Articles in Category: Manufacturing

To the members of the 112th US Congress:

As supporters of US manufacturing, we’d like to share with you this open letter. If any confusion exists about what remains important to the vast majority of Americans, we’ll rely on that old adage, “It’s the economy, stupid (with all due respect of course). We hope that this Congress views all policies, manufacturing and otherwise, in the context of jobs, specifically the need to create good ones for the millions currently under- and unemployed. Please see embedded video below:

[youtube]http://www.youtube.com/watch?v=RI1CxXaQRPs[/youtube]

To that end, we feel several manufacturing (and to some extent, consumer spending) proposals would help accomplish those ends. We believe the 112th Congress can do a lot to re-balance the economy around manufacturing. To think that we can survive as a global super power on services alone doesn’t make any sense to us. As a nation, we have always made and built things and legislation should support that. In addition, we’d advocate for policies that apply both carrots and sticks, if you will a mix of incentives and enforcement. According to NAM, manufacturing supports 18.6 million jobs in the US (one in six private-sector jobs), or 10 percent of the workforce. But as a percentage of total GDP, manufacturing represents 11 percent ($1.6 trillion).

Therefore, we would specifically encourage you to examine the following policies:

  1. Minimize the trade deficit – We would urge you to deploy strategies to minimize the trade deficit, since that represents one of the few areas within GDP that government can influence at this time. (Consumer spending remains in the hands of consumers, government can’t control the amount of FDI and stimulus programs do not appear to have broad congressional support). Therefore, we would advocate a few personal incentives on purchases. As an example, a new federal sales tax on consumer items could be applied to the purchases of goods coming from countries in which we have a trade deficit. The goal is to tie consumers more closely to the implications of their spending decisions. Moreover, just as you can buy carbon offsets today you could buy “China offsets” as well (some compelled, some not).
  2. R&D We believe making the R&D tax credit permanent balances just one leg of the manufacturing stool, so to speak. To really grow the manufacturing sector, we need incentives to keep innovation and production on our shores, across the entire value chain starting with design/engineering and progressing through to service parts. Therefore, we’d advocate using tax credits tied to production either via outsourced domestic partners or the company who developed the product.
  3. Align corporate and personal tax policy with production Rather than favor hedge and private equity fund managers with lower marginal tax rates as the past tax code did, consider offering lower corporate income (for S-Corps and LLCs, income and corporate taxes are one) and capital gains tax rates to those who create, domestic industrial jobs (i.e., business owners and investors in manufacturing business) with significant onshore production/supply components. Consider capping income tax rates at 20 percent for this group (similar to the former hedge/private equity fund carried interest tax rate) to encourage top performers (e.g., elite MBA graduates) to enter manufacturing rather than investment banking, management consulting, etc. (Brings to mind a recent New Yorker story headlined “What Good Is Wall Street?” and poignantly subtitled “Much of what investment bankers do is socially worthless”)
  4. Immigration We’d urge you to support a strong pro-immigration policy extended to qualified manufacturing trades as well as white collar professions (e.g., IT development). Realizing that high unemployment is as much the result of a lack of qualified candidates as it is excessive supply, it is essential to coalesce the right manufacturing skills to build the economy of the next century.
  5. Reduce business uncertainty US manufacturing needs Congress to pass a bill limiting the rule-making authority of regulatory bodies such as the EPA, particularly when those rules impact job growth (and/or cause harm). EPA regulation of greenhouse gases from stationary sources serves as one example, as does the EPA’s Boiler MACT rules.
  6. FDI – We would urge you to pass legislation on FDI (foreign direct investment) that applies reciprocal rules to both countries (as opposed to the current policy of only examining whether a particular investment in the US poses a national security threat). Let’s explain with an example. If today, a US corporation cannot buy into, say, a Chinese state-owned steel mill, then vice versa, a Chinese state owned company should not be allowed to invest in a US corporation; the same rules should apply with regard to intellectual property (e.g. mandatory technology transfer) unless both parties (e.g. countries) come to a mutually agreeable arrangement.
  7. Extend minority- and women-owned tracking of business in supply bases to US-owned and/or operating supplier facilities on a multi-tier level and require federal reporting requirements in this area for government contracts.
  8. Stop the “one hit wonders Please don’t enact any more one-time expensing options (e.g. $250k deduction allowances for capital purchases). These initiatives hardly represent growth strategies; moreover, they merely push demand forward, but do nothing to create sustainable long term growth.
  9. Follow the lead of Israel in encouraging policy that closely aligns research-university, private-sector and federal-technology transfer by spurring investment in promising areas and incubating new private sector start-ups. Expand the In-Q-TEL venture and public/private collaboration and matchmaking model by creating similar programs with other departments and agencies to encourage the growth of innovative small businesses with breakthrough applications for government (e.g., infrastructure, military, space exploration, etc.).
  10. Lead by example and spend time visiting, encouraging and counseling manufacturing companies and workers in your own congressional districts and states. Let owners, managers and workers alike know that their cause has a voice and that you are listening and want to take their best ideas back to Washington.

