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Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum TURI Metal Finishing Forum May 20, 2004 May 20, 2004 Christian Richter Christian Richter The Policy Group The Policy Group

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Page 1: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Trends, Problems& Metal Finishing Outlook

TURI Metal Finishing ForumTURI Metal Finishing Forum

May 20, 2004May 20, 2004

Christian RichterChristian Richter

The Policy GroupThe Policy Group

Page 2: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Snapshot: Surface Finishing in 2004

Globalization Pressures & ChallengesGlobalization Pressures & Challenges

Asia

Pressureson

Prices

U.S.

Pressures on

Processes

Europe

Pressureson

Products

Global Sourcing Coating Options New Market Demands

Page 3: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Snapshot: Manufacturing Job Losses Since 2000

Of the 2.8 million total, over 50 % of job losses in five industries:Of the 2.8 million total, over 50 % of job losses in five industries:

Computer & electronicsComputer & electronics Transportation equipmentTransportation equipment MachineryMachinery Fabricated metalsFabricated metals ApparelApparel

17 of 21 industries constituting U.S. manufacturing sector have sustained 17 of 21 industries constituting U.S. manufacturing sector have sustained losses exceeding 10 percentlosses exceeding 10 percent

Surface Finishing Market Research Board – loss of 40K – 70K jobsSurface Finishing Market Research Board – loss of 40K – 70K jobs

This time really This time really isis different – Cyclical vs. Structural Losses different – Cyclical vs. Structural Losses Over 70 percent structural losses Over 70 percent structural losses

Page 4: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

U.S. Import Trends from China and from Other Pacific Rim Countries (% of total U.S. imports)

1990 1995 20002003

China

Asia - Excluding China0

5

10

15

20

25

30

35China

Asia - ExcludingChina

Page 5: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Output & Employment in the Manufacturing Sector: Jobs Down, but Output Constant

0

5

10

15

20

25

30

35

1950 1960 1970 1980 1990 2000 2002

ManufacturingEmployment as Shareof Total Employment

ManufacturingOutput vs. Real GDP

Page 6: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Competitiveness:Cost Position of U.S. vs. Trading Partners

Page 7: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

PrimarySuppliers

OEMs& DoD

Finishing

SurfaceCoatingOptions &Solutions

Design of Products, Practices, Protocols

Research, Procurement Policies

GlobalCompetition

US Regulatory andOverhead Demands

* EU Directives & Market Demands

Supply Chain Trends& European Pressure

Agenda for Surface Coatings: Engagement - Procurement / R&D

DriversResponses

Page 8: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Pentagon: Driver or Bellwether on Emerging Technologies & the Environment?

$ 100 million in funding for enviro research & testing programs

Focus on non-electrolytic processes Recent Pentagon meetings on metals & coatings technology

December 2003 – Joint Strike Fighter & nickel March 2004 – corrosion #1 priority / “dry coatings” at depots

Finishing Strategy: Informing Pentagon R&D Priorities, Analysis and Procurement & Maintenance

Key Industry Concerns: Eliminate potential “bias” in emerging decision making Review environmental impacts, functionality / applicability &

cost in programs

Project: Joint DoD-Finishing Industry Symposium / Workshop on Technology

Page 9: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Pentagon – Selected Technology Programs focusing on Reduced Environmental Impacts

Department of Defense Department of Defense Environmental Security Environmental Security Technology Certification Technology Certification ProgramProgram

Department of Defense Joint Department of Defense Joint Group on Pollution PreventionGroup on Pollution Prevention

Department of Defense Department of Defense Propulsion Environmental Propulsion Environmental Working GroupWorking Group

Page 10: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Key Websites: HCAT.ORG / SERDP.ORG

Or go to Or go to

www.hcat.org Click on Click on HCAT HCAT Member Member WorkspaceWorkspace Check that Check that you have the you have the proper browserproper browser Click button Click button to enter siteto enter site

Username:Username: hcatguesthcatguest

Password:Password: hcat hcat

Page 11: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Significant U.S. “Non-Regulatory”Developments for Nickel

RECENT ACTION (U.S. National Toxicology Program)RECENT ACTION (U.S. National Toxicology Program) 1010thth Report on Carcinogens – December 2002 Report on Carcinogens – December 2002 DeterminationDetermination: Nickel compounds upgraded to : Nickel compounds upgraded to

“known” human carcinogen“known” human carcinogen

Page 12: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Significant U.S. “Non-Regulatory”Developments for Nickel

PENDING ACTION (US EPA Risk Assessment)PENDING ACTION (US EPA Risk Assessment)

Major decision on soluble Ni compoundsMajor decision on soluble Ni compounds Industry study (TERA, 1999) and scientific input have Industry study (TERA, 1999) and scientific input have

role in outcomerole in outcome

KEYKEY: EPA currently engaging in additional round of : EPA currently engaging in additional round of internal review in light of NTP nickel listing (& EU internal review in light of NTP nickel listing (& EU developments)developments)

Expected publication – Imminent ?Expected publication – Imminent ?

