Articles in Category: Public Policy

(Continued from Part One.)

Shouldn’t compromise, on a broad and fundamental level, be the new normal? I don’t mean political compromise that’s an intangible dog-and-pony show that gets citizens nowhere. I mean personal sacrifice from the bottom up. Shouldn’t everyone admit that it’s not the 1950s anymore? That no one is really, necessarily “owed a house, two cars, standard vacation times, etc., anymore? That no one is really “owed limitless credit card spending that mostly supports cheaply made Chinese goods? How did we get to a point where we — as public or private sector workers and anyone in between completely refuse to reduce our own consumption or take a bit of a hit to a relatively luxurious lifestyle so that that lifestyle has some chance of continuing in the future? (And yes, speaking from personal experience, in my book any country where the majority of the population has access to shelter, running water and a Wal-Mart has no idea how good it has it.) We live in a world where lighting-fast global trade and information exchange is changing everything we need to change along with it.

Now, I hesitate to revert to Nucor as an example (since it’s a valued MetalMiner sponsor, therefore close to the company) but I can’t resist simply because it’s a great example. When faced with the recession and declining orders and revenues, the company which paradoxically does not employ a union workforce yet is proven to have some of the most engaged, committed and dedicated employees in the steel industry didn’t issue massive layoffs; instead, it lowered everyone’s wages for an indefinite period everyone, from the CEO to floor workers. Did hundreds of people lose their jobs? No. Did hundreds of people experience hardship? You bet. But the individuals who make up the company realized, as a whole, that sacrifices needed to be made now, so that the lifestyle and economy that we knew and loved can hopefully return.

So yes, many public unions are bloated, and yes, some of those jobs could likely be cut entirely. But is it the only bogeyman scapegoat that we should be focusing on? No. Should collective bargaining be totally stripped? Probably not. Could it benefit from being scaled back? Maybe. Ultimately, the focus should be on individual and, when added up, institutional compromise and sacrifice so that unions are not leveraged for the wrong reasons, and so that old jobs are not only retained, but new ones have the potential to be created. That way, cities like Vallejo and states like Illinois (where I live and from where I write) can get back to solvency sooner rather than later.

–Taras Berezowsky

Just this morning, while reading about cities being broke, I realized that MetalMiner hasn’t really weighed in on the public union debate, mostly stemming from the Wisconsin / Gov. Scott Walker debacle, what with the need for spending cuts and curbing the right to collective bargaining, let alone how public employee unions factor in to the looming bankruptcies of cities and states.

So here’s my own personal take.

Consider the lead paragraph from this piece in last Sunday’s Times Magazine:

“Vallejo, a city about 25 miles north of San Francisco, offers a sneak preview of what could be the latest version of economic disaster. When the foreclosure wave hit, local tax revenue evaporated. The city managers couldn’t make their budget and eliminated financing for the local museum, the symphony and the senior center. The city begged the public-employee unions for pay cuts ” all to no avail. In May 2008, Vallejo filed for bankruptcy. The filing drew little national attention; most people were too busy watching banks fail to worry about cities. But while the banks have largely recovered, Vallejo is still in bankruptcy. The police force has shrunk from 153 officers to 92. Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. Three of the city’s firehouses were closed. Last summer, a fire ravaged a house in one of the city’s better neighborhoods; one of the firetrucks came from another town, 15 miles away. Is this America’s future?

Clearly, cities and states are screwed because they are super-short on revenue. Tax bases have eroded why? Liberals may point to Bush-era tax cuts for the wealthy, and conservatives may call out massive overspending by local, city, state and federal governments on “frivolous line items, most notably public sector unions and Social Security/Medicare/Medicaid, etc. But both groups, including those in the middle, likely agree that the dearth of well-paying jobs is not helping any citizen contribute to their respective tax bases, be they in Detroit, Harrisburg, Pa., or Vallejo, Calif.

Now, I don’t think collective bargaining is to blame for all the ills facing municipal budgets; nor are unions the be-all, end-all evil that many farther-right conservatives make them out to be. Indeed, I’m sure many hard workers exist in the public sphere, those who pull their weight for their salary and benefits. And I also concede that many middle class blue- and white-collar workers, be they in the public or private sectors, are pissed off at the Wall Street banks and hedge funds that played so carelessly with money and mortgage securities that led to the taxpayers bailing them out. It makes me livid to think that CEOs and top managers walked away with million-dollar bonuses when the economy shafted the majority of Americans (the worst offenders, in my opinion, should be sitting side by side with Bernie Madoff behind bars) and I’m not even a union worker. But it sets a terrible example for those who actually do work hard to make mid-five-figures and simply want basic benefits for their families. (The utter disparity in economic conditions between the richest and poorest in the US is another post entirely, and no matter what anyone says, the markets are not really built to close the gap they thrive on that disparity.)

