The U.S. copper industry tripled its productivity from 1975-90. Had the rest of the economy done as well, the standard of living in the United States would have increased three-fold.
"It boggles the mind, doesn't it," says John Tilton, a professor of mineral economics at Colorado School of Mines who researches the sources of labor productivity growth in the mining of natural resources.
This amazing productivity increase -- which saved the U.S. copper industry and keeps it second only to Chile's -- was not accomplished by discovering newer, richer deposits. Moreover, it was done in spite of increasing environmental regulations and associated costs.
Tilton's research reveals that only one fifth of the increase can be accounted for by a shift to more productive mines. Eighty percent of the improvements which led to increased competitiveness were made at the mine level.
"This was largely accomplished by engaging in innovative thinking, embracing new technology, and investing in more efficient equipment. This turnaround projects an image of mining that is closer to high-tech than to sunset industries," he said.
More importantly, Tilton believes this model can be generalized, with vital lessons in competitiveness for both managers of other beleaguered industries and for the country's economic policy developers.
Environmental regulations, often blamed for reducing the competitive abilities of U.S. companies, may actually have played a positive role. According to Tilton, "They forced efficiencies, causing companies to either invest in new equipment or close."
About half of the U.S. copper mines did shut down or greatly curtail their operations. "The rest gave careful thought to the future and what it would take to survive. They invested, innovated, and expanded," he said.
Conventional wisdom assumes that the survivors were the low-cost, highly productive mines. Tilton's work shows, however, that the mines which survived the crisis of the 1980s were not necessarily those with the lowest costs at the beginning, but rather those where management, engineers, and workers were most successful at reducing costs.
He cites the example of the Bingham Canyon mine. Kennecott Copper shut the mine down in early 1985 after five years of losses. Later that year it launched a $400 million modernization program that included a mobile in-pit crusher, a five-mile-long coarse-ore conveyor system, a seventeen-mile slurry pipeline to transport concentrate from the mill to the smelter, three autogenous grinding mills, six ball mills, and ninety-seven large-capacity floatation machines -- all embodying the latest technology. The result was an increase in labor productivity of nearly 400 percent.
Unfair foreign competition is another frequent scapegoat for failing U.S. industries. Although the copper industry did ask Congress for protection twice, it was never received. "Ironically, the U.S. copper industry would probably not be as competitive as it is today had it received the protection it asked for," Tilton said.
But even if the lessons Tilton teaches are taken to heart, eventually existing metal mines in the U.S. will play out. What then? There have been no major copper mines opened in the U.S. since the 1960's. Will the U.S. mining industry move abroad? Will the country become increasingly dependent on foreign imports?
More research and thought is needed to answer these compelling questions. Meanwhile, interested readers can learn more from Tilton's article "Surviving in the Competitive and Global Mining Industry" in Mining Engineering (September 1997).
He has also co-authored "Innovation, Productivity Growth, and the Survival of the U.S. Copper Industry," a chapter in the book Productivity in Natural Resource Industries (edited by R. David Simpson and published by Resources for the Future in 1999).
Contact:
Leah McNeill
(303) 273-3302
Pager 266-2652
[email protected]
http://www.mines.edu/All_about/public
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