The US economy might be at the beginning of what looks to be a challenging second half, according to Reibus International CEO and founder John Armstrong.
He sat down with SMU managing editor Michael Cowden for a Community Chat to discuss the economic outlook, its impact on Reibus, and the company’s long-term goals around digitizing how steel is bought, sold, and transported.
“It’s going to be harder to get credit, harder to raise capital,” Armstrong said. That’s because of higher interest rates and tighter lending standards stemming from the banking crisis.
Also, he advised to “look at the data,” as the economy hasn’t yet felt the full effect from the layoffs that have hit tech and other sectors. He predicted challenges ahead in non-residential construction and in automotive.
When it comes to steel, medium and smaller service centers might face real challenges. “Many of them are supported by local banks that are going to make it harder to lend,” he said.
Another issue: a big perceived price gap between buyers and sellers, one that could be running as high as 25%. It all adds up to a “confusing” steel market.
In a March 23 interview with SMU, Armstrong had disclosed that the company had laid off just over 50 people in the prior few weeks. Regarding the layoffs, Armstrong said that though they were unfortunate, they were “more of a reorganization than a reduction.” The company, as part of that restructuring, closed a commodity-trading business in Dubai. But it also had successes during the same time frame, he said.
For example, Reibus built out its logistics business, expanded in Europe, and developed digital platforms that support six languages. “We’re doing many things we’ve never done before,” Armstrong said.
He described Reibus as a “technology company that deals in metal” and explained why past attempts at digitization hadn’t succeeded. “They failed before iPhone technology was there.” In short, a prevalent digital culture, in addition to better digital technology, supports greater use of online platforms now. The same technologies and culture were not there to support attempts at digitizing steel buying and selling in past decades.
Looking ahead, Armstrong is optimistic. The company is expanding in Europe and in Asia. It has gained traction in the North American trucking market and is moving into different modes of transport, including ship and rail. It is also building its core business and improving relationships with core customers.
“Digitization is logical,” Armstrong said, adding that Reibus is “fully planned for the next 10 years.”
By Ethan Bernard, firstname.lastname@example.org