If lithium-battery-powered vehicles are the future, then why is the Obama Administration pursuing new regulations that would make shipping the batteries so burdensome and expensive? We’ve examined the issue before here and here, and were pleased to see The Washington Post cover the issue in its Saturday edition, “Everyday lithium batteries at center of debate about cargo handling.” Excerpt:

The new regulations could affect a massive web of companies, including manufacturers, shippers and retailers. They say costs would be staggering. UPS told PHMSA that complying with the rules would cost the company at minimum $264 million in the first year. And the company said each subsequent year would cost an additional $185 million.

Best Buy submitted a long list of products that would be affected, including portable GPS devices, portable DVD players and TVs, cellphones, cordless headphones, universal remote controls, cameras, camcorders, even electric razors and toothbrushes.

In today’s Post, Robert Samuelson digs into natural gas and hydrofracturing today in his column, “Shale gas: Hope for our energy future.” Good and necessary introduction to the issue. We recommend it to whoever writes and edits the editorial page for The Philadelphia Inquirer, who should be ashamed for the bizarre attack against former Gov. Tom Ridge.

Ridge was hired last week to advise and represent the Marcellus Shale Coalition, companies and groups involved with the production of natural gas from the Marcellus Shale formation in Pennsylvania. In an editorial Friday, “Shale’s shill,” The Inquirer throws out the term “shill,” when describing advocacy for a major and growing contributor to the state’s economy and employment.

Former governors can choose many career paths. Some of them become college presidents. Some go on the lecture circuit.

And then there’s Tom Ridge, who is set to become a paid shill for the natural-gas drillers swarming his native state.

The Inquirer’s argument boils down to “there’s something obnoxious” about a former governor representing an industry “that poses serious environmental risks, and has already spent millions on lobbying to forestall paying its fair share of state business taxes.” Risk! Risk! If there’s risk, we must never act! As for taxes, well, that’s a matter of dispute.

It’s always bizarre to read newspaper writers who are offended by the exercise of the First Amendment, which is what Ridge has been hired to do — express a point of view and petition the government. One’s almost tempted to call the paper’s editorialists “hacks,” but that would be lowering ourselves to their level.

So we’ll just close by referring the editorialists to the Oil & Gas Journal’s recent story, “Study projects boost in Marcellus shale jobs, economy.”

How dare they report that!

Since President Obama has been promoting batteries, batteries and more batteries, it’s a good time to bring out Gary Numan’s 1979 synth-wave classic, “Cars,” played on automobile horns with an accompanying (head)light show — all powered by one battery.

It’s a DieHard ad:

Via Gizmodo, with a hat tip to Glenn Reynolds. We were going to link to the original version a while back, when the Buzzcocks played the Black Cat here in D.C., twinning it up with their song, “Fast Cars.”

UPDATE (8:25 a.m.): Speaking of batteries, here’s XTC performing “Battery Brides.” More hooky irony from one of the masters thereof, and in this case, the battery is a reference to mass production techniques.

President Obama is scheduled to participate in the ceremonial groundbreaking Thursday at LG Chem’s advanced battery manufacturing plant in Holland, Mich. The Koreans are paying attention. From Chosun Ilbo‘s English-language news site, “Obama to Attend Groundbreaking for LG Chem Plant in U.S.“:

U.S. President Barack Obama will attend a groundbreaking ceremony on Thursday for an LG Chem plant in Holland, Michigan, the company said Sunday. It is very unusual for an incumbent U.S. president to appear at such an event for a foreign company, and it is the first time for a Korean firm.

LG is investing US$300 million to build the plant which will produce batteries for electric vehicles. First-phase commercial production is scheduled to begin in the first half of 2012, and once completed in 2013 the plant will churn out lithium ion cells for 200,000 hybrid cars annually….[snip]

As part of efforts to revive the auto industry by bringing more green vehicles to the road, the U.S. government has lent considerable support to LG’s Holland plant, including $151 million from a federal stimulus program. The Michigan state government also offered tax cuts worth $130 million, which together with the stimulus funds will almost offset LG’s entire construction costs.