But as I see it, however, there is only one long-term solution.

(Continued in Part Two.)

–Taras Berezowsky

Over a year and a half ago we reported on a major trade dispute between the US and Mexico, specifically over a US ban on Mexican origin trucks crossing the border into the US. Mexico retaliated with US/Mexico truck dispute punitive tariffs that totaled $2.4 billion annually, according to the Wall Street Journal. The US, in disallowing Mexican trucks to cross the border, has violated the North American Free Trade Agreement. But no more — the two countries have brokered a deal in which half of the tariffs would get eliminated upon signing of the treaty (expected in 60 days, according to the story) and the other half of the tariffs would get eliminated when the first Mexican trucks pass a series of tests including drug tests, English language tests and safety tests.

Jim Hoffa, president of the International Brotherhood of Teamsters Union, had argued for the ban suggesting that, according to the WSJ, the new law “caves in to business interests at the expense of the traveling public and American workers.”

The punitive tariffs have harmed industry and stifled job growth according to US Chamber of Commerce President Tom Donohue: “This delay put more than 25,000 American jobs at risk, and retaliatory tariffs have been in place for two years on many U.S. products entering Mexico.

The argument for lifting the trucking ban, however, extends far beyond the jobs issue as well. From a US-import perspective, the existing process of essentially forcing every single inbound truck to change over to an American carrier adds nothing but hassle and extends the inbound supply chain. Crossing into the US border already creates potential excessive delays particularly due to the drug wars raging throughout Mexico (and some US cities). In a time-motion study from 2004, analyzing Northbound traffic (Mexico-US) truck re-loading times within Mexico can equate to 17 percent of the total time of moving goods from the border through to the US side.

But the biggest shocker of the time motion study involves the inherent efficiencies (or inefficiencies) of the US side of the equation (not the Mexican side). If you look at the time it takes to process the inbound or outbound truck from the US and Mexico, one might expect that to be about equal. If you made that assumption, you’d be dead wrong. Consider this:

  1. Leave out the time it takes to truck goods from Chicago to Laredo (it is what it is). The time study concluded that all of the remaining procedures (inspections, drayage, warehousing, congestion, wait time, etc.) ranged from 12 hours to 81 hours (in other words, to export US made goods, it takes 12 -81 hours at the border)
  2. On the import side of the equation it takes 1.3 to 10.5 hours

The Mexican side of the equation (e.g. the time it takes for the procedural aspects of border crossing) from Mexico to the US is 2.8 6 hours and from the US to Mexico 2.6 5.3 hours.

And here I thought the President wanted to double exports in five years!

–Lisa Reisman

In part of our continuing coverage of rare earth metals and related minor metals, MetalMiner is pleased to welcome Mr. Lawrence Heim, Director of The Elm Consulting Group International, LLC, an independent environmental, health, and safety consulting practice, as a guest contributor. According to their website, Elm was engaged by a leading US-based electronics manufacturing industry association to conduct the first independent third-party Conflict Minerals supply chain traceability audits, supporting the association’s “Conflict-Free Smelter designation for tantalum.

Up until recently, substantive efforts related to conflict minerals have focused on “bag and tag programs at mines and voluntary procurement standards based on reputational risk concerns. In 2010, a leading US-based industry association of electronic manufacturers began field trials of a conflict minerals audit program based on tools developed by the association and an international non-governmental organization. Our firm, The Elm Consulting Group International LLC, was one of three firms invited to participate in the field trials; we subsequently conducted the first tantalum supply chain traceability audits encompassing sites in the US and Japan. We also had the opportunity to evaluate an additional site a scrap metal company in the US.

