Wednesday, December 29, 2004
Steel bounces back
Surely the story of the year for metal stampers ... Pittsburgh Post-Gazette: U.S. steel producers catapulted out of a lengthy depression last year as the star-crossed industry's stars aligned themselves like never before.
The fruits of restructuring and consolidation, surging demand from China, the strengthening economy and a weaker U.S. dollar were the leading reasons for steel's rebound. Analysts expect the prosperity streak to continue in 2005. But it's still an industry in which clouds are always on the horizon, and next year is no exception.
"If the dollar remains weak and China doesn't collapse, the steel business should have a strong 2005," said Charles Bradford of Bradford Research.
The roots of the rebound were sown three years ago, when much of the industry languished in or near bankruptcy, besieged by cheap imports, slack demand and high costs. Bethlehem Steel, LTV Steel, National Steel and other producers shed billions of dollars in pension and retiree health-care costs in bankruptcy, making them more attractive targets for competitors healthy enough to acquire and resurrect them.
Industry leaders International Steel Group, Nucor and Pittsburgh-based U.S. Steel purchased nearly a dozen of their sick sisters and slashed union and management ranks. U.S. Steel reduced its domestic work force by 20 percent and other survivors made comparable reductions. Their restructuring created larger, heathier steelmakers that exert more clout in price negotiations with major customers.
The fruits of restructuring and consolidation, surging demand from China, the strengthening economy and a weaker U.S. dollar were the leading reasons for steel's rebound. Analysts expect the prosperity streak to continue in 2005. But it's still an industry in which clouds are always on the horizon, and next year is no exception.
"If the dollar remains weak and China doesn't collapse, the steel business should have a strong 2005," said Charles Bradford of Bradford Research.
The roots of the rebound were sown three years ago, when much of the industry languished in or near bankruptcy, besieged by cheap imports, slack demand and high costs. Bethlehem Steel, LTV Steel, National Steel and other producers shed billions of dollars in pension and retiree health-care costs in bankruptcy, making them more attractive targets for competitors healthy enough to acquire and resurrect them.
Industry leaders International Steel Group, Nucor and Pittsburgh-based U.S. Steel purchased nearly a dozen of their sick sisters and slashed union and management ranks. U.S. Steel reduced its domestic work force by 20 percent and other survivors made comparable reductions. Their restructuring created larger, heathier steelmakers that exert more clout in price negotiations with major customers.