The focus will be on advanced batteries,  “clean energy,” the “green economy,” etc., but one hopes the President also remarks on the importance of foreign investment in creating jobs in the U.S. economy. The company’s U.S. subsidiary is Compact Power, Inc. (Blog summary.) News accounts…

• Detroit Free Press, “Obama will visit Holland battery plant Thursday“
• Holland Sentinel, “Obama coming to Holland“
• AP story, “Obama to attend LG Chem groundbreaking“
• AP, June 23, “Mich. creates tax-free zone for LG Chem in Holland“

We appreciate the ceremonial and political component to the scheduling of the President’s trip this week. For one thing, it helps the locals recover from Holland’s shattering loss in the World Cup.

For a real boost, the President should returns for a visit next May, during Tulip Time. March in the parade, Mr. President!

In a Forbes magazine column, “K Street Capers,” Brian Wingfield reviews some of the lower-profile issues on which business associations lobby, such as the unintended consequences of Iran sanctions, foreign-made plastic flowers and mixed-martial arts.

And lithium batteries. We wrote yesterday how the new health care law taxes one of U.S. industry’s great success stories, medical devices, forcing manufacturers to cut jobs and investment. (“Never Letting a Good Deed (Device) Go Unpunished (Untaxed).”) Federal regulators are also working to make it more expensive and difficult for the industry to operate in the United States.

Batteries. Makers of lithium ion batteries and medical-device producers are fuming about a proposed Department of Transportation rule they claim will drive up the distribution costs to power cellphones, e-readers, pacemakers and insulin pumps by $8.5 billion during the next decade. The regulation would classify all lithium batteries as hazardous materials when transported by cargo plane–requiring special storage easily accessed by pilots in case of fire–and forcing manufacturers to get safety certifications for battery design. A pending transportation bill sponsored by House Transportation Committee Chairman Jim Oberstar (D–Minn.) would impose similar restrictions.

Meanwhile, the trial lawyer lobby is still trying to stimulate more speculative lawsuits against device makers, pushing the Medical Device Safety Act, which would replace consistent federal safety standards under the FDA with a more exploitable regulatory regime under 50 state court systems. (The bills are S. 540, originally introduced by Sen. Edward Kennedy.)

Too many federal officials claim to support U.S. manufacturers but then enact laws and regulations that disadvantage the same manufacturers in global competition. In the case of medical device manufacturers, they have to be wondering, “What’s next?”

President Obama gave remarks about the economy Friday at a manufacturing company in North Carolina. As The New York Times reports:

To highlight his economic agenda, he flew to Charlotte to visit Celgard, a firm that produces material for lithium batteries and has received $49 million from the stimulus program. The company is expanding its Charlotte plant and building a new facility in nearby Concord. Mr. Obama said the stimulus money was helping Celgard create 300 new jobs directly and as many as 1,000 new jobs for suppliers and contractors. 

It’s great the President chooses to highlight manufacturing. At the same time, manufacturers can remind him that the Administration is rolling an avalanche of regulations down upon the economy, burying the very industries he’s promoting.

Lithium batteries represent a good example. As previously noted, in January the Pipeline and Hazardous Materials Safety Administration [PHMSA]  issued a notice of proposed rulemaking [NPRM] to modify regulations that govern the shipping of lithium batteries and cells as air freight. The proposed regs require the batteries and battery-containing products be shipped as hazardous materials,  imposing unnecessary, anti-competitive and in many cases prohibitively expensive handling and packaging requirements.

Lithium-ion batteries are already hugely important in portable electronics and consumer goods, where just-in-time manufacturing and supply chain efficiencies are critical. The National Association of Manufacturers also discussed the impact of the proposed regulations on the electric vehicle industry in the NAM’s formal comments:

As the federal government encourages greater energy independence, the development of a lithium ion battery industry in the United States is more critical than ever. The PHMSA NPRM is totally inconsistent with national policy goals because the rule will make it more difficult and more expensive to ship large advanced batteries that are used for electric and hybrid vehicles and domestic energy exploration. Achieving a level playing field in the United States that keeps transportation services efficient and costs competitive is critical to the success of these larger policies intended to promote energy independence.