Disclaimer: Nucor is a sponsor of MetalMiner and Spend Matters. The views expressed in this article represent the editorial opinions of the authors.

–Lisa Reisman and Jason Busch

Industrial job training, and retraining, is now in focus nationwide as companies shed jobs and look to rehire more skilled labor. We’re continuing to look at the welding occupation specifically, especially through the lens of new welder recruitment and experienced welder retraining.

For context, in a 2009 survey of 779 industrial companies, issued jointly by Deloitte, Oracle and the Manufacturing Institute, 32 percent of overall respondents reported “moderate to serious skills shortages. However, that figure was 74 percent for aerospace and defense companies; as we know, that sector is a large employer of welders and welding-related workers.

The National Center for Welding Education and Training, also known as Weld-Ed, began in 2007 as a cooperative venture between the American Welding Society (AWS), private companies, and many colleges and universities to explicitly close the gap between trained welders and industry demand.

Contrary to what we heard, in a recently issued report, Weld-Ed noted that between 2002-2009, there was actually a surplus of welders on the market rather than a shortage 10 percent of welding jobs were lost, mostly due to the economic downfall. But an appointed National Skill Panel projects an increase of “at least 238,692 new and replacement welding professionals between 2009 and 2019, much of it due to baby boomers retiring. How to restock those ranks is problematic.

Arguably the biggest challenge facing the industry is controlling the perception of welding, and figuring out ways to keep welding beginners and seasoned professionals up to speed on the ever changing technological needs in the industry.

“The more types of welding you master the more you can earn, says Richard Seif, senior vice president of global marketing at Lincoln Electric in Cleveland, on the Careers in Welding Web site. “If you have math and science skills, going to college to become a welding engineer just about guarantees [sic] good pay: more than $50,000 a year to start and thousands more a year after that, the site quotes him as saying. In our last post on this topic, we found that claim to be a bit too bold.

Weld-Ed’s report found discrepancies in program content and length of training from state to state. They noted that no national education standard exists for welders; therefore, certification varies from state to state, or worse, from job to job. Hopefully, Obama’s “Skills for America’s Future initiative will make steps in the right direction, but for those welders not in a position to go back to school, it might not be the savior the government is hoping for.

AWS and Weld-Ed are already trying to bridge the gap between industry demand and the worker supply pipeline (they work through a consortium of publicly funded universities and Weld-Ed is based on the campus of Lorain County Community College in Elyria, Ohio) and will continue to gather statistics on what ails the perception of the industry.

If it seems a stretch for metal sourcing professionals to pay attention to the trends in something as specific as welding employment, it shouldn’t be. With production likely to continue a sustained increase due to global demand, companies will need increasingly skilled workforces, and it’s in their best interest to have a hand in cultivating them.

–Taras Berezowsky

This is Part Two of a two-part series. Read Part One here.

I read an interesting article yesterday that explored a field quite opposite the metal market the legal profession but nonetheless relates nicely to our previous discussion about the state of job training and technical schools in the US.

The Economist makes the case that law schools and law firms sometimes have trouble seeing eye-to-eye in terms of the duties and responsibilities expected of each other. “The lousy job market is, of course, not the law schools’ fault, the article reads. “But law schools could still do more to help their graduates prepare. It goes on to quote Evan Chesler, head of Cravath, Swaine and Moore, a New York firm, lamenting that “they teach few of the practical skills of lawyering, leaving the firms to do much of the training in a recruit’s first years on the job. Richard Revesz, the dean of New York University’s law school, replies that most firms’ needs are so specific that law school should not be expected to provide them.

