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Metals Service Center Institute Northern Ohio Chapter Town Hall Meeting

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Metals Service Center Institute Northern Ohio Chapter Town Hall Meeting

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    4. Cyclical Vs. Structural

    5. Low Interest Rates Improved Financial Market Conditions Tax Cuts Weaker Dollar Recovery Preconditions:

    6. GDP Anemic Unemployment High Under-employment However:

    7. Struggle continues for manufacturers Chicago Tribune 7-4-03 Unemployment rate jumps to 9-year high Chicago Tribune 7-4-03

    8. Over 2.8 million manufacturing jobs lost in past 3 years Manufacturing employment in the U.S., currently at approximately 14.8%, has fallen below the level at which it was first officially announced The flight of labor-intensive goods-making tasks to low wage countries isnt the only reason for manufacturing unemployment anymore. Lately its been big companies tendency to order parts from foreign countries that has cost small to medium-sized U.S. family firms a lot of business. (Los Angeles Times 5/18/03)

    9. Need for collaborative coalition of metals and manufacturing groups We need to elevate awareness level of the manufacturing crisis Large and small manufacturing businesses need to work together to insure fair and free trade Securing Americas Future: The Case for a Strong Manufacturing Base Joel Popkin Study

    10. Leverage the strength of our diverse membership base focusing it on saving N. A. manufacturing Utilize our chapter infrastructure to conduct 5 town hall meetings by year-end ? Chicago on 8-21, Charlotte on 10-9, Atlanta on 10-16, Los Angeles on 10-21, Cleveland on 12-2 and 7-10 more scheduled in 2004 CEO fly-in to Washington, D.C. in February Coalition for a Sound Dollar

    12. Market fundamentals have historically not set the value of the Japanese Yen, Taiwanese Dollar, Korean Won and Chinese Yuan Governments Have! Chinas growing trade surplus and huge foreign investment inflows would suggest one thing a stronger yuan reality is visa vie the U.S. dollar theres been no change Optimism that Treasury Secretary Snow understands the issue

    15. Coalition of over 80 trade associations focused on achieving a sound dollar policy www.sounddollar.org Growing momentum to utilize Section 301 of the Trade Law of 1974 to get the Administration and Congress to address currency manipulation IMF Article 4 Various provisions of WTO regulations

    16. Personal Commitment & Participation Write your elected officials (federal, state & local) Invite elected officials into your plants Hold elected officials accountable to take a stance on pro-manufacturing agenda Get engaged in championing manufacturing at home . . .

    18. MSCI Town Hall Meeting Saving Manufacturing December 2, 2003 Michael D. Siegal Chairman & CEO Olympic Steel, Inc

    20. U.S. Domestic Hot Rolled Steel Prices This slide shows the dramatic price fluctuations we have experienced in the market during the past 3 years. 2003 prices are listed through August. We are now seeing a price increase.This slide shows the dramatic price fluctuations we have experienced in the market during the past 3 years. 2003 prices are listed through August. We are now seeing a price increase.

    22. Months Supply on Hand

    23. Weekly Production and Operating Rates

    24. Steel Production Statistics - as of October 2003 * Year to date production at 80,748,000 tons, compared to 82,493,000 for the same period in 2002. Year to date capacity utilization rate - 81.5%, a decrease of 2.1% from the previous year, trending upward. Steel consumption is expected to cap at 114 million tons for 2003, compared to 115.5 million tons for 2002. 2004 projections are at 116.6 million tons, trending rapidly upward Service center shipments at 36,944,000 tons for 2003, compared to 37,682,000 tons for the same period in 2002. Statistics misleading Statistics misleading

    25. Imports in Tons

    26. Euro and Canadian Dollar

    27. Brazilian Real (inverted)

    28. Korean won (inverted)

    29. US Price Premiums

    30. Finance/Credit Environment Steel industry on Office of Currency and Comptroller (OCC) watch list. Lending is now asset based. High fees and premiums. The ratio of debt to EBITDA tightening. Severe reduction of international credit insurance, limiting availability of imported steel. Continued bank consolidation. In addition to currency issues, its a very challenging finance environment. In addition to currency issues, its a very challenging finance environment.

    34. International Steel Group Inc. Major consolidation and restructuring in North America Trade restraints lifted with NAFTA and WTO Convergence of USA and Non-USA pricing Emergence of China as opportunity and threat May see disconnection of US prices and US economy? Raw materials becoming a driver of price? USA pursues European Model

    35. Substantial Progress In Consolidation

    36. Groundbreaking New Labor Contract Job descriptions Job classes Line of progression Schedules Safety committees Grievance procedure Employee security Health care 401(k) Holidays Shift premium Pension plan (defined contribution) Profit sharing Vacations Retiree benefits (VEBA) Wage scale Contracting out

    37. Labor Efficiency

    38. Comparison to the Global Cost Curve

    39. USA Steel Prices Track The Overall Economy

    40. Steel Industry Conditions

    42. Steel Industry Conditions

    43. Steel Industry Conditions

    44. Subsidized New Capacity Defies Reason

    46. Global Trends in Steelmakers Costs Coke shortages = $10 impact [0.4x delta] Ocean freight (ore) = $10 impact [1.5x delta] Scrap (integrated) = $8 impact [0.2x delta] Natural Gas = $10 impact [4.5x delta] Labor Productivity = $15 benefit Declining dollar

    47. U.S. Manufacturing Is Same Size It Was In 1959

    48. 20 Years of Jobs Decline

    49. Majority of the Fortune 100 Exports Nothing

    50. Is the Deficit Sustainable?

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