Fractured Supply Chains Drive Steel Prices Skyward

View Email Online   May 3, 2021   Welcome to the newest monthly newsletter offering from MetalForming magazine and PMA.  We hope you find it useful and interesting; please feel free to share your thoughts with us.   This regular column from MetalForming magazine provides an inside look at the management styles and techniques of metal forming and fabricating company executives. We’ll share some of their philosophies, their daily challenges and how they face them, and offer additional insights. We hope that you find these interviews useful and can take away some ideas to use at your own company. Want to be interviewed for this column? E-mail editorial director Brad Kuvin.   Perspectives on Business Management with Reggie Clow, Owner, Clow Stamping Co. Short-run stamper/fabricator Clow Stamping employs nearly 500 people, has 300,000 sq. ft. under roof, 17,000 active part numbers and more than 400 accounts—dizzying numbers that demand a tight ship. And, tightening the ship is precisely what owner Reggie Clow has been working diligently on, including an evolution to the entrepreneurial operating system (EOS) initiated 2.5 years ago. Here, Clow shares his EOS successes, and his vision for the future. “A couple of years ago I read ‘Traction: Get a Crip on Your Business,’ by Gino Wickman,” Clow says, “which provided guidance as our president, Lori Davies, my management team and I implemented an EOS.  The book also helped guide us as we installed a right-person right-seat (RPRS) workforce strategy and turned our focus on improving companywide communication and accountability.” Clow also tells MetalForming his strategy for overcoming the skilled labor shortage threatening to inhibit his ability to grow the company. “We have 485 employees and I have enough work for 550 people,” he says. “We can’t get our headcount where we need it, so we’ll invest $1 million this year to develop enough automation to account for the equivalent of 10 to 12 production workers… We’re (also) planning, either later this year or in 2022, to automate our shipping department.” Here’s the rest of our interview with Reggie Clow.   PARTNER CONTENT   Introducing Formic - Automation Made Easy We deploy automation from top OEMs, and we only charge a low hourly rate, saving you money from day one. We handle all the complexity, performance guaranteed. Whether it’s machine tending, material handling, or something else, automation has never been more accessible. Get a quote today!   The Four Dimensions of Competitive Positioning Results of the recent Harbour Results 2021 Benchmarking Survey reveal a new trend: Manufacturers are struggling with profitability. “The return on capital employed for the industry average has fallen below the corresponding weighted average cost of capital,” writes Laurie Harbour in this month’s Love Letter to Manufacturers, exclusively for MetalForming magazine and PMA. “Driving up returns with profitable growth will require a sound strategy to compete successfully. But, too often businesses develop a competitive strategy that is one-dimensional, which may produce some wins, but fails to deliver the profitability levels enjoyed by others in the industry.” Harbour then launches into a sports analogy to illustrate four dimensions of competitive positioning to drive greater profitability. Among them: Having the right equipment for the opportunities presented, the skillsets in the business to best use that equipment, and an understanding of the market’s needs and requirements. The right combinations of machines versus labor and the costs and prices for each. Delivering a value proposition for which the customer is going to pay, eagerly or reluctantly or, delivering value in such a way that allows you to profit from it more than your competitors.    PARTNER CONTENT   CAR MBS Returns to Traverse City in August! The Center for Automotive Research is bringing back CAR MBS for its 56th year in Traverse City, Michigan, for one of the year’s first in-person automotive events! Join CAR August 4-5 for two days of thought-provoking speakers and unmatched networking opportunities. Use code MBSDEAl to save 10% on your purchase!   Your Quarterly Economic Trends Report Precision Metalforming Association (PMA) membership offers access to quarterly economic trend reports from ITR Economics, which provide economic intelligence to reduce risk and drive practical and profitable business decisions. PMA has just released the April 2021 report, which notes that “U.S. Real Gross Domestic Product rose 8.6 percent from the pandemic low to the end of 2020 and has another 2.5 percent to go before equaling its last peak. Leading indicators point to sustained rise this year, with 2021 coming in appreciably stronger than 2020 for the vast majority of markets.” “We lifted the production outlook (for the U.S. forging and stamping industries) by 3.6 percent, 1.7 percent and 1.1 percent for 2021, 2022 and 2023, respectively,” say the report’s authors from ITR Economics, “as the latest economic evidence points to a faster economic recovery than previously expected. Annual production will generally rise into late 2022 before plateauing through late 2023. Here’s the executive brief.   PARTNER CONTENT   6 Steps to Determining if You're Spending Too Much on Energy Cost reduction strategies are always on the forefront for organizations, and one effective way to curb costs is by taking a closer look at one of your biggest cost factors: energy.   Fractured Supply Chains Drive Steel Prices Skyward A perfect storm of freight backlogs, blast-furnace shutdowns, import tariffs, lingering coronavirus concerns, labor strikes and skilled workforce shortages have severely constrained steel supplies and set prices at record levels.  In this detailed, multi-sourced article provided exclusively to MetalForming magazine, author Steve Horton, marketing manager at Minneapolis, MN-based metal former Ajax Metal Forming Solutions, takes a deep dive into the issue, and its impact on our industry. “Ajax and hundreds of other manufacturers across the United States who buy tons of steel are stuck between erratic availability and escalating prices,” Horton writes.  “Steel demand has raced well ahead of supply for the last six months with no immediate sign of slowing down.” Among those quoted in the article: Andy Pappas, managing director and head of metals asset-based lending at BMO Harris Bank; Cleveland-Cliffs president and CEO Lourenco Goncalves; and Tony Krump, purchasing manager at Ajax Metal Forming Solutions.   PARTNER CONTENT   Content Strategy Drives Lead Growth & New Business Opportunities Since 2003, TopSpot has specialized in digital marketing and website development for industrial manufacturers, fabricators, CNC shops, OEMs and more. Learn more about how TopSpot’s data-driven content development increased the industrial website's online leads by 221% within the first year.   The USMCA Promises to Dramatically Change the North American Automotive Supply Chain If you're doing business in Mexico, in particular for the automotive industry, you need to read this National Law Review article. "Most automotive businesses in Mexico use outsourcing operations to manufacture in the country,” note the authors. “The new outsourcing rules will impose a need to reassess and restructure a number of labor, corporate and tax structures, and short-term strategies. "Upon VAT-certification renewal,” the article continues, “companies will, among other things, no longer have the ability to obtain expedited 16% VAT refunds on their operational balance." Also up for discussion: labor laws, mandatory technical standards and tax reforms.     MetalForming magazine is the official publication of Precision Metalforming Association. 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