SUMMER 2004 OCMA NEWS - MEETING UPDATE

OCMA Presents Annual President’s Awards

At the July 15th meeting of the OCMA, outgoing OCMA President Walt Chaput, GM-Powertrain – Defiance, presented the “Company of the Year” award to Sam Clark, Honda of America Mfg., Inc. and the “Supplier of the Year” award to Robert Brooks, Penton Media Inc. The awards, established a decade 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.

OCMA has benefited from the contributions of Honda of America Mfg., Inc. from its inception. One of the earliest OCMA guest speakers was the Honda Vice President for Purchasing. The company has also provided the opportunity to OCMA members to tour the Honda facility at Anna on two occasions most recently, this Spring. These tours have proved to be very popular with the OCMA membership with both of the tours maxing out the available space.

Honda of America Mfg., Inc. associates have attended OCMA meetings with outstanding dedication. In the early years, it was Robert Barnhart, Jay James, and Richard Tanner. They introduced Sam Clark to OCMA and Sam became one of the founders of the OCMA Environmental Affairs Committee. In recent years, although continuing to participate in OCMA functions, Sam has also passed the torch to Paul Huwer and Bart Pinson.

Robert Brooks, Editor, Foundry Management & Technology, accepted the award on behalf of Penton Media, Inc. The first edition of the OCMA News was published in September 1992 and Penton Metals Group and Virginia Cahill were major contributors to the effort. Without their assistance, who knows when a newsletter would have been created. For nearly twelve (12) years, Penton Media, Inc. has been reponsible for the layout, printing, and distribution of the newsletter.

Ohio Representative Chris Widener from the 84th House District (Clark and Green Counties, Springfield and Beavercreek) was the luncheon speaker. Rep. Widener, Vice Chair of the Civil & Commercial Law Committee, was the Chief Sponsor of Sub. H.B. 342. Recently enacted, Sub. H. B. 342 establishes medical criteria for tort actions claiming illness from exposure to silica. Rep. Widener is a trained architect and was appointed to the Civil & Commercial Law Committee by Speaker Householder as a representative of the business community. He is the only non-attorney on the committee. The key points of his presentation are summarized below.

1. The enactment of H. B. 292 & 342 reflect the Ohio House of Representatives goal to pass comprehensive tort reform in 2004. Hearings are continuing on elements of S.B 80 and more reform is expected after the election.

2. The Ohio House of Representatives is taking a different approach to tort reform than did the Ohio Senate. Rep. Widener believes that breaking S. B. 80 into distinctive pieces, addressing individual issues, protects the reform bills from being overturned by the Ohio Supreme Court in one overarching decision as has happened previously.

3. Originally, silica and mixed dust were included in the asbestos reform bill, H. B. 292. The crushing burden of asbestos cases in the special division of the Cuyahoga County Court coaxed the legislators to act. More than 50,000 cases are waiting for adjudication in Cuyahoga County and according to credible evidence only 10-15% of these 50,000 cases include plaintiffs who have any symptoms at all.

4. The focus of the reform effort was to establish some type of medical criteria that would help determine whether the plaintiff’s case was worthy of presentation to the Court. Both asbestosis and silicosis are determined by what is called a B-read of a pulmonary x-ray. Not all medical personnel familiar with x-rays can perform B-reads so the legislation provided some criteria for defining a ”competent medical authority”.

5. During testimony on H. B. 292, medical experts from The Ohio State University explained to committee members that asbestosis and silicosis were actually significantly different illnesses. As a result, the decision was made to split the two issues and introduce separate legislation that specifically dealt with silicosis and mixed dust. Rep. Widener became the sponsor of the new bill, H. B. 342. In a favorable development for passage of the silica and mixed dust reform, unlike the hearings for H.B. 292 that drew large crowds and testy testimony from the trial bar, five hearings were held for H. B. 342 and no opponent testimony was offered.

6. As Chief Sponsor of H.B. 342, Rep. Widener received a number of inquiries from the media about why a silica and mixed dust bill was needed. According to the media representatives there was no apparent crisis in this area. Rep. Widener explained to the media that silicosis was bound to be the next target of the trial attorneys and their class action lawsuits if a bill was not passed. He noted that in the six-month period that he was sponsor of Sub. H. B. 342, the number of silicosis cases tripled from 500 to 1500, clearly a crisis in the making.

