Another Burden on Automakers

Proposed new rules requiring manufacturers — in particular auto parts suppliers — to identify the origin of some of the common minerals in their products could impose heavy additional costs on an industry that's just now getting its head above water. The well-meaning goal of the rules is to limit the use of minerals from war-ravaged central Africa, but the expense could impose additional hardships here.

The proposed rules are the result of the Dodd-Frank financial regulation law enacted last year. Publicly traded companies would be required to report the source of the metals they use in their products to the Securities and Exchange Commission. The act stems from worries that the minerals — gold, tin, tantalum, tungsten and others — from rebel-controlled mines in the Congo are fueling that country's civil war. The law requires firms to report whether their minerals came from the Congo or nine neighboring countries in Africa.

Enforcement was delayed until August.

Auto firms have told their suppliers they will have to be prepared to identify the source of their raw materials. Other firms — particularly high tech companies — are affected as well.

The National Association of Manufacturers has estimated the cost of the regulations on the manufacturing sector at $9 billion to $16 billion.

Rick Goss of the U.S.

Information Technology Council, at a meeting on the issue in Washington last month, reportedly called the law a "sledgehammer" that could create what amounts to an embargo on mineral products from a major portion of Africa. Once the metal is refined in smelters, Goss was quoted as saying, there is no way of identifying the country of its origin. The only way to assure the SEC that the metals don't come from central Africa, he said, is to refuse to do business with anyone "who touches central Africa," the Voice of America reported.

Ann Wilson of the Motor & Equipment Manufacturers Association told The Detroit News that "to put this burden on the industry to determine where raw materials come from down the supply chain is going to be very difficult."

The law ought to be repealed. The auto industry and its suppliers shouldn't be encumbered with the duty of solving the internal problems of central Africa.

At the very least, any regulations ought to allow manufacturers to report minerals as of an "indeterminate origin" until they are able to develop techniques for tracing and indentifying the raw materials in a more cost effective manner.

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