Challenges and Opportunities Are Everywhere

To say that this year has started off with more uncertainty than expected is an understatement. There have been natural disasters including flash floods, landslides, earthquakes and record-breaking heat, as well as political unrest and discord across the globe. And those in the industrial world are not immune to these challenges with new bills, regulations and tariffs, but also significant opportunities to boost some manufacturing sectors in the U.S., including flow controls.

The recently passed U.S. tax reconciliation bill offers substantial advantages for many businesses. The Tax Foundation, a nonprofit, nonpartisan tax policy organization, estimates that the new bill will increase long-run GDP by 1.2% long term but will also increase federal budget deficits and add higher interest costs on that debt.

A major win in the bill for manufacturers is the ability to expense domestic research and development costs in the year they are incurred. A bonus depreciation for short-lived investments was also restored. Additionally, interest expenses are now deductible in more capital-intensive businesses, helping to offset some of the higher interest rates of the last few years.

In the energy sector, while many of the green energy credit incentive programs were phased out, oil and gas and coal-fired energy producers will find some benefits. The Department of the Interior and Bureau of Land Management will now hold regular lease sales for land and waterways to allow for more exploration, increasing government revenue from leasing up to $17 billion in the next decade. The new bill also allows deductions for intangible drilling costs to be taken upfront instead of spreading over the life of the well, reducing taxable income and freeing funds for drilling operations costs. Numerous federal fees that were previously imposed on industry activities, including methane emissions, were also repealed. That’s a lot of detail and doesn’t even begin to scratch the surface of all that’s included in the bill.

Specific to valve manufacturers and flow control companies, there also seems to be a lot of merger and acquisition activity happening right now. Industry News covers a number of high-profile transactions including Baker Hughes, Flowserve and Parker Hannifin announcements from the last quarter. This is creating larger organizations that can better serve their customer base as one supplier and should benefit end users.

We will continue to keep you abreast of the biggest news as it happens on ValveMagazine.com and the pages of the print edition. Please reach out with any news you have to share or if you have ideas for things you’d like to see.