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Specialty Metals Industry is On Offense on Defense by Richard McCormack, Manufacturing News January 19, 2006 Vol. 13, No. 2 The U.S. specialty metals industry has issued a stern warning to the U.S. government and the Department of Defense: create an industrial policy that encourages investment in domestic production now, or risk the loss of an essential industry that supplies advanced materials used in every weapon system in the American arsenal. The Specialty Steel Industry of North America (SSINA) says the U.S. government must take "dramatic and comprehensive" actions aimed at creating a better investment climate in the United States. If it does not do so, then foreign countries offering a myriad of inducements and illegal subsidies will capture the production of super alloys, titanium, stainless steel, high-strength, and high-temperature metals. "The U.S. could gradually lose its domestic specialty metals manufacturing base if U.S. manufacturers of specialty metals move production offshore in search of what they perceive to be better business opportunities and profits," says the Washington, D.C.-based trade group. "Were this to happen, not only would the U.S. lose its manufacturing base, but it would also lose its leading-edge position in specialty metals technology, along with its ability to develop new technology...In this industry, our factories are our laboratories." SSINA conducted a survey of its members and asked them to pinpoint the defense applications of their products. It found that the specialty metals industry can be easily overlooked because it is at the very bottom of the defense supply chain, yet it is "critical" to the nation's defense. Because the military market constitutes only 10 percent of industry sales, DOD is dependent upon the commercial success of the industry. "We need to have a healthy core of business in order to make the products for the leading-edge products used for defense," says Jack Shilling, chairman of SSINA and chief technical officer for Allegheny Technologies Inc. "If foreign companies or governments sell products at prices that are unfair by U.S. laws that are either dumped into our market or are subsidized, we will fight that. We'll take anybody on a level playing field. We're not going to let somebody come here and dump products into the U.S." The success of the industry is being jeopardized by countries that cheat. "Our argument is unique and should be a politically acceptable argument," says Shilling. "We're not asking for the government to go and build a specialty metals plant. We're not asking the government to build a wall around the United States and require multinational companies to make all of their investments in the U.S. A much better solution would be to create a level playing field for investment." Unfortunately for the industry -- and for the military -- that playing field is not level, and is tilting every day more towards China. If the industry is severely weakened, it will be hard, perhaps impossible, to rebuild. "It's not just another platitude, it's very true," says Shilling. As a Ph.D. engineer, "I came up through the R&D in the specialty metals area before I became a management executive running [a specialty metals company]. I worked there my whole life. I know this industry backwards and forwards. I can make this point: the investment decisions being made based on trade, costs and taxes worry me." The industry feels it is important to make sure the Defense Department understands its strategic importance as a fourth- and fifth-tier supplier to the big defense contractors. The main purpose in preparing its "Specialty Metals and the National Defense" report "was to get DOD's support and we really have it now," says Shilling. Gary Powell, Acting Deputy Undersecretary of Defense for Industrial Policy, was quoted by SSINA as saying: "There is no question that specialty metals are critical to national defense...and myriad defense programs would be negatively impacted by specialty metal supply disruptions." Virtually the entire U.S. specialty metals industry is behind the SSINA defense industrial base initiative. "Every CEO I know in this industry believes it in their heart that the U.S. is engaged in a high-stakes poker game" with international competitors, says Shilling. "This isn't just, 'We're supporting Jack in Washington' They are asking me: 'Are we making any progress?' " Now that it has provided DOD with a comprehensive look at its applications in defense products, the next step for the industry is to create and then lobby for the adoption of an agenda that encourages investment in the United States. It will outline what needs to be done in three areas: trade, costs and taxes in order to be competitive with unfair practices overseas. "We're not asking for a bailout," says Shilling. "Our competitors have developed industrial strategies and U.S. multinationals are playing directly into them. All the garbage that you read about from free trade groups saying the U.S. anti-dumping laws are hurting the U.S. economy -- they're nuts. Those people are crazy. They have self-serving interests. Once we lose our manufacturing base we're dead." The report, "Specialty Metals and the National Defense," is located at http://www.ssina.com. Articles: Reflections On General Electric's Global Strategy |
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