Friday, September 3, 2010             Facebook    Twitter     LinkedIn

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Magazine Article

  

Penny Pinching



In an industry desperately trying to manage its costs, everyone's job becomes more difficult as a result of the instability. Airlines try to control costs to be certain not to exceed budgets, but then they're caught between a 50-percent cable price increase and increasingly expensive fuel. What's the right answer?

"It makes everybody's job very hard," Konkel states. "It makes our job harder, because we have to go ask for more money in an industry that we know is struggling." Copper and fuel aren't the only hikes shaking up the bottom line, but rubber compound used on the cables' connectors has also seen a 10 to 15-percent increase as a result of raising oil prices.

IF ONLY WE KNEW

No one cause is to blame for the price increase. "If only we knew then we'd all be rich," Konkel insists, but three primary forces have been behind the spike. According to Konkel, the most common explanation is the rapid industrial growth happening in China and the primary building construction. "I was thunderstruck," Konkel said of his most recent trip to Beijing. "Everything was under construction except roads. The cities are booming with new apartment buildings. The country is becoming more modernized."

Hurricane Katrina had an impact on the industry leaving massive parts of the south without electricity. Many areas still need to be rewired and copper suppliers can't get their hands on copper fast enough. Labor unrest and strikes within the Chilean copper mines have both factored into the scarcity. While it may seem to be prime entrepreneurial real estate throughout the U.S. and all of North America as copper remains in high demand, it simply hasn't been cost effective for companies to open new mining sites.

THE ALTERNATIVES

Reduce. Reuse. Recycle. Refurbish? Other than APUs, there is not a comparable copper alternative. ITT-BIW experimented with aluminum, because, at about a third of the weight Aluminum maintained half the conductivity of copper, but the metal was impossible to anneal.

"When carrying power from one point to another it has to be a copper cable," asserts Brian Piety of J&B Aviation.

The alternative some companies offer is to refurbish an old or damaged cable. After they receive the damaged cable they cut off the old connector and mold a new one on along with a new nose. By doing so, they are salvaging approximately 60 feet of cable and only charging for the new connector, the manpower and the electrical testing to make sure the refurbished cable works properly. According to Piety, a customer can do this for less than half the price of a new cable.