Based on industry reports, this issue manifests itself in the welding profession as well. We’d heard anecdotally that US manufacturers are experiencing a shortage of welders, and with comparably high starting salaries, there seemed to be a disconnect between able welders hooking up with suitable employers, such as Thermadyne, ESAB and Caterpillar.

Although certain specialized welding positions earn higher salaries than the majority of Americans, such as a welding engineer in the shipbuilding industry (noted below), the range is reflective of most other production-category occupations:

With industrial companies cutting staff and/or wages, they are forced to run with a smaller staff that has newer more specialized skill sets. Those companies may not have the resources to act as de facto training centers to get those workers up to speed, effectively leaving that to technical schools and community colleges. But if workers have taken steep pay cuts or have been laid off, they may not feel they have the financial wherewithal to enroll in retraining programs no matter how hard the Obama administration pushes its Department of Ed initiatives. (Some people don’t see getting into more debt, via federal loans, as the means to get higher-paying jobs.) If there’s lower enrollment, as we’ve reported, training programs’ already-expensive equipment needs become unfeasible to sustain. Ultimately, this bolsters the perception that the manufacturing sector is washed up for good.

That perception may be the biggest obstacle to empowering future welders to optimally match their skills with actively searching employers. Of course, this takes personal drive as much as government assistance. A key aspect of the perception equation: recruiting young welders to replace soon-to-retire baby boomers.

–Taras Berezowsky

In reading all the news about Caterpillar’s recent acquisition of surface- and underground-mining company Bucyrus, our water-cooler conversation here at the office features some different takes on the deal’s importance.

While Cat is seen to have bet on the rising commodities market and has touted its move as the biggest in the company’s history, some of us see the acquisition as nothing more than an opportunity to grow business overseas. Yet we aren’t discounting Caterpillar’s deal making and influence in the mining business.

In terms of domestic mining, this deal shouldn’t do much of anything, other than boost the company’s bottom line, stock price and market share — arguably a major hope for relatively new CEO Doug Oberhelman. The majority of Cat’s business these days, especially as far as mining equipment is concerned, has spread to the developing world. “The emerging market demand is really what’s driving things, said Jefferies & Co analyst Stephen Volkmann in a Reuters report. (Bucyrus, also according to Reuters, does a third of its business abroad.) With global demand continuing to be strong, why shouldn’t it?

Source: Reuters Metals Insider, Nov. 16

But it’s hard to discount the fact that the domestic economy and its housing market are still sluggish, and construction here is at a relative standstill compared to more active construction scenes in Asia. This creates quite an ironic backdrop for Caterpillar’s intent to center its mining business in South Milwaukee (where Bucyrus’s offices are). Cat hired nearly twice as many employees outside the U.S. in the first half of 2010: 1,240 domestic workers to about 2,400 abroad, according to their Web site. Cat gained 38 percent of their 2009 sales and revenue in North America, while 62 percent came from the rest of the world. David Lee Smith writes in a post for The Motley Fool that the company doubled profit in the third quarter due in no small part to BRIC economies’ eagerness to tap into their mineral-rich reserves — and Cat’s earlier shedding of 37,000 full-time and contract workers.

As much as I’d love to, it gets harder and harder to stick to the credo “Keep Manufacturing Jobs in the States. And deals like this, of course, often have very little to do with that. We have to call a spade a spade: a huge international mining equipment company betting on better demand abroad than in their own backyard. After all, the distances from Peoria or South Milwaukee to Chilean copper mines or South African platinum pits at least in an economic sense get shorter and shorter all the time.

–Taras Berezowsky

This is Part One of a two-part series. Read Part Two here.

How to explain the gap between federal job retraining initiatives and low enrollment at a growing number of industrial training programs? Is there a correlation? What are the factors at work?

We’re hearing reports of factory jobs in the manufacturing sector being added as the economy continues its slow rebound. But at the same time, companies are unable to match up open positions with workers’ existing skill sets. What happens when nursing programs are started and funded in an area where predominantly blue-collar factory workers live? And how much money will those workers have to put in or borrow to switch careers to where the jobs are, or will be?