The major takeaways from our experience include:

  • Supply chain auditing takes careful planning. The audit process is far more efficient if it begins close to the point of materials origin and works forward. Starting at the consumer/end use results in the audits being incomplete until all the preceding supply chain links are audited. Once the full chain is completely audited, all the open/incomplete reports must be amended.
  • Even though the SEC’s jurisdiction is limited to publicly-traded companies, the conflict minerals audit mandate will directly impact non-publicly traded companies as they are likely to be part of the supply chain of directly-regulated companies. Information and audit requests will flow through the entire chain, which is the goal of the law.
  • New information sources beyond facility/company files are needed. Some of this information is to be developed by the US government under the Law, but much will be left to the companies and auditors to locate on their own. SEC and other stakeholders have expressed concern about the veracity of the information regarding activities near the point of extraction/export. This information need creates an opportunity to leverage emerging information management technologies such as Sentiment360
  • Material buyers are already demanding third party audits/evaluations, demonstrating hesitation to rely on self-declarations by suppliers. This indicates that, although SEC standards allow companies to conduct and rely upon internal due diligence activities and representations, market forces may push companies to engage third party auditors for all its conflict minerals evaluations and related statements. Read more

In part of our continuing coverage of rare earth metals and related minor metals, MetalMiner is pleased to welcome Mr. Lawrence Heim, Director of The Elm Consulting Group International, LLC, an independent environmental, health, and safety consulting practice, as a guest contributor. According to their website, Elm was engaged by a leading US-based electronics manufacturing industry association to conduct the first independent third-party Conflict Minerals supply chain traceability audits, supporting the association’s “Conflict-Free Smelter designation for tantalum.

Additional proposed elements of the Conflict Minerals law include:

  • Due diligence process not prescribed. Neither the law nor the SEC’s proposal specifies the requirements for the scope or execution of a due diligence process for the Conflict Minerals Report. Instead, the SEC’s opinion is that it would be inappropriate for them to prescribe any specific guidance on the due diligence efforts. This allows companies/industries to develop a framework reflecting their own unique circumstances, products and supply chain. However, the scope of the effort and the information relied upon must be specifically described in the Report.
  • Applicability to scrap. The proposal establishes a separate standard for scrap materials. The SEC stated that if companies “obtain conflict minerals from a recycled or scrap source, they may consider those conflict minerals to be DRC conflict free. However, the preamble provides confusing if not conflicting language on this point.
    • Companies claiming the use of scrap/recycled material “would be required to disclose in their annual report, under the ËœConflict Minerals Disclosure’ heading, that their conflict minerals were obtained from recycled or scrap sources and that they furnished a Conflict Minerals Report regarding those recycled or scrap minerals. Based on this statement, a full third-party Conflict Minerals Report is required for scrap that is deemed DRC conflict-free.
    • The SEC does not plan to define what is recycled or scrap material. Companies are left to establish their own definition, with supporting explanations and associate due diligence efforts to be provided in the Conflict Minerals Report for the scrap/recycled material. In addition to creating ambiguity for auditors, this will likely result in companies defining “scrap one way for purposes of the SEC, and another way under EPA regulations. See 40 CFR 261.2(c).

The actual regulations are less ambiguous, stating clearly that Forms 20-F, 40-F and 10-K must contain a Conflict Minerals Report for scrap/recycled conflict mineral materials.

Number of companies affected. Two groups of companies will be directly impacted by the Conflict Minerals Law: companies that are directly regulated by the SEC, and companies that are not SEC-regulated, but are suppliers to impacted companies. For the first category, the SEC estimated that 1,199 companies will require a full Conflict Minerals Report. The methodology for determining this number is worthy of mention. The SEC began by finding the amount of tantalum produced by the DRC in comparison to global production (15% – 20%). The Commission selected the higher figure of 20% and multiplied that by the total number of affected issuers, which they stated is 6,000. (75 Fed. Reg. 80966.)   Clearly, this methodology does not consider many additional factors and the actual number of companies that will require the full audit is certain to be higher. For the second category the suppliers no estimate has been made.   But if one anticipates 10 suppliers (we have data indicating that the number of suppliers ranges from one to well over 100 for a single directly-regulated company; an average of 10 suppliers may be conservative, especially given the wide range of conflict mineral-containing products) for each company directly regulated, the number of additional companies impacted would be 12,000.

The next guest post will review the proposed requirements in comparison to three of the first-ever Conflict Minerals supply chain traceability audits, conducted from AugustNovember 2010 by independent third-party professional auditors.