Page 13: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Nickel Developments: Pressure on Processes & Products

New US HHS Cancer Classification and US EPA Risk AssessmentNew US HHS Cancer Classification and US EPA Risk Assessment

RegulatoryRegulatory: Triggers or accelerates new regulation: Triggers or accelerates new regulation OSHA hazard communicationOSHA hazard communication Review of OSHA permissible exposure limitsReview of OSHA permissible exposure limits Review of EPA requirements – esp. air, waterReview of EPA requirements – esp. air, water

MarketMarket: Material end uses / “de-selection” in supply chain: Material end uses / “de-selection” in supply chain AutomotiveAutomotive Aerospace / defenseAerospace / defense

Industry ActionIndustry Action: Engagement with Decision makers: Engagement with Decision makers The Regulatory “Domino Effect”The Regulatory “Domino Effect” Changing “Vicious Circle” to “Virtuous Circle” in the federal regulatory / Changing “Vicious Circle” to “Virtuous Circle” in the federal regulatory /

research agendaresearch agenda

Page 14: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Nickel & Automotive Trends

Europe: Nickel is NOT currently included in ELV Europe: Nickel is NOT currently included in ELV DirectiveDirective

BUT, potential negative decisions re EU nickel riskBUT, potential negative decisions re EU nickel risk assessment could “override” even favorable US decisions onassessment could “override” even favorable US decisions on H&E riskH&E risk

Future Scenarios for AutomotiveFuture Scenarios for Automotive

Regulatory: End-of-Life Vehicles (ELV) DirectiveRegulatory: End-of-Life Vehicles (ELV) Directive Market: Restricted Materials Management PoliciesMarket: Restricted Materials Management Policies

RMMS currently in place address mainlyRMMS currently in place address mainly reporting for substances of concernreporting for substances of concern

Industry / GR Engagement with OEMS, Tier 1/Tier 2 Industry / GR Engagement with OEMS, Tier 1/Tier 2

Page 15: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

California Nickel Developments:Drinking Water

Office of Environmental Health Hazard AssessmentOffice of Environmental Health Hazard Assessment(OEHHA) Public Health Goal (PHG) for(OEHHA) Public Health Goal (PHG) forNickel CompoundsNickel Compounds

PHG for nickel compounds lowered to 12 ppb fromPHG for nickel compounds lowered to 12 ppb from

50 ppb (2001) – initial proposal was 1 ppb50 ppb (2001) – initial proposal was 1 ppb U.S. EPA drinking water standard ~ 100 ppb U.S. EPA drinking water standard ~ 100 ppb Background sources – OEHHA reported avg. 15Background sources – OEHHA reported avg. 15

PHG is NOT a regulatory standard!PHG is NOT a regulatory standard!

Page 16: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Los Angeles Basin Nickel Developments

South Coast Air Quality Management DistrictSouth Coast Air Quality Management DistrictRule 1426 – Adopted May 2003Rule 1426 – Adopted May 2003

Emission controls considered for non-chromium Emission controls considered for non-chromium plating operations, including nickelplating operations, including nickel AQMD used Negotiated Rulemaking process to AQMD used Negotiated Rulemaking process to identify regulatory options and develop rule identify regulatory options and develop rule Rule is essentially a 2-year mandatory data Rule is essentially a 2-year mandatory data collection effort (purchase records, NO source collection effort (purchase records, NO source testing):testing):

Non-chrome electroplating operationsNon-chrome electroplating operations NotNot applicableapplicable to electroless nickel operations to electroless nickel operations

Page 17: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

OSHA Chrome Worker Exposure Limit

ImpactsImpacts

Hard & Deco Chrome & AnodizingHard & Deco Chrome & Anodizing

Rulemaking MilestonesRulemaking Milestones

Small Business Impact Review – CompletedSmall Business Impact Review – Completed Notice & Comment – Fall 2004Notice & Comment – Fall 2004 Hearings – Winter 2005Hearings – Winter 2005

