Articles in Category: Public Policy

With our office currently very attuned to the world of babies (Lisa and Jason welcomed their third boy, Simon, into existence nearly two weeks ago), not to mention their feeding schedules, this little news item certainly set off the baby radar.

The Chicago Tribune reported that the Consumer Product Safety Commission just passed the toughest rules regulating baby cribs in US history. The main target is the “drop-side model, in which the sidepiece that drops down can cause babies to become trapped and hang themselves to death. Beginning this summer, drop-side cribs, and also those with unsafe mattress supports/slats, will be illegal to put or keep on the market. Another historic rule prohibits the sale of almost all second-hand cribs, since most would not pass the new standards.

Source: CPSC via Chicago Tribune

(For the record, Lisa and Jason are not using a drop-side crib. Whew.)

Needless to say, this will have quite an effect on both babies and their parents, and manufacturers.

In terms of baby safety, the rules are reportedly a long time in coming according to the Tribune, between November 2007 and April 2010, at least 35 fatalities attributed to structural crib problems were reported. Since 2007, 11 million cribs have been recalled. Earlier this year, “seven firms, including Million Dollar Baby, Jardine Enterprises and LaJobi Inc., voluntarily recalled more than 2 million drop-side cribs, according to an LA Times article.

On the manufacturing side, will this cause new supply chain disruptions, with new plans for production and distribution having to go into effect pretty soon?

The Juvenile Products Manufacturers Association, a non-profit trade association, doesn’t think so.

“There will be a negligible impact to manufacturers upon passing of the final rule in terms of product being able to meet the new federal standard, the association writes on its Web site.

But JPMA is worried about potential re-testing of already-safe cribs creating hiccups in getting the product to market efficiently.

According to their site: “JPMA does anticipate impact on the cost to be in compliance with the new mandatory rule to the manufacturers from a material standpoint. JPMA estimates the impact to be upwards of approximately 10% due to additional materials being utilized in order to meet some of the new requirements.

Even if companies like Child Craft, the world’s largest crib manufacturer, have to do an about face to adjust to the new regulations, babies around the country will undoubtedly be safer in the long run.

So, anyone want to speculate on future used-crib scrap market trends?

–Taras Berezowsky

We’ve all read about the tenuous relationship between US importers and Chinese exporters that colors anti-dumping news, with the requisite lists of duties and suspensions that are in line for metal products. But a new concern lurks behind the dumping dispatches; one that may come into play pretty heavily in future US-China trade — some may argue it already has — especially in terms of affecting US exports.

The debate over certain elements of intellectual property rights (IPR), a contentious issue here in the States, has now spilled over into the macroeconomic forum between the US and China. It’s long been known that Chinese pirating of copyrighted works, for example, is commonplace, but this is the first time that a federal-level investigation will try to put a quantitative stamp on the extent to which IPR infringements in China can devastate US business there. This comes from one of two reports, released by the US International Trade Commission (USITC).

China has been robustly advancing “indigenous innovation policies, which the US sees as undermining its firms’ business opportunities in China’s economy. “This “web of policies” often embedded in government procurement, technical standards, anti-monopoly, and tax regulations may make it difficult for foreign companies to compete on a level playing field in China, the USITC’s news release states. The graph and table below show the extent of China’s involvement at every stage of the supply chain.

Source: USITC

The first report found that the extremely weak or even non-existent enforcement of IPR leads to “widespread infringement upon “U.S. firms’ copyrights, trademarks, patents, and trade secrets in China. (The second report, a more quantitative analysis of the effect of IPR infringement on US jobs will come out in May 2011.) For metals companies doing business with China, this can certainly cause harm beyond simple exports the firm’s brand image, for example, or proprietary information, even if not explicitly shared, may become easily compromised. (Manufacturing equipment or processes are also targets.) As we’ve seen through the WikiLeaks cables, the Chinese have few qualms when it comes to hacking US corporations’ databases. Who’s to say this doesn’t extend into IPR?

Reuters intelligence in the Business Standard pointed to a recent report by PwC that said “the urgent need to protect intellectual property has forced 92 per cent of surveyed companies operating in China to plan budget increases on information security in the next 12 months. Chinese firms and the government have been under fire for either forcing companies to hand over patents and designs (or simply stealing them) when it comes to products such as high-speed trains, auto designs, mobile phones and wind turbines. The International Intellectual Property Alliance estimates US trade losses due to piracy in China of at least $3.5 billion in 2009, according to the article. For context, that is nearly the total value of the US aluminum extrusions market.

–Taras Berezowsky

Source: Al Arabiya News

Somebody big, old and important stands in the way of Chinese development of Afghanistan’s Aynak copper mine.

Hint: He doesn’t move. Nor is he alive.

Yep, none other than Buddha okay, okay, ancient likenesses of Buddha, not the royal prince of peace himself is giving the Metallurgical Corp. of China (MCC) more and more headaches.

