2023 State of the Industry: Changing Legislation and Problems on the Horizon for Suppliers and Distributors
Things are getting easier in the U.S. right now — at least compared to life over the last three years. In March 2020, the world shut down in a way most could never have dreamed. The pandemic halted everything. Streets were empty. Grocery store shelves were barren. Nonessential employees stayed home from work and, in some cases, never returned to the office.
Even though the pandemic has been contained and — in many cases — life has improved, the world is still grappling with the fallout, including supply chain holdups and new logistical headaches. The vibe is, to put it mildly, more optimistic. Legislation is centered around growth. On building back better. Not just going back to where we were in 2020, but getting to a point where we can start to progress on schedule again.
“The story of America is a story of progress and resilience,” President Joe Biden said during his 2023 State of the Union Address. “We are the only country that has emerged from every crisis stronger than when we entered it. That is what we are doing again.” Part of a return to normal life, however, means the return to normal problems. The world is not suddenly perfect because pandemic restrictions have loosened. There were issues before, and there will be issues after. The difference is we can work to combat those issues together, standing up for legislation that helps businesses, and making our voices heard if we disagree. We can find new ways to make products more environmentally friendly, and ensure they’re made in compliance with strict safety requirements. We can choose to purchase domestically instead of buying products abroad, easing the stress on the global supply chain.
The last time Print+Promo Marketing wrote its State of the Industry report, the Democrats controlled both the House and Senate. Following the 2022 midterm elections, Republicans gained control of the House, with the change in the Senate being Arizona Sen. Kyrsten Sinema switching her political affiliation to independent status. The Biden administration will now have to work harder to pass legislation. But, it’s not all gridlock. Some things have progressed. And several of those developments would have real implications for promotional products suppliers and distributors should they go into effect.
Many of these changes have to do with new legislation regarding environmental efforts. You’ve probably seen news about PFAS (per- and polyfluoroalkyl substances) chemicals, or “forever chemicals” as they’ve been dubbed. They are primarily used on apparel and packaging to prevent stains and repel water.
There are also possible new fees that printing manufacturers would have to pay as a result of environmental pushes, due to Extended Producer Responsibility (EPR) programs targeting the collection and recycling of packaging and printed paper, and new OSHA regulations that, if not implemented, could result in exponentially higher fees.
Finally, over the past year, the supply chain has dominated conversations throughout the industry. While lockdown protocols in China have created headaches that are still felt in the U.S., the local supply chain on the ground has been upset by things like possible UPS strikes, the rail strike that almost happened, and staffing shortages. With all of this in mind, it might be hard to think “things are getting better.” But, industry experts have been paying close attention to these developments in an attempt to minimize any problems felt within the promotional and print industries.
The goalposts for true environmental activism and green business are moving all the time, thanks to continually evolving science, along with activism and legislation. As new discoveries in environmentalism develop, legislation moves at a similar pace to make sure companies and governments are doing things the right way in congruence with the day’s standards.
Gary Jones, vice president of environmental, health, and safety affairs for PRINTING United Alliance, Fairfax, Virginia, says one of the biggest issues promotional products distributors and suppliers should monitor is the changing legislation around PFAS chemicals.
“What we’re seeing is a tremendous amount of activity on a broad front, from both the federal government and the state governments,” Jones says. “A lot of state governments have either passed or are trying to pass legislation that bans the intentional use of these chemicals. And the chemicals are primarily for textiles for stain and water resistance.”
Jones brings up Scotchgard as a commonly known example of a PFAS chemical application for apparel. Though it’s used in packaging, too, as a way to deter moisture.
“It provides resistance to primarily the paper substrate, although we do see a little bit with plastic substrate,” he says. “Like a pizza box or fast food packaging, to keep the grease from leaking through the box. They would treat that with a PFAS-containing coating.”
Some bans in the U.S. on PFAS in food packaging went into effect on Jan. 1, 2023, provided safer alternatives were available for the particular packaging application. New York also just passed legislation to prohibit the use of PFAS chemicals in production of clothing and textiles in the state, and Jones says other states, like Colorado and Maine, are moving forward with legislation that would require companies to report to the government if they are using PFAS chemicals.
“The EPA has a couple of rules that are pending right now, where they’ve eliminated certain exemptions for PFAS, and you’re basically going to have to tell the federal government all products you’re using that have PFAS in them,” Jones says. “And what’s interesting about PFAS is that the current threshold for reporting it is relatively high, at least for our application. But with the one proposal, the EPA wants to eliminate that. So, basically, it’s going to be the presence of any of those chemicals. We’ve been monitoring it and have submitted comments opposing it, because it would cause a huge administrative headache for companies that are using those chemicals.”
