Precision News May/June 2014

THIS ISSUE: Development and Success / Taxing Questions / Workplace Leadership / The Fire Triangle

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The NTMA SW Regional Magazine Featuring Arizona, San Diego and North Texas

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NTMA SW BRINGS YOU:

TECHNOLOGY . BUSINESS . EDUCATION . EVENTS . DIRECTORY

THE EXPERIENCE AND INSIGHT TO GET THE JOB DONE!

PLUS

AN UNANTICIPATED PATH OF DISCOVERY

TAXES / ENERGY / INFRASTRUCTURE / PROPERTY RIGHTS / CYBERSECURITY / TRADE / ENFORCEMENT / LABOR

GETin

A BUSINESS OWNER SETS OUT TO SELL HIS BUSINESS BUT THE STORY DIDN’T PLAY OUT EXACTLY AS HE ANTICIPATED

WE ARE IN DANGER OF LOSING OUR COUNTRY’S ASSETS

GEAR!

IGNORING THE LONG-TERM EFFECTS OF ALLOWING FOREIGN CORPORATIONS TO PURCHASE THE ASSETS OF OUR COUNTRY

THE LEADERSHIP ISSUE

PN HELPS YOU MAKE THE MOST OF YOUR RESOURCES AND MEMBERSHIP

The Future of Manufacturing

Workers

Health

Property Liability

Auto

Forecasting the Future: Additive Manufacturing

401 Ways to Prepare for the Future

by Glenn Van Noy

If you were going to forecast the future of manufacturing, you would be looking at a company like Forecast 3D... A progressive, creative, company that pushes the limits of technology through imaginative and thoughtful problem solving with just the right mix of talented people and a highly disciplined process. What does Forecast 3D do exactly? Rapid prototyping, 3D printing and short run production services primarily for the aerospace industry, medical devices and consumer products. They are a multi-million dollar company and the oldest privately held facility of its kind in the U.S. Forecast 3D is ITAR registered, often handles sensitive intellectual property and innovative specialty parts. But, the people at Forecast can get just as excited and passionate about this “really cool thing” from a backyard inventor — maybe even more so because of Forecast’s humble beginning. Forecast 3D began in 1994, in Corey and Donovan Weber’s garage casting RTV parts. Within a year, they moved into their first facility and purchased their first 3D Systems SLA machine. Initially, Forecast 3D spent a great deal of time educating its customers about 3D printing, stereolithography (SLA) technology and its extraordinary possibilities. Corey and Donovan Weber teamed with the creators of the SLA technology, 3D Systems, to include RTV castings to their service offerings. 3D Systems supplied Forecast 3D with newly built SLA models that fueled Forecast 3D’s growth into a leader in the RTV prototype and short-run production service industry. Today, Forecast 3D offers latest in Stereolithography (SLA), Selective Laser Sintering (SLS), CNC Machining, Injection Molding, ProCast RTV Tooling, Hybrid RTV Tooling, and Metal Casting in a 38,948 square foot facility in Carlsbad, CA with 82 employees. SO WHAT MAKES FORECAST SO SPECIAL? Their founders, Corey and Donovan lead with an eye to the future and believe in their people to get the job done right. Their single greatest resource is their employees: a gifted team of engineers, master craftsmen, and every other skill set it takes to run a modern, world-class facility. Quality and craftsmanship is first and foremost. Forecast 3D uses only the best in Additive Manufacturing technologies and materials. Ongoing research and development, the creation and maintenance of proprietary technologies assure their customers flexibility, efficiency and the best product possible. Forecast 3D’s customer service sets them apart from their competition and often draws customers away from their biggest, nearby competitor.

Creating lifelong financial health also means planning for greater longevity and potential healthcare needs as you get older. 401(k) plans can be a powerful tool in promoting financial security in retirement, attracting and keeping valuable employees. The NTMA Plan is sophisticated, simple and flexible. The initial set-up is painless. Plan administration is hassle free with 24/7 guidance and support for employees. If your company doesn’t offer 401(k)s to your employees or would like information on the new NTMA 401(k) Plans, please call Glenn Van Noy at 760-419-1393 to explore which NTMA 401(k) Plan would be right for your company.

Champion Risk & Insurance Services, L.P. is a proud supporter of the NTMA San Diego and the San Francisco Bay Area Chapters. We provide the NTMA Metalworkers’ Program, a group of competitively priced, specialty coverages that are essential to precision machining operations. This program is not offered by generalist brokers. For a no obligation evaluation and consultation, contact Glenn VanNoy at 760-419-1393 or gvannoy@championrisk.net. LIC #0800751

The Weber brothers have one eye on the shop and one eye on the future, with a singular goal in mind: offer the customer the ideal manufacturing solution for a specific application.

Champion Risk

For more information about Forecast 3D, go to www.forecast3d.com.

An Affiliate of Wood Gutmann & Bogart Insurance Brokers

& Insurance Services, L.P.

MAY/ JUNE 2014 VOLUME 4 • ISSUE 3

Contents 12

Features

Departments

How the Decision to Sell Led A Business Owner Down An Unanticipated Path of Discovery

03 President’s Letter

This is a story about a successful manufacturing business owner who set out a plan to sell his business. But the story didn’t play out exactly as he anticipated.

04 Policy Matters 08 People Power 10 Feature Focus 21 NTMA Initiatives 22 Websites that Work

We Are In Danger of Losing Our Country’s Assets

22 Arizona Chapter Info 28 San Diego Chapter Info

We Americans blithely ignore the long-term effects of allowing foreign corporations to purchase the assets of our country in the form of companies, land, and resources.

30 North Texas Chapter Info

Cover photo: Gear milling. (Sandvik Coromant)

32 Shop Floor

29 NTMA Membership

OUR MISSION:

“WE JOIN TOGETHER AS MEMBERS OF THE SW REGION PRECISION CUSTOM MANUFACTURING COMMUNITY TO ACHIEVE BUSINESS SUCCESS IN A GLOBAL ECONOMY THROUGH ADVOCACY, ADVICE, NETWORKING, INFORMATION, PROGRAMS AND SERVICES.”

