[Spam] [Vision2020] World Economics
Phil Nisbet
pcnisbet1 at hotmail.com
Wed Feb 1 16:14:20 PST 2006
Mark
Let’s face it, the new third rail of American Politics is Green and not
grey. Try to amend any portion of any environmental law even to make the
law more workable and the fur flies. Why suggest that you do not have as
many GOP folks on the band wagon as Democrats?
Just as an example, I was with a group of South Dakota Democrats trying to
get legislation through that would allow the Black Hills Institute to
function and to stop being harassed. Their efforts were uncovering some of
the best examples in the world of T Rex and raptors and carrying out the
work in a solid scientific manner, but the fact that they funded their work
through the sale of the fossils was considered anti-environmental and had
been opposed by Sierra Club and others. Though the group was bipartisan, we
had a tough time getting more than a handful of Senators willing to sign on.
And during the week we were lobbying in DC, Federal Marshals kicked in the
doors of the Black Hills Institute and arrested 7 paleontologists and 10
geotechnicians. They also confiscated fossils that were going to be sent to
several very important Museums, property valued in the millions of dollars.
We still could not get any politico to look at the very reasonable idea that
recovery of fossils on private lands was not a breech of the law.
It took us 5 years of hard battling to finally get a bill through. And
let’s face it; Fossils are not exactly the most controversial of
environmental type laws.
When we tried to get a revision of ESA that allowed us to take actions based
on Habitat Conservation that would include more than one species, a very
reasonable plan that would have combined agency efforts and allowed funds to
be better spent, it was DOA in Congress. The older Single species approach,
even in areas where the same ESA listed critters occupied the same habitats
was supported by the DC based Green community and even though the HCA
approach was backed by some of the very best Wildlife Biologists, it went
down to smoking ruins.
Just a bit for history Mark, the Lemhi County Riparian Conservation
Agreement, signed by all of us back a decade ago, was illegal. All the
actions we took under that plan were illegal. We did it anyway and were
lucky that nobody made a fuss, but the plan saved thousands of square miles
of stream habitat that were critical to Bull trout and to Chinook.
That’s finally legal now and HCA’s are the rage, but technically Grassroots
for Multiple Use and Idaho Conservation League folks could have been doing
time together if anybody had made a push to see it happen.
The big companies live quarter to quarter. Most of them are not long term
planners. They avoid controversy like a plague. Its also pretty typical
for them to either try to Greenmail their way into getting a permit or using
the stringent permitting requirements as a means of creating a barrier to
entry for any junior rivals.
That means that communities and grassroots organizations are the only groups
on the field trying to get more logical laws passed. People at the
grassroots level on both the green and the use side of the equation are
really not that different. You know that from all the areas where ICL and
GMU did work together. If there are solutions to be found, it’s not going
to be between the Big Boys and Congress, it will be between local
environmental advocates and local people and companies. The local companies
and the local people are always going to stand for high environemtnal
standards, because, hey we have to live here and not in a penthouse in NYC.
Phil Nisbet
>From: Mark Solomon <msolomon at moscow.com>
>To: "Phil Nisbet" <pcnisbet1 at hotmail.com>, chapandmaize at hotmail.com
>CC: vision2020 at moscow.com
>Subject: Re: [Spam] [Vision2020] World Economics
>Date: Wed, 1 Feb 2006 09:09:44 -0800
>
>Phil,
>
>Why is it then that after 11 years of a Republican majority in Congress and
>5 years of a Republican president that the permitting requirements that
>are, in your opinion, forcing companies to take their operations abroad
>have not been changed? It could make one cynical enough to believe that the
>controllers of some of these corporations prefer to leave the supposed
>permitting hurdles in place so they can cry about them while shipping
>capital abroad.
