story in the local paper about the history of the logging and lumber business in their idyllic little town.

Wood For Good

Great little video in a tweet from the KFIA and Wood For Good highlighting the benefits of wood.


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