Keeping one eye on Washington: trade, MACT threaten U.S. foundries.

The business of making castings always has been about more than production. Be it human resources, worker safety, ergonomics or marketing issues (to name a few), foundries always have been able to keep only one eye on melting and pouring metal, while the other ensures that the business of making castings continued.

In recent history, however, the U.S. foundry industry may never have been faced with two more daunting non-production issues than the two staring it in the eyes today. Unfair trade and the U.S. EPA's pending maximum achievable control technology (MACT) rule threaten to reshape the U.S. foundry industry unlike ever before. How these two issues shakeout in the near future will determine the place of metalcasting in the U.S.

At this point in time, the debate on these two issues has begun to heat up in Washington, D.C. The U.S. foundry industry is in the process of beginning an official investigation with the U.S. International Trade Commission (ITC) to determine the extent of the effect that low-cost offshore casting imports have had on the industry. On MACT, U.S. metalcasters have submitted their formal comments to U.S. EPA and are in the midst of a communication process to help shape the final rule.

This article provides an update of the current situation of both issues.

Unfair Trade

In April, the AFS Trade Commission worked with the U.S. House of Representatives Ways and Means Committee to issue a formal request to the U.S. International Trade Commission (ITC) to initiate a fact-finding investigation of the current competitive conditions facing U.S. metalcasters. Termed a Section 332, this fact-finding investigation will provide a thorough overview of the U.S. metalcasting industry as well as review the conditions of competition between the U.S. industry and certain foreign countries.

"The Section 332 is an opportunity for the industry to better understand its future challenges, to create synergy and speak as one voice," said Chuck Kurtti, AFS Trade Commission chairman and AFS 2nd vice president.

The AFS Trade Commission worked closely with Congressman Michael Collins (R-GA), who is a member of the Ways and Means Committee, to begin the formal request process. Collins now is working with Ways and Means Committee Chairman Bill Thomas (R-CA) to finalize the letter that will serve as the formal request to the ITC to initiate the investigation.

While the final report generated by the Section 332 and issued by the ITC makes no formal recommendations on what should be done about foreign competition, it will serve as the foundation for all future trade actions at the federal level by the industry as a whole or segments of it.

"The report generated by the Section 332 investigation is an authoritative and well-respected document in the international trade community," said Pat McGrath, Georgetown Economic Services, who is assisting the Trade Commission in its efforts. "If the results are favorable to the foundry industry, it will carry a lot of weight in future trade actions."

The foundation for the report generated by the ITC will be a confidential survey it sends out to selected casting producers (domestic and foreign), domestic casting purchasers and casting importers. These surveys are critical to the process as they are the opportunity for U.S. firms to provide evidence of the harm that they continue to experience from foreign foundry competition.

"The survey is critical because there is no data on the impact of casting imports," said McGrath. "The only way the ITC can judge the level of impact is this primary data collection method."

Typically, according to McGrath, the confidential survey requests information about an operation's product and shipment totals, sales and income, capital expenditures and research, and the impact of foreign competition. However, every survey is unique. The goal of the AFS Trade Commission is to help shape this survey to fit the need of the U.S. metalcasting industry to reveal the affect of imports. The sidebar on this page, "Examining the Tool and Die Industry's Section 352," takes a look at the Section 332 questionnaire for the U.S. tool and die industry.

Before this report is issued, however, the ITC must work with the House Ways and Means Committee as well as the respective parties requesting the Section 332 investigation to ensure the proper focus for the study. From there, the ITC's professional staff of economists and attorneys develops the questionnaire.

Once responses to the questionnaire are collected, the ITC puts together its final report. The entire process is expected to take 6-12 months.

"The ITC staff will do everything in its power to find out about major foreign competition and how it affects U.S. foundries," said McGrath. But the ITC is not going to beg for information. "It is up to the industry," said McGrath. "A good representation of the industry being harmed is a high response rate on the survey because that shows the industry cares."

Pending MACT Rule

On February 21, the APS 10E MACT Ad-hoc Committee submitted its formal comments on the pending iron and steel MACT Standards to the U.S. EPA. These new standards regulating the emissions of hazardous air pollutants from iron and steel foundries were officially proposed by EPA in December, which opened a 60-day public comment period.

"While we are far from finished with the process, the formal comments lay the foundation for the next steps," said Gary Mosher, AFS vice president-environment, health and safety. "As with the comments, the AFS 10E MACT Adhoc Committee will continue to play a key role in working with the EPA to resolve our issues and shape a set of final standards that reflect foundry practices and meet the needs of the Clean Air Act."

