Summer 2006 OCMA NEWS - MEETING UPDATE

President John C. Vaught called the business meeting to order at 12:15 P.M.

II. SPEAKERS

Speaker of the Ohio House of Representatives Jon Husted displays his OCMA Speaker Award with former OCMA president John Vaught.

The Honorable Jon Husted, Speaker of the Ohio House of Representatives, discussed actions taken by the Ohio General Assembly since he became Speaker in January 2005. Speaker Husted has made revitalizing Ohio’s economy his top legislative priority. As the former Vice President of Business and Economic Development at the Dayton Area Chamber of Commerce, Speaker Husted has a very comprehensive understanding of how taxes, regulations, and government policy can affect Ohio’s businesses. The key points of his presentation are summarized below.

1. Upon assuming the Speakership, Speaker Husted convened a retreat with members of the Republican majority. They discussed the need to “get the Ohio economy going” and developed a mission statement. This was a very unusual assignment for the Republican caucus given the differences of opinion and regional issues. However, the Republicans laid out a mission statement that spoke of “transforming Ohio’s economy” to create good jobs that would lead to hope for tomorrow and hope for our childrens’ future.

2. Tax reform was on the top of the list of changes that were essential to transform Ohio’s economy. During a meeting with site selection experts from all over the country, the point was made that Ohio’s tax system especially for business was too complicated. Although Ohio had certain incentive packages to create jobs and spur investments, a business needed a consultant to assist them in understanding the tax code. What was needed was a simplification of the tax code and a move to consumption taxes versus taxes on investment.

3. The House of Representatives faced a very daunting economic scenario when they contemplated tax reform. At the time, projections had the Ohio government confronting a $3-5 billion deficit in FY2005. Medicaid expenditures were increasing 12-15% per year while inflation was less than 2%. To address this issue, the Ohio General Assembly passed the lowest growth budget in 40 years. The budget was to increase only 1.9% in the first year and 2.4% in the second year of the biennial budget.

4. Having addressed the spending side of the budget, the House then passed the largest tax cut in the history of Ohio, 21% across the board. Ohio’s top rate of 7% was reduced to coax those individuals who were leaving for Florida to stay in Ohio a little longer. The tax package also included major business tax reform including the long promised elimination of the tangible person property tax and the implementation of a broad-based commercial activity tax or CAT. In the process the Ohio General Assembly created a more fair system of taxation and cut taxes by $800 million.

5. Since the tax and budget package were adopted, 36,000 new jobs have been created in Ohio. Despite the significant tax cut, actual revenues to the treasury increased measurably. Ohio’s rainy day fund, which had been depleted by a weak economy and excessive expenditures, has grown to more than $1 billion. The impact upon his hometown of Dayton has also been notable, two companies have moved from California to the Dayton area since the tax package was enacted.

6. The Ohio House of Representatives did not stop there. Following the mission statement adopted at the early retreat, the House passed the Third Frontier Program assisting high tech businesses to invest in new technologies and develop cutting edge services and products. The passage of the Workers Comp reform bill, S.B. 7 will result in cost reductions of $100,000 for employers throughout the state. Those reductions are under attack by the UAW and the Ohio Academy of Trail Lawyers who have funded a referendum campaign to eliminate only those provisions favorable to employers.

7. Another area where change was critical was tort reform. Since January 2005, the House has passed more than twenty (20) pieces of legislation pertaining to tort reform from asbestos to medical malpractice. Prior to the passage of the medical malpractice legislation, malpractice insurance was increasing at a rate of 20-30% per year. Since its passage, the rate is approximately 6%. Business publications with rankings for tort systems by state have moved Ohio from 37th to 19th. The Ohio Manufacturers’ Association believes that the Ohio system is now the 4th best in the Nation.

8. Ohio also faces a challenge in the area of higher education. To enjoy continued economic success, Ohio universities must graduate more engineers and scientists. Speaker Husted is especially concerned about the lack of cost control in higher education. College tuition is increasing at 2-3 times the general inflation rate at a time when colleges are supposed to be concerned about recruiting students. Speaker Husted intends to confront this “academic arms race” by pushing for more consumer driven education.

