SPRING 2008 OCMA NEWS

GLOBAL WARMING LEGISLATION – THE LATEST THREAT TO OHIO METAL CASTERS

While the debate will surely continue about whether the recent evidence of global warming will lead to apocalyptic floods, droughts, coastal abbreviation, and hordes of locusts (just kidding) is sure to continue, it appears as if a consensus has developed on Capitol Hill that Congress needs to enact legislation to address carbon dioxide emissions. This is not a positive development for our industry or for manufacturing in general, but it is reality and we must prepare to use our influence to minimize the potential harm to our industry and to our country.

The America’s Climate Security Act of 2007 also known as the Lieberman/Warner (L/W) bill S 2191 was approved by the Senate Environment and Public Works Committee in December 2007 and will be debated in the Senate beginning in June 2008. L/W would create a national cap-and-trade scheme for greenhouse gas emissions, in which emitters would mostly be allocated right-to-emit credits based on how much greenhouse gas they currently emit. The cap would tighten over time, until by 2050, emissions would be reduced to 70% below 2005 levels. The bill would impose specific emission limits on electric utility, transportation, and manufacturing industries. The frightening aspect of L/W is that it is a middle-of-the-road proposal which has been criticized by the environmental community for not going far enough. There are other proposals in Congress that are more restrictive and would be far more harmful to manufacturing.

Unfortunately, S2191 is likely to cause enormous problems. According to an econometric study prepared by the American Council for Capital Formation, L/W would cause Ohio to lose nearly 140,000 jobs by 2020. This is a net number assuming that high energy using industries may lose more jobs, but new jobs in developing renewable energy areas would mitigate some of those losses. By 2050, jobs losses would total almost 500,000. Under L/W, energy prices would rise as the additional cost of carbon emissions directly impacts the prices paid by consumers of energy. Ohio consumers will have to pay 50% more for natural gas and 29% more for retail gasoline by 2020. By the year 2050, these prices will double from the 2008 starting point. The wholesale price of electricity is expected to increase by 80% above baseline by 2020.

The impact upon the Ohio metal casting industry is predictable. With natural gas prices expected to increase dramatically in the relative short-run and to double by 2050, the impact upon casting operations and the cost of raw materials could be devastating. It is not out of the question to raise the possibility of natural gas shortages under this scenario as electric utilities turn increasingly to using natural gas versus coal to fire their boilers to create electricity. A near doubling of the wholesale price of electricity would be extremely damaging. Finally, those metal casters melting with a cupola would also be faced with decreasing quantities of coke at ever increasing prices. It is not unreasonable to conclude that these increases in production costs would put Ohio foundries at a severe competitive disadvantage and may result in many foundries closing.

To address the threat posed by the global warming legislation, OCMA has been on the offensive. OCMA has been participating in a new coaltion, the Ohio Climate Change Dialogue Group, whose purpose is to educate Ohio citizens generally, and Ohio leaders specifically, about the potential impact of L/W and other legislation mandating carbon dioxide emission reductions. The Dialogue Group sponsored a meeting in Columbus on Friday, May 2, 2008, with Ohio Senator George Voinovich as keynote speaker.

As a member of the AFS Government Affairs Committee, OCMA Executive Director Russ Murray has participated in efforts to develop an industry position on global warming and the L/W legislation. OCMA Vice President for Environmental Affairs Ryan Burke, OSCO Industries, Inc., Kim Myers, Griffin Wheel Company, and Craig Schmeisser, RMT, Inc. assisted the AFS 10-E committee in its deliberations about the technical issues presented by L/W. Based upon this work, AFS is taking a strong position in opposition to S 2191 L/W. On May 21-22, Russ Murray participated in an AFS “fly-in” to oppose S 2191.

This battle has just begun. It is important to follow closely the debate about S 2191 L/W. OCMA and AFS will continue to communicate developments on the legislative process. The legislation is unlikely to be enacted this year because President George W. Bush has threatened to veto the bill, but next year with a new Administration this legislation is likely to move forward. Please prepare to assist us in efforts to combat this potentially devastating legislation. If you have any questions about the legislation, please do not hesitate to call (614) 876-5100 or e-mail ohiocastmetals@sbcglobal.net.