>
>The post WWII steel industry is a classic example. At the end of the war,
>this country had the only intact steel industry in the world. Steel mills
>in Japan, Russia, Germany and Britain had been heavily damaged in the
>fighting. Rather than take advantage of this global domination of a vital
>industry to reinvest in new technologies and facilities and maintain their
>market position, the US industry instead ran their plants into the ground
>while sending their profits to shareholders. Surprise, surprise when this
>most basic industrial building block of the American economy "all of a
>sudden" faced the flood of "cheap imported" steel from new plants built
>with new technologies (continuous batch and rolling mills) from the
>resurgent post war economies of Japan, China, etc. I lived in Cleveland for
>a while back then. I saw mills closing right and left. All this happened
>before any of the modern suite of environmental laws and regulations were
>enacted in the early 70's.
>
>Mark Solomon
>
>At 8:48 AM -0800 2/1/06, Phil Nisbet wrote:
>>James
>>
>>I will give you the example of a plant I know. Rock Island used to produce
>>Silicon Carbide and shut its doors in 1998. We buy that material from the
>>Chinese now. The job lose from closure of the plant had a drastic effect
>>on not only the folks there in Wenatchee, but also on the people who
>>supplied raw materials to their plant.
>>
>>Why did it shut its doors? Because the plant was built in the 1940. In
>>order to meet new requirements for efficiency they needed to up grade the
>>plant and a new plant, a change in the operating conditions on their
>>existing permits, required just the kind of expenditure I was talking
>>about. They were not a new start up, just an existing business with old
>>plants that needed upgrades.
>>
>>And it was not simply Rock Island; the whole Northwest Silicon and Silicon
>>Carbide industry closed its doors. 2000 Jobs went across the great waters
>>to China. Over a billion dollars in product went from being made in the
>>USA to being controlled by the Chinese.
>>
>>Now some may argue that such industries are bad and inherently nasty and
>>as dead as the Dodo or buggy whips. The trouble with such analysis is
>>that Silicon is the basis of computer technology and our high tech
>>industries. Silicon carbide is the basis of many of the innovations in
>>materials sciences like composite armors. We were operating those plants
>>in America to supply those industries and they had not upgraded for many
>>years. All plants have to eventually modify their production lines to add
>>new technology or become obsolete.
>>
>>But changing plants requires new permits. Hence that application of the
>>rule that I have previously given you.
>>
>>We do not build new refining capacity here in the US, because the permits
>>are simply too hard to get.
>>
>>We do not expand factories in the US, because the permits are too costly
>>here.
>>
>>We do not upgrade the equipment and processes of our existing plants in
>>the US, because doing so will require new permits to operate, we let the
>>plants run until they fall apart and then close the doors.
>>
>>When the cost of getting a permit is higher than the actual costs of
>>environmental compliance, you might think that somebody somewhere would
>>figure out that we just might have a problem. As we end up with more
>>people working in offices filling out paperwork than in the field actually
>>doing environmental work, you just might want to figure that we have a
>>problem.
>>
>>Your suggestion, James, is that we seek to change the environmental
>>regulations in countries that the plants move to. I am suggesting that
>>even with their laws a duplicate of ours; they will still hold an
>>advantage that relates not to environmental standards but to the permit
>>process itself.
>>
>>I know that there are cases for some industries moving to get a benefit
>>from pay issues, but I think that as you investigate you will find that
>>those are low tech and low skill, low pay jobs. Are we that concerned
>>about the call centers shifting to India? Or should we perhaps be more
>>concerned with losing high paying blue collar jobs?
