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Nickel soap opera
editorial
How was it for you?
Richard Felton EDITOR
I
t has to be said that the Metal Powder Industries Federation (MPIF) put in the effort in the past year to change the face and duration of their PowderMet2006 annual conference and exhibition, and they're reaping the rewards in terms of customer appreciation. This year's event was well received by delegates and exhibitors, the latter particularly liking the increased traffic in the exhibition hall generated by the scheduling of "non-compete" time where there were no conference presentations. And if the number of exhibitors was slightly down of what might otherwise have been expected, it's hardly a surprise given the imminence of the PM World Congress to be held in Korea in September. MPIF president Edul Daver and executive director Jim Trombino reviewed the business in North America in a by-now traditional double-handed presentation on "the state of the nation". The picture they pained was not altogether pretty. Set against the continuing inability of America's Big Three auto makers to make headway against the "perfect storm" conditions of wildly fluctuating
raw material prices, high energy costs, poor labour relations bundled with high labour legacy costs, and deft and agile competition from foreign, notably Asian, auto producers, PM North America is in something of a fix. As one delegate wryly put it, watching GM or Ford struggling to match the likes of Honda or Toyota is "like watching an elephant learning to dance". Falling market share for the Big Three translates directly into thousands fewer vehicles built, thousands fewer transmission systems - big users of PM products thousands fewer sets of con rods and therefore collectively many thousands fewer PM parts sold. Trouble on this scale, of course, does not limit itself to the companies at the top of the production chain. The Tier One suppliers who make many of the assemblies that go into US vehicles are also in the mire. The US operations of big names in PM like Delphi and Dana Corporation have already slipped into Chapter 11, even though their overseas subsidiaries are immensely profitable. And although the fate of Delphi has faded from the headlines as the wrangling over future pay levels and company profitability has moved to back rooms and appearances in the US Bankruptcy Court, the bald fact is that Delphi made a 2006 First Half loss of a quite staggering $2.6 billion. These grim business realities, of course, kick back directly through the PM production chain to powder manufacturers who have seen a fall in powder shipments in North America. More widely, reduced production and profitability for PM manufacturers of all sorts mean that there is less money available for reinvestment in terms of new machinery, so
Nickel soap opera The Inco saga of bid and counter bid over the attempt to take over Falconbridge has provided comfort in recent weeks for those who suffer insomnia. Now that's over, with the big money of the institutions and hedge funds plumping for a rival hostile bid from Europeanbased Xstrata. Another hostile bid for Inco itself by Vancouver-based Teck
metal-powder.net
Cominco has collapsed for want of capital. With much of the steam and consequent upward pressure on share price evaporated as a result, Inco's growth-byacquisition strategy looks to be in some disarray. Now it is left with a possibly viable friendly merger with US-based Phelps Dodge or a takeover by Brazilian interests. Ho, hum.
no part of the supply chain escapes the malign influence of current conditions. However, said the MPIF Big Two, not all was doom and gloom. After a couple of years of seeming indecision over the big question of "What to do about China", major US players have taken up the challenge, setting up operations and joint ventures in the burgeoning Chinese market that already has around 700 domestic PM companies with more swelling that number every year. GKN Sinter and Black & Decker are but two of the American PM manufacturers enjoying competitive success as a result of taking their expertise to a market that is crying out for it. Staying with the theme of things Asian, a feature of PowderMet2006 was a talk on China, its aims and ambitions by Tom Faranda, said to be an expert on the topic. Despite the deployment of quite spell-binding oratorical skills of a style instantly recognisable by church congregations in America's Bible Belt, the central assertion that China's ambitions are to become a world leader in economic, industrial and, possibly, military terms came as no great surprise to anyone in the audience. A discourse on China's historical relationship with Japan did little to illuminate possible futures for a PM-oriented gathering either. For this observer, the talk was strong on presentation and unattributed assertion, but woefully short on hard fact. The American PM community and China, however, did come together in a different sense a little while after the conference with news of a 64-count indictment against three people implicated in the plot to steal Metaldyne's powder forging trade secrets and other alleged offences relating to GKN (Metal Powder Report, March 2005). An indictment, of course, is not a finding of guilt. But there is little doubt that the proceedings will be of intense interest to the PM community world wide when they eventually come to court.
