Associated Equipment Distributors’ Christian Klein details the association’s strategy of increasing engagement between members and lawmakers in 2016 as a means to bolster the industry’s workforce and economic opportunities. He also hints at issues facing AED in 2017.
Associated Equipment Distributors (AED) spent the past year emphasizing member participation in the political process to advance its policy goals. According to AED Vice President of Government Affairs Christian Klein, the themes for the year were “industry engagement and motivating action by engagement.”
To this end, AED certainly appears to be succeeding. It scheduled visits with lawmakers at member company facilities, and AED’s Political Action Committee saw increased participation during the election cycle. The association reengaged with Canadian lawmakers and sent two delegations to Cuba to meet with lawmakers about opportunities for members there.
“We put a high premium on getting our members as actively engaged in the political process as possible with a goal of motivating the legislative process, and we’ve seen great results,” Klein says. “We’ve held scores of meetings between our members and members of Congress back in their states and districts. These are opportunities for members of Congress to come and visit these facilities, and it’s an opportunity for them to see firsthand how the local economy is impacted by votes cast on Capitol Hill.”
After several legislative victories in 2015, AED turned its attention toward its remaining policy goals: supporting infrastructure legislation, addressing a shortage of trained industry technicians and the potential effects of the November election.
Calling For Infrastructure Investments
At the very end of 2015, President Barack Obama signed a $305 billion, long-term highway bill into law. AED had been among the lead campaigners for the bill. Its passage meant the association could focus on another infrastructure bill: the Water Resources Development Act, which authorizes investment in Army Corps of Engineers construction and underwater infrastructure projects.
Klein says that AED is advocating for this bill because investments in conservation and infrastructure can lead to significant market impact for the equipment industry. According to a 2012 AED-commissioned study by the College of William & Mary, each dollar spent on water infrastructure generates around 12 cents in equipment industry market activity.
Contrast that with federal highway infrastructure investments, in which each dollar invested generates 6.4 cents of market activity for equipment industry operators, including those involved in supplying navigation, flood control and construction equipment.
“The market impact of water infrastructure investment is actually twice the impact of highway investment on a per dollar basis,” Klein says. “The problem is that the annual federal spend on water infrastructure is much less than it is for highway — a couple billion dollars a year versus $40 billion a year for highway infrastructure.”
Klein says Congress has actually been cutting back on water infrastructure over the last few years. In response, AED is requesting that creative financing tools, including grants and money for states to loan out, be used to reverse that trend. AED also supports using many of these tools — as well as raising the gas tax — to provide consistent funding for the Highway Trust Fund.
“The job is not done. Although we did get a new highway bill, which could provide billions of dollars per year in market activity for our members, what Congress did not do was create a new revenue source for the Highway Trust Fund,” Klein says. “They drew money from other sources. We’ve been saying to members of Congress for years that we need to have a predictable revenue stream to fund infrastructure investments.”
Addressing the Technical Education Shortage
This past year AED and the College of William & Mary conducted another study, this time demonstrating that a technician shortage is costing the equipment industry $2.4 billion in lost economic activity a year.
“That’s basically economic opportunity that’s foregone as a result of not having enough technicians to fully serve your customer base and grow your company. The shortage has about same impact as the federal highway investments contributing $2.4 billion in market activity,” Klein says. “Our industry is losing that same level of activity because we don’t have the technicians.”
The study also found that technician jobs are staying open three times longer on average than other jobs, and a survey of AED members done as part of the study indicated that applicants for those jobs often lacked the skills desired by employers.
On September 8, 2016, a letter coordinated by AED and signed by 26 construction industry organizations requested that Congress pass the Strengthening Career and Technical Education for the 21st Century Act.
The bill would update and reauthorize the Carl D. Perkins Career and Technical Education Act, which would align career and technical education programs with appropriate labor markets, increase student awareness and participation in work-based learning and promote industry-recognized accreditation programs.
The bill passed the House on September 13, 2016 and at the time of this writing, AED is urging support for the bill in the Senate.
“The shortage has been a problem for our industry for decades. We want to make sure students understand there are opportunities for careers in this industry,” Klein says. “We have been working with schools, making sure curricula are more in line with what our members need and putting out our own accreditation program.”
Klein says the equipment industry’s shortage could be a microcosm of a broader problem regarding alignment of educational programming with career opportunities across the whole economy.
“Ultimately the federal government can’t wave a magic policy wand and tomorrow we’re going to have all the technicians that we need,” Klein says. “It’s going to happen because local schools, businesses, organizations and government get together and start better coordinating their school curricula and work to help everybody universally understand where the economic opportunities are.”
Engaging Members Ahead of Pivotal Election
The election year also has driven AED member engagement in the political process.
Klein says the association arranged more than 50 meetings between AED members and their legislators ahead of the election, when “members of Congress are often most sensitive to what their constituents are concerned about.” AED mobilized its Canadian membership this year by conducting a north-of-the-border version of its Washington, D.C. Fly-in on Parliament Hill in Ottawa, where members met with senior policymakers to share their concerns.
In addition, AED’s PAC has already made more than $170,000 in contributions this cycle to candidates whose congressional votes have aligned with AED’s positions.
“We are on track for a record cycle both in terms of the level of participation by our members, the number of contributions and the amount of the contributions, but also in the way we split the money out,” Klein says. “We strongly encourage our members to get involved in hand delivering the PAC money to their members of Congress, so they can see that the organization has its roots in the local community.”
This strategy of building triangular relationships between AED, its members and lawmakers will be central to AED throughout 2017, as Klein believes the country is headed towards a “once-in-a-generation” tax reform debate led by Speaker of the House Paul Ryan. AED plans to push capital investment as a goal of the tax reform and has already sent a tax survey to its members to gather data.
At a time when the market has dictated a shift away from equipment purchasing in favor of renting and long-term leasing, Klein says AED will lobby lawmakers to reject extensions on cost recovery periods and to protect tax policies like “last in, first out,” accounting and like-kind exchanges. He says AED will continue to urge Congress to act as a check on policy overreach affecting member businesses by executive branch agencies.
All signs point to a busy year ahead for AED as it prepares to engage a new presidential administration as well as new and returning legislators on these matters.
“The people elected in November are going to have to be people who are willing to have this debate and consider this issue of how to pay for the next generation of America’s infrastructure in a fiscally responsible way,” Klein says. “The tax reform is going to be a big central issue for us next year. Everything has been pushing in this direction for years.”
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