Significant IssuesSignificant Issues

Economic Feasibility – Latest OSHA estimate = $5,000Economic Feasibility – Latest OSHA estimate = $5,000 Technical Feasibility – Challenge of reaching low levelsTechnical Feasibility – Challenge of reaching low levels

Page 18: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

PELPEL 1010 55 11 0.50.5 0.250.25

Action Action LevelLevel 55 2.52.5 0.50.5 0.250.25

Current PEL: 100 ug/m3 Chromic Acid 52 ug/m3 CrVI (ceiling concentration)

Revised PEL:

Page 19: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Chrome PEL: Components of A Final Rule

•Dramatically Revised PEL

•Action Level

•Exposure Assessment

•Segregated Regulated Areas

•Methods of Compliance

•Respiratory Protection

•Protective Work Clothing

•Hygiene Facilities/Practices

•Housekeeping

•Medical Surveillance

•Hazard Communication

•Recordkeeping

Page 20: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Chrome PEL: Electroplating Industry Impact

1010 55 11 0.50.5 0.250.25

Average Average Compliance Compliance Costs % of Costs % of RevenuesRevenues

0.26%0.26% 0.29%0.29% 0.61%0.61% 0.88%0.88% 1.15%1.15%

Compliance Compliance Costs as % of Costs as % of ProfitProfit

5.34%5.34% 5.82%5.82% 12.46%12.46% 17.96%17.96% 23.46%23.46%

Page 21: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Regulation-Driven Technologies: US OSHA Replacement Options for Cr Electroplating

Substitute MaterialsSubstitute Materials Trivalent ChromiumTrivalent Chromium Nickel-Boron Plating ChemicalsNickel-Boron Plating Chemicals Cobalt-Based Plating ChemicalsCobalt-Based Plating Chemicals

Substitute ProcessesSubstitute Processes Pressure Controlled Atomization Process (Thermal Spray)Pressure Controlled Atomization Process (Thermal Spray) High Velocity Oxygen Fuel ProcessesHigh Velocity Oxygen Fuel Processes Amorphous Nanocrystalline Composite DepositionsAmorphous Nanocrystalline Composite Depositions Flexible Preceramic Coatings DepositionFlexible Preceramic Coatings Deposition Organic Sealants ApplicationOrganic Sealants Application Inductive Coupled Radio Frequency Plasma TorchInductive Coupled Radio Frequency Plasma Torch

Page 22: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Finishing’s $100,000 Regulatory Relief Package: Selected Targets Hazardous WasteHazardous Waste

F006 RuleF006 Rule

Water (Post-MP&M Rule)Water (Post-MP&M Rule) Pretreatment Streamlining RulePretreatment Streamlining Rule

Air Air ExemptionExemption from USEPA federal permitting requirements from USEPA federal permitting requirements Chrome air toxics regulationsChrome air toxics regulations

RiskRisk Revise USEPA criteria for assessing metalsRevise USEPA criteria for assessing metals Inform OEM / Pentagon research effortsInform OEM / Pentagon research efforts Inform US and European risk / regulatory efforts on nickel in productsInform US and European risk / regulatory efforts on nickel in products

OSHAOSHA Chrome worker exposure limitsChrome worker exposure limits

Page 23: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Selected Government Relations Projects / Products & Initiatives

““Future of Finishing” – $75,000Future of Finishing” – $75,000

Surface Finishing Technology Symposium – PentagonSurface Finishing Technology Symposium – Pentagon

Benchmarking Tools for Surface Finishing - $200,000Benchmarking Tools for Surface Finishing - $200,000

EMS / ISO 14000 Training Programs – $200,000EMS / ISO 14000 Training Programs – $200,000

Nickel Finishing Emissions Study – $75,000Nickel Finishing Emissions Study – $75,000

““Nickel Strategy Group” with Nickel InstituteNickel Strategy Group” with Nickel Institute

Nickel Carcinogenicity Study – NiPERA – $1.2 millionNickel Carcinogenicity Study – NiPERA – $1.2 million

Page 24: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

The Future of Surface Finishing

Multiplicity of ChallengesMultiplicity of Challenges

EconomicsMarkets

Technology

Sustainability

Regulation

Page 25: Trends, Problems & Metal Finishing Outlook TURI Metal Finishing Forum May 20, 2004 Christian Richter The Policy Group

Where the Industry’s Going…

Strategy – The Long Term…Strategy – The Long Term…

Assess trendsAssess trends Anticipate impactsAnticipate impacts Measure opportunitiesMeasure opportunities Offer solutionsOffer solutions Launch the Launch the rightright initiatives initiatives Execute effectivelyExecute effectively

Succeed in the future!Succeed in the future!