http://www.metalcenternews.com RSS feeds for Metal Center News 60 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7380/MCN-Feature.aspx#Comments 0 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=5808&ModuleID=13945&ArticleID=7380 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=7380&PortalID=51&TabID=5808 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7380/MCN-Feature.aspx Will Congress Leave Us Hanging Again? Without a new federal highway bill, the outlook for metals demand from the infrastructure sector remains cloudy. While other parts of the construction market are starting to see some early signs of life, the same cannot be said of the infrastructure or public works sector, which has continued to decline this year. Any significant improvement is viewed as unlikely until Congress passes a major long-term surface transportation reauthorization bill, which would be quite a feat given the current political climate in Washington. A new highway bill could give a big boost to the suppliers of steel, aluminum and other materials used in infrastructure construction. Steel, in particular, has a lot to gain from new public works projects that would increase demand for concrete reinforcing bar, plate, structurals, pipe and tube, and wire rod. Infrastructure improvements account for about half of all rebar sales, with the rest going into commercial and multifamily construction. “We must make rebuilding our crumbling transportation infrastructure system a top national priority,” says John Surma, chairman and chief executive officer of United States Steel Corp., Pittsburgh. “It’s essential to be able to do business efficiently within our own borders in order to maintain our dominant role in the global economy.” Not only are the nation’s roads and bridges in need of repair, but also its locks and dams, pipelines and energy grid, parts of which are critically near failure, says Thomas Danjczek, president of the Steel Manufacturers Association, Washington, D.C. Alison Premo Black, chief economist for the Washington, D.C.-based American Road & Transportation Builders Association, reports that about 25 percent of the nation’s bridges have been deemed structurally deficient or functionally obsolete. By some estimates, more than 200,000 bridges need to be renovated or replaced. Based on the U.S. Department of Transportation’s needs and conditions report, the government would need to spend an additional $10 billion per year to keep from losing further ground in the maintenance of the country’s roads and bridges, and another $79 billion per year to do the work that is truly needed. Michael Rehwinkel, president and chief executive officer of Chicago-based Evraz North America, notes that construction of non-building structures, including highway, bridge and water supply construction, was expected to grow about 6 percent this year. “However, that was predicated on a well-funded surface transportation bill being in place prior to the 2012 highway construction season.” Instead, what has happened since the latest transportation bill expired in 2009 is that Congress has passed a series of 90-day extensions—a total of nine extensions to date—to keep federal funds flowing to existing infrastructure projects at current levels. This stopgap approach has left the infrastructure construction sector depressed. “A long-term, well-funded federal bill would provide the certainty that states and local municipalities need to go ahead with infrastructure construction projects,” says Philip K. Bell, a spokesman for Gerdau Long Steel North America, Tampa, Fla. Without such a bill, public works construction has remained relatively soft by historical standards and even weaker than it was a year ago. Late last year, metal suppliers to the infrastructure sector saw a slight bump as the last of the American Recovery and Reinvestment Act (ARRA) economic stimulus money went through the system for some bridge projects, says Robert J. Willis, vice president of construction market development for the Steel Market Development Institute, Washington, D.C. Despite that increase, total spending for put in place public works construction declined by 7.2 percent in 2011, according to Metal Strategies Inc., West Chester, Pa. Ken Simonson, chief economist for the Associated General Contractors of America, Arlington, Va., says that public construction is down about 3 percent so far this year. He attributes that dip to the lack of further economic stimulus money, the depletion of allotted funds for water and sewer projects, and the completion of post-Katrina reconstruction in New Orleans. “It’s difficult to measure the impact of the ARRA as a whole. So many of the projects were supposed to be shovel-ready but weren’t, so a lot of those funds didn’t go to steel-intensive projects,” says Christopher Plummer, managing director of Metal Strategies. While it was originally billed as an infrastructure measure, the economic stimulus legislation proved not to be so. “Of the over $800 billion package, most estimates conclude that only 8 to 10 percent was used to fund infrastructure spending,” Bell says. “There is no such thing as shovel-ready when it comes to construction. Now the federal government admits that,” says Charles Bradford, metals analyst and principal of Bradford Research in New York. The economic stimulus funds were mostly used for reconstruction, rework and rehabilitation projects, but not a lot of new construction, says Premo Black. In fact, only about $3 billion of the package went for bridge work. There are a number of bright spots when it comes to infrastructure construction, however. One such area is electrical transmission and the upgrading of the nation’s power grid, says James Lewis, a spokesman for the Arlington, Va.