Ask a MHEDA-NET Group: Impact of Deregulation

October 1, 2017

“How will potential deregulation in the Trump Administration impact the material handling industry and/or your company? What changes have you seen so far?”

Kevin Thompson, Partner, Conveyor Solutions West, Inc. Newport Beach, CA

To understand what we expect out of President Trump’s Executive Order, we need a little history. President Reagan signed an executive order that required the White House to review all new entries in the Federal Register and allowed for some to be analyzed for a financial impact. President Trump went a few steps farther by stating that each new regulation must replace two existing regulations and it (plus the 2 removed) must have a total economic impact of “no greater than zero” (Quoted from Executive Order). For reference, at the end of 2016, there were over 91,000 items in the Federal Register, which is the list of all rules, regulations, modifications, etc. It is about 19% higher than 2015’s final count.

Also from the Executive Order…it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.” If this holds true, the cost for regulations should not go up and could go down.

How does this impact how I run the business? I am in California, the state that invented regulations. California has so many crisscrossed regulations it is impossible to know them all. I still try to be aware of any regulatory issues which affect my customers and our industry. Thus, the Executive Order will probably not have an immediate impact on most of my customers and thus my business.

The only way it may affect the Industry is the general belief that it will be easier (or at least not more difficult than today) to run a business. This general feeling that the future will be brighter can have a significant impact on a customer’s decision to spend money on Capital Equipment. To help us capture some of those funds, we are generally expanding the size of our company to support the increased possibilities.

Will Egerton, VP Operations, Wecon Systems, Ontario, Canada

Wow, This is a big question! We are not exactly sure how this will impact the Material Handling industry but I believe history shows us deregulation is a good thing for industry in general. Being in Canada I guess we will not be affected directly but the affects will be felt very quickly after they are felt in the states. This should make companies more competitive and allow us to be stronger. A big concern still should be the safety around our industry, this is the one thing that cannot be compromised, regardless of what level of deregulation takes place. We have enjoyed the amount of work being done here in Canada and partnered with many American firms over the last few years and certainly would like to see that continue for quite some time to come.

Stephen Lowe, VP of Sales & Marketing, Allied ToyotaLift, Knoxville, TN

Within 200 miles of Knoxville, TN are manufacturing plants for Toyota, Nissan, BMW, Cadillac, and Volkswagen with a combined manufacturing capacity of over 1.9 million vehicles per year. Knoxville, TN where our Headquarters sits is in roughly the center of that group of manufacturing plants. It is fair to say that as the automotive industry prospers (or does not prosper, for that matter) so prospers the economy of East Tennessee, Southeastern Kentucky, and Southwestern Virginia.

Will, then, President Trump make policy and regulatory decisions that are good for the automotive industry? Our customers believe that a Trump administration will indeed be good for our economy. They believe he will create a better job market for the US worker. Reshoring to the US has been on the rise for many good reasons over the past several years. Our political stability, steadily increasing foreign labor costs, steadily increasing raw material costs, and the difficulty of maintaining long distance transportation chains have shown that the US is still the best place to do business. And the US is also still the world’s largest economy. With the President releasing the USA from a self-imposed domestic energy embargo (coal industry and oil drilling) the economy will be booming. New jobs creating products sold overseas will result in new money in the domestic economy. And a higher demand for skilled US workers will create better wages. And that prosperity translates to an upswing in the purchase of new automotive vehicles, it is believed.

We believe that economic boom has already started and see signs of increasing optimism at our customers and increased sales volumes for our dealership. Plants in our service area are updating material handling equipment fleets and expanding their labor forces. We have added more folks to our dealership, both service techs and sales folks. We are very optimistic and look for 2017 to be yet another record year for our dealership!

Steve Stein, President, Stein Service & Supply LLC, Charlotte, NC President

Trump spoke frequently about overregulation during the campaign, and his plans to decrease regulation were part of the reason that he was elected. Unfortunately for the president and his supporters, talking about something on the campaign trail is a lot easier than actually getting something done in Washington DC. While the president has signed an executive order and assigned teams within agencies to cut red tape, actual changes to regulations will take months or even years to be enacted. If the federal government actually succeeds in removing any regulations, it’s likely that the states will step in to fill any vacuum created.

Much of the regulation that affects small businesses on a daily basis is at the state and local level. The Trump administration’s push for deregulation is unlikely to have any effect at this level, and in fact, it seems like many local governments are moving toward more regulation, not less. In my area, local governments are increasingly requiring permits for most material handling product installations. Depending on the municipality, this process can be very challenging and expensive, which could have a negative effect on product sales.

Perhaps I’m a cynic, but I really don’t expect any significant deregulation from the government at any level. While it might be nice to have a little less government interference, I’m not going to spend a lot of time talking about it or worrying about it. It’s very easy to get caught up following the constant barrage of political news, but in the end, there is very little that will actually affect my business. To quote the great Stoic philosopher Epictetus, “If you wish to improve, be content to appear clueless or stupid in extraneous matters.” Many who know me will say that I’m doing an excellent job at this!

MHEDA-NET is a free networking service designed for members to meet via conference call with others from non-competing markets to discuss common industry business issues. To learn more about MHEDA-NET visit www.mheda.org/mhedanet or contact Rebecca Hein at rhein@mheda.org