Ensuring your voice is heard: metalcasters storm Capitol Hill.

Inside This Story:

* The two main issues facing metalcasters in Washington D.C.--a reduced silica PEL and trade--are highlighted, including details on how the industry is asking Congress to help.

* Thoughts from various Washington insiders are shared to provide a flavor for today's political climate.

Today's metalcaster understands that business can be as much about politics as it is about production. Often, the politics can be in customer relationships, but more than ever it is becoming the politics of legislation, regulation and international trade.

According to the U.S. Small Business Administration, today's average metalcaster faces $7,000 of regulatory burden per employee per year. This includes worker safety and health and plant environmental issues that must be kept in compliance with federal laws and regulations. In terms of international trade, the metalcasting industry has lost 18% of its casting jobs to foreign competition from across the globe, and this is expected to rise to 20% within the next 10 years, according to Stratecasts, Inc.

What can be done to help relieve these "strangle holds" around the metalcasting industry's neck? A group of metalcasters gathered in Washington D.C. in March at the AFS Government Affairs Conference in hopes of securing some answers. Through two days of talks, these metalcasters received insight from various Washington insiders on what the climate is on Capitol Hill and where their political issues fit into the current situation. Then, these metalcasters turned around and took this knowledge and discussed the current state of our industry with legislators on Capitol Hill.

In the political arena, the two specific issues confronting metalcasters are the proposed changes to the permissible exposure limit (PEL) of silica and the unbalanced playing field on which metalcasters must compete with China. This article examines those issues and details what the metalcasting industry communicated to Congress. Armed with this message, metalcasters can continue to communicate with Congress throughout the rest of the year.

Silica PEL

In 1968, 1,157 deaths related to the inhalation of excessive amounts of silca-containing dusts occurred (all occupations, not just metalcasting), according to OSHA. In 1970, OSHA adopted a new PEL for silica of 100 [micro]g/cu m, and by 1996 deaths attributed to silica dropped to 212. This progress can be attributed to an increased awareness of the health concerns with silica and the potential for silicosis. However, deaths still occur today due to silica exposures that are higher than the permissible limit.

As a result, in December 2003, OSHA began the process of introducing a new rule to decrease the PEL for silica by 50% to 50 [micro]g/cu m. As with any new rule that would significantly affect small business, the rule had to first go through a Small Business Regulatory Enforcement (SBREFA) Panel to determine the true cost on small businesses in the U.S. The result from the SBREFA Panel was that the draft rule was summarily rejected due to too many faulty assumptions and conclusions as to the measurement of the silica dust, implementation of the rule and overall costs to small business to comply. The recommendation by the SBREFA Panel to OSHA was to not pursue the rule.

Despite this stance, OSHA has indicated it plans to move forward with a revised PEL for silica. According to experts familiar with the rulemaking process, OSHA has placed the rule on its agenda but has not issued a timetable for a new draft of this rule. In terms of the guidelines for the draft rule and what other regulations will accompany the lower PEL (such as required health tests on workers, clothing and accessories for workers, continual air testing), experts say this is up in the air. But OSHA has floated the idea of a 75% reduction to the PEL instead of the previous 50%.

When metalcasters visited Capitol Hill in March, they discussed with their legislators OSHA's goals with the silica PEL. While disagreement doesn't exist between the metalcasting industry and OSHA on the importance of reducing silica exposure, the conflict arises over whether the regulatory agency needs to reduce the PEL to achieve that goal.

The current PEL for silica is not enforced to the necessary degree. Based on OSHA data, 30% of all collected silica samples for general industry and construction have been in excess of the current PEL. By simply enforcing the current standard throughout industry, OSHA will see a drop in silica exposure.

In addition, a lower PEL for silica is not technologically or economically feasible for today's metalcaster or laboratory testing facilities. Current air sampling and testing techniques are not accurate enough to measure levels of silica at 50% of the current PEL, with [+ or -] error percentages placing firms in and out of compliance depending upon the sample taken. Also, the current capital cost of the environmental equipment required for metalcasters to install in their facilities to ensure they meet a reduced PEL will force many metalcasters into unprofitability.

Chinese Competition

The focus is on leveling the playing field as today's U.S. metalcaster searches for ways to compete with Chinese metalcasters. Overall, according to the National Assn. of Manufacturers, the U.S. trade deficit with China is $124 billion, and imported castings into the U.S. are currently meeting 18% of the U.S. casting demand, representing more than $5 billion in sales. In Washington D.C., three legislation options have been developed with the support of the metalcasting industry.

