Manufacturers Should Strive for Quality, Cost Effectiveness to Boost Productivity

Introduction In preparing this paper considerable time was spent attempting to find some upbeat data about the mining industry, so those of us in the field could feel somewhat better about future prospects. Much to my regret, I failed to uncover substantial evidence that our near-term or, for that matter, our long-term opportunities appear all that bright in North America. That is certainly not the kind of assessment anyone likes to hear or accept as even a possibility. Those remarks may, on the surface, appear far too pessimistic. This industry will experience a recovery and most likely will see conditions begin to improve later this year or early next. The kind and degree of recovery, however, will more than likely differ from those experienced in the past. Fundamental Changes Clearly, the fundamentals on a world scale of our business have undergone important changes. In recognizing these fundamental changes, mining authorities believe productivity advances are needed to change the direction mining has taken in recent years. The really tough question is whether increases in productivity will be enough to change the course of events that has dominated the mining sector for the past decade. Before one can provide an honest answer, an appraisal of what has and is happening now is necessary. Here are some changes and events that have taken place that effect domestic mining and will probably continue: • Mineral-rich lesser developed countries (LDCs) in Africa, South America, and Asia-Pacific have reached a point where they have developed the needed mining infrastructure to not only produce at a high rate, but in many instances, at a lower cost than fully developed countries. Just as importantly, these countries, even if they do not enjoy lower costs, will produce for world export with government subsidies because min¬ing products are key in obtaining badly needed foreign exchange. • These producing countries also have the distance advantage of lower labor, environmental, and other important regulatory costs. If that were not enough, these same countries have minerals with considerably higher grade ore and, in some cases, much lower cost accessibility. • Exporting North American commodities is impaired by a dollar that continues to strengthen against other important currencies around the world. There are other impediments to overcome, but these represent some of the realities our industry faces. Can those obstacles be overcome through improving productivity? In the past, this industry has offset the impact of these events to a sizeable degree through innovations of mining techniques, equipment and processes, and by increasing the size of its individual operations to reduce costs. Will further enhancements along these lines be enough to alter this changing balance in the future? While there is no answer, it is apparent that if we do not mount a full-scale assault in some key areas, our prospects will not be encouraging. Productivity improvements throughout the entire chain of the mining industry most certainly rates as a high priority. Every link in that chain from mine planning, equipment selections, and transportation considerations needs to be examined and reexamined to assure the lowest effective cost is developed. Quality, while oftentimes costing a little more initially, is still the most cost effective purchasing decision to make. Regulations Another area of concern is regulations, be they environmental or those that dictate what must or must not be done in running our business. Certainly, I do not suggest that we not protect our environment. However, there is an acceptable balance that has, over