Supply and Demand

Bill Hackos, PhD.
Vice President, Comtech Services, Inc.

My last job before joining JoAnn at Comtech was with a mining company called the Climax Molybdenum Company. I know it’s a funny name. Molybdenum is a metal used to make stainless steel. If you have a stainless steel utensil set it contains molybdenum. It’s also used to make high-quality lubricants. Any lubricant that has the word “moly” in its name contains molybdenum. Climax is the name of the 11,000 ft high Colorado mining town where the company’s first mine was developed.

I worked in the computer center until the company lost most of its business to foreign competition. I was eventually laid off. Sound familiar? Here’s why I lost my job.

In the 1970s Climax was mining molybdenum at a cost of about $6.00 per pound and selling it at $9.00 per pound. Business was good. Then the demand for molybdenum increased sharply. Since Climax was the only producer of molybdenum in the world it was able raise its price because of the shortage. Eventually the price reached $30.00 per pound. Everything was wonderful!

Then the Chilean mining companies noticed that the price was so high that it was profitable for them to develop a molybdenum operation as a byproduct of their copper mining operations. For the first time, Climax had a competitor. The flood of molybdenum from Chile drove down prices. The price finally fell to $4.00 per pound. Climax could not compete with cheap Chilean molybdenum mined with very low labor costs and government subsidies.

The parallel of the current situation affecting the technical writing community intrigues me. Because of the bubble, the need for technical writers increased rapidly. The shortage led to very high wages for technical writers. Rightly or wrongly, company managements felt that they could get technical writing done more cheaply overseas even with the complications of distance, competence, and cultural issues. With the collapse of the bubble and the current availability of cheap overseas writers, the market for technical writers in the U.S. has collapsed. We are scrambling to find lower paying technical writing jobs or even looking at career changes.

The economics are parallel to the downfall of the Climax Molybdenum company. A shortage results in an astronomical increase in price, encouraging overseas interests to get into a business that was not feasible at the lower prices. Cheap labor overseas causes prices to fall, leading to a market collapse for Americans.

The molybdenum mining business has not recovered in the U.S. in 30 years.