Chaired by Gary Thoe, ThyssenKrupp Waupaca Foundry, Inc., the MACT Ad-hoc Committee is comprised of engineering and environmental professionals from the metalcasting industry. The formal comments issued by the AFS committee (and other AFS MACT-related information) are available on the AFS website at www.afsinc.org/mact.

"These standards will have a great impact on our industry, more so than when the original Clean Air Act was implemented in the early 1970s," said Thoe.

During the comment period on the proposed rule, more than 80 organizations and individuals filed formal public comments. More than fifty were foundries or foundry-related organizations detailing the difficulties this proposed rule presents the U.S. metalcasting industry. The majority of the balance of the comments were from non-government organizations that believe the proposed rule wasn't providing enough regulation.

The next step for the MACT Adhoc committee is to respond to EPA and their requests for more information concerning the formal comments that were submitted. U.S. EPA has set a goal to publish the standard by August 30, 2003. Legally, EPA must have a final rule published by October 30, 2003.

Despite the efforts of the Ad-hoc Committee and its negotiations, it still is expected that the debate over the proposed rule will not end with the technical arguments, and the publishing of a final rule. Legal action may be required to suspend implementation of the rule by EPA.

"As optimistic as we can be regarding the success of our efforts, it will be naive to not anticipate that as an industry we will have to file a court challenge once the final rules are published," said Thoe. "In the event that we will have to take that step, the legal cost will be significant and we will need to seek financial support from our industry."

The key with the rule is that a foundry must calculate its emissions on a potential to emit basis (24 hr a day/365 days a year) unless previously accounted for in other action.

"Once foundries calculate their HAP emissions based on potential to emit, many are going to be surprised to find out that they will be covered by the standards," said Mosher. "For example, a foundry using 2.8 lb/hr of triethylamine (TEA) through phenolic urethane coldbox core machines that are not vented to a scrubber will need to apply for an air permit and install a state-of-the-art scrubber."

For More Information

Visit www.moderncasting.com to view the U.S. ITC's official questionnaire to assess the competitive conditions facing the U.S. tool and die industry.

Visit www.afsinc.org for more information on both trade and MACT as well as official documents related to both issues.

RELATED ARTICLE: Examining the tool and die industry's section 332

During 2001-2002, the U.S. tool and die industry commissioned its own Section 332 investigation to assess competitive conditions in the U.S. and selected foreign markets. Similar to the U.S. foundry industry, tool and die makers were reeling from the affects of low-cost offshore suppliers winning away U.S. customers.

In response, the industry was hoping to use the Section 332 fact-finding investigation as a way to develop a base of economic information that would support the idea that the offshore suppliers were unfairly pricing their tools and dies to gain U.S. market share. This base of respected information from the ITC would then serve as the foundation for any action individual or groups of tool and die makers would pursue against offshore competition.

While the results of the tool and die industry Section 332 investigation didn't end up helping the industry (the report showed that the harm caused to the U.S. industry wasn't strictly due to imports), U.S. foundries can use that investigation as a learning experience to understand the types of questions that must be answered to provide sound data to the U.S. ITC. While no two investigations or questionnaires are identical, the similar nature of the two industries means that some similarities are likely to exist. It is anticipated that the ITC will be issuing its questionnaire for the metalcasting industry in late summer.

Following is a look at some of the questions asked by the ITC for the tool and die Section 332 investigation. For a look at the full questionnaire, visit the For More Information section at www.moderncasting.com.

* "report your firm's shipments, exports and employment related to the production of tools, dies and molds in your U.S. establishment(s) during 1999-2001.";

* "report the revenue and related cost information (sales, cost of goods sold, gross profit, operating income, net income, etc.) on tool, die and mold operations of your U.S. establishments";

* "provide information on production costs (raw materials, labor costs, assembly/finishing costs, overhead, etc.)";

* "provide information on employment costs (salary and wages, health benefits, training, etc.)";

* "report your firm's capital expenditures and research and development expenditures for tool, dies and molds and the values of property, plant and equipment using in production";

* "report your firm's average annual lead-times to produce tools, dies and molds";

* "has your firm imported or had plans to import any tools, dies and molds";

* "list any major customers that have moved production to a foreign country during the past three years (including date moved, to what country, annual value of work, etc.), the result of which has been a direct loss of tool, die and mold production";

* "indicate which of the following production technologies your firm has implemented in order to remain competitive (possible answers include rapid prototyping, machining, solid modeling, process simulation and production management software)";

* "how involved is your firm in your customers' product design process";

* "identify the government policies that have the greatest impact on the operation of your business and describe how these policies affect your ability to compete".

