Keep Customers, Congressmen
Even Closer, as the Saying Goes
By Tim Triplett, Editor-in-Chief
It’s harder to tell friend from foe in the steel trade these days. As evidence of that fact, consider the comments from members of the Association of Steel Distributors, who participated in a panel discussion last month in Chicago. All five panelists, and probably most of the ASD members in the room, now insure their receivables. It’s a fact of life today that service centers can no longer count on customers to honor their commitments and pay their bills.
“Not a sale goes out of our door without credit insurance. At least once a year, all our major accounts are reviewed with financial statements and personal visits by our credit department. No matter who it is, they get reviewed regularly. You just can’t take a risk anymore,” said Jim Queen of JM Steel Corp. in Cuyahoga Falls, Ohio.
“You have to really understand who you are dealing with, the financial fabric they are made of,” said Gary Birnbaum of Charter Steel in Chicago. “You must have good personal relationships with people and know how they are going to react under stress. Otherwise, you can get stuck with a lot of inventory.”
Bill Vitucci of Vitco Steel in Posen, Ill., noted how personal relationships have suffered. “In the past, if the guy from ABC Company was your fishing buddy, you could help him work through a situation. You can’t do that anymore and still be insured.
“On the relationship side, before the sale is made, you have to understand the customer’s business and what their moral obligation is to their customers and suppliers. That is the new norm in terms of credit and establishing customer-supplier relationships,” Vitucci added.
The panelists also appealed for more government support of manufacturing. “We can’t keep losing companies overseas. It just kills the economy. The government has to understand we must be kept on a level playing field,” said Birnbaum.
Doug Everhart of Greenpoint Metals in Franklin, Ohio, noted that the United States’ huge trade deficit and China’s vast holdings of U.S. Treasuries gives the Asian giant excessive leverage. “In three years, the interest that we pay the Chinese will fund their entire defense budget. They control our debt. They don’t want to hear about trade talks. If you don’t contact your representatives and say this is serious, we are in trouble.”
“It is up to every one of us to write a letter and express our concerns over the debt crisis and enforcement of our trade laws,” added Jim Barnett of Grand Steel Products in Wixom, Mich.
Not to suggest that all customers are the enemy—or even politicians for that matter—it would be wise to heed the old adage, with a timely twist: “Keep your friends close and your customers and congressmen even closer.”