Print Friendly

Turning Ploughshares into Swords (Why War is Good for the Metals Business)

At a meeting of some of the writers and sponsors of Lord Copper (www.lord-copper.com) towards the end of last year, there was a debate about the value or otherwise of war to the metals business. Here, Anthony Lipmann proposes his view of the benefits; the opposite case will be put in the coming weeks.

As I write this, two Chinook helicopters throb slowly across my line of sight in a still, blue sky, heading for nearby Yeovilton Naval Airbase. Their gearbox-cases are cast at a foundry in London to whom we supply the zirconium to harden the magnesium. The gearboxes themselves are put together not far from here at Westland in Yeovil – the same Westland whose origins date back to leather-working. So, this is my first example of the profitability of war. For, in 1915, Westland Aircraft Works offered its services to the War Office when it was realised that the Somerset skills of leatherwork and sewing could be better deployed in aircraft manufacture rather than glove or shoe-making. The result – highly profitable contracts for Shorts and Sopwith.

Warmongering for metal merchants is no less profitable today. Another of the metals I trade in, which has both military and civil uses, is rhenium. When I make a sale of rhenium I do not know, for example, what percentage is used in civil or military engines. What I do know, though, is that the market would be considerably smaller were it not for the military application. At Pratt & Whitney, they calculate that three times as much rhenium is needed on average for the single engine F35 Joint Strike Fighter as for their newly launched geared turbofan civil engines. While the civil engine has already taken 7,000 orders, and is the fastest selling engine in the history of aviation, the prospects for the production of 2,400 F35s, rising to a possible 3,500 plus, means that a third more rhenium will be needed for military. The question arises, could this small industry survive without military orders? When rhenium rose to $12,500 per kg in August 2008, the lines at the Pentagon were humming with questions as to why rhenium wasn’t in the government stockpile? At that point the military freely admitted, it was not a question of price – it was a question of supply. When you look at it this way, it is not hard to understand that folk, like me, who supply this extra special metal would be sore oppressed if the military guys happened to find a replacement.

So let’s try to be honest about this side of the argument – War is damn good for the metals industry.

Of course, I might prefer to say, in a moralistic way, that peace is good for metals but it would fly in the face of about 4000 years of history. Take bronze for example (the alloy of Cornish tin and Cypriot copper). It was the harnessing of bronze that underpinned the empires that stalked the globe from Mesopotamia while the Brits (mercifully separated by water) were brexited up in caves or hunkered down in dwellings slung on stilts above the wetlands, spearing for fish. While Assyrian swords cut a swathe from East to West with tempered bronze, the best we could do at that time was sharpen a stone. Metal was providing its worth to empires and has never looked back.

In fact, war itself was so profitable in those days you could say it became an end in itself (a view strongly argued in Ian Morris’s book ‘War – what is it good for?’ (2014). In this book, Morris argues that productive war generates Leviathans, monstrous countries which demand obedience from their populace but at the same time, paradoxically, create spaces of peace for the majority of their citizens. Behind those monsters lay metal – initially ugly, brittle iron; latterly bronze. In both cases metal won, and those first metal merchants who generated metal and the objects made from it, were the states that commanded their people to mine, smelt, forge and kill.

Moving on to the 14th Century, trading in armour remained a good business to be in. Francesco di Marco Datini, a middle ranking Tuscan merchant, who left a cache of 150,000 letters to posterity like an email archive, is effectively the best window into the day-to-day life of a 14th century merchant. His trials and tribulations about payment, war, warring partners in his business, duplicity, are spookily familiar to the working metal man of the 21stcentury. When it came to trade in armour, he had few scruples about supplying both sides if it was good for business. He didn’t like peace much because, as he said, ‘For, when peace is made, they often sell their armour’.

But it’s when you get towards the First World War that it becomes easiest to make the case for the healthy relationship between metals, war and profit. For my information, I rely on Major General Smedley Butler (1881-1940), whose 1935 book ‘War is a Racket’ allows the money to tell the story. Bethlehem Steel: Profits 1910-1914 US $6 million per year average (1914-1918 US $49 million per year). United States Steel 1909-1914 US$105 million, (1914-1918, $240 million). Anaconda 1910-1914 US $5 million (1914-1918, $34 million). The visors, spurs, tin studs for shields and cuissards, blades and scabbards of Datini’s day had become barbed wire, armour-piercing projectiles, big guns and tanks. During WWI, 21,000 new millionaires were made in the USA, a fact we know via official US tax returns before offshore accounting became a national sport.

Joan Littlewood’s Oh What a Lovely War voices best the disgust of ordinary humanity at the business of war with the juxtaposition of the statistics of death versus the statistics of profit. How much of the British public knew, until her play, that the fuses in English grenades were made by Krupp? One scene in Act 2 comprises a shooting party, an activity as enjoyed by some metal people of our own era as it was in 1914, in which it is implied that businessmen have a community of interest whatever their sides in war…I was interested by the reference to Possehl, the Germany trust company, bequeathed  by the Possehl family to the citizens of Lubeck, for whom I worked in 1987:

France: What were you saying about nickel, von Possehl?

Germany: That last consignment – we didn’t get it.

America: Hazards of war – loss of consignments.

 

and further on

Britain: …they’ve just taken Jacks & Co to court for exporting iron ore to Germany, They’ve got a blacklist too – and I’m on it.

 

So here’s my penultimate example in this little article about how bloody profitable war can be for metal people. Even asymmetric wars and abstract wars on terror generate profit. If you happen to have been in the metal trade since the turn of the millennium you will also have been around in your office at the time of the destruction of the twin towers (incidentally, at one time also the home of Comex and numerous metal merchanting companies). Perhaps you will recall too the moment, a bizarre moment, a few days after the destruction, when someone had to start the clear up. At that time a company from New Jersey, a scrap metal company, not used I would imagine to ticker-tape parades or indeed any societal praise at all, led its heavy-lifting equipment down 5th Avenue towards Ground Zero to the unusual sight of standing ovations from New York citizens. For, at that moment, the scrappy symbolised spirit, the undying spirit, of New Yorkers, the resilience and the determination to carry on. A few months later I was at my desk when I was called by a firm of sworn samplers and assayers in Rotterdam perhaps to share with me their confusion. They had been asked to sample and analyse a large amount of burnt and mangled steel, high in organics.

Should the scrappy have done that job for free? Should he have donated his profit to the brave firemen of New York? Or should he have made a profit? Indeed was it not his duty to make a profit?

Today, Donald Trump is proposing to build a great wall between the United States and Mexico. At our office we have calculated that 100 kgs of rebar steel will be needed per cubic metre of concrete. The concrete wall will need to be 20 metres high (to discourage climbing) and 6 metres below ground (to discourage tunnelling). It will need to be 3154 kilometres long, which is the length of the border, and we therefore calculate that it will need approximately 2.6mt of rebar per metre or 8.2 million tons of steel.

One thing is for sure – even this apparently defensive act suggested by a US Presidential candidate will be profitable for one set of people.

If anyone should vote for Trump surely it is the steelmakers?

 

Published March 30th 2016 on www.lord-copper.com