If you’re in the steel industry, then you’ve probably heard about the investigation on the effects of imported steel initiated under Section 232 of the Trade Expansion Act of 1962. Under Section 232, the Secretary of Commerce has a maximum of 270 days to determine whether the quantities or manner by which steel is imported into the United States from other countries threatens national security. If the administration comes to the conclusion that foreign countries such as China, Brazil, and Turkey have been purposely flooding the American market with cheap steel to put out of business steel mills in America, President Trump could decide to set up tariffs and quotas on those steel imports to protect American workers and the US steel market.
- President Trump enacted section 232 on March 2018
- In 2019, prices will be near 2006-2014 levels, which is 20 to 25 percent above 2015-2017 ranges
- Companies using steel in their production process must improve their profitability everywhere else
- MetalEZ (by ABIS), is the leading expert in helping steel companies increase their profitability
What can the Metal Industry expect?
President Trump enacted section 232 on March 2018 and it will affect all steel manufacturers, individuals, and companies that buy, import, or ship steel. This will increase the price of steel, which will benefit American steel manufacturers and potentially stimulate growth and jobs in places like Pennsylvania, Michigan, Indiana, Alabama, Illinois, and Ohio that are known for their steel mills, but retailers or buyers of steel will face higher costs, which will then affect businesses’ margins.
According to a new study conducted by IHS Markit and the Procurement Executives Group (PEG), construction costs rose in March 2018. And the trend is moving upward. “Steel prices surged on the announcement of Section 232 tariffs, with current prices in the United States rivaling or exceeding 2011 levels, the second highest ever recorded,” said John Anton, associate director – Pricing and Purchasing, IHS Markit. “Increased production will provide partial price relief late this year. In 2019 prices will be near 2006-2014 levels, which is 20 to 25 percent above 2015-2017 ranges.”
The IHS Markit study (abstract below) shows that the prices of 11 out of 12 categories increased between February and March:
"In 2019 prices will be near 2006-2014 levels, which is 20 to 25 percent above 2015-2017 ranges."
The potential negative drawbacks of Section 232 will undoubtedly filter down to the consumer market and the general public. That’s right, the general public for anything that uses steel. For example, any home appliance like a refrigerator, oven, washer & dryer and microwave, even cars and metal roofing will now increase in price because the steel that is used to construct them is higher. One likely reason for the President issuing the Section 232 is in an attempt to make on his promise about bringing more jobs back to the factories, while at the same time setting up possible future negotiations with other countries on steel that favor the United States.
How can the Metal Industry protect its margins?
But regardless of the reasons behind initiating Section 232, one thing is for certain: steel costs will go up and the profit margins of companies using it will go down. So how do you prepare for the inevitable and protect yourself? The answer is by improving your profitability everywhere else. By leaning every department, every process, every aspect of your value chain, so you recapture the profit margins you will lose when steel prices will rise.
The most effective way to do this is through a complete Metal Industry Software such as an ERP system.
An Enterprise Resource Planning (ERP) system is a business management software that allows you to use integrated applications to manage your business and automate many of your processes, such as manufacturing, asset tracking/management, inventory, sales, shipping, invoicing, and human resources. ERP systems make processes more efficient and reduce costs. An ERP software saves you time and enables your business to function smoother and more effectively through integrating multiple systems into one central software. This new system will collect, store, manage, and interpret data from your business activities such as product planning, cost, manufacturing, marketing and sales, inventory management, and shipping and payments.
For over 12 years, MetalEZ has been helping companies from the Steel and Metal Industry save an immediate minimum of 25% on their time when switching to MetalEZ.
With steel price set to rise dramatically, having a system that automates your entire company’s workflow will not only save you time but also save you money. Here at ABIS, Inc., we care about your business and want to help you mitigate risks, increase your margins, and improve your revenue stream all while automating your processes. We do this through our pristine MetalEZ system. For over 12 years, MetalEZ has been helping companies from the Steel and Metal Industry save an immediate minimum of 25% on their time when switching to MetalEZ.
MetalEZ has an array of features to help your business thrive, such as Customer Relationship Management (CRM), Accounting, Business Process Management (BPM), Logistics, Purchasing and Procurement Software, Purchase Order Management, Vendor Management Order, Wireless Warehouse Management (WHM), Project Management, and Sales Force Automation, as well as others.
Read Also: What is an ERP Software?
Not only do you need to prepare for how higher steel prices will affect your costs, it’s vital to understand how your customers, retailers, and suppliers will react to Section 232. With a fully integrated ERP system, your business will be ready when any changes to the market occur. With everything automated and mapped to one single accessible location, it’s easy to know where your money is going and where it’s being generated. There’s enough to worry about, why not allow us to worry about the details for you and automate your business? For a free consultation, call us at 713-680-2247 or email us at firstname.lastname@example.org and we’ll help you determine what best suits your business’s needs. With MetalEZ body armor on, you can confront Section 232 head-on and knock it to the ground.