Manufacturing 2.0
Rock River Valley manufacturing experts discuss the many facets of manufacturing: technology, education, training, events, people and any other aspects of this important segment of our economy. They’ll use this blog to get the word out and solicit feedback on local and global manufacturing. They hope to better engage our employers, employees and our future work force and increase their understanding of manufacturing. |
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Add comment September 2nd, 2008
Who says manufacturing is dying? Take a look at this report and the chart that shows that we are investing in manufacturing technologies right here in the U. S. A. and it’s up over 15% over 2007. Industry analysts expect continued growth into the third quarter as manufacturers invest in the latest and greatest manufacturing technology at IMTS 2008.
Add comment September 2nd, 2008
 Attention all users of steel…here’s an interesting article….
By ROBERT GUY MATTHEWS
September 2, 2008
The global scramble for raw materials is changing the shape of the world’s steel industry: Iron-ore miners are becoming steelmakers, and steelmakers are becoming ore miners.
In an effort to gain independence from the mining giants that control the world’s iron ore and have raised prices more than 80% this year alone, a growing number of steelmakers are shopping for their own iron-ore mines. Meanwhile, several ore miners are seeking to cash in more directly on the world’s growing demand for steel.
![[photo]](http://s.wsj.net/public/resources/images/OB-CF234_MKAR54_NS_20080901194057.jpg) |
| Reuters |
| Workers at Cia. Vale do Rio Doce in Brazil, a market where the industry trend toward vertical integration is most visible. |
“The main difference between now and, say, 10 years ago is that there is no excess capacity in the market,” says John Anton, a steel economist for Global Insight, an economic consulting company based in Waltham, Mass. “For one company to get what it needs, it now has to outbid another company.”
The trend toward controlling production from the raw materials to finished product, known as vertical integration, harks back to the way the steel industry operated decades ago, when it was common for steelmakers to own their own mines. In the U.S., the practice fell by the wayside in the face of competition from foreign steelmakers. The thinking was that the best way to fend off competition from abroad was to focus on steelmaking, which historically was more profitable than mining iron ore.
The swing back toward vertical integration is most evident in Brazil, which has vast reserves of iron ore that remain either untapped or up for grabs. “Brazil is the strategic place for the steel industry,” says Lakshmi Mittal, the chief executive of Luxembourg-based ArcelorMittal, the world’s largest steelmaker by production. “It has the raw materials. It has the market. It has the growth.”
In the past month, steelmakers and miners have announced major investments in Brazil’s fast-growing economy. ArcelorMittal said it would pay $810 million for the Brazilian iron-ore assets of Oslo-listed London Mining PLC and agreed to develop a port facility to ship iron ore, while a consortium of Japanese steelmakers joined the bidding fray for a collection of Brazilian mines owned by Cia. Siderúrgica Nacional. Also interested in those CSN mines are steelmakers from China, India and Russia.
Meanwhile, Brazil’s Cia. Vale do Rio Doce, the world’s largest iron-ore miner by volume, said last month that it planned to build a $5 billion steel complex. The mill, to be completed by 2013, would have about 2.5 million tons of capacity, with most of the output targeted for domestic use. Several other smaller iron-ore producers have indicated they also want to move into steel production.
Like many miners, Vale is flush with cash from historically high iron-ore prices and has been looking for new ways to deploy this capital. Vale has said it also wants to buy other mining operations as it moves to diversify away from iron ore. But even with $14 billion earmarked for that purpose, the company hasn’t had success in buying other mining operations. For instance, Vale’s proposed deal to buy smaller metals miner Xstrata PLC fell through this year over price negotiations.
In addition to the steel complex, Vale announced last month that it was building an aluminum plant in Brazil so it could feed that new plant with the bauxite from its mines. It is also investing in joint ventures with steelmakers. In April, the miner signed a memorandum of understanding with JFE Steel Corp., a large Japanese steelmaker, and Dongkuk Steel Mill Co., a South Korean-based mill, to construct a steel-slab plant in Brazil.
A Vale spokesman said that the company’s mission is to enter into joint ventures with steelmakers to build in Brazil and increase the production of steel there. Those joint ventures would naturally purchase their iron-ore needs from Vale.
Steelmakers have focused on Brazil in part because Australia’s iron-ore reserves are controlled by BHP Billiton and Rio Tinto, meaning there are almost no opportunities for a newcomer to gain a foothold in the market. Moreover, Australia’s logistics and transportation system is nearly at capacity and labor costs are higher.
Write to Robert Guy Matthews at robertguy.matthews@wsj.com
Add comment September 2nd, 2008
Economic activity in the manufacturing sector failed to grow in August, while the overall economy grew for the 82nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementâ„¢ Manufacturing Business Survey Committee. “The PMI indicates a slight decline in manufacturing during August. This continues the 2008 trend toward negligible growth or contraction each month, but ultimately results in very little overall change in the sector. This month’s report is showing the first signs of lower prices as the Prices Index fell significantly, though still at an inflationary level. Export orders picked up additional momentum, and that is important to manufacturers as domestic demand remains soft for most industries.”
The five industries reporting growth in August — listed in order — are: Paper Products; Computer & Electronic Products; Miscellaneous Manufacturing; Apparel, Leather & Allied Products; and Chemical Products. The industries reporting contraction in August are: Wood Products; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; Furniture & Related Products; Machinery; and Primary Metals.
Read the rest of the report….
| M | T | W | T | F | S | S |
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