RD64 - Annual Executive Summary of the Manufacturing Development Commission


    Executive Summary:
    EXECUTIVE SUMMARY
    MANUFACTURING DEVELOPMENT COMMISSION
    January 2008

    The Manufacturing Development Commission is the successor to the Joint Subcommittee Studying Manufacturing Needs and the Future of Manufacturing in Virginia, which was established by Senate Joint Resolution 64 of the 2004 Session and continued by Senate Joint Resolution 361 of the 2005 Session. In 2006, the Manufacturing Development Commission was established as a codified legislative body as set forth in Chapter 41 (§ 30-275 et seq.) of Title 30 of the Code of Virginia.

    The purposes of the Commission are to assess manufacturing needs and to formulate legislative and regulatory remedies to ensure the future of the manufacturing sector in Virginia. Its powers and duties include:
    • Assessing the direct and indirect economic impact of the manufacturing sector on Virginia's economy;
    •Determining the needs of the manufacturing sector and the most efficient, and cost-effective manner in which such needs may be addressed;
    • Considering the effect of local and state tax policies; regulatory compliance costs; research and development investment, energy, transportation, and workforce training policies and costs on the manufacturing sector; and the appropriate role for state and local governments in ensuring the future of the manufacturing sector in the Commonwealth;
    • Developing a comprehensive energy plan for the Commonwealth, which evaluates the Commonwealth's current and future energy supply and demand;
    • Evaluating the effectiveness of state and local economic development programs and incentives on the research and development of technology-intensive manufacturing;
    • Consulting and coordinating with the Joint Commission on Technology and Science, the Joint Legislative Audit and Review Commission, the Joint Commission on Administrative Rules, and other legislative commissions, committees, and councils to minimize fragmentation and duplication relative to the respective powers and duties of such groups; and
    • Providing manufacturers and advocates with a forum to address their concerns.

    Senator Frank Wagner chairs the Commission. The legislative members for the 2007-2008 interim were Delegate Harry R. "Bob" Purkey, Senator Martin Williams, Senator Roscoe Reynolds, Delegate Samuel Nixon, Delegate Daniel Marshall, Delegate David Poisson, and Delegate Watkins Abbitt. Dr. John Sygielski, Brett Vassey, Joyce Waugh, and Robert Williams have been appointed as nonlegislative members, and Secretary of Commerce and Trade Patrick Gottschalk is an ex officio member. Information about the activities of the Commission is available at its website: http://dls.state.va.us/manufacturing.htm.

    The Commission met twice in the 2007-2008 interim.

    The first meeting was held on August 14, 2007, at the Liebherr Mining Equipment Company facility in Newport News. Issues addressed by the Commission included:

    •The status of House Bill 3113 and Senate Bill 1403 from the 2007 Session. These bills passed the General Assembly subject to the condition that they be reenacted by the 2008 Session. The bills would restructure Virginia's environmental boards by replacing the Waste Management Board, Air Pollution Control Board and Water Control Board with a Board of Environmental Quality. This new board would promulgate regulations and set environmental standards. The tasks of issuing permits and taking enforcement actions would be assigned to the DEQ. A new Environmental Appeals Board would be established to hear appeals of permitting decisions. It was reported that the proposed structure increases transparency and public access in significant waste and air permitting decisions. The legislation would institute the same procedural structure for permitting and enforcement activities for all three programs.

    •The Virginia Energy Plan, which grew out of Commission-generated legislation from the 2006 Session, was prepared by the Department of Mines, Minerals and Energy. The Plan proposes actions to implement the Commonwealth Energy Policy over the ensuing 10-year period. The Commission was presented a draft of the Plan that clarifies four overall goals: (i) increasing Virginia's energy independence; (ii) expanding consumer energy education; (iii) reducing greenhouse gas emissions; and (iv) increasing energy-related economic development and research and development.