-based Aluminum Association. Domestic producer shipments of aluminum electrical wire and cable were up about 30 percent year on year in the first quarter, with aluminum conductor steel-reinforced cable and bare cable up 34 percent and insulated wire and cable up 23 percent. Premo Black points to some other positives. Investment in Class 1 railroads should remain stable this year. Ports and waterways are seeing increased spending—largely from the port authorities and their tenants rather than federal funding—in preparation for the expansion of the Panama Canal at the end of 2014, which will open the East and Gulf Coast ports to more Asian trade. Investment in oil and natural gas pipelines, a big consumer of steel plate, should also remain strong. As Bradford points out, the average pipeline is about 40 years old, which is much longer than it was designed to last, and so must be replaced. Increased drilling in the nation’s shale plays also is creating a need for additional transmission pipelines. Private transportation infrastructure spending is also up approximately 8 percent this year, Simonson says. Public transportation spending, on the other hand, is down 11 percent, while drinking water infrastructure investment is down 10 percent. Meanwhile, all eyes are on public transportation infrastructure spending and whether or not Congress can pass a multi-year surface transportation bill. Sen. Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works Committee, has said she is optimistic a bipartisan bill will get passed before the latest short-term extension expires at the end of June. Others are not so sure, especially with this being a presidential election year. Everyone recognizes the need for a good transportation system, says Kevin M. Dempsey, the American Iron and Steel Institute’s senior vice president of public policy and general counsel. Short-term extensions aren’t good for anyone, making it harder for state and local departments of transportation to plan for future projects, he adds. Nevertheless, Simonson predicts the outcome will be two more short-term extensions before a full blown reauthorization bill is approved. Currently, congressional leaders are trying to find some common ground between the $109 billion two-year bill passed by the Senate in March and the tenth 90-day extension approved by the House after it failed to pass a five-year $260 billion plan. Further complicating the process is that the House’s extension includes language promoting construction of the entire Keystone XL pipeline, which remains controversial. “That opens a whole new can of worms and could make it even more contentious,” says Adam Parr, vice president of policy and communications for the Steel Manufacturers Association. Lynn Lupori Gray, senior consultant for Hatch Beddows, agrees, calling the Keystone pipeline a political volleyball. “Anything it is attached to will be hard to pass.” “I am hoping this will lead to at least a two-year extension this time before Congress can come up with an even longer-term plan,” says Dempsey at AISI. Bill Jones, vice chairman of O’Neal Industries Inc., Birmingham, Ala., says even a two-year bill will not be enough. “It will still make planning very difficult and the implementation of long-term projects (the ones that are most steel intensive) nearly impossible.” Future uncertainty also puts a dampener on the ability to bring certain innovations to the marketplace, including SMDI’s E-Span 140 project to promote short span steel bridges and the aluminum industry’s promotion of aluminum bridge decking. Traditionally, surface transportation projects are paid for by the federal Highway Trust Fund, which is largely funded with a gasoline tax. The federal gasoline tax has been fixed at 18.4 cents per gallon since 1993 and is not indexed to inflation. With the average American driving fewer miles in cars that consume less gas, “that means the money coming into the federal coffers has declined significantly,” Plummer notes. The federal gasoline tax currently pays for only about half of needed transportation maintenance, says Danjczek at SMA. That means other sources of funding for infrastructure projects must be identified. “Congress needs to take an ‘all of the above’ approach, putting all potential funding mechanisms on the table,” says Bell at Gerdau. This includes such options as raising the gasoline tax, indexing it to inflation, increasing tolls or adding new toll roads and expanding the use of public-private