The Obama administration has recently announced a new job retraining initiative, which looks to specifically pair training schools (and their students’ curricula) with industrial companies in all 50 states, ultimately hoping to make job placement a firmer guarantee.

The initiative may be a response in part to the tide of bad press that “for-profit colleges have been receiving. Schools, such as those owned by Apollo Group and Kaplan, and their executives have been under fire for boosting their bottom lines while increasing numbers of graduates have been defaulting on their federal loans. (Roughly 90 percent of for-profit schools are federally funded, according to reports.)

But “Skills for America’s Future, as the initiative is called, may not work as well in practice as intended in theory. MetalMiner spoke with Steve Kay, principal of the William D. Ford Career-Technical Center outside Detroit. He said that due to abysmal enrollment numbers in their computer-aided machining (CAM) program, the school had to shut down the program entirely and auction off its training equipment. To replace it, they began an Emergency Medical Technician program.

Cultural perception, rather than federal funding or rule-making, may be playing a greater role. “Not only are the jobs that used to pay $28 an hour now paying only $12-$14, put parents are actively encouraging their students to do something else, Kay said.

He went on to explain that parents who grew up working in such historically manufacturing-heavy areas as Detroit are now seeing those industrial models crumbling before their eyes. This influences them to coach their kids to pursue computer programming or design, he said.

William D. Ford Career-Technical Center isn’t the only school to auction its machining equipment. Dennis Hoff, president of Hoff-Hilk Auctions in Minneapolis, has presided over five school auctions over the past three years, including St. Paul College.

Federal policy and the technical training programs may be at odds in another way. In one example, officials, while pushing for alternative energy investment, are decrying the fact that certain training programs (think the DeVrys and University of Phoenixs’ of the world) are not offering sufficient job placement for students to repay their debt. Meanwhile, advocates for alternative vocational tracks may contend that for some of these industries, such as wind energy or biofuel production, many jobs simply haven’t been invented yet. Essentially, students are enrolling in programs to prepare them not for existing fields, but for ones they will eventually pioneer. Determining exactly which skills to teach under this approach has been just as difficult, said Fred Dedrick, executive director of the National Fund for Workforce Solutions, in a National Journal article. Ultimately, what good is a student’s vocational certificate if there’s no job to match on the other side of the rainbow? Who’s to blame?

This argument has yet to fully play out. As we follow the industrial jobs initiative, we’ll continue talking to those teaching and learning the trades in this current economic climate. Paradoxically, as unemployment levels remain high, industrial companies struggle to fill open positions.

In the next post, we’ll explore the welding sector and why there appears to be a nationwide welder shortage even with $50,000 starting salaries.

–Taras Berezowsky

Source: Forward Online

“Imagine a nation that has lost its ability and desire to make things¦

With that tagline, we enter the world of TINKERERS, a graphic novel and “original tale of the near future written by David Brin and illustrated by Jan Feindt. The comic book envisions a dystopian future, painting America’s flailing manufacturing sector as both victim of and primary accomplice to its own demise. As much an economic tale as a moral one, TINKERERS’ authors clearly have the US industry’s failings in their crosshairs.

Or do they?

(The novel may be read in its entirety here.)

Characters speak in clearly biased and sometimes vitriolic tones, whether bashing the results of global free trade, extolling the virtues of mercantilism, or decrying Americans’ consumerist attitudes. While many sides are alternately and somewhat equally represented, the story never adds up to a cohesive or satisfying conclusion.

Overall, the viewpoints/stereotypes coming from the talking heads are all over the place. Perhaps this is the point; to have a discordant slew of “controversial issues brought up and have the reader, much like the main character, sort out the individual truth for herself.   We all know the truth is messy (if there is such a thing as a single truth), and I don’t expect things to be tied up in a neat little bow¦

But it still doesn’t absolve the author of making his characters speak in overwrought abstractions. As soon as Danny Nakamura, the “hero,” is close to getting a straightforward answer from someone, they change gears for no other reason than to move the plot along. (“We didn’t decline because our time was up, says Bill Nolan, an uncanny comic-ink-copy of Kris Kristofferson. “No, we’re the world’s teenagers, Daniel. Always will be. It was our glory¦and our downfall¦and maybe key to our future. But go ask around, I’ll bet you’ll get a different answer.) A slight Marxist undertone muddles the message of the story, and seems antithetical to the authors’ and publisher’s main goals.