This saga began playing out when MCC won a contract to mine for copper in Aynak, 30 miles south of Kabul, in 2008. Some 11 million tons of proven copper reserves (not to mention several other metals; see below) lie under ancient Buddhist ruins initially discovered by archaeologists in the 1960s. Nothing had been excavated until MCC began actively taking steps to develop infrastructure; this led to Afghan and French archaeologists truly getting their act together.

Source: The New York Times

Now, a 2,600-year-old monastery has been uncovered, featuring more than 150 statues of Buddhas, seven stupas (tombs for housing saints’ relics), and frescoes, according to the Associated Press. (The site’s actual name is Mes Aynak “mes is the word for “copper in the local Dari language.) This poses a problem for China, as they’re hungry for copper and ancient preservationists are still in their way.

“We don’t think the construction will be affected by the discovery of ancient sites,” said Jawad Omer, spokesman for the Ministry of Mines and Industry, in a Nov. 19 Reuters article. Then, on Dec. 5, Reuters reported that safeguarding the relics could up to three years, delaying MCC’s operations indefinitely. MCC hoped to begin production in 2013 but clearly that’s not happening now. The discoveries “will delay the implementation of the project for a while, but that is something that we can afford,” Afghanistan’s Mines Minister Wahidullah Shahrani told Reuters.

Actually, Mr. Shahrani, you may not be able to afford it.

This situation puts the Afghan government and their Ministry of Mines between a rock and a hard place. They are struggling with the dual mandate of sorts, heeding the 2004 Historical and Cultural Artefacts Law to preserve ancient cultural gems such as these, while doing everything in their power not to lose out on billions in rare-to-come-by foreign investment (God knows the only significant investment in Afghanistan lately has been US military’s infrastructure to wage the “war on terror.)

Both of these challenges, artistic and economic, are more vital than ever. The country’s cultural soul split when the Taliban destroyed the two massive Bamiyan Buddhas in 2001, and saving the Aynak ruins would help ease that painful memory. However, getting the copper mine up and running would help the nation’s flailing economy that is still almost entirely dependent upon foreign aid.

Kudos to the Afghan government for standing up for arts and culture preservation personally, I completely agree with their interim decision to give archaeologists the time and space to do their work. Economically, however, it may be in their best interest to facilitate China’s gamble as quickly and efficiently as possible, so that when the time comes to fund the preservation of new historic finds, Afghanistan has a bit more money in its pocketbook to support them.

–Taras Berezowsky

Read more MetalMiner coverage on the huge logistical challenges and concerns about mining in Afghanistan:

Afghanistan Bids for Place as Iron Ore and Copper Producer

Vast Riches of Minerals Found in Afghanistan Ought to Fall on Deaf Ears

If I were to do an informal survey right now, I’m pretty sure a sizable number of our readers either work for small manufacturing businesses or depend on small businesses to continue their operations.

That’s why the argument that Scott Shane lays out in a recent Business Week article is pretty important to our readers indeed, to the majority of working Americans in the country today. Shane asserts that the Fed’s second installment of quantitative easing will do very little to help small businesses (which account for roughly half of the private-sector economy), instead potentially widening the gap between them and their large multinational counterparts.

The jobless rate remains high, up to 9.8 percent in November, and the Bureau of Labor Statistics reported that only 39,000 new jobs were added last month at least 150,000 a month are needed to keep the unemployment rate stable. The Financial Times outlines the good news: the PMI slipped only 0.3 points to 56.6 last month, according to ISM, keeping up the recent trend of overall positive growth, which is what many economists expected. “Manufacturing was fuelled by accelerating growth in imports, inventories and supplier deliveries, the article reads. “However, employment, production and new orders grew more slowly in November.

Small businesses are especially hurting in the latter three areas. The slightly improved manufacturing statistics may not be reflective of what SBs are facing, and indeed, SB owners are responsible for many of the new jobs added. Shane points out that the Small Business Administration says small companies generate more than 50 percent of “nonagricultural private-sector gross domestic product but only 31 percent of exports.

The major goals of QE2 to drive bond interest rates down and hope banks will lend more are lost on SBs, because they are suffering from lower demand for their products/services and have no incentive to borrow money to expand their operations (not that the banks are champing at the bit to lend anyway.)

What we’re left with is to push for more constructive developments on the fiscal policy side of things, not the Fed’s monetary policy, as Shane concludes. The Obama administration’s recent compromise on extending the Bush tax cuts is step in this direction; entertaining the idea of a QE3 is not. Lisa Reisman and Jason Busch, editors of MetalMiner and Spend Matters, respectively, outlined exactly what Congress needs to do in 2011 to help the manufacturing sector many of their ideas apply to the future health and well-being of small businesses, those very companies serving as the heartbeat of a nation that makes and builds things.

–Taras Berezowsky

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

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

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