President signs bill to extend COBRA subsidy benefits
The 2010 defense appropriations bill (H.R. 3326), signed by the President on December 21, 2009, includes an extension of the eligibility period for premium assistance under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The current premium subsidy eligibility period was scheduled to end on December 31, 2009. It is now extended to February 28, 2010. The nine months of premium reduction has now been increased to 15 months under the extension.
Workers who are involuntarily terminated from their jobs (assistance-eligible individuals) and are eligible for COBRA health insurance coverage, are responsible for 35 percent of the premium versus the total premium as was originally the case.
This premium assistance was originally part of the federal stimulus package, the American Recovery and Reinvestment Act (ARRA), enacted last February.
HR Professionals, there are some other significant changes, read the summary comments here.

We wrote a piece in Production Machining August 2009 about the “New Domestics.” You can read it here.
Researching for that piece, and for a presentation to the PMPA’s Automotive Market Supplier Group, I visited Hyundai ‘s North American plant in Alabama. 

Good enough in Logistics to be the USAF benchmark.

I was impressed with what I saw and learned, stuff that they don’t make a big fuss about, but that tells you they are playing their “A Game. ” Not just cool engineering stuff, but stuff like, the fact that  THE US AIR FORCE IS BENCHMARKING TO HYUNDAI ALABAMA ASSEMBLY OPERATIONS FOR LOGISTICS.
Stuff like that.
Well, my comments weren’t exactly resoundingly welcomed by many in my audience, who, understandably, had plenty of pain due to their business exposure to the “old domestics…” But while staying up on automotive trends (you never know when the phone will ring with a great question) we found this story  in the Detroit News.
Hyundai Sales Rise During 2009 Auto Sales Crisis.
Hyundai Motors Co. can claim something no other major carmaker can: It sold more cars in 2009 than it did in 2008.
While automotive sales industrywide have fallen by 23.9 percent in the U.S. and carmakers struggle to survive, Hyundai has thrived.
“In 2009, we learned to never let a crisis go to waste,” said John Krafcik, Hyundai U.S. president.
You can read more at the link above.
The details in this story are worth a review. What is your shop’s plan to get “New Domestic” business?  That is where the sales growth is.  Are New Domestics in your long term plans?
We were impressed by what we saw during our tour of Hyundai. And we know first hand how much domestic steel goes into those New Domestic Honda’s that they are made down in Marysville, Ohio- we used to sign the certifications and test reports for their steel when we were still in the steel industry. There is a real market for high quality materials and components among the NewDomestics.
The New Domestics are building cars, selling cars, and making news. How about you?

The commissioners found the US domestic industry had been injured, with all six commissioners voting that injury had occurred as a result of the flood of imports of chinese subsidized steel tubes.
The US International Trade Commission (ITC)  announced today its final determination in favor of the domestic steel industry over the Chinese industry in the $2.7 billion countervailing (anti-subsidy) investigation on Chinese Oil Country Tubular Goods. The commissioners found the US domestic industry had been injured, with all six commissioners voting that injury had occurred as a result of the flood of imports of chinese subsidized steel tubes. (6-0)
As a result of this finding, the combined anti-dumping and anti-subsidy tariffs on OCTG (oil pipe) now will range from 10-99%, meaning these tariffs will be prohibitive to the high-cost Chinese steel pipe makers. The tariffs in this case are determined in order to offset damage caused by illegal subsidies and dumping.
This was, to our knowledge the largest steel related case handled by the ITC, and the unanimous decision will certainly add to the strains between mercantilist China and the United States.
More  Chinese Steel trade cases are, pardon the pun, “in the pipeline.”
Dow Jones Newswire Report.

The World Trade Organization has agreed to investigate whether China’s export duties on nine commodities that are used as raw materials for various basic industries ( including aluminum and steel) provide a trade-distorting competitive advantage to Chinese producers.
Resource hoarding protects high cost low efficiency producers.
The investigation was prompted by complaints from the US, the EU, and Mexico that Chinese export restrictions were discriminatory and violated WTO rules. The Chinese government defended the tariffs saying they are intended to inhibit overproduction and emissions as well as conserve scarce natural resources.
Read Steel Industry Analyst  Michelle  Applebaum’s  update on this hoarding dispute here.
Our original post  from November 4, 2009, explaining this dispute can be found here.


The weldability of steels is influenced primarily by the carbon content. At higher carbon levels, steels may need either pre- or post- weld heat treatment in order to prevent stress build up and weld cracking.
Generally speaking, if the Carbon Equivalent (CE) is 0.35 or below, no pre- or post- weld  thermal treatment  is needed. In our experience with maintenance welding, we have found that preheating was beneficial between 0.35 and 0.55 CE. Above 0.55 CE we usually both pre- and post- weld heated to relieve stress and prevent cracking.
So CE= .35 max.
However the other elements that are contained in the steel also have an effect on the steel’s “carbon equivalence.” These additional elements can really add up in scrap fed electric arc  furnace steels that now predominate in our market.