9. In wrapping up his presentation, Speaker Husted noted that Ohio’s economic woes did not develop overnight so it would be unreasonable to assume that they can be addressed overnight. The Ohio General Assembly has taken significant steps to improve the business climate in Ohio and they intend to continue to do so. They are now considering a reduction in capital gains taxation in an effort to spur additional investment in Ohio. Speaker Husted ‘s goal is to continue to follow the mission statement to transform the economy.

Michael Quinn, Director of Group Strategies, Logistics Management, Inc. (LMI) described his company’s Shippers Advantage Program that provides quality freight service at an exceptional discount. Logistics Management, Inc was founded in 1981 and is now managing in excess of $250 million in freight volume. Importantly, the California Cast Metals Association (CCMA) has an agreement with LMI and more than one half of their members are participating.

OCMA's John Vaught presents Michael Quinn of Logistics Management Inc. with the speakers award following his presentation of the Shippers Advantage Program.

Key points of his presentation are provided below:

1. In cooperation with the major motor carriers including Yellow, Dayton Freight, USF Bestway and Reddaway, and Overnight, LMI provides a Shippers Advantage Program with the following benefits:

• Substantial discounts on all inbound, outbound, or 3rd party billed shipments. The discounts are on lower LMI contract rates resulting in discounts as large as 70% off current carrier rates.
• The expanded buying power of LMI helps smaller companies to obtain rates equal to those paid by larger companies.
• LMI rates are negotiated to take effect on January 1 of each year. Those rates are held for the entire year so member companies can plan shipping activities without fear of rising freight costs.
• LMI’s contracted fuel surcharges are 65% lower than the industry average.
• LMI will provide a free audit of potential customers bills of lading to determine whether LMI rates would benefit them.

2. For those companies with more than $100,000 in annual less than truckload (LTL) shipping costs, LMI offers an individualized, fee-based program that provides more aggressive pricing, additional carrier alternatives, and additional administrative support. With this program, LMI actually “takes over” freight and carrier management including billing. Under this program, LMI handles all payment of bills, continually checks shipping charges, and audits all bills. This program uses a sophisticated web-based management program.

If you have any additional questions, please contact the OCMA office. The OCMA Board of Trustees will be reviewing member response to the LMI, Inc. presentation to determine whether a relationship with LMI, Inc. would be beneficial to our membership.

Ryan Augsberger, Managing Director of Public Policy Services, Ohio Manufacturers’ Association (OMA), provided his perspective on this November’s elections. As manager of the OMA’s lobbying team he is intensely interested in the outcome of these important elections. The key points of his presentation are presented below:

1. The gubernatorial race between Ohio Secretary of State Kenneth Blackwell and U.S. Representative Ted Strickland has created incredible national interest. Many political groups have already begun their media campaigns. Ohio will see more than its share of national figures such as President George Bush and New York Senator Hillary Clinton as well as Hollywood celebrities. Whoever wins will be on a short list of potential VP candidates for 2008 presidential election.

2. The November election is especially important because the results will affect the Ohio State Apportionment Board. The Board is responsible for re-writing the state legislative and congressional districts. Historically, the political party in the majority on the Board has written the districts to favor its candidates and seismic changes can occur following the re-drawing of the districts. The Board includes the Governor, Auditor, Secretary of State, a member selected by the Speaker of the House and President of the Senate, and a member selected by the minority party.

3. For the auditor race, Rep. Mary Taylor, a Republican with a 100% OMA favorable voting record is facing Rep. Barbara Sykes, a Democrat with a 0% OMA voting record. In the race for Secretary of State, Hamilton County Clerk of Courts, Greg Hartmann, a Republican is up against former Franklin County Court of Common Pleas judge, Jennifer Brunner, a Democrat. For the Ohio Treasurer race, conservative Ashtabula Auditor Sandra O’Brien a Republican is taking on Democrat Richard Cordray. Ohio Attorney General Betty Montgomery is pitted against Democrat Rep. Marc Dann who has an OMA voting record of just 12.5%

4. For the Ohio Supreme Court, OMA has endorsed Supreme Court Justice Terrence O’Donnell and former Ohio State Senator Bob Cupp. Cupp’s opponent is former Ohio State Senator Ben Espy. While in the Senate, Bob Cupp was very helpful to the manufacturing industry sponsoring tort reform legislation and other key issues.