These considerations are just as important to the creation of jobs as the stimulus funding trumpeted by the President Friday in North Carolina.

Just dropped over at the website for the Medical Device Manufacturers Association, www.medicaldevices.org, and find the MDMA to be engaged in the very same issues Shopfloor has been blogging on. Yes, not that big of a surprise — they’re manufacturers. But health care AND lithium battery shipping practices!

Relevant excerpts from the MDMA’s releases follow:

“House Health Care Bill Passes“: “MDMA is very concerned about the impact a $20B device tax will have on patient care, innovation and small businesses. If eliminating the tax is not possible, structuring it to provide relief for smaller companies is critical. Under the current structure, many companies will owe more in taxes than they generate in profits, requiring companies to lay off employees, cut R&D budgets and slow the development of new therapies that will improve the quality of care for all Americans. Moving forward, these issues must be addressed before the tax takes effect in 2013.”

“MDMA Submits Comments on Lithium Rule“: “MDMA submitted comments today on a proposed rule by the Department of Transportation that would limit the ability of medical devices and other products containing small lithium batteries to be transported by aircraft. Specifically, the rule would force a greater number of finished medical products to be classified as hazardous material, which would likely impede the ability for devices to reach patients in a timely fashion. MDMA acknowledged these concerns in the comment letter and further expanded upon the impact on small businesses.” The comments are available here.

“MDMA Raises Concerns with Proposed International Tax Increases“: “MDMA, along with other trade and business groups around the country, signed a letter of opposition to Congress regarding a proposed increase in international tax provisions for manufacturers exporting products overseas.  The tax increases, included in the Administration’s FY2011 proposed Federal budget, would increase the tax burden for exporting companies by a collective $122 billion over the next 10 years.” The NAM also signed this letter.

(Hat tip: Area Development Online.)

The Pipeline and Hazardous Materials Safety Administration [PHMSA] in January issued a notice of proposed rulemaking [NPRM] for regulations intended to improve the safety of shipping lithium batteries and cells via air. Unfortunately, by requiring the batteries and battery-containing products be shipped as hazardous materials, the proposed regs are onerous and could make the use of air cargo prohibitively expensive.

This proposed regs are especially puzzling coming from the Obama Administration, since lithium batteries are considered an essential element in the low-carbon, “green jobs” economy the Administration is always talking about.

As the National Association of Manufacturers contended in comments submitted on the proposed rule:

As the federal government encourages greater energy independence, the development of a lithium ion battery industry in the United States is more critical than ever. The [proposal] is totally inconsistent with national policy goals because the rule will make it more difficult and more expensive to ship large advanced batteries that are used for electric and hybrid vehicles and domestic energy exploration. Achieving a level playing field in the United States that keeps transportation services efficient and costs competitive is critical to the success of these larger policies intended to promote energy independence.

The NAM’s objections are many, including not just the additional, unnecessary costs but the competitive disadvantage the rules would impose on U.S. manufacturers. From our comments:

Due to the impacts of designating lithium ion and lithium metal cells and batteries and the products containing these batteries as Class 9 hazardous materials when shipped by air, shippers will face increased costs from transportation providers because most air carriers charge additional fees for carriage of fully regulated hazardous materials shipments. In addition, the restriction to only cargo aircraft for these shipments as well as the proposed rule’s Class C compartment requirement for stowage aboard the aircraft will squeeze the available air cargo market as competition for cargo space will increase as all manufacturers affected by this NPRM will be limited to cargo aircraft. One manufacturer believes that an effect of the rule will be a loss of 80 to 90% of the existing airfreight capacity that will force shippers to redesign entire supply chains in less than a six-month timeframe. As a result, shipping costs will skyrocket and shipping delays will be an inevitable byproduct of a restricted air cargo market. Manufacturers believe that the PHMSA cost-benefit analysis is inadequate and does not consider these transportation market impacts to shippers as a result of very short implementation of the NPRM. Further, the PHMSA cost benefit analysis does not even consider the supply chain relationships impacted by this NPRM or the global nature of modern supply chains.

The comment period ended March 12 and the docket, PHMSA-2009-0095, closes Thursday.