Haviland USA

HAILEYBURY (miningweekly.com) – The world’s biggest nickel producer, Russia’s Norilsk Nickel, will halt its Tati mine and concentrator in Botswana for 12 days, after a furnace breakdown at the smelter that processes most of the concentrate from the mine.

The company will assess its options during the shutdown, and will place its employees on formal paid leave, the firm said in a statement.

The sharp decline in nickel prices, plus the failure at the smelter, which processes 90% of the concentrate produced at the Tati nickel mine, had prompted the suspension of operations.

Nickel traded above $22/lb in 2007 but has since fallen sharply, to around $4,2/lb, as slowing global economic activity dampens demand for the metal, which is used to make stainless steel.

The mine will close from December 24 to January 5, while Tati “assesses various options to deal with this matter until such time as the BCL smelter has been repaired and is able to accept concentrate feed from Tati once again”, the firm said.

Tati, which is located 40 km east of Francistown, has been conducting underground and opencast mining operations since the mid 1990s ,with ore mainly being trucked to and processed at BCL’s smelter operation.

Norilsk acquired 85% of the Tati mine, which produced some 20 000 t of nickel contained in product over the last 12 months, when it bought Canada’s LionOre Mining last year.

The government of Botswana owns the balance.

Moscow-based Norilsk has operations in Russia, Finland, South Africa, Botswana and Australia, and is a controlling shareholder in US platinum-group metals miner Stillwater Mining.

There’s been a mixed reaction so far to President Bush’s promise of $17.4 billion in loans to troubled U.S. automakers.

Congressional Republicans don’t like the idea of using money from the $700 billion bailout program intended for banks and other financial firms, and the union representing autoworkers says this is too harsh on its members.

President-elect Barack Obama, praised the administration’s action but warned, “The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely necessary to save this critical industry and the millions of American jobs that depend on it.”

Obama will be free to reopen the arrangement once he takes office, if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject.

Obama was noncommittal on possible changes but said he would “make sure that when we see a final restructuring package that it’s not just workers who are bearing the brunt.”

Michigan Governor Jennifer Granholm, D., said the $17 billion loan package is “a great Christmas present, not just to the automakers but to those who supply them, representing 3 million jobs across the country.

“The reality is the auto industry touches almost every sector of the economy, whether it’s steel or plastics or microchips or service industries, so this industry has to survive,” she said this morning on CBS’ The Early Show.

In announcing the loans on Friday, Mr. Bush said that a restructuring of the companies, in order to avoid bankruptcy and to ensure their future viability, would need to be drawn up by March 31. If they failed to do so, Mr. Bush said, they would have to repay the loans immediately.

“The time to make the hard decisions to become viable is now – or the only option will be bankruptcy,” he said.

Meanwhile, Sen. Mitch McConnell, R-Ky., said he has strong objections to President Bush’s plan.

McConnell, the Senate’s top-ranking Republican, said Friday he objects to tapping into the financial rescue fund to help bail out a specific industry.

Now that Mr. Bush has freed up the money from TARP for General Motors and Chrysler, McConnell says all the stakeholders need to be held to strict, date-specific requirements in turning around the auto sector. He says those changes need to involve labor and health benefits, and should be agreed to by Feb. 17.

Republican Jim Bunning, the state’s other senator, echoed McConnell’s objections. Bunning said a news release that using the financial rescue fund for the auto industry is an abuse of power.

Under terms of the loans, Mr. Bush said the companies’ workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year. And he called for elimination of a “jobs bank” program – negotiated by the UAW and the companies – under which laid-off workers can receive about 95 percent of their pay and benefits for years. This month, the UAW agreed to suspend the program.

The deal also calls for two-thirds of the automakers’ debts to be converted to stock in the companies.

The government will also have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.

UAW president Ron Gettelfinger has said he was disappointed that President Bush singled out workers when discussing concessions to be made, and that foreign auto companies would dictate the wages of UAW workers.

Granholm said the effort to restructure the automakers will require sacrifices on the part of all stakeholders, not just workers. “That is going to be a very, very tough slog, but necessary to have an auto industry in America that is vibrant.

But, Early Show anchor Erica Hill asked Granholm, can the Big Three survive without their employees making wage concessions?

“No, there has to be sacrifice on the part of everyone,” Granholm said, but added, “People aren’t aware that last year, the UAW entered into a very controversial contract going forward which cut in half the starting wages of those who would be employed at auto plants, from $28 an hour to $14 an hour. They offloaded all of their health care costs into a voluntary employee benefits association which was really revolutionary, too.

“They know they have to do more, but it’s not just them, is the whole point. It has to be everybody who feeds into the system.”

Canadian Prime Minister: We’re “Doing Our Share” To Aid Big Three

Meanwhile, Washington isn’t the only source of emergency funds for the ailing automotive industry.

Canada’s federal government, and the government of Ontario, will provide the Canadian subsidiaries of the Detroit Three automakers with $3.29 billion in emergency loans, the prime minister said Saturday.

Prime Minister Stephen Harper said Canada’s bailout plan – the equivalent of 20 percent of the U.S. aid package – will help keep the plants afloat while the automakers restructure their businesses to retain one the country’s most important sectors.

