Grove City, Pa.   -  Boosting western Pennsylvania’s manufacturing base, enhancing the region’s commitment to sound environmental stewardship and expanding job opportunities is the goal of legislation crafted by U.S. Rep. Phil English (R-Pa.).  Today, English unveiled new legislation to create a tax credit to incentivize domestic remanufacturing. English was joined by Bill Gager, President of the Automotive Parts Remanufacturers Association, GE-Transportation representatives and other Pennsylvania manufacturers and workers during his announcement at the GE-Transportation facility in Grove City, Pa.

“If we are serious about building the economy of the future right here in western Pennsylvania, we must embrace comprehensive policies that not only create new jobs for our community and allow our businesses to grow, but also meet the environmental demands of the 21st century,” said English, a senior member of the House Ways and Means Committee, which has jurisdiction over tax policy.  “Today, I am delighted to announce a new initiative that will use the tax code to promote increased, environmentally-friendly production for local manufactures which in turn will attract and retain good paying jobs in our area.”
 
Remanufacturing is the disassembly of a worn-out product, cleaning, repairing and replacing its parts and then reassembling them to factory or performance specifications.  Importantly, it provides environmental and economic incentives to reuse products that otherwise would become part of the solid waste stream.  Reclaiming materials through remanufacturing has long been a highly valued and environmentally desirable alternative to disposal. 

“While similar to recycling, remanufacturing goes even further toward greening the economy by retaining the value-added components of the original manufacturing process, including energy, waste disposal, and capital and human investment,” English said.

“Remanufacturing sustains hundreds of good jobs at our plant and with our suppliers,” said Stephen C. Harris, Plant Manager of GE -Transportation's diesel engine manufacturing facility in Grove City, Penn. “The legislation proposed by Congressman Phil English is poised to strengthen the competitiveness of the manufacturing industry in
Pennsylvania.”                                                                                                       

English’s initiative incentivizes increased remanufacturing by establishing a tax credit equal to 20 percent of the amount of a taxpayer’s expenditures on certain equipment purchases.  A 20 percent tax credit for the investment in equipment used exclusively in remanufacturing operations will accelerate capital investment in remanufacturing and provide significant environmental and labor benefits.  At a 2:1 job ratio (or better) for each $100,000 of capital investment in remanufacturing, this incentive for environmentally-friendly business should make a significant long-term contribution to U.S. labor demand from a business sector that will provide needed job skill training.

“As the new, energy-efficient era rapidly moves forward it is essential for local manufacturers to remain on the forefront of innovation,” English said.  “By creating an incentive for new, environmentally-friendly investment, manufacturers will seize the opportunity of more affordable capital, spur new spending and create new jobs.  This is a win-win initiative for our local economy.”

English will formally introduce the legislation when he returns to Washington next week.

*Summary of the bill follows:

A Bill to Create a Remanufacturing Tax Credit
Introduced by Congressman Phil English

Overview of Current Law
No unique remanufacturing tax credit exists in the Internal Revenue Code.

Proposed Legislation & Estimated Cost
The proposed bill, the Remanufacturing Tax Credit Act would create a tax credit equal to 20 percent of the amount of a taxpayer’s expenditures on certain equipment purchases.

Limitations:
„X Qualifying equipment includes only that equipment used primarily in the U.S.
„X Products produced on equipment for which the taxpayer claims the credit for must be no more than 50 percent virgin material.
„X Seven specific “remanufactured product” definitional criteria.
„X $10 million per year for any taxpayer (including related taxpayers).

No cost estimate is available for this bill at this time.

Benefits of the Legislation

Reclaiming materials, (i.e., recycling and remanufacturing) has long been a highly valued and environmentally desirable alternative to disposal.  It provides environmental and economic incentives to dispose of products that otherwise would become part of the solid waste stream.  Reclaiming materials saves landfill space and energy, saves the raw material and thus preserves natural resources for future generations, and reduces pollution inherent in the manufacture of products from virgin materials.

• Job and Skill Creation.  Remanufacturing is very labor intensive, typically employing people with low skills, training them and then providing opportunity for advancement.

• Efficient Energy Conservation.  For every kilowatt-hour of energy spent in remanufacturing, about 5 kilowatt-hours of energy are recaptured.

• Improves Equipment Life and Conservation of Materials.  It provides a mechanism to reuse good parts and an orderly channel for the recycling of unusable parts as raw materials, thus preserving our natural resources and other raw materials.

• Goods for Consumers.  It prolongs the useful life of consumer products and expands the market alternatives.  Remanufactured products are 25% to 50% less costly than new.  Depending on the age of a product, there may not be any new replacement part other than one that is remanufactured.

• U.S. Trade.  It makes a significant contribution to the balance of trade because its primary competition is newly manufactured products, many of which are imported.

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