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Advocacy can be pivotal in helping distributors improve

Keywords: Tags  MSCI, Metals Service Center Institute, metal distributors, M. Robert Weidner, Kloeckner USA Holdings, Michael H. Hoffman

For many metal distributors, the most vital everyday issues revolve around inventory, product pricing, local demand, profit margins and other aspects of competitive and financial health. But local, national and international regulatory, economic and tax concerns also provide a steady background hum to the everyday world of service center business. Navigating these can become challenging.

“I’ve often heard members say, ‘I’m too wrapped up in the issues of my business to care about politics.’ But whether we like it or not, politics directly impact our business in the form of taxes, regulation and trade,” Metals Service Center Institute (MSCI) president and chief executive officer M. Robert Weidner said. “If we want to be competitive on a global scale--and as individual organizations--we must engage in the political arena.”

That’s where industry advocacy comes in, principally through the efforts of the 400-member MSCI. On several fronts, the organization has attempted to pursue policy issues designed to improve the business standing and performance of metal distributors

“MSCI today provides members with time-efficient and cost-effective networking, first-class education at all levels, strong advocacy support and exceptionally high-level industry information and research,” said Michael H. Hoffman, vice chairman of Newport Beach, Calif.-based Kloeckner USA Holdings Inc., who in June finished a two-year stint as chairman of the MSCI.

The organization lobbies lawmakers, governors and the White House, offers an annual legislative scorecard on the voting records of members of Congress and tries to set an agenda of issues most important to service centers. In an annual strategy report, the MSCI outlined several goals: to promote political compromise; to seek fiscal accountability in government; to create a “commonsense” regulatory framework; to reduce taxes on U.S. manufacturers; to seek public investment in a domestic work force; and to expand access to global markets and enforce trade agreements.

Weidner has said repeatedly throughout the past year that the Obama administration and Congress need to refocus their energy and efforts on issues critical to manufacturing and the metals industry. “Our members and others within the manufacturing industry have made it clear: Their success is dependent upon political leadership and pro-manufacturing policies,” he said. “Our elected leaders have a responsibility to deliver meaningful results for the American people and the U.S. metals industry. We have real challenges ahead, and MSCI is eager to roll up its sleeves and immediately get to work with our elected leaders.”

Specifically, the MSCI urges the President and Congress to work together to develop and pass a budget that creates incentives for growth and corrects debt and deficit balances. Additionally, Weidner said, members are seeking a commonsense regulatory framework that fosters job and economic growth, as well as a simpler, flatter and fairer tax system to give them the confidence to invest and innovate.

On a global scale, MSCI members are dependent on U.S. leaders to expand access to global markets and enforce trade agreements. In particular, the organization has strongly encouraged the Obama administration to demand that China comply with all of its World Trade Organization obligations and allow its currency to trade freely on the global foreign exchange markets.

“Manufacturing could be the primary force of change in turning around the economy,” Weidner said, citing a study commissioned by the MSCI that revealed the metals industry had a total economic impact last year of more than $550 billion, or more than 3.5 percent of gross domestic product. In addition, companies involved in the production, wholesaling and primary processing of metals provide more than 2.4 million jobs nationwide that pay more than $55 billion in wages and about $65 billion in local, state and federal taxes annually.

“We are hopeful that the Obama administration and Congress will work together to lead boldly and take decisive action,” he said.

This past summer, the MSCI joined the Coalition for Fair Effective Tax Rates, a group that argues for comprehensive tax reform at the federal level. Coalition members, including the National Federation of Independent Business, the S Corp. Association and the Small Business and Entrepreneurship Council, will try to convince federal lawmakers that higher effective tax rates will have negative consequences on service centers and will ask the White House and Congress to use effective tax rates as a leading metric for tax reform. Specifically, the coalition will use this metric to bolster support to broaden the tax base while lowering tax rates for corporations, pass-through businesses and individuals, but will not take a position on individual tax deductions or credits that could be considered for elimination.

“We are excited to join this coalition, which will represent large and small businesses seeking to reform the tax code to spur economic growth, add jobs, increase fairness and reduce complexity,” Weidner said. “MSCI represents businesses that pay income taxes through both the corporate and individual rate systems. As such, tax reform must be comprehensive--lowering the corporate tax rate, and rates for the small businesses or pass-through entities that pay through the individual system.”

Collectively, the coalition represents about 500,000 businesses, ranging from some of the nation’s top corporations to “Main Street” businesses that employ only a handful of workers. The coalition’s individual members are united in their belief that the tax code is broken and a burden on U.S. job creators, Weidner said.

“Reducing the complexity of the tax code by eliminating some deductions and credits will allow lawmakers to reduce individual and corporate income tax rates,” he said. “It will also reduce confusion and the amount of money small and large businesses spend to comply with the code. These savings will allow our members to hire more workers, improve employee benefits and make more capital investments, all of which will produce economic growth.”

It also is important that the federal tax code not choose winners and losers, Weidner said. “Whether it is through parity between the individual and corporate effective tax rates or by eliminating policies that favor one industry, or even one company, over another, we believe that the surest path to prosperity--for our members, American families and the nation--is having a tax code that is fair and neutral across all industries and business sectors.”

A Senate bill aimed at reforming oversight of currency exchange rates has the support of the MSCI. The Currency Exchange Rate Oversight Reform Act, sponsored by Sen. Sherrod Brown (D., Ohio), would provide for the identification of misaligned currencies and require action to correct the misalignment.

“This legislation is an important step in holding countries accountable for illegal trade practices,” Weidner said. “For far too long, American-made goods have been disadvantaged in the global market because countries like China manipulate their currency to gain an unfair advantage. The U.S. metals industry and its workers deserve to compete on a level playing field.”

Weidner said the MSCI has a more than decade-long history of supporting legislation aimed at stopping currency manipulation by U.S. trading partners, including being a founding member of the China Currency Coalition. The Senate bill would provide important tools and mandates to the U.S. Treasury Department to “require Treasury to identify misaligned currencies and require action by the administration if countries fail to correct the misalignment,” he said.

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