« on: July 07, 2008, 03:11:34 PM »
A Penny Saved?
A supplier of the much-maligned coin tries to keep making cents
By Allison Gorman
The Lincoln penny turns 100 next year, and with its negligible value, we're as likely to vacuum up a penny as to stoop for it. In two U.S. cities, however, cents are still major stakes. One is Greeneville, Tenn., where since 1998 Jarden Zinc Products has been the sole supplier of U.S. penny blanks, which are 98% zinc. The 200-employee company, a subsidiary of New York-based Jarden Corp., also makes coins for other countries, as well as solid zinc strip. But pennies are big busi-ness for Jarden. Dun & Bradstreet estimates the company's coinage revenues last year at $140 million, roughly three-quarters of its total sales. The U.S. Mint contract alone represents $275 million since fiscal year 2004—$106 million in FY07.
The other city is Washington, D.C., where mint director Edmund Moy recently warned Congress that the cost of making low-denomination coins is "unsustainable." With metals prices soaring, the Mint has produced pennies and nickels at a loss since 2006; last year the cost of a penny peaked at 1.67 cents. Moy believes proposed legislation allowing the Treasury Department, not Congress, to determine coins' metal content could save taxpayers $100 million a year. Bill sponsor Sen. Wayne Allard (R-Colo.) says de-politicizing coin production would free it from influence by those with "an interest in keeping the status quo." Jarden Zinc, for one, anteed up $180,000 to lobbyists in 2006 and refers media inquiries to Washington attorney Mark Weller, its lobbyist and spokesman for pro-penny group Americans for Common Cents.
Jarden helped found ACC in 1990 to fight a now-perennial ground swell to eliminate the penny altogether. That move would cost Americans $600 million a year in prices, "rounded up," Weller says. MIT scientist and anti-penny crusader Jeff Gore counters that dealing with cents wastes $10 billion of Americans' time annually. "We need money," he says. "But how fine a gradation do we need?" (When the half penny was retired, Gore says, it had the buying value of today's dime.) Weller acknowledges that the penny will eventually disappear, but insists that "we're not at that point right now." Congress seems to agree—this session, anyhow—but with Allard's legislation gaining traction, and the Treasury Department eyeing steel as a coin substrate, Jarden is positioning itself for change. The company does produce steel coinage, Weller notes—though he suggests zinc may prove the more stable choice long-term.
Time will tell whether the Mint takes that bet; for now, it's opted out of the Jarden contract, which ends Sept. 30.
Seriously, how does anybody justify letting the government handle our money when they can't even create money at a profit, especially when they have a monopoly on the whole printing money industry?
Politicians lose money even when they print it.