(On a stylistic note, while the scenes feature generally serviceable drawings, the choices of race and gender representations are rather awful. Aside from stealing visages of Bernie Mac, Morgan Freeman and the aforementioned Kris Kristofferson outright, the artist paints the main character’s distant Japanese cousin Akio Nakamura’s skin in a sickly green. Female characters, on the other hand, are depicted in stereotypically bullish ways.)

The slew of viewpoints simply confused me, rather than allowed me to make any sort of logical conclusions based on the economic principles and landscapes. The fact that after his quest Danny straps on his boots and gloves to take part in an “illegal construction process belies the point the writers (and by extension, the funders) are trying to make. I’d like to think that the “third way of negotiating with all parties to end up with a novel engineering solution for the future is a good, or at least legal, thing; when I get to the end, however, I feel even less sure about that.

Is it a cynical approach? An idealistic one? Or is the comic simply a shill for the US Department of Defense?

TINKERERS appears to be underwritten to some extent by DARPA, which, as stated on the last page of the novel, invested one billion dollars in alternate manufacturing in August 2010. Essentially, the US military-industrial complex is subliminally recruiting people to work for or within their cause by smartly presenting this story’s message as “you can decide for yourself to speak highly of industrial virtues while simultaneously speaking ill of the “expressive fields like entertainment or law does not do its overall message justice.

My suggestion for improvement: hone and simplify the message. It’s too cluttered, and if the organization responsible for the comic intends to promote US metal production, then the end does not really make that clear. The creators clearly love the science fiction genre and try to make it work here, but it sadly falls flat. Understandably, this is a product of a metals trade association, but there has to be a better way of preaching to the choir and more importantly, preaching outside the chapel.

Ultimately, TINKERERS must decide what it wants to be. It tries to bring severe, “hammer-over-the-head didacticism together with vivid entertainment, but the marriage rings false to this reader. Pick one or the other, folks; it doesn’t succeed being both.

–Taras Berezowsky

MetalMiner is pleased to welcome Dan DiMicco, CEO of Nucor Corporation in the first contribution of what we hope will be many op-ed pieces over the coming months. Mr. DiMicco has served as Nucor’s President and Chief Executive Officer since September of 2000. In addition, Mr. DiMicco has been re-appointed to serve on the United States Manufacturing Council which works with the Federal Government and the US manufacturing sector.

America is known as the Land of Opportunity. However, for the 26 million Americans currently unemployed or underemployed, the Land of Opportunity seems like an illusion. This is the worst economy since the Great Depression. However, the response from our political leaders has fallen far short of what is needed to overcome this crisis.

Many economists have noted the parallels between our current economic and political environment and that of the late 1930s persistently high unemployment, inadequate economic stimulus by the government and a lack of public and political support to do more. World War II provided the impetus necessary to make the serious investments this country needed. Those investments not only ended the Great Depression; they laid the foundation that built the American middle class and the greatest period of prosperity any country has ever experienced.

We need a similar public-private partnership now in order to restart our economy and lay a new foundation for the next generation of American prosperity. Our political leaders do not seem to grasp the seriousness of the situation. Policies enacted to date have been the equivalent of bringing a garden hose to a five-alarm fire. We are at a crossroads.   Investments we make now (or fail to make) will determine America’s economic future for the next fifty years.

We are falling dangerously behind our economic competitors. The United Nations just released a report showing the top countries for foreign investment. For a long time, the U.S. held the top spot for foreign direct investment by multinational companies.   Now, we are fourth behind China, India and Brazil.

We need to create 25 million jobs over the next five years to put Americans back to work and ensure a strong economic future. This will take bold measures and a comprehensive economic plan by the public and private sectors. There are several steps policymakers can take to reignite our economy and create future prosperity.

Enforce global trade agreements. Our trading partners need to be held accountable for the rules of global trade they have agreed to abide by in order to access our markets.   Illegal subsidies and currency manipulation by countries like China must end.

