The BlackSmith Tax Credit (BS-TC): A Victim of Politics
by JOHN DROZ
August 21, 2012
The following article was inspired by a recent magazine story about the difficulties faced by the wind turbine industry, as it deals with further delays in gaining yet another extension of the 20-year-old Production Tax Credit (PTC) for generating electricity sporadically, unreliably and at great expense using wind energy. We thought the situation would be much clearer and more accurate, if another Eighteenth Century technology were substituted for wind energy, in discussing wind energy subsidies.
Jobs and the economy - these messages are being trumpeted as of utmost importance to our nation during this presidential campaign season. Meanwhile, with the BlackSmith industry still on pins and needles regarding another extension to the BlackSmith Tax Credit (BS-TC), no orders have been placed for nails, hinges or other items made by BlackSmith shops in the United States for 2013.
Despite their decades-long efforts to improve their forge, fuel, hammer and pig iron technology and quality - while also modernizing the design of the wrought iron nails, hinges, chairs, candlestick holders, gates, foot scrapers, lanterns and other items they make - BlackSmith manufacturers are now left with no other choice but to begin dismissing employees.
Just this week, two BlackSmith-related manufacturing layoffs have been announced. First, hammer manufacturer IAVAHammer said it will be forced to lay off 230 people at its facility in Little Rock, Arkansas. Days later, anvil manufacturer DIMMprospects said it will close its Tulsa, Oklahoma plant in November, and 167 people will be laid off.
President Barack Obama used a campaign stop in Pueblo, Colorado to push for the BS-TC extension. He is visiting the Vesta Forge Products manufacturing plant, which in July celebrated the production of its first 1,000 wrought iron ornamental garden decorations. However, Vesta CEO Rube Goldberg told The Denver Post earlier this year that the company may be forced to lay off 1,600 employees in Colorado if the BS-TC isn't extended.
"We serve many families and communities," Goldberg said, "by providing important everyday products. Although our process is old-fashioned and slow, and our products cost much more than modern mass-produced steel items, a lot of people like Vesta's salute to tradition.
"Moreover," he continued, "we use charcoal and hand-operated blowers, instead of oil or natural gas or the high-tech equipment found in many factories today. Tradition is important. In fact, our goal is to build at least one hundred new BlackSmith shops over the next decade, to manufacture thousands and thousands of heavily subsidized home products annually. We could never do this, we could never keep this tradition, this vital nostalgia alive, if politicians cut off the BS-TC and other subsidies."
It's true that the BS-TC has bi-partisan support in the Senate and Congress. And just last week, a Senate committee passed an extension to the BlackSmith tax credit. Yet ironically, in preparation for a presidential race where jobs will likely prove to be of utmost importance, BlackSmith jobs are falling by the wayside.
Many in the BlackSmith industry, and even former presidential advisor Carl Rover, think the BS-TC will not see an extension until the lame duck session. This kind of last-minute extension will of course lead to an increasing number of layoffs and extend the jolting stop-and-start momentum that this industry has experienced in the past. And while a one-year extension may be helpful in saving or regaining some jobs, it will do little to build the long-term health of the BlackSmith industry.
Harry Tokien, VP and chief service officer of Mitsutushi Foundry Systems, expressed concern regarding the unpredictable nature of the market, due to policy uncertainty, while speaking at the recent Associated BlackSmiths of America ForgePower lobbying event. "The stop-start nature of U.S. regulations really prohibits the long-term nature of R&D and planning for sales," he said. "If we have a repeat of 2004, it will be difficult for us to deliver, due to suppliers and supply chains not being able to catch up."
A one-year extension would also do little to ensure that projects are actually built, since many BlackSmith projects take months to complete from start to finish.
"This every 12-month hopscotch doesn't do anything for long-term strategy. We've got to have a level playing field that brings some stability, via continued subsidies that enable us to compete with more efficient, modern facilities, and lets us perpetuate this beautiful vestige of the horse-and-buggy era," said Duncan Gerbil, interim CEO of Snoozalong Industries, during the ForgePower event.
For now, though, it seems the BlackSmith industry will likely remain a victim of politics - at least until after the elections.
Traditional and "modern" technologies. Located less than a mile apart in Little Chute, Wisconsin, a replica recalls traditional Dutch windmills that ground grain into flour and operated pumps for the Netherlands' extensive dike system - while an expensive new 150-foot-tall turbine on the high school grounds generates 0 to 20 kilowatts of electricity, enough to power five average homes when wind conditions are at their maximum. The Dutch windmill is expected to draw tourists, while the new windmill helps make politicians and students feel they are "doing something" about "saving the environment," even though such turbines are notorious for slaughtering eagles, cranes and bats.
Enormous, heavily subsidized wind turbines turn a formerly idyllic Upstate New York agricultural community into an industrial zone, while diminishing property values, impairing people's sleep and health, and causing local bird and bat populations to plummet. The real-life BlackSmith "salute to tradition" remains popular with turbine makers who rely on taxpayer subsidies, and with politicians who rely on taxpayer-subsidized campaign contributions from turbine makers.
John Droz is a physicist and environmental advocate.