“We cannot afford, in the United States or Canada, the catastrophic short-term collapse of the Big Three automakers. The U.S. has signaled that they are not going to allow these companies to fail, and we will do our share of the North American package to see that this doesn’t happen either,” said Harper speaking at a news conference in Toronto.

Canada’s automotive industry represents 14 percent of the country’s manufacturing output, 23 percent of manufactured exports, and directly employs more than 150,000 Canadians. The country’s largest industry within the manufacturing sector, it has been suffering from its slowest sales in 26 years and dwindling operating cash.

Ontario has agree to provide 1.3 billion Canadian dollars ($1.07 billion) of the total since the province alone employs about 400,000 auto sector workers – both directly and indirectly – and the industry is the mainstay of about 12 Ontario communities.

“In Ontario, we’ve got thousands of people and their families who rely on the auto industry to be on firm ground, so they can put food on the table and keep a roof over their heads … No state or province employs more workers, and we’re not going to give that up,” said Premier Dalton McGuinty, speaking alongside Harper Saturday.

The Canadian plan will provide General Motors Canada with loans of up to 3 billion Canadian dollars ($2.47 billion) and Chrysler Canada will receive up to 1 billion Canadian dollars ($823 million). The companies will get the money in three installments, with the first portion coming Dec. 29.

However, Harper and McGuinty stressed that the government will not be handing over blank checks, saying that all stakeholders will be expected to make adjustments to reduce structural costs.

“Canadian taxpayers expect their money will be used to restructure and renew the automotive industry in this country,” said Harper. “They expect all stakeholders to come to the table and work together towards sustainable long-tern solutions to maintain our current production share of the North American market.”

Harper’s statement was applauded by Canadian Auto Workers President Ken Lewenza, who said the union was willing to work with industry to protect jobs.

“This will ensure that the Canadian industry is protected and the numerous investments governments have made over the years will continue to benefit our communities. This is a very sound decision on the part of both governments,” said Lewenza, who has been lobbying the government to develop an aid package as soon as possible.

Harper also announced two additional steps the federal government will take to support the overall competitiveness of the auto industry. Automotive suppliers will have greater access to accounts receivable insurance through Export Development Canada to compensate for the reduced availability of credit. A new facility will also be created to support access to credit for consumers to improve the accessibility of car loans and dealer financing.

Similar to the U.S. auto bailout package, the Canadian aid package comes with strings attached, including a request that parts suppliers get the money they are owed, that borrowers accept limits on executive compensation, and that they provide the government with warrants for nonvoting stock.

McGuinty warned that the money will only be delivered after auto companies agree to meet conditions set by the governments.

“Those conditions include limits on executive compensations. The loans will only stay in place beyond March 31, 2009 if our governments are satisfied there are solid restructuring plans in place and under way,” said McGuinty.

Meanwhile, in the U.K., British auto manufacturers stepped up pressure on Prime Minister Gordon Brown’s government to deliver an industry bailout package today as a report revealed that car production slumped by a third in November.

The Society of Motor Manufacturers and Traders warned that crumbling domestic and export demand would lead to extended plant closures and job cuts as production falls.

The industry body wants the government to move quickly to restore demand and loosen tight credit conditions.

The government has confirmed it is in talks with Jaguar Land Rover’s Indian owner about possible financial support.

The society says the number of cars built in British factories dropped 33 per cent to 97,604 last month. Commercial vehicle production fell 50 per cent to just under 11,000.

History has it that the gasoline prices have been higher than the diesel fuel prices. But then again, this does not always hold true. During some winters, the demand for distillate heating oil increases which also raises the price of diesel fuel—so much so that is becomes more expensive than gasoline.

In the United States since September 2004, the price of diesel fuel has been by and large higher than the price of gasoline all year round and this is due to numerous reasons. The worldwide steady increase of demand for diesel fuel and other distillate fuel oils has put pressure on the tight global refining capacity—more so with the strong demand of such products in China, Europe, and the United States.

The transition from low sulfur diesel (LSD) fuel to ultra-low sulfur diesel (ULSD) fuel in the United States has affected the diesel fuel production and distribution costs. This is due to the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content.

Another reason for this shift in the norm between gasoline and diesel fuel prices is that the federal excise tax on the latter is higher than the tax on gasoline.

The Primary Factors Affecting The Price Of Diesel

Cost and supply of crude oil – The worldwide supply and demand of crude oil determines its price, and the rising demand has put great pressure on the supply. The Organization of Petroleum Exporting Countries (OPEC) has all of the spare production capacity and possesses a significant percentage of the world’s crude oil reserves. The prices spike as a response to the disorder in the international and domestic crude oil supply.

Tight refining capacity and international diesel fuel demand – Refineries in the United States have been in operations at around 90-percent capacity. Other countries depend more heavily on distillates and diesel fuel than does United States, thus making the refining capacity tight worldwide. Competing international demand for refined distillates affects the price of diesel fuel in the United States.

Product supply/demand imbalances – The prices of other commodities are more stable as compared to the prices of fuels because of the dependence on petroleum and because there are few alternative fuels in the market. The stocks decline fast if the supply declines unexpectedly. When stocks are low and declining, some players may bid higher for the product. Prices will stay high if the diesel fuel transportation system cannot support the flow of surplus supplies.

Seasonality in the demand for diesel fuel and distillates – The price of diesel fuel slowly rises during the fall, declines in the late winter, rises through the early spring, and then declines in the summer. The demand by farmers during the different seasons creates an upward pressure on the diesel prices.

