[TheForge] Re: Price of steel & scrap

Fri Apr 2 08:55:00 2004

Well, I'm scarcely an expert on this sort of thing, but two things come
to mind for those of you who are watching these events.

1) "Differentiate the product."  If all the steel obtainable were shit,
then a market would develop for good steel.  The producer/seller of this
good steel would have to differentiate it in the minds of his customers
from the shit.  That can be hard to do.  Just look at the trouble that
the Pure Iron folks had with their excellent product.  But it is
certainly possible, and well worth accomplishing.  Think of this as a
business opportunity...

2) The bean-counters (CPA's) are making a real mess of American
industry.  Could someone PLEEZ explain back to me why when we buy an
expensive piece of equipment, the bean counters expect us to retire it
in five or ten years, regardless?  They do something like take the piece
of equipment on as a corporate asset, then lease it back to the dept.
using it.  (?)  When the value of the equipment has reached its basis
(?) value, they want it OUTTA THERE.  No matter that it will have to be
replaced by another expensive piece of equipment, and everybody using it
will have to be retrained to use the new one...

I saw a prime example of bean counters  f*****g up a company:  I used
to work for a world-leader in analog computers.  They had an excellent
in-house analog printed-circuit board production facility.  They had an
excellent in-house  machine shop. 
The machine shop went first:  Previously, jobs were billed by the time
they took.  Idle time got billed to overhead.  Then a bean-counter got
his hands on it and eliminated the overhead account.  After all,
overhead was "nonproductive" time.  No matter that that's when machines
were repaired, machinists trained, etc.  So THEN, the overhead time got
divvied up between the jobs in the shop.  When the shop was busy, no
problem.  When there was one tiny order in the shop for a few brackets -
GUESS WHAT!?  That job ate all shop charges.  Suddenly $5 brackets cost
$100 each!  So project leaders went to outside machine shops for their
brackets.  Leading to a less and less busy shop.  Soon there was no work
for the shop and they started firing the machinists and selling off the
machines.  HOW EFFICIENT!
Happy with that success (!) the bean counters went after the analog
printed-circuit board production facility.  They went outside for prices
on PC boards.  BOY were they cheaper outside.  Why, without even
eliminating the overhead account they got numbers on papers PROVING how
much money they'd save by selling off the shop.  So they did.  THEN they
got quotes for their PC boards.  "OH, did you want ANALOG boards?  We
quoted you on DIGITAL boards!  Analog will be X times MORE!"  Too late. 
Production facility already closed!

So, with that in mind, don't always believe what the "experts" tell you
about the world and its economy.  I think we have quite a capacity for
rebounding from the nonsense the bean-counters lead us into.  Takes
common sense, though.  Think of it as a business opportunity...

Bruce

>>> [email protected] 4/1/2004 4:16:20 PM >>>

Bob wrote:

> It might be a good idea to double the size of your garden this year.

We've been expanding it a bit every year.  All the topsoil from the
new shop site, f'rgzample, I spread 10" deep on poor sod  to extend
the garden, tore up some roots in another spot while I had the use of
the tractor.

> I think we are in for a hell of a ride.

Yup.  Of course, I've thought that since circa 1968 or so, when I was
-- um -- very young. :-)  Since then I've done some reading about
complex systems and catastrophe theory.  I now think that
extrapolation is misleading and that sometime along about now, give or
take a decade, things are going to get interesting somewhat suddenly.

>> Chinese steel producers are striking deals with foreign suppliers
>> to ensure steady sources for increasingly scarce materials such as
>> iron ore, needed to make basic carbon steel, and nickel, which is
used
>> to make stainless steel.

And chromium.  There are only a few commercial sources of chromium for
all the stainless and specialty alloys.  Mainly (IIRC) South Africa
and Russia.

After I posted the bit about coke in Germany, I did a quick Google.
India's steel industry is in a tizzy about coke, too.  How soon a
single shipload will arrive from China is a big deal.

Here in Nova Scotia we closed down our steel mill because it hadn't
been able to compete internationally for years without gov subsidy,
despite the fact that they were sitting on a coal mine.  I always
wished they'd just stop dicking around with competition for Bolivian
rail contracts and turn out a couple of hundred tons of misc. small
bar sizes cheap. :-) Now the coal mine is closed, too, and we have to
order by the bag from away.

- Mike

-- 
Michael Spencer                  Nova Scotia, Canada       .~. 
                                                           /V\ 
[email protected]                                     /( )\
http://home.tallships.ca/mspencer/                        ^^-^^

-- 

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