Domestic Steel Suppliers Need to Step Up For Upcoming Wind, Rail Investment

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[youtube]http://www.youtube.com/watch?v=4t1oLz3wiQk [/youtube]

Joe Coleman, commodity manager at Spain-based Acciona Wind Power, spoke with MetalMiner about what he’s seeing in the steel markets, and how to engage American suppliers in a relationship with Acciona’s wind turbine assembly plant in Iowa. (Video: Taras Berezowsky/MetalMiner)

At first blush, attending a supply chain conference may not exactly scream “Metals! but this specific one hosted by IMEC in Chicago last week certainly has a lot of implications for steel plate and aluminum buyers and suppliers. Of particular note was the lineup of industries that IMEC had invited to be represented: wind energy, aerospace and railroad, and health care.

As our sister site Spend Matters prepares to launch Health Care Matters, the third category of the conference seemed rather enticing, but knowing how much aerospace, rail and increasingly, wind, depend on steel, I decided to focus on the latter route. Not only that, but I soon learned that the government and the businesses in these industries might just improve the landscape for American manufacturing jobs. Nearly 100 percent of the federal funds (American Recovery and Reinvestment Act ARRA and others) apportioned through various programs for rail investment have Buy America clauses attached, said Karen Rae, deputy administrator for the Federal Railroad Administration (FRA), during the conference. (Realistically, the percentage may actually end up being between 60 and 90 percent.)

Rae delineated the dollar amounts for broad investment announced by Secretary of Transportation Ray LaHood, and provided a scope of what’s to come for high-speed, commuter and freight rail travel. Rae said four significant pots with $4 billion (originally turned down by Florida Governor Rick Scott) would be redistributed to other regional projects. $800 million will go to significant upgrades in the Northeast corridor, as well as continued investment of $400 million in the Midwest. The FRA is also looking at improving the Detroit and Chicago link, and Rae expects the creation of 1000 construction jobs in Michigan related to that project. The FRA is also continuing with $300 million to invest in California’s high-speed rail system. Lastly, Rae said, a significant commitment to equipment was made $336 million for pooled purchase in the Midwest for locomotives (seven new ones) and rail cars (48 new ones), added on to previous orders.

Recent data show that the rails are a major part of the US commodity exports. The American Association of Railroads saw year-over-year a drop in rail freight carloads this April, for only the second time since the beginning of the recent economic recovery, according to the Financial Times. However, there is a 94 percent correlation between industrial production and rail traffic, and the numbers showed that “there were several bright spots within this measure grains, metallic ores, chemicals and motor vehicles that correspond to buoyancy for those industries and robust export demand. The good news? Perhaps the National Export Initiative doubling exports over five years will actually have a chance of being achieved. The not-so-good news? When the conference’s keynote speaker and founder of the Reshoring Initiative Harry Moser asked how many attendees were familiar with the export initiative, by my count, only 5 or so out of a couple hundred raised their hands.

Looks like we all government, manufacturers and MetalMiner have some more work to do.

–Taras Berezowsky

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