The NTMA SW Regional Magazine Featuring Arizona, San Diego and North Texas EXECUTIVE DIRECTOR & EDITOR Chris Mignella

PrecisionNews

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CONTRIBUTING WRITERS Jamie Beauvais, David Lair, Margaret Jacoby, Omar S. Nashashibi, Michele Nash-Hoff, Erik Skie, Ted Szaniawski ADVISORY BOARD Chris Mignella, Lisa Ellard, Glenn VanNoy, Gail Houser EDITORIAL, ADVERTISING & ADDRESS CHANGES Chris Mignella, Executive Director & Editor Phone: 602.388.5752 Email: ExecutiveDirector@arizonatooling.org

Precision News is published bi-monthly by the Arizona Tooling & Machining Association (ATMA). Opinions expressed are those of the authors or persons quoted and not necessarily those of the ATMA. While efforts to ensure accuracy are exercised, ATMA assumes no liability for the information contained in either editorial or advertising content. ATMA assumes no responsibility or liability for unsolicited manuscripts or artwork. Reproduction in whole or part without the expressed written consent from ATMA is prohibited. Precision News is the registered trade name of this publication. Copyright ©2014 by ATMA. All rights reserved.

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First Word PRESIDENT’S LETTER

Hello, P.N. Readers! The last couple of months have had some events and gatherings that I wanted to highlight for you. First our Arizona chapter had a great meeting in February with a change in format to have two roundtable discussions. We gathered to discuss topics of “In Process Metrology” and “Human Resources – Attracting and Retaining Workforce”. The group discussions were informative with industry colleagues sharing experiences and with input from knowledgeable associates. It was a great evening and the majority in attendance had very positive reviews and requests for more such meetings this year. If you missed this meeting please plan to attend the next one we’re planning for June. We’re working on topics and improvements to our format and want your participation and suggestions. In February the .ATMA along with Arizona Commerce Authority took a road trip to visit manufacturing companies in .. .. the Flagstaff .and Prescott areas. We took the message of the Arizona Manufacturing Partnership to companies in the northern and central regions of our state to talk about the AMP mission of: changing the perception of manufacturing in our state; working with educators to better fill the workforce requirements in manufacturing; and establishing open lines of communication between manufacturing companies across our state. Collectively manufacturers in Arizona can have a huge voice is shaping workforce efforts and that’s what we know AMP can help to focus. In March, I attended the “M.F.G. Meeting” Conference which joined the NTMA, PMA, and AMT in one huge event held here in Phoenix. What a wonderful conference. This was another opportunity to meet and talk with your piers from across the country and attending informative keynote presentations, roundtable discussions, association meetings, as well as an opportunity to interact with national sponsors of the event which all support our daily business activities. Participating in these kinds of national event helps broaden your perceptive of our industry and share with others in our manufacturing family. At this meeting Dynamic Machine received its 35 Year Membership Certificate. What a great honor to be recognized as a long time NTMA member. But I must admit although 35 years sounds impressive we have members in Arizona that exceed our number. Our most senior member is Powill Manufacturing at 54 years! They are followed by Precision Die and Stamping, Modern Industries, Osborn Products and Zircon Precision ranging in membership from 44 to 41 years! These fellow members are testament to the benefit and value they receive from a national trade association like the NTMA. Whether it is for the government advocacy, affinity programs, business development assistance or networking opportunities, these companies along with many of our other longtime members see the value in sharing benefits and experiences with other manufacturing companies. May I say a personal Thank You to these five companies for your membership, participation, and contribution throughout the years. Also in March, the Arizona Tech Council held its Aerospace & Defense Forum. This was another great event to again have with the opportunity to interact with manufacturers from across Arizona. But these were only some of my experiences. I’d like to hear from some of our readers. If you love manufacturing and want to share an experience drop me a note.

Thank you for your time. I’m excited about manufacturing, especially in Arizona, and working with fellow manufacturers across our great state we can continue to improve our industry development and success.

Hope to see many of you at an upcoming event. As always, continued to success to each of you. DAVID LAIR Vice President, Dynamic Machine & Fabrication Corp. and President, ATMA

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Policy Matters BECOME A VOICE FOR CHANGE

A Taxing Question by OMAR S. NASHASHIBI

“Don’t tax you, Don’t tax me, Tax that fellow behind the tree.” – Senate Finance Committee Chairman Russell B. Long (Louisiana), 1973

This phrase, the origin of which dates to the 1930’s, still holds true today. Another great line used in Washington is, “one man’s pork is another man’s prize.” The U.S. tax code reflects both these truisms – everyone wants tax reform and a balanced budget but no one wants to pay for it or give up their prized provisions. This is the great dilemma facing those few lawmakers in Washington who are serious about reforming the tax code. Which provisions should they eliminate in the name a simpler code and lower income tax rates? The R&D Tax Credit, which is among the most politically popular provisions but will “cost” the federal government $2.2 billion in lost tax receipts in 2014? The IRS will forgo $74 billion in tax collections in 2015 because of Bonus Depreciation, which 81% of NTMA members reported using last year. Over 91% of companies report they benefit from Section 179 Equipment Expensing, the

Tax policy affects small businesses, especially manufacturers in many ways. The obvious is the amount of money left over to reinvest in the business. However, there are more, less visible aspects. Specific tax Of course, none of this factors in the provisions affect the ability to borrow; amount of tax revenue generated by the particularly for a pass-through, which must purchase of equipment, the investment in use a personal guarantee to secure a loan. research, and the hiring of people in an An Ohio metalworking business reported expanding business. Under Congressional rules, policymakers traditionally cannot take their lender told them that without Bonus Depreciation, they would not have received those numbers into account so all these provisions, on paper and using “Washington the lower borrowing rate they secured. math,” cause the government to take in less A tool and die shop in the Northeast had consistently spent over $700,000 per year revenue. Bring in the politics and this becomes even more complicated. One side since the Great Recession on new says eliminating any credit or deduction is a equipment; but because of an expiring tax provision, only set aside $100,000 this year tax increase while the other says these are for maintenance instead of investment. special interest giveaways and loopholes. Congressional Joint Committee on Taxation says this is a revenue loser to the tune of $20 billion over the next two years.

In many ways, all sides are correct, part of the reason Congress has made more than 15,000 changes to the tax code since 1986 but never once simplified it, let alone passed meaningful reform.

fyi: Congress has made more than 15,000 changes to the tax code since 1986 but never once simplified it, let alone passed meaningful reform. +

Photo: NTMA

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continued on page 06

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Policy Matters

A Taxing Question continued from page 04

The most common theme among manufacturers is we need simplicity and stability in the tax code. One person recently said, “just tell me how much I have to pay for the next 10 years and then I can plan a business strategy.” Manufacturers are frustrated, and rightfully so. Congress extends tax provisions at 11:59PM on December 31st, congratulates themselves, and expect the economy to grow. In my job as a lobbyist for NTMA, I have to educate these lawmakers that our equipment takes months to place into service and certainly cannot be “switched on” by the midnight deadline. The first week of April, the Senate Finance Committee passed yet another bill extending roughly sixty expired tax provisions. At the urging of groups such as NTMA, the Committee Chairman, Sen. Ron Wyden (D-OR) extended most of the provisions retroactively to January 1, 2014 and for all of 2015, providing at least some certainty for the next year. The package included several provisions important to manufacturers such

as the R&D Tax Credit, Section 179 Equipment Expensing, and Bonus Depreciation for machines placed into service by December 31, 2015. Most significantly, Chairman Wyden said this is the last tax extension bill he will move and will focus his efforts on comprehensive tax reform. In the U.S. House of Representatives, retiring Ways and Means Committee Chairman Dave Camp (R-MI) released his draft bill to overhaul the revenue code. Met with some skepticism by Wall Street and others, the bill goes a long way to help small and medium sized domestic manufacturers achieve their goal of simplicity and stability. While the draft proposal eliminates some provisions such as Bonus Depreciation and is not as generous on other credits a nd deductions, it removes much of the red tape and lowers the top income tax rate to 25% for all domestic manufacturing income. This is an important victory for NTMA members in the first round of the tax reform battles ahead.