The other issue is that PFAS is sort of a blanket term for all of the chemicals fitting that description.
“There [are] so many PFAS chemicals,” says Stephanie Buka, government affairs coordinator for PRINTING United Alliance. “There are thousands of them. And we don’t want them all grouped together, because some are more toxic than others or more harmful to health than others, but the EPA is sort of grouping them all together. So, we really prefer that each chemical be considered based on its own unique makeup and profile, and we don’t want all the PFAS chemicals grouped together for risk assessment purposes.”
The EPA’s new guidance on PFAS chemicals would be close to a zero-tolerance standpoint. According to a New York Times report, EPA administrator Michael S. Regan said the government is seeking “near-zero” levels of PFAS substances in products and drinking water.
“This is very significant,” Regan said, according to the Times. “This is the first time in U.S. history that we’ve ever set inferable limits on PFAS pollution.”
Right now, the EPA’s announcement pertains mostly to utility companies, placing regulations and mandating that they take steps to limit the amount of PFAS chemicals in drinking water. But, as Jones says, the battle against PFAS chemicals is ongoing, and as new regulations come into play, manufacturers will need to change the way they do business and manufacture their products.
This is where industry groups like the Alliance are taking action to try to appeal to lawmakers to find solutions that don’t fully disrupt the way they do business, or at least try to tailor the legislation so it does not lump all PFAS chemicals under one umbrella term, where each chemical is subject to the same scrutiny.
In order to do that, Buka says members of the Alliance, as well as PPAI, have signed onto letters from organizations like the American Chemistry Council. They also have discussed the possibility of carrying out fly-ins in Washington, D.C. to meet with legislators.
“A fly-in is where you fly to D.C., walk around Capitol Hill, and you have meetings set up with certain congresspeople that you think will help advocate your cause, or even to raise awareness about your issues, and build relationships with Congress members,” Buka says. “We felt there was a good connection with PPAI, and that there was an opportunity to share resources and potentially do a fly-in together.”
Within that vein of pollution, Jones says the Alliance is keeping track of issues surrounding hazardous waste management, and helping Alliance members manage hazardous waste properly, to prevent penalties and violation notices. Also, air pollution regulations have been changing, as the EPA and various states are enforcing new rules.
Jones notes Michigan and certain counties in Nevada as specific examples.
“There are a couple of other states that are moving,” he says. “New Jersey is looking to revise their regulations for printing or their guidance document. And our concern is that the EPA has signaled that they want to reduce the ozone standard once again, which will trigger another round of rulemaking.”
This pertains to the print and promotional products industries because decorators need to be aware of whether or not they need air permits from their state or local government.
“They have to make sure they have the right permits and are meeting the control requirements,” Jones says. “And some of the thresholds for permitting are very, very low. And so they need to be aware of what their current air permit threshold is, and what they need to be doing to stay in compliance, especially with a focus on air pollution and air pollution reduction.”
Extended Producer Responsibility
Another legislation change relating to environmentalism that print manufacturers should especially be aware of is the idea of EPS. The practice has taken hold in four states, and Jones says there are five or six more that the Alliance is actively monitoring and engaging with to see whether they go through with this type of legislation.
“Basically, what extended producer responsibility is is a law that gets passed and imposes a fee, which I call a tax, on packaging and printed paper,” Jones says. “And the tax is designed — or the fee is designed — to pay for the collection and recycling of those materials. The fee is going to be based on how readily recyclable your materials are.
“So, some states — there [are] two right now that are just after packaging, and that includes paper packaging and plastic packaging, and that’s Maine and California, and Oregon and Colorado included printed paper,” he continues. “The states we’re monitoring, right now there are two bills that have been introduced in New York State, New Jersey has a bill that’s moving through, Washington State has a bill that got a lot of action but has died this year, and like I said, there’s a good few ... that have also proposed [legislation].”
Jones says this legislation should be concerning to print and promotional products manufacturers because when a company sells printed products directly to a consumer, that company selling the product is on the hook for the fee. Those added costs could be enough to sway some customers away from buying as many printed products — or any printed products at all — if there are alternatives available to them.
“If we’re selling to our customer, our customer has to pay the fee,” Jones says. “And obviously, the concern is the customer may not A) want to print as much or B) if it’s for communications like printed paper, they have other alternatives, primarily electronic, and they would print a lot less if they have to pay a tax or additional fee on the cost of putting your products into the marketplace in each of these states.”
In addition to the places where businesses need to stay on the up and up with their environmental and hazardous waste obligations, Jones says the print and promotional products industry is “consistently not doing well” with a number of OSHA regulations.
