Our guest on the show today is my friend Miles Free, Director of Industry Affairs at the Precision Machined Products Association (PMPA).
Miles was actually the first featured guest on this podcast four years ago, and we are very thankful to have him back for episode 149. He is definitely one of the most passionate people I know about the machining world. It was a great conversation in which we covered an array of topics, such as tariffs, shop safety, electric cars, and even a bit about Ghostbusters.
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Miles and I started the interview reflecting on the first episode we did together back in April of 2018. It was right around the time when President Trump was introducing tariffs on imported metals. Despite leaning conservative politically, Miles was very critical of the policy at the time and still is. He labels it the equivalent of implementing economic sanctions on ourselves—harsh sanctions. He reported to me that in December of 2021, for hot roll band, the US price for steel was $1,947 per ton. In Europe that same steel was $1,016 per ton, in China it was $634 per ton, and the world export price was $820 per ton. The policy was originally implimented to prop up the production of US steel mills. Today US steel mills are at 82.4% capacity, up less than 15% since the tariffs were implemented
Despite the huge disadvantage in raw material costs, US manufacturing is currently thriving, which Miles attributes to the fantastic ingenuity of US shops. He says several months after the initial Covid-19 panic caused demand for parts to plummet, customers suddenly needed new parts and demand shot back up. US contract manufacturers were prepared to step up to the plate to fill the demand. In 2021, PMPA shops had their highest average sales ever for December, up 23% from the average sales of the last five Decembers. Sales were up 18% over the prior year.
Miles says he is not sure if reshoring is actually occurring but according to the last census report, exports of US manufactured goods were up 18% from 2020 to $1.1 trillion.
Miles is a huge believer in the future of electric cars. He loves to reminisce about his first white paper for the PMPA back in 2003 in which he predicted a bright future for electric cars. Many association members said he was crazy at the time. Miles says today he can only think of five shops in the PMPA currently making automotive parts for the Big 3 automakers, but he can name a dozen PMPA members making parts for Tesla.
He pointed outside his office window to show me his own Tesla Model Y, which he was able to buy from selling portion of his own investment in Tesla stock. He boasts that he spends 1.7 cents per mile driving the car. Prior to gas prices shooting up, his 2015 Honda Civic Hybrid got him 5 cents a mile. He estimates a conventional internal combustion engine car would get about 15 cents a mile.
Miles made a point of covering the topic of safety in our interview. He says shops need to prioritize keeping their talented employees safe. He argues that if companies have a reputation for neglecting the safety of their people they will have trouble finding good talent. Also, the penalties for breaking safety laws can kill companies economically. Starting in 2022, the government passed a law that if a company even fails to post a sign with safety regulations they can be fined $14,502. Even accidental first offenses can trigger huge fines. It’s possible for a company to be fined $145,000 per violation per day.
According to Miles, the EPA also has very harsh punishments for violations—harsh for gross violations that are obviously detrimental to the environment, but also harsh punishments for unnecessary regulations designed by people ignorant about the processes in question.
I told him that sometimes talking about the EPA makes me think about the scene in Ghostbusters when the the ignorant EPA agent shuts down the protection grid, releasing all of the captive ghosts.
But I digress.
Talking to Miles is always interesting and an upper because he is so passionate about our industry. If you want more of his wisdom, I suggest you check out his blog at pmpaspeakingofprecision.com and his podcast, Speaking of Precision: Mondays with Miles.
Question: What has been the most surprising thing to you about the machining business in the last year?