Metalcasters speak out to congress during government affairs conference.

The 2003 AFS Government Conference with the theme, "Metalcasting: America's Foundation and Future," was held in Washington, D.C. in April, drawing more than 100 attendees from around the country. The two-and-a half day meeting featured sessions with prominent policy experts and elected officials, meetings with Congressmen and their staffs, and a special White House briefing.

The highlights of the conference included a keynote address by syndicated columnist and Fox News commentator Tony Snow. Snow provided unique insights and perspectives on the war in Iraq and his interviews with politicians such as Secretary of State Colin Powell and other members of the President's cabinet.

Attendees participated in a special White House briefing held at the Old Executive Office Building next to the White House, and heard firsthand from key agency officials on environmental, trade and tax issues. Speakers at the briefing included one of the nation's top experts on regulatory issues, Paul Noe, Counselor to the Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, and Marianne Horinko, Assistant Administrator for Solid Waste and Emergency Response, U.S. EPA.

One of the featured speakers was Rep. Mac Collins (RGA), a key member of the trade, health and tax writing committee of the House of Representatives Ways & Means Committee. Collins is supporting and leading the industry's efforts for the U.S. ITC to launch a Section 332 investigation into the competitive conditions facing the metalcasting industry. Collins discussed some of the legislative issues facing Congress, and enlightened industry leaders about the inner workings of the political process.

ITC Decision Clears Way for Duties on Imported Cast Fittings.

On March 12, the U.S. ITC announced that imports of nonmalleable cast iron pipe fittings from China are being "dumped" in the U.S. and threaten material injury to the U.S. industry. The ITC reached this determination after a 4-0 vote in the affirmative.

The final determination clears the way for dumping duties on these pipe fitting imports from China. The final dumping margins ranged from 6.34-75.5% Dumping refers to the illegal trade practice of selling in a foreign market at below cost of production or home market price. Dumping duties calculated by the U.S. Commerce Dept. are meant to offset the unfair price advantage. However, the ITC must find material injury or threat of material injury for the duties to stick.

The petitioners in the case were Anvil International, Inc., Portsmouth New Hampshire, and Ward Manufacturing, Inc., Blossburg, Pennsylvania.

U.S. ITC

Democracy in Action: Talking MACT on Capitol Hill.

During the AFS Government Affairs Conference in Washington, D.C. in April, a group Ohio metalcasters--Tim Hall and Kai Spande, GM Powertrain, and Russ Murray and Lynn Bierly, Ohio Cast Metals Assn.--met with Rep. Marcy Kaptur (D-Ohio). During the meeting, this group focused on the pending MACT rule, emphasizing to the congresswoman the impact this rule would have on Ohio (the largest foundry state in the U.S.). The group cited that GM and Ford each would have to spend more than $50 million to replace their wet scrubbber air pollution control systems at their foundries to become compliant.

The day after the meeting, Kaptur took part in a House of Representatives Appropriations Committee meeting in which U.S. EPA Administrator Christina Whitman explained EPA's budget request for fiscal 2003-04. During questioning by members of the committee, Kaptur asked the Administrator about the proposed MACT standard and presented her concerns about the possible impact on Ohio. She recited the facts about Ohio's foundry industry and the impact this rule would have on firms like Ford and GM. Kaptur stated that metalcasting was critical to basic manufacturing and something should be done to fix the proposed rule.

While Whitman had no response, Jeff Holmstead, Assistant Administrator for Air & Radiation at EPA, who had spoken two days earlier at the AFS Conference replied that EPA was aware of the problems (due to extensive comments submitted on the proposed rule) and was working with the industry to reach a situation to everyone's satisfaction. Rep. Kaptur indicated that she would be monitoring the situation and that she was concerned about the possible detrimental impact.

Following up on this issue, Inside EPA, a news report covering EPA and environmental issues, wrote an article in April titled, "EPA Seeks Ways to Fix Foundry Air Toxics Technology Proposal."

The article stated: "EPA air chief Jeffrey Holmstead is conceding that a proposed EPA air toxics rule contains 'unintended consequences to the struggling foundry industry that the agency plans to address before finalizing the regulation later this summer. Holmstead told Rep. Marcy Kaptur (D-Ohio) at an April 2 House subcommittee hearing on EPA's fiscal year 2004 budget that the agency believes the industry has very legitimate concerns about EPA's proposed maximum achievable technology standard (MACT) for iron and steel foundries."