Electric Arc Furnaces are predominately scrap fed.

Photo credit.
Here are two formulas for calculating Carbon Equivalents.
CE=%C+(%Mn/6)+(%Cr+%Mo+%Va)/5 + (%Si+%Ni+%Cu)/15
This is the first formula I learned when I took over metallurgical support for  maintenance ‘back in the day.’
In this formula you can see that 6 points of Manganese are approximately equal to one point of Carbon.  5 points of Chrome, Moly or Vanadium are roughly equal to a point of Carbon, while it takes about 15 points of Silicon, Nickel or Copper to get about the same effect as one point of Carbon.
The GE formula for Carbon Equivalency is CE= C+(Mn/6)+(Ni/20)+(Cr/10)+(Cu/40)+(Mo/50)+(Va/10). If this is less than .35 max, you should have no need to pre or post weld thermal treat in most cases.
As long as CE is no more than .35, you probably won’t need to preheat or post weld stress relieve your welded parts. above .35 CE, you may need either or both depending on section thickness and CE.
* (I) added (extra parentheses) to keep (the terms) clear in (this post); no (scathing rebukes) from (math teachers) please!

A Precision Machining Holiday Gift Suggestion: We’re certain that these  will be appreciated and appropriate regardless of the holiday that you celebrate. 

  1.  To your suppliers, an order.
  2. To your banker, forgiveness.
  3. To your QA people, respect.
  4. To your customers, Zero Defects and 100% on time.
  5. From your customers, payment according to terms. 
  6. To the people who call you up, delightful answers.
  7. To your local regulators, a passing nod.
  8.  To your congressmen and senators, one hell of a good explanation about what the heck it is that we do in manufacturing.
  9. To your employees, a sincere word of appreciation for all they have been through with you.
  10. To your supervisors, a good example.
  11. To your family, friends, and the people you love, your full attention when you are not at the shop.
  12. To your employer, good will.
  13. To your interns and apprentices, patience.
  14. To yourself, respect and satisfaction with having done your best.

And to the bureaucratic regulators in Washington, a good swift kick in the pants while wearing your work shoes comes to mind…

Season's greetings as appropriate.

Best wishes for the coming year from PMPASpeakingofprecision.

Six exceptions to employer prohibitions on acquiring genetic information are

  • Inadvertent acquisitions of genetic information do not violate GINA, such as in situations where a manager or supervisor overhears someone talking about a family member’s illness.
  • Voluntary disclosure: Genetic information (such as family medical history) may be obtained as part of health or genetic services, including wellness programs, offered by the employer on a voluntary basis, if certain specific requirements are met.
  • Genetic information may be acquired as part of the certification process for FMLA leave (or leave under similar state or local laws), where an employee is asking for leave to care for a family member with a serious health condition.
  • Publically available: Acquisition through commercially and publicly available documents like newspapers is permitted, as long as the employer is not searching those sources with the intent of finding genetic information.
  • Where required by law: Acquisition through a genetic monitoring program that monitors the biological effects of toxic substances in the workplace is permitted where the monitoring is required by law or, under carefully defined conditions, where the program is voluntary.
  • Forensics Baseline in Law Enforcement Laboratories: Acquisition of genetic information of employees by employers who engage in DNA testing for law enforcement purposes as a forensic lab or for purposes of human remains identification is permitted, but the genetic information may only be used for analysis of DNA markers for quality control to detect sample contamination.

Get this and other info on Genetic Discrimination  here.
Free Posters
Don’t get extorted into purchasing expensive new posters by those sermonizing emails from high priced poster companies. You can download the latest  GINA compliant posters  directly from the EEOC  in English, Spanish, Arabic, and Chinese.

Guest post by Peter Morici, professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.
Executive summary: “More jobs will be lost. Inferior patient care. We will all be losers.”
Senate Democrats have managed a compromise on a health care bill that is a fraud on the American public, which is increasingly leery about a government run health care option.
 Instead of a government health service to provide coverage to individuals not covered by company plans, the Senate Bill authorizes the federal Office of Personal Management to contract with a nonprofit insurer to provide an alternative to private health care plans.
 The post office is such a nonprofit-it walks, talks and doles out mediocre service just like the motor vehicle and Veterans Administration.

The service we deserve?

