One of the most difficult problems in bringing back manufacturing from offshore to “Reshoring” in the United States is the increasingly stringent environmental regulations being imposed at Federal and State level that adversely affect various sectors of the manufacturing industry. The following describes some of the more stringent environmental regulations.
Clean Water: As authorized by the Clean Water Act in 1972, the federal Environmental Protection Agency (EPA) oversees the National Pollutant Discharge Elimination System (NPDES) Regulations for Storm Water Discharges. In most cases, the NPDES program is administered by authorized states. Many states, such as California, have set up multiple water quality control regional boards that develop and administer specific regulations for their region. The San Diego regional board issued 62 pages of new regulations in August 2002, for which compliance has been very onerous and expensive for manufacturers. For example, rain water falling on a manufacturer’s parking lot must be monitored so that toxic pollutants, oil grease, waxes, chemicals, and visible floating materials are prevented from entering the storm drains on the property connecting to the municipal sewer system.
Hazardous Air Pollutants: In 2005, the Federal Occupational Safety and Health Administration (OSHA) proposed standards to go in effect January 1st 2006, but Congress didn’t approve the new standards as stringently written. The proposed standards would have reduced the allowed emissions for hexavalent chromium (a chemical compound used in the chrome plating process) to less than 1/50th of the allowable level (52 mg. of chromium per meter of air down to 1mg.) The emission standard of 52 mg. that went into effect in 1998 was already a 97 percent reduction in hexavalent chromium emissions. In May 2006, Congress finally approved slightly less stringent regulation of 5 mg. per cubic meter of air, which went in effect January 2007.
Metal plating, including chrome plating, is important to the electronics, machine equipment, defense, and automotive after-market sectors of manufacturing because every metal part that could corrode is nickel or chrome plated to keep it from corroding. These new standards required existing chrome plating facilities to purchase new environmental control equipment in order to maintain compliance status. Many large plating facilities converted to the more expensive, but less toxic trivalent chromium, which is suitable for some applications and certain thicknesses of plating. The trivalent chromium process requires more careful control than the hexavalent chromium process and is more difficult to do in some applications such as barrel plating.
On June 12, 2008, the EPA issued final national air toxics standard for smaller-emitting sources in the plating and polishing industry applicable to cadmium, nickel, lead, manganese, and chromium. The final rule affected an estimated 2,900 existing planting and polishing facilities. These standards seriously affected the chrome plating industry nationwide and have accelerated the offshore outsourcing of products requiring chrome plating.
In San Diego County, six metal processors went out of business between 2007 and 2008, and one company closed down its chrome plating line prior to the stricter regulations going into effect. Two companies moved their chrome plating across the border to Tijuana, Mexico so that there are now only two metal processors that do chrome plating, which has stretched lead times for locally fabricated metal parts that require chrome plating. Of course, there is no border control for the flow of air so emissions in Tijuana affect the air quality in San Diego County.
Clean Air: In September 2006, the federal EPA approved new national air quality standards that reduced the previous daily particulate matter standard by nearly 50 percent. Particulate matter is fine particles such as soot, dust, and liquid droplets that are too small to see. A new Maximum Achievable Control Technology (MACT) for hazardous waste combustors (boilers and incinerators) followed in 2008. EPA will soon announce new draft rules aimed at slashing toxic air pollution emitted by power plants.
Electric utilities and manufacturers have objected to these new air quality regulations, saying that the new rules cost billions of dollars to implement. William O’Keefe, CEO, George Marshall Institute, wrote “…the utility MACT will impose costs on utilities that far exceed air quality benefits…Forcing the utility industry to install the most expensive emissions reduction technologies will simply drive up the cost of electric power when it can least be afforded…That is not what we need as our economy struggles to recover from the worst recession in decades.”
A report released in 2007 by the National Association of Manufacturers (NAM) stated “the domestic environment for manufacturers is dominated by concerns about rising external costs that make manufacturing from a U. S. base difficult. These costs for corporate taxes, health care and pensions, regulation, natural gas, and tort litigation add more than 30 percent to manufacturers’ costs.”
In addition, the NAM report stated that the annual cost of complying with federal regulations is more than $10,000 per employee for manufacturers, while the cost is half that for non-manufacturers. When companies are spending more money on regulatory compliance, materials, fuel and energy, they have less money for R & D, new product development, and purchase of capital equipment and systems. This puts U. S. manufacturers at a substantial disadvantage compared to manufacturers in countries that aren’t subject to this degree of regulation.
On October 14, 2010, Joe Barton, Ranking Member of the Committee on Energy and Commerce and Michael Burgess, Ranking Member of the Subcommittee on Oversight and Investigations, wrote a letter to Lisa Jackson, Administrator of the U. S. Environment Protection Agency, expressing their concern over the cumulative impacts of new regulations being proposed by the EPA under the Clean Air Act (CAA). The letter included a chart (51 pages), which identified approximately 40 proposed or final CAA regulations, including greenhouse gas regulations, revised air quality standards, and other regulator proposals under the CAA, as well as many regulations in the pre-proposal stages. The letter stated, “At least eight of the proposed or final rules included have compliance costs estimated by EPA to exceed $1 billion each. It appears that collectively the Administration’s new or proposed CAA regulations could impose billions of dollars of additional new costs annually on U. S. business as the new rules are implemented by your agency.” A response was requested with regard to the accuracy of the compliance costs estimated included in the chart and if there were any other pending or proposed CAA regulations not included in the chart.