OCMA Annual Foundry Tour

OCMA members listen intently as the Alliance Castings Company LLC tour guide carefully explains a key operation at the foundry.		Ron Evers, Operations Manager, Alliance Castings Company LLC, accepts the OCMA Foundry Tour Award from OCMA President Jeff Otterstedt, Clow Water Systems

On Wednesday, April 23, 2008, fifty (50) representatives of OCMA member companies participated in a tour of Alliance Castings Company, LLC in Alliance. This green sand foundry casts side frames, bolsters, couplers, knuckles and yokes for the railroad industry. With nearly six hundred (600) employees, the foundry uses slingers to make molds for the side frames and bolsters and jolt machines to make molds for the couplers, knuckles, and yokes. The foundry operates a 30 ton arc furnace that melts low carbon steel. The maintenance crew at Alliance Castings Company, LLC must be miracleworkers because the furnace has never been down for more than a couple of days in succession in more than three decades of service.

Of major interest during the tour was the new core machine. Formerly, the foundry used eight (8) smaller cores for the side frame casting. Now the new core machine can create two (2) side frame cores in one cycle, replacing the former sixteen (16) cores for the casting. According to Operations Manager Ron Evers, the new core machine has greatly improved productivity and has greatly reduced casting defects.

The OCMA luncheon was held at the Alliance Country Club where the food and service were outstanding. OCMA President Jeff Otterstedt, Clow Water Systems presented an Iron Pourer Award to Ron Evers, Operating Manager, for generously allowing OCMA members to tour its facility. General Manager Larry Stewart was unable to attend the luncheon, but did greet OCMA members and present them with a brief history of the Alliance Castings Company, LLC.

Tour Guides: Larry Stewart, Ron Evers, Doug Battershell, Sam Mitchell, Bill Graham, Gary Utley, Adam Reed, Ron King, and Bob Childs.

OCMA Board of Trustees Convene Strategic Planning Meeting

On Tuesday, May 13, 2008, all of the OCMA Officers and five of the OCMA Trustees attended a Strategic Planning meeting to discuss both the short and long-term challenges facing OCMA. Led by OCMA President Jeff Otterstedt, Clow Water Systems, the trustees reviewed current OCMA finances, discussed the continued consolidation and shrinkage of the Ohio metal casting industry, and examined possible succession plans to assure a smooth transition following Executive Director Russ Murray’s future retirement.

The most compelling challenge facing OCMA today is the fact that the present projected revenue stream does not cover on-going expenses. The Board of Trustees adopted a fiscal year 2008-2009 budget at their April Board meeting that contained a projected budget deficit of approximately $6,000. Unfortunately, the loss in 2007 of Ford Motor Company, several companies supplying Ford Motor Company, and Ross Aluminum Foundries as member companies resulted in revenue losses greater than the projected deficit. This fact along with continued significant increases in health insurance costs have transpired to place OCMA in an operating position where the surplus is being reduced. Members of the Board of Trustees will recommend action to address this issue to the OCMA membership at the annual meeting in July.

Although Executive Director Russ Murray’s retirement is expected to be years away, the OCMA Board of Trustees discussed a variety of succession plans which would maintain OCMA as a leading state association. Additional discussion and research will be needed and strategic financial action will be necessary to accomplish this worthy goal.

The secret of OCMA’s leadership in the metal casting industry is the dedication and contributions of the Officers, Trustees, and membership. We are fortunate to have men and women in our organization who are prepared to give up an entire day, drive from all points of Ohio to Columbus, and spend hours discussing the future of OCMA. Please thank OCMA President Jeff Otterstedt, Clow Water Systems, Vice President Jim Flanagan, Babcock & Wilcox Company, Treasurer John Burke, OSCO Industries, Inc., Secretary John Kurtz, Kurtz Bros., Inc., and Past President George Deckebach, Miami-Cast, Inc., as well as Trustees Angela Dine Molaskey, St. Marys Foundry, Inc., Joe Cuske, Griffin Wheel Company, Dave Yonto, The Quality Castings Company, John C. Vaught, Tri-Cast, Ltd., and Curt Weiffenbach, Keener Sand & Clay Company for taking this time to address the future needs of OCMA.

American Foundry Society (AFS) Government Affairs Conference (GAC)

OCMA Goes to Washington The OCMA delegation at the AFS Government Affairs Conference took a few moments from their rigorous preparation to have their photo taken. The OCMA delegation members met with their Congressional leaders & staff in fifteen (15) separate meetings during their day on Capitol Hill. Pictured from left to right are: Jim Gary, GM Powertrain-Defiance, OCMA President Jeff Otterstedt, Clow Water Systems, OCMA Executive Director Russ Murray, Stephen Fitch, GM Powertrain-Defiance, John Sprague, Frech USA, Wes Jetter and Scott Frens, Fort Recovery Industries, Inc., OCMA Treasurer John Burke, OSCO Industries, Inc., OCMA Past President John Vaught, Tri-Cast, Ltd., Rick Rogel, Empire Die Casting, Inc., and Craig Holman, Columbus Steel Casting Company. Missing from the photo were OCMA Vice President for Environmental Affairs Ryan Burke, OSCO Industries, Inc., Craig Schmeisser, RMT, Inc., Ken and Dave Seilkop, EPCOR Foundry.

Although our delegation was not the largest of any state represented at this year’s AFS Government Affairs Conference (GAC) in Washington, DC on April 9-11, 2008, we were well represented. As always, OCMA members should be proud of their record of dedication and support of the national effort to educate our national leaders about the importance of the metal casting industry. This year was a historical one in that the American Foundry Society (AFS) and the North American Die Casting Association (NADCA) joined together to sponsor this year’s event.

This year’s conference was highlighted by a presentation by Professor Peter Morici, University of Maryland, School of Business, who provided an insightful and irreverant presentation on the impact of unfair trade practices on the U.S. economy. A potential look into the not too distant future of carbon trading was presented effectively by Will Ferretti, VP & Special Assistant to the Chairman, Chicago Climate Exchange. Participants were also treated to a heartfelt presentation about occupational safety and health by OSHA Director Edwin G. Foulke, Jr.

Key issues discussed at the conference included trade and currency manipulation, the Employee Free Choice Act, and potential expansion of the Family Medical Leave Act (FMLA). Other important issues presented included energy forecasts, election year 2008, immigration enforcement, and an environmental update from AFS Washington lobbyists Christian Richter and Jeff Hannapel, The Policy Group.

As always, the most important task of the OCMA delegation was reserved for lobbying on Capitol Hill on Thursday, April 10, 2008. The OCMA delegates began their day with 10:00 AM meetings with Congressmen Robert Latta and Pat Tiberi followed by meetings with House Minority Leader John Boehner and Representatives Charlie Wilson, Jim Jordan, and Steve Chabot. The OCMA delegation was shuttled by staff to the depths of the U.S. Senate to a private room to meet with Senator George Voinovich to discuss the Lieberman/Warner global warming legislation and its impact on Ohio’s manufacturing base. Senator Voinovich is preparing an alternative bill that will be more protective of Ohio’s manufacturers. Members of the OCMA delegation also met with Senator Sherrod Brown’s Chief of Staff, Jay Heimbach. Returning to the House side of Capitol Hill, OCMA members spent the rest of the afternoon meeting with Reps. Steven LaTourette, Ralph Regula, Jean Schmidt, Marcy Kaptur, and Zack Space. After a tiring, but fulfilling “day on the Hill”, all AFS GAC participants enjoyed the hospitality of Fairmount Minerals, Ltd. and Badger Mining at the Reserve Officers Association where Congressman Bart Gordon (D-Tenn), Chairman, House Science and Technology Committee was the honored guest

The AFS GAC presents an opportunity to remind our Congressional Delegation of the importance of the metal casting to the manufacturing base in the state of Ohio. That’s why we need to maximize our participation and support to this event.

