AWPA's Annual Meeting in San Diego, California offered attendees lots of new insight and information on the world economic outlook; trends in globalization; upcoming congressional and presidential elections; what's new from several rod mills; and the presidential decision on the section 201 trade case against wire rod (see related story).
The Economy
John Rothfield, an international economist with Bank of America, offered a very informative presentation on the Global Economic Outlook. His overall conclusion was that the US economy, in general, will continue to do well, although it will probably slow down a little.
Speaking on the positive economic picture, the economist offered some facts. This year alone, the economy is estimated to grow 5%. To date, the US has experienced 107 straight months of expansion - the longest since the Civil War. Additionally, companies are getting 7% more productivity out of each worker annually, while compensation has increased by
only 5%. Even the Asian crisis impact was blunted because of the lower interest rates that resulted. While $50 billion in lost trade accrued, $300 billion was saved through these lower rates.
"However," Mr. Rothfield warned, "The Federal Reserve must raise rates a little to slow the economy down." This
increased growth cannot go unchecked and the US economy must be tightened up to get back to where it should be.
As for the world economy, the future looks bright as well. Globally, the economy grew 3.7% in 1999, which is higher than average. Economists predict this growth will continue, although commodity prices will also start rising.
Some specific country and/or regional outlooks: The European economy has been growing strongly over the last couple of years and these countries' borrowing costs are dropping due to lower interest rates (down to 3%). However, most still have high unemployment rates, in some cases at levels over 10%. The economy in China has made a great comeback, although during the second half of this year, the currency will probably be devalued, causing some minor
disruptions. Russia continues to grow and is slowly stabilizing. In Latin America, recessions were seen in various countries during the Asian crisis. However, Mexico and Brazil, among others, are now recovering.
Technology
Cornelis de Kluyver, Dean and Professor of Management at the Peter F. Drucker Graduate School of Management, emphasized the importance of technology in our economy, and the results it has had.
Historically, this is the second time this century that the US has witnessed high levels of globalization driven by technology. The first was immediately preceding World War I when railroads were developed. Globalization ended after the
war when the federal government began to resort to protectionist measures to aid the falling economy.
This time around, increased globalization is making us more dependent on others, and thus more vulnerable to international economic forces. Ironically, Mr. De Kluyver asserted, "The more global we get, the more local we want to be." This means more and more issues are now being decided locally rather than at the federal level.
The speaker hypothesized we are only at the beginning of this technology boom, which is creating unprecedented interdependence between economies, markets, companies and individuals. In his view, this trend could lead to an increased emphasis on distribution, and possibly the extinction of the middleman. However, personal relationships in the business world will not disappear. Instead, it appears that the more "high-tech" society gets, the more "high-touch" customers will be.
According to Mr. De Kluyver, globalization will continue, but this will necessitate some political and economic restructuring (i.e., the World Trade Organization needs to be "beefed up"). Technology will develop further, but companies will still have to offer "high-touch" customer service. Finally, competition will grow as we see economic recoveries in Asia, Europe and Latin America. Yet cooperative strategies and consolidations with overseas companies will thrive at the same time.
His final words to the audience: "To win in this new global environment, companies must be hyper competitive; technologically intensive; comfortable with short life cycles for their products; adaptive to competitors also being customers, partners and suppliers; and focused on continuous learning. The professor concluded, "The key to success is through leader-ship and managerial teamwork."
Politics
Turning to the upcoming fall congressional and presidential elections, Kate O'Beirne, Washington Editor for the National Review, updated attendees on her outlook and views about what will happen in November with respect to party leadership in the House and Senate, as well as the White House.
Overall, there are huge stakes for both parties in the 2000 elections. All three institutions of our government, are completely up for grabs, and it is expected that three Supreme Court justices will be retiring during the next president's
first term of office.
Republicans decided early to go with their best choice for president - Governor George W. Bush (R-TX). However, they did not count on Senator John McCain's (R-AZ) high level of support from independents. Confronting the Republican Party is Al Gore, the likely Democratic nominee, who is relentless, tireless and aggressive, making him a formidable opponent. He is able to take advantage of, and has taken credit for the strong economy and peace abroad. She
foresees Bill Bradley, Gore's primary opponent, dropping out of the race by the end of March.
In the House races, Republicans have problems because of the positive trend of their historically key issues: crime is down; there is virtually no budget deficit; welfare rolls are down; and the Cold War has ended. According to Ms. O'Beirne, whichever party wins the White House will also probably win majority status in the House of Representatives.
Republicans are also very concerned that if Senator McCain is on the top of the ticket, he will bring to the polls non-voters who tend to vote Democratic. Ironically, only 10% of the seats in the House are considered to be in competitive races.
As for the Senate, Republicans are defending 19 seats and Democrats 14. Of these, the Republicans have more of the open, and therefore, vulnerable seats, as well as some incumbents in trouble. These include Florida, Michigan, Missouri, Rhode Island, Delaware, Minnesota, Pennsylvania and Washington. Democrats are vulnerable in only four states -
Nevada, New York, New Jersey and Virginia.
Rod Mills
Rounding out the informative program, three rod mill representatives updated the audience on developments and improvements recently introduced at their respective facilities. The speakers were: Ellen Norick, Sales Representative for Rocky Mountain Steel Mills in Pueblo, Colorado; S. Ron Geddes, Manager of Operations at Ivaco Rolling Mills in Canada; and John Foster, Vice President of Long, Forged and Semi-Finished Steels for Ferrostaal Inc. Materials from these presentations are available by calling the mills or the AWPA office.
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| Bank of America's international economist John Rothfield makes his predictions
on where the global economy is headed. |
Dean Cornelius de Kluyver, Dean at the Peter Drucker Graduate School
of Management, offers attendees his views on technology's impact on
globalization and the world economy. |
The Washington Editor of the National Review Kate O'Beirne outlines
the political landscape of the upcoming fall elections. |
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