A Path to Profitability

by Douglas Stalheim

Publisher - DGS Metallurgical Solutions, Inc.

Category - General Novel

Many steel producers in the world today continue to struggle to find the desired profitability in today’s basic structural steel market. This has been more common since the 2008 worldwide economic crisis. There are many factors that can contribute to reduced or lack of profitability in the production of structural grade steels. Depending on where in the world one is located will determine which factors may or may not be present. Factors that many structural steel producers may face can be broken into two basic groups: 1. Cost to produce 2. Market availability and/or market sophistication/understanding of steel attributes. Cost to produce can be related to overcapacity in the market, energy costs, raw material costs, equipment capabilities, heavy capital costs/investments, high product rejection rates/yields and a young/inexperienced work force. Market availability/market sophistication or understanding can be related to physical location of the steel producer relative to the market, access to international markets and more importantly today a lacking of market sophistication/understanding of the end users actual costs to produce a part. In other words, many of today’s end users of structural steel seem to think that “steel is steel” and there is not a difference from anyone supplier to the next, resulting in only pricing not quality/performance being the measuring stick for the producer. While there are worldwide economic conditions that are out of an individual person or company’s control, there are opportunities for individual companies to address and overcome the factors that might be hindering desired profitability. This paper will outline some basic steps that producers of structural steel can implement to overcome the various factors that may be hindering their ability to produce the desired profit. One must remember there are no “magic” remedies, but by working intelligently within each producers facility and raising the level of the markets end users level of sophistication there are opportunities for profitability. In other words, there are “paths to profitability” that can be used to address today’s difficult times and improve a given steel producers ability to generate profit.

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