September 17, 2004    Volume 11, No. 17

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Materials Industries Form Trade Group To Combat
Bush Administration's Desire To Kill DOE R&D Program


The largest basic materials industries in the country have formed a new lobbying organization to promote a small Department of Energy collaborative research program. The Alliance for Materials Manufacturing Excellence (AMMEX) consists of more than 80 companies from the aluminum, chemical, forest products, glass, metal casting, plastics and steel industries. Representatives from their trade associations will fight on behalf of the beleaguered Industrial Technologies Program within the DOE's Office of Energy Efficiency and Renewable Energy. The program has been under budgetary assault by political appointees within the Energy Department. The Bush administration has not looked favorably on the Industrial Technologies Program (ITP), which was created in 1987 and is widely regarded as being a successful industry/ government research collaboration. DOE has tried to reduce funding for the program since 2002, but has been rebuffed to some degree by Congress. In its 2004 budget request, the Bush team asked for $64 million for the program, which is far less than what it received in 2002, when its funding level was about triple that amount at $184 million.

In its 2005 budget submission, DOE said the program, which funds cost-shared research with industry, was "unable to provide high levels of public benefit" and that much of its research has "reached a point where federal funding is no longer appropriate."

Organizers of AMMEX disagree with that assessment and say it is unfortunate the Energy Department doesn't believe the program is worthy of support.

"It makes no sense" to cut the program, says Larry Kavanagh, vice president of manufacturing and technology at the American Iron and Steel Institute. The basic materials industries are the largest energy users of any sector including transportation "and there are enormous, enormous opportunities to improve energy efficiency with all kinds of implications" for improving national security, the environment and the competitiveness of a myriad of U.S. industries that use their products. "It is the only program in government that materials manufactures use to develop new technology and deliver it to the plant floor," Kavanagh states.

For industries that are under competitive assault by foreign rivals, funding the program "is a no brainer," adds Kavanagh. There are materials manufacturing plants in virtually every congressional district. They provide hundreds of thousands of jobs and the only way these companies will survive is by continuously developing and deploying new technologies. The Industrial Technologies Program is the only such program in the federal government that helps them do that. Virtually every other government program or policy aimed at the materials sector adds costs and regulatory and financial burdens. "We want to make people aware of our successes so the program can not only stay alive but increase," Kavanagh says.

The program has been impacted negatively by the notion that it is "corporate welfare," a moniker that irritates those involved. "Technology investment takes costs away and the argument that it's welfare is completely ridiculous because companies are not asking for a handout," Kavanagh explains. "They are investing in joint programs and the government is getting tremendous benefits from the dollars it invests: jobs, a cleaner environment and a competitive manufacturing sector. What else do you want?"

Those who have worked within the Industrial Technologies Program office at DOE say the current political climate does not bode well for the program. David Garman, acting under secretary for Energy Science and the Environment and head of the Office of Energy Efficiency and Renewable Energy, which oversees the program, has told audiences that the government does not have enough money to fund such programs, no matter how worthy they might be. Garman "is looking for areas where he can have a major impact and where he can see a major change," says one ITP program manager. Garman's "pet programs," he adds, are hydrogen and FreedomCAR, which have been funded at the expense of industrial technologies. Garman has said in speeches that it's important to halt energy efficiency programs that do not show potential for big gains in favor of those that do. It's important not to spend small amounts of money on a lot of different programs, but instead pursue "bolder" initiatives.

Garman, according to those who are involved in the program, has an ideological problem with government support of industry and was intent upon overhauling the Industrial Technologies Program when he arrived at his post after 21 years of working as a Senate aide. "What happened is they brought in a bomb and blew up the place and we're still trying to put it all back together again," said one program manager who recently left the agency and asked that he not be named. "They're trying to change so many things that everything is unstable. It's not like we were the Bureau of Indian Affairs that had some really big problems."

Garman forced then ITP manager Denise Swink out of her job shortly after he arrived, say sources. Swink, who was respected by most people involved in the program for her management skills and passion, "didn't play ball with the people she was working for and they said that she was 'off the reservation,' " according to the former program manager. Another said that Swink "refused to play the 'shut-up and sit-down game.' She was a champion for the program and was not sorry about saying it. So when they got rid of her, a lot of her legacy and what she did was tainted because [the program] was something that she was for." Garman declined requests to be interviewed for this story.

Other people associated with the program from state agencies that collaborate on R&D projects funded by the program say they're tired of having to lobby Congress to get funding reinstated. "Politics overrode the true needs of the industrial sector," says one state official.

The principals involved in forming AMMEX understand the political aspects associated with the program, but feel the needs of the materials sector are too great not to acquiesce to an ideological orientation. "The process industries feel we're in a real dangerous situation," says Michael Greenman, executive director of the Glass Manufacturing Industry Council and an AMMEX organizer. "The process industries are the underpinnings of our whole society and they are in serious trouble."

Companies in all of the materials industries understand the need to do fundamental, cross-cutting development work beyond the majority of corporate research that is directed at new product development. "When we go overseas, the Industries of the Future program in the United States [part of ITP] is put forward as a model program for private-public partnerships," says Greenman. "When you go overseas and see their technology, in many ways and in many places it's way, way ahead of ours. We don't know that here. We still think we're number-one because we're so big and have a massive economy, but it's smoke and mirrors in many ways."

One aspect of the program that the new group hopes to promote is the energy savings that have resulted from research funded by ITP. The program measures energy savings at the plant level but not those that result from the actual use of the products or savings achieved farther down the supply chain. For instance, R&D projects funded in part by ITP have improved the performance characteristics of steel. A new generation of advanced lightweight strong steel is now being used in cars like the Chevy Malibu and the Chrysler Pacifica. The cars are just as strong, but lighter and therefore use less fuel.

"The energy you save in the plant making these steels is small compared to the millions of gallons of gasoline you save a year by putting these vehicles on the road," says Kavanagh. "But [DOE] doesn't look at that benefit. It's a flaw in the system, but it's nobody's fault. We're trying to get that fixed so that they can do a better tally of the value and the return on federal dollars spent."

When benefits are measured for the other industries participating such as aluminum, paper and glass, the program has been found to save .8 barrel of oil for every federal dollar invested. "There is no program in the government with that track record," says Kavanagh. "If all of these benefits were looked at, this would be the number-one program in the government and they would double the funding for it."

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