Final Thoughts
Final Thoughts
Written by John Packard
August 14, 2015
I was speaking with the owner of a manufacturing company late last week. He told me his company had a number of union plants and he has negotiated a number of union contracts over the past few years. “People don’t strike anymore,” he said, “unless someone puts a line in the sand and forces the issue.” He went on, “Health care, you have to come up with some viable solution.” He then told us, “The steel mills are not the issue. It is going to be auto where profits are high. What is the perspective of the union worker who gave all kind of concessions to bring the industry back? Michigan is a right to work state….”
“Sept. 7, Labor Day — Always a big day for the UAW and, in a contract year, can be the day the union picks a lead automaker for contract talks. Sept. 14: Four-year contract with GM, Ford and FCA US expires for about 140,000 hourly autoworkers. Oct. 1, 2015: Six-year contract with John Deere expires for 11,000 workers.” Detroit Free Press
The steel industry needs to watch the developments between ATI and the USW very carefully. It is our opinion that the ATI position regarding health care costs and the union’s need to participate in paying some of the costs for health care are the same (or similar) as those being presented to the USW union members at US Steel and ArcelorMittal USA. The stars have lined up against the union with both AM and USS at a cost disadvantage against their peers. Imports have been flooding the market, taking share from the domestic producers and forcing the domestic mills to re-evaluate all of their costs in order to be competitive. The union has to be aware, that after years of putting off the inevitable, they must now face giving back some hard fought gains.
Automotive is an entirely different story and one that may play out to be more important to the steel industry than the USS and AM contract talks. Automotive companies negotiated a two-tiered wage structure during the Great Recession. The companies have made billions in profits since then and we are looking at 2015 being close to 17 million light vehicle sale year.
It has been the automotive industry which has kept the flat rolled steel mills – especially the integrated mills – whole. Well, at least able to run. Now, with energy sector hurting from the prolonged high value of the dollar and low price for a barrel of oil, the steel industry cannot afford a strike at the auto companies.
The timing of our 5th Steel Summit Conference couldn’t be better. We have a number of issues which our panelist will be able to discuss as the industry faces some very critical issues: imports and dumping suits, union negotiations both with ArcelorMittal and US Steel as well as the auto companies and John Deere, a world economy gone awry, currency issues, commodity issues and questions about future demand in key industries: auto, energy and construction. Where are we in the industrial cycle and how do we return manufacturing to this country? We will have the largest gathering ever for a Steel Summit Conference and we would like to add your company name to our list (or better yet – your name). Go to www.SteelMarketUpdate.com and click on the Steel Summit link (Events tab) for details about our program and the cost to attend. You can register online or you are welcome to contact our office: 800-432-3475.
I was trading emails with a number of our speakers over the weekend as they labor to produce the best presentations possible for this year’s Steel Summit program. Dan DiMicco promised that he would produce a rousing keynote address and I encourage everyone to notice that we have saved the best for last. Our government regulation and trade panel with Kevin Dempsey of the AISI, Richard Chriss of the AIIS and Lewis E. Leibowitz a well know trade attorney, will have plenty to speak about in light of all the trade suits filed since June 3rd of this year. That panel will follow Dan DiMicco…
I want to take a moment to mention that SMU is adding a brand new “summit” conference in March of 2016. We will host our Leadership Summit 2016 at PGA National Resort & Spa (home of the Honda Classic Golf Tournament) in Palm Beach Gardens, Florida. The dates are March 8-9, 2016. Unlike our Steel Summit Conference this new conference is meant to be for a small group of executives as we tackle a limited number of topics over the two days. One of those topics will be on trade, trade suits, understanding the law and how to work within the system and much more. The conference will be focused on executives from manufacturing and distribution. We will produce more details in the coming weeks but mark your calendars now.
One of the metals and mining analysts pointed out to SMU over the weekend that the Chinese move of lowering the value of their currency vs. the US dollar would make iron ore and other commodities that the Chinese have to import more expensive for the Chinese steel mills.
On Monday we will begin our mid-August flat rolled steel market survey. If you receive an invitation, please take a few minutes to complete the questionnaire. If you didn’t receive an invitation to participate and you would like to, please send me a note at: John@SteelMarketUpdate.com
As always your business is truly appreciated by all of us here at Steel Market Update. Suggest our workshops (Steel 101 in October), conference and newsletters to your steel friends…
John Packard, Publisher
John Packard
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Final thoughts
SMU has heard from some larger buyers who have stepped back into the market to buy at prices that, if not at a bottom, they assess to be close to one. Is it enough to stretch out lead times and send prices upward again? Or do we continue to scrape along the mid-$600s per short ton (st) as we have been doing for most of the last month?
Final thoughts
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves had some insightful things to say today about the steel market and about a conference we suspect might be Steel Summit.
Final thoughts
They say a picture is worth a thousand words. Well, when you add in some commentary from respected peers in the steel industry to those pictures, that may shoot you up to five thousand words, at least. In that spirit, we’ve added some snapshots from our market survey this week, along with some comments from market participants.
Final thoughts
I thought we’d have more clarity this week on Section 232, Mexico, and a potential carve-out for steel melted and poured in Brazil. As of right now, the only official comment I have is from the Office of the United States Trade Representative (USTR).
Final thoughts
There are just 40 days left until the 2024 SMU Steel Summit gets underway on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta. And I’m pleased to announce that it's official now: More than 1,000 people have registered to at attend! Another big development: The desktop version of the networking app for the event has officially launched!