...Ping
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Posted on 04/21/2006 7:20:13 AM PDT by FerdieMurphy
It was in his 2003 State of the Union Address that President George W. Bush expressed his administration’s objective to “strengthen global treaties banning the production and shipment of missile technologies.” It was thereafter, between 2003 and 2004, in which the Committee on Foreign Investments in the United States (CFIUS) allowed the last manufacturer in the U.S. that provided a key element instrumental in cruise missile guidance, to be relocated to the Peoples’ Republic of China. During this week’s U.S. visit of China President, Hu Jintao, and his meetings with President Bush and his advisors, it would be apropos to revisit a strategic corporate deal which occurred over a period of several years. With its finality in 2004, the U.S. now remains totally dependent upon China for key rare earth metals and their production necessary in the manufacture of the most crucial of U.S. military warfare.
The CFIUS decision in January 2006, regarding the approval of the Dubai Ports World Company, to take over port operations of the six largest East Coast ports in the U.S., not only raised many U.S. Congressional eyebrows but set off a strew of newly proposed legislation, to include more transparency between CFIUS and the U.S. Congress. But CFIUS has long had a precedent of approving such business transactions, and the ports deal was only the latest of such. As the deal approval became known to the public via AP reporter, Ted Bridis, in February 2006, apparently even he was more in the loop than the lawmakers on Capitol Hill. However, there have been close to 2,000 other deals approved by CFIUS since its inception in 1988, many of which should have involved and concerned the U.S. Congress much sooner.
It is the lack of accountability of the secret CFIUS committee, presided over by the Secretary of the Treasury, which has only of late concerned the U.S. Congress, and with its machinations just recently disclosed to the public. And it was the Dubai Ports deal which exposed the seemingly arbitrary fashion, and unanswerability to any other branch of government which was disturbing. For the decisions CFIUS makes ultimately becomes the responsibility of the U.S. federal government, while possibly compromising its best interests, including U.S. national security.
As it is, the Department of Defense has problems procuring necessary equipment and manufacture of parts from foreign entities, where national security must be weighed over acquisition of parts from offshore. Yet at the same time, the U.S. government has pushed the concept of global trade, often in direct conflict with the protection and national security of the U.S.
Producing powdered neodymium-iron-boron permanent magnets is critical to enabling control of aircraft and more specifically cruise missiles guidance systems as well as the Joint Direct Attack Munition or JDAM bomb, used prominently in the 2003 bombing of Baghdad, which preceded arrival of U.S. ground troops there. Magnequench UG, although still headquartered in Indianapolis, IN, is the sole provider of specialized magnets for military aircraft systems. But it closed down its manufacturing arm permanently in 2004 and finished relocating operations to China at that time, with its operations now solely controlled by Chinese companies with direct ties to the Chinese government.
Magnequench magnets are produced from a unique patented process of sintering specialty metals. They are used by various electronics and aviation companies, but Magnequench’s primary client is the Pentagon, leaving the U.S. in a rather precarious position with China. Enjoying 85% ownership of the world’s market of rare earth metals, required for its magnet production, Magnequench’s factories are now located in Batou, China. It is there that the world’s only operating rare earth mine exists. Thus, China now owns a monopoly on the manufacture of missile magnets which the U.S. military is dependent upon for its most sophisticated technology and weaponry.
Magnequench’s relocation culminated following several years of what started out as a General Motors subsidiary company in 1986. General Motors was responsible for the development of the manufacture of a permanent magnet material in the early 1980’s and began its production in 1987. In 1995, Magnequench’s majority interest was purchased from General Motors by the Sextant Group, which was comprised of two Chinese companies, San Huan New Material and the China National Non-Ferrous Metals Import and Export Corporation. It is reported that few in the industry or in the federal government knew which companies formed Sextant at that time.
Three years later, after commitment from Magnequench CEO, Archibald Cox, Jr., that its two Indiana-based plants would not be shuttered, its assembly line for magnets in Anderson, IN was shipped to China. In 2000, GA Powders, a subsidiary of Magnequench, originally a Department of Energy project, was relocated from Idaho Falls, ID to Tianjin, China. And in 2004 Magnequench’s other Indiana plant in Valparaiso, IN, responsible for production of elements of the JDAM bomb was shut down and shipped to China. Although there was an “agreement with GM” from Cox that the plant would remain in Anderson, IN according to Clyde South, a negotiator for the United Auto Workers Local 662, Magnequench proceeded to eliminate all of its domestic manufacturing jobs anyway.
Under the 1988 Exxon-Florio Amendment to the Defense Production Act, President Bush could have ordered San Huan New Materials to divest its holdings in Magnequench, as it manufactured a strategic asset. The President was pressed to do so by Congressman Even Bayh and Congressman Pete Visclosky, both of Indiana in 2003, but the President chose not to intercede. In 1990, however, President George H.W. Bush ordered China’s government-owned National Aerospace and Export Company to divest its interest in Mamco Manufacturing of Seattle, WA. At that time it was feared that China would use Mamco to acquire its jet fighter technology.
