The Yen, the Yuan and Self Interest

I appreciated Dr. Peter Morici's recent comment about the Big-3's pleading to the President:

The Yen, Yuan and the Big Three Meeting with President Bush

The President [met] with leaders of the Big Three domestic automobile companies. Auto leaders say they want don't want special treatment but rather solutions that generally help U.S. businesses.

High on the list is the undervalued Japanese yen, and it provides a perfect example of an issue where the auto industry speaks out of two sides of its mouth and behaves unrealistically.

The dollar is extremely undervalued against the Chinese yuan, Japanese yen and several other Asian currencies, and this problem affects all domestic manufacturers competing with trans-Pacific imports.

Consistently, GM, Ford and Chrysler lobby for relief on the yen but are noticeably reticent on the Chinese yuan, because they are locating factories in China and enjoy the benefits of Chinese protectionism.

The Big Three can’t have it two ways, a stronger yen and a weaker yuan. Japan can not appreciably revalue its currency, nor can other Asian governments revalue their currencies, until China stops intervening in currency markets.

Each month, China buys with yuan nearly $20 billion in U.S. dollars and hard currencies. The yuan it prints for this purpose flow into the hands of consumers in the United States and Europe, and create a 25 percent subsidy on Chinese exports. Unless and until China stops this egregious violation of free trade principles, Japan and other Asian economies undervalue their currencies too.

A resolution to the Big Three’s problems with the Japanese yen is not possible until the Big Three embrace realism and recognize the damage imposed by Chinese currency manipulation.

Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.

WIRE-Net works with NEO Mfr and Fuel Cell Experts on Major Advanced Energy Initiative

Over the next decade, primary geothermic fuel cell use will play an increasing role in Ohio'’s use of advanced energy resources. WIRE-Net, on behalf of Independent Energy Partners, (IEP), ThermaFab Alloy, Inc., and Case School of Engineering with Wright Fuel Cell Group, NextTech Materials, Ltd., Battelle, and Composite Technology Development, Inc. has requested a Third Frontier Fiscal Year 2007 grant of $337,000 as part of $505,500 project for the research and development, leading to the commercialization of a Geothermic Fuel Cell™ (GFC™). WIRE-Net became familiar with IEP's work through an introduction made by Richard Steubi, BP Fellow for Energy and Environmental Advancement at the Cleveland Foundation.

IEP, a Colorado-based company, owns the exclusive rights to a patented Geothermic Fuel Cell™ technology (GFC™), that can dramatically lower the cost of oil and natural gas recovery from unconventional hydrocarbon resources. A primary application of the GFC™ is for on-site coal gasification for the production of syn-gas and/or for coal-to-liquids. In addition to creating over a hundred new industrial jobs in Ohio, over the next five years this application will facilitate the creation of additional new jobs around a new industry: in-ground coal gasification.

While a number of geothermic technologies have been used to produce oil from unconventional resources, many of them successful in confirming the scientific basis of geothermics, the economics have not supported a viable, long-term business model. The greatest barrier to commercial success facing these proven geothermic techniques is the cost of energy required to heat the ground. The GFC™ technology changes those economics.

Utilizing the research and testing capabilities of the School of Engineering and the Wright Fuel Cell Group at Case Western Reserve University, the design, engineering, and fabricating expertise in exotic alloys of ThermaFab Alloy, Inc. in Cleveland, and solid oxide fuel cells manufactured by NexTech Materials in Ohio, the collaboration will demonstrate that GFCs™ can be used as the heat source for an extraction method that will economically produce oil, natural gas, and “green electricity” from unconventional hydrocarbon resources.

This is the first phase of a project that will use solid oxide fuel cell (SOFC) technology to create a single, working GFC™ unit that will be tested under laboratory conditions in preparation for a second phase field demonstration project.

GFC™ units work by heating the ground, releasing gases, and hydrocarbon liquids that flow into neighboring collection wells. A portion of the gases are processed and returned to the fuel cell stack to fuel the reaction, with the remainder available for sale. Following an initial start-up phase of operation, the GFC™ process becomes a self-fueling system - producing oil, electricity, and surplus natural gases.

WIRE-Net's 2006-2008 strategic plan stressed building collaborations around new technologies that could help create new market opportunities for NE Ohio manufacturing companies. Ty Haines, WIRE-Net's Vice President of Manufacturing Services is serving as the Project Manager for this Third Frontier Grant.