partnerships. “There is every reason to believe, given the current gridlock and funding problems in Washington, that we will get another extension and not a full transportation bill,” Danjczek says. That is not good news for steel suppliers. Though overall steel operating rates are 78 to 80 percent, capacity utilization for such construction metals as rebar, wire rod and structurals is closer to 60 or 65 percent. “While that is up about 10 percent year on year, it is still down from the 75 percent traditional operating rate,” he says. Like other executives, Danjczek is hopeful Congress will come to grips with infrastructure funding sooner rather than later, as the nation’s roads and bridges continue to crumble. “We can’t just keep kicking the can down the road.” Tue, 31 Jul 2012 18:23:00 GMT f1397696-738c-4295-afcd-943feb885714:7380 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7379/MCN-Feature.aspx#Comments 0 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=5808&ModuleID=13945&ArticleID=7379 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=7379&PortalID=51&TabID=5808 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7379/MCN-Feature.aspx Housing Faces Slow, Uneven Recovery Don’t expect a big turnaround in residential construction—and its associated increase in metal consumption—anytime soon, say the experts. Mirroring the uneven economic recovery, the housing market is expected to move in a slow, gradual upward path in 2012, while encountering its share of speed bumps along the way, according to economists participating in a National Association of Home Builders construction forecast webinar in late April. While monthly housing data in the first quarter showed signs of a slight softening, NAHB Chief Economist David Crowe said this is more reflective of typical month-to-month volatility in the numbers, rather than an indication of any significant downward trend in the broader housing market. Pointing out that less volatile quarterly data have continued to show modest improvement in key housing indicators such as builder sentiment, new-home sales and housing production, Crowe said “the housing outlook continues to slowly brighten.” Reflecting that sentiment, the U.S. Commerce Department reported that sales of new homes rose 3.3 percent in April. Over the past three months, new-home sales have averaged 344,000, up 14 percent from the 301,000 in the same period last year. Other fundamentals remain positive for housing, he noted. Demographic factors include pent-up household demand and echo-boomers heading into their prime household formation ages. Historically favorable mortgage rates are expected to remain below 5 percent through next year. And the house price-to-income ratio has now returned to its historical average of about three-to-one vs. the nearly five-to-one during the height of the housing boom. Housing still faces formidable challenges, he cautioned, such as rising foreclosures, persistently tight lending standards for homebuyers and builders, and difficulties in obtaining accurate appraisals. “No one is anticipating that an upward path for housing will run in a straight-line trajectory,” Crowe said. “The economy is in an uneven recovery, and we can expect some corresponding ups-and-downs in the housing market in the months ahead.” NAHB projects new-home sales will climb from a record-low of 305,000 units in 2011 to 357,000 this year and 505,000 in 2013. Existing single-family sales are expected to follow suit, rising from 3.8 million last year to 4.4 million in 2012 and 5.4 million next year. Likewise, housing starts are expected to improve, with single-family housing production increasing from 434,000 units last year to 503,000 this year and a more solid 660,000 in 2013. On the multifamily side, starts posted a healthy 55 percent increase in 2011 over 2010. “A lot of newly formed households have become renters, so we need more rental units,” Crowe said. NAHB forecasts that multifamily starts will rise from 177,000 units last year to 216,000 in 2012 and 235,000 in 2013. With many households choosing to stay in place and remodel their homes rather than move, residential remodeling is expected to rise 12 percent this year and another 7.9 percent in 2013, he added. U.S. economic outlook Delving into the economic forces that will influence housing in the next two years, Chris Varvares, senior managing director and co-founder of Macroeconomic Advisers, LLC, projected U.S. GDP growth of 2.6 percent this year and about 3.3 percent in 2013, barring any unexpected fallout from the eurozone debt crisis or runaway oil prices. In the United States, the payroll tax holiday, emergency unemployment benefits and the Bush-era tax cuts are all due to expire at the end of the year. If Congress does not act, Varvares said, “we could be hitting a fiscal cliff.” On the plus side, he added, increasing household formations, rising real incomes, steadily upward payroll growth and a bullish stock market will contribute to the current economic expansion. Varvares believes home prices have hit the trough. He expects prices to be flat this year and to rise 1.5 