Regulatory Fines for Compliance Infractions - My Advice for a Positive Outcome

A BALANCED VIEW FOR FACILITIES & REGULATORS

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A good topic that is guaranteed to fire off robust conversation would be EPA and DNR fines for environmental compliance infractions. Regulated facilities within the manufacturing, agricultural, and construction industry sectors are the most commonly affected.

In this post we’ll discuss both sides of the equation, and how the levying of fines can actually open up the opportunity for a collaborative effort that ends well for all parties involved.

Facility managers and small business owners often feel as if they are being unfairly and unmercifully punished when a notice of violation comes in the mail accompanied by a potentially financially-crippling fine. But while many might feel that the fines can be heavy-handed or unfair on behalf of the regulatory agencies, there is one simple reason why they feel such legal action is a necessity…

To get your attention.

In my experience, I don’t believe it is the intent of the EPA and DNR to cripple facilities or hinder the business community by levying fines. I also don’t believe agency fines are levied just to exercise their regulatory power.

Whenever a penalty comes into play, it is usually the last step of a process that culminates over many months or years. A fine is issued when the regulatory agency feels it is necessary to protect human health and the environment, and it can result from a civil or criminal enforcement action depending on the egregiousness of the infraction.

The Notice of Violation and corresponding penalty is normally issued because of an imminent threat to residents or employees at a particular installation, or to the surrounding ecosystem. The severity of the penalty is directly proportional to the level of risk of exposure resulting from the failure to adhere to the law & rules. Typically, this is the last action after a series of attempts get the attention of a facility fails.

After a fine has been issued for an infraction, from my experience, a line is usually drawn in the sand separating the facility and the regulatory agency. At this point, a struggle often ensues where the facility managers and the regulators argue over the validity and necessity of the fine. This can lead to unnecessary litigation and a significant amount of time and money wasted on settling the issue.

A more productive way to handle these situations is to view them as an opportunity for the regulators and the regulated to come together for the purpose of understanding one another. The great majority of the time, facilities want to do what’s right but just don’t know how.

In the “real” world, facilities have to deal with so many regulatory agencies that compliance with one in particular can slip through the cracks. On the other hand, regulators may not always realize that they are only one in a long list of agencies that demand the attention of facilities for compliance.

While efforts are made by regulatory personnel to reach out to facilities in non-compliance, facility managers often find themselves giving their attention to the agency that poses the biggest threat to continued operations at that time. That’s how a non-compliance situation can get to the level of penalties or fines.

If a facility shows its willingness to get back into compliance, there is hope. Also, if the regulatory agency starts with the assumption that the facility did not intend to willfully violate the law, a collaborative and productive effort to right the situation can happen. Negotiation is possible for reduced settlement of fines when open and honest communication takes place.

Anyone that has worked in private industry knows that facility managers are usually caught up in the endless daily struggle for meeting their bottom line. The pressure to keep financially afloat can be great. Often times, regulatory compliance isn’t written in to the cost of doing business.

Additionally, planning standard operating procedures that include environmental compliance may not have taken place from the jump. But when a fine is issued from a regulator, it offers the opportunity to rework their business plan and adjust priorities by bringing the issue to the forefront.

One thing that we must come to realize is that we’re all playing on the same team. Industry brings us the products and services that we as citizens need to have a comfortable living and a strong economy, and regulators are there to ensure that the production of such goods and services is carried out in the most responsible manner that protects human health and the environment along the way.

If a regulatory fine brings people together to work as a team, the outcome can be a win-win situation for all parties involved. In the end, it can help provide the framework a regulated facility needs to ensure future compliance and growth for the business as a whole.

In my next article, I’ll talk about the true cost of doing business in an environmentally safe way, and how some facilities enjoy a short-term unfair competitive advantage due to circumventing the laws & rules covering environmental compliance.

Carlton Flowers
Carlton’s Industry List

Market Watch - Titanium Dioxide Set For Major Growth

Why This Raw Material Is A Positive Growth Indicator for Manufacturers

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A good way to predict what is in store for several Missouri manufacturers is to keep your eyes on the raw material titanium dioxide. Why? Because it is directly connected to pigments. Any manufacturing process that involves paint coatings is directly affected by the outlook of this key raw product.

Nothing can happen in manufacturing without a good supply of of titanium dioxide. Raw material suppliers base their production on the outlook of manufacturing itself, which means they are doing their homework on the economic outlook for the manufacturing industry itself.

As we speak, the prognosticators are talking about titanium dioxide becoming a growth industry between the present time and the year 2024. It feeds into the market for paint coatings, paper & pulp, textiles, plastics, rubber, cosmetics, printing inks, catalysts, welding electrodes, food colorants, water treatment agents, and pharmaceutical products.

There’s also a lot of talk going on about the rise in use of polycarbonate plastics in the automobile industry due to demand for lighter weight vehicles, and also products relating to building construction. Titanium dioxide provides the needed protection for these materials which have a low scratch resistance. A rise in plastics plastics production will require an increase in the supply of these protective coatings.