This technology can position Ohio as a leader in advanced energy. The Ohio Department of Natural Resources cites that Ohio has approximately 11.5 billion tons of bituminous coal. Successful application of GFC™ units can improve the economics of coal extraction by generating saleable gas, hydrocarbon liquids, and electricity without the environmental impact of mining, and without the sulfur and other green house gas emissions from coal burning. Moreover, Ohio can create a whole new industry around GFC™ manufacturing, coal gasification plant design, building, processing, and global export.

WIRE-Net EXECUTIVE RECEIVES NATIONAL FELLOWSHIP

WIRE-Net's Rebecca Kusner, Vice President of Workforce Development, has been selected to join the 2006 class of Marano Fellows at the Sector Skills Academy. This group of Fellows is comprised of twenty-four leaders in the workforce development field who represent educational, community, and faith-based organizations, workforce investment boards, and economic development organizations located throughout the country, and in diverse industry sectors such as healthcare, hospitality, biotechnology, automotive, manufacturing, transportation, construction, and information technology.

The Sector Skills Academy was founded in 2005 as joint project of the Aspen Institute’s Workforce Strategies Initiative, Public/Private Ventures, and the National Network of Sector Partners (NNSP), to provide emerging leaders with a unique opportunity for peer learning, skills development, and professional growth. Marano Fellows are named in honor of Cindy Marano, a leader in the field of sectoral workforce development and head of NNSP until her death in April 2005.

In addition to skills development, during a 12-month period Academy Fellows participate in a series of three 3-day workshops designed to promote peer-to-peer learning and establish new relationships with prominent Sector Skills Academy faculty and mentors who are recognized leaders in the field of sectoral employment development. Participants are expected to apply the lessons of the Academy in order to substantially enhance their work in their chosen sector.

A proponent of sector-based strategies, Ms. Kusner joined WIRE-Net in 2005 to lead the organization’'s new workforce development initiative. WIRE-Net Works includes School-to-Career, WorkSource, and Employment Plus -- programs and services that offer manufacturing company employers performance-based solutions that will meet current and future workforce needs.

WIRE-Net's 2006-2008 Strategic Plan outlines stresses out need to create relationships with key public sector workforce development leaders. Since 1989, WIRE-Net has been a recognized leader in developing effective workforce strategies for manufacturing. During that time over 350 NE Ohio companies have relied on WIRE-Net for programs and services that address their human resource needs. Our success has been due to our designing programs that adjust to current trends while not lowering standards to be competitive. WIRE-Net has begun to implement a sector-based workforce strategy in the new WIRE-Net Works initiative. We're pleased that Rebecca can bring her learning to this new program.

Major support for WIRE-Net’s workforce programs is provided by The Abington Foundation, The Alcoa Foundation, Annie E. Casey Foundation, Charles Stewart Mott Foundation, The City of Cleveland, Deaconess Community Foundation, East Ohio Conference of the United Methodist Church, Eaton Corporation, Enterprise, Eva L. and Joseph M. Bruening Foundation, Fred A. Lennon Charitable Trust, The George Gund Foundation, George W. Codrington Charitable Foundation, The Hitachi Foundation, PMA Educational Fund, RPM Corporation, The Thomas H. White Foundation, and The U. S. Department of Labor. The Charles Stewart Mott Foundation provides major support for the Sector Skills Academy. To learn more about the new fellows and the Academy, please visit: www.sectorskillsacademy.org

Mayor Frank Jackson, Councilman Jay Westbrook, Cudell Improvement Inc, and WIRE-Net Celebrate Demolition of "The Trinity Building"

Last month marked the "creative destruction" of a major Cleveland eyesore, as Cleveland Mayor Frank Jackson, Cleveland City Councilman Jay Westbrook (Ward 18), and community, business, and resident stakeholders gathered to kick-off the demolition of the 170,000 sq. ft. former Trinity Building on Cleveland’'s west side.

The Detroit Avenue property was best known as the home to the Monarch Aluminum Company in the 1950’s. Cudell Improvement, Inc. and WIRE-Net applauded the city’'s leadership in acquiring the property through tax foreclosure and for making this site the pilot project for the City's new Industrial-Commercial Land Bank Program. A $2.5M investment by the City in demolition and environmental clean up will convert the property into a new 5½ acre for light industrial uses.

