APRA Requests a Remanufacturing Tax Credit

January 15, 2009

CHANTILLY, VA – The current economic crisis demands that business and the Federal government work together to find the best methods to stimulate the economy. One important way to stimulate investment is to give tax credits for the purchase of new capital goods and machines. Such credits make good economic sense and are even better if they promote environmental goals, such as reuse and recycling. For this reason the Automotive Parts Remanufacturers Association (APRA) is working with its membership to contact Congress to support a tax credit for the purchase of equipment used to recycle or remanufacture goods.

APRA’s 1,000 members remanufacture used vehicle parts so that they may be given another life. These parts keep many heavy-duty trucks, construction equipment, fire trucks, off road vehicles, and agricultural equipment around for many years by extending their useful life. They keep vehicles running for those Americans of lesser means who cannot afford the cost of new parts. By remanufacturing used parts APRA members extend both the useful life of the parts and the vehicle on which they are used, reduce the amount of waste that flows into our landfills and salvage most of the raw materials and energy that was used to create the original part. Because it saves more of the labor, the capital, and energy that went into fabricating the original part, remanufacturing is “environmentally superior” to merely recycling a part to salvage its metal components.

Most remanufacturers are small businesses, and purchasing and maintaining the proper equipment is a vital but expensive part of the business. Assistance with acquiring and replacing such equipment in the form of a tax credit will permit remanufacturers to produce better and longer lasting products.

Moreover, the American remanufacturing industry is currently beset with economic problems due to the influx of inexpensive new parts from Asia and elsewhere. Because of the common perception that new is always better than used, most consumers will purchase a new automobile part instead of a remanufactured one if the prices are comparable. Because producing new parts in Asia and transporting them to the U.S. is very inexpensive and often subsidized, many new vehicle parts manufactured abroad sell for less than what a remanufacturer must charge for its parts to make a profit. Even knowledge of the potential for the foreign new parts to be of inferior quality is not enough to replace the need of many consumers to find the lowest cost alternative.

Providing a tax credit will allow American remanufacturers to compete with these cheaper foreign products.

In March 2008, APRA assisted in the introduction of a Recycling/Remanufacturing Tax Credit bill, H.R. 5659. The bill received favorable attention but, due to the press of other business, no action was taken on it. Because the goals of the bill fit so perfectly in the environmental and economic goals of the new administration, APRA is seeking support for its reintroduction in the new Congress.