Final Thoughts

Final Thoughts

Written by Tim Triplett

It’s ironic that so many companies finally have the financial capital they need to expand – thanks to record-high steel prices – but not the human capital. The shortage of qualified labor has been a serious drag on growth in most sectors of the economy, including steel. But ITR Economics reports some signs that the pandemic-related labor disruptions are finally easing.

gearsThe labor force participation rate has recovered to 62.3% from a mid-recession low of 60.0% and now stands at less than one percentage point below the pre-pandemic level, reported ITR in a recent blog.

Businesses are hoping the labor pool will swell now that enhanced federal unemployment benefits have lapsed. Resumption of in-person classes at schools will also have an effect as parents – freed from supervising their children’s remote learning – can reenter the workforce.

“Many of these factors are coming to fruition around the same time, suggesting there may be some easing of labor-force pressures late this year,” said the experts at ITR. “However, due to the severity of the labor market imbalance, we expect only moderate relief in the near term. The labor market imbalance existed before the COVID-19 pandemic and will not be resolved by a reversal in pandemic-related trends.”

Disintermediation Rearing Its Head Again?

Prior to joining Steel Market Update, I spent 20 years editing Metal Center News, a publication dedicated to the metals distribution channel. There I became very familiar with the word “disintermediation,” a fancy term for “cutting out the middleman.” That is among service center executives’ worst fears.

Steel mills have tried many times in the past to sell directly to large OEMs – sometimes through e-commerce schemes – usually to find they can’t provide the level of service that these customers have come to expect. In the process, they have damaged their relationships with distributors, who basically are an extension of their own salesforce.

SMU received a note recently from one service center exec who reported that some of his large customers are starting to get offers directly from a couple of mills.

“Considering the supposed supply constraints, I find it interesting they are going around the distribution base, which is a big percentage of the mill book, and trying to sell directly. Now that we are down to just four large producers and a few smaller regional mills, are they trying to shift strategies to try to cut out the middleman?” he asked.

Given the degree of mill consolidation, is this perhaps a strategy whose time has come? Or is it just a couple mills sending up a few trial balloons? Have you heard similar reports from your customers? Send a note (not for attribution) to and let me know what you think.

You have just a bit more than two weeks to take advantage of the information on the SMU Steel Summit conference platform. Attendees will have access to the platform at until 5 p.m. EST on Friday, Oct. 1.

SMU Events

There’s still time to register for SMU’s next Steel 101: Introduction to Steel Making & Market Fundamentals Workshop, which is set for Oct. 5-6. The curriculum is designed as a primer for those new to the industry and even as a refresher for those with some experience. Participants will get a look at all the stages of production in a virtual guided tour of a steel mill. You can learn more about next month’s Steel 101 workshop by clicking here.

Also put this on your calendar. SMU will co-host the Tampa Steel Conference, along with Port Tampa Bay, on Feb. 14-16, 2022, at Tampa’s Marriott Water Street Hotel. This will be a live and in-person event. You can learn more by clicking here

As always, we appreciate your business.

Tim Triplett, SMU Executive Editor,


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