In addition to Mayor Frank Jackson and Councilman Westbrook, family members of the former owners of Monarch, as well as, John Magill, Ohio Department of Development, Tracey Nichols, Cuyahoga County Department of Development, John Colm, WIRE-Net President & Executive Director, and Anita Brindza, Executive Director, Cudell Improvement, Inc participated in the event.

WIRE-Net's 2006-2008 Strategic Plan speaks to the need to redevelop manufacturing company properties in the urban core to ensure the city has a healthy tax and employment base and manufacturing firms have room to expand. The Trinity property affords an opportunity for one or more companies to have a modern space in an area supported by new infrastructure. WIRE-Net has welcomed the opportunity to be a part of that process.

OHIO’S “SILICON VALLEY OF ALTERNATIVE ENERGY”

GETTING REAL

Over fifty people from 36 NE Ohio business organizations drilled into the business of Advanced Energy today (November 8, 2006), putting rubber on the road that leads to Ohio’s “Silicon Valley of Alternative Energy”, as our new Senator-elect, Sherrod Brown, puts it. They didn’t come to dissect policy or discuss legislation, but to identify opportunities to put NE Ohio’s manufacturing expertise to work in emerging advanced or alternative energy markets.

The event was cosponsored by WIRE-Net, the NE Ohio Campaign for American Manufacturing, the Cleveland Foundation, and Charter One Bank. Back in 2003, Ohio was in the thick of a vicious economic restructuring and had lost several hundred-thousand manufacturing jobs and over 1000 manufacturing firms. WIRE-Net’s Board stepped up and help create a public debate about the dire situation facing NE Ohio communities that depend heavily on manufacturing for jobs, taxes, innovation and economic health. That effort resulted in the formation of the NE Ohio Campaign for American Manufacturing or NEOCAM, which now includes a dozen organizations from across our region that speak for nearly 1000 manufacturing firms and their 60,000 employees. NEOCAM includes WIRE-Net, the major metalworking and metal finishing associations, the United Steelworkers of America-District 1, and others.

NEOCAM has pushed for legislative solutions to manufacturing challenges and has held several town hall forums that have looked at the impact of our inadequate trade policies on NE Ohio; we’ve held public forums with our candidates for Governor, including Governor-elect Ted Strickland; and candidates for Cleveland mayor, including Mayor Frank Jackson.

Today’s event was the second in our “Perspectives on American Manufacturing” series. This series kicked off in late September with a forum on Trade and US Manufacturing at the Union Club, where over 150 business leaders heard Dan DiMicco, CEO of Nucor Steel, deconstruct the myth of free trade.

Today we didn’t gather to debate policy, but instead to create practical awareness of opportunities in several emerging energy fields. The question was could we create meaningful links between NE Ohio companies, and new business opportunities in various segments of the energy field. Richard Steubi, of the Cleveland Foundation, an entrepreneur by nature, was willing to work closely with us to bring experts together with leaders from a variety of companies to bring new business to Cleveland.

So joining us today were leaders from many segments of NE Ohio’s business community, including lenders, law, economic development, investors, and, most importantly entrepreneurs and leaders of Ohio manufacturing firms of all sizes in

• precision metal forming,
  
• electronics,
  
• hydraulics,
  
• metalworking and machining,
  
• plastics and polymers,
  
• metal castings and others.

We can look backward and see great Ohio innovators in the energy field, like Charles Brush, who built perhaps the first functioning electricity generating windmill at his Euclid Avenue property in 1890 (check out the picture above from the December 1890 issue of Scientific American...taken at Brush's Euclid Avenue mansion. He used the windmill to recharge his batteries.) … but I’d rather look ahead to the great ideas and businesses that we can help generate out of the meeting held today. We’ve only started this “New Markets Initiative”, but we believe there is great potential, as expressed from the animated business-to-business discussions that Richard Steubi and his colleagues kick-started. And we already know companies that are doing great business building wind turbine gearboxes, and dryers for the PEM fuel cell industry. There is reason for optimism.

We also believe that this down to earth, face to face and “shoe leather” approach to economic development is what is needed to make the dream of a new kind of Ohio “silicon valley” a reality. We’re looking forward to working with our new Ohio leaders to make it real.