Transportation costs – The distance between the retail location and distribution terminals and refineries has a direct relationship with the transportation cost—that is, an increase in one increases the other.

Regional operating costs and local competition – Depending on the location of the dealer, the cost of doing business varies which include wages and salaries, benefits, equipment, lease, insurance, overhead, and state and local fees. Even if retail stations are in close proximity to one another, they still have differing costs. Another factor that affects diesel fuel prices is the number and location of the local competitors.

Valley City Plating (VCP) has been around a long time—the Grand Rapids, MI-based company began providing decorative finishing services to local furniture and other manufacturers in 1897.
Motorcycle

VCP’s current owners, Jeff and Jon Rasche, acquired the company from their parents in 2002. Shortly after the current owners took over, they began experiencing problems with nickel/chrome plated parts for a major customer, Honda motorcycles.

The company currently operates out of an 82,000-ft2 facility, with approximately 70 employees performing buffing, polishing and decorative chrome plating of steel and brass parts for motorcycle OEMs such as Harley-Davidson and Honda. VCP also does work for furniture and gaming OEMs, and performs specialty finishing processes including antique, bright satin and satin brass and copper, black nickel and brushed chrome.

Jon Rasche recalls the difficult early days when he and his brother first took over the business. “We were burning through money, and we were investing in things like our wastewater treatment system, which was a six-figure upgrade.

Then the problem started,” he recalls.

“The problem” was a severe issue with adhesion of decorative chrome plating on muffler covers for Honda’s Gold Wing touring bikes and VTX cruisers. “It didn’t show up until the parts were heated,” Rasche says. “They discovered it when they would start the bikes at the end of the Honda assembly line. When the pipes cooled, they’d blister on the outside. It got to a point where Honda was heating the parts with a torch before assembly to see if they were going to blister. The vast majority were failing.”

Faulty Analysis
Getting to the root cause of the adhesion issue proved difficult. “Usually, adhesion problems are caused by poor cleaning,” Rasche says. “This was much deeper and more complex than that.”

At the core of the problem was VCP’s nickel chemistry vendor, which was advising addition of more brightener to the plating baths used for the parts. “The supplier was a company we had been doing business with for about 15 years,” Rasche recalls. “We would send bath samples to them on a regular basis for analysis. They had outsourced their analytical capability and they were getting some bad information from their outside lab.

“Unfortunately, once they discovered they were getting the bad information, they did a heck of a job trying to cover it up.”
polishing
Finishing for most motorcycle parts begins with polishing, either by hand or on one of VCP’s three robotic cells.

As attempts to solve the problem by adding brightener to the nickel baths failed, Honda representatives arrived to help troubleshoot the defect. A jet flew what few good parts there were from Grand Rapids to Honda’s Marysville, OH, assembly plant.

Finally, VCP enlisted help from Haviland Products Co., a plating process supplier based in Grand Rapids. “Several people from Haviland were here for several days, and they were adamant that our brightener level was way, way higher than it was supposed to be—maybe 50 times higher,” Rasche says. “Yet the vendor kept recommending that we add more brightener. We struggled a bit to believe what Haviland was telling us, but in the end we didn’t have much choice but to try their recommendation.

“My brother and I had just acquired the business in May 2002, and this was happening in January 2003,” Rasche recalls. “So we were in a tough spot—we had been losing money for months, and then we got hit with this. We had never been through anything like it before. We nearly went bankrupt—if our parents weren’t our sole bank, we probably would’ve gone bankrupt.

“But, in a lot of ways, that situation made us the company we are today,” he continues. “We learned a lot, and the experience still impacts the way we do some things.

“For example, we’re probably one of the only platers that now bakes the majority of our motorcycle parts that will be subjected to heat. We bake parts every day for 30 min at 500°F, one piece per lot, and if there are any problems with the sample part, we bake them all.

“We put the baking into our long-term corrective action plan for Honda, so we still do it.”

Ramping Up Business
Since those rough early months, VCP has grown in its niche. “Our mentality is really a job shop mentality—smaller lots, shorter lead times, fussy parts,” Rasche says. “Our Harley work is for Custom Vehicle Operations, which is still OEM but it’s the custom vehicle end of OEM. CVO takes an OEM platform and modifies it. The CVO business is about 5,000 bikes/yr. We also plate accessories for Harley.”
Typical plating process for motorcycle components
Typical plating process for motorcycle components includes multiple cleaning stages, semi-bright and bright nickels, particle nickel and hexavalent chrome.

Typical lot sizes at VCP run from 50–500 pieces. The company operates one manual chrome plating line with two semi-bright nickels, three bright nickels, one particle nickel and one chrome tank. “We can run a fair amount of volume through that line,” Rasche says. “Right now, we’re running four days a week, two shifts. We also have a specialty line that runs brasses, coppers and other finishes. We run that line one shift a day, four days a week.”

Rasche explains that particle nickel is a third layer of nickel under chrome plating. “When you hear people talk about triple nickel, that’s what they’re talking about,” he says. “Harley is requiring it now on OEM parts. It’s basically like a nickel flash that further improves corrosion protection.” Most parts are in the particle nickel bath for only about 90 sec, he adds.

