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Letter text:
Comments on the Presidential Memorandum regarding "Construction of Pipelines Using Domestic Steel and Iron" - Docket Number 170309252-7252-01
April 7, 2017
Dear Mr. Langdon and Mr. Halfman:
On behalf of the American Foundry Society (AFS), thank you for the opportunity to provide comments on the construction and maintenance of American pipelines which will help the Department of Commerce develop a plan for the domestic sourcing of materials for the construction, retrofitting, repair, and expansion of pipelines inside the United States as directed by the January 24, 2017 Presidential Memorandum regarding “Construction of American Pipelines.”
AFS is supportive of the administration’s recent decision to grant a permit for construction of the Keystone XL Pipeline which will allow the United States to have improved access to safe, reliable, and affordable energy supplies from Canada, and reduce our need to import crude oil from less stable countries and regions of the world. In addition to improving the nation's economic and energy security, the proposed project will provide manufacturing and construction jobs, including for the U.S. metalcasting industry.
Industry Overview: Metal Castings are Critical in the Supply Chain for American Pipelines
The U.S. metalcasting industry is the sixth-largest industry in America and the second largest supplier of castings in the world, after China. Metal castings are integral to virtually all U.S. manufacturing activities. In the U.S., castings are used to produce 90% of all manufactured durable goods and nearly all manufacturing machinery.
Our industry is made up of 1,956 facilities , down from 2,170 five years ago. This reduction can be attributed to the recession, technological advancements, foreign competition and tightening regulations. Our industry produces castings made from iron, steel and aluminum alloys, which have thousands of applications. In addition to the automotive, construction, and industrial markets, other major sectors supplied by the metalcasting industry include oil and gas, mining, power generation, as well as energy exploration and conversion.
The American metalcasting industry provides employment for over 200,000 men and women directly and supports thousands of other jobs indirectly. The industry supports a payroll of more than $9 billion and sales of more than $30.3 billion annually. Industry capacity is 15.3 million tons with the industry forecast to operate at 75% of capacity in 2017.
The metalcasting industry is composed of predominately small businesses, with 80% of domestic metalcasters having fewer than 100 employees. The industry is widely dispersed in every state in the nation, with the highest geographic concentration of facilities in Ohio, Pennsylvania, Indiana, Illinois, Michigan, California, Texas, and Wisconsin. Imported castings now comprise nearly 25% of the market, with more than 20% of these imports coming from China. The foundry industry has been damaged by the onslaught of foreign castings coming from countries with little regulation, state subsidized operations, including energy and raw materials.
AFS is the major trade and technical association for the North American metalcasting industry. The association has more than 8,000 members representing over 2,000 metalcasting firms, their suppliers and customers.
Oil and Gas Pipelines
The United States has the largest network of energy pipelines in the world, with more than 2.4 million miles of pipe. U.S. metal castings play an integral part in this network by manufacturing thousands of high quality iron, steel and nickel alloy castings used in the construction, retrofitting, repair, and expansion of pipelines inside the United States. Our industry has valuable expertise, capability and capacity to continue to provide key American made castings.
Our castings also go into the construction of pipelines, including the heavy-duty equipment used to build the pipelines, produce the gas and move it through pipelines to businesses and communities across America. A wide variety of mechanical, electrical and hydraulic power transmission components are made with American-made castings.
Here are just a few examples of the castings U.S. foundries produce:
• Pumps
• Compressors
• Couplings
• Valves and Seals
• Bushings, support castings and brackets
• Flow meter housings
• Blanks and billets for seamless refinery pipes
• Volutes
• Other piping and tubing applications
• Engine blocks
• Turbine housing
As highlighted in the diagram below from the Energy Information Agency (EIA), transporting natural gas from the wellhead to consumers requires many infrastructure assets and processing steps. U.S. metalcasters produce critical castings for every aspect of this system.
EIA - https://www.eia.gov/energyexplained/index.cfm?page=natural_gas_delivery
Manufacturing Opportunities
Because manufacturing relies on both natural gas and electricity, lower natural gas prices not only reduce the cost of purchasing natural gas for fuel, but manufacturers also see an indirect reduction in costs through the use of less expensive electricity. As our pipeline network grows, so does manufacturing opportunity. In addition, foundries need reliable, affordable sources of energy, and that’s why natural gas pipelines are important to our success. Furthermore, we rely on energy as we design, test and manufacture our castings.
Today, we can be more competitive and a lot of that is because of the lower gas costs. For energy-intensive industries such as metalcasting, production costs have been reduced as a result of the increase in natural gas supply.
Here are common locations that metal castings are used in pipeline construction: (See PDF for images)
Pipeline Pumping Station – valves made from castings in the foreground
Valve Body Castings
Outlook
There are hundreds of foundries across the nation producing castings (iron, steel and other complex alloys) in all sizes and shapes for the U.S. energy and construction sectors, including pipelines. Oftentimes, the castings are available in pre-ground or in finish-machined condition. Ready-to-install parts save our customers time and money. The U.S. metalcasting industry is strong and continues to be a vital domestic supply chain partner.
Overall, oil and natural gas are vital to the U.S. manufacturing sector and economy as a whole. Increasing natural gas and oil production in the United States, coupled with increasing demand from a variety of industries, make pipeline infrastructure essential. While providing thousands of jobs and contributing billions to the economy, new and existing pipelines, are helping to keep U.S. manufacturers, in particular American metalcasters, remain competitive internationally. We are proud that the U.S. metalcasting is playing a vital role by supplying keep components for the construction, as well as for the entire complex network that transports oil and natural gas from the wellhead to the end user.
AFS urges the administration to move forward with pipeline projects expeditiously using U.S.-made castings. AFS appreciates the opportunity to provide these comments on the construction and maintenance of American pipelines. If you have any questions or would like additional information about our comments, please contact me or Stephanie Salmon with our AFS Washington office at ssalmon@afsinc.org or 202-452-7135.
Sincerely,
Doug Kurkul
CEO
American Foundry Society