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Outlook bright if Washington behaves: Gerdau

Keywords: Tags  steel, Gerdau Long Steel North America, Guilherme Gerdau Johannpeter, Port of Tampa Steel Conference, Catherine Ngai

TAMPA, Fla. — Gerdau Long Steel North America could see growth opportunities in the upcoming year thanks to a bottomed-out construction market and a burgeoning automotive sector, according to the company’s top executive.

But economic growth will require Washington to act, offering much clearer economic goals and working through gridlock, Guilherme Gerdau Johannpeter, president of the Tampa-based company, said March 1 during the 24th annual Port of Tampa Steel Conference.

Nonresidential construction is "facing a very slow recovery from the bottom, (but) we’ve clearly hit the bottom on this," Johannpeter said. "The funding is absolutely there, (but) the dynamics have to change in the game so that (politicians) can refocus on the things that create jobs and help the U.S. economy."

Uncertainty on Capitol Hill has had an impact on the steel market, he said. "We’re a little scared of the rhetoric coming out of Washington. In the fourth quarter, we saw a lot of buzz coming in for the fiscal cliff. Customers were reluctant to buy and replenish their inventory. That’s a signal that we’re not at a stable recovery at this point."

Washington must agree on a five-year transportation bill if the transportation and infrastructure markets are to pick up, he said. "If we had a five-year bill, I think we’d see a different environment out there. Call it sequestration, call it fiscal cliff, but there’s an impact on the amount of business we see in highway and construction."

Johannpeter pointed out that one bright spot for the North American steel industry is the special bar quality market, particularly as it applies to the automotive sector.

"We’re heavily involved in the light-vehicle and heavy-truck scene. We’re seeing a lot of companies reshoring parts that typically were (made) in (South) Korea (or) Japan now being produced here in North America," he said. "It’s not only a recovery in output, but it’s also quality content. We’re seeing more North American content in cars and trucks. This is a bright spot for us, and we think we will continue developing this market."

Johannpeter said that while Gerdau tracks import statistics carefully, the more important thing to note is that successful companies in the United States often are ones that have little import penetration.

"Look at companies like Reliance (Steel & Aluminum Co.): They source very little imported steel. The fact of the matter is that customers who are successful in growing their businesses do not rely on imports to build their businesses," he said. "They want to work ... (with) a producer in North America, focusing on the value chain and focusing on the value level. Lead times are very important these days."

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