Processing for a typical motorcycle component begins with buffing and polishing, either by hand or in one of the company’s robotic polishing cells. “Volume is the primary factor that determines whether parts will be hand-polished or sent to a robot,” Rasche says.
A video screen near the chrome line
A video screen near the chrome line provides visual confirmation of process conditions, including time left in tank and other variables.

An example of a part that is processed on the robot cell is the muffler tip for the Honda Gold Wing. VCP operates three robotic polishing cells.

From polishing, parts move to the plating line for a thorough cleaning designed to remove any buffing or polishing compounds. The multi-stage cleaning process takes place at 160–170°F, and includes alkaline cleaning, electrocleaning, power washing, acid dip and multiple rinse stages.

Clean parts are semi-bright nickel electroplated, with typical plating times of 25–30 min. The semi-bright nickel is followed by bright nickel, particle nickel and finally chrome plating. “The first layer of nickel is usually between 0.3–0.6 mil thick,” Rasche says.

“By adding the particle nickel, we were able to lower our minimum nickel thickness from 0.78 to 0.56 mil for some customers.”

All tanks in the chrome line are 12 ft long, 2 ft wide and 3.5 ft deep, and the line includes multiple extra tanks that can be ramped up as needed. Video screens near the plating line show what tanks are available, how much time is left at each tank and other process conditions.

VCP’s decorative chrome process is hexavalent, and Rasche believes that’s still the way his big customers want it. “We have not gone to trivalent chrome yet,” he says. “Trivalent chrome has come a long way, and some systems are better than others. There may be some potential new business we’ve lost because we don’t have a trivalent process, but I’m not aware of any current work that we’ve lost because of it.”

Wastewater treatment for the chrome line and the plant’s other processes consists of multiple tanks for settling and precipitating metals. “We put a six-figure investment into expanding and upgrading our waste treatment system in 2002,” Rasche says. “Our goal is to run at about half the local regulations for metals content. Nickel in the wastewater, for example, is about 0.4 ppm.”

Some rinse water, from tanks in front of the chrome plating process, is discharged directly to sewer. The rest is batched and discharged daily.

Continuous Improvement
VCP has no formal lean manufacturing program, but the company constantly looks for ways to operate more efficiently. “One of the big things we’ve done is reduce variation by standardizing process parameters for each job,” he says. “So now each bar carries a tag that tells the operator which tanks it goes in, the amperage, time and other processing conditions. It’s really kind of common sense stuff, but it pays off.”

Also literally paying dividends is the company’s monthly incentive program, which enables workers to earn a bonus based on their regular pay each month. “We eliminated piece work when we took over the company. That pay system really just encourages a ‘me, me, me’ attitude and multiple quality issues, and that’s not what we wanted,” Rasche says.

The incentive program covers only things that employees can affect and control, Rasche explains. “So chemical consumption, utilities and other items that employees can impact are included. Things they can’t control, such as rent, equipment purchases and the cost of our employee health insurance, don’t count.”

The bonuses encourage employees to take ownership of the processes, and the program has paid off for them and for VCP. “Last year, for example, we had very similar sales to 2006, but our nickel consumption was significantly lower.” Rasche says. “So we’ve found more and more ways to obtain the minimum nickel thickness we need and still have a beautiful part while operating more efficiently.”

According to Rasche, the monthly incentive program has paid out about $850,000 over the past three years to approximately 40 non-officer employees. The company also has a quarterly profit-sharing plan separate from the incentive system. “There are pay periods when employees might get their regular check, a profit sharing check and a monthly incentive check, so they could receive several times what their normal weekly earnings would be,” he says.

Jon Rasche is proud of the operating changes his team has made since he and his brother Jeff took over the business. “Our problem-solving ability has improved a lot, our maintenance program has improved a lot, and we’re competing for work with some of the elite jobs shops in the U.S.,” he says. “We may not have all the capabilities of some of the others, but we have a very committed team and we do the basics very well.”

About the Chemistry
Haviland’s Ultima NI-1 is a single-brightener semi-bright and bright nickel system that is said to highlight grain refinements in plating of ferrous and nonferrous metals and plastic substrates. Haviland says it produces uniformly bright and ductile deposits with exceptional leveling, ductility and receptivity to chromium plate and decorative applications.

According to Haviland, the chemistry operates effectively over a wide solution composition range, and is well-suited for high-volume production applications that require simplicity of operation and control. It can be analyzed by simple Hull cell testing. VCP also uses the company’s chemistries in its cleaning processes and specialty brass plating line.

“We have witnessed a meltdown of pricing in the non-ferrous sector,” said Jeff Solomon, chief executive of Montreal-based Globe Metal Recycling Services, Inc.

“Low prices have a devastating effect on recyclers. With these low prices there is virtually no margin left on a wide range of (non-ferrous) items and these items will become part of growing inventories of unsold materials accumulating in scrap yards.”

To counter the slowdown in demand, Solomon said the company is working hard to increase volumes and market share at Globe Metal, which purchases all grades of non-ferrous metals and processes 10,000 to 12,000 tons of non-ferrous scrap per year.

York, Pennsylvania-based Consolidated Scrap Resource, Inc. is also trying to grow its non-ferrous business in a “smart and controlled way”, said Ben Abrams, executive vice president and chief financial officer. The Company buys all types of non-ferrous metals and operates six facilities located throughout central Pennsylvania.

