on 3/12/02 4:12 AM, Erik Reuter at [EMAIL PROTECTED] wrote: > This is an unusual definition of "efficiently". By the usual economic > definition of efficiency, if others can produce and sell steel cheaper > (long term, not dumping), then they are more efficient. You have to > include everything, like wages and pensions.
Just to be a smart ass- efficiency n 1: the ratio of the output to the input of any system 2: skillfulness in avoiding wasted time and effort; "she did the work with great efficiency" [ant: inefficiency] Cheaper is not being more efficient. I'll give you the tale of two companies: Company A makes widgets. It takes 1 A employee 8 hours to produce 10 tons of widgets. It can take these widgets and sell them for 10 bucks. Their profit is 1 dollar. (.8 man-hours/ton) Company B relies more manpower and less efficient means of production to produce widgets. It takes 2 B employees the same 8 hours to make 10 tons of widgets. They can also sell the widgets for 10 bucks, but they make 5 dollars profit. (1.6 man-hours/ton) Ton for ton of widgets, Company A will always make less money than Company B even though A is more efficient at producing widgets. > Also, I'd like to see some more credible source, with data, about the > output of US steel mills versus foreign steel mills. Rep. Peter Visclosky is a Chair on the Congressional Steel Caucus and he represents the first district of Indiana. The city of Gary is located there; where they have lots of experience of losing steel industry jobs. I do think he is credible. To back up those claims: http://www.steel.org/policy/trade/aug98rep/compete3.htm http://www.steel.org/policy/trade/aug98rep/compete2.htm http://www.steel.org/policy/trade/aug98rep/compete1.htm World wide production numbers can be had at www.worldsteel.org The best I could do for foreign steel efficiency was a snippet from a recent McKinsey article regarding Chinese mills: (Free if you register) "Shougang Steel, for instance, employs more than 100,000 people to make seven million tons of steel, though international standards suggest that the number of workers could be only 10,000 to 20,000. Shougang could in theory dismiss a majority of its employees immediately, but the local government, though supportive in principle, refuses to allow layoffs on this scale." (Full article at: http://www.mckinseyquarterly.com) > I've seen a lotof articles that claim that the micro-mills can produce steel > more efficiently than the large, integrated mills. According to what I've > read, the US has many of the large mills and comparitively few of the > newer micro-mills. Currently micro (or mini) mills currently produce 45 to 50 percent of the total output for the US. They are very productive (as productive as any micro mill in the world), and they are very new in comparison to integrated mills. They have not been around long enough to be effected by legacy costs. If you would like to learn more about the darling of the US mini-mills you can visit http://www.nucor.com The problem with mini-mills is that they rely on scrap iron and steel. They can't make it from virgin materials. If you need specialty steel it is going to have to come from an integrated mill. Your car is a byproduct of an integrated mill, mini mills can't produce strong enough alloys for the automotive markets. Not to mention my favorite tool steels. If I could go on record with my position on the steel industry it would be this: I want steel as close, clean (environmentally), consistent, and as cheap as possible. I believe this works for every country that uses steel. I don't like tariffs. I do however understand the reasoning behind this decision. It is temporary, and everybody will get over it. The tariffs will bump up the price of a refrigerator about 3 to 5 bucks. Whoo-whee. It will raise my material costs .02 to .03 cents per piece. Again whoo-whee. I do expect a couple of things to happen over the next three years. Not this year for this is an election year. 1. Relaxation of regulations that restrict mergers between integrated mills. These laws have been around since before Carnegie was building libraries. This would allow for greater absorption of upgrading costs and allows steel plants to specialize just like the mini-mills. 2. Some kind of relief of Legacy costs incurred by the older integrated mills. There is a bill in congress right now that was written by Rep. Visclosky. Interestingly enough it is called the Steel Revitalization Bill and a summary is located at: http://www.house.gov/visclosky/hr808_107.htm And lastly...the only article that is on my side (Published today): http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT38JT65QYC&liv e=true Steel makes a country strong, Matthew Bos
