EoW January 2013

Transatlantic cable

carbon bre composites. Ultimately, when you’re trying to make your vehicles lighter you’re going to use some collection of all of these.” To incrementally improve fuel economy over the next decade, Mr Rousseau wrote: “Auto makers will need to get creative.” General Motors already has apparently got the message.

Export/import

Slower growth in China, now the world’s second-largest economy, poses risks to major industries in the United States “As China’s economy cools, American exporters are increasingly feeling the chill.” Nelson D Schwartz, who covers banking, nance and Wall Street for the New York Times , was calling attention to a remarkable aspect of the relationship between China and the United States: mutual dependence. Rivals in many spheres, the two big powers increasingly are nding that, when one economy meets with reverses, the other su ers sympathetic pains. (“China’s Slowing Economy Puts Pressure on American Exporters,” 22 nd October). Mr Schwartz o ered some examples of contractions in American industries that prospered as China boomed. Cummins, the big Indiana engine maker, in October cited weak demand from China as a major reason for its elimination of 1,000 to 1,500 jobs by the end of the year. Schnitzer Steel Industries, the Oregon rm that is one of the nation’s biggest metal recyclers, is cutting 300 jobs, or seven per cent of its work force, as scrap exports to China plunge. And Caterpillar, the Illinois manufacturer of earth moving equipment, reported lower sales in China and cut its global outlook for 2012. Even as the presidential candidates were striving to top each other’s pledges to get tough on Chinese exports to protect American jobs, experts were saying that the more immediate threat to American workers might in fact be the slowing of sales to China, which has bid up the price of much of what the US sent overseas in recent years. In the week before the Times article appeared, the Chinese government announced that gross domestic product (GDP) grew in China at an annual rate of 7.4 per cent in the third quarter, the slowest pace in more than three years. And China’s full-year growth was expected to decelerate to 7.7 per cent from the breakneck 9.3 per cent pace of 2011. The resultant softening in Chinese demand has begun to clip American exports. This view was con rmed by Dean Maki, chief United States economist at Barclays Capital (New York), according to whose analysis the drop in exports to China alone is responsible for shaving 0.1 to 0.2 percentage points o the growth rate for the American economy, which expanded at an annualised rate of 1.3 per cent in second-quarter 2012. He told Mr Schwartz, “There’s de nitely been an e ect from slowing exports to China on US exports.” † While the overall job market in the US has improved and the jobless rate has fallen, according to Mr Schwartz the slowdown in export growth has probably contributed to the loss of 38,000 jobs in the American manufacturing sector since July. He noted that the decline has been striking because exports, together with manufacturing, have provided a relative bright spot since the end of the recession. The United States still brings in from China far more than it sends in the other direction, importing nearly $4 in goods for every $1 it exports. Nevertheless, Mr Schwartz pointed out, the rapid growth rate there bene ted many large American exporters and made China the third-largest buyer of American goods after Canada and Mexico. In 2011, China imported $103.9 billion in products from the United States, or 7 per cent of American exports worldwide. And now, Chinese demand has obviously been cooling. Dorothy Fabian – USA Editor

Steel

An owner of steel service centres in the American Northeast and Midwest will restart an Ohio steel plant

Esmark, a distributor and former operator of Wheeling- Pittsburgh Steel, has acquired at bankruptcy auction the defunct steelmaker’s Yorkville, Ohio, plant and a 50 per cent stake in a related joint venture for steel processing. The $6.3 million acquisitions were announced 11 th October and the company set a re-launch of the mill – as Ohio Cold Rolling – for January. The Yorkville plant produced light-gauge steel for the container and packaging markets. Now, much of its output will go to Ohio Coatings Co, also located in Yorkville. Esmark’s partner in the 50-50 steel processing venture is TCC Steel, of South Korea. In a period of low demand, with US steelmakers operating at around 70 per cent of capacity, the project represents a triumph of optimism. Esmark (Sewickley, Pennsylvania) estimates $800 million in rebuilding costs, plus $15 million or more for steel sheet and other supplies for the restart. Len Boselovic of the Pittsburgh Post-Gazette (13 th October) recapped the Yorkville history. That plant and a half-interest in Ohio Coatings Co were among the assets put on the auction block following the May 2012 bankruptcy of RG Steel, the fourth-largest US steel producer. RG had been formed in March 2011 from a combination of Wheeling-Pitt’s former operations; Bethlehem Steel’s former Sparrows Point plant in Baltimore; and the former WCI Steel plant in Warren, Ohio. The bankruptcy idled all the plants. Mr Boselovic also reported a resolution of the issue of remedying environmental hazards at Yorkville, which had delayed the October closing. The US Environmental Protection Agency agreed to make Ohio regulators responsible for enforcing the clean-up, estimated to cost $1.5 million to $3.5 million. Esmark chairman and CEO James P Bouchard said that the company has set aside $2 million for the e ort, with Ohio to provide $1 million. † Esmark owns steel service centres in the Northeast and Midwest that process steel for steel producers and their customers. It took control of Wheeling-Pitt after a 2006 proxy ght and sold the operations to Russian steel producer OAO Severstal in 2008 for $1.25 billion, which included the assumption of debt. Severstal sold the mills to RG in 2011. The other buyers of RG Steel’s assets include a partnership led by Pennsylvania businessman Charles Betters. The partners paid $16 million for the Warren plant. Mr Betters told the Post-Dispatch that he hopes to nd an operator for the mill, which produced high-carbon steel used in the blades of farm equipment, knives, and other products.

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January 2013