February 2024 Volume 6

WASHINGTON UPDATE

FIA Government Affairs Update By Megha Patel

2024 is off to a great and busy start for all of us at FIA! From Lobby Day 2024 to a trade relief survey that kicked off a fair trade roadshow, the association has had its hands full, to say the least. Both of these undertakings are crucial to expanding our advocacy efforts and protecting the domestic forging industry. Lobby Day This year’s Lobby Day was a resounding success, a testament to the active participation of our dedicated members! The event brought together 28 representatives from 20 member companies (the largest number in FIA history!) from all over the continent to Washington, D.C. on February 6-7. Facilitated by our lobbying firm, The Franklin Partnership, FIA members and staff held productive meetings with over 40 congressional offices. During these discussions, they highlighted the urgent challenges facing the domestic forging industry. Key topics included advocating for the Leveling the Playing Field 2.0 Act, allowing successive antidumping and countervailing duties investigations, and securing tax relief for our members. A select group of members graciously extended their stay to help the association with its congressional appropriations request. The meetings were overall positive, and the congressional offices were receptive to the issues and requests presented. FIA will continue our advocacy efforts to ensure the North American forging industry remains robust and secure. FIA, supported by the SMI government relations firm, is actively pursuing $10 million in government funding through the Metal Forging Innovation Program for research and development projects. Encouragingly, the association was allocated $5 million in the fiscal year 2024 Senate bill though it is yet to be passed. While funding approval is not guaranteed, FIA remains optimistic about its chances to receive the funds and the boost it could provide to the domestic forging industry. Tax Update FIA is in support of the tax bill currently making its way through Congress. The legislation has three key provisions designed to benefit our members. Firstly, it reinstates immediate R&D expensing. Previously, businesses could immediately write off 100% of their R&D expenses, covering costs associated with the development, testing, and enhancement of products and services. However, recent changes make companies amortize their R&D investments over a span of five to fifteen years. This alteration resulted in an average additional tax burden of 32%. Secondly, the bill incorporates a pro growth interest deductibility standard. Many companies rely on loans to finance long-term investments in equipment and facilities. At the start of 2022, a stricter limitation on the deductibility of interest payments on business loans came into effect, elevating the cost of financing crucial investments in machinery and equipment.

Lastly, the bill allows full expensing for capital investments. Bonus depreciation enables businesses to deduct a large percentage of the cost of eligible purchases in the same year, rather than spreading the deduction over several years. Unfortunately, this provision expired at the close of 2022 and is undergoing a phased 20% reduction each year. According to the National Association of Manufacturers, private-sector R&D spending experienced a decline of 1.2% in Q3 of 2023. Since the imposition of a detrimental R&D amortization requirement in 2022, the rate of growth in R&D spending has dwindled from an average of 6.6% over the preceding five years to less than 1% in the past year. This is why the FIA, during Lobby Day, urged Congress to pass this pro-growth tax bill to ensure investment and job creation in the forging industry. U.S. Trade Survey As you all know, unfair trade continues to pose a significant threat to North American forgers, jeopardizing operations and weakening national security. FIA began a proactive effort in May of 2023 to explore opportunities for trade relief. In collaboration with Cassidy Levy Kent LLP, the association’s trade counsel, a survey was issued to gather crucial data from members to identify whether a trade case is feasible. The questionnaire assessed the effects of import competition on FIA members, taking into account the wide range of forging products and the unique challenges the industry faces on a daily basis. In fact, Cassidy Levy Kent kicked off a Fair Trade Roadshow this past January to visit members and better understand the forging industry. These visits allowed them to create a comprehensive narrative that accurately conveys our industry's challenges to decision-makers in Washington. For those seeking more information about our efforts in addressing import competition or the Fair Trade Roadshow, please reach out to FIA directly. Member engagement is crucial in our efforts to advocate for fair trade practices. Conclusion FIA is thrilled to be elevating our advocacy efforts year after year and remains committed to championing the industry's interests. Thank you to all the members who dedicated time from their busy schedules to join us for Lobby Day and contribute to the fair trade roadshow. We appreciate the ongoing support and encouragement of our advocacy efforts! Megha M. Patel

Government Affairs Manager Forging Industry Association Phone: 216-781-6260 Email: megha@forging.org

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