EoW September 2010

Transat lant ic Cable

The oil spill

Steel

The historian’s-eye view: American history abounds with longer-term catastrophes than the Deepwater Horizon In the US, the effort to stem the flow of crude oil into the Gulf of Mexico has been accompanied by lively commentary on whether or not it is the worst environmental disaster America has ever faced. President Obama declared that it is. But the Washington Post , among others, points out that the national past is littered with oil spills, explosions, toxic dumps, extinctions, and at least one river on fire. On 22 nd June – Day 63 since the explosion of the Deepwater Horizon rig – David A Fahrenthold and Ylan Q Mui wrote that historians, predictably, say an evaluation of the president’s words depends on what he meant by “worst” and “disaster.” The Dust Bowl of the 1930s caused more social upheaval. The Exxon Valdez oil spill in 1989 had a higher wildlife death toll. The pesticide DDT affected a wider swathe of the country. The Post reporters observed, “From the perspective of a bison or a (now-extinct) passenger pigeon, the whole thing might look like one long disaster.” (“Historians Debate Designation of ‘Worst Environmental Disaster’ in US”). At this writing, the cap-and-capture effort that has riveted public attention to the gulf appears to be gaining on the problem. While we wait, it might be worthwhile to consider a letter to the editor of the Beaufort (South Carolina) Gazette that was cited by syndicated columnist Thomas L Friedman as the best reaction he has seen to the oil spill (“This Time Is Different,” 11 th June): “I’d like to join in on the blame game that has come to define our national approach to the ongoing environmental disaster in the Gulf of Mexico. This isn’t BP’s or Transocean’s fault. It’s not the government’s fault. It’s my fault. I’m the one to blame and I’m sorry. “It’s my fault because I haven’t digested the world’s in-your-face hints that maybe I ought to think about the future and change the unsustainable way I live my life. If the geopolitical, economic, and technological shifts of the 1990s didn’t do it; if the terrorist attacks of Sept. 11 didn’t do it; if the current economic crisis didn’t do it; perhaps this oil spill will be the catalyst for me, as a citizen, to wean myself off of my petroleum-based lifestyle. “‘Citizen’ is the key word. It’s what we do as individuals that counts. For those on the left, government regulation will not solve this problem. Government’s role should be to create an environment of opportunity that taps into the innovation and entrepreneurialism that define us as Americans. For those on the right, if you want less government and taxes, then decide what you’ll give up and what you’ll contribute. “Here’s the bottom line: If we want to end our oil addiction, we, as citizens, need to pony up: bike to work, plant a garden, do something. So again, the oil spill is my fault. I’m sorry. I haven’t done my part. Now I have to convince my wife to give up her SUV.” Mark Mykleby

Newly optimistic Midwestern steel processing centres wager that demand for steel will continue to rise with the US economy As demand for flat-rolled and bar steel picks up in the American Midwest, the steel processing centres that serve auto makers, appliance manufacturers, and the light-manufacturing industries are bellwethers of the progress of the US steel industry back toward pre-recession health. The centres – variously known as distributors, stockists, and service centres – suffered along with the steel producers which at their lowest point were operating at only 40% of capacity. Now, the steel makers are at about 70% of capacity and feeling much better about their prospects. Accordingly, so are the steel processing centres. Writing in the Southtown Star (Tinley Park, Illinois), Mike Nolan profiled one of them: the cavernous Sun Steel plant, in Chicago Heights, sold to Russia’s OAO Severstal in 2008 and re-acquired by the original American owners in May of this year. Together with Sun, the brothers James and Craig Bouchard have bought back another Chicago Heights steel centre, Century, from Severstal. Their Chicago-based company Esmark, through its Esmark Steel Group subsidiary, had already begun reassembling a core group of steel service centres. With a $100 million line of credit from GE Capital, the financial services unit of the multinational conglomerate General Electric (Schenectady, New York), Esmark is also considering other acquisitions. (“Brothers Banking on Steel Rebound,” 13 th June). “It’s going to be a slow climb out”for the steel processing centres, the Esmark Steel Group chief executive Tom Modrowski told the local newspaper. But an account of the Bouchard brothers’ recent activities suggests speed and nimbleness beyond the ordinary. Until about two years ago, the Bouchards operated a network of ten steel service centres around the Midwest, as well as the producer Wheeling-Pittsburgh Steel Corp (Wheeling, West Virginia). They bought Sun in 2004, followed by Century in early 2005. In the summer of 2008 – just months before the collapse of the financial markets – they sold the whole bundle to Severstal for $1.2 billion, with the Russian producer assuming outstanding Esmark loans and debt. A noncompete agreement kept the Bouchards on the sidelines for a year, according to Mr Nolan. Then, last fall, they plunged back in, paying $10 million for Amtex Steel, a service centre in nearby University Park that has been renamed Chicago Steel & Iron. “Along with Sun and Century, the Bouchards also picked ❈ ❈ up an Ohio steel service center they had sold to Severstal,” Mr Nolan wrote. “Esmark didn’t say how much it paid for the assets. Combined, the service centers annually ship about 300,000 tons of flat-rolled steel, according to Esmark.” Good judgment and good timing obviously figure in the Esmark story to this point. So does good luck. And the company evidently expects more of the same. Esmark Steel Group CEO Tom Modrowski told the Southtown Star , “We’re excited about what lies ahead.”

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EuroWire – September 2010