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Have Current Governmental Policies Impacted Engineers?

The final chapter of our salary survey will focus on the impact that 2018’s governmental policy changes have had on engineers and the industry.

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The Trump Administration has introduced several new policies that have greatly impacted the engineering industry. These policies range from how the internet operates to how we acquire and trade in raw materials. The impact of these policies is starting to be felt by some, while others are still waiting for the dust to settle. We asked our engineers how certain policies have impacted them and if they have felt the change yet or is still too soon to tell.

The Impact of Tariffs on Raw Materials

This past March, President Trump and his administration enacted a 10% tariff on steel and aluminum. The main reason behind this was to effectively tax all income raw materials from other countries like China and Mexico to drive up business for U.S. driven business. The impact from this policy has been immediate. Depending on which side of the business you find yourself, these tariffs have either hurt you or benefited your bottom line.

The tariffs on steel have impacted several businesses negatively. For example, according to Democrat & Chronicle of USA Today, New York suppliers, farmers, and manufacturers have seen a slowdown in sales or higher prices in steel. Square Deal Machining in Cortland County makes steel enclosures for military electronics, hardware for aerospace companies, and metal pieces for tentmakers. “As soon as they started talking tariffs, the imports slowed down,” said Joseph Morgan, Square Deal’s chief executive. “All the jobs we bid on last year we were losing money on. It was one of our busiest years with some of our lowest margins.”

For aluminum, the story is very different. Recently, the American Primary Aluminum Association (APAA) in conjunction with Economic Policy Institute (EPI), the Alliance for American Manufacturing (AAM) and the Coalition for a Prosperous America (CPA) presented data the tariffs on aluminum have boosted production and created new jobs. As a result of the tariffs, 22 new and expansion projects have been announced in downstream aluminum industries.

2,000 workers will be employed to generate $3.3 billion in new investments and will add almost one million tons of annual rolling and extrusion capacity to the domestic aluminum industry. Several of the new projects include the production of extruded (rod and bar, pipe and tube, and extruded shapes) and rolled (sheet and plate) products.

While on the surface the tariffs may appear to benefit U.S. raw material producers, over the long term, their impact will hurt the U.S. economy. A recent report commissioned by Koch Industries found that the gross domestic product (GDP), household income, and industrial production would fall, while unemployment would rise. The report concluded that while initially, the U.S. made products would become cheaper by comparison, costs would increase for American businesses and consumers.

According to Business Insider, the response to higher prices would lead “businesses and consumers could buy less, resulting in a slower pace of job growth, less capital investment, and eventually slower economic activity.” Some of the key findings in the report are a total economic cost of $2.8 trillion from 2018 to 2030, GDP would be 1.78 percentage points lower in 2019, and $2.75 million workers would be unemployed compared with current projections, as hiring plans slow and workers are laid off.

Engineers Take on Tariffs on Steel and Aluminum

When we asked our readers if the tariffs have impacted their jobs, the majority at 67% said no. Of the 33% that said tariffs have impacted their day to day work, the top industries impacted were mining equipment, mobile equipment, material handling, hydraulic systems, and machine tooling and automation. The major impact was due to the rise of cost in either raw materials or in the purchase of products.

One reader responded that the tariffs have impacted their current projects: “Have [had] to postpone new projects to determine ways to reduce costs to hold consumer costs down and having to increase the price of other products’ lead times.” For those whose products are made overseas, the tariffs are increasing their production costs. One reader states that “Currently our products are manufactured in China. New tariffs would significantly increase the cost of our products and potentially negatively affect our competitiveness in the market.”

However, just like the market, not all respondents reported a negative impact on their business. One reader responded that “The prices for some raw steel we use has gone up, but we are also seeing an unbelievable increase in work in our industry since the beginning of 2017, so the amount of work available to us has significantly increased our ability to absorb any price increases for raw material.” Several are reporting that the focus on increasing U.S. steel and aluminum production have helped that business.

Time will tell how engineers adjust to changes in global trading. As one engineer noted, “[We] have not really seen the effects too much yet, but when we start the next new model project it will be more obvious. We will mainly see a difference in the steel bought for all of our toolings. These costs will more than likely be driven back to my company. The decreasing of China’s tariffs on automotive from 25% to 15% may help offset this difference though if we start pushing more products to them.”

The Impact of Net Neutrality

2018 introduced the possible end of Net Neutrality. Briefly, Net Neutrality was introduced in 2015 by the Obama Administration as a way of treating all internet data as equal. It resulted in the operating principles that internet service providers (ISPs) could not scale cost on consumers based on what data they were trying to access. The Trump Administration took decisive action in 2018 to rollback Net Neutrality and remove ISPs from being classified as a utility service.

Even though Net Neutrality has been repealed, the effects have yet to be felt because of the pushback from state governments, and even CEOs of ISPs. California passed its own Net Neutrality laws after the repeal went into effect in June, and the Justice Department filed suit to challenge those laws in October. A group of 22 Democrats Attorneys General has sued the FCC in an attempt to reinstate the former Net Neutrality rules. Public outcry from sites like Facebook and Google have pressured CEOs from ISPs like AT&T to promise that they won’t start to throttle or create different pricing plans for internet access.