–Lawrence Heim

Click Below to Read More in the Series:

Part 1

Part 2

Part 4

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MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


As a former metals trader (not ring, mind you, but import/export), I learned many tricks of the trade, so to speak. Unscrupulous traders once (perhaps still) easily circumvented US law in a variety of ways by creating false companies, transshipping products (knowing full well the products would end up in the hands of US adversaries) and outright falsifying the actual “end use of said product.” Nonetheless, sometimes laws get circumvented legally because the language of the law lacks specificity. But as an ex-Arthur Andersen consultant, I can appreciate the difference between the letter of the law and the spirit and intent of the law (Enron anyone?). Our contacts in the rare earth metals world tell us that tantalum scrap traders have found profitable ways to skirt the new Dodd-Frank Conflict Minerals Law.

These scrap dealers have followed market developments closely, attending any/all meetings and conferences having to do with conflict minerals. According to our source, traders have said to him, “nothing is going to change, African origin material will find a way to get into the market.”

To understand how the scrap supply chain works, we refer to an earlier MetalMiner post covering tantalum forms: “Tantalum comes in basically three forms: tantalum ore and concentrate (where our sources tell us long-term pricing could easily exceed $120/lb with African spot prices at $60/lb, though one can’t actually buy African tantalum at that price), tantalum oxide/salts (which essentially double the ore prices) and finally, capacitor-grade tantalum powder, now at approximately $300/lb, according to our sources. It’s this last grade that finds its way into the electronics we own. With tantalum prices mounting, the lure of finding loopholes in the law may prove too tempting. So we inquired how the tantalum scrap supply chain may operate in comparison to the non-scrap supply chain.

Basic premise: Tantalum oxide concentrate currently in the $120-$150/lb range with Congo ore currently in the $40-60/lb range, an approximate $100/lb difference.

We have identified the following approximate costs and process steps to use scrap and avoid traceability requirements:

  1. Extract metal from concentrate $15/lb
  2. Refine metal to powder $15/lb
  3. Refine metal powder to ingot $15/lb
  4. Chop to ingot $10/lb (this is the only additional cost and is not traceable)

The scrap chain would still allow for an increase in the basic price of Congolese material. From a price perspective, the above-referenced process still undercuts or matches the “clean material.” In other words, the “alternative non-regulated supply chain” can operate profitably at today’s tantalum market prices.

The Enough Project, original advocates of the legislation, along with the NGO Global Witness, are said to have begun work anew with the SEC to explain the loophole within the law. Clause 1502 of the legislation defines what needs to be reported to the SEC, but the portion of the law relating to scrap and recycled materials contains some ambiguity, as our guest blogger Lawrence Heim of The Elm Consulting Group International will elaborate on in a follow-up post tomorrow.

In the meantime, buying organizations will want to pay careful attention to both the new legal requirements as well as this new loophole. For the latest in complying with the SEC conflict minerals law, check out our free resources (including more articles and exclusive white-papers).

 

(This is part 2 of a two-part series; read part 1 here.)

OK, so even though the transportation plan and infrastructure proposal we wrote about in Part 1 has the potential to spur contracts for OEMs and metal suppliers, in all likelihood, the money to fund that endeavor is “less likely to be found than a yeti riding a unicorn, as R.A. wrote in the Economist. Hence, the chances of getting through the Republican House are very close to zero.

Some other budget items, however, may also have implications for manufacturers in the steel and rare earths industries.

The proposed line items most affecting domestic manufacturers include a $143 million allotment for the Hollings Manufacturing Extension Partnership, ostensibly to help companies improve innovation strategies and adopt more efficient manufacturing processes, and a $526 million proposal for the International Trade Administration to continue pushing the National Export Initiative, according to the budget. However, the programs, at nearly $700 million combined, may not achieve long-term economic sustainability for manufacturers.

The Commerce Department will save $43 million dollars, however, after the Emergency Steel Loan Guarantee Program is cut as proposed. The program came out of the 1999 Steel Act, which allowed for monies from private banks and investment firms to go to steel companies suffering from an influx of foreign imports.

Most interestingly, the hubbub over rare earth element (REE) supply constrictions from China has gotten to such a boiling point that the US administration is making budgetary allowances for REE domestic exploration. Generally, press releases about junior mining firm exploration are never all that interesting or newsworthy in and of themselves, but one from Ucore, a Canadian junior REE mining firm, posted on Digital Journal, caught our eye. According to the release, Obama’s budget contains funding for the creation of a rare earth Energy Innovation Hub. (This allotment undoubtedly stemmed from the Department of Energy identifying five rare earth metals that are critical for the US to secure in the short term, in a report last December.) “The hub will bring together top scientists to conduct cross-disciplinary research related to critical materials and rare earth elements in what the US DOE describes as an effort modeled after the “Manhattan Project,” according to the release.