While it is difficult to move any major legislation in an election year, tax reform is certainly gaining traction in Washington. The few serious lawmakers left in the nation’s capital are working behind the scenes on what could be a major economic stimulus bill – comprehensive tax reform. We are optimistic that in 2015 we could see an earnest effort to overhaul the code after all the legwork done in 2014. There is no question there will be winners and losers in tax reform. This is why, among all other sayings in Washington, the following holds true above all else – “if you don’t have a seat at the table, you’re on the menu.”

OMAR NASHASHIBI is a founding partner at The Franklin Partnership, LLP, a bi-partisan government relations firm retained by the National Tooling and Machining Association in Washington, D.C. Learn more at: www.franklinpartnership.com

NTMA SOUTHWEST REGIONAL CONFERENCE DALLAS, AUGUST 1-3, 2014

!$1 Save the date and join us for our 2nd annual regional conference! We’ll be heading to Dallas for some Texas-sized networking and breakout sessions to assist you in growing your business. Conference will be held at the Dallas Fort Worth Airport Marriot 8440 Freeport Parkway Irving, Texas 75063 Conference presented by the North Texas, Arizona, San Diego, Rocky Mountain, and Northern Utah Chapters of the NTMA. Registration Information will be coming soon!

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People Power YOUR MOST VALUABLE RESOURCE

Employee Engagement: One in five of your employees is leaving in 2014 by MARGARET JACOBY, SPHR

A new Career Builders survey of over 3,000 full-time employees revealed that one in five employees plan a career change in 2014. The survey examined employees from the private sector spanning several different industries and company sizes. According to the results, job satisfaction is the primary reason, with nearly 20 percent of employees being dissatisfied in their current job. Salary concerns and not feeling valued were cited as the most common causes of job dissatisfaction. While the survey revealed the two most common causes of employee dissatisfaction, causes can be hard to quantify and narrow down to leading causes that company leadership can work to address. The Career Builder survey also showed that limited advancement opportunities, workplace stress, limited or no salary increases, struggles with work/life balance, and poor relationships between supervisors and workers as other common causes and all have long-term damaging effects on a company. What’s worse is the more employees that face these challenges, the more likely this will become the underlying “company culture.” The damage companies experience from dissatisfied workers can be long-term, especially if the employee doesn't leave the company. A recent Gallup survey which revealed an alarming statistic that 70 percent of employees are disengaged in the workplace, and was often also caused by employee dissatisfaction. The Gallup research has linked employee engagement to specific business outcomes that directly affect the bottom line, such as higher productivity, profitability, and customer ratings. I shared in a recent blog post five warning signs an employee is getting ready to leave. If supervisors notice new bad habits such as excessive use of personal time, poor performance or a change in attitude, these are signs the employee may be planning to leave. The important factor with an employee leaving is ‘Why’. By looking for the above warning signs, managers can address the issues or cause, and have a greater chance of retaining the employee. There are high costs associated with employee turnover, which makes effective HR solutions even more critical. If as the Career Builder survey suggests and 20 percent of your employees are leaving, it’s time to evaluate the business and make improvements. Opening lines of communication, and educating employees on their purpose in the company is a start. But, for greater results, more extensive organizational change may be needed. For more help with employee retention, download a copy of Practical tools to manage costly employee turnover. To learn more about how our human resources support services can benefit your business give us a call or send an e-mail.

MARGARET JACOBY is the president of MJ Management Solutions, Inc. She can be reached at margaret@mjms.net Learn more at: www.mjms.net

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6 Questions Every Employee Should Be Able To Answer One of a company’s highest performing employees seemed to have lost his enthusiasm for work. He went from super dedicated to detached. Something just wasn’t right. So his boss, Justin Rosenstein, whose philosophy was addressed in a recent Inc. article, took the employee for a walk and asked him one simple question: “What’s wrong?” At first the employee couldn’t pinpoint the source of his malaise. He said, “I’m not sure what I’m doing here and I wonder if I should even be doing this work.” Rosenstein started asking questions. “When you go back to your desk, what’s the next project you’ll accomplish?” and “Why are you going to do that?” The employee struggled to come up with meaningful responses. The missing ingredient --- the reason that the employee was struggling --- is that organizational and role clarity didn’t exist. Without role clarity employees don’t understand what they’re expected to do and how their work fits into their organization’s master plan. This lack of focus is bound to lead to duplicated efforts, deflated morale and hours spent on unimportant tasks. Rosenstein believes that there are three essential elements that support successful organizational and work performance --- Clarity of Purpose, Clarity of Plan and Clarity of Responsibility. Only with a clearly defined purpose in mind can employees be trusted to make good decisions. Once purpose is understood, a plan --- a master list of what needs to get done must be established. However, without clarity of responsibility the chances of dropping the ball at critical moments are exponential. All three components are essential. To establish whether or not you have Clarity of Purpose, Clarity of Plan and Clarity of Responsibility in your organization we recommend that you ask your employees the following questions: • What are you working on right now? • Are you confident that it’s the most important thing you could be doing? • Do you know who is waiting on you? • Do you know to whom you should go for support? • Do you know how your work fits into the overarching product/service we provide? • Do you know why our product/service matters? Listen carefully to what your employees have to say. If their responses sound like our example employee --- “I’m not sure what I’m doing here.” or “I wonder if I should even be doing this work.” You should ask yourself a really critical question. Should my organization consider a process to gain organizational and role clarity?

