The Association of Women in the Metal Industries (AWMI)'s 2009 Annual Conference held in San Diego, California this past week provided those in attendance with both an opportunity to strengthen their community, and to gain a complete overview of the state of the steel industry as a whole, with the tone of the meeting set by keynote speaker, the outspoken chairman, president and CEO of Nucor Corp., Mr. Dan DiMicco.
In his keynote presentation given Thursday night at the AWMI event, Mr. DiMicco, never one to mince words, gave it to the audience straight: 2010 will not be a good year for the steel industry, in his view. While steel capacity utilization rates have recovered somewhat and the economy is back in growth territory again, the US steel industry, and the US manufacturing industry as a whole, remains in peril, according to DiMicco. The main reason for this, said DiMicco, is that "real demand has not changed."
DiMicco said that as inventories have now been drawn down to very low levels, steel will closely reflect the economy in 2010, and the economy will continue to suffer under the weight of the jobs crisis -- which DiMicco passionately believes those in Washington should make their top priority, ahead of healthcare and global warming legislation. As for the stimulative efforts undertaken by the government so far, such as the American Recovery and Reinvestment Act and Cash for Clunkers, DiMicco said such actions amounted to no more than "sugar highs" which do not address the underlying problem burdening the economy, which is the lack of jobs, particularly in the area of manufacturing. Mr. DiMicco also cited China's "mercantilist" market practices as a major threat to American manufacturers. Unless and until we are able to put America back to work, DiMicco believes that it may be several years until a true recovery is seen.
Mr. DiMicco acknowledged that the picture for US manufacturing he painted was pretty bleak, but he said he wanted to encourage the audience members and their friends and family to take action by bringing these issues to the attention of their communities, Congressmen and to the Administration. DiMicco said that on the bright side, he is already making some progress in this area and has shared his views in multiple recent meetings with the legislators in Washington.
In his presentation, Mr. DiMicco also mentioned that the firm's rumored plan to build a pig iron plant in Louisiana is currently postponed due to the soft demand situation. During the question and answer session, Mr. Dimicco elaborated on this point somewhat, stating that although the firm has purchased acres of land in Louisiana, anyone who is thinking about building a steel mill in the United States in this market "has something wrong upstairs."
In contrast to Mr. DiMicco's comments, Friday's Keynote session speaker, William Strauss, Senior Economist and Economic Advisor of the Federal Reserve Bank of Chicago, offered a more optimistic view of the US economy and a rosier outlook for manufacturing. Strauss, who produces the monthly Chicago Fed Midwest Manufacturing Index, said that while we have just emerged from the longest and deepest recession in 50 years and that unemployment will continue to rise through the first quarter of 2010, there are some good reasons to be optimistic about the economy going forward.
In fact, in stark contrast to DiMicco, one of the primary reasons Strauss is optimistic about the economy is the performance of the manufacturing sector. US manufacturing output has risen strongly in the last three months, and further improvement is expected in 2010, with output expected to rise by as much as five percent next year. Capacity utilization remains weak, though that is improving too, as is reflected in steel output levels. Capital goods orders and shipments have also stabilized. US auto sales are off significantly this year, falling below 10 million annualized units in the first six months of 2009, with year-to-date light vehicle sales off 25 percent. However, auto production cuts have been far deeper - at 45 percent. This has brought inventory levels for cars and trucks below desired levels, which, along with pent-up demand, should support increased automotive output going forward, according to Strauss. Furthermore, US auto sales recovered in October to above 10 million units, in the absence of the cash for clunkers incentive.
Mr. Strauss also shared his opinion that the idea that America is losing its manufacturing base is "total BS." Stauss said that although employment in the manufacturing sector has decreased, this is largely due to gains in productivity. Regarding the overall jobs situation in the US, Strauss said that although unemployment will continue to rise, peaking at an estimated 10.1 percent in the first quarter of 2010 as the economy improves and more out-of-work individuals start to look for work again, it should start to edge lower throughout the rest of the year as more jobs are added to the economy. He did admit that as in the previous two recession cycles, adding jobs will be the slowest and most difficult challenge of the recovery.
Other bright spots for manufacturers cited by Strauss include the weaker dollar, which encourages exports and will help the US self-correct its trade deficit (Mr. DiMicco also mentioned the weak dollar as an advantage but had a less rosy view of the trade deficit overall), and the decrease in costs to hire American workers due to decreases in wages and benefits.
While the two keynote presenters differed in their opinions on the outlook for US manufacturing, both agreed that unemployment will be the biggest hurdle for the economy to overcome in order to achieve meaningful growth next year and avoid a "W"-shaped recovery. All in all, the consensus of speakers and attendees at the conference seemed to be that while 2009 was a difficult year across the entire metals industry and 2010 will likely prove challenging as well, things should slowly get better if and when a true recovery of the economy gets underway.
Other speakers at the three-day event included: an industry panel discussion featuring James Desmond, Vice President and COO of EMJ Company; Sheila Janin, Director Coated Products at ArcelorMittal USA and Robert Owen, Director Strategic Sourcing for Silgan Containers Corporation. Matthew Slaughter, Associate Dean and Professor of Economics at Dartmouth College, was also scheduled to speak at Saturday's keynote session about leadership in today's global economy.
As part of the event, AWMI also arranged a mill tour of California Steel Industries a week prior to the conference on Friday November 6, as well as a ship building tour at San Diego's General Dynamics NASSCO ship yard which took place on Thursday, November 12.
In addition to providing an excellent forum to learn from industry experts and discuss the industry with peers in a relaxed environment, AWMI is committed to developing leadership skills, and providing education mentoring and networking that contribute to successful careers for women in the metal industries. AWMI recognizes one special woman in the metal industry every year with its "Member of the Year" award, which was presented at this year's conference to Helene Watson, AWMI International Bylaws/P&G Chair, for excellence achieved in her role as an association leader.
For more information on AWMI, visit www.awmi.org.