ENVIRONMENTAL UPDATE

USEPA recently promulgated a final area source rule for iron and steel foundries and has now begun the process of developing area source rules for copper, non-ferrous, and aluminum foundries. The Hazardous Air Pollutants (HAPs) of concern identified by USEPA include beryllium, cadmium, chromium lead, manganese, and nickel. A consent decree with the Sierra Club requires that USEPA issue a final rule for these three foundry area sources by June 15, 2009.

For each of the area source categories, USEPA must develop standards based on generally available control technology (GACT) used to reduce emissions of HAPs. GACT may be in the form of pollution control devices or best management practices. Although this was the exact criteria that was considered for the area source rule for iron and steel foundries, the end result was a rule that was considerable more stringent than what industry representatives believed to be generally available control technology. For example, the EIF emission limit in that standard may cause larger iron and steel foundries to install baghouses on their melting operations, an air pollution control device that was not generally used by foundries utilizing induction furnaces.

AFS through the 10E Committee is working with USEPA to develop reasonable area source rules. Craig Schmeisser, RMT, Inc., is a member of a working subgroup that is studying this issue and OCMA Vice President for Environmental Affairs Ryan Burke, OSCO Industries, Inc. will also be attending the 10E Commitee meetings.. Executive Director Russ Murray has solicited volunteers from those OCMA members operating non-ferrous and aluminum foundries. To date, no one has volunteered. It is critical that we have input from non-ferrous and aluminum foundry owners to determine the impact that the various proposals may have on your operations and your competitiveness. We need someone to step up.

BENEFICIAL REUSE UPDATE

According to staff in the Ohio EPA Division of Surface Water, the new proposed beneficial reuse rules were provided to the Office of General Counsel in early April 2008 for their review. It appears that the legal staff are having problems with sections of the proposed rules. It is impossible to predict when the proposed rules will be made public under these circumstances. If significant movement is not made in the near future, it will be imperative to explore action to move these proposed rules forward. With the forthcoming guidance from USDA Agricultural Research Service and USEPA, it is time for Ohio to recognize that spent, non-toxic foundry sand is a beneficial industrial by-product that can be utilized in many applications. Further delay only results in continued landfilling of this valuable by-product.

On Tuesday, April 1, 2008, at the Beneficial Use of Industrial Materials Summit in Denver, Colorado, Rob Dungan, Project Leader, Agricultural Research Service (ARS) and Rufus Chaney, a renowned soil scientist, also from (ARS), reported on their foundry sand research. In a room crowded with regulators, recycling professionals, and industry representatives, both Dungan and Chaney presented findings that concluded that spent, non-toxic foundry sand is indeed, cleaner than native soils! ARS and USEPA are working to create a guidance document outlining how spent, non-toxic foundry sand can be used for agricultural and horticultural applications.

On Wednesday, July 23, 2008, The Ohio State University, USDA, USEPA, AFS, and FIRST are sponsoring a Foundry Sand in Soil Applications Workshop at the OSU campus in Columbus. Dr. Robert Dungan, USDA, ARS will be one of the speakers. The workshop will provide an introduction to foundry sands in soil manufacturing. Researchers will describe the soil-like properties of foundry sands and their environmental profiles, which are comparable to native soils. Soil blenders will present their experience in using these sands, including sample specifications and issues such as pH balancing. Best management practices for foundries will be covered. Ohio metal casters should plan to attend the workshop and should also encourage the top management of their local nurseries and landscape architect firms to attend as well. The USDA ARS research has presented a new opportunity for the beneficial reuse of spent, non-toxic foundry sand and we need to take advantage of this opportunity.

Photos courtesy of Nick Cannell, EMTEC.

The next OCMA meeting will be held on Thursday, July 17, 2008, at the Columbus Convention Center. Rich Wile, MPPW P.C., will discuss how foundries can utilize the federal research & experimentation tax credit and Tom Froehle, McNees, Wallace & Nurick, will provide a summary of the recent electricity restructuring legislation.