5. Senator Mike DeWine appears to be locked in his closest re-election battle with former Ohio Secretary of State and present Congressman Sherrod Brown. It is important that voters understand the anti-business positions of Rep. Brown when they decide to vote in November. Rep. Brown has a 0% voting record for the National Association of Manufacturers. It does not get worse than that.

6. Important Congressional races include:

* District 6 – From Mahoning and Columbiana County to Scioto County along the Ohio River - State Rep. Chuck Blasdel is locked in a close battle with Ohio Senator Charlie Wilson. Wilson won a spirited Democratic primary in which he ran as a write-in candidate. Rep. Blasdel was instrumental in the passage of business tax reform in the Ohio House of Representatives and has been helpful to Ohio manufacturers in other areas since his election. This is an open seat formerly held by gubernatorial candidate Ted Strickland.

* District 15 – Western Franklin, Union, and Madison Counties - Rep. Deborah Pryce, a member of the House leadership, faces Franklin County Commissioner Mary Jo Kilroy. Rep. Pryce has not had a competitive race for over a decade, but the Democrats believe that they have a real shot at knocking her off in November.

* District 13 – Northern Lorain, southern Cuyahoga, and western Summit counties - Mayor of Lorain Craig Foltin faces lawyer and former State Representative Betty Sutton who is supported by labor and abortion advocates. This is an open seat formerly filled by Rep. Sherrod Brown.

* District 18 – Eastern Central Ohio including Coshocton, Muskingum, and Jackson counties – Embattled Rep. Bob Ney, under a cloud of suspicion for possibly accepting gifts from notorious lobbyist Jack Abramoff is in the race of his career against Democrat Zach Space.

7. There are also a number of important Statewide Ballot Issues again this year. Unfortunately for the business community, these ballot issues are more likely to spur Democrats and more liberal voters to the polls. This is unlike the previous biennial election, which contained a homosexual marriage initiative that has been credited with bringing out thousands of conservative voters. Important statewide ballot issues include:

* Statewide Smoking Prohibition – this initiative is does not include a strict prohibition statewide

* Minimum Wage – Referendum would increase the Ohio minimum wage to $6.85 per hour and adjust the rate each January by the rate of inflation measured by the Consumer Price Index.

* Workers Comp Reform SB 7- This referendum sponsored by the UAW and the Ohio Academy of Trail Lawyers would eliminate only those provisions favorable to employers and eliminate the nearly $100,000.annual savings for employers.

* Gambling- Sponsored by developers and race tracks to allow gambling in Ohio.

Doug Rowe if he Ford Cleveland Casting Plant, makes his presentation on Skid Steer Equipment.

Doug Rowe, Melting Shop Supervisor, Cleveland Casting Plant, Ford Motor Company, made a brief presentation concerning a potential hazard created by the use of skid steer equipment to clean up a routine cupola bottom drop. The hazard could be present for any transportation of hot sand, slag, or coke by this equipment. Key points of his presentation are presented below:

* A Ford Motor Company employee at the Windsor Casting Plant was badly burned when the skid steer utility vehicle burst into flames while he was performing clean up of a cupola bottom drop. Although the sand, slag, and coke had cooled for two hours and the area had been fully hosed down, a crack in the hydraulic lines resulted in atomized hydraulic fluid, which was ignited by a burning ember that apparently burned through the Kevlar sleeve meant to protect the hydraulic lines.

* The atomized hydraulic fluid burst into flames and engulfed the cockpit of the vehicle. The employee was unable to quickly exit the vehicle because the high heat level sealed the door/windshield gasket and prevented his exit. The employee kicked out the windshield and was able to exit but only after receiving severe burns of his back and legs.

* Ironically, the airflow with the enclosed cockpit was actually enriched by an on-board air conditioning unit and a rear-mounted engine radiator fan that were provided to improve employee working conditions in the cockpit.

