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Summer 2009 OCMA News |
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Summer 2009 OCMA News |
SUMMER 2009 OCMA NEWS For the Good of Our Industry, "Cap and Trade" Legislation Must Be Stopped
The nearly sixty (60) OCMA members attending the annual meeting were treated to straight talk from long-time OCMA member and leader Craig Schmeisser, RMT, Inc. concerning the potential impact of the House-passed American Clean Energy and Security Act of 2009 (ACES) otherwise known as the Waxman/Markey bill or "cap and trade". Schmeisser began his impassioned appeal stating the purpose of his presentation was to convince OCMA members to write both Senators Voinovich and Brown and demand that they vote "no" on this legislation. He indicated that this opposition could be likened to a "last stand" because the consequences of inaction could be devastating. Fundamentally, (ACES), introduced by Reps. Henry Waxman (D-CA) and Ed Markey (D-MA), would set a cap on green house gases (GHG) and call for reduction in carbon emissions of 83% below 2005 levels by 2050. It would establish a "cap and trade" mechanism whereby facilities emitting more than 25,000 metric tons of carbon dioxide equivalent in 2008 would be required to reduce emissions or purchase emission allowances to meet the carbon cap. Finally, ACES would impose on retail electricity suppliers a requirement that 25% of their electricity sold must be generated from renewable resources such as wind, biomass, solar, and geothermal. The bill does not treat nuclear generation as renewable and provides no incentives to promote nuclear energy. Although most Ohio foundries would not be "covered facilities"; all Ohio metal casters would be affected by the anticipated increase in both natural gas and electricity costs. The renewable energy requirement alone dictates that all manufacturers will be forced to pay more for electricity because renewable energy is so much more expensive than that generated using fossil fuel. Predictions about how much electricity and other energy costs could increase are "all over the map", but a recent AEP document indicated that they projected a 25% increase in electricity rates if the legislation is enacted. RMT, Inc. learned through discussions with DTE Energy the following anticipated increase in utility rates compared to a 2007 average rate of 8.87 cents/KWh. YEAR NOTES INCREASE Using these data points, RMT, Inc. calculated the impact on three foundries casting different metals: Type of Foundry Annual Production Tonnage Average Annual Cost Increase
from 2015 to 2030 A major hurdle to controlling carbon emissions stems from the fact that this issue is global. Proponents of the legislation and Democratic leaders believe that developing nations will follow the U.S. and Western European lead if the developed nations commit to carbon reduction. This naiveté continues despite the fact that prominent leaders in China and India just recently reiterated their position that they have no intention of limiting their economic production to controll carbon. Ultimately, U.S. controls on carbon emissions could actually result in greater global emissions if the increased costs from ACES results in outsourcing of U.S. manufacturing to China and India where their emissions are much higher than the emissions of U.S. companies presently manufacturing the products. Schmeisser debunked the promises of the proponents of ACES who claim that the legislation will create clean energy jobs, achieve energy independence, reduce global warming pollution, and transition to a clean energy economy. According to the U.S. Office of Management and Budget (OMB) wind power is calculated to produce 1.5 O & M jobs for every MW of wind power. According to Schmeisser, Valero is putting up a large wind farm of approximately 60 MW and they have only three (3) maintenance workers. Schmeisser also referred to a Spanish study of green power that concluded that for every green job created in Spain, more than two (2) traditional jobs are destroyed by higher energy costs. Schmeisser also provided an incredible slide that exhibited a type of organizational chart that displayed the regulatory process of the four Titles in the bill. There are nearly 400 new regulations in the bill and approximately 1060 new mandates in the bill. You may have seen a copy of the slide if you watched Ohioan Minority Leader John Boehner on the House floor during the debate before the vote. It is a symbol of mass confusion! Senator Barbara Boxer (D-CA), Chairperson of the Environment and Public Works Committee, intends to introduce her version of the climate change legislation in early September with expectations of a vote before the end of the month. OCMA members are encouraged to write Senators Voinovich and Brown and express their concerns about the potential impact of this legislation on your business and your employees. OCMA will be providing a sample letter to ease your task. Please take action, it is critical. OCMA Presents Annual President’s Awards