percent in 2013. Macroeconomic Advisors forecasts 514,000 single-family starts this year and 751,000 next year. Multifamily housing production should hit 221,000 this year and 238,000 in 2013. “Our long-term analysis suggests that given the demographics, we need to build roughly 1.6 million units a year over the next decade to meet demand for housing,” Varvares said. “Obviously, we are now well below that. We do believe we will see a fairly nice run in 2013 and beyond as we need to build those units.” Looking at various state statistics behind the national numbers, Robert Denk, NAHB’s assistant vice president for forecasting and analysis, noted a range of conditions across the country. Homebuilding nationwide bottomed out at an average of 27 percent of normal production, but individual states ranged from 10 percent to 50 percent of normal production. Housing prices are drifting back to near-normal in many states. Some states, however, such as Arizona and Nevada, have seen an overcorrection of boom prices and will take longer to normalize. “What we are seeing is stabilization of house prices across the country, back to nearly their historical averages,” Denk said. Nationally, foreclosure rates have dropped back down to an average of 1 percent. While they remain a problem in most markets, they are at crisis proportions in only a few, he noted. The protracted housing recovery now under way will bring housing starts to 40 percent of normal production by the fourth quarter of this year and 55 percent of normal by the end of 2013, NAHB forecasts. Getting back to normal considerably faster will be oil states Texas and Oklahoma; coal and natural-gas producing Wyoming and Montana; and Iowa, supported by agricultural commodities. Employment data sends mixed message Employment data is a good indicator of activity in the construction sector. The unemployment rate for former construction workers fell to 14.5 percent in April, from 17.8 percent in April 2011 and 21.8 percent in April 2010, reports the U.S. Census Bureau. The total number of workers employed in construction (both residential and nonresidential) has remained flat for the past two years, however, suggesting that workers are being hired into other industries or are retiring, returning to school or quitting the labor force rather than waiting for rehiring by contractors. On a positive note, architectural and engineering services employment, a harbinger of future demand for construction, climbed for the sixth straight month, to its highest level since May 2009. Ken Simonson, chief economist for the Associated General Contractors of America, noted that even after small losses in the first quarter, the construction sector added 63,000 jobs over the past year. “The plunge in the unemployment rate for former construction workers from 21.8 percent two years ago is good news. Unfortunately, few of them have found jobs in construction, which actually employed 1,000 fewer workers than it did in April 2010.” Construction started losing jobs in 2006—more than a year before the rest of the economy—and did not touch bottom until February 2011, a year after other sectors, Simonson pointed out. Even in the past year, there have been construction job losses in half the months. “It is tough to attract and retain workers when employment gains are so spotty,” he said. “With workers finding jobs in other industries, retiring or returning to school, contractors face a potential shortage of skilled workers in a year or two.” The 1.1 percent increase in construction employment over the past year was shared among all sectors of the industry. Looking at just the residential sector, employment among specialty trade contractors climbed by 33,100 or 2.3 percent, helped by a large increase in multifamily construction. Single-family homebuilding eked out a gain of just 700 workers (0.1 percent), AGC estimates. Construction spending overall inched up in March to an annualized rate of $808 billion or 6 percent above year-ago levels, according to an AGC analysis of federal data. The biggest gains were in private nonresidential projects in manufacturing, energy and transportation. Public sector construction activity continues to decline. Private residential spending was up 7.4 percent compared to March 2011. New single-family construction posted a 10.3 percent year-over-year rise. New multifamily construction was up 23.3 percent from the previous March, while spending on residential improvements moved up 2.6 percent year-over-year, AGC reports. New-home construction won’t really take off until the market has worked down the excess inventory of existing houses. That process is well under way, reports the National Association of Realtors. Median existing single-family home prices are firming in many metropolitan areas, while improving sales and declining inventory are creating more balanced conditions, said Lawrence Yun, NAR chief economist. “We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges,” he noted. At the end of the first quarter, 2.37 million existing homes were available for sale, which is 21.8 percent below the close of the first quarter