“Global Sourcing” panelists included Tom Fish, president of Anvil International; Randy Cowart, president and CEO of The Wm. Powell Co.; Dennis Niver, vice president of purchasing & alliances for Red Man Pipe & Supply; and Elod Papp, director-materials management for Fluor Corp.
A separate session took place the next day with panelists discussing “PVF Safety & Liability” from a variety of perspectives. Panelists included Robert Vick, vice president, commercial/industrial, NIBCO, Inc.; Tom Foster, sales manager/industrial div., Charlotte Pipe & Foundry; Stephen Letko, account manager, Latin/South America/Domestic projects, Weldbend; and Mike Abeling, president of the IPD and of Consumers Pipe & Supply in Los Angeles.
Supply House Times Editor Jim Olsztynski served as moderator for both programs.
Global Sourcing & The PVF ChannelThe “Global Sourcing” program focused heavily on the threat to American PVF manufacturers - and to all manufacturing industries - from Chinese imports. “There are many differences in the competition we face from China vs. those we faced in the past,” asserted Anvil's Tom Fish. “What sets them apart is that China is huge - 1.4 billion people, with very cheap labor, costing about $100 per month. They can produce goods for about 40 cents per hour as we calculate. These are difficult numbers to compete with in the U.S.”
During his introduction, moderator Jim Olsztynski pointed out that Chinese labor costs are so low they have targeted Mexico's maquiladora plants to relocate production in China. As a result, since 2000, the maquiladoras have lost some 300,000 jobs and suffered 520 factory closings from work that has drifted to China. Other Asian countries also are concerned about losing imports to China.
Referring to pitiful wages and working conditions, Powell's CEO Randy Cowart stated bluntly that “lots of stuff in China is being machined by virtual slaves.” He also accused Chinese manufacturers of avoiding import duties by shipping valves to Mexico and Canada, where companies export them as their own products under NAFTA's favorable rules. “The world knows what they are doing,” said Cowart. “It may be legal, but does it help you (wholesalers)?”
Wholesaler panelist Dennis Niver acknowledged that “our customer base is after us to reduce cost by sourcing globally.” He was asked if he still detects any “buy American” sentiment. “That pool of people keeps getting smaller,” Niver replied. “Often buyers may prefer to buy American-made goods, but their corporations are forcing them to look to other ways to cut costs.”
Representing end users, Fluor's Elod Papp said his company is under pressure like everyone else to reduce costs, but must continuously monitor quality to make sure inferior and potentially unsafe products don't slip in. “Overall, people are becoming more aware of the need for quality coming from overseas, and their quality control is increasing. If the quality level is okay (from foreign producers), we will buy it.”
Cowart chimed in that “the difference between domestic and foreign quality is that the legal standards in the United States offer a lot of protection you just don't get in many other places.”
Fish, whose company has filed two unfair trade complaints against Chinese imports with the International Trade Commission, said that Chinese malleable fittings imports were up 153% over the last five years - “and the marketplace has been relatively soft.”
“China is the issue,” he said. “We filed two suits, but have not done anything yet regarding pipe nipples, which have been growing at an even more shocking rate. China did not export in 1999, now they do about 7,600 tons. China has become the number one player in the nipple market.”
Fish told the audience that the Canadians filed a dumping case last December on Chinese steel nipples and adaptive fittings. They won the suit and imposed 150% duties on Chinese nipples. “I take that as good news for manufacturers in Canada,” said Fish. “I'm not sure it is for manufacturers in the United States. I would guess those (Chinese) products will just come south.”
“Global Sourcing” panelists and audience members spent a good portion of the session discussing liability implications of dealing with foreign producers. This was the primary subject of a second PVF panel program at the ISH NA Conference.
PVF Safety & Liability“A 'Perfect Storm' is brewing,” said NIBCO's Robert Vick. “New liabilities exist today that did not exist 30 years ago that are much more threatening to our ability to stay in business. The key things driving this are environmental movements, regulatory decisions and tort lawyer successes. It's a primary problem of big manufacturers, but once they get through with us, they will trickle down to the wholesaler and installer.”
Vick referred to what he called the “litigation ladder,” using asbestos as an example. It started with lawsuits on behalf of people directly exposed to asbestos through manufacturing and mining. Then litigation got aimed at people indirectly exposed to asbestos via insulation and other building products containing asbestos. Recent class action litigation has been ventured on behalf of people who may have been unwarily exposed to asbestos in a casual way, even though their exposure is uncertain.