>>
>>Phil Nisbet
>>
>>>From: "James Reynolds" <chapandmaize at hotmail.com>
>>>To: pcnisbet1 at hotmail.com
>>>CC: vision2020 at moscow.com
>>>Subject: Re: [Spam] [Vision2020] World Economics
>>>Date: Wed, 01 Feb 2006 07:54:09 -0800
>>>
>>>Phil,
>>>
>>>Thank you for the interpretation it added a lot to our conversation last
>>>night. All agree with your information in terms of having an effect on a
>>>new start-up industry. It was brought up however that many of the jobs we
>>>are losing are when existing manufacturing plants shut down here. Those
>>>examples don't seem to fit your explanation since an existing entity
>>>would not have to deal with the start-up issues you describe. In our
>>>ignorance we guessed that our job losses result from plant shut-downs
>>>more than from missing the new potential development. Why then are
>>>businesses shutting down plants here to build new ones elsewhere if it is
>>>not to reap the benefits of lower wages and more slack environmental
>>>regulations/enforcements?
>>>
>>>James
>>>
>>>>From: "Phil Nisbet" <pcnisbet1 at hotmail.com>
>>>>To: chapandmaize at hotmail.com
>>>>CC: vision2020 at moscow.com
>>>>Subject: Re: [Spam] [Vision2020] World Economics
>>>>Date: Tue, 31 Jan 2006 16:20:24 -0800
>>>>
>>>>James
>>>>
>>>>Actually, the fact is that even with higher standards for environmental
>>>>protection and high wages, the productivity of American workers is so
>>>>much higher than those overseas that we can and do compete favorably.
>>>>
>>>>The reason we end up with problems in the competition relates to
>>>>regulatory delay and not the regulations themselves.
>>>>
>>>>I give you the example of Corning deciding to huild a SiC and SiBr plant
>>>>to make composite fiber for use in body armor and humvee armor. Both the
>>>>US and Canada have the exact same environmental regulations and
>>>>standards and comparable pay scales and the Canadians have a higher rate
>>>>of tax on products. So why was a plant built in Canada? Because
>>>>Corning could get their permits to build in just 6 months and to build a
>>>>plant in the US takes a permit time line of years.
>>>>
>>>>So any company who wants to meet a current demand and get to market in a
>>>>timely manner is not going to build in the USA, because you want to be
>>>>selling from a finished facility at the peak of demand and not have your
>>>>money tied up waiting to build for years. You lose opportunity costs
>>>>and you lose time cost of money costs and those are pretty major for any
>>>>business.
>>>>
>>>>Lets say that the bank charges a company 6-7% on money borrowed or
>>>>reserved for building a new plant. If the plant costs $100,000,000, you
>>>>are going to have it cost you an extra 3 millions to build in Canada and
>>>>in the USA it is going to cost you a good three years interest or 18
>>>>millions of dollars. On top of that, if you get to market first you get
>>>>bigger market share and peak pricing for the materials you are seeking
>>>>to compete in, which on a major plant you have to figure on as
>>>>preliminary sales of 30 milion a year and an ability to pay off your
>>>>plant in a three to four year stroke, while the people who come in
>>>>behind the market leader will take 8-10 years to pay down plant and
>>>>equipment.
>>>>
>>>>Look at labor costs in a plant that size as about a third of product, so
>>>>about $10,000,000 in payroll costs. You can ship the plant overseas and
>>>>save on that payroll, but what are you really saving? You have a need
>>>>for fewer and more productive workers here in the US so your labor
>>>>savings is really not that much. You might save far less than twenty
>>>>percent of your labor costs, which is only $2,000,000 a year. Put that
>>>>up against killers for sending the job overseas like transportation
>>>>costs to get the product back here to the market and it would be no
>>>>contest where you would build products. You end up spending serious
>>>>money in containers and shipping and in demurge and a host of other
>>>>problems that are costs far greater than any savings in labor.
>>>>
>>>>If you look at the environmental costs per dollar its about ten cents on
>>>>the buck here or Canada and around 7 cents on the dollar elsewhere.
>>>>Thats not a lot of savings for a plant when you have to ship product
>>>>back here.
>>>>
>>>>So why do they go elsewhere? Because as I noted, instead of paying off
>>>>100 million in plant costs they have to pay off 118 million, they miss
>>>>the market window and end up paying on that for an extra 7 years at 6-7%
>>>>interest.