“The real challenge has been to operate when prices are constantly falling, as they have been for the last two months,” Abrams said. “But as prices stabilize, we will pay less for our raw material, so we will start to see some consistency in our margins.”

The price paid by Consolidated Scrap for scrap copper in late October was down 60 percent from June, Abrams said. Aluminum was down close to 70 percent.

Abrams blames lower demand on expectations for slower growth, adding that there has been an absence of buyers, both from domestic and international companies. He does not expect to see any improvements in demand until manufacturing picks up.

“Our business is no different than other manufacturing businesses. Tighter credit, as we have right now, hurts demand for all types of production,” Abrams said.

Bob Garino, director of commodities at the Institute of Scrap Recycling Industries, Inc. in Washington D.C., characterizes the market for non-ferrous metals as unbalanced. While there is plenty of supply due to lower industrial production, he said there is very little demand. “We are not seeing any buying to speak of,” he said.

Garino blames slower demand on a slowing economy, adding that demand started to slow this summer, even though prices held steady. “We sensed slower economic activity months ago. It really seemed to start dropping off in the second quarter,” he said.

Garino notes that the Commodity Research Bureau (CRB) Metals Index in late October was down 30 percent from its April peak. The CRB Index consists of copper scrap, lead scrap, steel scrap, and other metals. The London Metal Exchange (LME), an index of LME traded metals, peaked in March and was down 52 percent in October.

Industrial production feeds into the total supply chain, Garino said, adding that the processers, therefore, are not looking for metals and that slows down everything coming into the metal scrap yards as well. “It’s all down across the board,” Garino said.

“The economy is weak and I don’t think you can assume that it is going to correct anytime soon,” Garino said. He said it could be mid-2009 before a recovery.

Price forecasts this year and next have been aggressively scaled back due to anticipated surpluses. Garino said some forecasts project copper prices will average below $2 next year, noting that copper is often used as a proxy for non-ferrous metals.

“The change has been tremendous and profound,” said John Mothersole, senior economist at IHS Global Insight, Inc. in Washington D.C., when referring to the market for non-ferrous metals. “I have never seen a market turn as quickly or as strongly.”

Mothersole said deleveraging has now engulfed commodities across the board. “What we’ve seen in financial markets is clearly spilling over into commodities and that is not surprising since a lot of financial capital has been at play in commodities,” he said.

The money that went into commodities is coming out of the market quickly and is contributing to the downward momentum in commodities, he said. “I think the market is pricing in a sharp downward revision in consumption growth for next year,” he said.

Mothersole said the market for non-ferrous metals may be near a trough. “But this market psychology is geared to accept any bad news,” he said. “Just like we overshot on the upside the last couple of years, we are likely to undershoot on the downside.”

Scrap metal recyclers have inventory that was purchased at much higher prices, Mothersole said, therefore it is going to be a long time before the recyclers realize the purchase price. He said recyclers are going to take a loss on a lot of their material.

Mothersole points to nickel as a market that has seen a huge correction. Prices on the LME peaked at $53,000 a metric ton. Nickel closed in October below $10,000. Aluminum peaked at $3,200 a metric ton but closed at $2,000 in October. Copper hit an all time high of $8,900 a metric ton, but fell below $4,000 a metric ton in late October.

“Amazing” and “extraordinary” is how Mothersole characterizes the price movements, “I think it is symbolic of the negative psychology that is pervading the market,” he said.

Scrap metal recyclers are going to be under financial stress, which may lead to consolidation in the industry, Mothersole said. “Scrap yards and secondary processors are really going to be under pressure given the high prices that they have been paying.”

To make matters worse, the credit crisis roiling the markets has reduced expectations for consumption growth next year. “I think with the kind of psychology that is hanging over the market right now we are very pessimistic,” Mothersole said.

When will the market for non-ferrous metals correct itself? “My strong suspicion is that markets are going to undershoot and that there is going to be a snap back at some point,” he said. “It all depends on when buyers start to step back into the market.”

The National Association for Surface Finishing (NASF) has announced the names of the new officers and board members for 2009.

The appointments are as follows:
Michael Siegmund, MacDermid, Inc., Waterbury, Conn., has been selected to serve as the president of the trade association for 2009. He will succeed Ray Lucas, Valley Chrome Plating, Inc., Clovis, Calif., who has completed a two-year term.

Other officers for 2009: Tony Revier, Uyemura International Corporation, Ontario , Calif., vice president; Pat Gleason, Microfinish Co., Inc., St. Louis, Mo., secretary/treasurer; Rick Delawder, SWD, Inc., Addison, Ill., executive committee member at-large; and Ray Lucas, past-president.

Results from NASF’s recent board of directors election were also announced. Newly elected to the Board for a two-year term beginning January 1, 2009, was Blair Vandivier, Benchmark Products, Inc., Indianapolis, Ind.; Bob Burger , KC Jones Plating Co., Warren, Mich.; Peter Gallerani , Integrated Technologies, Danville, Vt.; Tom Gerhardt, General Super Plating Co., E. Syracuse, N.Y.; Pat Gleason; John Kinne, Xtalic Corp., Marlborough, Mass.; Ray Lucas; Bill Wiggins, Automation Plating Corp., Glendale, Calif; and Joelie Zak, Scientific Control Labs, Chicago, Ill.—all serving two-year terms.