Indeed, the budget document does mention the three new Energy Innovation Hubs (as an addition to the three existing ones), but there is no line item or explicit mention for how much the hubs will cost. For that, one must watch a slideshow of Energy Secretary Chu’s breakdown of DOE spending requests to find that they’re requesting $146 million total to fund all six hubs, and $20 million specifically for the rare earths portion, which they are calling the “Critical Materials hub. (We’ll keep an eye on this as it progresses.)

Ultimately, will throwing more government money at investments like these help secure valuable resources and economic stability? Or should the government’s domestic and international policies take the lead in helping existing private enterprise compete on their own terms? My guess is some mixture of the two would produce the most valuable returns, but one thing is clear: attacking the deficit and preserving fair trade laws and policies should be the federal government’s No. 1 priority, leaving true innovation to the private sector companies that know how to do it best.

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


While we all know President Obama is excellent at paying lip service to the US manufacturing community, and has indeed signed several substantial acts trying to revitalize domestic job and export growth, we’ll have to wait and see if his initiatives in the federal budget proposal for the 2012 fiscal year 1) get approved and implemented, and 2) spur a sustainable and effective growth pattern in American manufacturing. For now, let’s take a deeper look into the reportedly “slimmed down budget as it relates to industry and manufacturing.

The largest proposal in the new budget is the $556 billion transport plan, to be spread over six years. Reuters reports that the plan is intended to repair the nation’s existing and crumbling infrastructure, while laying the groundwork for a transnational high-speed rail network. Although the administration touts the infrastructure plans as sure-fire ways to create jobs, it’s still unclear how it’ll be paid for. Obama calls for $53 billion for the rail projects alone, and intends to spend 17 percent of the overall $556 billion transportation plan the first year, according to Reuters. The Republican-controlled Congress chafes at this, especially since the initial proposal claims the price tag will be taken care of by a “Transportation Trust Fund (which will swallow up smaller “Highway Trust Funds); aside from Ëœcompetitive grants,’ the revenue stream isn’t clear, much less definitively viable.

Essentially, it’s a more extensive version of an expired act:   the plan’s costs “would be more than 60 percent above the inflation-adjusted levels of SAFETEA-LU (The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users), which expired on September 30, 2009, and has been kept afloat at the same funding level by a series of continuing resolutions since expiring, writes Jeff Berman in the Supply Chain Management Review.

So the overarching question becomes: is more spending to promote potential jobs and future infrastructure investment more important than attacking near term trade imbalances and drastically reducing the current budget deficit? Is it a “chicken-or-the-egg argument?

The pro of spending now: it helps get the ball rolling on contracting the companies and manufacturers that would be building these rail networks, roads and bridges the Caterpillars, Vulcan Materials, Parsons, steelmakers and prefab materials makers of the world (the American Society of Civil Engineers estimates a price tag of $2 trillion to bring overall US infrastructure up to speed, and a lot of that would go to contracting these companies). The con: the creation of new institutions (with new workers, new management, etc., new budgets, etc.) such as the “Infrastructure Bank that would come out of this plan, described in the Reuters report, in which states and private investment would pour money into the bank to match federal funds, solely to finance transportation.

More on metal-specific manufacturing areas of the budget in Part 2.

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


Forbes, on the heels of the February 3, 2011 edition of Manufacturing & Technology News, recently reported that, “The Director for National Intelligence is undertaking a National Intelligence Estimate (NIE) on the state of American manufacturing. Growing concern over loss of domestic capability and dependence on foreign nations for key high-tech materials, components and systems has led the DNI office to start such an effort. An NIE according to Wikipedia, is an estimate of a National Intelligence Estimate “course of a future event. These documents are classified and given to policy makers for decision-making. NIEs, according to the Council on Foreign Relations are the “most authoritative and coordinated written assessment of a specific national-security issue,” as reported by Manufacturing & Technology News.

This development has great significance to our manufacturing readership for a number of reasons.