* Ford Motor Company casting operations are planning to replace the skid steer units with center articulating tractors such as a “Kramer” or “Coyote.

* Additional actions recommended to prevent such an accident include:

1. Comprehensive pre-use inspection of the unit;
2. During inspection place the hydraulic system under minimal load (slightly lifting the bucket etc) looking for leaks;
3. Replace hydraulic fluid (300F) with available fluid with higher flashpoint (525F) and use anti-misting additive to reduce atomization caused by pin hole leaks;
4. Added precautions taken to ensure cupola bottom drop materials are cooling, including extra raking, saturation/quenching, and use of thermal imaging for the detection of hot spots.

OCMA Treasurer John Burke (OSCO Industries) presents the annual financial report at the annual meeting in July. Good news: OCMA is in the best financial shape in several years.

II. OLD BUSINESS

A. Approval of Past Minutes

A motion was made, seconded, and unanimously approved to accept the minutes from the meeting held on January 19, 2006, at the Columbus Convention Center.

B. Membership and Finance

OCMA Vice President George Deckebach, Miami-Cast, Inc. presented the membership report. There were no new members and one member company dropped its membership. However, two companies that had fallen far behind on dues paid in full. OCMA membership stands at 83 members.

OCMA Treasurer John Burke presented the financial report. The Board of Trustees adopted the OCMA budget for 2006-2007. John presented a history of OCMA’s finances from its inception that showed that OCMA had built up a substantial surplus just prior to the recession (1999) that helped the organization make it through three lean years. The resurgence in membership and the annual golf outing have replenished the surplus and it stood at approximately $35,000 at the end of FY 2005-2006. The Board of Trustees voted to provide Executive Director Russ Murray with a variable compensation program based upon the size of each year’s surplus. The Treasurer’s report was adopted.

C. Environmental Update

OCMA Vice President for Environmental Affairs Dennis Baker, Flowserve Corporation, presented the environmental report. The PowerPoint environmental report is available from the OCMA office, just call or e-mail. Key issues are outlined below:

Generally Available Control Technology

• USEPA is preparing to introduce the Son of MACT or GACT. GACT will apply to area sources; those with a potential to emit less than 10 tons/yr for a single HAP or less than 25 tons/yr for any combination of HAPs. USEPA views area sources as important contributors of HAPs especially in urban areas. The USEPA is operating under Section 112(k)(1) which states that USEPA shall “achieve a substantial reduction in emissions of HAP from area sources”. Section 112(k)(3) requires USEPA to prepare a national strategy for urban air toxics.

• The AFS Area Source Working Group met with USEPA representatives at AFS Headquarters on June 7, 2006. OCMA representatives included OCMA Vice President of Environmental Affairs Dennis Baker, Ryan Burke, OSCO Industries, Inc., Kim Myers, Griffin Wheel Company, Craig Schmeisser, RMT, Inc., and OCMA Executive Director Russ Murray.

• Pollution prevention programs (PPP) will not be addressed in the GACT rule. It is likely that the Agency will promote the use of low emission binders in the future, but it does not fit under the authority outlined in the Federal Register. This means there will be no trade-offs between organic and metallic HAPs.

• For those foundries using cupolas the Working Group is pushing for a grain-loading limit higher than the 0.07 limit proposed by the USEPA. The two sides are exploring a 0.5 lb PM/ton metal limit. Still working on a way to identify initial compliance without using stack testing.

• For those foundries using Electric Arc Furnaces (EAF) or Electric Induction Furnaces (EIF) GACT rules will vary. For EAF’s it is expected that a baghouse will be required since most EAF’s have them. For EIF’s, no controls are considered to be the generally available control technology, but there may be different requirements based upon the size of the furnace. USEPA is not sure about uncontrolled EIFs and is recommending a work practice(s) to minimize these emissions. There is also a need to identify an initial compliance demonstration without stack testing in this area as well.

• For fugitive emissions, USEPA is receptive to visual inspection vs. opacity requirement. The Agency is considering an initial opacity reading and then visual inspection for “normal” conditions.

