EoW January 2013

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Transatlantic cable
January 2013 24
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.
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 11th 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 (13th 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.
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,” 22nd 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