The first reason involves understanding why the Director of National Intelligence (who initiated the NIE) has undertaken this assessment. We can only speculate, but our best analysis suggests the concerns over the reliance on foreign sources of key raw materials and inputs such as rare earth metals combined with a growing trade deficit not merely explained away via higher priced oil and steady increases in industrial productivity have given policy-makers pause in an effort to better understand the nation’s supply risk.

In a recent Forbes blog post covering this story, Loren Thompson suggests that the concern not only relates to metals markets (he gives a lengthy example of armor steel only available via one producer here in the US) but also to key products such as antibiotics with the recent closure of the last Bristol-Myers Squibb antibiotics producing plant in NJ, as well as large tires used for the military. Finally, Thompson points to Evergreen, the solar panel maker in Massachusetts, that received US federal assistance but still moved its operations to China. Thompson said the reason for the move involved “low-interest loans from state-controlled banks.

Thompson goes on to suggest multiple additional reasons why the US Intelligence Community may have identified US manufacturing for this NIE. We have covered many of these on MetalMiner from comparatively “high US corporate tax rates to regulations that add cost layers to US businesses. But he suggests the real reason behind the need to look at US manufacturing more strategically has to do with China’s mercantilist policies.

Whether the results of this NIE make the mainstream news pages remains to be seen. Certainly US manufacturing strategies will need attention, as will the US trade deficit.

–Lisa Reisman

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In our continuing coverage of the relationship between manufacturing and government policy, there’s a stark difference of opinion and data over whether business process offshoring has cost domestic jobs in the United States.

The Conference Board, a not-for-profit business and research firm that focuses on helping organizations’ performance and better serving society, teamed up with Duke University to release their January 2011 report on what offshoring is doing to domestic businesses. (The Conference Board also releases the Leading Economic Index LEI one of main economic indicators MetalMiner uses in tracking metal price trends.)

The Center for International Business Education and Research (CIBER) and the Offshoring Research Network (ORN) at Duke University’s Fuqua School of Business surveyed a number of companies, asking a range of questions about their offshoring goals and operations. The survey drew some rather surprising results.

“Over half of the participants in our survey say offshoring has resulted in no change in the number of domestic jobs in most functions, said Fuqua Professor of Strategy and International Business Arie Lewin. So, essentially, they’re saying we’re not losing jobs to overseas workers most of the time.

The Economic Policy Institute is saying the exact opposite. A recent EPI analysis, as relayed by Manufacturing & Technology News, concluded that the US visa programs that allow companies to hire skilled foreign workers the H1B and L-1 programs are “out of control and are “costing Americans hundreds of thousands of jobs. The author mentions four companies, Infosys, Wipro, Satyam and Tata Consultancy, which are specifically contracted to hire foreign workers and bring them to the US, only to get trained and sent back to India. This coincides with the Conference Board/Duke findings: “Manufacturers and high-tech/telecommunication companies are less likely to use captive offshore operations owned by the company and located on foreign soil and are moving increasingly toward the use of third-party providers of offshore labor.

Granted, most of these positions are in the IT sector, a heavy focus for offshoring research. “The finding that the U.S. software sector has the highest ratio of offshore to domestic employees almost 13 offshored jobs per 100 domestic jobs may be a reflection of a scarcity of domestic science and engineering graduates in the U.S, said Lewin of Duke’s business school.

That statistic points to the crux of the matter for offshoring. The report shows evidence that offshore practices are “no longer driven by cost cutting, but by enhancing innovation and increasing speed to market. (This is something Spend Matters, our sister site, has written about extensively.) The average cost savings for companies actually decreases in many cases, as they are increasingly dealing with unexpectedly high costs in developing offshore operations (e.g. training programs, loss of managerial control, etc.)

Just because offshoring news good or bad hits the IT sector first, that doesn’t mean metals manufacturing is immune. Although specific data from the Conference Board/Duke report wasn’t (freely) available for the metals industry, analysts at NASSCOM, an Indian IT trade association, indicate that it’s only a matter of time before US manufacturing workers may be in trouble: “The Indian outsourcing firms are quickly branching out of IT services and into aerospace design, retail, pharmaceuticals R&D, legal and banking systems and systems integration of the U.S. manufacturing sector, according to the Manufacturing & Technology News article. “Outsourcing companies in India are targeting new industrial sectors, new technologies and services “from smaller companies,” says NASSCOM president Som Mittal.

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


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