March 2012 - Optimism is building in the metals industry. In 2009, the forecast was bleak. The automotive and construction industries were floundering terribly and demand was extremely low. Moving on to 2010, the outlook began to improve. Companies were implementing strategies to deal with the economic conditions and making tough decisions so they would emerge from the recession with stronger, more efficient operations.
Last year, Modern Metals published the annual Editorial Advisory Board Roundtable feature in the May issue, and board members were feeling optimistic about both the state of the economy and their own right-sized, streamlined businesses. However, that feeling reached a plateau in the third and fourth quarters as demand began to stall. For 2012, board members are hoping the year’s slow upward trend is here to stay for the full 12 months.
“The 2012 outlook for the North American steel industry is for moderate growth with the market experiencing a 3 percent increase in apparent steel demand, according to the AISI,” says William C. Steers Jr., general manager, communications and corporate responsibility, ArcelorMittal Americas. “In the United States, demand is strong and is supported by energy and auto demand.”
Although year-over-year business seems to be improving, board members are concerned about global and political stability, which could have a huge effect on both long-term and short-term plans.
“The economy has been a disappointment to almost everyone you talk to,” says Richard McLaughlin, director, Hatch Beddows, Pittsburgh. He notes there are many unknown factors that might stall robust growth, including the outcome of the 2012 U.S. presidential election. “That will have an important effect on the economy itself because of people’s expectations and the potential impact on consumer confidence. There is almost a polar opposite point of view between the parties about what government should and shouldn’t be doing.”
Many in the industry are hoping for a different direction in future government polices, from business to infrastructure and everything in between. Less-restrictive policies mean companies will be more willing to start new projects, fund expansions or hire new employees.
“There has been much talk about reversing the decline of American manufacturing by both political parties in Washington, with precious little action,” Steers says. “We need new tax policies to encourage investment, stronger Buy America provisions to ensure that American tax dollars support American jobs, workforce training programs to prepare the next generation for technically demanding manufacturing positions and programs on industrial energy efficiency to help American businesses become more efficient.”
Being at the helm in business today is more complicated because of the global economy and the speed of information. Ultimately, optimism only will take the industry so far. It needs to be backed up by companies that are confident in the economy’s direction, both locally and globally, and confident that the drivers of demand will continue to be strong.
“We are faced with a globally competitive market, and we must continually improve to meet these changing dynamics,” says Dan DiMicco, chairman, president and CEO, Nucor Corp., Charlotte, N.C. “But that in itself is not new. Change is an ongoing historical reality and always will be. The ability to adapt yet stay strong in the fundamentals is more important than ever. Whenever we forget the fundamentals, we get disastrous results.”
To read more of the comments from Modern Metals’ editorial advisory board, turn to this month’s cover story on page 18. MM
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