7. H. B. 342 requires that in a tort action in which a silicosis claim is alleged, a written report and supporting test results constituting prima-facie evidence of an exposed persons’ physical impairment must be filed. The new law also provides the opportunity for the defendant in the case to challenge the adequacy of the plaintiff’s prima-facie evidence with the Court making that determination. The law also requires the Court to maintain jurisdiction over any case not meeting the prima-facie evidence threshold because the case may be reinstated if that threshold is met at a later date.

8. A “qualified medical professional” defined in the legislation must provide the written report and supporting test results. The written report must include a detailed medical history, the results of a physical including a pulmonary examination, and a detailed work history to determine the likelihood of exposure to silica or mixed dust.

9. H. B. 342 also addresses those instances where a company purchases another company and suffers liability for claims of the purchased company even if the company has since been sold. He gave as an example, Crown Cork & Seal that purchased a company with liability for asbestos claims for $5 million. Ninety days later Crown Cork & Seal sold the company. Since that time, Crown Cork & Seal has paid more than $500 million dollars in asbestos claims! Under H. B. 342, Crown Cork & Seal’s liability exposure would have been limited to two times the purchase price plus an inflation factor. These provisions of H.B. 342 are described as “piercing the corporate veil” and may be challenged by opponents of the bill.

10. Rep. Widener stated that additional portions of S. B. 80 do need to be enacted. He mentioned caps on civil and product liability. The guiding principles of the Civil and Commercial Law Committee are twofold. One, there should be fairness for both sides. Two, will the legislation stand up to scrutiny of the Ohio Supreme Court if challenged. Both H.B. 292 & 342, have what he described as “quick tickets” to the Ohio Supreme Court. The laws include provisions that allow opponents to go directly to the Ohio Supreme Court for an investigation of the constitutional validity of the new law. Rep. Widener pointed out however, that the legislation was also written so that if sections of the bill are found unconstitutional, only those sections will be affected by the Court’s decision. The remaining elements of the legislation would continue in effect unlike tort reform legislation that was passed in the late 1990’s.

11. Rep. Widener encouraged OCMA members to support Ohio Supreme Court candidates who endorse tort reform. He stated that with the narrow 5-4 majority, tort reform efforts could fail once again if opponents to tort reform are elected to the bench.

Karen Wright, President & CEO, of Ariel Corporation located in Mount Vernon, Ohio, was our keynote speaker. Ariel Corporation is the world leader in natural gas compressor manufacturing. Ms. Wright was recently named Vice Chair of the President’s Manufacturing Advisory Council. The council will ensure that manufacturers of all sizes have a voice in the ongoing implementation of the Bush Administration’s Manufacturing Initiative. Highlights of her presentation are presented below:

1. Ariel Corporation was founded in 1966 by her father Jim Buchwald in the family’s garage. It is now the world’s largest compressor manufacturer with more than 500 employees. Her father began the company with an idea that high-speed portable compressors could be used in the exploration of natural gas. He created a rental fleet of the portable compressors that moved from wellhead to wellhead. The company then designed and manufactured larger and more efficient compressors at the behest of their customers. Ariel Corporation has continued to grow with approximately 70-75% of market share in the industry and more than $200 million in sales. The company purchases approximately $80 million in castings every year!

2. The company’s success began with a simple philosophy outlined by her father; the quality of the product begins with the design. In producing the compressor, Ariel works with all of its suppliers to make sure the new design will work. For example, in designing new product, foundries producing the castings are involved in the initial design to make sure the parts can be cast and the design will work. A similar philosophy drives the manufacturing process and after sales customer service. The result of these efforts produces a scrap rate of 0.25%.

3. Ariel Corporation’s product is a pressure vessel that must withstand enormous stress. All compressors are tested at 150% of maximum allowable load (pressure) prior to leaving the plant. The compressors come with a promise of lifetime service. If a compressor breaks down in the field, Ariel Corporation service personnel are instructed to fix the problem and then determine whether the particular problem is covered by warranty.

4. Ariel Corporation has an excellent relationship with its suppliers. It does not purchase based on price, value is the key. They work with their suppliers to create a quality product and success generally follows.

5. Ariel Corporation will not go to China! The company believes that its workforce cannot be replaced in China. They are hard workers who know how to “fix things”, and many of them have more than twenty (20) years of service at Ariel. Top management continually communicates with the workforce to continue improvements and to allow the workforce to know what and how the company is doing.

6. Regarding China and India, Ms. Buchwald believes that with lightweight consumables, U.S. companies cannot compete with Chinese and Indian labor rates. She contends however, that complex castings are another matter entirely. She does not believe China can compete with U.S. for these products. With just-in-time manufacturing the lead times needed to use Chinese made products would be unwieldy. U.S. casting companies have the best technology and local suppliers allow Ariel Corporation to easily cooperate on engineering issues with no communication difficulties.

