Steel price increases and healthy corporate revenues during the first two quarters of 2004 are slowly translating into jobs.
The steel industry turned out in force last week for the annual Steel Success Strategies conference in New York City. The number of participants jumped to more than 1,000 from 600 in 2003, when the industry appeared to be stagnating.
Although it continued to founder for the first several months following the June event in 2003, the steel business picked up steam as it neared the end of 2003 and roared into the new year.
As higher consumption brought increased orders and limited competition, the industry and the businesses serving it or buying its products found themselves with conditions that have turned 180 degrees during the past year.
Yet, despite the favorable times and outlook for their industry, hiring at the region's huge local mills is almost completely limited to replacing those leaving the work force through retirement or other reasons.
Industry optimistic
Productivity gains allowed U.S. Steel Corp. and International Steel Group Inc. to forge new labor contracts in mid-2003 that cut employment levels substantially, and that probably never will be reversed, said Jim Robinson, United Steelworkers of America District 7 director.
"Productivity gains mean fewer people are needed, and that's happening throughout the manufacturing industry,'' he said.
Replacement hiring does signal the work force reductions have stopped and employment levels have bottomed out.
Ispat Inland Inc. is doing some hiring on a limited basis, said spokesman David Allen.
"The industry will continue to get smaller, but we have to replace the talents we're losing,'' he said. "As long as we continue to get strong the entire economy can gain whether or not our numbers rise. All sorts of related business will do well, as well as increase the diffusion of money the industry puts into the economy.''
The company run by Bruce Roth is a typical example of the trickle-down effect. Roth, president and chief executive officer of National Recovery Systems in East Chicago, said the atmosphere at this year's steel conference was as different as his business prospects were last June.
"I saw more optimism and enthusiasm for now and for the next three to five years,'' Roth said. "The steel business is very strong domestically, and it appears that with China and Russia having internal problems, they won't be a threat.''
National Recovery Systems, a subsidiary of Australia-based Brambles Corp., had 80 employees nationwide a year ago, including three working at its facility at Ispat Inland, where nine people were laid off during the preceding year.
"We've brought everyone back and hired more,'' Roth said. "We've hired 20 more for the entire company. When the third quarter starts we'll go from the four eight-hour shifts we're now running to 21 eight-hour shifts a week. ... People are working more overtime.''
The company, which recycles carbon materials created in the steelmaking process into briquettes that can be used as substitutes for coke and metallics, was on the bubble a year ago, Roth said.
The years 2002 and 2003 were the worst in the company's 25 year history
"My business was gloom-and-doom then,'' said Roth of the company that does $30 million in annual sales. "What a turn-around. The volume of business has really picked up.''
Demand improving
The favorable change in the industry has given companies stability and allowed them to begin investing in their business again.
"We're spending $500,000 in modernization equipment,'' Roth said. "A year ago I was thinking of taking it to another location.''
James Reid, CEO of Chicago Heights-based Century Steel Co., said he had considered doing some hiring in May and June, but the plan was derailed by late shipments of steel from its producers.
"Steel is late from the supplier and that means our deliveries are late,'' said Reid, whose company buys flat-rolled steel, then cuts it to size for resale to a wide variety of light consumer durables, building and agriculture equipment manufacturers.
The market was so poor in 2003 that Century Steel was selling its products at little or no margin, he said.
"This year there's a shortage of steel, so we can ask for a reasonable margin even though the prices are extremely high," Reid said. "2003 was the worst economic climate for the steel industry in 20 years, and we had to work hard to be profitable. This year all the distributors are prospering because of the lack of (steel) availability.''
Roy Berlin, head of Hammond's Berlin Metals, said his company is selling everything "we can get our hands on,'' but mills have restricted the amount of supply and raised prices.
"It's a problem throughout the industry,'' Berlin said. "The demand worldwide has improved, so anyone who has steel can sell it. We have passed on the price increases demanded by the mills, but no more than that, so our profits have stayed stable but haven't improved.''
The company is a little busier, but hasn't hired any news employees to add to its about 65-member staff. Instead, workers are getting more overtime.
"You never know how far down the line things will change,'' Berlin said.
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