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Manufacturing summit speakers address EPA rule impacts

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SARAH TINCHER / The State Journal: John Deskins speaks to the crowd at the Manufacturing Leadership Summit June 9. SARAH TINCHER / The State Journal: John Deskins speaks to the crowd at the Manufacturing Leadership Summit June 9.

The West Virginia Manufacturers Association hosted 15 educators, experts, industry leaders and representatives from various organizations for the first day of its Manufacturing Leadership Summit at Glade Springs Resort in Daniels June 9.

The speakers covered subjects ranging from energy to international trade to business, large and small; but two topics acted as a common denominator in several presentations: the Environmental Protection Agency’s proposed rule to restrict carbon emissions and the importance of the manufacturing industry.

EPA rule, emissions and coal

Similar to many recent responses offered by West Virginia lawmakers and energy industry leaders, Mario Longhi, president and CEO of United States Steel Corp. condemned the rule with regard to the coal and manufacturing industries.

“(The EPA) guidelines take direct aim at coal, and in turn take direct aim at manufacturing,” Longhi said. “Regulations such as these put the steel industry and the whole domestic manufacturing (industry) at a competitive disadvantage against other steel-producing nations, such as China, India and Russia.”

Not everyone, however, necessarily agreed with the common belief that the rule is a deliberate attack on coal.

Derrick Price Williamson, an energy and public utility attorney, said the proposed target emissions reduction in West Virginia, which are currently set at 20 percent below the 2012 levels, are quite possibly attainable.

“If you look realistically, both (American Electric Power) and FirstEnergy have closed a number of coal-fired plants or have plants that closed down,” Williamson said. “Based on data that I have seen, AEP has reduced (CO2) emissions by 20 percent since 2005. FirstEnergy, by 2015, will have reduced emissions by 25 percent. … To the extent that the EPA rule is going to apply, they may be well on their way to being in compliance.”

Williamson continued, however, to note how the impact the rule has on neighboring states would likely trickle into West Virginia.

“Although we’re obviously concerned about West Virginia and what this might mean for West Virginians,” he said, “the reality is, what happens in other states will impact West Virginia. We may be able to neatly meet whatever emissions obligation falls out from a final rule … but we will be impacted by what other states have to do.”

Several nearby states that are included in the PJM market — which is responsible for managing the wholesale market electricity price in 13 states, including West Virginia — have much higher target goals to reach. For example, Pennsylvania’s reduction goal is 32 percent, Ohio’s is 28, New Jersey’s is 43 percent, Virginia’s is 38 percent and Maryland’s is 37 percent, Williamson said.

“For those states to meet those emissions standards, that will come at a significant cost, and that cost will be worn out in the PJM wholesale market price for electricity,” he said. “And that market price for electricity will come back to you here in West Virginia.

“We need to rightly be concerned about the impact of this proposed rule on West Virginia, but the fact is the impact of it regionally, if not nationally, will affect us just as much when it comes to electric pricing.”

Matt Letourneau, a spokesman for the U.S. Chamber’s 21st Century Energy Institute, also agreed the issues with the rule expand much further from coal.

“Let’s not fool ourselves into thinking that this entire discussion about EPA regulations is only about coal, because it’s not,” he said. Once you start regulating under the Clean Air Act you have to keep getting cleaner and you will eventually run out of coal plants to shut down, and then you will move into natural gas; because, while natural gas is about 50 percent cleaner than coal, it’s still a fossil fuel and it still produces carbon, he continued.

He did, however, defend the continued use of coal.

“We have way too much coal to simply decide we’re going to not use it,” Letourneau said. “We have a 250-year supply of coal, why wouldn’t we want to use it? Let’s work on technologies to make coal cleaner, yes, but let’s not completely eliminate it.”

Manufacturing sector

Many speakers also addressed the economic importance of the manufacturing industry on both the state and national levels.

“The only way to recover and rebuild the middle class is through manufacturing,” said Jose “Zito” Sartarelli, dean of the West Virginia University College of Business and Economics. “That’s the only (sector) that pays wages that are appropriate. At $10 an hour, you do not create a middle class.”

John Deskins, director of the Bureau of Business and Economic Research at WVU, introduced a grim statistic for West Virginia: with only a 53 percent labor force participation rate, the state ranks “dead last” in the nation.

“We need a strong catalyst in our state to turn this vicious cycle around with regards to some of these fundamental demographics, with regards to young people leaving the state, with regards to low labor force participation, with regards to poor health outcome and high rates of prescription drug abuse,” Deskins said. “We see a vicious cycle and we need a catalyst, some spark, to turn that vicious cycle around and I think that manufacturing can be an important part of that spark to turn these fundamental demographics around.”

Manufacturing represents 9 percent of total economic output in the state, he said. Overall, the sector produces more than $6 billion worth of manufactured goods in West Virginia, which amounts to nearly 10 percent of state’s total economic output.

In addition, manufacturing employs 48,000 people in the state, Deskins said. And the average annual income for workers in the manufacturing sector is $53,059 — the second highest in the state’s economy.

“We’re talking about the sector where we want that spark to provide this turnaround that we need,” Deskins said. “Manufacturing is a heck of a sector to look for that spark when we’re talking about good pay, good jobs that really contribute to the broader economy.”

On the national level, manufacturing supports an estimated 17.5 million jobs in the U.S., with more than 12 million directly involved in manufacturing, Longhi said. Additionally, every dollar spent in manufacturing adds another $1.32 to the economy, he added.

“The United States’ critical infrastructure, just like economic security, is dependent upon a robust manufacturing sector,” Longhi said. “Without a diverse and prosperous manufacturing industry that is able to meet all of our nation’s construction and infrastructure needs, we put the strength of the country’s network in the hands of foreign entities.”