7. Ms. Buchwald believes that U. S. manufacturing will have strong growth in the years ahead. Ohio is a fast growing export state, the number two exporter in autos and number three in machinery to make plastic molds etc. She believes advantages such as the ability to service just-in-time manufacturers, proximity, better quality, and personal relationships, same culture, and same language will prevail. She reminded the audience that the U.S. manufacturing sector taken alone would be the fifth (5th) largest economy in the world.

8. Concerning the Manufacturing Advisory Council, there are fifteen (15) members on the council and she is the only woman. From discussions with Commerce Secretary Don Evans, she believes that both President George W. Bush and Secretary Don Evans are aware of the tremendous importance of manufacturing in America. At the initial meeting in June, the Council identified seven (7) major issues affecting manufacturers in the U.S.: 1) Health care; 2) Red tape and government regulations; 3) Energy costs and availability; 4) Tort reform; 5) Tax reduction and simplification; 6) Education of the workforce; and 7) Unfair trade practices.

9. Of the issues identified, the Council believes that each is “doable” and should be considered. The Council has broken up into subcommittees, each charged with devising strategies to confront the individual issues identified.

10. Regarding energy, Ms. Wright stated that we have “our heads in the sand”. The U.S. is already straining its supply of natural gas and demand for natural gas is growing at a much faster pace than new reserves can be found. Additionally, we are now using natural gas to create electricity; creating excess demand for natural gas at a time when reserves are declining. She stated that we need to develop a new energy source, soon.

11. On tax reform, the estate tax should be eliminated. Presently, the estate tax can be equal to 55% of the worth of the company. Most heirs do not have the money to pay these taxes and stay in business. The tax destroys the value of family owned small businesses and eliminates the connection between the original entrepreneur and his/her heirs who are most likely to have the same commitment to the company’s success.

12. Regarding quality control for those U.S. manufacturers using Chinese imports, there remain lots of problems in Chinese manufacturing. It is imperative that the level of quality expected must be made abundantly clear to the Chinese manufacturer. She would recommend third party oversight of the inspection program, samples or pre-order shipped and inspected before entire shipment is made, pre-approval of all changes, and the setting of a “per shipment” failure tolerance.

13. Major changes are needed in our educational system. She quoted the chairman of Intel who stated, “We are not educating our children to meet the challenges of the new technical economy”. India has higher quality schooling in technology and engineering. She claimed that Ariel Corporation has had to develop its own technical training capability because they can no longer recruit from trade schools teaching machinist skills.

14. On the trade issue, she stated that only governments can deal with unfair trade practices and the Manufacturing Advisory Council will provide input into this process. For example, the Chinese do not concern themselves with patent infringement, they copy everything in sight! Many companies in the U.S. don’t export their products because they are concerned that the Chinese will use reverse engineering to copy their product. This must be stopped.

15. Despite China’s unfair trade practices and currency manipulation, U.S. manufacturers should not despair. The economy is growing and U. S. manufacturing will regain its strength. She encouraged Ohio metal casters to recognize the advantages that they possess (proximity, quality, technology, etc.) and to “sell” these advantages to their present and prospective customers. As the playing field levels, U.S. manufacturers can compete with anyone.

Barry Moore, GM-Powertrain – Defiance, Manager of Engineering, provided an overview of recycling at the GM Powertrain – Defiance Plant. The highlights of his presentation are outlined below:

1. Barry outlined the types of recyclable waste at the Defiance plant:
· Batteries (flashlight, radio, fork lift truck, automotive, and power supplies, etc);
· Florescent and HID bulbs (mercury and sodium vapor, high intensity, etc.);
· Lighting ballast and small capacitors;
· Oil and degreasing solvent;
· Wood pallets;
· Iron and Non-ferrous metals;
· Mercury switches and thermostats;
· Discarded productive materials;
· Quench slag;
· Exempt foundry sand;
· Expanded Styrofoam beads (refractory);
· Aluminum bead blast media (used for lawn furniture);
· Office paper recycling;
· Tin and aluminum cans, plastic glass bottles;
· Blast cabinet and grinder fines;
· Concrete from demolition.

2. The recyclable waste streams are handled in the following manner:
· Used oil is collected in totes and transferred to the storage tank for recycle/reclaim.
· Ni-cad, alkaline, & lithium batteries are collected at Point of Use (POU) Areas for recycle/reclaim.
· Automotive & Truck batteries are collected in maintenance for recycle/reclaim.
· Waste Fluorescent & HID bulbs are collected at the Hazardous Waste Building for recycling.
· Degreasing solvent is reclaimed and managed by Safety Kleen.
· Lighting ballast and electronic devices are collected at the Hazardous Waste Building and recycled.

