The U.S. Department of Defense’s new cyber security standards for defense contractors are creating significant costs and uncertainties for electronics manufacturers, but industry leaders are trying to make it work, according to participants in IPC’s North American Executive Forum call on January 6.

When fully implemented over the coming year, the DoD’s Cybersecurity Maturity Model Certification (CMMC) program will require cyber security certification for all contractors doing business with DoD, including contract bidders, subcontractors, and companies that sell commercial products or services to DoD. A non-profit governing organization, the CCMC Accreditation Body (CCMC-AB), will certify third-party inspectors who will then certify companies/businesses/contractors against the various CMMC standards/levels.

However, cyber security expert Leslie Weinstein told IPC members the DoD’s implementation of the CMMC program has been plagued by confusion since it was launched as a pilot program last January. Deadlines have been missed and reliable information has been lacking, Weinstein said. In the months ahead, more uncertainties may arise as the Biden administration takes charge at DoD and the program is potentially expanded to cover other federal agencies.

An instant poll conducted during the call underscored the industry’s concerns. Of the 47 industry leaders who responded, 30% said the U.S. defense market constitutes more than 50% of their business. Sixty percent said their companies would seek CMMC certification despite the costs and difficulties, but 62% said the program will likely result in shrinking the U.S. defense electronics industrial base. More poll results can be found here.

IPC will continue to advocate for the industry’s interests in the CMMC program and to help with industry compliance efforts, including new educational resources and webinars slated for later this quarter. Click here to access a prior IPC webinar featuring Leslie Weinstein, and don’t hesitate to contact me if you have questions or suggestions.

If your company manufactures or imports chemicals in the United States, then you need to review the pre-publication version of proposed changes to the U.S. Environmental Protection Agency’s (EPA’s) “TSCA Fees Rule.” Your initial feedback is needed by Tuesday, January 26.

This 2018 rule provides the EPA with a source of funds to fulfill its obligations under the Toxic Substances Control Act (TSCA), including the completion of risk evaluations of high-priority chemical substances. The proposed changes to this rule are important because, under TSCA, the EPA will have between 20 and 30 risk evaluations occurring in any given year; and even if the current list of such substances does not apply to your company, future lists may apply, and you may be obligated to pay at that time.

IPC and its peer associations have been communicating with the EPA and other federal policymakers to underscore the need for commonsense reforms to the 2018, and we are pleased that the proposed rule appears to make important and positive changes.  For example, the EPA is proposing exemptions for companies that manufacture or import high-priority chemical substances in quantities below 2,500 pounds per year; or produce them as a non-isolated intermediate; or import them in an article, produce them as a byproduct, or produce/import them as an impurity.  Also, the EPA is proposing a volume-based fee allocation. However, even with these positive provisions, we need to continue to provide information to the EPA to ensure those changes are instituted.

As of January 7, the proposed rule is yet to be published in the Federal Register. Once it is published, comments will be due to the EPA within 45 days. To prepare for that comment period, we welcome your initial feedback on the pre-publication version of the proposed rule by Tuesday, January 26.

During your review, please consider the following:

• To bolster the case for the proposed exemptions, can you provide data on the potential impacts of the “TSCA Fees Rule” on your operations?
• How would the proposed fee calculation methods impact small businesses?
• Should a volume-based fee allocation be calculated on average volume over the last five years, based on the most recent year of reporting; or could the EPA use production volume ranges and calculate fees based on those ranges?

Further information on the “TSCA Fees Rule” is contained in this recent IPC blog. 

Please contact me with your questions and feedback, and update your IPC email preferences (advocacy) to receive all of our environment, health, and safety information. I will continue to keep you updated.

As we set to close 2020, we look forward to 2021 with trepidation but also with a degree of optimism. We’re closing out one of the worst years in history, and when the dust settles, global real GDP growth will be down 3.7 percent. The United States economy will have fallen by 3.5 percent during the year, the worst annual decline since the that, the Great Depression. 2020 is one of the 10 worst years in the 200+ years of U.S. history.

As we present the December economic outlook report, we reflect that in some ways, 2020 could have been worse, but in many ways, it could have been better.

In this month’s report, you will find U.S. and European data on economic growth, employment, Manufacturer’s Sentiment (PMI) and end markets for electronics.

You will also find details on industrial production, capacity utilization, PCB production data and North American PCB bookings.

Please let us know how you use this research along with what other details you would like to see from IPC.  We welcome your thoughts and feedback.

IPC applauds the U.S. Congress for approving more than $900 billion in aid to support recovery from the COVID-19 pandemic. The package provides economic support in the form of unemployment aid, direct payments, and business loans, as well as funding for vaccines and testing.

IPC had urged Congress to pass a COVID-relief package with provisions to help the electronics manufacturing industry cope with the pandemic and contribute to the economic recovery, including extending the Paycheck Protection Program, modifying unemployment insurance benefits, and providing aid to state and local governments to ensure essential services are maintained.

Going forward, IPC will keep an eye on the implementation of the provisions of interest to our industry, and we will continue to advocate for measures to increase business certainty and long-term recovery. 

Below are details of key measures in the aid package.