of 2011 when there were 3.03 million homes on the market. There has been a sustained downtrend since inventories set a record of 4.04 million in the summer of 2007, Yun said. Total existing-home sales, including single-family and condo, increased 4.7 percent to a seasonally adjusted annual rate of 4.57 million in the first quarter. “This is the highest first-quarter sales pace since 2007,” Yun said. “With strong market fundamentals, total home sales this year should rise 7 to 10 percent.” When will residential construction reach the tipping point when demand for new homes is no longer crippled by the oversupply of existing houses? Clearly that’s a process that will take at least another few years, provided the U.S. economy suffers no further setbacks along the way. Meanwhile, suppliers of metals and other building materials should find shelter in other markets. Tue, 31 Jul 2012 18:12:00 GMT f1397696-738c-4295-afcd-943feb885714:7379 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7378/MCN-Feature.aspx#Comments 0 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=5808&ModuleID=13945&ArticleID=7378 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=7378&PortalID=51&TabID=5808 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7378/MCN-Feature.aspx Empty Seats Behind the Wheel Fallout from the recession and stiffer regulations have resulted in a shortage of qualified truck drivers, a problem without a quick solution. Moving metal is growing increasingly difficult for North America’s service centers as the trucking industry’s driver shortage continues to worsen. Finding trucking capacity to transport steel, aluminum and other products will get even more challenging before it gets easier, say the experts. The U.S. trucking community was devastated by the recession as carrier after carrier closed their doors or sidelined a portion of their fleets as business dried up along with the economy. Companies that survived have been in no rush to reinvest in capacity, made cautious by the economy’s slow recovery. The end result is an environment where trucks, and the men and women who drive them, are in short supply. “There’s a huge shortage of trucks right now,” says Debby Cottingham of Debby’s Agency, an affiliate of Mode Transportation, Olive Branch, Miss., “and the rates are going out of this world.” The shortage is particularly pronounced in flatbed trucking, which handles most metal shipments. “The van situation is different, but right now the truck-to-load ratio in Alabama is 300 loads for every flatbed truck,” she says. Routes out of Alabama, plus some in the Midwest, are particularly difficult to cover, she adds. Bill Ritter, president of Chesterton, Ind.-based ADS Logistics, says the downturn was particularly hard on the independent contractor. Drivers that emerged upright have a lot of leverage today, however. “It’s a good time to be a trucker. Pricing is definitely going up, and capacity is what’s driving it,” he adds. Moreover, the balance of power isn’t likely to shift anytime soon, for several reasons, say the experts. For one, the economic recovery has not yet fully taken off. When the construction market finally kicks in, demand for flatbed haulers will increase substantially. Furthermore, the age of the typical driver is rising, and carriers are having difficulty finding the next generation of drivers to replace them. So experienced drivers with good safety records will remain in high demand. Finally, and perhaps most significant, new federal Compliance Safety Accountability standards have forced some existing drivers out of the market, while preventing others from coming in, adding to the manpower shortage. “That one is really serious,” Ritter says of the CSA safety scores. “If drivers have a bad safety score, they can’t get hired.” Calls for improved highway safety have led to increased scrutiny of potential new hires. “Looking at the people who are coming up, the 25- to 30-year-olds, it’s hard to find someone who hasn’t gotten in a little bit of trouble. The background checks are extensive,” Cottingham says. How can the trucking industry be having so much trouble filling positions at a time when there are so many Americans out of work? It’s much more time-consuming to qualify a person to get behind the wheel than it is to disqualify an unsafe driver, notes Eric Starks, an analyst with FTR Associates, Nashville, Ind. “Even if you had a million people waving their hands saying they wanted to be drivers, the industry can only process 150,000 people per quarter. There’s a chokepoint right there,” he says. “That’s why you always have a driver shortage situation coming out of a recession. And it’s exacerbated by the CSA, which took drivers out of the pool who were qualified [under the old rules], but nobody will hire them now.” DeWitt Weldon sees this problem regularly. Weldon is the general manager of Butler, Pa.