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Milwaukee Journal Sentinel
October 29, 2004
Pressing On With Nerves of Steel
By Rick Barrett
If Bill Jens' company ever collapses under the heavy weight of steel prices, he swears that it will
be on his terms and not those forced by desperate competitors.
Steel Survival Strategies
Zachary Johnson, a press operator at Ataco Steel Products Corp., Cedarburg, molds seat frames
Wednesday. The company has seen its steel prices more than double since 2002 and has lost a
couple of big orders. Quotable I am not going to sit back and drown in this pricing climate
because I didn't have the courage to do what was right.
— Bill Jens,
Owner, Ataco Steel Products Corp.
Conference
The Nov. 11 "Steel Survival Strategies" conference, sponsored by the Precision Metalforming
Association, is open to all companies. The all-day conference in Rosemont, Ill., is meant for
company presidents, plant managers, chief financial officers, materials managers and purchasers.
The cost is $125 per person for PMA members and $225 for non-members.
For details, contact the PMA at www.metalforming.com.
Jens is president, chief executive officer and owner of Ataco Steel Products Corp., a Cedarburg
metal fabrication shop with about 100 employees and a customer list that has included some of
the biggest names in the lawn and garden industry — such as Simplicity Manufacturing Inc. in Port
Washington.
As U.S. steel prices have more than doubled since 2002, Jens lost a $7 million product order to a
competitor in Mexico. He lost a $2 million order to another company that said it could do the
work cheaper, probably because it didn't include higher steel prices in its bid.
Jens wants nothing to do with such money-losing pricing strategies. He would rather risk losing a
customer than sell products at a loss.
"If I am ever forced out of business, it will be on my terms," Jens said. "I am not going to drown
in this pricing climate because I didn't have the courage to do what was right."
In constant search for ways to survive what's become an industry crisis, Jens plans to attend a
"Steel Survival Strategies" conference Nov. 11 in Rosemont, Ill. The conference is sponsored by
the Precision Metalforming Association, of Cleveland, and is open to all companies that make
metal products.
"We haven't had a summit like this before," said William Gaskin, association president. "This is a
special meeting because of the real crisis that's going on in our industry. We absolutely stand to
lose some companies" as higher steel prices erode company profits.
The conference will explore thorny issues such as customer contracts and bids in a volatile
pricing climate. There will be advice from lawyers and an update on steel prices from a steel
company executive.
"There's no silver bullet here," Gaskin said. "But people can walk out of this meeting with a better
understanding of their options."
Participants will be warned to avoid discussions that could be interpreted as colluding on prices.
"We certainly don't want an antitrust investigation of our industry," Gaskin said.
The urgency of the conference can't be overstated, according to Gaskin. In 2003, 32% of the
Precision Metalforming Association's 1,200 member companies lost money. It could be worse
this year as companies operate on even thinner profit margins and struggle to keep their contracts
out of the hands of foreign competitors.
"A lot of our members have good relationships with their banks, but there comes a point where
desperation sets in," Gaskin said. "They can't afford to lose money on every part they ship.
"Increasingly, some companies "will just plain refuse to deliver parts to their customers" if higher
steel costs can't be included in the price, Gaskin said.
The availability of steel, as well as its price, is another issue that's put a strain on steel-product
companies. Some of the biggest Milwaukee-area manufacturers have run out of steel at times,
shutting down production lines until the next shipment arrives.
"You might order 80,000 pounds of steel and get only 40,000 pounds," Jens said. "We have been
able to get all of the steel that we need so far, but in some cases it's in split shipments.
"The quality of the steel being received is another issue, local manufacturers say. At times, they
are forced to accept poor quality material or have none at all.
Much of the focus at the November conference will be on immediate business survival strategies.
The metal-forming industry also has to lobby for changes in foreign trade to solve the crisis, said
Dick Wilkey, president of Fisher-Barton Inc., a Watertown company that makes parts for the
agriculture and lawn-and-garden industries.
It's common for companies to threaten to send their metal parts orders to China and Mexico,
according to local manufacturers.
"It's like a vicious circle," Jens said. "If you don't pass steel price increases on to your customers,
you will probably be driven out of business. If you do pass them on, customers threaten to take
their business elsewhere."
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