lliance Steel LLC relocated its main plant and expanded during the 2020 portion of the ongoing global health crisis and continues to win new business, despite working within a market that is no longer predictable.
“It has been 18 months of craziness” in terms of how the steel market has reacted through the pandemic, says Alliance Steel’s Drew Gross, vice president-commercial.
Although Gross and his team continuously assess the steel environment, after this experience, they “gave up on definitive statements. Everyone has been wrong, from 30-year steel veterans to purchasing executives to analysts. This thing outlasted expectations. The way the market moved was just insane.
“Balancing customer orders with mill orders was very difficult. Only those customers with really strong forecasts were able to hit it right. We had to fill in the gaps to help our customers cover their own orders. The steel market is still tight but you can find material,” he notes.
“We have hundreds of customers. Not one is exempt from labor problems. We are having calls with customers telling us that they have started to turn work away, which means they cannot work down their own backlog effectively. This is going to keep demand elevated for quite some time,” Gross says.
The labor shortage is forcing leadership of manufacturing companies to approach the hiring, recruitment and retention process in new ways. “Alliance is seeing it, too. We are seeing sign-on bonuses and retention bonuses.” For example, McDonald’s is offering a $15 minimum hourly wage and a $500 signing bonus in the area. “For many of our customers, trying to compete with that as a manufacturer is tough.”
The expense of training new hires is considerable. “There is the safety factor and the experience factor. Coming into a new workplace and being safe is our No. 1 priority. You are also investing a lot in training and retaining employees past the training period—getting them integrated into the process and staying there is difficult,” Gross says. “You go to create a shift schedule and a hardhat and gloves are just sitting there. Some employees are changing their minds” and moving on.
As a result, there is a new emphasis on automation “to mitigate some of the issues with employment and workforce.”
alliance steel llc
Alliance has grown significantly, especially in Gary, “so we need more labor than ever before.” Gross believes that if he had more people, the pace of the company’s growth would increase.
Previously, Alliance could place a single phone call to cover a load. “We are set up with a strong in-house company that supports regional freight, but the long-haul carriers are backed up, more so in the South than in the Midwest.”
There are bottlenecks for imports, too. “There are not enough people to unload ships, and there is difficulty in scheduling cargo. We believe it will get worse before it gets better. ”
The CRU U.S. Midwest domestic hot-rolled coil index futures quotes as of Sept. 17 ranged from $1,918 to $1,930 per ton for September. The October futures price quotes, on the same date, ranged from $1,826 to $1,845 per ton.
“We like to see domestic capacity and availability increase for service centers,” Gross says. “We don’t want to see supply out of whack with demand.”
In the meantime, he’s paying attention to the delta between foreign and domestic pricing and supply and how that will affect the U.S. market.
“Everyone must make the right inventory decisions and keep polling customers about what will happen,” he says. “The one thing we can agree on is no one got this exactly right.
“We are dealing with variables we never dealt with before,” he adds. “Consumer spending has changed during the pandemic. You cannot evaluate data in black and white. The reality lies in the gray.”