3. The Plant Recycling Program relies upon employees placing the recyclable items in the appropriate containers. Specially marked containers throughout the plant are used to collect bottles, aluminum cans, and paper. A list of acceptable items is affixed to the containers.

4. The GM Powertrain casting plant generates approximately 150, 000 tons of non-toxic foundry sand each year. They presently have a stockpile of exempt sand holding somewhere between 250-300, 000 tons of sand waiting for beneficial reuse opportunities.

5. Potential uses of Exempt Foundry Sand that were defined in DSW 400.007 include:

· Manufacturing another product – grout, cement, flowable fill, asphalt, etc.
· Post-composting additive.
· Auto-skid agent.
· Soil blending ingredient.
· Roads/parking lots.
· Pipe bedding.
· Structural fill.

6. Excess foundry sand current markets:

· Landfill uses – cover for the working face of an active landfill, road construction with the active cell.
· Structural fill – support for roadways, parking lots, and buildings.
· Pipe bedding and backfill.
· Manufacturing another product – CLSM or flowable fill, cement or concrete.

7. To open additional opportunities for exempt sand use, GM-Powertrain – Defiance has funded two projects with The Ohio State University (OSU) Horticulture, School of Natural Resources Farm in Columbus, OH. The two projects are “Risk Assessment Demo Project – Top Soil, and “Sports Turf Study”.

8. The Risk Assessment project was undertaken because OEPA policy prohibited the use of exempt foundry sand in soil mixes that could be used to grow crops for human consumption. Samples of exempt foundry sand were sent to OSU (approximately 1 ton). The sand was mixed with various other by-products and vegetable crops were planted. Tissue analysis and risk assessment were prepared.

9. In the plot with only foundry sand, the vegetables grew very well. The tissue analysis demonstrated that the foundry sand plots produced vegetables that had concentrations of potentially toxic trace elements that were lower than the other soil mixes and the nutrient and organic matter contents exceeded those blends with no foundry sand. As a result of the study, GM was able to obtain a variance from the Ohio EPA and is able to use their foundry sand to produce manufactured soils. With the permit, they have worked with N-Viro and TimCor to produce these soils.

10. The “Sports Turf Study” is an on-going study to determine the feasibility of using exempt foundry sand to produce playing field turf. The initial tests were to determine the agronomic characteristics and playability of the turf grown with a foundry sand blend. In year one, the soil chemical and physical measurements as well as turf establishment and growth parameters with foundry sand were comparable to other mixtures. The study demonstrated the potential to recycle a variety of organic and mineral by-products as turf root zone mixes.

11. Preliminary conclusions include: 1) the foundry sand mixes seem to be comparable to the virgin sand; 2) the permeability of the mixes is radically smaller than the virgin sand; and 3) the shear strength of the 15 cm root zone seems to be higher than the 30 cm root zone and it seems to establish more quickly.

12. In 2004 the turf study will continue high maintenance fertilization, irrigation, and mowing and tests will be repeated. In 2005, all fertilization, irrigation, and routine maintenance will be dramatically reduced. Treatments will be evaluated under high and low maintenance regimes. If you would like to visit the OSU Foundry Sand Turf Study contact Steve Schneider at (614) 330-1230, or e-mail him at schneider113@osu.edu for a personal tour or attend the OSU Turf Field Day on August 18th, 2004. For more information and directions to the research facility: visit http://ohiostateturf.osu.edu/TurfFacility.htm.

13. Major barriers to more extensive recycling at GM-Powertrain – Defiance are government regulations.

· Regulations are often restrictive and burdensome;
· Regulations may not exist for the beneficial reuse of waste by-products;
· In Ohio, the current policy, Ohio EPA 400.007, has been rescinded;
· Governmental bodies often take the most conservative approach and ban the use of waste by-products.

14. Other barriers include:

· Public perception: for example Dihydrogen Oxide common water, could be labeled in the following manner: 1) overexposure can cause suffocation; 2) 7000 deaths occur caused by this substance; 3) second leading cause of injury-death in children ages 1-14 years old. These characteristics would suggest to the public that water should be banned!
· Developing markets for the material.
· Recycling costs.

