Final Thoughts

We will host our Community Chats at 11 a.m. ET each Wednesday for the foreseeable future. The next session on April 29 will feature Ken Simonson, chief economist for the Associated General Contractors of America, who will report on how the coronavirus is impacting construction in the U.S. You can register for this webinar by clicking here.

If that time does not work for you, you can access a recording of each session at www.SteelMarketUpdate.com by clicking on the SMU Community Blog dropdown in the upper left. We intentionally keep these sessions short, less than 45 minutes, because we know folks are busy.

One drawback of our format is that we can only address a few of the many questions typed in by the 300+ participants who log in to each webinar. We understand it must be frustrating to ask a question that goes unanswered. But please keep the questions coming. They give us insights into what you are thinking and leads into subjects for future articles in Steel Market Update.

Last Wednesday, guest speaker Bernard Swiecki from the Center for Automotive Research (CAR) outlined the challenges vehicle manufacturers will face when they get the all clear to reopen their assembly plants. It’s not just a matter of turning on the lights and telling workers to report for duty. With virtually no sales since mid-March when the government ordered the shutdown of all nonessential businesses to stem the spread of the coronavirus, car companies are facing a major liquidity crisis. They may not have the capital they need to purchase parts and other materials (such as steel) and to handle the payroll until cash begins flowing again.

That being said, several people on the webinar asked for more specifics on the possible dates the auto plants may restart. Next to construction, automotive is the largest consumer of steel, and the health of the steel industry is dependent to a large degree on how quickly auto production can recover. Fiat Chrysler Automobiles (FCA), for example, has announced that it plans to begin reopening plants as soon as May 4. CAR has posted what it describes as “a living document” titled Restarting Automotive Manufacturing After the Coronavirus Pandemic, on its website, www.cargroup.org, which will track the progress week-by-week and plant-by-plant as automakers come back on line.

Swiecki is hopeful but skeptical that FCA and other companies will be able to get back to work in just a few weeks. The Kia plant in Georgia, for one, has the go-ahead from the state, which has renounced the stay-at-home rules ordered by most other governors. But Kia suppliers in other states still face restrictions. Many of the components that go into Kia vehicles come from Mexico and South Korea, which continue to struggle with COVID-19. “Other states and other countries must have their acts together. Trade needs to be there, by land and by sea. All the enablers need to be in place. Unfortunately, a good chunk of them are outside our country and outside our control,” Swiecki said.

Others listening in to the webinar asked for more detail on the status of the automotive market in Mexico, the USMCA trade agreement, the likely impact of historically low oil and gasoline prices on production of cars versus trucks, pent-up demand for new versus used vehicles, the lack of funding for R&D, and reshoring of the automotive supply chain, among others.

Please keep the questions coming. We’ll do our best to get to them eventually. Meanwhile, stay safe.

Tim Triplett, Executive Editor