One of the unintended consequences of strict environmental protection laws and regulations in the United States that drives manufacturing offshore is the increased environmental pollution in other countries, such as China and India. India and China have been getting more polluted in the last 30 years, as more and more U.S. manufacturing companies have outsourced to these countries. Four cities in India and six cities in China are listed in the “Dirty 30” list of the worst polluted sites in the world, according to a 2007 report by the New York-based Blacksmith Institute. The Institute’s “Top 10” list now includes four cities in China and two in India. The Institute’s list is based on scoring criteria devised by an international panel that includes researchers from Johns Hopkins University, Harvard University, and Mt. Sinai Hospital in assessments of more than 400 polluted sites. “Children are sick and dying in these polluted places, and it’s not rocket science to fix them,” said Richard Fuller, Blacksmith Institute’s founder and director. The Institute highlights the health threats to children from industrial pollution, such as the stunting effect of lead poisoning on intellectual development. Some 12 million people are affected in the top ten sites, according to the report.
One of the worst examples is Wanshan, China, termed the “Mercury Capital” of China, because more than the 60 percent of the country’s mercury deposits were discovered there. Mercury contamination extends through the city’s air, surface water systems, and soils. Concentrations in the soil range from 16 to 232 times the maximum national standard for mercury contamination. To put this into perspective, the mercury from one fluorescent bulb can pollute 6,000 gallons of water beyond safe levels for drinking, and it only takes one teaspoon of mercury to contaminate a 20-acre lake – forever. The health hazards of mercury exposure include kidney and gastrointestinal damage, neurological damage, and birth defects. Chronic exposure is fatal.
On June 19, 2007, the Netherlands Environment Assessment Agency announced that China’s carbon dioxide (CO2) emissions were seven percent higher by volume than the United States in 2006. Many experts were skeptical, but on June 13, 2008, the same agency announced that a new study found that China’s emissions were 14 percent higher than those of the United States in 2007. “The Chinese increase accounted for two-thirds of the growth in the year’s global greenhouse gas emissions, the study found.” In addition, China is now the largest source of SO2 emissions in the world (SO2 causes acid rain), and. Japan and South Korea suffer from acid rain produced by China’s coal-fired power plants and yellow dust storms that originate in the Gobi desert.
An article titled “Scientists Track Asian Pollution” in the September 4, 2008 issue of The News Tribune of Tacoma, Washington reported that the Journal of Geophysical Research that stated “East Asia pollution aerosols could impose far-reaching environmental impacts at continental, hemispheric and global scales because of long-range transport,” and “a warm conveyer belt lifts the pollutants into the upper troposphere over Asia, where winds can wing it to the United States in a week or less.”
Dan Jaffe, a professor of environment science at the University of Washington and a member of the National Academies of Science panel studying the issue, said, “This pollution is distributed on average equally from Northern California to British Columbia.” He added that “up to 30 percent of the mercury deposited in the United States from airborne sources comes from Asia, with the highest concentrations in Alaska and the Western states.”
What good does it do to control the quality of our air and water in the United States so strictly that we drive our manufacturing industry south of the border to Mexico or offshore to Asia where environmental regulations are either lax or nonexistent? If people want strong environmental protection while retaining American jobs, we are going to have to analyze the cost of the environmental impact on American manufacturers and accept a reasonable compromise that doesn’t go overboard on environmental regulations that drive more and more manufacturing offshore. Another option would be to assess an environmental impact fee on products imported based on the level of pollution in the country of origin as compared to that of the U. S. The natural disasters of the past year, such as the Icelandic volcano, and the recent earthquake/tsunami in Japan have shown us that what happens to the environment in one part of the world affects the environment of other parts of the world. While government takes the time to come to grips with this problem, you can prevent yourself from contributing to the world’s pollution by buying products made in America. Remember, every product you buy made in China or India contributes to the world’s pollution.
[…] Still, some people think we should open ourselves up to a bit more pollution to provide a kind of lesser-evil alternative to the uber-pollution status quo in China. It’s a decent argument, and I’m open to the possibility that some regulations may go too far, but I doubt a significant number of jobs would come back to the US if we start down this path. It begs the question though — what’s our responsibility for pollution in other countries? The world? […]
It’s now cheaper to buy a BRAND NEW Chinese water pump for my truck than a recycled one from the U.S. Consider all the petroleum and environmental impact involved with the production and shipping of just this one part, as compared to recycling.
Just throw it away, everybody; in a World of 7 billion humans with finite resources, don’t recycle, don’t fix it, just throw it away and buy a new one!
This is insane, isn’t it?