Techgenix.com recently reported on what small business feel the impact of Net Neutrality would have on their business. In their report, a survey by Paychex “shows that 44% of business owners said that the repeal of net neutrality will affect them negatively while only 12% said that it will benefit them. The remaining 44% are not sure what this is all about and how it can impact them. In addition, 59% believe that this repeal will bring down the number of visitors to their website and business.”

When it comes to Net Neutrality, the effects are still too early to tell. Only 5% reported that their works were being affected by the repeal. The majority agree that the repeal in the rules may impact research availability and access to the internet for small businesses, but it is more of a fear of what may come—the battle has yet to be decided.

Rollback on Green Engineering

Green engineering is defined by the EPA as “the design, commercialization, and use of processes and products in a way that reduces pollution, promotes sustainability, and minimizes risk to human health and the environment without sacrificing economic viability and efficiency.”

As listed on the EPA’s website, some of their green engineering principles are as follows:

  • Holistically use systems analysis and integrate environmental impact assessment tools.
  • Conserve and improve natural ecosystems while protecting human health and well-being.
  • Use life-cycle thinking in all engineering activities.
  • Ensure that all material and energy inputs and outputs are as inherently safe and benign as possible.
  • Minimize depletion of natural resources.
  • Strive to prevent waste.
  • Develop and apply engineering solutions while being cognizant of local geography, aspirations, and cultures.
  • Create engineering solutions beyond current or dominant technologies; improve, innovate, and invent (technologies) to achieve sustainability.
  • Actively engage communities and stakeholders in the development of engineering solutions.

In the light of the decisions made by the Trump Administration in 2018, one could say that green engineering has taken a step back. Just this past month, the current administration has advocated for the revitalization of the global coal industry. Fossil fuels like coal and oil have been proven to be harmful to the environment and unsustainable. The recent report from the United Nations Intergovernmental Panel on Climate Change and the latest installment of the U.S. National Climate Assessment both point to the increase of carbon emissions from the use of coal and gas has direct factors in the cause of negative climate change.

However, the U.S. delegation at the COP24, the United Nation’s climate conference in Katowice, Poland, promoted the wider use of fossil fuels—in direct contrast to many other nations and global economy leaders embracing new energy sustainability initiatives.

Several companies which include Microsoft and Bank of America Merrill Lynch, have stepped up their interest in clean energy. According to Abyd Karmali, managing director and climate finance executive at Bank of America, the company has directed more than $70 billion sustainable business activities that deliver financial returns and carbon emission reductions. “Independent analysis has shown that our clean energy investments in the U.S. have created an annual average of 39,728 jobs, contributing a cumulative $30 billion in economic output,” says Karmali.

A recent article from Greenbiz.com details a “record-breaking group of global investors which last week brought together 415 firms with $32 trillion of assets to launch a new ‘Investor Agenda’ that urges governments to strengthen their national climate action plans and enact policies that facilitate a faster transition to a low-carbon economy.”

Also, the World Business Council for Sustainable Development has launched the New Energy Solutions global initiative. “The project will aim to facilitate cross-sectoral collaboration in a bid to scale up the deployment of pre-commercial and/or proven low-carbon technologies that are being rolled out too slowly across the power, transport, industry and buildings sectors” according to Greenbiz.com.

Many of our engineering readers haven’t been impacted by the change in direction of energy initiatives. Only 14% have been directly impacted by the refocus on coal and the lack of focus on solar and wind energy initiatives. When asked how they have been impacted many stated a change in jobs was necessary due to companies closing shop. “I work with several solar companies in [the Northwest] and they also have put the brakes on hiring consultants to help with projects and reducing a number of new products to a number that can be handled in-house,” states one reader.

Another told us that “New technologies will fuel growth. We operate a machine shop in Texas where solar and wind is large in West Texas. Focusing on dying technologies like coal makes growth more difficult.” These changes even affect research movements. One reader wrote that they “they spend a lot of time engineering more efficient gas burners to support the states that have high environmental/emission standards. The government’s decreased support for green initiatives changes everything.”

The hope is that a refocus on coal will drive up the economy. Some of our readers stated that the shift back to coal has increased some work in specific divisions. “I work primarily in servicing coal power plants so the reduction in green initiatives has caused many of my customers to decide not to retire coal power plants quite yet. This, in turn, has resulted in a boost in the coal-fired steam-turbine generator service and repair business throughout North America,” said one respondent.

Ultimately, many believe that change is inevitable and many will take it upon themselves to push green engineering initiatives. “I think the automotive industry overpowers the government’s changes in this aspect. With gas prices increasing again, there will be another surge in sales for fuel-efficient vehicles,” said one Machine Design reader. Another told us that “These technologies will thrive in due time through efforts driven by the free market. They haven’t yet, but I expect that they will in the future.”

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