| Brief
Description of Locker Associates... |
Locker Associates is a New York City based business-consulting firm
that specializes in enhancing the competitiveness of businesses
and industries on behalf of corporate, union and government clients.
By combining expert business and financial analysis with a sensitivity
to labor issues, the firm is uniquely qualified to help clients
manage change by:
Leading
joint labor/management business improvement initiatives
Facilitating
ownership transitionsto secure the long-term viability of a business
Conducting
strategic industry studies to identify future challenges and opportunities
Representing
unions in strategic planning and workplace reorganization
Formulating
business plans for turnaround situations
Performing
due diligence for equity and debt investors
Over
the last nineteen years, the firm has directed over 200 projects
spanning manufacturing, transportation, distribution and mining
industries. Typical projects involve in-depth analysis of
a firm's market, financial and operating performance on behalf
of a cooperative labor-management effort. Locker Associates
also publishes a widely read steel newsletter called Steel
Industry Update (see
intro below), that
circulates extensively throughout the steel industry.
| Our
Latest... Steel Industry Update #218 -- July, 2007 |
To its credit,
BusinessWeek recently reopened the debate on the impact of imports
and offshor-ing on the U.S. economy. According to BusinessWeek,
shifting production overseas has inflicted worse damage on the U.S.
economy than the numbers show. In fact, if this is true, the apparent
growth in U.S. manufacturing has been substantially overstated in
recent years, which means productivity gains and overall economic
growth have been overstated as well. Most importantly, it may also
help explain why wage growth for most American workers has been
so weak.
The BusinessWeek analysis is based on the work of Susan N. Houseman,
an economist who has identified a crucial problem with government
statistics. Houseman discovered that import price data, published
by the Bureau of Labor Statistics, does not capture the drop in
price that occurs when a domestic manufacturer shifts production
overseas and imports the finished goods. This is important because
the import price data is used in calculating real GDP growth and
productivity, among other measures. So if “real” import
growth is understated then domestic production growth is overestimated.
BW labels this “phantom GDP” and it estimates that this
statistical error overstates U.S. GDP by $66 billion since 2003.
Adjusting for this $66 billion eliminates 40% of the gains in manufacturing
output during this same period.
Although the actual size of phantom GDP could be larger
or smaller than BW’s estimates, it is clear that we have not
accurately accounted for the impact of offshoring on the economy.
The new numbers could force a reassessment of productivity and wages
as well as the true performance of the economy. For example, some
economists now think that at least half of U.S. productivity growth
has resulted from glob-alization, not more efficient domestic production.
Phantom GDP could also help explain why pay for American workers
has generally remained stagnant as their companies grow ever more
efficient. Often times, U.S. employees’ wages are tied to
plant or domestic performance. Therefore they are unable to share
in the cost savings and productivity improvements that are occurring
overseas. Meanwhile, company ex-ecutives, whose compensation is
generally tied to overall profits, reap the full benefits of such
improvements.
In terms of trade policy, the new numbers suggest that the U.S.
may...
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.
| Selected
U.S. Steel Industry Data, November and Year-to-Date |
| (thousand
tons) |
|
Year-to-Date |
| |
2007 |
2006 |
%
Chg |
2007 |
2006 |
%Chg |
| Raw
Steel Production..................... |
9,042 |
8,169 |
10.7% |
98,916 |
100,880 |
1.9% |
|
Capacity Utilization........................ |
88.5 |
81.5 |
-- |
86.6 |
89.0 |
-- |
| Mill
Shipments............................... |
8,683 |
7,991 |
8.7% |
97617 |
101,000 |
3.3% |
| Exports.............................................. |
984 |
807 |
21.9% |
10275 |
9,025 |
13.9% |
| Total
Imports.................................... |
2,322 |
3,418 |
32.1% |
31240 |
42,265 |
26.1% |
| Finished
Steel Imports..............,.... |
1,962 |
2,794 |
29.8% |
24979 |
33,487 |
25.4% |
| Apparent
Steel Supply*................. |
9.661 |
9.978 |
-3.2% |
112,321 |
125,462 |
-10.5% |
| Imports
as % of Supply*................. |
20.3 |
28.0 |
-- |
22.2 |
26.7 |
-- |
| Average
Spot Price**($/ton)............. |
661 |
651 |
1.5% |
650 |
657 |
-1.1% |
| Scrap**($/gross
ton)............................ |
284 |
210 |
35.2% |
294 |
287 |
2.3% |
Source:
AISI & Purchasing Magazine & US Geological Survey
*Excludes semi-finished imports
**Avg price of 8 carbon products #auto bundles + iron ore
shipments
|
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