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The steel industry is suffering from chronic over capacity, with production ability of 1.8B tons...

The steel industry is suffering from chronic over capacity, with production ability of 1.8B tons but expected 2012 orders of just 1.5B tons. And instead of cutting back, the sector is building more mills, often supported by governments. Major problems include the fragmentation in the industry and the political difficulties of closing plants - witness ArcelorMittal's (MT) travails in eastern France.
Comments (3)
  • jev
    , contributor
    Comments (4) | Send Message
     
    "fragmentation in the [Steel] industry?" typically the solution is to 'defragmentate'...with a slew of mergers, takeovers and plant closures?
    28 Nov 2012, 11:09 AM Reply Like
  • TwistTie
    , contributor
    Comments (2476) | Send Message
     
    The game is called "Musical Steel Mills".

     

    If you are really big, when you sit down, it doesn't matter if someone is already in the chair. You just squash them and demolish the chair.

     

    The game is played until there is only one player left and no chairs.
    28 Nov 2012, 12:27 PM Reply Like
  • gausmus
    , contributor
    Comments (105) | Send Message
     
    "Chronic overcapacity....[irrat... Government Support"? Thus it always has been in this industry. Perhaps a better way to think of it: Some players (ArcelorMittal, et al) are in it for the $. Others (Hollande, China) are in it to create jobs, or rather, to export their unemployment.

     

    Lakshmi Mittal got his start buying govt. owned/subsidized steel mills when their government sponsors got tired of the endless drain on the national treasury. Sure, Mr. Mittal (who I admire greatly) gave these assets the tough love they needed to make Revenues > Costs. That's what owners do!

     

    France should consider:

     

    1) The company predecessors of Arcelor were wards of their governments (France, Spain, Belgium). For Hollande to step in at this point and threaten nationalization ignores a sad and recent history in the FRENCH steel industry.

     

    2) If anybody can make a steel mill profitable, it's Mr. Mittal. His "street cred" on this point is legendary. Should France succeed in wresting control of this plant from ArcelorMittal, it almost guarantees an ongoing drain on the FRENCH treasury.

     

    So jev - I agree with your "defragmente" comment. Mr. Mittal does as well, and has said so in the press many times. But it will not work with Hollande & his sychophants roaming the earth unfettered by a moral code and clear business purpose.

     

    This is a very black mark on the history of French commerce.
    28 Nov 2012, 01:17 PM Reply Like
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