At the July 22nd annual meeting of the OCMA, OCMA President Jim Flanagan, Babcock Wilcox Company, presented the “Company of the Year” award to OCMA Past President Jeff Otterstedt, representing Clow Water Systems and the “Supplier of the Year” award to Joe Koncelik, representing OCMA General Counsel Frantz Ward LLP. The awards, established fifteen (15) years ago in 1994, recognize the value to OCMA of contributions made by its member companies and the individuals who give their valuable time to advance not only the OCMA, but also more importantly, the metal casting industry in Ohio. Clow Water Systems has been a member of OCMA since 2001. Jeff Otterstedt, VP/General Manager, was elected to the OCMA Board of Trustees in 2003 and also served as Vice President, President, and Past President. During his term as President, OCMA confronted the development of the Area Source Rules for Iron & Steel Foundries. These rules affected all foundries that were not covered by MACT rules. USEPA was intent upon issuing rules that were MACT-like for foundries as small as 10-15 employees. OCMA worked closely with the AFS Area Source Working Group and fought hard for small foundries. OCMA advocacy during his term assisted in minimizing the ultimate impact of the new rules on foundries pouring less than 20,000 tons annually. In Spring 2007, Clow Water Systems hosted the OCMA annual foundry tour with San CasT, Inc. The luncheon held in the Olde Warehouse Restaurant in historic Roscoe Village was one of the best ever. Clow Water Systems has been a key supporter of the OCMA Annual Golf Outing. Derek Dozer, HR Committee, and Heather Klesch, Environmental Affairs Committee, have been active and contributing members of OCMA. Frantz Ward LLP was awarded the Supplier of the Year award in 2006, but the work they performed for OCMA and its members in 2008 was so important that it was easy to select them for this year's Supplier of the Year Award. Last July, Mike Frantz and Rebecca Bennett alerted the OCMA membership to the potential devastating impact of the Healthy Family Act and the Employee Free Choice Act on Ohio metal casters. They provided outstanding advice on how to prepare for the possible passage of the Healthy Family Act which was a ballot initiative that was fortunately withdrawn from the ballot at the last minute. They also alerted the members about changes to the Family Medical Leave Act and the Americans with Disabilities Act that they needed to incorporate in their human resources programs. Perhaps the greatest contribution to OCMA was the time, knowledge, and experience of former Ohio EPA Director Joe Koncelik. Mike Frantz committed Joe's time pro bono to work with Executive Director Russ Murray in an effort to enact important legislation affecting the beneficial reuse of spent, non-toxic sand. Although the proposed legislation drafted by Joe was not enacted into law, OCMA was able with Joe's assistance to obtain support of the legislation by the Ohio EPA and Ohio Manufacturers' Association. MEETING UPDATE
On Wednesday, July 22, 2009, nearly sixty (60) representatives of OCMA member companies attended the OCMA annual meeting in Columbus. The Honorable Tim Schaffer, (R-31st District Lancaster), was the luncheon speaker. Sen. Schaffer is Chairman of the Senate Environment and Natural Resources Committee. He has been supportive of business in general and manufacturing specifically during his career in the House. The key points of his presentation are summarized below. 1. Sen. Schaffer had done a considerable amount of research in preparing for his presentation to the OCMA membership. He began his remarks by reminding his audience that during the Civil War more cannonballs were cast in Cleveland than were cast in the entire South, a major reason for the North's ultimate advantage. 2. Senator Schaffer has a very simple philosophy about government. Government should only do those things that individuals cannot do without joining together. 3. As a state legislator he becomes involved in helping constituent companies deal with state regulators especially Ohio EPA. He said that it is important to have a good relationship with regulators, but sometimes it is necessary to ask for some help from your state representative or state senator. If you are having problems with an individual regulator it is important to bring your concerns to your state senator before it is too late. If they are notified early in the process it is easier for them to make a difference. 4. Term limits have brought a lot of "regular citizens" into
the State House, many of them young and aggressive. These individuals
have run for office with a goal of getting things done. They want to
help out their constituents and are looking for ways to do just that
so it is important that you communicate your concerns to your Representative
and Senator. Asking them to visit your facility and meet your employees
is an excellent way to develop a working relationship. 5. He reminded the audience that the Republican House initiated the major tax reform package that included elimination of the hated tangible personal property tax and a 20% reduction in personal income tax liability. He predicted that once the economy turns around, Ohio should be well-positioned to do well because of tax, regulatory, and tort reform that have made Ohio a more business friendly state.
