Articles in Category: Public Policy

We have had several water-cooler conversations this week in the office regarding the ethics of those involved with the WikiLeaks releases.

Information obtained and distributed illegally certainly raises ethical questions. No doubt those responsible will see their day in court. Though we found many of the leaks disturbing, the one that relates most closely to MetalMiner readers involves the accusation that China’s Politburo has authorized hacking into US corporations’ systems as well as individuals and organizations involved in the support of the Dalai Lama.

Whereas we can’t speculate as to whether the breaches received state-sanctioned authorization, we have enough data to conclude that the Chinese have and continue to break into the systems of major US corporations.

Consider the following data points. We know that two large US corporations, including one in the metals industry, are currently working with the FBI investigating cyber-security breaches conducted by the Chinese (we can’t release the names of the companies due to the on-going investigation).

We recently spoke with Chris Archinal who handles Energy Sector Sales for Critical Infrastructure for McAfee Inc., and he shared a few insights with us around APTs (Advanced Persistent Threats). APTs in the computer security community refer to “a sub-set of such threats, in a long-term pattern of targeted sophisticated hacking attacks aimed at governments, companies and political activists, and by extension, also to refer to the groups behind these attacks.”

The acronym APT also suggests several attributes of how these threats actually manifest themselves. According to Damballa, a company that also provides cyber-security solutions, the “A in Advanced refers to how criminal operators use the “full spectrum of computer intrusion technologies and techniques. The “P in Persistent refers to criminal operators that prioritize a task and “monitor and interact to achieve the defined objective. Finally the “T in Threat implies ‘a level of coordinated human involvement in the attack, rather than a mindless and automated piece of code.'”

According to Archinal, 83 percent of companies in the US have been hacked. Many of those attacks come in the form of Personal Identification Information (PII) violations (think social security numbers and credit card information), but from his point of view, he sees plenty of nefarious activity surrounding the US power grid. Essentially, according to Archinal, “the Chinese are trying to hack into the power grid to take a blueprint of where and how energy feeds into key hospitals and 911 centers as examples.

Besides the ongoing two-dozen-plus FBI investigations, our sources on the ground in China tell us the concerns here in the US have validity. For example, Paul Adkins of AZ China told us, “A girl that used to work for me went to the PLA University (she is a member of the Communist party and graduated as a Lieutenant from University). Her major was Internet Defense and Attack Strategies. The PLA is turning out specialists, as well as the regular universities. It’s not direct evidence that the government/party actively runs a hacking and attack strategy, but it’s a fair bet that they do.”

We also asked Paul about motive. He believes anti-US, anti-capitalism and anti-democracy feelings, especially amongst university students and young graduates feed into the cycle: “It’s not a personal thing, but after decades and centuries of imperial servitude, many Chinese are un-trusting and suspicious of western values, attitudes and opinions. Add to that the generic education system that promotes Chinese values, history and outlook. Many people know nothing better.”

MetalMiner will continue to report on this story over the coming months.

The “Rare Earth Metal Scare, if we can agree to call it that, has lit a fire under some Japanese global corporations when it comes to securing raw material supply. The Ëœalleged’ rare earth export ban from China has put at least two Asian countries in high gear to kick-start a full-blown global sourcing strategy. The fire started when the Canadian Embassy in Tokyo received a request from the Japanese government in November, to conduct a seminar introducing Japanese trading firms and OEMs to Canadian junior rare earth mining firms. The meetings took place earlier this month. We spoke to a source that told us the trading houses had called the consulate up to 10 times per day inquiring about what metals each of the junior miners have available. Several Canadian mining companies participated (Avalon, Commerce Resources, Pele Mountain, Rare Earth Metals, Rock Tech Lithium, Stans Energy   and Harp Capital) and 65 Japanese companies attended, including Mitsubishi, Marubeni, Toyota, Mitsui, Hitachi, Sumitomo and The Japan Steel Works (JSW), to name a few — with just two weeks notice. Three hundred Japanese firms remained on the waiting lists to meet with the mining firms.

This activity comes on top of a recent Japanese government announcement of a $1.3 billion fund to help Japanese firms secure supplies from abroad. The fund encourages typically risk-averse trading houses and end users to find promising properties to make joint venture agreements to secure long term supply, according to Ron MacDonald, a former MP of the Canadian Parliament, now Senior Counsel Global Markets on behalf of Commerce Resources. Specifically, the $1.3 billion fund will go toward four key programs. The first involves reducing use and creating better economics around the use of the metal involved. The second involves programs toward research and development. The third program examines recycling technologies and initiatives and finally the fourth allows for direct investment in firms such as the ones based in Canada. Coordinated by JOGMEC (Japan Oil Gas Metals National Corporation), the organization will have “significant influence in cutting up these resources, according to MacDonald. Part of JOGMEC’s strategy involves early stage investment. Much of the discussions focused on the heavy rare earth metals and the percentages of heavies within each mine’s reserves.

