Summary
Steel has not been the most attractive industry over the past 35 years. The grinding decline of the steel business since the early 1970s has been painful for shareholders, communities, government officials and employees. However, a change in that pattern began in Jan 2004, when the price for hot-rolled steel, jumped about 13%. And prices continued to increase such that the annual price increase for hot-rolled steel had soared from $290/ton to $756/ton. The automotive industry has been forced to absorb the higher costs, while it continues to face cost pressures on the retail and supply sides. Steel has been the primary raw material for vehicle production since the invention of the automobile. The overall effect of increased steel prices is that automotive OEMs and suppliers must find ways to better manage steel costs. Automotive managers should focus on two things to manage steel input costs, benchmarking and complexity reduction.
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How to Deal with Steel
Steel has not been the most attractive industry over the past 35 years. The grinding decline of the steel business since the early 1970s has been painful for shareholders, communities, government officials and employees. Investors fret that the industry has yet to earn the "required rate of return on equity." But much has changed in the steel industry over the past 12 months. The publicly listed companie...
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