|

Avoid Conflict: Comply With Dodd-Frank

NO RATINGS
View comments: newest first | oldest first | threaded
Richbuyer
User Rank
Stock Keeper
Gov't is famous for unintended consequences
Richbuyer   5/10/2011 5:48:12 PM
NO RATINGS

Thank you, Mr Hilvers, for intoducing some salient points of reality, the kind of which often is lost, amidst all the happy talk about saving the planet and intervening in the bad things done in other countries, (or even in our own!) I'm ALL FOR social responsibility, but as you allude to, the commonplace demogoguery found connected with such legislation will prevent any fair minded consideration of the actual human toll on the people impacted. At least, Reps Frank and Dodd can feel good about being champions of do-goodism.

And, Gerry - Your saying "I guess I am more of a market driven person and that doing the right thing eventually gets recognized in the marketplace." actually runs counter to what you're trumpeting. Aside from giving yourself a pat on the back, "doing the right thing" in the marketplace need not require the forceful intervention of the law. Is market driven synonymous with Gov't force-driven? I fear the rise of too many fascist-leaning people that are comfortable posing as free market cheerleaders. Please re-read Mr Hilver's message, albeit a bit more thoughtfully. Thank you. 


Gerry Fay
User Rank
Blogger
Re: Conflict Metals: Good intentions gone tragically bad.
Gerry Fay   5/6/2011 3:59:36 PM

Tony,
Thanks for your informative post. Through these interchanges, we all learn more.

While I appreciate your view and perspective, by singling out one paragraph to make your point, I want to ensure the readers understand the main point of my blog:

"The proposed SEC disclosure rules for the conflict minerals provision of the There is no doubt that the effects of this legislation will ripple throughout all layers of the electronics supply chain. How deep and wide these ripples will spread is still open for debate. What we do know, however, is the electronics supply chain is no stranger to the challenges imposed by such regulations.

I again thank you for your views as you are doing exactly what I hoped the blog would do: Create a debate to improve our overall education on this issue and to strive for creative solutions to a complex issue.

Regards,
Gerry

TonyHilvers
User Rank
Stock Keeper
Conflict Metals: Good intentions gone tragically bad.
TonyHilvers   5/6/2011 3:23:55 PM

I am concerned that the article “Avoid Conflict: Comply With Dodd-Frank” by Gerry Fay, Senior Vice President, Supply Chain Solutions, Avnet Electronics Marketing is unduly optimistic about the electronics industry’s ability to immediately solve a long-standing social conflict that has resisted efforts by the International Conference on the Great Lakes Region (ICGLR), the U.S. State Department and the United Nations.

In his article, Fay writes: “The trade in conflict minerals provides rebels and criminal networks within the region with hundreds of millions of dollars a year. The electronics industry is in the unique position to significantly diminish the resources available to these brutal and corrupt forces.”

IPC has been working on this issue for the last two years and initially I thought the same thing. Just don’t buy minerals (metals) from the Democratic Republic of the Congo (DRC) and put the rebel mines out of business. Unfortunately, social responsibility issues are complex no matter how much we like to think or fervently wish there is a simple solution.

Yes, I will address the significant financial toll to the electronics industry on this issue. But here’s the dirty little secret — there’s a human toll to pay in “boycotting” the mines in the DRC. Consider the DRC’s tin mines. The DRC’s tin mines account for roughly four percent of the global market for tin. And it’s estimated that about two percent of tin from the DRC has been identified as coming from conflict mines. Where does the other two percent of tin come from? The tin comes from many artisanal mines – mom and pop operations – whose wages support tens of thousands of people.

It’s tough, dirty work in these artisanal mines but it does provide a wage. Shut down these artisanal mines and what happens? Tens of thousands of miners in the DRC lose their jobs and most likely their only source of income.  Starvation will probably follow. And make no mistake about it; the artisanal mines will be shut down.  

There’s also a better than average chance that other countries surrounding the DRC will experience the flight from African minerals by the global business community.  And then, these African countries, like Rwanda, will suffer greatly too.

So what’s causing this law of unintended consequences? Dodd-Frank legislation, passed this year as part of the Wall Street Reform and Consumer Protection Act, requires publicly traded companies to report to the U.S. Security and Exchange Commission (SEC) on their source of tantalum, tin, tungsten and gold.  Though the SEC is still working on the rules, even now requirements are flowing down through the entire supply chain and across all U.S. industry segments — from automotive manufacturers to construction equipment to electronics.

The enormity of this supply chain review and audit is breathtaking — significantly larger and more costly in scope than RoHS. While the SEC last year estimated the cost of implementation at $16.5 million, IPC in a survey to its members estimated the cost to the electronic interconnection industry alone to be $279 million in the first year of implementation.

