Been Down So Long It
looks Like Up To Me was the title of a novel written in
the 1960s by the late Richard Fariña, perhaps better
remembered as the husband and musical partner of Mimi Baez
Fariña, sister of folk singer Joan Baez. Too bad the
title is already copyrighted. It might make a great description
of the current economic outlook, particularly by the more
By late February, many in the ferrous
scrap and steel industries had written off March and said they
were hoping that April and the second quarter would bring a
recovery. Their pessimistic critics didn't share the belief
that the market might rebound soon.
Even with the $787-billion economic
stimulus package approved by Congress and signed by President
Obama, economic recovery may be a long time coming. It takes
time to get even "shovel-ready" infrastructure construction
projects started. In any case, a new bulldozer pushing dirt
around and workers with a few more bucks in their pockets
aren't likely to make this nation's battered economy do an
about-face overnight. Something fundamental has been severely
The public's trust in banks, both
commercial and investment, is one example. Instead of safely
watching over our savings, they were betting the house on
highly leveraged mortgages and hoping that the flimsy house of
cards would not fall. With trust has gone consumer confidence.
Home foreclosures, job losses and personal bankruptcies have
weakened the foundations of the economy. Those facing personal
financial crises have no money to spend, while those who still
have a home and a paycheck may be figuring they'd better hold
on to all they can.
What's needed is not simply a
government spending plan or a tax cut, but a renewed belief
that those at the top can be trusted and are not driven just by
avarice; that like the sermons they preach to stockholders and
employees, they also want their companies to grow and prosper;
that motivation isn't driven simply by stock options, year-end
bonuses and a corporate jet; that rewards (monetary and
otherwise) come to those who do the job well, not simply
because they occupy a corner suite.
The late Ken Iverson, former chairman
and chief executive officer of Nucor Corp., Charlotte, N.C.,
once explained that his steel company had a bonus program for
its employees. When business was good, managers and blue-collar
workers benefited by varying degrees. When the market was doing
badly, the company had another program. Iverson called it "Feel
the Pain" and said, in brief, that higher-paid employees like
him would face steeper pay cuts.
Analyst Michelle Applebaum, managing
director of Michelle Applebaum Research Inc., Chicago, wrote
recently that the U.S. steel industry has managed to survive
what were some of the toughest times any industry has faced.
Applebaum was taking on the critics of the "Buy America"
provision in the economic stimulus package, but in her argument
she also pointed out that the industry has revived itself from
near death in the past decade and is now one of the most
competitive in the world.
"To the casual observer," she wrote,
"the American steel industry most probably looks like the boy
who cried wolf; the import-whining has been going on for 50
years. The casual observer also most probably believes that
Japan is still the low-cost producer and our steel industry is
a rust-bowl dinosaur. Hogwash and ancient history. Today,
America is globally acknowledged as one of the world's
lowest-cost places to make steel; witness the dozen or so
American steel companies acquired with rubles, rupees, yen and
euros over the past half dozen years?.?.?.?"
There is one thing we can safely lose
in this economic downturn the arrogance that afflicts some who
climbed the corporate ladder. These "success stories" often
regard all below as lesser creatures that don't deserve what
they have attained.
Not too many years ago, while attending
an industry conference, I was dismayed-but not surprised-by the
remarks of a corporate executive. He complained about a
demolition contractor who had bid for a job dismantling one of
his company's abandoned factories. The guy showed up at his
office driving an expensive 4?x?4, he said with an air of utter
shock in his voice.
Knowing that most scrapyard owners and
demolition contractors spend a lot of time outside in their
yards or on-site at a dismantling job, I thought it probably
was well earned and perhaps one of the few rewards that a
demolition contractor could bestow on himself. Today, many own
4?x?4s and if you've ever driven through a scrapyard you know
why-the gullies and ruts can do a number on the average car's
Also, when scrap dealers reap rewards
it's not in the millions of dollars. Most are still small
family owned and operated companies. If they have a corporate
jet, it probably was bought at a Defense Department scrap metal
sale and will soon be turned into feedstock for a secondary
Fortunately, though, the scrap industry
often is the first to feel a strengthening of the nation's
industrial activity, a bellwether that economic times are
improving. Former Federal Reserve Board chairman Alan Greenspan
was fond of tracking scrap metal prices and saw them as a
leading indicator of economic recovery in hard times.
Perhaps a scrap dealer driving a
gas-guzzling 4?x?4, rather than Wall Street's financial
wizards, will be best able to tell when the economy truly is on