It's been described, aptly,
as the inbox from hell. As Barack Obama puts together his
transition team in the weeks before his inauguration on Jan.
20, the President-elect could be forgiven if depression-with a
small "d"-sets in.
It seems inevitable that by early next
year the economic situation will have worsened as the impact of
the "virtual" financial crisis feeds through to the "real"
economy. Consumers will have cut back further, manufacturers
will shed more jobs and the impact on steel and metal companies
will only become more severe.
In the face of the most uncertain
economic outlook in generations, what does the U.S. metals
industry need from the next President? The top priority is the
one that's simplest to identify but likely will be the toughest
to implement Fixing the economy.
In the days after the election, Obama
hinted at his support for a second stimulus package that
hopefully will prove more successful than the first package in
generating growth in the consuming sector. Metal producers and
fabricators are quite capable of responding to changes in
market conditions; what the industry needs is for the
government to preserve the manufacturing base and prevent
end-user demand from evaporating further. A big new push to
invest in the infrastructure network would help.
The economic crisis sometimes seems to
have overwhelmed all other considerations, but longer-standing
issues remain a concern. Trade, and especially relations with
China, remain a key challenge for the next administration.
Steel imports crept higher in the fall as the dollar
strengthened, and whether that's seen as good news or bad news
by consumers and producers, it serves to put trade policy high
on the agenda. Whether Obama will live up to some of his tough
campaign rhetoric, or prove friendlier to the North American
Free Trade Agreement and other international agreements once in
office, is one of the key uncertainties for U.S. industry.
The debate over climate change
(remember that?) continues. Obama has said he will implement a
cap-and-trade program, which some in the steel industry fear
could hamstring producers vs. foreign competitors. Energy
policy also is critical, even if oil costs roughly half as much
as it did in the summer. It was the lack of a coherent policy
after the last oil spike in the 1980s that was largely
responsible for the recent surge in prices. Obama wants to
invest $150 billion over the next 10 years in clean energy
sources, but the importance of securing reliable, affordable
supplies in the meantime-from oil, natural gas and coal-needs
to be made a priority too.
There are many more issues-jobs,
regulation, taxes and others-on the metal industry's wishlist.
But there also are several things the sector doesn't need,
including a bailout. The auto industry might be going cap in
hand to Washington, but the days of the steel industry being
dependent on government aid are long gone. The way in which
steelmakers have cut production in recent months to match the
precipitous decline in apparent demand has been breathtaking.
If Washington had reacted as nimbly to the crumbling economy as
steelmakers did, the chances are that the country would be in
better shape than it is today.