“The ones that bubble up to the top are going to be machine guarding and lock out/tag out,” he says. “Those are always in our top five most commonly violated OSHA standards.”
Relating back to the pollutant issue, Jones warns that many companies are falling behind in their hazard communication program, where they’re not keeping up with collecting safety data sheets, labeling chemical containers, inventorying of chemicals in use, or making sure employees are trained properly to handle all of those chemicals.
Sometimes the issues are as simple as not knowing when safety shoes are necessary.
“Because our industry uses a lot of manual labor, they need to look at safety shoes,” Jones says. “I just answered a question from a member about safety shoes in terms of ‘Where do safety shoes have to be worn?’ And, pretty much, if you do an assessment and you look at hazards, usually once you start moving quantities of materials where you use a pallet jack or forklift, at that point ... you really need to start looking at safety shoes. And a lot of folks tend to not follow that, tend not to recognize the hazards associated with, say, dropping something on your foot or running into something and causing a serious injury.”
Just like the environmental rules, OSHA and workplace safety regulations change too, so it’s paramount for business owners to stay educated on the latest regulations, lest they be on the hook for hefty fines and violations.
Due to the changes in the consumer price index, OSHA has increased penalties and changed the way they enforce them, Jones says. What once would have been a single fine can now stack up due to multiple enforceable violations.
“[OSHA] changed their enforcement policy, where they are now going to encourage their inspectors to cite instance by instance in lieu of grouping similar violations under a single penalty,” Jones says. “For example, if they were to come into a facility and ... they find a piece of equipment that has a hazardous area that’s not guarded, and someone’s operating that equipment, they’re going to cite you, and that could be $30,000, and not $15,000. ... What they did at one time is say, ‘Oh, you have three machines, they all needed guards, we’re going to put that down as one item and give you one proposed penalty.’ Now what they’re going to be doing is listing them each with their own penalty.”
Jones says distributors and suppliers can keep their heads above water by simply doing their homework as much as possible — looking at what legislation would affect them and their businesses, and getting involved with political action groups when possible. Many of these resources are available through PRINTING United Alliance.
“So, I would say in terms of balancing the two or looking at the two, between the environmental and the OSHA, I think companies need to be spending some time on their OSHA compliance requirements, and making sure that they’ve got their act together, so to speak, and that they’ve got compliance programs in place that can withstand the scrutiny of an OSHA inspection,” Jones says. “And what I do want to mention is that we have a lot of resources available for [Alliance] members on our webpage. And these resources are pretty much free.”
Strikes and Labor Interruptions
President Biden got involved in December to keep a nationwide rail strike from happening, which would have created enormous strain for American consumers and manufacturers. The strike would have started on Dec. 9, 2022.
“It was tough for me, but it was the right thing to do at the moment — save jobs, to protect millions of working families from harm and disruption, and to keep supply chains stable around the holidays,” President Biden said at the time, according to Reuters.
While eight of the 12 unions involved ratified the agreement, four rail worker unions still denied the proposal on the grounds of paid sick leave.
Because of that, President Biden said that the “fight isn’t over.”
If a rail strike were to go into effect, it would freeze approximately 30% of U.S. cargo shipments by weight, and cost the American economy as much as $2 billion per day. During the pandemic, cargo shipping ports were already put under immense strain as staffing shortages left boats unloaded, delaying products.
Buka, however, is optimistic that the averted strike is an averted catastrophe. It’s rare that the federal government can step in on an issue like this, so there was more in play than just the unions deciding to strike unilaterally.
“I think they dodged a bullet,” Buka says. “President Biden got involved and helped. There was an issue with healthcare for the labor unions, and I don’t think they got exactly what they wanted in the agreement, but there was enough agreement that they could avoid the strike. There’s a potential, but for now, [it’s a] bullet dodged.”
There does, however, still seem to be the possibility of a UPS strike for 2023. The last time a UPS strike occurred was in 1997, which culminated in $780 million in losses for the company across a 15-day strike, and 80% of packages being undelivered. Contract negotiations between UPS and the Teamsters Union are set for the spring, with existing contracts expiring in July.
If a strike happens here, it would most likely affect the back-to-school campaigns that distributors would be working on for August and September delivery. And, as holiday campaigns move higher and higher up the calendar, it could also have implications for the holiday season.
The Big Picture
Overall, the industry has learned to adapt like every other industry. By now we’re all more than sick of hearing about the “pivot.”
But, it’s true. The industry has been resilient against unprecedented adversity. While there will always be things that could make life more difficult for business, the best solution is to be informed, educated, and prepared.