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Feature Focus // PrecisionNews

Get A Grip If we were to think of the gloves that our father wore while working in the yard it might have been a pair of nice leather gloves or even leather and cotton combination. These gloves still exist today but they are the past. The past is great but now there is something better. About 7 years ago a new technology was brought to the industrial market. This new technology is Micro Foam Nitrile coating. Why should anyone

in the machine industry care about this new glove technology? The biggest reason is the oils that are present in most everything that is handled in the machining industry. Micro Foam Nitrile will provide a good grip while working around light oils. The benefit is allowing your hands to grip what you’re supposed to grip. The glove is different than most gloves, the oil sits on the coating or surface of most gloves. The Micro Foam Nitrile gloves will absorb light oils, by keeping the oils away from the surface of the glove it allows for better grip. There are many reasons to try these gloves:

micro-foam nitrile coating offers 360° breathability, making it the most breathable glove on the market today 4. 25% Thinner - Than most foam nitrile gloves on the market while offering twice the mechanical performance 5. Form, Fit and Feel - Mimics the “hand at rest”, reducing hand fatigue and increasing comfort 6. Optimized Grip - The micro-cup finish allows for a controlled grip

2. 100% Silicone-free

If you haven’t tried the MICRO FOAM NITRILE gloves it is definitely worth trying a pair. For a free trial pair contact victor@azglove.com.

3. 360° Breathability - Patented

Learn more at: www.azglove.com

1. Knit Wrist - Helps prevent dirt and debris from entering the glove

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Manufacturing in Arizona for over 46 Years Providing precision machining and Industries Served: fabrication of diverse parts and assemblies â&#x20AC;˘ Automotive â&#x20AC;˘ Aerospace â&#x20AC;˘ Medical â&#x20AC;˘ Firearms â&#x20AC;˘ Dept of Defense â&#x20AC;˘ Electronics Serving the Aerospace/Aircraft, Military, Oil Tool and Commercial Industries ISO9001:2008 and AS9100:2009 REV â&#x20AC;&#x153;Câ&#x20AC;? CERTIFIED 2440 Cades Way, Vista, California 92081 Facility Recently Expanded phone: 760.727.5228 fax: 760.727.0799

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Feature Story // PrecisionNews

BY ERIK SKIE

How the Decision to Sell Led a Business Owner Down an Unanticipated Path of Discovery This is a story about a successful manufacturing business owner who set out a plan to sell his business. But the story didnâ&#x20AC;&#x2122;t play out exactly as he anticipated.

Our story begins more than 20 years ago, in a 6 foot by 9 foot working space. From these humble beginnings he built a full service business that designs and manufacturers solutions for some of the most complex and rigorous shipping environments in the world. The company weathered the most recent recession, and was well-positioned for continuing growth.

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But family, faith, and personal adventures have always played a big part in the owner’s life. So in 2013, after more than two decades in business, he decided that selling might be the best way to secure his financial future and create the personal flexibility to pursue his next adventure. With the recession fresh in his mind and a business that was performing well, he also felt this was the best way to reduce the personal risk and stress that had become so familiar. However, going through the selling process transformed his original goal. Instead of selling the business, the owner is now working with his leadership team to ensure that the company continues the legacy he set out to create more than 20 years ago. Crystallizing goals and dreams The decision in 2013 to explore the sale of the company was one step in a planning process that started back in 2009. At that time, the owner wasn’t sure exactly what transition plan was best for the business, but his goal was absolutely clear: maximize business value and create lasting opportunities for those who had worked beside him to build the company. He also sought to preserve the culture and values that had been so critical to the company’s success. To do this, he approached the business like a homeowner views improvements: do those things that have the broadest appeal to the widest range of potential buyers and the value will follow. Because he was creating real value, he knew there would be multiple suitors from which he could choose the best for the company. Creating lasting value The owner began to put a critical eye to each of the four engines of a business that create lasting value (financial, growth, leadership, and execution). He engaged his leadership team members in the discussion so they could better understand how their day-to-day efforts improve the value and stability of the business. Line managers began to take a broader and more holistic view of their role. In essence, more of the management team began to think and operate like owners. Business performance continued to improve, and the value in the business that was once so dependent on its founder suddenly translated into sustainable enterprise value that went beyond one person’s capabilities. Personalizing the plan In tandem with his business‐building efforts, the owner began to address another area of inflexibility that was limiting his transition options and creating stress: his concentration of personal wealth within the business. As is the case with many privately held business owners, the company was his only source of income. The owner realized that any long‐term adverse impacts on the company would also have significant personal consequences. The owner created a plan to diversify his stake in the business and increase his personal liquidity. The idea was simple: use financial resources created within the business to reduce personal obligations and increase personal liquidity. That way, if business conditions eroded the owner would not be dependent on the business income to meet non-business obligations. This was accomplished by creating a capitalization plan that slowly shifted excess capital to personal liquidity. The implementation of this plan created some surprising business benefits. Now that the business had a line of credit, managers became much more aware of the need to actively manage the collection of accounts receivable and monitor inventory levels. Over a five-year period where sales increased, the working capital requirements of the business actually decreased. The owner not only created his own liquidity and financial security, he reduced business risk and managers became more effective at managing working capital. continued on page 14

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Feature Story //

How the Decision to Sell Led a Business Owner Down an Unanticipated Path of Discovery

PrecisionNews

continued from page 13

Planning for transition and preserving the legacy Fast forward five years to 2013. The owner was now prepared to transition the business. He was in a great place personally, and the business was performing at peak levels. So why did he change direction? Suffice it to say that the journey of prepping the business for sale created a strong desire in the owner for his team members to enjoy the fruits of their labor. Selling the business, while potentially a positive, could put that goal at risk. For the owner, continuing to own the business was the surest way to accomplish his personal and business goals, and preserve the legacy he has worked so hard to create. Five years of work did not go to waste. The owner has an even higher level of flexibility today than he did five years ago along with the confidence that whatever the market brings, his business has the

sustainability to work through the challenge. He continues to personalize the plan, build value, and evaluate his dreams to make sure they become a reality. What is your dream? Whatever your goals and dreams for your business, one thing is clear: planning ahead creates more options and flexibility for the inevitable changes in direction, challenges, and opportunities that come with business ownership.

ERIK SKIE is Managing Principal, Manufacturing and Distribution, CliftonLarsonAllen. Erik can be reached at erik.skie@CLAconnect.com or 630.368.3645.

CliftonLarsonAllen is one of the nationâ&#x20AC;&#x2122;s top 10 certified public accounting and consulting firms. Structured to provide clients with highly specialized industry insight, the firm delivers assurance, tax and advisory capabilities. CliftonLarsonAllen offers unprecedented emphasis on serving privately held businesses and their owners, as well as nonprofits and governmental entities. The firm has a staff of more than 3,600 professionals, operating from more than 90 offices across the country. For more information about CliftonLarsonAllen, visit their website at: www.CLAconnect.com

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A PrecisionNews SPECIAL REPORT

We are in danger of

Losing Our Country’s Assets We Americans blithely ignore the long-term effects of allowing foreign corporations to purchase the assets of our country in the form of companies, land, and resources. We are selling off our ability to produce wealth by allowing so many American corporations to be purchased by foreign corporations.