Lead and mold claims are following the same pattern. “As the momentum of this type of litigation intensifies, the threat becomes more aggressive and broad-based,” Vick said.
He noted that NIBCO has made a continuous, sizable investment in manufacturing facilities and technology to abide by ever more stringent environmental regulations and aggressive tort litigation. Vick added that NIBCO has had to triple the size of its legal staff over the last 10 years.
Weldbend's Steve Letko hammered on the responsibility of manufacturers and everyone else in the supply chain to commit themselves to “total quality improvement.”
Letko pointed to a report of boiler inspectors citing 1,492 safety violations related to piping systems, representing 20% of all reported incidents. “This is not an insignificant problem. You need to research and verify quality processes to identify where the high percentage of problems occur.”
“Quality does not end with the manufacturing process,” he said. “It has to do with the way you service your customers with on-time shipments and proper documentation. We all have the human element to contend with, and mistakes happen. But quality includes the way you react to a problem and the promptness of your reaction. This limits your degree of liability.”
Letko followed up on the morning's presentation by reminding audience members to “know your vendors.”
“When contracting for offshore materials, are you checking the trustworthiness of the supplier? Do you have immediate access to the producer? Does the import company do the necessary research to shield you from legalities? A trustworthy manufacturer should welcome in-plant inspections.”
Letko concluded by citing recent headlines about an explosion on a cruise ship, a refinery fire in Oklahoma, and a pipeline explosion - all events stemming from faulty PVF products or their installation.
Charlotte Pipe's Tom Foster devoted his presentation to a review of sound safety practices pertaining to the use of industrial plastic pipe. Many problems can be alleviated or eliminating simply by using common sense handling and storage techniques. (See chart on page 28.)
Foster concluded, “The way to prevent liability claims and or safety problems is to properly design and install the system. If this is done, the system should remain trouble-free for the life of the application.”
The wholesaler member of the panel, Mike Abeling, enthralled the audience with a review of his company's involvement in a captive insurance program. Joining this group has reduced its liability exposure and limited premium increases to much lower than the 30% per year rate that has been the industry average.
Consumers Pipe & Supply's insurance program has about 250 manufacturers and distributors nationwide. A prime criterion for gaining acceptance is an exceptional loss record. Once a company belongs, the captive insurance company assists members in controlling losses with ongoing training. Elements include:
-- Forklift and lifting training.
-- Instructions on OSHA log requirements. “OSHA can walk in the door at any time. If you don't furnish the log, you can be sued,” said Abeling.
-- Product training, especially with engineered products. “If we bring in something from overseas, there has to be a company behind it,” he stressed. Abeling also said it's important for counter people to have sufficient product knowledge to understand things like pressure ratings. “Also, we're careful in what products we recommend to customers. We never specify. We only recommend.”
-- Twice a year captive insurance members are required to attend risk control educational sessions filled with best practices exchanges.
-- Seek “additional insured” clauses from vendors. “Wherever we can in distributor agreements, we make it a two-way street,” said Abeling. “Each state has different laws, but in most cases everyone down the line can be held liable.”
-- Document everything. “Keep all records together, including every phone call,” said Abeling.
“You have to operate beyond reproach with customers,” he concluded. “Tell them everything up front. If a problem happens, handle it immediately. It will not go away. It will probably get worse.”
Sidebar: Safety Tips For Plastic PipeReceiving Pipe
-- Inspect for any transportation damage prior to unloading.
-- Examine the pipe ends for any cracks, splits, or gouges.
-- Examine the pipe IDs for any internal cracks or splits.
-- Any damage should be shown to the driver and clearly noted on the bill of lading.
-- Handle with reasonable care.
-- Never push or drag from a truck bed.
-- Avoid contact with any sharp objects (rocks, angle irons, forklift forks, etc.).
-- Never lift the pipe or move the pipe by inserting forks into the pipe ends.
-- If possible, store inside. If this is not possible, store on level ground that is free from sharp objects.
-- If the pipe is in pallets, stack them “board on board” rather than pallet boards on the pipe.
-- If the pipe is stored in racks, it should be continuously supported along its length. If this is not possible, the spacing of the supports should not exceed three feet.
-- The pipe should be protected from the sun, and stored in an area with proper ventilation.
Source: Tom Foster, Charlotte Pipe & Foundry