What’s the answer then? Well, the law has been passed and the SEC is writing the rules to address sourcing conflict metals. For artisanal miners, the damage has been done. No OEM in their right mind (or members of their supply chain) will willingly source metals from Africa, let alone the DRC.

And quite candidly, no one will oppose the law. As you can see, this is a complex issue turned into sound bites by well-meaning non-governmental organizations using terms like “blood metals” and “bloodberry phones.” If you oppose the law, then obviously you support rape and murder in the DRC by the rebel miners and criminal networks. It’s a no-win position.

There was — and maybe still is — a responsible solution to the issue of conflict metals. Over the last three years, electronics industry groups and global metals associations have been working to “bag and tag” minerals from artisanal mines in the DRC. The DRC government supports this action as do other countries in the Great Lakes Region of Africa.

It’s not a perfect system, but it can work if it’s given time to be implemented.  Unfortunately, the rush to source ‘”conflict free” immediately can only serve to worsen the situation in the DRC.   Right now, the only smelters that can be certified as “conflict free” are those that are not sourcing in the DRC or adjacent countries. We need to give these certification systems time to work.

Let’s face it; it seems nothing in the DRC is perfect or easy, even though we keep trying to legislate in order to make it that way.

www.ipc.org/minerals

Tony Hilvers

Vice President of Industry Programs

IPC – Association Connecting Electronics Industries

 

 

 

 

 

 

  

 

Gerry Fay
User Rank
Blogger
Re: RE : Avoid Conflict: Comply With Dodd-Frank
Gerry Fay   5/4/2011 9:43:31 AM

Anandvy,

I guess I am more of a market driven person and that doing the right thing eventually gets recognized in the marketplace.

But I like the way you think!

anandvy
User Rank
Supply Network Guru
RE : Avoid Conflict: Comply With Dodd-Frank
anandvy   5/4/2011 8:14:51 AM

"but you can bet that those companies that are among the first to label their products "conflict free" are going to enjoy a significant competitive edge."

@Gerry,

 Thanks for the  article. Let's first congratulate Avnet for taking the lead in developing the tools and strategies to tackle this menace. Why can't government put extra tax on the  non-"conflict free" products and distribute this extra tax collected to the people who are affected by mineral conflict ?


Gerry Fay
User Rank
Blogger
Re: Congratulations
Gerry Fay   5/3/2011 5:05:38 PM
NO RATINGS

Kevin,

I think if you read the next paragraph, the paragraph you reference will be more clear.

Regards,
Gerry

Gerry Fay
User Rank
Blogger
Re: Congratulations
Gerry Fay   5/3/2011 4:59:33 PM
NO RATINGS

Nemos,

Thanks for the feedback. I believe profits and social responsibility can go hand in hand and some times can lead to greater profits!

Regards,
Gerry

Kevin
User Rank
Stock Keeper
So, no problem?
Kevin   5/3/2011 4:57:35 PM
NO RATINGS

So, I'm free to use conflict minerals as long as I disclose the source?

Nemos
User Rank
Supply Network Guru
Congratulations
Nemos   5/3/2011 4:40:46 PM

First of all, I want to give you congratulations for this amazing passage and to the Avnet for being such a responsible company and doesn't  care only for profit.

I hope a lot of companies in electronic industry will follow your example, in conclusion I want to notice again the following sentence "We are keenly aware of our responsibility to maintain as socially and environmentally responsible a supply chain as possible"









More
Although costs are rising in the supply chain, smart logistics professionals can fight the trend with good practices.
It is more critical than ever that today's shipping customers make a concerted effort to be good customers.
With any new venture, organizations must do their due diligence before committing to set up shop in emerging markets.
Failing to plan may represent the greatest risk of all to the global supply chain.
In North America, the electronics supply chain relies heavily on ground shipping. Avnet's Gerry Fay interviews Dave Kevern, vice president, World-Wide Services at Federal Express to get insights.
Twitter Feed
EBN Online Twitter Feed
EBN Dialogue / LIVE CHAT
EBN Dialogue enables you to participate in live chats with notable leaders and luminaries. Open to the entire EBN community of electronics supply chain experts, these conversations see ideas shared, comments made, and questions asked and answered in real time. Listed below are upcoming and archived chats. Stay tuned and join in!
Archived Dialogues
Live Chat 01/15: CPOs Re-Shape Their Business Roles
Increasingly chief procurement officers (CPOs) are re-shaping their organizational role to focus on creating results far beyond cost controls. A new IBM survey explores how.
Live Chat 11/12: Examining the Cyberthreat to Supply Chains
The number of cyberattacks is on the rise and hackers are targeting the supply chain. Drew Smith, founder and CEO of InfoArmor, will be on hand to discuss the reality of today's threat landscape and what to do about it.