BY MICHELE NASH-HOFF

It is not just foreign companies buying our assets that is the problem - it is the state-owned and massively subsidized companies of China that are dangerous because China uses its state-owned enterprises as a strategic tool of the state. By pretending they are private companies abiding by freemarket rules to our detriment makes us the biggest chumps on the planet. German economist Fredrich List, wrote, “The power of producing wealth is...infinitely more important than wealth itself.” How many Americans paid attention to the news last year that Smithfield Foods was acquired by a Chinese corporation? Last September, shareholders approved the sale of the company to Shuanghui International Holdings Limited, the biggest meat processor in China. Smithfield bought 100% of Friede Goldman United, and in 2012, A-Tech Wind Power (Jiangxi) bought 100% of Cirrus Wind Energy.

Chinese companies are even acquiring healthcare companies: WuXiu Pharma Tech bought AppTec Laboratory Services, and Mindray Medical International bought Datascope Corporation in 2008; BGI-Shenzhen bought Complete Genomics in 2012, and Mindray Medical International bought Zonare Medical Systems in 2013. Wall Street and the finance industry are not immune from acquisitions by Chinese corporations: Shenzhen New World Group bought Sheraton Universal Hotel in 2011; China Aviation Industrial Fund bought International Lease Finance Corporation in 2012; and Fosun bought One Chase Manhattan Plaza in 2013. One of the earliest acquisitions by a Chinese corporation was when the Hoover brand was sold to Hong Kong, China-based firm Techtronic Industries after Maytag that owned Hoover was acquired by Whirlpool in 2006. continued on page 18

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We are in danger of Feature Story //

Losing Our Country’s Assets

PrecisionNews continued from page 17

The acquisition of American companies by foreign corporations isn’t something new. Many prominent companies founded in America have been bought by corporations from the United Kingdom, France, Germany, Italy, and other European countries in the latter half of the 20th Century. Most American don’t realize that such iconic American companies as BF Goodrich and RCA are now owned by French corporations, and that Carnation and Gerber are now owned by Swiss corporations. Most foreign countries don’t allow 100% foreign ownership of their businesses, but sadly, the United States does not exercise the same prudence. We sell our companies to them, and they almost never sell theirs to us. This tilted playing field has gutted America’s economic power. What is enabling Chinese companies to go on a buying spree of American assets? Trade deficits - our ever-increasing trade deficit with China over the past 20 years is transferring America’s wealth to China and making millionaires out of many Chinese. In 1994, our trade deficit with China was $29.5 billion, and it grew to $83.8 by 2001 when China was granted “Most Favored Nation” status and admitted to the World Trade Organization. By 2004, it had doubled to $162.3 billion. After a slight dip in 2009 during the depths of the Great Recession, the trade deficit grew to $318.4 billion in 2013. If you add the annual trade deficits for the past 20 years, it totals $3.15 trillion. China now has over one billion serious savers and more than a million millionaires whose assets when combined provide billions to spend to buy our assets. In addition, it is our trade deficit with Japan that has enabled Japanese corporations to go a buying spree of American assets since the 1980s when such companies as Columbia Pictures Entertainment was acquired by the Sony Corporation of Japan in 1989, and Bridgestone Corporation of Japan bought Firestone in 1988. However, our highest trade deficit with Japan of $84.3 billion in 2007 was nearly one third of our current trade deficit with China. While we are still transferring wealth to Japan, it is a democracy and doesn't have armed missiles pointed in our direction. In theory, we have the means to protect ourselves from this. CFIUS, the Committee on Foreign Investment in the United States, has the power to regulate, approve and deny these purchases. However, it is rare for the CFIUS to block deals. “During 2011, the most recent year with data available, the CFIUS was notified 111 times of deals that fell under its purview. Of those 111 covered deals, 40 were investigated and just five were withdrawn during that investigation...This year, Chinese companies have bought 10 companies worth $10.5 billion, says Thomson Reuters. That’s more than 20% of the 484 U.S. companies that have been bought by foreign companies this year worth $43.6 billion, Thomson Reuters says.”

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The 2013 Annual Report to Congress by the U.S.-China Economic and Security Review Commission states, “China presents new challenges for CFIUS, because investment by SOEs can blur the line between national security and economic security. The possibility of government intent or coordinated strategy behind Chinese investments raises national security concerns. For example, Chinese companies’ attempts to acquire technology track closely the government’s plan to move up the valueadded chain. There is also an inherent tension among state and federal agencies in the United States regarding FDI from China. The federal government tends to be concerned with maintaining national security and protecting a rules-based, nondiscriminatory investment regime. The state governments are more concerned with local economic benefits, such as an expanded tax base and increased local employment, rather than a national strategic issue, especially as job growth has stagnated.” The report, continues, “China has amassed the world's largest trove of dollar-denominated assets. Although the true composition of China's foreign exchange reserves, valued at $3.66 trillion, is a state secret, outside observers estimate that about 70 percent is in dollars. In recent years, China has become less risk averse and more willing to invest directly in U.S. land, factories, and businesses.” Did we let the USSR buy our companies during the Cold War? No, we didn’t! We realized that we would be helping our enemy. This was pretty simple, common sense, but we don’t seem to have this same common sense when dealing with China. China has a written plan to become the Super Power of the 21st Century. With regard to China’s military buildup, the report states, “PLA modernization is altering the security balance in the Asia Pacific, challenging decades of U.S. military preeminence in the region...The PLA is rapidly expanding and diversifying its ability to strike U.S. bases, ships, and aircraft throughout the Asia Pacific region, including those that it previously could not reach, such as U.S. military facilities on Guam.” It is time to wake up to the real dangers of our dangerously high trade deficits with China. The Communist Chinese government is not our friend. They are a geopolitical rival that is striving to replace the United States as the global hegemony. We should not let Chinese corporations acquire any more of our energy companies or technology-based companies if we want to maintain our national sovereignty.

