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The deal for International Steel Group to be acquired by European ownership underscores the wrenching transition in U.S. manufacturing. But it also illustrates that it's too easy to say shrinkage of the manufacturing base is a one-way street. Textiles and toys will not be growth markets for the foreseeable future; high-tech, high-capital and high-skill manufacturing feeding global markets will.
Many traditional production plants are healthy this year as well. Those numbers are reflected in the earnings reports of manufacturers and distributors in this issue. Many industrial distributors supplying U.S. steel producers have seen a great year as world demand for steel continues at a red-hot pace.
Perhaps more than any other industry, offshore ownership of U.S. steelmaking capabilities hammers home how far and fast globalization really has moved. The U.S. represents 21 percent of the world manufacturing market today, while Asia represents 33 percent; you know the slope of the trend line.
Just as ISG pulled troubled steel companies from the ashes, you have to look at the opportunities the soon-to-be largest global steelmaking firm offer to the market that really matters, the one in your back yard.
Customers and global markets have changed the rules significantly in the past five years, as well as the definitions of value. But the same basic equations that made U.S. manufacturers and distributors competitive and successful for decades have not. If you aren't improving your capabilities and skills to grow new business, you will have a smaller market to work with.
While most distributors have seen higher levels of risk the past five years, it has been a long wait for higher levels of opportunity to start appearing. But they are appearing.