>>>>
>>>>At a 7.5% interest rate the building of the Canadian plant cost 3
>>>>million in interest for the delay and then hits market window to pay out
>>>>o the 103 million for construction in three years, bringing their
>>>>interest costs on the plant to about $16,000,000. On a three year
>>>>building delay in the US, they end up paying 118 milion and take 7 years
>>>>to pay out the plant for an interest cost on the plant $52,000,000. In
>>>>both locations the environmental and labor costs are the same.
>>>>
>>>>In the third world its even more attractive, as in, you walk in they
>>>>hand you their requirements and you go out and build it, no delays. You
>>>>hit your market window on the nose every time and you do not need a huge
>>>>staff to try to get all the paperwork and hearings and lawyers and all
>>>>the rest required here.
>>>>
>>>>Want to remain cost competative with the rest of the world? Pre-Plan
>>>>and have it figured out where we want what so that industry has shorter
>>>>delays. Consolidate the permitting process so that the people who want
>>>>to get a plant in can go to one location and get all the permits going
>>>>at the same time. Keep the same environmental standards, the actual
>>>>requirements for discharges and the rest, but make it less time
>>>>consuming to report and comply.
>>>>
>>>>Because its the time cost of money that is killing US manufacturing, not
>>>>the wages paid to workers or the environmental costs of real standards.
>>>>
>>>>Phil Nisbet
>>>>>From: "James Reynolds" <chapandmaize at hotmail.com>
>>>>>To: lfalen at turbonet.com, vision2020 at moscow.com
>>>>>Subject: Re: [Spam] [Vision2020] World Economics
>>>>>Date: Tue, 31 Jan 2006 15:05:27 -0800
>>>>>
>>>>>I feel the same way as you on this Roger.
>>>>>
>>>>>The main argument used for the ultimate lowering of our standard of
>>>>>living was that we could not compete with foriegn wage rates or the
>>>>>lack of environmental regulations placed on foriegn industries. Then it
>>>>>went, either their wages and enviromental regulations have to increase
>>>>>or our's need to decrease in order for us to compete. Industry will
>>>>>naturally choose to operate in the place of least cost, leaving us
>>>>>without jobs which will then push us to lower our wage expectations and
>>>>>thus our standard of living.
>>>>>
>>>>>The scenario does make it seem very important for our trade agreements
>>>>>to have wage and enviromental specifications in them. I sure hope we
>>>>>don't end up screwed.
>>>>>
>>>>>James
>>>>>
>>>>>
>>>>>>I am not an economist and would have to do so some research to come up
>>>>>>with a good analysis. Off the cuff, I doubt the statement in the
>>>>>>paragraph. On the second point. Isolationism would be an unmitigated
>>>>>>disaster. Two hundred years ago, that was somewhat workable, but not
>>>>>>today. We have to compete in a global market.
>>>>>>
>>>>>>Roger
>>>>>
>>>>>
>>>>>> > Is it true that the current trend of opening up the USA to the
>>>>>>principle of
>>>>>>> a world market (WTO etc) is what is driving the unsettling of our
>>>>>>>economy? I
>>>>>>> was listening to a pontificating friend about how the USA cannot
>>>>>>>maintain
>>>>>>> the current standard of living unless the rest of the world is
>>>>>>>brought up to
>>>>>>> the same standards and that is not going to happen because of the
>>>>>>>scarcity
>>>>>>> of resources.
>>>>>>>
>>>>>>> Are we going to have to lower our standard of living to enter into
>>>>>>>the world
>>>>>>> economy our government is taking us into? Could we maintain our
>>>>>>>standards if
>>>>>>> we did not go along with the world economy model but instead relied
>>>>>>>on
>>>>>>> ourselves for everything again? Do we have the resources to go it
>>>>>>>alone
>>>>>>> under any model and still maintain the life we are accustomed to?
>>>>>>>
>>>>>>> James Reynolds
>>>>>
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