Develop our domestic energy resources. By expanding domestic energy production, both traditional and renewable resources, we will diversify our energy supply. This will increase our nation’s competitiveness and energy security, as well as generate tax revenue for additional investments.

Implement a national manufacturing strategy. America must be a nation that builds things again. True, sustainable wealth can only be created by producing goods. We need to grow our manufacturing base so that it accounts for 20 percent of our gross domestic product. Our economic competitors have manufacturing strategies. America needs one.

Invest in our infrastructure to ensure future economic competitiveness. Infrastructure built 50 years ago that fueled America’s economic growth in the second half of the last century is crumbling. The American Society of Engineers has stated we need to spend $2.2 trillion over the next five years to replace our aging infrastructure. Only 12 percent of our stimulus bill was spent on infrastructure. By comparison, China spent 80 percent of its stimulus on infrastructure.

America did not become the Land of Opportunity through inaction. Bold vision and strong leadership resulted in policy decisions and investments that benefited generations of Americans.   Today, America needs that kind of leadership.   Our political leaders need to rise to the occasion, and we need to demand that they do.

Dan DiMicco

Disclaimer: Nucor Corporation is a paid sponsor of MetalMiner.

Last week, Nucor CEO Dan DiMicco sat down with Maria Bartiromo in an 8:30 minute segment on the state of the US economy, where and how the government and private sector can come together to help US companies better compete both domestically and globally as well as share some interesting statistics about the historical contribution of US manufacturing to GDP. Dan believes a tighter partnership between the government and the private sector looking at a range of issues from the trade deficit to energy independence to holding overseas trading partners accountable to WTO rules are all part of the solution to help grow the US economy. As he points out, the Chinese “got it right with their $700b stimulus on infrastructure whereas our programs went to Ëœsugar highs’ taking us from one bubble of overspending to the next.

And even though Dan admits he wears red because he is a Yankees fan (we won’t hold that against him), he also explains why Nucor employees wear red on Fridays:


We’d welcome your comments and reaction to the segment in the comments section below.

–Lisa Reisman

Disclosure: Nucor is a paid sponsor of MetalMiner.

We were recently lucky enough to go on a tour of Elkay Manufacturing where we saw American manufacturing at its finest. From state of the art robotic equipment to an amazing laser cutter, we saw a degree of quality and care go into the production of product that may be tough to beat in other parts of the world. But the world of industrial manufacturing continues to evolve. New policy-makers in Washington have in part, altered the landscape as have a series of trends in terms of exchange rates, trade deficits, global labor rates etc. Here is a mix of articles on the state of US manufacturing as well as global manufacturing trends:

Health Care Costs and the Manufacturing Fallout

Should the US Government Allow a Chinese Steel Mill to Invest in Steel Technology They Don’t Have?

Andy Grove on US Manufacturing and Jobs Growth Not Without Controversy

Manufacturing Enhancement Act of 2010 It’s But One Small Piece of the Pie

–Sheena Moore

Disclaimer: MetalMiner has no commercial relationship with Elkay Manufacturing

Last week, the collective MetalMiner team had the pleasure of visiting a local manufacturer, Elkay Manufacturing, headquartered in Oak Brook IL. You might not know Elkay by name but you’ve definitely sipped from their water coolers.

Last week, we wrote about our visit as it got us thinking about how US manufacturers differentiate themselves from their Chinese peers. As you may recall, Jason (my husband and author of Spend Matters are currently re-doing our kitchen and learned that Elkay has developed a new technology to make stainless counter tops in a “custom matte finish that has the benefit of reducing the appearance of scratches and fingerprints. Since a friend of ours works at Elkay, he treated us to a plant tour and opportunity to see first hand whether or not this new product innovation would meet our requirements.

Here is a link to a video that showcases a similar product application (new innovation) from Elkay, etched sinks:

Besides product innovation, Elkay, like many manufacturers, has invested in new technology. In this short video clip, my 7-year old son holds a stainless steel bicycle charm made on a laser-cutting machine. The machine can cut to a 30,000th mm tolerance!

[flv]http://www.youtube.com/watch?v=S3q-fxUshsA[/flv]

Now to finish that kitchen¦.

If you have a little snippet or video clip of an interesting product innovation in the metals space, send it to us, we’d like to feature these on a regular basis.

–Lisa Reisman

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