-based M/K Express, a subsidiary of Marmon/Keystone. “I’m not trying to disparage drivers, but the majority of applications we’re getting now are from people who have not worked out at other organizations. It’s largely related to their safety scores and violations they have had on the road,” he says. “If you hire one of these guys and, God forbid, something happens, the lawyers could have a field day.” Trucking industry officials realize they will have to become creative to lure younger drivers into the profession. One program that’s enjoying some success is designed to attract veterans with experience driving military trucks into the commercial trucking world. “There is an emphasis within the DOD and DOT, and to a lesser degree the states, to make that happen,” says Dave Osiecki, a senior vice president of policy and regulatory affairs for the American Trucking Associations, Arlington, Va. “That’s not going to solve all our problems, but it will help around the edges.” The driver shortage is just one of the issues the trucking community and its trade association are addressing. The industry also is involved in the congressional and statehouse debates over infrastructure spending, both how to fund it and how much to allocate. “It’s a competitiveness issue, it’s a mobility issue and it’s a safety issue,” Osiecki says. “Highway funding and the related congestion is a pretty big issue for trucking.” Moreover, since any kind of tax increase is unpalatable to both taxpayers and politicians, some states are pushing to fund highway spending through increased use of tolls, either by raising fees on existing toll roads or converting free roads to pay-for-use. The trucking industry is overwhelmingly opposed to that method as a funding source. According to the ATA, an estimated 15 percent of all monies collected through tolling go to administrative costs. That is in sharp contrast to gas taxes, where just one penny out of every dollar paid goes toward the cost of collection. So far, three states have gotten authorization to convert free roads to toll roads, the maximum the law allows. Other states are trying to change that statute, but the trucking industry is fighting back. As an alternative, the ATA has asked Congress to raise taxes on both gas and diesel fuel to fund infrastructure repairs and expansions, “but the politicians don’t have the will to do that,” Osiecki says. “We’d even accept just a diesel tax increase, but they won’t even do that. It’s mind-boggling,” he adds. Another major fight for the ATA is over proposed changes to the CSA’s Hours of Service regulations. While the maximum driving time per day, 14 hours, and the minimum time off, 10 hours, remain the same in the new proposal, changes to some of the restart provisions would effectively reduce seat time. Under the current rules, a driver can restart his Hours of Service after taking 34 consecutive hours off. The new rules call for two consecutive nights of rest, which would push the restart up to 45-48 hours. Other changes include limiting restarts to once per week and a mandatory half-hour rest break during each shift, further reducing drive time. “The position of the ATA is that we see no need for the changes. The industry has been safer than ever under the existing rules that have been around since 2005, and we really don’t believe there’s much scientific or research basis to change it,” Osiecki says. The ATA has sued the Federal Motor Carrier Safety Administration to halt the changes. A decision on the matter is expected shortly before the proposed date of implementation in July 2013. The industry is eagerly awaiting the outcome. “Everyone on the trucking side says that’s going to be a game changer,” says Weldon. “I’m a big supporter of CSA regulations and think they’re necessary, but the Hours of Service that have been proposed can have a drastic effect on the way products are shipped, both for shippers and transportation companies. It’s a huge issue on the table.” One method of combating the reduced hours of service is through equipment upgrades. The use of new technology is enabling more of the on-duty time to be spent on the road. The most notable development has been the use of on-board recorders, GPS devices that provide a variety of information to both the trucker and the trucking company, including driving speed, miles per gallon, hard braking and other factors. Given this information, companies can determine optimal routes and times and driving modifications that can improve fuel economy and safety. The technology also serves as a tamper-proof method of logging information, a major switch from the pencil and paper approach used for decades. Initially scoffed at by many drivers, usage of such devices has steadily increased. The ATA supports mandatory use of the devices in all vehicles. “This has helped our members understand these things do work, they help drivers comply, they help with safety and they help companies manage their fleets better,” Osiecki says. More and more truckers are getting on board with on-board recorders. “Everybody seems to be embracing technology,” says Starks a FTR. “If the owner-operators are starting to embrace it, that’s a pretty good sign, because they’ve not always been quick to adapt.” Another advancement that can reduce the time spent loading and unloading heavy material like steel and aluminum is a