CITY OF INDUSTRY, Calif. The failure of both
Washington and local governments to give a clear message on
economic, tax and regulatory issues continues to discourage
investment in steel, manufacturing and metal distribution,
executives charged this week.
Reliance Steel & Aluminum Co., for example, had expected
its capital spending for 2012 to reach $250 million, David
Hannah, chairman and chief executive officer of the Los
Angeles-based distribution chain, said at the Metals Service
Center Institutes Southern California Manufacturing
But as the year progressed, Reliances spending "lost
quite a bit of momentum," due in large part to
uncertaintyat both national and local levelson such
issues as taxes and the regulatory climate, and will fall "far
short" of this years earlier target, he said.
"We dont know what the rules are going to be," Hannah
said of the unclear regulatory situation ahead.
Another Reliance executive told AMM that the
companys capital expenditures through the first nine
months totaled about $137 million, with next years
expenditures expected to drop to range of $150 to $175
John Ferriola, president and chief operating officer of
Nucor Corp., noted that the Charlotte, N.C.-based steel
producer was at one time looking to build a blast furnace in
Louisiana. But as questions about carbon taxes "dragged on for
years" with no clear resolution, Nucor instead ended up
choosing direct-reduced iron technology for the site.
"It's impossible to go ahead without having consistent,
reliable data," Ferriola said.
Michael C. Arnold, president and chief executive officer of
Ryerson Inc., agreed that one of the greatest challenges during
the past several years has been "complete uncertainty over what
might happen" in the year ahead. Since the Chicago-based
service center now operates on an international scale, he said
it could decide to invest in such markets as Germany or South
Africa if they were seen as more attractive than the United
States. "We have global choices," he said.
The data backs up the growing "conservatism" among chief
executive officers, said Michael H. Hoffman, vice chairman of
Klöckner USA Holdings Inc. According to a recent survey of
chief executives, some 85 percent currently arent
inclined towards expansion or investment, he said.
That apprehension comes at a time when Europes
recession is "deeper and wider" than anticipated, while
Chinas rate of economic growth is down to a comparatively
low annualized rate of 8 percent, Hoffman said.
While none of the executives at the event endorsed either of
the two presidential candidates, no one hearing their remarks
would mistake the summit as a rally to re-elect President
"The next four years cannot go the way the last four years
went," Arnold said.
However, Republican Mitt Romney wouldnt get a free
pass. Ferriola said that if Romney is successful, businesses
will expect him to "make good" on his promise to designate
China a currency manipulator.
Moreover, none of the executives predicted a quick change to
the current climate based on next weeks election results.
While an Obama victory might immediately send stock markets
"down a bit," Hannah predicted, a Romney win is unlikely to
"spike" them upwards, either. "I dont really see any real
big surprises out there," he said.