Paycheck Protection Program

The bill would authorize a second round of loans under the Paycheck Protection Program (PPP). The provisions included:

• Appropriates $284.5 billion in new funds for the U.S. Small Business Administration (SBA) to guarantee first- and second-round loans.
• Allows businesses with severe revenue reductions a second draw on loans up to $2 million.
• Expands the uses of PPP funds that would qualify for loan forgiveness, including personal protective equipment purchases, adaptations for COVID-19 safety-related measures, operational expenses, and supplier costs.
• Allows PPP borrowers to choose a loan forgiveness period ranging from eight to 24 weeks.
• Grants borrowers flexibility on eligible expenses paid for with forgiven PPP loans, reversing guidance from the Internal Revenue Service.
• Bars publicly traded companies from receiving PPP loans.
• Requires interest rates on PPP loans to be calculated without compounding or adjustments.
• Clarifies that approved PPP payroll costs include employer-provided group insurance benefits.
• Clarifies that businesses must have been in operation on Feb. 15 to qualify for a PPP loan.

Employee Retention Tax Credit

The bill extends and expands the CARES Act refundable payroll tax credit for “eligible employers” affected by COVID-19 through June 30, 2021.

• The credit percentage is increased from 50% to 70%.
• The amount of qualifying wages per employee is increased from $10,000 for the year to $10,000 per quarter.
• The gross receipts test is changed from a 50% quarterly decline when compared to the prior year quarter to a 20% decline.
• The full-time employee threshold is increased from 100 to 500.
• Employers can claim the credit and participate in the Paycheck Protection Program but with restrictions to prevent double dipping.
• Codifies IRS guidance whereby health plan expenses can be counted as qualified wages when employers pay no other wages, e.g., furloughed workers who continue to get healthcare.
• New employers are eligible for the credit.

Disaster Loans (EIDL)

The CARES Act expanded the SBA’s Economic Injury Disaster Loan (EIDL) program and authorized the agency to advance as much as $10,000 for recipients to pay sick leave to workers affected by Covid-19, retain employees, and make other covered payments. This new measure would:

• Double the authorization for advance funds to $40 billion, from $20 billion, and extend it through Dec. 31, 2021.
• Provide $20 billion for certain entities to receive the difference between $10,000 and the advance funds they received under the CARES Act. Eligible recipients would include those with 300 or fewer employees that are located in low-income communities and that had economic losses of at least 30% over eight weeks compared with a similar period before the pandemic.
• Repeal a provision from the CARES Act that requires PPP forgiveness amounts to be reduced based on EIDL advances.

Loan Payment Relief

The CARES Act provided $17 billion for the SBA to pay the principal, interest, and associated fees for loans under the 7(a), 504, and microloan programs for six months. The new measure provides $3.5 billion to extend the payment relief for additional periods depending on the program and the small business type, and caps monthly payments at $9,000 per borrower.

Other Measures

• Small Business Provisions: Provides $1.92 billion for the SBA to:
  • Increase its maximum guarantees for 7(a) loans to 90% through Sept. 30, 2021.
  • Temporarily increase 7(a) express loans.
  • Temporarily waive certain fees associated with the 7(a) and 504 loan programs.
  • Allow eligible small businesses to use 504 program funds to refinance existing debt equal to 100% of the cost to expand those businesses.
  • Support as much as $7.5 billion each year in debt refinancing for 504 program projects that do not involve expanding a small business.
  • Allows businesses participating in the 8(a) program on or before Sept. 9 to extend their participation by one year.

• Unemployment Leave: Restores and reduces to $300 per week, from $600, the Federal Pandemic Unemployment Compensation (FPUC) created under the CARES Act. The extra payments, which expired on July 31, would apply to weeks of unemployment after Dec. 26 and through March 14, 2021. The bill extends other CARES Act unemployment benefits set to expire on Dec. 31 through March 14, 2021. 
• Direct Payments & Tax: Provides another round of direct payments of as much as $600 for an individual, $1,200 for joint filers, and $600 for each qualifying child. It would apply a similar income limit and phase-out as the CARES Act, reducing the payments by 5% for individuals with adjusted gross incomes of more than $75,000. Filers with AGIs greater than $87,000 would not receive a payment. Payments would be based on 2019 taxes.  
• Payroll Tax Deferral: Workers who deferred their payroll taxes since September would be given until Dec. 31, 2021, to pay back the government, instead of April 30, 2021.
• Paid Leave Credits: Extends credits for paid sick and family leave provided under the second coronavirus relief package through March 31, 2021.
• Gross Income: Clarifies that gross income would not include certain forgiven debt, emergency SBA disaster loans, and loan repayment aid provided by the CARES Act.
• State & Local Aid: State and local governments that received funding through the CARES Act to pay for unbudgeted expenses tied to the COVID-19 emergency can use remaining funding through Dec. 30, 2021.
• HUAWEI/ZTE: Provides $1.9 billion for a Federal Communications Commission program to assist small service providers replacing equipment made by Chinese firms Huawei Technologies Ltd. and ZTE Corp.

As always, please contact the IPC Government Relations team if you have any questions or concerns about these measures.