Washington Watch

So the Democrats have regained a majority in the House and Senate. Some characterize this as divided government. Others call it a reinstatement of checks and balances. Whatever you call it, industry must be vigilant about how the new power players could affect U.S. business and markets.

The new legislators may not have material handling on their minds in putting forth their agendas, but you can be sure the bills they'll be introducing in their first year will shape what goes on in the country's factories and distribution centers. (See the box, On the Agenda,)

Fred Thimmel, president of Bryant Products (Ixonia, WI, www.bryantpro.com) and chairman of the Conveyor Equipment Manufacturers Association's (www.cemanet.org) government affairs committee, says a flurry of new bills is customary whenever new legislators arrive. This year's flurry of activity is more intense due to the unusually large freshman class.

"While many intriguing bills have been introduced, it is far, far too early to say if any will gain traction," he says. "Conversely, bills that have sat in committee are generally dropped from consideration and their bill numbers are recirculated for use on new pieces of proposed legislation. Casualties of this process are numerous bills dealing with medical and product liability reform, expansion of employer liability in medical malpractice cases and greater oversight of OSHA findings."

Jason Poblete, an attorney in the regulatory litigation group of Reed Smith LLC (www.reedsmith.com), expects labor issues to be priorities early on. Before re-entering the private sector he served as spokesman and senior adviser to Bill Thomas (R-Calif.).

"Ted Kennedy (D-Mass.) chairs the health committee in the senate and Congressman George Miller (D-Calif.) is taking the lead of the Labor Committee," says Poblete. "They'll bring a disproportionate interest to OSHA. But if they want to pass any legislation it will have to be on a bipartisan basis if they want the president's signature. Healthcare appears to be the starting point for the Senate, but there will be different issues trial ballooned, especially as they enter the budget consideration period. We'll see how the industries respond."

With so many presidential candidates making themselves known for the 2008 election, chances are the legislative agenda will lighten considerably as that election nears. That's why businesspeople need to keep an eye on both parties. Poblete expects immigration, pension and healthcare issues to move forward. Minimum wage will be another big issue early on, especially leading up to the summer.

Early signs coming out of OSHA (www.osha.gov) point to a focus on helping businesses to be more compliant with existing regulations. Homeland security will be mixed in with immigration reform and port security, which will place new security demands on the private sector. "When you have massive national immigration reform, there may be dislocations in the economy that will affect all industries," says Poblete.

Strength in Numbers
To address possible regulatory changes, industry associations are engaging their members and partnering with other associations that have lobbying leverage. Rick Blasgen, CEO of the Council of Supply Chain Management Professionals (www.cscmp.org), says he's expecting logistics to be a key area of focus for many government power brokers.

"To me, when something affects commerce as transportation has, I think it will get increased attention," he says. "With ports it started with security. It's a congestion issue, and those politicians who say every single container ought to be inspected have no idea what they're talking about. That will just stop the world in its tracks. When it affects goods getting to people, that's when attention will be driven to it."

Indeed, when it comes to trade issues, free and safe can be conflicting priorities. That's why House Bill H.R. 1 is getting a lot of industry attention. The bill would require 100% scanning of U.S.-bound containers loaded in China and the Netherlands. Last year, Patty Murray (D-Wash.) led the opposition to the bill and will remain a key opponent. It will come down to whether customs can successfully convince Congress and the media that 100% risk assessment and scanning will create the same level of security as 100% physical inspection.

Blasgen is making sure CSCMP participates with the International Warehouse Logistics Association (IWLA, www.iwla.com) and the Warehousing Education and Research Council (WERC, www.werc.org), to educate law makers on such concerns.

"Just as we expect supply chain partners to collaborate, so should associations," Blasgen says. "We underestimate our ability as voters and professionals to educate lawmakers on what it is they need to know to make our country better in terms of the supply chain profession. We can have more of a voice if we're joined at the hip."

Joel D. Anderson, President & CEO of the IWLA, agrees that the global supply chain will be high on the legislative priority list. The IWLA's job is not only to educate lawmakers, but to lobby them.

"The environmental agenda will move into the workplace on the diesel particulate issue and I believe it is here that business is vulnerable," he says. "Business may have to adopt a pollution reduction strategy just as they have for accident prevention."

Of course, environmental issues are connected to healthcare, and when it comes to warehousing, balancing the well being of workers against the costs of keeping them healthy could become an even greater challenge for U.S. businesses.

"Healthcare will be a big campaign issue, and that's a very serious problem," says Bob Shaunnessey, executive director of WERC. According to WERC's annual salary survey, the average warehouse worker makes about $25,000 a year. Family health coverage can cost $15,000-$20,000 a year.

"Right now the system is broke and it will take something serious to fix it," Shaunnessey continues. "You have a cost spiral that's partially driven by doctors protecting themselves against liability. So you have lots of tests and things happening in the healthcare system that, using normal judgment, you wouldn't do. But doctors resort to every test they can think of now to protect themselves against liability in case they might be sued. That's crazy. The way healthcare institutions raise rates in general to cover their expenses for people who are not insured is a tax on employers."

In summary, businesspeople need to keep their eyes on the new legislators. By communicating early and openly with them, both as individual taxpayers and through trade associations, business may find common ground. The associations related to material handling and logistics have an opportunity and an obligation to protect the interests of their members.

"If we handle the next five to ten years correctly on the policy side and on the safety and security side, we can be way ahead of the first responder unit in homeland defense," concludes attorney Poblete. "This is a good legislative season to take advantage of divided government. That's the silver lining. The days of congress beating up on the private sector are gone."