MICHELE NASH-HOFF is the President ElectroFab Sales and the author of Can American Manufacturing be Saved? Why We Should and How We Can, available at www.savingusmanufacturing.com or www.amazon.com

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PrecisionNews // NTMA INITIATIVES

How Can NTMA Help You Grow Your Business? Profitability grows when revenue increases and costs are controlled. NTMA can help you with both. Though most of our members are small- to medium-sized companies, the power of the association can help you do business like a large corporation. REVENUE GROWTH • We organize regular business-to-business purchasing fairs, designed to operate like speed dating for suppliers. We invite 100 or more buyers from large companies and then give you opportunities to briefly pitch your products and services. As a result attendees leave with good contacts and solid leads, leading to increased business. Companies have been awarded millions of dollars in contracts as a direct result of these events. • We offer a program called Members First, designed to help members turn to each other to meet needs. Perhaps your next customer is an NTMA peer? Or perhaps an NTMA member would make an excellent vendor for you? Members First helps make the connections. • By interacting with fellow members in your local chapter, you may discover new business opportunities, or ways to work together with peers to increase business or market yourselves cooperatively. COST CONTROL • We offer discount programs with several large suppliers (including Grainger, UPS and Yellow Freight), allowing you to leverage NTMA’s combined buying power for your own benefit. • Our business insurance program keeps more money in your pocket by offering a necessary product in a low-overhead, notfor-profit manner. Our decision resources allow you to be smarter about how you use your resources, resulting in greater efficiencies and lower costs. Learn more at: www.ntma.org/initiatives

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PrecisionNews // ARIZONA TOOLING & MACHINING ASSOCIATION

MEMBER LISTINGS REGULAR MEMBERS David Wright

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PrecisionNews // ARIZONA TOOLING & MACHINING ASSOCIATION

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Scottsdale Business Banking Allen McDougall, Sr. Relationship Manager 480-348-5114 Contact Chris Mignella at: ExecutiveDirector@arizonatooling.org

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480.348.5114 :H VSHFLDOL]H LQ SODFLQJ VNLOOHG SHUVRQ 6/08 Safety Meeting (General Safety Standards) 11:30 PDLQWHQDQFH PHFKDQLF DQG RWKHU VNLOO at Leavitt Group, 919 N. 1st St., Phoenix MANY6/09 THANKS Combined Membership, Marketing & Program 7R ÂżQG RXW KRZ \RX FDQ SXW RQH RI WKH ODU MeetingATMA 11:30-1:00VALUED at Foresight Technologies, TO OUR 2014 SPONSORS: VSHFLÂżF UHFUXLWHUV WR ZRUN IRU \RX FRQWD 1301 W. Geneva, Tempe 6/21 Board of Directors Meeting 11:30-1:00at at 1.888.AEROTEK RU JR WR www.aer Micro-Tronics, 2905 S. Potter, Tempe, 85282 6/29 General Dinner Meeting 5:00-8:00pm at Phoenix Airport Hilton, 2435 S. 47th Street, Phoenix

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NTMA UPCOMING EVENTS

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NTMA/PMA 2014 Legislative Conference Washington, DC â&#x20AC;˘ May 5-7, 2014

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ATMA EVENTS IN MAY/JUNE 2014 May NTMA Conference > 3/5-8 Safety Meeting > 5/6 @ 11:30-1:00pm (Phoenix Heat Treat) Membership/Mktng & Program Mtng > 5/15 @ 4:00pm (Doubletree Hilton/Raintree Room) @ 4:00pm - 5:30pm Board of Directors Mtng > 5/20 @ 4:00pm (MicroTronics) Dinner MEETING > 5/28 @ 5:00-7:30pm (Airport Hilton)

June Precision News Articles/Ads Due > 6/9 Membership/Mktng & Program Mtng > 6/12 @ 4:00pm (Doubletree Hilton/Raintree Room) @ 4:00 - 5:30pm Board of Directors Mtng > 6/17 @ 4:00pm (MicroTronics) Roundtable Meeting > 6/25 @ Airport Hilton 5:00 - 8:00pm For more information contact Chris Mignella at: ExecutiveDirector@arizonatooling.org Arizona Tooling & Machining Association

ATMA PRECISION may/june 2014

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• Machining Excellence since 1997 • ISO 9001 + AS9100B Certified • Experienced senior machinists • Experts in stainless, aluminum, plastics and exotics • 8A Certified, Viet Nam Vet, Minority Owned Small Business • Eager to provide you with quality performance and quick responses

Contact Nichols at 480-804-0593 www.nicholsprecision.com

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Contact Nichols at 480-804-0593 www.nicholsprecision.com

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32 /

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PrecisionNews // NTMA -SAN DIEGO CHAPTER

MEMBER LISTINGS

SAN DIEGO CHAPTER

REGULAR MEMBERS 2014 BOARD OF DIRECTORS President SEAN TILLETT Alphatec Spine, Inc. Vice President CLIFF MANZKE Manzke Machine, Inc. Corporate Secretary and Treasurer HEATHER RUSSELL K-Tech Machine, Inc. Membership MIKE BROWN Computer Integrated Machining Past President TONY MARTINDALE Martindale Manufacturing BOARD MEMBERS Education Board Member John Riego de Dios Construction Tec Academy, Kearny HS Member at Large Lyle Anderson Member at Large Michael Brown Chapter Executive Tammy Tillett Advertising/Marketing Cathy Teal

OUR MISSION “To form an alliance within the San Diego region of the local machining and tool industry and to foster mutual success through education, technology, opportunity sharing and act as one voice with the government and the community.” San Diego - NTMA Chapter 197 Woodland Pkwy., #104, PMB #148 San Marcos, CA 92069-3020 Phone: 805.558.5830 Email: info@ntmaSanDiegoChapter.com www.ntmaSanDiegoChapter.org

Sean Tillett

Alphatec Spine

760.494.6774

Darryl Chudomelka

Asigma Corp.

760.966.3103

Peter Neville

B&H Tool Company Inc.

800.272.8878

Alejandra Rogue

BMW Precision

760.966.3103

Lyle Anderson

C&H Machine and EDM Services

760.746.6459

Maurice Brear

Compucraft Industries

619.448.0787

Michael J. Brown

Computer Integrated Mach., Inc.

619.596.9246

Erich Wilms

Diversified Tool & Die

760.598.9100

Michael Duffy

Duffy Machine

760.598.7963

Donovan Weber

Forecast 3D

760.929.9380

Andrew Allen

Henry Machine, Inc.

760.744.8482

Jim Piel

J I Machine Company, Inc.

858.695.1787

Heather Russell

K-Tech Machine, Inc.

760.471.9262

John Riego de Dios***

Construction Tec Acad. Kearny HS

858.496.8370

Frank Harton

L.F. Industries, Inc.

760.438.5711

Cliff Manzke

Manzke Machine, Inc.

760.504.6875

Russell Wells Sr.

MarLee Manufacturing, Inc.

909.390.3222

Mike Meziere

Meziere Enterprises, Inc.

760.746.3273

Linda Kurokawa***

Mira Costa College

760.795.6824

Mark Rottele

Roettele Industries

909.606.8252

Beau Haubruge***

San Pasqual High School

760.291.6000

Robert Kemery

Solar Turbine

619.544.2808

Scott Cormony

Waterjet West, Inc.