Vasko Popovski PE, Regional Sales Engineer, Applicd Process Inc., presented a new perspective on how to increase casting sales in a declining or shrinking economy. Applied Process Inc. is a global supplier of austempering services for iron, steel and ductile iron castings. Key points of his presentation are provided below: 1. Popovski reminded the audience that heat treating/austempering of iron and ductile iron castings provides characteristics that make these castings comptetive with parts made of steel that are fabricated, welded, or perhaps "hogouts". This presents new opportunities for aggressive foundries looking to change their usual method of sales. 2. Popovski used a football analogy and Starbucks Coffee to introduce "market segmentation", a concept that suggests that there can be much greater demand for your product if you introduce it to individuals/companies who are not familiar with how your product can fulfill their needs. 3. The Starbuck Coffee example illustrates market segmentation well. According to the Wall Street Journal "In the mid-1990s, the typical Starbucks customer was an affluent white college graduate. But newer customers according to a 2004 company survey, were somewhat more likely to be minorities and had an average income of $55,000 a year down from more than $80,000 for long-timers. Star Bucks had succeeded in increasing demand for their coffee by convincing a large "segment" of the population that Star Bucks coffee was a great product for them as well. 4. He stated his idea as follows: "It is OK to sell castings to people who buy castings. You will certainly not ignore a casting drawing that comes across your email, but I promise you that five other foundries are looking at that same drawing and cost competition will be fierce. I suggest a different "market segment": People who buy forgings and fabrications." 5. How would a foundry begin a casting conversion marketing effort. Industries with good prospects include mining and agriculture, both old industries with a lot of different parts designed in steel because similar parts have always been made out of steel. Also realize that many (most) design engineers have little or no knowledge of cast metals as design materials or casting as a manufacturing process. So we normally need to find a part made in some material than the one they are using. 6. A good place to start your effort is an industry equipment exposition such as the MINExpo held in Las Vegas in September 2008. What one would do at these expos is visit the booths and displays where companies are showing their equipment. Upon viewing the equipment it is likely that you will determine that a casting design could be more effective and cost efficient. Discuss your ideas with the engineers at the booth, determine the number of parts needed annually to determine the potential market, and ask for a meeting at the plant where parts are made or assembled. If you are hesitant to try this alone, Popovski offered to go with you!
7. The remainder of his presentation contained numerous examples of casting conversions using autempered ductile iron, magnesium, ductile iron, and aluminum. Several examples are outline below, but if you are interested in more information, please contact the OCMA office to request an edited version of the Popovski presentation. 8. Popovski described a ductile iron hub and steel sprocket welded together that was converted to a one-piece austempered ductile iron casting at a cost savings of $18 versus $40. Another ADI casting won an AFS Casting of the Year Award. This casting replaced an eighty-four (84) piece assembly that was welded and bolted together. The ADI casting was 15% lighter and eliminated 30 minutes in assembling time. 9. A very compelling example demonstrated the strength of a ductile iron casting that replaced extruded steel parts on a John Deere agriculture machine that harvested corn/wheat. The ductile iron feeder slats were able to withstand the "harvesting" of a stray fence post where the extruded steel slats broke and stopped harvesting for the day. This is very expensive equipment that needs to be running constantly and cannot be easily repaired in the field. Last, a ductile iron air scoop casting for an agricultural application replace a steel weldment at a 40% cost saving for the customer. 10. Aluminum castings are ripe for replacing weldments and fabrications to save time and weight. A B356 aluminum redesign of the Corvette brake pedal from a steel assembly provided a more than 70% weight reduction. A diesel engine cooler adapter cast from 356 aluminum by the lost foam method replaced seven (7) iron and aluminum components and resulted in a component nearly fifty (50) pounds lighter. 11. The instrument panel for the BMW X3 was a magnesium die casting converted from steel stamping which reduced the weight by 50% without sacrificing impact strength. Finally, a gray iron green sand casting of a head for a pressurized water vessel was converted from a weldment and achieved time and cost savings. Mr. Popovski’s PowerPoint presentation is available from the OCMA office. If you are interested in a copy, please call or e-mail. Arc Flash Panel
Recently, a number of OCMA member foundries have undergone an OSHA inspection in which they have been cited for lack of compliance with NFPA 70E pertaining to the dangers of arc flash. These violations caught several foundry safety personnel by surprise because OSHA regulations do not provide detailed information about arc flash. This is where NFPA 70E comes in. OSHA requires employers to protect their employees from electrical hazards including shock and arc flash. However, as noted above OSHA regs do not cover these hazards. Instead OSHA uses NFPA 70E, a consensus standard of the National Fire Prevention Association to determine compliance with its general duty clause. To explore this issue with the OCMA membership a panel of OCMA members who had undergone these inspections discussed their experiences. Members of the panel were OCMA Treasurer John Burke, OSCO Industries, Inc., OCMA Trustee Jeremiah Clegg, Burnham Foundry LLC, OCMA President Jim Flanagan, Babcock & Wilcox Company, and OCMA Trustee Angela Dine Molaskey, St. Marys Foundry, Inc. Key points of the panel discussion are presented below:
2. For example, foundries have been citied for not having performed an arc flash audit. The failure to perform the audit generally results in additional citations for lack of employee training for the hazards of arc flash, lack of personal protective equipment (PPE), and not providing insulated tools. Another common citation is failure to properly label the potential arc flash hazards and failure to designate arc flash boundaries.