July/August 2006 MPR
3
How was it for you?
Richard Felton EDITOR
I
t has to be said that the Metal Powder Industries Federation (MPIF) put in the effort in the past year to change the face and duration of their PowderMet2006 annual conference and exhibition, and they're reaping the rewards in terms of customer appreciation. This year's event was well received by delegates and exhibitors, the latter particularly liking the increased traffic in the exhibition hall generated by the scheduling of "non-compete" time where there were no conference presentations. And if the number of exhibitors was slightly down of what might otherwise have been expected, it's hardly a surprise given the imminence of the PM World Congress to be held in Korea in September. MPIF president Edul Daver and executive director Jim Trombino reviewed the business in North America in a by-now traditional double-handed presentation on "the state of the nation". The picture they pained was not altogether pretty. Set against the continuing inability of America's Big Three auto makers to make headway against the "perfect storm" conditions of wildly fluctuating
raw material prices, high energy costs, poor labour relations bundled with high labour legacy costs, and deft and agile competition from foreign, notably Asian, auto producers, PM North America is in something of a fix. As one delegate wryly put it, watching GM or Ford struggling to match the likes of Honda or Toyota is "like watching an elephant learning to dance". Falling market share for the Big Three translates directly into thousands fewer vehicles built, thousands fewer transmission systems - big users of PM products thousands fewer sets of con rods and therefore collectively many thousands fewer PM parts sold. Trouble on this scale, of course, does not limit itself to the companies at the top of the production chain. The Tier One suppliers who make many of the assemblies that go into US vehicles are also in the mire. The US operations of big names in PM like Delphi and Dana Corporation have already slipped into Chapter 11, even though their overseas subsidiaries are immensely profitable. And although the fate of Delphi has faded from the headlines as the wrangling over future pay levels and company profitability has moved to back rooms and appearances in the US Bankruptcy Court, the bald fact is that Delphi made a 2006 First Half loss of a quite staggering $2.6 billion. These grim business realities, of course, kick back directly through the PM production chain to powder manufacturers who have seen a fall in powder shipments in North America. More widely, reduced production and profitability for PM manufacturers of all sorts mean that there is less money available for reinvestment in terms of new machinery, so
Nickel soap opera The Inco saga of bid and counter bid over the attempt to take over Falconbridge has provided comfort in recent weeks for those who suffer insomnia. Now that's over, with the big money of the institutions and hedge funds plumping for a rival hostile bid from Europeanbased Xstrata. Another hostile bid for Inco itself by Vancouver-based Teck
metal-powder.net
Cominco has collapsed for want of capital. With much of the steam and consequent upward pressure on share price evaporated as a result, Inco's growth-byacquisition strategy looks to be in some disarray. Now it is left with a possibly viable friendly merger with US-based Phelps Dodge or a takeover by Brazilian interests. Ho, hum.
no part of the supply chain escapes the malign influence of current conditions. However, said the MPIF Big Two, not all was doom and gloom. After a couple of years of seeming indecision over the big question of "What to do about China", major US players have taken up the challenge, setting up operations and joint ventures in the burgeoning Chinese market that already has around 700 domestic PM companies with more swelling that number every year. GKN Sinter and Black & Decker are but two of the American PM manufacturers enjoying competitive success as a result of taking their expertise to a market that is crying out for it. Staying with the theme of things Asian, a feature of PowderMet2006 was a talk on China, its aims and ambitions by Tom Faranda, said to be an expert on the topic. Despite the deployment of quite spell-binding oratorical skills of a style instantly recognisable by church congregations in America's Bible Belt, the central assertion that China's ambitions are to become a world leader in economic, industrial and, possibly, military terms came as no great surprise to anyone in the audience. A discourse on China's historical relationship with Japan did little to illuminate possible futures for a PM-oriented gathering either. For this observer, the talk was strong on presentation and unattributed assertion, but woefully short on hard fact. The American PM community and China, however, did come together in a different sense a little while after the conference with news of a 64-count indictment against three people implicated in the plot to steal Metaldyne's powder forging trade secrets and other alleged offences relating to GKN (Metal Powder Report, March 2005). An indictment, of course, is not a finding of guilt. But there is little doubt that the proceedings will be of intense interest to the PM community world wide when they eventually come to court.
July/August 2006 MPR
3