760.471.2600

*National Associate Members **Associate Member ***Educational Partner

ASSOCIATE MEMBERS Glenn Van Noy

Champion Risk and Insurance Services

Founder 800.829.0807 x716 760.916.1741

Steve Doda

Aerotek

Greg Seaholm

IMS Metal Supply

858.602.9297

Greg Mercurio

Shop Floor Automation

619.461.4000 x1001

San Diego - NTMA Chapter EVENTS May Member Meeting • 5/22/2014 San Pasqual - NIMS Manufacturing - San Pasqual HS June Member Meeting • 6/19/2014 Restaurant (TBD) Strategies - Exit Planning July Member Meeting • 7/17/2014 Outdoors (TBD) SD Chapter Picnic August August 1-3, 2014 Dallas, TX SWR Conference Visit www.ntmasandiegochapter.org for details as they become available.

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PrecisionNews // NTMA MEMBERSHIP

Why join NTMA? To say it simply, the NTMA gets it. We understand your challenges in today’s economy. We recognize that many of you face a talent gap, with necessary skills in short supply. And we know that there’s a gap between the reality of our industry and the public’s perception of it. But even more importantly, NTMA has the resources to do something about these issues. Our educational programs stimulate the talent pipeline. Our resources and roundtables help members share best practices and solve common business problems. And by speaking with one voice, we cut through media-generated perception to communicate reality to policy makers and the public. American ingenuity isn’t dead. It isn’t in decline. It’s alive and well in the custom precision manufacturing industry. NTMA stands for the future. We also stand with your peers. Will you stand with us– and your industry–today? JOIN US TODAY!

BENEFITS OF JOINING Networking You don’t have to go it alone. Membership immediately connects you with peers at the local, regional and national levels—opening up conversations that can lead to new opportunities while helping you discover better ways to operate. Training We offer an arsenal of training programs designed to pick up where American vocational and technical education leaves off, preparing your workers to meet the demands of today’s precision manufacturing environment. These range from informal programs to college-level courses. Discount Programs You don’t have to be a big company to get big-company treatment from suppliers and vendors. Through association membership, you qualify for volume discounts on everything from office supplies to payroll service to shop components—no matter how small your volume may be. Online Resources From job postings to a members-only marketplace, from industry news to archived webinars, NTMA members can take advantage of a number of benefits without ever leaving their keyboards. Market Research Good business begins with good planning. But it’s hard to plan without reliable market intelligence. That’s where our reports come in. We survey the marketplace as well as our members to put useful data in your hands.

2014 NTMA PURCHASING PURC HASING FFAIR AIR

June 3-4, 2014 H O F F M A N E S TAT E S , I L

WHERE BUYERS M MET ET SUPPLIERS FO FOR R 30 YE YEARS ARS

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Cut off off Date 5/19/2014 For more information please visit:

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Initiatives NTMA is constantly moving forward, seeking new ways to help you grow profitably. Our programs include everything from the National Robotics League to a constantly evolving set of benchmarks and best practices.

VISIT:

NTMA.ORG 800-248-6862

1.800.248.6862

ITINERARY IT INERARY

JUNE 3RD 12:00pm - 1:00pm W Welcome elcome and Lunch aatt DMG Mor Morii 1:00pm - 5:00pm Business Dev Development elopment and Marketing Seminarss Seminar 5:00pm - 7:00pm W Welcome elcome Reception aatt Big Kaiser JUNE 4T 4THH 9:00am - 3:00pm Purchasing F Fair air at at Big Kaiser

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NORTH TEXAS CHAPTER 2014 BOARD OF DIRECTORS President TODD ELLARD Manda Machine Company Vice President JEFF SPENCER Clay Precision Treasurer BARRON SMITH R.W. Smith Company Chapter Executive LISA ELLARD Trustee JOE O’DELL Plano Machine & Instrument, Inc.

BOARD MEMBERS Mike Berdan BE Technologies Frank Burch Southern Machine Works Bill Walter Ellison Technologies Micah Embrey CNC Precision/Shamrock-Bolt Don Halsey Halsey Manufacturing Ray Jones MWI, Inc. Pat McCurley Midlothian Insurance Karla Chandler Education Liason

NTMA - North Texas Chapter ntc.ntma@gmail.com phone: 214.536.4970 PO Box 541236 Dallas, TX 75354-1236 ntmanorthtexas.org

NTMA-NORTH TEXAS MEETINGS & EVENTS May 15, 2014 – Sponsor and Associate Night Shamrock Precision August 1-3, 2014 – NTMA Southwest Regional Conference in DALLAS

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PrecisionNews // NTMA -NORTH TEXAS CHAPTER

MEMBER LISTINGS REGULAR MEMBERS

ASSOCIATE MEMBERS

Vincente Chan

Aeroweld Technologies, Inc.

972.247.1189

Larry Ellison

AJR Metalworks, Inc.

214.352.3766

Mark Hestly

Air & Earth Instrument Company

972.438.2277

Tommy Thompson

Bodic Industries

972.840.1015

Wade Whistler

A.C.T. Precision Sheet Metal, Inc.

214.678.9114

Lewis Lance

Bodycote Heat Treat

817.265.5878

Wayne Applegate

Applegate EDM, Inc.

972.488.8997

Rick Blair

Brook Anco Corporation

585.475.9570

Tony Woodall

AST Waterjet

972.554.0383

Craig van Hamersveld

Campat Machine Tool, Inc.

972.424.4095

Dan Wiktorski

Axis Machine Works, Inc.

214.390.5710

Claudia Pautz

Castle Metals

972.339.5000

Steve Ingersoll

Bailey Tool & Manufacturing

972.974.8892

Norm Williamson

H & O Die Supply, Inc.

214.630.6660

Michael Berdan

BE-Technologies, Ltd.

972.242.1853

Mike Johns

Haas Factory Outlet

972.231.2802

Christi Cameron

Cameron Machine Shop, Inc.

972.235.8876

Matt Curtis

Hillary Machinery, Inc.

972.578.1515

Jeff R. Spencer

Clay Precision, Ltd.

903.891.9022

Rod Zimmerman

Iscar Metals, Inc.

817.258.3200

Joseph Lodor

Commerce Grinding Company, Inc.

214.651.1977

Curtis Dahmen

Kaeser Compressors, Inc.

972.245.9611

Robert McNamara

Davis Machine & Manufacturing

817.261.7362

Mark S. Holly

Machinists Tools & Supplies

214.631.9390

Charles Gilbert

DNS Tool Cutter Grinding, LLC

972.241.5271

Leland McDowell

McDowell Machinery & Supply Co.