• USEPA is willing to consider higher production cut-offs and total metal HAP emissions, but requested additional justification from the Working Group. The USEPA has recommended a 1000 ton/yr for iron and 500 ton/yr for steel production cut-off. The AFS Working Group is pushing for 6500 tons/yr iron and 3500 tons/yr steel cut-offs.

• For TEA control, USEPA is seeking a type of reduction however the Working Group is only recommending controls if the foundry is using more than one ton of TEA.

• For pouring, the USEPA asked the Working Group why its proposals did not include requirements in this area. The Working Group representatives indicated that there were no restrictions in MACT so why would we have them in the GACT. USEPA has asked for a more elaborative justification.

• Representatives of the Working Group will be meeting with USEPA on August 2, 2006 at their Research Triangle offices in Raleigh, NC. OCMA Vice President for Environmental Affairs Dennis Baker, Kim Myers, and Craig Schmeisser will be in attendance.

Beneficial Reuse

• Ohio EPA has announced its intent to draft a rule to replace OEPA Policy 400.007. The proposed rule is been delayed although the Agency expects to meet a deadline of the end of 2006.
• OCMA has already spoken with Lead Rule Writer, Chris Bowman, OEPA Division of Surface Water to inform him of our intent to advance the metal casting industry’s interests and open wider opportunities for the use of spent, non-toxic foundry sand. The Environmental Affairs Committee presented the OEPA with a position paper back in early 2006.

EMTEC Report

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

• EMTEC has also received a grant of $80,000 for an investment casting research program.

• EMTEC has entered into a partnership with Sinclair Community College to provide product development services. The services include rapid prototyping and the use of a CNC machine.

• EMTEC is continuing its PTAC program which helps small businesses sell their products and/or services to the U. S. Government

Energy Industries of Ohio (EIO) Update

Larry Boyd, EIO, indicated that Stark Community College might no longer be interested in pursuing the training program for employees in the metal processing industries. However, he stated that they are in discussions with a Canadian college that may be interested in the curriculum recommendations.

Larry also announced that EIO in cooperation with OCMA, the Ohio Energy Office, and GMIC is sponsoring a session of the US DOE’s Process Heating training to help manufacturers identify ways reduce the use of natural gas in their operations and lower costs. The course will be held September 13, 2006, from 8:00 AM to 4:00 PM on the 30th Floor of the Riffe Office Tower in Columbus. The course costs $120 to attend which includes breakfast, lunch, a course manual, and a CD containing the DOE’s “Process Heating Assessment and Survey Tool” for evaluating efficiency options on heated equipment.

OCMA President Vaught presented distinguished service awards to Craig Schmeisser, RMT, Inc. and Dave Yonto, The Quality Castings Company.		Outgoing OCMA president John Vaughr is presented with the Distinguished Service Award from incoming president George Deckenbach

IV. NEW BUSINESS

A. OCMA Secretary John Kurtz, Kurtz Bros., Inc., presented the following recommendations of the Nominations Committee to the body. A motion was made to accept the recommendations. The motion was seconded and the nominees were elected unanimously.

* President George Deckebach, Miami-Cast, Inc.
* Vice President Jeff Otterstedt, Clow Water Systems
* Secretary John Kurtz, Kurtz Bros., Inc.
* Treasurer John Burke, OSCO Industries, Inc.

Board of Trustees - Terms to expire in 2009

* Walt Chaput, Omnisource Corporation
* Joseph Cuske, Griffin Wheel Company
* Doug Rowe, Cleveland Casting Plant

B. OCMA President John C. Vaught, Tri-Cast, Ltd., presented the 2006 President's Awards. The awards are based upon the recipient's contributions to the OCMA and to the Ohio metal casting industry. The Company Award was presented to OCMA Trustee Jim Flanagan representing Babcock & Wilcox Company. The Vendor Award was presented to OCMA Counsel Mike Frantz representing Frantz Ward LLP.

C. Incoming OCMA President George Deckebach presented the Distinguished Service Award to OCMA President John C. Vaught. OCMA President Vaught presented distinguished service awards to Craig Schmeisser, RMT, Inc. and Dave Yonto, The Quality Castings Company.