3. Angela Dine Molaskey, St. Marys Foundry, Inc., pointed out that each foundry must have a simple line drawing of the electrical systems of the foundry. Many older foundries such as St. Marys Foundry, Inc. do not have such drawings. St. Marys Foundry, Inc. hired a electrical engineering firm to complete the simple line drawing, perform the arc flash audit, designate the arc flash boundaries and label dangers appropriately, and perform the employee training. The cost for these activities was significant. As a side note, Angela commented that OSHA inspectors returned to her facility for a compliance checkup on another safety matter and the inspectors went straight to the power boxes. She stated that this is clearly a priority for OSHA right now. 4. As noted above, the cost of arc flash compliance is not cheap. Both Burnham Foundry LLC and Babcock & Wilcox Company expended approximately $20,000 to come into compliance. OSCO Industries, Inc. is using their personnel to do Category 2 work to keep costs lower, but are contracting out Category 4 work due to the danger involved. 5. OCMA President Jim Flanagan informed the OCMA members that the arc flash issue was brought to his attention because an arc flash incident at another B & W facility resulted in severe injuries to employees. The foundry used an outside consultant to perform the audit and training and put in new controls and panels to further reduce the potential danger. 6. OCMA will be providing members and non-member companies an opportunity to learn more about arc flash and what that means to the foundry at an Arc Flash Workshop on Wednesday, September 23, 2009, at the Ashland Casting Solutions office in Dublin, OH. The announcement and details will be coming soon. ENVIRONMENTAL UPDATE
Vice President of the OCMA Environmental Affairs Committee, Ryan Burke, OSCO Industries, Inc., presented the environmental report. Key issues are outlined below: Foundry Sector Initiative 1. Instead of program specific rules (e.g. air regulations) USEPA is starting to compile information to develop a set of rules for the foundry industry. Process will be slow. Conrad Chin, USEPA-RTD from Area Source rulemaking is involved. Mandatory Green House Gas (GHG) Reporting (Proposed Rules 1. Proposed on April 10, 2009, these rules would require initial report for calendar year 2010 submitted by March 31, 2011. 2. Report would only cover emissions from stationary fuel combustion sources. Foundries are not a listed source category. Aggregate maximum rated heat input capacity of the stationary fuel combustion units at the facility is 30 mmBTU/hr or more. Facility that emits 25,000 tons of CO2 or more per year from all stationary sources must report these emissions. 3. The proposed rule is very specific on emission estimation methodology. Important issues remain such as whether actual or potential emissions are to be used to determine the 25,000 ton threshold. See www.afsinc.org for a pre-final rule calculator. 4. OCMA submitted comments taking issue with the sixty (60) day comment period and suggesting a more reasonable alternative threshold of 100,000 tons given the cost of compliance and the fact that the 100,000 threshold would cover all major emitters. Lastly, OCMA argued that the cupola should not be considered a stationary fuel combustion source. Join Us This Fall
Photos courtesy of Nick Cannell, FOPAT Productions
The Changing of the Guard New Officers and Trustees of the OCMA Board elected at the Annual Meeting are as follows: Officers * President Jim Flanagan, Babcock & Wilcox Company Board of Trustees - Terms to expire in 2012 * Jeffrey S. Otterstedt, Clow Water Systems Also, the Board of Trustees appointed Len Stupczy, Sand Products Corporation to fill the vacancy created by the resignation of Dan Salak.
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