 This public-private plan would have a disproportionate share of participants with expensive preexisting conditions and chronic problems.
Although it would have slightly lower administrative costs than Aetna or Humana, this adverse selection of clients would compel it to provide inferior service and curtailed benefits, unless the federal government empowered this nonprofit to force doctors, hospitals, pharmaceutical and medical device companies to accept significantly lower reimbursements than they do from most private insurers.
Inferior patient care is the more likely outcome.
Just as with the House Bill, private companies will find it cheaper to drop coverage and pay a tax, and push their employees into this public-private option.
Ordinary Americans are correct to fear that they will lose their private insurance. Once a few or one large competitor in an industry opts to drop their private insurance in favor of paying a tax and pushing employees into the public-private option, other firms must follow or face competitive cost disadvantages.
 By adding another 31 million people to the health insurance roles, the Senate and House bills will add another one to two thousand dollars to the cost of a private family health care plan.
Americans fortunate enough to hold onto to their private plans may not be taxed directly but they will face a combination of higher co-pays, bigger payroll deductions for health care, and lower wages to permit employers to absorb higher cost costs.
 Health care will be more expensive and good health care less accessible for many tax-paying middle class workers.
 The Senate and House Bills “bend the curve,” but in the wrong direction. By increasing entitlements without truly taking on the special interests-tort lawyers, pharmaceutical companies and insurance companies-these bills would raise the cost of health care.
 Americans already pay at least 50 percent more for health care than the French and Germans and perhaps double what the British pay. By pushing health care from 18 percent of GDP to 20 percent, these alleged reforms will make the typical middle class family poorer and the U.S. economy less competitive.
 More jobs will be lost.
 That simply is not health care reform Americans should accept and the polls indicate they don’t.
 Sadly, Senate and House Democrats believe they know better than most Americans what is good for them. These elitists don’t know much about effectively managing health care or the economy, and we will all be losers for that.
 Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.
Peter Morici
Robert H. Smith School of Business
University of Maryland
College Park, MD 20742-1815
Photo courtesy of

On the cusp of beating last year...

This is a graph of the 4 week moving average of total rail traffic from ASI Transmatch. The data is through December 5, 2009, or 48 W 2009.
The  4 week moving average for 2009 appears to be ready to cross the 2008 total shipments.
Rail shipments are an excellent proxy for economic activity in the broader economy,  as they reflect the  real demand for the raw materials and finished products for a broad spectrum of commodities and merchandise. Both the slope of the 2009 moving average and the imminent approach to 2008 are positive signs of improvement, in our opinion.
Rail Traffic Data  is Warren Buffett’s “Desert Island Indicator“- the one indicator that he would choose if he were on a desert island and had only one indicator to use.
The use of rail data as a proxy for the health of the economy was also an important plot element in Ayn Rand’s influential novel Atlas Shrugged.  (If you don’t have time to read the 1088 pages /1.3 pounds of this book, then read the review here -just scroll down to the first review towards the bottom of the page. Or you can wait til the movie starring Charlise Theron is released in 2011.)
You can sign up for the rail shipment data here, in the Yellow box.
Thanks to John Griner of PMPA member company Griner Engineering  whose conversation inspired this post.

The China Post  carried a story last week headlined “China slaps anti-dumping penalties on steel imports from U.S., Russia.”

Man Bites Dog- China Files WTO Complaint.

The story: “China said Thursday it will impose penalties on steel imported from the United States and Russia, claiming the countries were allowing it to be sold at a cut price.”
“The  (Chinese) domestic grain-oriented electrical steel industry suffered material damages” due to the dumping, the statement said following an investigation. Dumping occurs when a foreign company sells a product in another market at less than normal value. ”
The analysis: Normally I would make some witty comment here,  but my favorite steel analyst, Michelle Applebaum of Michelle Applebaum Research Inc. (MARI)  beat me to it in an email dispatched Thursday December 10th. Here’s what she had to say:
“Last night Beijing announced that there’d been a preliminary decision affirming dumping and subsidies from American steel exports.
“While the tonnage involved in this trade suit – 75,000t, or less than a tenth of a percentage point of the Chinese market – is truly trivial, this decision is anything-but. (emphasis Miles’)
“In our view, this trade case reflects an effort by Beijing to stem a surging tide of Western complaints about China’s high cost and subsidized steel industry’s exports, which have been sizable at times over the last half-dozen years in virtually every region of the globe.
“The West has taken a 3-pronged approach in dealing with this problem, and the effort is fairly unified. First, the US and Europe have filed official complaints with the WTO regarding WTO-illegal subsidies to steelmakers via controls on the export of steelmaking raw materials. Second, 8 global steel trade associations combined to issue an “advisory” last spring regarding the need for Chinese steel restructuring/rationalization and suggested a path to effect that. Finally most Western countries have placed some type of limits on Chinese steel imports, via their own individual WTO-compliant remedies.
Headline News!

“This seemingly trivial man-bites-dog decision is a reflection of the pressure that Beijing is feeling from the unified West.   While China is clearly fighting Western pressure on exports, at the same time we see Beijing for the 10th time in as many years come out with yet another attempt at cutting production at the so-called “backwards and polluting” steel players in the provinces.
“The social issues Beijing faces are acute; while many view China as a dictatorship, we see the “democracy by civil unrest” aspect to the culture loud and clear in the mob-led reactions to Beijing’s attempts at rationalizing their high-cost steel industry.” end Michelle Applebaum quote.
From where we sit: This “Man Bites Dog” trade  filing by the Chinese is as much a result  of their impotence to restructure their high cost high polluting steel industry as it is about a “truly trivial tenth of a percent of market”  grain oriented electrical steel issue.
Canadian Aspects: