TPT May 2010

G lobal M arketplace

Severstal’s chief executive andmajor shareholder,Alexei Mordashov, who said, “I am optimistic that we will see a broad improvement in the industry this year.” (10 March) In MetalMiner, a blog for purchasing professionals in the metals industries, Stuart Burns made the observation that Severstal’s position is typical of most global players now, certainly outside of China. In this view, steel makers are not interested in significantly increasing capacity. Rather, they are focused on moving upstream to more value-added products, in securing raw material supplies to insulate themselves against iron ore and coking coal price risk, and in improving their own quality and efficiency. Mr Burns wrote, “Even Severstal, whose highly competitive Russian plants are running at 95% capacity utilisation, are earmarking only a portion of their capital expenditure to expanding mini mill capacity.” (11 March) › Metal components manufacturer Precision Castparts Corp. (Portland, Oregon) announced it has acquired a 49% equity stake in Yangzhou Chengde Steel Tube Co, Ltd, a manufacturer of carbon steels and alloy steel seamless steel tubes. As reported by the financial newswire RTTNews (15 January), the American company said its lack of capacity for seamless boiler pipe manufacture would have forced it out of that market. Through its newChinese affiliation, Precision expects to gain immediate access to the boiler pipe market in China. From there, the distribution network of another US forgings and castings maker – Wyman-Gordon Co (Grafton, Massachusetts) – will introduce Precision Castparts products around the world.

Yangzhou Chengde Steel Tube manufactures seamless extruded pipe for boilers in coal-fired power plants, as well as pipe and tubing for energy-related applications such as the transport of compressed natural gas. It operates a single facility, in China’s Jiangsu Province. Legal proceedings In California, a ‘whistleblower’ suit against PVC pipe maker JM Eagle will go ahead without the participation of Washington JM Eagle (Los Angeles), the world’s largest manufacturer of PVC pipe, and its former parent company Formosa Plastics Corp (USA) are being sued for millions of dollars in damages for allegedly supplying substandard water and sewer pipe to states, cities, and municipalities across the US from 1995 to 2005. The new “qui tam” (whistleblower) lawsuit, like an earlier such suit filed by former employee John Hendrix, stems from an assertion by Mr Hendrix that the tensile strength of PVC pipe sold by the company was below that required by Underwriters Laboratories to qualify for the UL mark stamped on its product. JM Eagle moved its corporate headquarters from Livingston, New Jersey, to the West Coast in 2008. The plaintiff, an engineer in the product assurance division of J-M Manufacturing (the company’s name before its acquisition of PW Eagle in in 2007), in Livingston, was given the job of fielding customer complaints. He was, he said, trained to find ways of attributing leaks and ruptures to the governments and contractors who installed and maintained J-M pipes. “Only when he was assigned to oversee certain tests did Mr Hendrix begin to think the complaints stemmed from the company’s own cost- cutting measures,” Mary Williams Walsh wrote in the New York Times . “He said he realised JM Eagle had started buying a lower grade of raw materials from Formosa and had speeded up its production lines without reporting the changes to the certification agencies” as required. (“Bursting Pipes Lead to a Legal Battle,” 12 February) Mr Hendrix told the Times that he was asked to oversee the certification of a new manufacturing process that put the pipes through a prescribed battery of tests. He concluded that JM Eagle had been selling substandard plastic pipe since 1996, and that it had subsequently manipulated test results. According to his original complaint, filed in 2006, when he told his superiors of his concerns they said the problems were a normal “business risk.” When he pursued the issue, he was fired. › The filing of Mr Hendrix’s second qui tam suit followed on the announcement by the US government that it had decided against intervening in the matter. The decision, announced on 16 February, was hailed by JM Eagle as a finding of innocence, but that is to assert too much. The purpose of qui tam is to enlist the public in the recovery of civil penalties and forfeitures; the government rewards with a portion of the recovered proceeds those who sue in the government’s name, or otherwise assist in the recovery. A civil action brought either by the United States or by a relator – whistleblower or other private party – in the name of the government involves the same considerations (of expense, available time, and likelihood of success, among others) that inform any decision to go to law for the recovery of damages. › Writing in Plastics Today after the government announcement, Clare Goldsberry observed that the law firm representing Mr Hendrix includes among those alleged to have sustained damage from

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