In addition to this particular example of guidance missile manufacture, the acquisition of titanium is also becoming a problem for the military in procuring spare parts and for its manufacture of its aviation vehicles. The Pentagon continues to have conflicts with the Congress on waiving the Berry Amendment. Enacted in 1941 and updated in 1972, it requires that specialty metals, including rare earth metals, titanium and super alloys, be manufactured in the U.S. for its weapons systems, unless otherwise unattainable. But as more and more American companies relocate offshore, the lines drawn become less and less clear.
And while not appropriate to put the blame of the offshoring of strategic assets on any particular President or branch of government at this time, it is appropriate, however, to see how various factions of the three branches of government, along with the loosening of corporate and industry regulations over the years, have cumulatively jeopardized the interests of the U.S. It is important that lawmakers therefore not become hawkish over the observance of our laws only when it becomes convenient to win political capital, but to how best serve the interests of the U.S. For the ramifications of business as usual when it comes to strategic assets could do irreparable future harm to America’s most vital asset, that being the American people.
Misleading headline.
Darn spell checker.
Kind of dated. Shut down currently. Isn't it interesting how China tried to snag control of UNOCAL...which owns these mines?
China also just snapped up a Canadian oil company...wonder if they also didn't manage their rare earths resources.
I gave a stick of jeweler's rouge to my son this year that I have had for over 40 years, at the time my dad bought it, that stick was the smallest size for sale; he is likely to use maybe one-sixteenth of an inch of the five inches left on the stick which was six inches long when new.
My guess is that the Pentagon has a few tons of these critical materials stashed somewhere.
It isn't exactly like we use several hundred cruise missles every day.
In theory. In practice look at how ridiculously difficult it has been to get a slight expansion of the existing oil pumping operations to include the 2000 acres in the adjacent little corner of the ANWR in Alaska. Clinton renamed it from, what Alaska National Petroleum Reserve... to Alaska National Wildlife Reserve...and Presto! For all practical purposes, the communists in the Sierra Club have a veto over National Security.
Maybe we need to buy all china has, so they don't have any.
I wonder if that isn't the defacto strategy in not doing ANWR and the other major oil deposits we know about...such as the Shale Oil deposits in the Western Rockies.
Lavoisier was well on his way to determining the atomic table of weights when his funding dried up and he was forced to take a government position as a tax collector, unfortunately for him, shortly after the guillotine was invented the revolution broke out and tax collectors were among the first to experience its remarkable efficacy.
Some substitutes are as rare as these minerals you so blithely propose to displace.
Welcome aboard, we need reasonable minds here.
Scientists aren't always writers, which is the reason for his post, I would guess.
Funny, I read it as though it were coercivity just because it should have been, where's that thread that shows one can make out the meaning as long as the necessary letters are included, regardless of their mixed order?
In fairness, FR's spell check flags coercivity but accepts coercively.
You have that 100% correct brownsfan!
For every dollar in my pocket (after taxes) there are at least 20 people trying to take it. There are people transferring jobs out of the country so I cannot even earn another dollar to replace the one I have.
Both political parties have become nothing but a ruling class and so long as they get elected in significant numbers we will be at the bottom of the food chain.
You have people, many conservatives I am ashamed to say, that think a company's sole purpose is to the stock holders. Well like absolutely everything else in life when taken to the extreme it becomes a bad thing. Keep downsizing, keep shifting production overseas, only worry about the next quarterly report and not the 2-5 year long term implications of your cutting. Eventually you will remove so much of the economic fuel (USA workers) that you will have leveled that playing field by lowering the standard of living in the USA to match the 3rd world scum.
A real titan of industry can grow a company with a good product, reasonable (not cheap) price, and high quality service. There are very few people left that can grow a company and I would say in that group you would not find many MBAs.
Any MBA idiot can make the bottom line look good for about 3 years after that the bottom falls out. The last 3 firms I worked for did that exact same thing. Cut, focus on the quarterly report to keep the stock up, get their bonus, after 3 years bankrupt.
Have you seen this...?
(Please FReepmail if you want on, or off, this list. I certainly have no desire to increase anyone’s stress-level. Thanks!!!)
They did a segment in China. I was amazed at the thousands of American's working and owning business's right there in China! Disco's and restaurants. You name it. We have thousands of our own making huge bucks and living in China.
I am still pinching myself.
the U.S. now remains totally dependent upon China for key rare earth metals and their production necessary in the manufacture of the most crucial of U.S. military warfare.Rare Earth metals are mined, not manufactured.
Our enemies in total disarray? You don't have to look any farther than FR to find a whole bunch of FReepers in total disarray over this!!
This is ridiculous! What IF we have a war with China? What a bunch of dumbasses we have running this country! We are so doomed, it's REALLY pathetic! We are in a race to the bottom!!!
Frankly, when things get this bad, it's way past time for an uprising.
I just love it - outsourcing our national security, only klinton could have thought of it!
LOL. Yes. ...Your 'Tree of Liberty' getting a little dry, is it?
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -- Thomas Jefferson
As those of us know who use Astroflight brushed electric motors.
With the things that are taking place today, I would have to say yes. Very dry indeed...
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