July 27, 2012    Volume 19, No. 12

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Critical And Strategic Materials Industry Has A New Voice In Washington, D.C. Aimed At Countering Multinational Company Bias Against U.S. Producers


By Richard A. McCormack
editor@manufacturingnews.com

A new Washington, D.C., advocacy group has been formed to promote government policies aimed at reviving domestic production of strategic and critical materials. The new Strategic Materials Advisory Council is comprised of former senior U.S. government defense and materials officials and industry experts. They are concerned about the national and economic security threats associated with the country's dependence on foreign suppliers of critical minerals and metals.

The coalition is aggressively challenging the large multinational companies that do not consider the national security implications of sourcing supplies from overseas. The group is also challenging government policy makers who focus on reducing the price of imported materials with no consideration of promoting domestic production.

The council "aims to provide demonstrable change to the strategic and critical materials industry, serving as an outlet for support and a vehicle for policy change," it says in its mission statement. It will "utilize its collective experience and first-hand knowledge of the supply chain to frame industry concerns and convey the importance of safeguarding our national interests to senior policy makers."

The council has already challenged the U.S. Department of Commerce and the U.S. Chamber of Commerce. In a letter to the Commerce Department's International Trade Administration it states that "multinational corporate executives with an eye toward expanding their international markets in a difficult domestic U.S. economy cannot be allowed to monopolize the issues surrounding critical materials and use them as a bargaining chip for access to those markets."

It says the U.S. government is focusing "only on end-users and consumers," which "could lead policymakers to overlook the risks and vulnerabilities associated with our nation's overreliance on foreign producers for many critical and strategic raw materials." The security of the U.S. national supply chain for these materials "is at a critical juncture and we can ill afford to let foreign interests with foreign policy and military agendas not allied with our interests, control production."

The new council has also questioned the U.S. Chamber of Commerce's lobbying effort to strike provisions in the 2013 Defense Authorization Act aimed at strengthening the domestic supply chain including requiring the Pentagon to purchase specialty metals and titanium from U.S. producers. The Chamber of Commerce is lobbying against five amendments to the 2013 Authorization bill (HR-4310) because they "send precisely the wrong message to countries overseas about how to manage domestic procurement systems" and should be "rejected," says the Chamber of Commerce in a letter to Congress signed also by the Emergency Committee for American Trade, the Semiconductor Industry Association and the Semiconductor Equipment and Materials International. The Chamber is controlled by companies that "have historically outsourced their U.S. supply chain," says Jeffery Green, organizer of the Strategic Materials Advisory Council and president of J.A. Green & Co., of Washington, D.C. "To call yourself the U.S. Chamber, you have a responsibility to worry about more than just OEMs" he notes. Small American suppliers and producers deserve a voice as well, he adds.

The Strategic Materials Advisory Council says the Chamber's opposition to an amendment that requires DOD to conduct a "Jobs Impact Statement" on potential contracts sponsored by Rep. Christopher Murphy (D-Conn.) "seems to run counter to the Chamber's historical positions. For decades, the Chamber has supported American business. As Rep. Murphy highlighted in his speech on the House floor, American businesses have lost millions of jobs in recent years. The amendment allows DOD to consider the potential employment impacts when awarding contracts. It does not mandate this consideration, but instead creates the possibility of reversing a declining trend in critical industries, a trend in which important labor skills and intellectual capital have relocated to foreign countries."

The Chamber did not agree. The provisions "undermine the ability of the U.S. government to procure the highest-quality goods and services at the best value, consistent with international obligations, and U.S. government efforts to promote more open procurement overseas for U.S. industries," said the Chamber in a letter to the House asking that the amendments be eliminated from the final bill. "The provisions limit the source of raw materials to domestic producers, designate certain materials as critical to national security (such as specialty metals), require DOD to purchase U.S. made titanium, and would provide the Department of Defense authority to take a Jobs Impact Statement by potential contractors into consideration in awarding procurements."

The Materials Council says it is important for domestic producers to counter the influence of the big multinational companies. An example: General Electric CEO Jeffery Immelt is head of President Obama's Jobs and Competitiveness Council. "GE's supply chain is highly dependent on China for their lighting division and that is where the administration is looking -- at the users of the materials rather than the producers," says Green. "It's a lot easier for a big multinational to come in and say don't mess with my supply chain than it is for a new producer of the materials who says I need help in getting through the burgeoning red tape and I need the government to show confidence in me so I can go to the market and raise capital and try to bring some of this production back. It's a David and Goliath fight."

The organization's website is www.strategicmaterials.org/. Here are the initial members of the council,
- Secretary Dean Popps served at the Department of Defense from 2003 to 2010, two years as acting assistant secretary for Acquisition, Technology and Logistics and three years as director of Iraq Reconstruction and Program Management.
- VADM Barry Costellohad a long career in the Navy before retiring in 2007. He served on the Joint Chiefs of Staff; as a Senate Liaison in the Navy's Office of Legislative Affairs and Chief of Legislative Affairs.
- Maj. Gen. Robert Latiff served in the Air Force until his retirement in 2006. He is currently a professor at the University of Notre Dame and at George Mason University. He is the chairman of the National Materials and Manufacturing Board and is a member of the Air Force Studies Board at the National Academies of Sciences. His last active duty assignment was at the National Reconnaissance Office where he served as director of Advanced Systems and Technology. He has a Ph.D. and M.S. in materials sciences from the University of Notre Dame.
- Maj. Gen Jeffrey Reimer is currently COO of InDyne Inc., after a 34-year career in the Air Force where he was responsible for all acquisition activities for the F-22.
- Cornel Holder is the former administrator of the Defense Logistics Agency's Defense National Stockpile Center, whose mission is to reduce U.S. dependence on foreign sources of strategic and critical materials during national emergencies.
- Dr. Gareth Hatch is founding principal of Technology Metals Research and ispresident of Innovation Metals Corp. based outside of Chicago. He is also the founding editor of Terra Magnetic and is the editor of the IEEE's Magnetics Society newsletter.
- James Hedrick is president of Hedrick Consultants and is on the board for a number of rare earth and strategic metals companies in Australia, Canada and the United States. He retired from the U.S. Geological Survey in 2010, where he was a rare-earth commodity specialist for 32 years.
- Jack Lifton is the founding principal of Technology Metals Research. He has worked for 48 years as a marketing and manufacturing executive in the high-temperature metallurgical industry.
- Stephanie Sanok is an analyst at the Center for Strategic and International Studies and focuses on international security issues.
- Jeffery Green Esq., president of J.A. Green & Co., has over 15 years of military and congressional experience, serving on the House Armed Services Committee involved in defense trade, acquisition policy and industrial base issues. Green continues to serve in the Air Force Reserves.


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