August 20, 2024
The York-based hydropower manufacturer, Voith Hydro, and their workers’ union, International Association of Machinists and Aerospace Workers (IAM) Local 1400 (District 98) have partnered to benefit from a federal clean energy manufacturing tax credit. The result? Greater worker safety, increased productivity, and likely the expansion of good-paying, union jobs.
A long history of hydropower manufacturing
Voith has been manufacturing hydropower equipment since 1870, with the company’s footprint in the United States dating back to 1877.
Today, the Voith Hydro facility in York, Pennsylvania is one of the world’s largest hydropower turbine equipment manufacturing plants, providing fabrication, machining, and assembly of large mechanical components used in hydropower facilities, housing some of the largest machine tools in North America.
Voith Hydro and its workers’ union—the International Association of Machinists and Aerospace Workers (IAM)—are poised to benefit from President Biden’s Inflation Reduction Act (IRA), taking advantage of a renewable energy manufacturing tax credit. This tax credit, along with clean energy investments driven by the Infrastructure Investment and Jobs Act, the IRA, and the associated Buy America incentives, are fueling demand for hydropower in the U.S., which can be generated 24 hours a day without any carbon dioxide emissions. Company representatives expect these federal investments to lead to the growth of the company, as well as the expansion of good-paying union jobs in Pennsylvania.
What Voith stands to gain thanks to the Inflation Reduction Act
In March 2024, the Department of Energy selected Voith Hydro as one of the companies qualifying for up to a 30% tax credit for investing in their existing renewable energy manufacturing facility under the Qualifying Advanced Energy Project (also known as 48C).[1] The American Recovery and Reinvestment Act (ARRA) first established 48C federal tax credits in 2009. President Biden’s Inflation Reduction Act (IRA) significantly expanded this tax credit in 2022. The expansion of the program included a $10 billion investment to grow the clean energy supply chain made in America, while creating high-quality jobs and reducing industrial emissions.[2] 48C provides up to a 30% tax credit on the amount a company spends for new or upgraded factories that build renewable energy parts. Projects that meet prevailing wage and apprenticeship requirements, which this project does, receive the full 30% credit. For Voith Hydro, this represents nearly $6 million in avoided taxes that provide the necessary boost to enable their nearly $20 million investment in new machining capabilities.
The Voith investment is one of the first 100 projects receiving these revamped tax credits from the Department of Energy.[3] These tax credits are just one part of a comprehensive plan by the federal government to spur the clean energy economy. As Carl Atkinson, Vice President of Sales for Voith Hydro spelled out: “One of the most important things to highlight is that investing in manufacturing and securing domestic supply chains is part one of the actions that need to be taken to spur clean energy in this country. The next steps to ensuring this domestic production results in expanding clean energy projects is to support the developers and owners, who will build these projects, and to enforce the requirements to buy American.” This well-rounded investment plan, already in motion, can and will result in the growth of the clean energy economy and will grow good-paying union jobs in the U.S., as we see at the York Voith Hydro plant. Kermit Forbes, Jr., Assistant Directing Business Representative of IAM Local Lodge 1400, also emphasized that “the Buy American provisions mean we could significantly increase our workforce. This is huge and will create highly skilled jobs for people in our region, benefitting workers and their families.”
How Voith is investing its savings
With savings from this federal tax credit, Voith Hydro has invested in a Horizontal Boring and Milling Machine (HBM), which will support production and rehabilitation of hydropower components weighing up to 200 tons, as well as an AP 120 TM Vertical Turning Lathe (VTL). Voith installed the HBM recently and unveiled it at the end of April. The company plans to install the VTL by the end of this calendar year. The HBM is one of the most advanced machines of its kind installed in North America and will be used to machine components critical to the continued use and expansion of hydropower in the U.S. It is estimated that installation of these massive pieces of equipment will also employ about fifteen construction workers in a variety of different trades working at a local construction company.
Upgraded machinery will boost productivity
As Carl Atkinson, reported, this equipment upgrade will help the company be more competitive, allowing them to fulfill more orders, which he expects will come with the unprecedented clean energy investments made under President Biden. Another benefit of the upgraded machines for the company, the union, and the workers is that the new equipment is safer to operate than the older equipment, which, in some cases was built over 50 years ago. The new machines have safety features which are built into them. There is better observation of the machine operations from the control center and digital measuring devices are built into the new machines. This will greatly improve the ergonomics of the job. The new machines also incorporate climate controls into the operator control center, allowing workers to operate the machinery for longer periods of time, without the same wear and tear on the body that hot summer day temperatures can cause.
The further implications for workers
Voith Hydro employs around 350 workers, including nearly 100 of whom the IAM represents. Welders and machinists at Voith Hydro and its predecessor companies (S. Morgan Smith and Allis Chalmers) have been represented by this union for 85 years—since 1939. IAM rep Kermit Forbes reported that the company’s wages and benefits are very competitive in the York area. The union and company negotiated a contract recently that increased wages substantially to ensure competitive wages for the skilled craftspeople in the factory. The recent bump in pay helps the company retain workers with years of experience.
Voith Hydro also relies on apprenticeship programs to train incoming workers. Four apprenticeship programs at Voith Hydro train individuals for jobs as mechatronics technician, inspector, machinist, and boilermaker. All four apprenticeships are registered with the state of Pennsylvania. Currently, there are nine active apprentices at the York plant.
-Carl Atkinson
Vice President of Sales at Voith Hydro
“This is not your run-of-the-mill welding. Our welders are working on curved, stainless steel surfaces that are often several inches thick. With our unique equipment, we rely on the in-depth training that our apprenticeships deliver to develop the workforce necessary for these complex and highly specialized tasks.”
For Voith and the IAM, receiving this tax credit was a group effort. Both the company and the union worked together to apply for the credit. Kermit Forbes, Jr. of the IAM emphasized that the tax credit is “good for the union, the workers, and the company. And it benefits all Americans. Anything that will keep and grow good-paying union jobs here in the U.S. is an important project.”
Sources:
[1] https://www.energy.gov/mesc/applicant-self-disclosed-48c-projects
[2] https://www.energy.gov/mesc/articles/new-48c-tax-credit-will-spur-historic-investments-manufacturing-and-critical#:~:text=As%20the%20nation%20builds%20a%20net-zero,critical%20clean%20energy%20products%20and%20materials.&text=As%20the%20nation%20builds,energy%20products%20and%20materials.&text=nation%20builds%20a%20net-zero,critical%20clean%20energy%20products
[3] https://www.energy.gov/articles/biden-harris-administration-announces-4-billion-tax-credits-build-clean-energy-supply