We preach a very specific gospel on industrial metal sourcing here at MetalMiner, and the arguments of a couple recent articles help shed light on how we view purchasing metal in today’s day and age.
It all boils down to using data and information strategically to better compete in a global marketplace. Let us lay out the details of two interesting stories to try and bring it into perspective.
Caterpillar, Nucor at Odds on Buy America
Two big American organizations are on opposite sides of legislation, and it comes down to competitiveness.
A recent Businessweek piece points to certain US companies, Nucor (on the large side) and United Streetcar (on the small side), that support Buy America legislation as a guideline for domestic infrastructure projects, seeing it as a way to give more Americans jobs and stay competitive. Others, such as Caterpillar and GE, obviously have global footprints and want to keep growing them.
The backdrop is that EU and Pacific nations (and their companies, such as Siemens AG) want to be able to win US government contracts, and with Buy America, it’s harder or impossible for them to do so. While US business deserves a level playing field on which to compete, jobs should be created for Americans, and we should buy American-made materials whenever possible, it may be hard to ignore the global sourcing and procurement atmosphere we’re all now in.
But while battles such as these over legislation flame on, other (arguably quieter) battles are being fought on the other side of the globe.
China’s Economic Data Play
Trade pacts, rules and legislative revisions are one external way to improve competitiveness, but another nation is working on a somewhat more internal one.
China, in its bid to secure as many commodities and other resources as possible, is winning the race for the world’s economic data, according to George O’Conor, the founder of Oco Inc. and Chime Media, in a rather interesting piece. In it, O’Conor posits that China is beating the US on competitiveness because:
“They have an organized plan to control everything from fresh-water resources to each link in the energy supply chain, gain valuable early access to trade intelligence, and meet global demand for goods by incentivizing exporting Chinese-made goods. Meanwhile the U.S. handcuffs itself with overregulation, unsound monetary policies and an outrageously punitive tax code.”
China is well on its way to “information dominance,” as he calls it, since they control “20 percent of all container ships, builds 90 percent of new containers and through its new investments in ports can now track the information from up to 40 million bills of lading at any given time.” O’Conor suggests “aggressive economic and trade policies that free U.S. businesses to compete with China, along with greater awareness of all the fronts on which this struggle is already being fought.”
So maybe it’s just as much about where a country’s manufacturers can be allowed to sell their finished products, as it is about amassing data and deploying it to your own competitive advantage.
What This Has to Do With Metal Sourcing
Essentially, we’ve proven that arming yourself with good data and intelligence is the best way to attack a sourcing strategy for metals.
Putting aside the externalities (trade policy, tax policy, environmental regulation), being able to read the data, define trends, understand the state of the market and execute a simple and consistent buying approach will reap rewards.