Mittal USA's CEO shares his industry views

Mittal USA's CEO shares his industry views

At MSCI's 2006 Carbon Conference last week, hundreds of people in the steel industry, including representatives from industry leaders like Mittal, US Steel, and Nucor gathered to discuss the fate of the carbon steel industry in 2006. One of the Keynote speakers was Louis Schorsch, Mittal Steel's North American CEO, who shared his vision of the steel industry's future. In his speech, Mr. Schorsch discussed with the audience important developments within the industry as well as factors he believes may threaten it. According to Mr. Schorsch, it is important to remember that "the market works." While the market was unsustainable several years ago, with bankruptcies always on the horizon, the industry has now righted itself, and steel companies are generating the cash needed to upgrade assets, said the CEO. Mr. Schorsch called this market turnaround, which occurred in 2004, a "reinvestment and recommitment to traditional steelmaking practices." Another trend we have seen in recent years, Mr. Schorsch pointed out, is that "size does matter." In Mittal's opinion, consolidation is good, and the leadership larger firms have taken to consolidate is a big step forward that will help to sustain the industry. The domestic market is now operating on a global stage, said Mr. Schorsch, and things have changed a lot since the years following the end of World War II when the US was the number one global leader in steel. Now, imports are a big part of the domestic market and customers are more global. Factors that could threaten the health of the steel industry, according to Mr. Schorsch, are governmental interference in trade, the declining health of the manufacturing sector, and market volatility. He said that over time, the industry needs to invest more in the manufacturing sector and to achieve more stable earnings so that these risks don't pose serious threats to the future of the steelmaking industry. Of GM and Ford's recent troubles, Mittal's CEO said, that the companies, "have strong attributes but face severe challenges." And of the hottest topic in the industry right now - Mittal's much-talked about bid for Arcelor - he said, after mentioning the setbacks of politics and nationalism, "If economics drive the process, it should happen."