Other members of the board include: Tony Alcaro, Alcaro & Alcaro Plating Co., Montclair, N.J.; Rick Delawder; Ken Hankinson, KCH Services, Forest City, N.C.; Jim Jones, Dixie Industrial Finishing, Tucker, Ga.; Mike Kelly, Asko Processing, Inc., Seattle, Wash; Charles Remied, SERFILCO, Ltd., Northbrook, Ill.; Tony Revier; Michael Siegmund; and Jerry Wahlin, AAA Plating & Inspection Inc., Compton, Calif.

The board was elected by the general membership in elections held this fall, with officers chosen at the annual board meeting on Nov. 19, 2008, in Washington, DC.

NASF is a membership trade association whose mission is to promote the advancement of the North American surface finishing industry. Its 2,800-plus members include metal finishing companies, suppliers, technicians, researchers, academics, consultants, students, and others.

The “ Bluegrass State” will roll out the “red” carpet for metal finishers, suppliers, end users, and OEMs on June 16–17, 2009. That’s when the participants of SUR/FIN 2009—the North American surface finishing industry’s premier trade show and technical conference—are expected to descend on the Kentucky International Convention Center in Louisville to network, preview new products, and share best business and operational practices.

The National Association for Surface Finishing—the show’s organizer and chief sponsor—hopes industry members will “explore the possibilities” when next summer rolls around. And with all that Louisville has to offer, the case to come to Kentucky is very compelling. “The venue just fits SUR/FIN,” said Eric Olander, vice chairman of the SUR/FIN 2009 Steering Committee. “ Louisville is a good convention town, has great accommodations and area attractions, and it’s easy to move around in. Plus, it’s a quick trip from the airport.”

More importantly, the state of Kentucky in general is very “industry-friendly,” which is critical for manufacturing sectors such as metal finishing. In fact, Louisville was recently anointed as the “Southeast’s leader in manufacturing” by Manufacturers’ News magazine. Louisville’s auto manufacturing sector is particularly appealing to finishers. “It’s the gateway to the automotive south,” said Olander, citing Ford, Toyota, and Corvette plants operating in the state. Louisville is also strategically located near some of the world’s largest OEMs and applicators, he added.

The importance of Louisville’s role in the auto manufacturing sector was recently demonstrated when Ford Motor Company unveiled a $200 million investment plan to expand operations in the city. Specifically, Ford plans an additional $100 million investment at its Kentucky Truck Plant—on top of the $200 million in retooling over the past two years—to allow the plant to produce the Navigator and Expedition models starting in spring 2009. Ford also plans to invest at least $100 million in the Louisville Assembly Plant to provide the manufacturing flexibility to produce a new, fuel-efficient car for the U.S. market by 2011.

Attractions
The allure of Louisville goes well beyond its industrial attributes. Dubbed America’s “ Most Livable Large City” by the U.S. Conference of Mayors, Louisville offers world-class performing arts venues, sports and entertainment complexes, fine dining establishments, and a bustling downtown area. Among the main attractions: the famed 4th Street Live District, Churchill Downs, Kentucky Derby Museum, Waterfront Park, Muhammad Ali Center, Speed Museum, Louisville Slugger Museum, Kentucky Opera, Louisville Zoo, Louisville Science Center, and Six Flags/Kentucky Kingdom, among others.

According to the Mayor’s office, more than $2.5 billion in investment and development is currently under way for downtown Louisville. Recent highlights include the multi-purpose arena, $150 million in new development surrounding Louisville Slugger Field, the proposed Iron Quarter Development, and nearly a half-billion dollar proposed expansion of the Fourth Street entertainment district.

“The Center City District will be an epicenter of electricity that connects the high-energy areas of our downtown—from the waterfront and throughout the heart of the city,” Mayor Abramson said. “It’s a quarter-of-a-billion-dollar investment that takes our downtown to a new level—from a project-by-project approach to a system of strategically connected districts that serve as economic magnets to draw millions of people, and dollars, to Louisville.”

The US chemical industry is concerned about the potential impact of a report, released by a liberal think tank on 19 November, which lists the nation’s 101 most dangerous chemical manufacturing and water treatment plants and urges Congress to develop stricter safety standards.

The report by the Center for American Progress (CAP), Chemical Security 101, recommends that such facilities be required to assess and use feasible alternatives to the high-risk chemicals that they produce and store. The goal is to lower the harm to surrounding populations in the event of an accidental release or terrorist attack.

But the American Chemistry Council (ACC), a major trade association representing US chemical companies, says that chemical facilities are already adjusting practices to comply with a temporary regulatory framework introduced two years ago, and new rules could send mixed messages to those making changes.

chemical refinery
The CAP list was compiled on the basis of risk management plans that chemical facilities submitted to the Environmental Protection Agency at the end of October 2008. Taken together with 202 other high-hazard facilities that could adopt alternatives, the plants span 41 states and put 110 million lives at risk, warns CAP – a group founded and headed by John Podesta, chief of staff to former US president Bill Clinton and now heading the transition team of president-elect Barack Obama.

Chlorine, hydrofluoric acid and sulfur compounds were picked out as substances posing the greatest threat. Among the report’s suggestions are that thirty bleach plants could generate chlorine on-site without rail shipment and bulk storage, and that eight petroleum refineries could substitute the hydrofluoric acid used to refine crude oil with sulfuric acid or emerging solid acid catalysts.