Most of my research points to the use of titanium dioxide in paint coatings first and foremost at 58%, with polycarbonates coming in second. Take special note to the fact that production of water-based paints is on the rise, and this raw material plays a big role in their use and development.

It’s pretty safe to say that titanium dioxide production is a key forecasting agent for market growth, and is definitely something we need to keep our eyes on as a consideration for how much production the Missouri market will be able to soak up for our manufacturers.

I’ll be digging up even more of these key market indicators in the coming weeks. There are about five that I have my eyes on, and I will keep you posted.

Carlton Flowers
Carlton’s Industry List


2018 Oil Crash - The Potential Effect of Falling Oil Prices on Manufacturing

The Positive & Negative Outcome of Lower Oil Prices to Consider

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If you’ve been watching the news, you might have seen that Oil prices are taking a nose dive. WTI Crude is currently sitting at $56.75 at the time I’m writing this post, which is just barely a notch above the low point. This is a definite bear market for oil, and the slide has been steady for a few months now.

Some say that this is the low point, and others say that there will be one more nose dive before it’s over. Whatever the case, the effect is going to be the same, and it’s something that everyone needs to take note of. Now is the time to take into considerations the positive and potentially negative impact of this slide on the economic outlook for Missouri manufacturing.

Let’s start with the positive impact. The most obvious impact will be lower prices at the fuel pump. That means consumers will have more buying power, and it might spur strong retail sales, especially during the holiday season. Consumer spending could stay strong for several months as a result, so this will have a definite impact on those of you who are manufacturing end-user products. B2B manufacturing may not see a spike in sales, but it is possible.

Lower oil prices mean cheaper oil-based chemicals. Those of you in the manufacturing industry that depend heavily on solvents and other oil-based products will probably see a drop in supplier pricing. It might take a while to trickle down, but there will be an effect. So you can count on a little wiggle room in your supply budget soon.

Now let’s look at the down-side. The bear market can have several negative impacts on your bottom line that could offset the positive. So it’s worth considering for your short-term production planning.

When oil prices fall sharply, you would automatically think that automobile sales would spike. That’s not necessarily true. In the past, consumers actually sit on the sidelines and wait to see what the future holds before spending on new cars. Consumers might think, “do I buy that SUV, or should I play it safe and get the small hybrid?”

While we have such volatility in the price of oil, it’s hard for consumers to feel secure in making firm decisions on big ticket purchases like cars. People will often wait until gas prices stabilize before finalizing a new car sale. So if you are somewhere in the supply chain for automobile production, don’t bet the farm on a big increase in buying just because gas prices drop.

If you are exporting, you better do your homework. A drop like this in oil prices has an effect on the strength of the dollar. As oil price drops and the dollar strengthens in value, that’s good for everyone except the countries who are BUYING from the US. A stronger dollar means less buying power for US goods. It’s really a complex relationship. But watch out if you are involved in export trade, or gearing up to expand into trade.

The long-term negative potential impact of the oil price drop would be the economy as a whole. This could be an indication of an impending recession. Couple this with the stock market action, and it very well could be the start of a big slow down.

The bottom line is, you better plan for the worst. There could be a nice spike in demand the short run, but the prospect of an economic slowdown certainly is a possibility.

How has the oil bear market affected the numbers for your facility, if any? Have you considered these factors in your immediate or long-term operational plans? I’m looking forward to hearing your input, and encourage you all to share.

Carlton Flowers
Carlton’s Industry List



Carlton's Industry List Blog Has Launched! What to Expect

Welcome to the Industry List Blog - What’s In Store

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Welcome aboard everyone, Carlton’s Industry List Blog has officially started! I’d like to take a few minutes to let you know what I have in store for you and explain what this will be all about.

The Industry List blog site will be my communication tool for sharing cutting-edge information as it happens with the manufacturing industry, the agricultural sector, construction industry, consulting firms, small businesses, and municipalities alike.

You’ll be the first to know about changes in regulations, trends, economic developments, and key factors that can affect your operation before it becomes available in the regular news networks. My goal is to provide highly valuable content that will help you in decision making and planning to keep up with the current state of industry.

You can expect about two to three blog posts per month. I encourage everyone to chime in and comment with your thoughts, insight, and questions about the topics that I bring to your attention. Collaboration among the members will be the key to making this work in the most beneficial way for everyone.

Here’s a summary of the types of articles that I will be bringing to you regularly:

  • changes in regulations and pending legislative action

  • trends in regulatory practices

  • best practices for industry efficiency

  • key insight on developments within various niches

  • opportunities for energy cost reduction and utility rebates

As we move forward, my goal is to be your point-man for information and be the central hub for all of you, my closest friends who are in this group. Keep your eyes peeled, and be ready to share your thoughts and interact!

Carlton Flowers
Carlton’s Industry List