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.