    •The Commission has been involved in attempts to alleviate the shortage of qualified technical workers by advocating new technical diplomas in Virginia's high schools. House Bill 2039 and Senate Bill 1147 from the 2007 Session directed the Board of Education to establish requirements for a technical diploma and an advanced technical diploma. The technical diploma is required to meet or exceed the requirements of a standard diploma and include a concentration in career and technical education. It was reported that the Board of Education has initiated the process for amending its regulations governing accrediting standards for graduation requirements in order to address the technical diploma and advanced technical diploma. As part of this process, the Board conducted a forum on July 24, 2007, at which numerous organizations provided comments on the requirements for the technical diplomas.

    •The third enactment clause of Senate Bill 1416 and House Bill 3068 from the 2007 Session directed the State Corporation Commission to conduct a proceeding to determine how to meet a statewide goal of reducing the consumption of electric energy by retail customers through the implementation of fair and effective demand side management, conservation, energy efficiency, and load management programs, including consumer education, by the year 2022 by an amount equal to 10 percent of the amount of electric energy consumed by retail customers in 2006.

    The second meeting was held in Richmond on January 8, 2008, to review possible legislative initiatives for the 2008 Session. The Commission also received a presentation from Brett Vassey on behalf of the Virginia Manufacturers Association addressing the skilled trades gap in the Commonwealth. The study was commissioned by the Virginia Manufacturers Association through a grant from the Virginia Workforce Council. The report notes that the adequacy of the skilled trades pipeline has become an issue of increasing importance to manufacturers because a general slowdown in the growth of the U.S. labor force, coupled with a large pending wave of retirements and the increasingly high-tech nature of manufacturing, is making it increasingly difficult to find adequate numbers of skilled trades workers. Absent proactive policy solutions, this combination of events is very likely to create crippling bottlenecks that have the potential to forestall economic growth. The report concludes that the current statewide educational pipeline for skilled trades appears inadequate to meet future needs. Overall, the average percentage of statewide need met across all twelve of the skilled trades evaluated in this portion of the study was only 44 percent. The cumulative shortfall in needed skilled trades workers between 2007 and 2012 is estimated to be 12,894 trained workers. The report may be viewed at http://www.vamanufacturers.com/skilledtrades/index.php

    The following legislative measures were presented to the Commission:

    •DEQ Board Consolidation Legislation

    Though proposed legislation was not available for Commission review, the Commission agreed (over the objection of Delegate Abbitt) to recommend the passage of legislation that embodies the concept of legislation that would retain the three separate environmental boards but would give the DEQ director authority to issue all permits.

    •Technical Diploma Legislation

    The Commission was briefed on House Bill 97, introduced by Delegate Purkey at the request of the Department of Education, that clarifies the diplomas available to students and delineates the differences between the advanced studies and advanced technical diplomas. The Commission took no action on this bill, the purpose of which is to make a technical correction to legislation enacted in the 2007 Session.

    •Machinery and Tools Tax Legislation

    Delegate Purkey has introduced House Bill 124, which exempts all certified pollution control equipment and facilities, placed in service on or after January 1, 2010, from state and local taxation pursuant to Article X, Section 6 (d) of the Constitution of Virginia. The measure also provides that certain machinery and tools placed in service on or after January 1, 2010, will be exempt from state and local taxation. The Commission agreed to recommend the passage of legislation. Secretary Gottschalk abstained from the Commission's vote.

    •Virginia Energy Plan Implementation

    The Commission received a briefing summarizing the administration's plans for legislation to implement the recommendations in the Virginia Energy Plan. Though no broad legislative package was announced several specific measures were discussed. These include setting up a mandatory reporting program for greenhouse gas emissions, setting up a registry to report greenhouse gas reductions, budgeting funds for energy research and development initiatives, and authorizing the Virginia Resources Authority to provide financing for energy efficiency initiatives by local governments. The Commission did not take action on any of these concepts.

    The Commission does not plan to submit a formal report.