-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueIPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
The Cost of Rework
In this issue, we investigate rework's current state of the art. What are the root causes and how are they resolved? What is the financial impact of rework, and is it possible to eliminate it entirely without sacrificing your yields?
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Following the Money
December 31, 1969 |Estimated reading time: 5 minutes
IPC plans to head to Washington, D.C. for its 8th Annual Capitol Hill Day to garner support for the Printed Circuit Investment Act.
Dan Green
"The first time I attended Capitol Hill Day, I was very nervous," began Dan Anderegg, president of Wellborn Industries, a manufacturer of printed circuit boards (PCB).
It is easy to see why. After all, Anderegg was a farm boy from Iowa set loose in Washington to sway legislators to buy into changing a decades-old tax plan for an industry they knew little about.
Much has changed since then. Anderegg, who has attended the IPC`s annual lobbying trip four more times, now handles the event like a Beltway insider: "The representatives are not your enemy. They have a genuine interest in what you have to say. Now, I can walk into their offices and they know my name." And now they know who IPC - Association Connecting Electronics Industries is, too.
In June, IPC heads to Washington to lobby for congressional support of the Printed Circuit Investment Act. If passed, the Act would reduce the current depreciation schedule for capital equipment used in the PCB and electronics assembly industries from five years to three.
This is the fourth year IPC has pushed for this change. While the message is the same, the starting block has changed. There is already a tremendous amount of support for the Act, which has identical versions in the House and Senate (H.R. 1122 and S. 635). More than 60 representatives and nearly 20 senators have signed on to cosponsor the bill. What the industry needs to do now is lobby those congressional representatives who have not cosponsored the bill. One way to do that is by attending IPC`s Capitol Hill Day on June 20, 2000.
Why attend? Simply put, Congress responds to the voice of its constituents. Should the Act become law, a reduced depreciation schedule will improve cash flow, permitting companies to reinvest in new capital equipment more quickly. The real question becomes: Why not attend?
For some perspective first-timers, the feeling of intimidation is often a deterrent. There is always a certain degree of fear of the unknown, but this can be easily overcome. "The nervousness goes away in the first few minutes," Anderegg said. The reward of a reduced depreciation schedule is worth any short-lived anxiety.
Indeed, the numbers make it important for the electronics assembly industry to come to Washington to help make this bill law. Electronics assembly is capital-intensive. Assembly companies face pressing decisions on investing in flip chip, chip scale packaging (CSP) and other emerging technologies every day. Capital expenditures in the U.S. assembly industry already exceed $2 billion and that amount will increase in the coming years.
Faced with these necessary investments and battered by over-capacity abroad, the high dollar and unfair trade practices by other countries, the last thing the domestic assembly industry needs is to be held back by U.S. tax laws.
In this instance, the United States needs to follow the lead of foreign governments and pass a reduced depreciation schedule that will give the U.S. contract manufaturing (CM) industry the opportunity to compete in the global market. Japan, for example, permits up to 80 percent depreciation in the first year, while China and Malaysia allow three-year depreciation on many types of assembly equipment. The United States, by contrast, follows a five-year (20 percent per annum) schedule.
A reduced depreciation schedule will not only bring the electronics assembly industry in line with the rest of the world, but also with other industries in the United States. The steel, chemical, aerospace and automotive industries all enjoy tax laws that permit full equipment write-offs as fast as halfway through its useful life. On the contrary, the five-year depreciation schedule currently in place for electronics assembly and PCB equipment was established in 1986 and based on the useful life of 1970s equipment. Technology is advancing at a pace much faster than that of two decades ago, with some equipment outdated in as little as 18 months. The depreciation schedule needs to be revised to reflect this increased pace.
IPC and the industry have gained solid support for the Printed Circuit Investment Act from representatives in the 106th Session of Congress. It is important that the industry push to close the deal now before the environment changes and momentum is lost, and the gap between domestic firms and those taking advantage of offshore tax laws becomes too wide. The current session of Congress closes in October; this has two implications for the Printed Circuit Investment Act. First, next spring the House and Senate will most likely welcome a number of new faces, so a new group of legislators will have to be educated about the industry and the Act. Second, the end of this session spells the end of H.R. 1122 and S. 635, which means they will have to be reintroduced next year.
The time to act is now. There is already bipartisan support for the bill. Senator Connie Mack (R-FL) introduced the Act into the Senate last March, while Reps. Phil Crane (R-IL-8) and Robert Matsui (D-CA-5) introduced the bill in the House. Both Democrats and Republicans are represented in the more than 80 cosponsors.
Those like Anderegg, whose representatives have signed on to the bill, return each year because they recognize that support is fleeting and that the pressure must be maintained. Think of it this way: If the customer stops showing up, they probably do not want the product anymore. The electronics industry is Washington`s customer.
Congressional representatives agree that it is time to change the outdated depreciation schedule. Acknowledging that most equipment in the electronics assembly industry has an economic life of less than three years, Senate Minority Leader Tom Daschle (D-SD) said, "I think it`s essential that we recognize how quickly product lines and technology change."
Sen. Mack adds that the current five-year tax code, "is particularly difficult for U.S. firms to bear, as the interconnection industry consists overwhelmingly of small firms that cannot easily absorb the costs inflicted by irrationally-long depreciation schedules."
IPC research supports Sen. Mack`s position on the effects on small business. More than 90 percent of companies in the PCB and CM industries are comprised of fewer than 100 employees.
For information on how to contact congressional representatives to lobby for their support of the Printed Circuit Investment Act, or for information on how to attend IPC`s Capitol Hill Day, contact Barbara Bradney at IPC`s Washington office at (202) 638-6219, or e-mail bradba@ipc.org.
One phone call, one visit or one letter from a constituent means more to a member of Congress than a dozen visits from the IPC staff. The IPC continues to make the case, but it is the members that make the difference.
DAN GREEN may be contacted at IPC - Association Connecting Electronics Industries, 2215 Sanders Road, Northbrook, IL 60062-6135; (847) 509-9700; Fax: (847) 509-9798; E-mail: DanGreen@ipc.org.