15. Improper materials and waste handling reduces recycling opportunities.

· Mixed material/waste could cost $600-1000 in testing/drum or waste stream;
· Additional labor to sort recycle items from mixed waste;
· Potential increase to disposal/recycle cost and potential lost revenue;
· Possible EPA fines;
· Lost opportunity for reuse, recycling, or reclamation;
· Mixing of waste materials can result in a fatal reaction.

16. 2003 GM-Powertrain – Defiance Recycling Results:

· 151,000 tons of exempt foundry sand;
· 33,000 tons of quench slag;
· 6860 tons of ferrous metal;
· 3011 tons of non-ferrous metal;
· 39 tons of steel;
· 10 tons of batteries;
· 1 ton of bulbs;
· 36 tons of degreasing solvent;
· 132 tons of oil;
· 7 tons of ballast and capacitors;
· 15,000 tons of concrete;
· 44 tons of wood pallets;
· 200 tons of plastic dunnage;
· 14 tons of office paper;
· 14 tons of glass and plastic bottles;
· 1 ton of aluminum cans;
· 1 ton of computer equipment.

ENVIRONMENTAL UPDATE

Chairman of the OCMA Environmental Affairs Committee, Kurt Braun, Ford Motor Company, presented the environmental report. With the Iron & Steel Foundry MACT final, the environmental report was much reduced. Key issues are outlined below:

Iron and Steel MACT Standards

* AFS has filed a Petition for Review of the Iron & Steel Foundry MACT as published in the Federal Register on April 22, 2004. The petition was filed on June 18, 2004 in the US Court of Appeals for the District of Columbia Circuit by the law firm Collier Shannon Scott, PPLC, on behalf of the AFS.

· AFS also filed a Petition for Reconsideration of the Iron & Steel Foundry MACT standard on June 21, 2004. It is possible that the wet scrubber issue may be changed to be more favorable to the foundries affected, but the chances are slim.

· OCMA will sponsor a MACT Seminar III in late September 2004. The seminar will give final direction to those foundries intending to “opt out” of MACT by utilizing a FESOP and will discuss strategies for compliance with MACT for those companies that are major sources and will be required to comply with MACT.

Silica Standard

· Although there is no additional information emanating from OSHA on a more restrictive crystalline silica standard, we must be prepared to anticipate such a standard. OSHA Administrator John Henshaw indicated at the AFS GAC meeting that they intend to propose a new standard in the not to distant future.

AFS Environmental Health and Safety Conference.

· The annual AFS Environmental Health and Safety Conference will be held on August 15-17, 2004, at the Indianapolis Marriott East.

Join Us This Fall

· The 1st Annual OCMA HR Seminar will be held on Thursday, October 14, 2004, at the Columbus Convention Center. For the first time ever, the meeting will begin in the morning, concurrent with the OCMA Board Meeting. It will then continue with lunch and afternoon sessions. The HR Committee has selected the topics of reducing medical & health insurance costs, Health Savings Accounts (HAS’s), legal update, and BWC return to work programs. We will have speakers from The Alpha Group Agency, Frantz Ward LLP, and BWC. We will also have a legislative speaker. Contact Russ Murray at 614-876-5100 for more information.

OCMA PAC Golf Outing

· The OCMA Southwestern PAC Golf Outing will be held on Friday, September 10, 2004, at the Royal Oak CC in Cincinnati. The OCMA Northern PAC Golf Outing will be held on Friday, September 17, 2004, at the Eagle Creek GC in Norwalk. Please join us for an enjoyable day on the links with your golfing buddies. You will have a good time and support the OCMA PAC at the same time.

EMTEC Report

Nick Cannell, EMTEC, provided the report. Highlights are outlined below:

· Last year, EMTEC provided more than $20,000 in direct assistance to Ohio foundries.

· EMTEC helped an Ohio foundry qualify for a $33,000 Safety Training Grant from the Bureau of Workers Comp (BWC)

· EMTEC has received a grant of $485,000 for an investment casting research project.

· EMTEC has also received a grant of $120,000 for a project using moldable ceramic to make missile nose cones.

The Changing of the Guard

New OCMA Board of Trustee Members and Officers

New Officers and Trustees of the OCMA Board elected at the Annual Meeting are as follows:

Officers

* President Doug Rowe, Ford Motor Co. Cleveland Castings
* Vice President John Vaught, Tri-Cast, Ltd.
* Secretary John T. Kurtz, Kurtz Bros., Inc.
* Treasurer John Burke, OSCO Industries, Inc.

Board of Trustees - Terms to expire in 2007

* Lynn Bierly, Mansfield Castings
* Mike Swartzlander, Ashland Casting Solutions
* Bud Tibbits, Hill & Griffith Company