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4. Cyclical
Vs.
Structural
5. Low Interest Rates
Improved Financial Market Conditions
Tax Cuts
Weaker Dollar Recovery Preconditions:
6. GDP Anemic
Unemployment High
Under-employment However:
7. Struggle continues for manufacturers
Chicago Tribune 7-4-03
Unemployment rate jumps to 9-year high
Chicago Tribune 7-4-03
8. Over 2.8 million manufacturing jobs lost in past 3 years
Manufacturing employment in the U.S., currently at approximately 14.8%, has fallen below the level at which it was first officially announced
The flight of labor-intensive goods-making tasks to low wage countries isnt the only reason for manufacturing unemployment anymore. Lately its been big companies tendency to order parts from foreign countries that has cost small to medium-sized U.S. family firms a lot of business. (Los Angeles Times 5/18/03)
9. Need for collaborative coalition of metals and manufacturing groups
We need to elevate awareness level of the manufacturing crisis
Large and small manufacturing businesses need to work together to insure fair and free trade
Securing Americas Future: The Case for a Strong Manufacturing Base Joel Popkin Study
10. Leverage the strength of our diverse membership base focusing it on saving N. A. manufacturing
Utilize our chapter infrastructure to conduct 5 town hall meetings by year-end
? Chicago on 8-21, Charlotte on 10-9, Atlanta on 10-16, Los Angeles on 10-21, Cleveland on 12-2 and 7-10 more scheduled in 2004
CEO fly-in to Washington, D.C. in February
Coalition for a Sound Dollar
12. Market fundamentals have historically not set the value of the Japanese Yen, Taiwanese Dollar, Korean Won and Chinese Yuan Governments Have!
Chinas growing trade surplus and huge foreign investment inflows would suggest one thing a stronger yuan reality is visa vie the U.S. dollar theres been no change
Optimism that Treasury Secretary Snow understands the issue
15. Coalition of over 80 trade associations focused on achieving a sound dollar policy www.sounddollar.org
Growing momentum to utilize Section 301 of the Trade Law of 1974 to get the Administration and Congress to address currency manipulation
IMF Article 4
Various provisions of WTO regulations
16. Personal Commitment & Participation Write your elected officials (federal, state & local)
Invite elected officials into your plants
Hold elected officials accountable to take a stance on pro-manufacturing agenda
Get engaged in championing manufacturing at home . . .
18. MSCI Town Hall MeetingSaving ManufacturingDecember 2, 2003 Michael D. Siegal
Chairman & CEO
Olympic Steel, Inc
20. U.S. DomesticHot Rolled Steel Prices This slide shows the dramatic price fluctuations we have experienced in the market during the past 3 years.
2003 prices are listed through August. We are now seeing a price increase.This slide shows the dramatic price fluctuations we have experienced in the market during the past 3 years.
2003 prices are listed through August. We are now seeing a price increase.
22. Months Supply on Hand
23. Weekly Production and Operating Rates
24. Steel Production Statistics - as of October 2003 * Year to date production at 80,748,000 tons, compared to 82,493,000 for the same period in 2002.
Year to date capacity utilization rate - 81.5%, a decrease of 2.1% from the previous year, trending upward.
Steel consumption is expected to cap at 114 million tons for 2003, compared to 115.5 million tons for 2002. 2004 projections are at 116.6 million tons, trending rapidly upward
Service center shipments at 36,944,000 tons for 2003, compared to 37,682,000 tons for the same period in 2002. Statistics misleading Statistics misleading
25. Imports in Tons
26. Euro and Canadian Dollar
27. Brazilian Real (inverted)
28. Korean won (inverted)
29. US Price Premiums
30. Finance/Credit Environment Steel industry on Office of Currency and Comptroller (OCC) watch list.
Lending is now asset based.
High fees and premiums.
The ratio of debt to EBITDA tightening.
Severe reduction of international credit insurance, limiting availability of imported steel.
Continued bank consolidation. In addition to currency issues, its a very challenging finance environment. In addition to currency issues, its a very challenging finance environment.
34. International Steel Group Inc. Major consolidation and restructuring in North America
Trade restraints lifted with NAFTA and WTO
Convergence of USA and Non-USA pricing
Emergence of China as opportunity and threat
May see disconnection of US prices and US economy?
Raw materials becoming a driver of price?
USA pursues European Model
35. Substantial Progress In Consolidation
36. Groundbreaking New Labor Contract Job descriptions
Job classes
Line of progression
Schedules
Safety committees
Grievance procedure
Employee security Health care
401(k)
Holidays
Shift premium
Pension plan (defined contribution)
Profit sharing
Vacations
Retiree benefits (VEBA)
Wage scale
Contracting out
37. Labor Efficiency
38. Comparison to the Global Cost Curve
39. USA Steel Prices Track The Overall Economy
40. Steel Industry Conditions
42. Steel Industry Conditions
43. Steel Industry Conditions
44. Subsidized New Capacity Defies Reason
46. Global Trends in Steelmakers Costs Coke shortages = $10 impact [0.4x delta]
Ocean freight (ore) = $10 impact [1.5x delta]
Scrap (integrated) = $8 impact [0.2x delta]
Natural Gas = $10 impact [4.5x delta]
Labor Productivity = $15 benefit
Declining dollar
47. U.S. Manufacturing Is Same Size It Was In 1959
48. 20 Years of Jobs Decline
49. Majority of the Fortune 100 Exports Nothing
50. Is the Deficit Sustainable?