Golden anniversary celebrates long-term industry commitment

BY MORRIS R. BESCHLOSS
PVF and economic analyst

Although golden anniversaries are usually associated with 50 years of wedded bliss, this year’s celebration acknowledges my half-century commitment to the PVF industry. Ironically, I’ll be going back to where it all began a half century ago at the Central Supply Association meeting October 1, 1956, at Chicago’s Palmer House Hotel. This month, I will return to the Palmer House, which is serving as the host hotel for the ASA Convention and ish-North America

It’s remarkable that after 50 uninterrupted years in the plumbing-heating-cooling-piping industry, I’m able to reflect on an exciting career at the same place and almost the same date where I started.

Little did I know then of the many PHCP adventures that were awaiting me and what paths they would take. I feel particularly blessed that I have been able to build this fruitful career in an industry that has become my dominant base of identification over the years.

It has not only provided me with the chance of expanding my capabilities and manifold relationships, but it has given me the opportunity to make an indelible impact with my chosen life’s work — a chance very few have the opportunity to do within their lifetimes.

In next month’s Beschloss Beat Q&A with Bill Sandler, president of the Valve Manufacturers Association, I will note the early respect that I had gained for those PVF leaders — whether manufacturers or distributors — whose love for the industry had made the PVF sector’s long-term survival equivalent to that of their own companies.

Such early exposure to these valve industry icons motivated my desire to someday emulate such dedication with a similar fervor.

I’m also grateful to the ASA and the Industrial Piping Division for giving me the chance to be more intimately involved with pipe-valve-fitting distributors on an institutional basis over the years. The same can be said for the industry manufacturers’ reps, to whom I devoted my August column.

As a proper tribute to our industry, I prevailed on The Wholesaler, along with the PVF Roundtable, to joint venture a blue ribbon panel to discuss “The Current State of the PVF Industry” on Thursday morning, September 28. Significantly, this year looks as if it will be the best in decades for this sector.

The session will be held at the prestigious Standard Club, less than a 10-minute cab ride away from the Palmer House, where the ASA meetings are being held. The only ticket for admission is indicating your desire to join your industry colleagues and attend this forum in an e-mail to flem6609@bellsouth.net.

We hope to see all of you there.

Commodity costs create inflationary concern

Despite the recent cost reduction of a wide range of global commodities, a return to pre-2002 prices shouldn’t be expected. Those prices reflected a pre-emerging global consumer economy that existed before the turn of the century.

Although the price surge of rare metals like gold, silver and platinum, as well as such construction-related metals as copper, tin, zinc and lead may have overshot the price mark on the upside, the unprecedented growth of global economies make permanent high prices inevitable. Although primarily affecting costs at the manufacturing level, such price inflation should also affect the consumer sector for two reasons:

• Imports, which are now exceeding 20% of America’s greatly expanded consumer usage, will continue to be subjected to accelerated price increases. Although the world’s major industrial exporters retain a significant labor cost advantage, natural resources carry a global price tag that maintains a worldwide universality.
  
• The accelerating demands of emerging global consumer sectors lessens America’s disproportionate attractiveness as the ultimate buying target of global productivity. This could mean ever higher prices as additional global buyers become available for the world’s expanding industrial capacity.

Although gold, silver and platinum have made much of the headlines, these are primarily investment vehicles, inflated by speculators who have driven these prices up to near-record levels. But also coming along for an unexpected ride are the critical components needed for the world’s unprecedented construction expansion.

This new global phenomenon has been the driving force behind both the surge in demand and the rocketing prices. That is why such formerly pedestrian materials as copper, iron and steel are in such short supply and undergoing excruciating price pressure. The best example of this new set of circumstances is copper, the universal component of global construction.
For years, copper prices gravitated between 50 and 70 cents per pound, occasionally spiking as high as $1.20 at times of periodic shortages. But in the last three years, the rampaging global growth economies have made a run on the red metal, vaulting the price to a record $4 per pound, before backing off and stabilizing in the $3 range.

This price and demand volatility has also changed the nature of iron, steel and derivative scrap from these and other normally profuse base metals. A main reason why a major downturn in the future is improbable is underscored by the skyrocketing cost of extraction, wherever these raw materials are found.

Such a turn of events also has shifted global economic power to the extractionist nations that harbor a disproportionate reserve of these previously overabundant metals. It also empowers nations that have, up to now, been unimportant geopolitically. They are now in a position to flex newly acquired economic muscles.

This may cause new shock waves in the Western Hemisphere, which, until recently, looked ready to embrace a Western Hemispheric Trade Authority, sponsored by the U.S.
The emergence of Venezuela’s Hugo Chavez in oil, Bolivia’s Ivo Morales in tin, Chile’s Michelle Bachelet in copper, plus Ecuador, Peru and Brazil in a variety of resources, will give this new cadre of Latin American leaders greatly increased influence.

This new leadership will act as a barrier to the further expansion of the North American and Central American Free Trade Authorities, as protectionism and regionalism are again reactivating an anti-free trade mentality. Even Mexico, which barely succeeded in electing a Harvard-educated conservative to the six-year presidency, will be in a weakened position due to the razor-thin plurality with which he was voted into office. This could also mean increasing domestic turmoil and increasing pressure on the instability affecting America’s southern border.

Morris R. Beschloss, a 50-year veteran of the pipe, valves and fittings industry, serves as PVF and economic analyst for The Wholesaler.