new flatbed design. Redieh’s Transit Lines Inc., Willowbrook, Ill., is using a coil trailer with an 18-inch drop, which lowers the center of gravity for the flatbed, allowing the material to be strapped in with a simple 75,000-pound nylon strap. Use of this type of trailer can cut 20 to 30 minutes off the load time. “We run several of those trailers, and it works extremely well with the short-haul stuff,” says Thomas W. Rediehs, company president. Other advancements, in various stages of adoption, include a trend toward automatic transmissions, anti-idling technologies, and skirts on trailers to assist with fuel economy. A host of other features, such as roll stability, lane departure warning signals and forward collision mitigation systems, are improving safety performance. One area that needs further development is the diesel engine technology. While automobile makers have figured out how to make engines that are both cleaner burning and more fuel-efficient, the same is not true for truck engine manufacturers. “The air is cleaner coming out of the pipe, there’s no question about that, but there’s a new component in the exhaust that makes the engine less reliable and not as efficient,” Ritter says. These emissions enhancements are partly to blame the increased price tag on trucks, which is a factor in the tightening capacity. “There’s been some extreme inflation on the equipment side,” says Ritter, who notes that the price of tractors and trailers has doubled in the last 10 years. The cost of used vehicles has skyrocketed, as well. All of this is why Starks projects that trucking capacity utilization will approach 100 percent by the middle of this year. He forecasts a 2 percent increase in trucking freight this year and another 3 percent increase next year. For the metals shipping segment of the transportation market, the crunch is even more imminent, Cottingham says. “This coming summer, we’re going to see the worst load-to-driver ratio we will ever experience.” Tue, 31 Jul 2012 18:01:00 GMT f1397696-738c-4295-afcd-943feb885714:7378 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7377/MCN-Feature.aspx#Comments 0 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=5808&ModuleID=13945&ArticleID=7377 http://www.metalcenternews.com/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=7377&PortalID=51&TabID=5808 http://www.metalcenternews.com/Editorial/CurrentIssue/June2012/tabid/5808/articleType/ArticleView/articleId/7377/MCN-Feature.aspx ArcelorMittal Steps Up to the Plate Taking customers’ suggestions to heart, the steelmaker upgrades the heat-treat line at Burns Harbor with a giant leveler, plus new plate blasting and painting capabilities. Steel giant ArcelorMittal has started production on the new heat-treat plate line at its Burns Harbor, Ind., mill—an upgrade that was not just customer-driven, but practically customer-demanded. Over the past several years, a number of ArcelorMittal customers have told the steelmaker that to remain relevant in the heat-treat plate market, it needed to make some changes. “We listened carefully and went to work designing a new plant that would better meet the needs of those customers, not just today but well into the future to maintain competitiveness against the best in the world,” says Mike Rippey, president and CEO of ArcelorMittal USA. What came out of those discussions was a $60 million investment to dramatically improve both the quality of the heat-treat product and the company’s ability to deliver it to service centers and other customers. The centerpiece of the facility’s upgrade is a new high-capacity leveler, which the company claims is the most sophisticated of its type in the world. The giant leveler, designed by Japan’s Steel Plantech, is engineered to level plate ranging from 3/8th inch to 4 inches thick and measuring up to 160 inches wide and 1,500 inches long. The new leveler has 8,200 tons of separating force, a tenfold increase over the line’s existing leveler, and can handle plate steel with yield strengths up to 200 ksi. Other new features of the line include a mist cooling system, a test cutting and plate blasting process and an in-line plate priming stage after the material has been through the leveler. Upgrades also were made to the furnaces on the heat-treat side of the now-continuous line. ArcelorMittal will run three products through the line: normalized plate for customers seeking a tough, fracture- and puncture-resistant material; quench plate for use in abrasion-resistant applications; and quench and tempered plate for high-strength applications. With the new line, the mill’s annual capacity is expected to increase by at least 15 percent to more than 100,000 tons. Altogether, ArcelorMittal produces more than 2 million tons of plate product each year at its U.S. facilities. And now the product coming out of Burns Harbor will match or exceed the quality from the company’s other facilities, as well as competitors’ products, claim ArcelorMittal executives. Customers have already noticed the difference. “We were almost getting to the point where we had to have a dual inventory, with the sub-par ArcelorMittal product that only certain customers would take and other products from some of the other U.S. mills that were superior,” says Denton Nordhues, president of Lisle, Ill.