The first legislation revolves around the issue of Chinese currency manipulation. China has pegged its currency, the Yuan, at an exchange rate of 8.28 to the U.S. dollar since 1994. In addition, China has purchased hundreds of billions of U.S. dollars to keep its currency undervalued against the dollar. The result from these economic actions is that Chinas currency is generally perceived to be undervalued, making its export prices artificially low and almost impossible to compete against.

In an effort to counteract the currency trend, bills have been introduced in the Senate and House of Representatives--S. 1758 and H.R. 3058. This bi-partisan legislation would order the Secretary of Treasury to analyze the exchange rate policies of the People's Republic of China to determine whether the country manipulates the rate of exchange between the Yuan and U.S. dollar to prevent effective balance of payment adjustments or gain an unfair competitive advantage in international trade. In any case, if a rate of manipulation is determined, the Secretary shall impose a tariff equal to the rate of manipulation on all products from China that enter the customs territory of the U.S.

The second legislation focuses on applying countervailing duty laws to non-market economies (NMEs). In the 1980s, the U.S. Dept. of Commerce determined that these laws shouldn't apply to NMEs. However, many NMEs have seen significant economic changes, including substantial foreign investment.

Today, a push to reverse this has begun because unfair foreign pricing and foreign competition's use of export and production subsidies have distorted trade and adversely impacted U.S. businesses and industries. U.S. antidumping and countervailing duty legislation is designed to mitigate the effects of unfair foreign pricing and trade distorting subsidies that result in the "dumping" of low-cost products. These duties offset the unfair competitive advantage by equaling the net amount of the countervailable subsidies, and are imposed on imports of the subsidized goods entering the U.S.

Metalcasters went to Capitol Hill asking Congress to support H.R. 3716 and S. 2212, which is bi-partisan legislation that requires countervailing duty laws to apply to NMEs. Both of these bills have begun to receive momentum. As of press time, S. 2212 is expected to be voted on in the near future as an amendment to another bill. If approved, this would set the legislation process in motion and put further pressure on the Bush Administration and China.

The third piece of legislation focuses on domestic manufacturing benefits. Since 2000, the European Union (EU) has been successful twice in having the World Trade Organization (WTO) declare that export-related benefits (Foreign Sales Corporation and Extraterritorial Income rules) the U.S. has provided domestic companies are prohibited export subsidies.

These rules exist to level the playing field for U.S. firms as they compete against foreign firms operating under territorial income and rebatable value-added tax systems. However, the WTO ruled that the EU is entitled to more than $4 billion of annual countermeasures against the U.S. for failure to repeal its rules. Without some benefits to offset these negated rules and enable global competition, U.S. manufacturers will have an even tougher time competing.

When metalcasters visited Capitol Hill in March, they asked Congress to support S. 1637, which focuses on a foreign tax credit. In addition, they asked Congress to look to Rep. Donald Manzullo (R-Ill.) and his efforts in the House of Representatives on this topic. S. 1637 uses a mechanism that would permit a deduction of up to 9% of the income earned from U.S. manufacturing, and it is a bi-partisan law and revenue neutral.

Storming the Hill

Metalcasters fight for face-to-face time with Congress on Capitol Hill. The industry presents its unified message once each year and then must follow-up throughout the other 364 days to ensure the message in remembered."

This outline of the current issues provides a cheat sheet for metalcasters to follow up. Only by making its voice heard can the metalcasting industry receive its just due in Washington D.C.

Bringing the Government to Metalcasting

U.S. Rep. Donald Manzullo (R-Ill.) believes it is critical to bring Congress to metalcasting and other manufacturing facilities so they can understand the true pressures being faced. He states that. "You can't explain metalcasting across a desk."

The proper invitation to a Congressperson asks them to visit your facility for a meeting with their constituents. According to Manzullo, your employees are not employees to Congress, they are constituents. The key is to call the member Of Congress and invite them. Detail to them that a group of constituents would like them to sit down and listen to a 5-10 min. presentation on the metalcasting industry and its pressures, followed by a tour of the plant and then a discussion session where the member of Congress can address the constituents and vice versa.

For More Information

Visit www.afsinc.org for the latest information on the scrap crisis, trade issues, and recent action by OSHA and EPA and how it will affect the metalcasting industry.