Mixed messages
The US government’s Department of Homeland Security (DHS) enacted temporary chemical security regulations two years ago, known as the Chemical Facility Anti-Terrorism Standards (CFATS). Its own list of high-risk chemical facilities is not publicly available, though it has published a list of roughly 300 chemicals considered a potential security risk.

But CAP cites several weaknesses with CFATS, which focuses mainly on physical security measures. ‘The CFATS framework cannot ultimately lead to chemical security,’ the report claims.

The regulations, CAP says, fail to require that chemical facilities assess safer and more secure alternatives, don’t provide protection for communities along chemical delivery routes, and don’t cover water utilities, even though 15 are among the nation’s most dangerous facilities. Water utilities could easily switch from chlorine gas – and sulfur dioxide gas in some cases – to less hazardous alternatives like liquid bleach or ultraviolet light, CAP says.

“The Chemical Facilities Anti-Terrorism Standards framework cannot ultimately lead to chemical security“ – Center for American Progress

But the ACC defends CFATS and cautions against efforts to develop new chemical safety requirements. ‘We are in the process of implementing this CFATS programme,’ ACC’s Scott Jensen tells Chemistry World. ‘We are concerned that the rules could change – we certainly don’t want to interject any unnecessary uncertainty,’ he adds. ‘The danger is that you could undercut the programme and send the people that have to meet these requirements mixed messages.’

‘We are still very much in the process of implementing the CFATS regulations,’ agrees DHS spokesperson Amy Kudwa. ‘We have also worked extensively with the chemical industry on voluntary standards to improve security.’ She notes that CAP’s list doesn’t correlate with either the chemicals that CFATS has identified as being of concern, or the types of facilities that are regulated under CFATS, because different methods were used to develop it.

Future prospects
Paul Orum, a safety consultant who drafted the report for CAP, says the expiration of CFATS in October 2009, ‘could provide an impetus for creating a comprehensive chemical safety programme. Just reauthorising the current programme will not provide effective chemical security.’

Orum and others believe that Obama could significantly strengthen the government’s chemical safety rules after taking office on 20 January, 2009. Obama and incoming vice president Joe Biden have both in the past introduced legislation that pushes chemical facilities to use safer alternatives where practicable.

A Chemical Facilities Anti-Terrorism Act, which requires high-risk chemical facilities to use safer methods and eliminates the exemption of water facilities, was introduced in March 2008, but has not yet been reviewed by the House, nor introduced in the Senate.

After a series of price hikes in July, pool and spa chemical manufacturers raised prices again in October, citing higher raw material costs.

Another round of increases is expected in January.

“We’re sensitive to price increases, so we’ve tried to [see what’s] behind them, but these are real,” said Manuel J. Perez de la Mesa, president/CEO of PoolCorp in Covington, La. “Manufacturers have been absorbing these increases and holding the line as long as possible before they passed them on.”

From July 2008 to January 2009 the increases will be considerably higher than 20 percent, with some reaching up to 30 percent, de la Mesa added.

Though fuel prices have played some role in the rising cost of chemicals, raw materials appear to be the primary culprit. In particular, cyanuric acid, which is bought almost exclusively from China, has become more expensive, making the production of dichlor and trichlor products more costly.

Distributors now are faced with raising prices in an increasingly competitive market.

“The biggest challenge we have is [that even] with solid price increases, we’re not able to pass them all on in the short-term because competitors in the market still have chlorine at an old price,” said John Coulier, vice president of sales and marketing at Quality Pool Supply Co. in Clio, Mich.

Eventually, distributors will have to adjust their prices to stay in business, according to de la Mesa. Chemicals cannot be stored as easily or for as long as pool equipment, and therefore any increases will move down the supply chain at a faster rate.

Big orders, on the other hand, may be on hold as companies take a wait-and-see approach to fall purchases.

“Based on the economy, we’re seeing a reluctance to commit to buying at this time of the year,” said Vernon Ketron, president of Appatek Industries in Concord, N.C. “We’ve talked to a lot of people, and they’re just not putting their cards on the table.”

Service companies also are concerned about the impact on homeowners.

“We have to continually raise our rates to make money, so it’s really hard,” said Dave Lopez, owner of Dave Lopez Pool Service in Granada Hills, Calif. “A lot of us are afraid of doing it because we don’t want to lose any accounts.”

Even with the economic downturn freezing consumer budgets, someone will have to pay for basic pool sanitation.

“[The increases] are not going to affect demand to any significant degree because the pools have to be maintained,” de la Mesa said.

For some truckers, it’s the best of times, a golden age in which they find their trucks packed, their revenues solid and their profits at record levels. For others, it’s the worst of times, a nightmarish period in which they scarcely emerge from one crisis before being battered by the next round of fuel price hikes or staffing shortages.

But whichever type they may be, truckers at least agree on this: their industry is going through an unprecedented period of upheaval, one marked by mergers, acquisitions and closures. In the words of Ted Scherck, president of the research consultancy Colography Group, “There is no shortage of turmoil in the trucking industry.”