MacDonald, in an interview with MetalMiner, discussed some of the challenges for Canadian mining firms as well as the Japanese mindset when it comes to investing in early stage companies. He suggested that Canadian firms should “get outside their comfort zone. Canadian firms look for funding from closed sources and private placements, but according to MacDonald, “their business is now truly global the pressure is global and the miners need to become more savvy about the international marketplace as that will drive the investment into production. He added that he felt a lot of these companies will have some difficulty moving in that direction.

MacDonald also offered specific advice to the Canadian government. “You have to represent the broad industry of Canada and make sure there is a level playing field to keep Canadian miners competitive, he said. MacDonald went on to say, “we need to be critically aware of what is going on in the US, particularly NAFTA where additional collaboration between the Canadian and US government via the US Restart program can make it easier for American firms to easily invest in Canada. Finally, with regard to down-stream processing that MacDonald characterized as a “difficult and thorny issue, he called on governments to partner with industry and develop cross-boarder strategies in which the US also participates.

From a Japanese perspective, MacDonald believes companies have historically invested too late in the process, after many firms have established long-term agreements as well as made investments. JOGMEC has encouraged Japanese firms to move more quickly and shore up supply and mitigate risk.

The Koreans have also taken a proactive role in shoring up long-term supply. Traditionally they have accepted the higher risk of early investments, particularly in light of supply shortages.

If the Chinese have reminded us all about one lesson regarding the supply of rare earth metals, it is this it almost never makes sense to rely on a “sole source (or in this case, a sole country) without having at least one other viable option available. How long will it take for American firms to take as proactive a stance as Japan and Korea? If you know of US firms aggressively seeking out long term supply, drop us a line…

–Lisa Reisman

In the midst of the TSA hubbub, with countless pundits decrying the security authority’s all-out attack on citizens’ personal freedoms — feeling passengers up, peeping their nude bodies through scanners, breaking urostomy bags, etc. the country’s Libertarian party mourns the loss of their co-founder, David F. Nolan, who died recently in Arizona at 66.

Nolan counted personal freedom among one of the cornerstones of his political philosophy. He created the Nolan Chart, which turned the traditional left-or-right liberal/conservative spectrum on its head by placing “personal freedom issues along the “Y” axis and economic issues along the “X” axis, creating a two dimensional chart that analyzes a person’s political viewpoint in a far more valuable way, according to nolanchart.com, an online forum “for commentary from all over the political map. A more advanced version of the chart, reworked by the non-profit organization Advocates for Self Government, is shown below.

Source: nolanchart.com

(*Find out where you lie on the political spectrum — Take the Nolan Chart Survey Here.)

Most interestingly for us, Nolan and his friends sprang into action after a certain speech in the early 1970s. From Nolan’s Washington Post obituary: “The impetus for the new party was a national address by President Richard M. Nixon on Aug. 15, 1971, Emma Brown writes. “U.S. currency would no longer be pegged to the gold standard, Nixon announced, and the federal government would institute new wage and price controls to curb inflation.

As gold prices soar while the near- and medium-term future of the dollar remains uncertain, the circumstances of the Libertarian Party’s birth seem very prescient. Few share Ben Bernanke’s view that inflation won’t rise considerably after the Fed’s second round of quantitative easing.

In that same decade, it’s no small coincidence that economists divided into the monetarists and Keynesians. This led to a split in thinking about how the government should interact with the economy. A recent article in The Economist lends more credence to the libertarian viewpoints of Austrian economist Friedrich Hayek, whose business cycle pointed out that low interest rates lead to wasteful capital allocation. Nolan’s party took up wasteful spending as a banner issue back then; the issue continues to surge today.

Personal freedoms and self-government, the latter being heartily co-opted by the Tea Party arm of the Republican Party lately, factor heavily in the growing sentiment that certain institutions (the White House and the Fed, for example) have irrevocably overextended the role and responsibilities of our federal government and, ultimately, over-leveraged it.

Nolan’s “third way of thinking has certainly, if anything, furthered the quality and focus of political discourse in this country. That doesn’t translate, not even remotely, into election wins (Nolan gained just 5 percent of the vote when he ran as a third-party candidate for U.S. Senate against John McCain this year), but that “winning now is not necessarily a core libertarian principle. “A third party¦can take a long-range approach – running candidates with no intention of immediate victory, he wrote in 1971, according to the Post.

Some might say Nolan envisioned a perfect marriage of the best intellectual thinking with the most practical-minded economic philosophy. This is evident when quotes such as the following display a marked absence of cutthroat rhetoric (to which both Republicans and Democrats are not strangers), instead lodging an idealistic call for rationality:

“There’s a surreptitious hope that [the major parties] adopt some of our ideas and put them into practice,” Mr. Nolan, quoted in the Post as saying on the 30th anniversary of the party’s founding. “Even if we didn’t get credit for them, they would be changes for the good, and we’d like to see them in our lifetime.”

–Taras Berezowsky

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

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

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