214.353.0410

David Ellis

Ellis Tool & Machine, Inc.

903.546.6540

Nicki Smith

MSC Industrial Supply

817.590.2637

Jim Harris

E.W. Johnson Company

972.436.7528

Ray Jones

MWI Inc. / Southwest Division

972.247.3083

Rudy D. Kobus

Expert Tool & Machine, Inc.

972.241.5353

Mike Chadick

North Texas Precision Instrument

817.589.0011

Monte Titus

F& R Machine & Repair, Inc.

214.631.4946

Reed Hunt

Reed Hunt Services, Inc.

817.261.4432

Gary Fore

Fore Machine Company, Inc.

817.834.6251

Scott Devanna

SB Specialty metals

800.365.1168

Mike Lee

Fort Worth Centerless Grinding, Inc.

817.293.6787

Bob Severance

Severance Brothers

972.660.7000

Shevin Goodwin

Goodwin Machineworks

972.242.485

Alan VanHoozer

Top Tooling of Dallas, Inc.

972.278.8300

Larry Borowski

Greenslade and Company, Inc.

817.870.8888

Glenn Wise

Wise Machinery, LLC

817.905.9473

Oscar Guzman

Guzman Manufacturing

972.475.3003

David L. Hodgdon

H. H. Mercer, Inc.

972.289.1911

Don Halsey, Jr.

Halsey Engineering & Mfg., Inc.

940.566.3306

MANY THANKS

Mike Kenney

Kenney Industries

214.421.4175

Denver Knox

Knox Machine Company

817.551.1600

TO OUR NTMA-NORTH TEXAS SPONSORS:

K & D Tool & Die, Inc.

972.463.4534

Cory Trosper Keith Hutchinson

ATMA_0202_FINAL_Layout 1 6/18/11 7:02 AM Page 19

Lancaster Machine Shop

972.227.2868

Scott Cody

LSC Precision, Inc.

940.482.9700

Sammy Maddox

Maddox Metal Works, Inc.

214.333.2311

Todd Ellard

Manda Machine Company, Inc.

214.352.5946

David Evans

• Machining Excellence903.439.6414 since 1997 Manek Equipment, Inc.

Rodie Woodard

• ISOInc. 9001 + AS9100B972.501.9990 Certified Maximum Industries,

Woodrow W. Thompson Allen Meyer Eddie Mills Eddie Steiner, Jr. Morris Padgett

• Experienced senior machinists 214.330.7757 • Experts in stainless, aluminum, Meyer Enterprises plastics and exotics 972.353.9791 • 8A Certified, Viet Nam Vet, Mills Machine Shop 940.479.2194 Minority Owned Small Business O E M Industries, Inc. 214.330.7271 • Eager to provide you with quality Padgett Machineperformance Tools, Inc. and quick 254.865.9772 responses Metal Detail, Inc.

Troy Paulus

Paulus Precision Machine, Inc.

Joe O’Dell

Plano Machine & Instrument, Inc. 940.665.2814 www.nicholsprecision.com

940.566.5600

Contact Nichols at 480-804-0593

Matt Harrell

Quickturn Technology, Inc.

469.643.5010

Barron Smith

R. W. Smith Company, Inc.

214.748.1699

Mike Embrey

Red Rock Industries

940.665.0281

Gary Embrey

Shamrock Precision

972.241.3931

Frank Burch

Southern Machine Works

580.255.6525

John Anselmi

Sunbelt Plastics Inc.

972.335.4100

Marshall B. Taylor

T & K Machine, Inc.

903.785.5574

Jake Bailey

Tower Extrusions Fabrication

940.564.5681 512.383.0089

Tom Buerkle

Traxis Manufacturing

David Greer

Tribal Solutions, Inc.

972.436.0422

William Winberg

Winberg & Company

817.640.7930

BIL L OR M A C H IN E T OOL SERVIC E

“The Power of Connections” may/june 2014

arizonatooling.org

PrecisionNews

Shop Floor NEWS FROM THE FRONT LINES

Fire Protection & Prevention by JAMIE BEAUVAIS, Arizona Safety & Emergency Consultants LLC

Fire is a chemical reaction that requires three elements to be present for the reaction to take place and continue. The three elements are:

HEAT, FUEL AND OXYGEN These three elements typically are referred to as the “fire triangle.” Fire is the result of the reaction between the fuel and oxygen in the air. Scientists developed the concept of a fire triangle to aid in understanding of the cause of fires and how they can be prevented and extinguished. Heat, fuel, and oxygen must combine in a precise way for a fire to start and continue to burn. If one element of the fire triangle is not present or removed, fire will fyi: not start or, if already burning, will extinguish.

Heat, fuel, and oxygen must combine in a precise way for a fire to start and continue to burn.

Ignition sources can include any material, equipment, or operation that emits a spark or flame—including obvious items, such as torches, as well as less obvious items, such as static electricity and grinding operations. Equipment or components that radiate heat, such as kettles, catalytic converters and mufflers, also can be ignition sources. Fuel sources include combustible materials, such as wood, paper, trash and clothing; flammable liquids, such as gasoline or solvents; and flammable gases, such as propane or natural gas. Oxygen in the fire triangle comes from the air in the atmosphere. Air contains approximately 79 percent nitrogen and 21 percent oxygen. OSHA describes a hazardous atmosphere as one which is oxygen-deficient because it has less than 19.5 percent oxygen, or oxygen enriched because it has greater than

PrecisionNews

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may/june 2014

23.5 percent oxygen. Either instance is regarded by OSHA as an atmosphere immediately dangerous to life and health (IDLH) for reasons unrelated to the presence of fire. Depending on the type of fuel involved, fires can occur with much lower volume of oxygen present than needed to support human respiration. Every roofing project has all three of the fire triangle elements present in abundance. The key to preventing fires is to keep heat and ignition sources away from materials, equipment, and structures that could act as fuel to complete the fire triangle. Fire Classifications Fires are classified as A, B, C, or D based on the type of substance that is the fuel for the fire, as follows: Class A - fires involving ordinary combustibles, such as paper, trash, some plastics, wood, and cloth. A rule of thumb is if it leaves an ash behind, it is a Class A fire. Class B - fires involving flammable gases or liquids, such as propane, oil, and gasoline. Class C - fires involving energized electrical components. Class C - fires involving metal. A rule of thumb is if the name of the metal ends with the letters “um,” it is a Class D fire. Examples of this are aluminum, magnesium, beryllium, and sodium. Class D fires rarely occur in the roofing industry.

Resources: Fire Protection and Prevention. n.d. https://www.osha.gov/dte/grant_materials/fy09/sh-1879609/fireprotection.pdf. Learn more at: www.ica.state.az.us or www.atma.org