-based Leeco Steel, an ArcelorMittal customer. “It looks like they’ve gone from being a severely sub-par provider of quenched and tempered plate to being All-American.” “Certainly, the old Burns Harbor product was not up to par with what was available in the marketplace. They have become a much more viable competitor in the commercial Q&T market,” adds Scott Pape, president of Kenilworth Steel, Warren, Ohio. In fact, Nordhues wonders if ArcelorMittal’s painted product will become the standard for U.S. heat-treated plate. “It will be interesting to see how the market reacts to this painted plate. Do customers start asking or insisting on a painted product on any plate we provide them? We could be back to a dual-inventory situation, although the good news is that all of the plate we’d have in the warehouse would be a superior product.” ArcelorMittal executives expect the mix of end-use customers to remain consistent even after the ramp-up to full production is complete. The company will continue to sell into the construction, agriculture and mining markets, with distribution to remain around 30-40 percent of the total. “A lot of our customers have been getting heat-treat products from us for a number of years,” says Jack Biegalski, director of plate product control, sales and marketing for ArcelorMittal USA. “From a quality standpoint, this really helps us stay with those guys. A lot of investment has been made in this market by our competitors, and this enhances our ability to deliver our programs.” Biegalski acknowledged that some of the company’s customers may have been doing the leveling that ArcelorMittal will now provide, but he isn’t worried about competing with them. “As an extra process, it is more efficient to do it here and provide our customers the product right out the door.” Getting product out the door quicker is another chief goal of the project. The original heat-treat line, installed shortly after the Burns Harbor facility was opened in 1966, was inherently inefficient. The first order in tended to be the last order out because it ended up on the bottom of the pile and had to wait for the plate on top to be moved for further processing. “Trying to hit shipment schedules out of a place like that was difficult, unless you just added time. And in this environment, that’s not good, because it’s inventory to somebody, whether it’s us or the customer,” says John Mengel, chief operating officer for ArcelorMittal plate. Working within the confines of the existing building, the company was able to reconfigure the line into a continuous process. The product goes through the charge table and hardening furnace, onto the high-pressure spray roller quench and then into the tempering furnace. From there, a transfer car moves it onto the process line for mist cooling, test cutting and plate blasting, leveling and finally priming. In the new system, the plate never touches the floor. “From the time the plate is charged to when it’s on its way down to shipping is somewhere around two to three hours,” says Mary Frankovich, an ArcelorMittal engineer who served as the project manager. The run time is a vast improvement from the week or more under the old system. Speed through the system will be further increased by a more consistently sound product, says the company. Under the old line, delays often formed when material had to be rerun because of quality issues. “It looks like they’ve thought through the space constraints pretty well,” says Pape, who was among many executives attending the ArcelorMittal open house in May. “Not only will the quality of the product be improved, but also the logistics of getting it through the plant.” Getting material to customers was also important throughout the construction process, which began in July 2011 and took the Burns Harbor heat-treat facility off line. ArcelorMittal dealt with that issue by relocating employees to its nearby Gary heat-treat facility, while redirecting orders from its Conshohocken and Coatesville facilities in Pennsylvania. “The transfer of talent was absolutely crucial and the first important step,” Mengel says. “It provided a seamless transition for the market so our customers would not experience interruption.” Altogether, the installation took nine months, with the first product coming off the new line in early April. The company is gradually moving up to full production, recognizing the importance of creating the best possible impression with its new material. “This product is not only new to the customer, it’s new to everybody here,” Mengel says. “We need to ramp up slow enough that we’re not compromising the quality. Otherwise, we wasted the money.” That appears unlikely. “The marketplace will be the ultimate decision maker, but I think they planned and executed the project pretty well,” says Pape. “John Mengel and his team should take some pride in that.” Tue, 31 Jul 2012 17:32:00 GMT f1397696-738c-4295-afcd-943feb885714:7377