By all accounts, that turmoil will result in a wholesale reduction in the ranks of truckers. “There are going to be fewer carriers to deal with and fewer options in the marketplace,” says Cliff Lynch, principal of C.F. Lynch & Associates (a logistics advisory service) and a DC VELOCITY columnist. “There will be lots more acquisitions in LTL. This industry is consolidating,” adds Mike Regan, chairman and CEO of Tranzact, a freight payment and audit company. The message is not going unheard on Wall Street. In a report issued in May, Bear Stearns research analysts Edward Wolfe and Thomas Wadewitz called the surface transportation sector “ripe for consolidation”—an assessment that was validated just days later when UPS announced its bid to buy less-than-truckload carrier Overnite Transportation.

As for what’s causing the shrinkage, the reasons are numerous and varied. Skyrocketing operating costs—for drivers, for fuel, for equipment and insurance—have taken their toll on truckers in recent years, leading to a rash of business failures (or absorptions by other carriers). And the carriers exiting the market aren’t being replaced. The days when an entrepreneur with $50,000 in the bank could go out and start a trucking company are long gone, thanks to entry barriers such as insurance costs and the need to invest in high-priced technology like state-of-the-art tracking systems.

But there’s more to the story than just economics. It’s also true that the transportation market as a whole has been undergoing a structural shift, partly as a result of the explosion in international sourcing and continued pressures to keep inventories lean. And many expect demand for regional service to soar as more companies invest in regional DCs to insulate their operations from the kinds of disruptions that have rocked global supply chains in recent years.

Diversify, diversify
In the meantime, the traditional lines between industry segments continue to blur—parcel, express, LTL and logistics providers are becoming one and the same. That’s largely a reflection of customer demand. Shippers today expect their carriers to offer multiple services—they want domestic service and they want international service. They want long-distance service. And increasingly, in response to pressures from their own customers, they want speedy regional moves to increase the velocity of inventory through their systems. It’s that pressure to diversify—to offer both longhaul and regional service, express deliveries and whatever else the customer might want—that has led to some of the more high-profile mergers and acquisitions in the trucking industry. Both big integrated carriers looking to branch out into new types of service and large trucking companies hoping to bolster their competitive positions have snapped up LTL carriers in recent years. And it appears that the consolidation is far from over.

Take Yellow-Roadway, for instance, a company that has been particularly aggressive in its expansion drive and shows no signs of slowing down. First came the Yellow-Roadway merger in December 2003, which brought together the two largest national LTL carriers. That was followed by the recently completed purchase of USF Corp., a group of regional carriers, which gives Yellow-Roadway an important stake in the critical next- and second-day delivery business.

“What Yellow-Roadway is trying to do [by acquiring USF] is build a more robust network [that] will not only handle long-distance loads, but have more integration with regional business,” says Bill Rennicke, a managing director of Mercer Management Consulting. Yellow-Roadway already owned New Penn, a regional carrier in the Northeast, and the USF purchase gives it a nationwide regional network. Beyond that, Rennicke sees Yellow-Roadway building broad international capabilities.

FedEx Corp., too, has followed a carefully plotted strategy for diversifying its operations. It started out by purchasing Caliber System from the then independent Roadway in 1998, and later acquired American Freightways. Those acquisitions gave FedEx important stakes in LTL, ground parcel and contract logistics.

Not to be outdone by rival FedEx, United Parcel Service in May announced its intention to acquire Overnite Transportation, an LTL carrier. Though its choice of Overnite took some by surprise, UPS’s purchase of an LTL business to round out its portfolio was widely expected. The UPS acquisition of Overnite makes particular sense considering that UPS’s main competitor is FedEx, whose businesses include LTL carrier FedEx Freight, a next- and second-day company. “FedEx showed that customers do value an integrated product,” Rennicke says. “From the UPS standpoint, they had the Hundredweight program, but having an LTL carrier in their portfolio was important for them.”

Regan believes that UPS is not finished shopping. “UPS is going to have to buy more trucking companies,” he says. “They’re not done. Overnite does not give it the critical mass [it needs] to compete with FedEx.”

As the industry continues to consolidate, it’s anybody’s guess who will be left standing. Rennicke has identified a number of carriers as potential acquisition targets, including ABF Freight System, the only remaining long-haul unionized LTL carrier outside of Yellow-Roadway; Con-Way Transportation, which boasts a network of regional carriers plus logistics services; and regional carriers like Estes Express and Saia Motor Freight. Regan adds that he wouldn’t rule out the possibility that someone will gobble up multi-regional carrier Old Dominion and regional LTL specialist New England Motor Freight.

No cause for alarm?
But what does all this consolidation mean for shippers? Though conventional wisdom holds that buyers—in this case, shippers—suffer when suppliers’ ranks thin (thus decreasing competition), that may not apply here. Rennicke, for example, doesn’t believe the Overnite deal will hamper competition. It may even make the LTL market more competitive, he says. “Overnite will be a stronger LTL competitor. The Overnite customer will get access to an array of top-notch services. I think it is very positive.”

He’s equally optimistic about Yellow-Roadway’s acquisition of USF. “I think it’s the same with Yellow-Roadway,” Rennicke says. “USF was never able to integrate even basic information services. I think just the customer service and technology overlay that Yellow has eventually will migrate to USF.”

Regan agrees that there’s no cause for alarm. “If I were a shipper, I wouldn’t necessarily be fretting [about the prospect of] consolidation of the industry,” he says. “I think in the LTL sector, you have to focus less on price than on customization of services. That’s what will drive more significant savings in the supply chain.”