Higher Steel Costs Coming

© 2002 Door & Access Systems
Publish Date: Spring 2002
Author: Tom Wadsworth
Page 38

Higher Steel Costs Coming

Tom Wadsworth
Editor, Door & Access Systems Magazine

American steel companies are declaring bankruptcy. The steel industry is posting huge losses. President Bush has imposed stiff tariffs on foreign steel. Shipments from foreign suppliers may decrease. We now have fewer steel suppliers to meet a steady demand.

It all adds up to significant increases in the cost of steel for the garage door industry, according to Joel Mazur, managing partner with The Techs of Pittsburgh, one of the steel suppliers for the door and access systems industry.

In the last 20 months, at least four major steel companies, Bethlehem Steel, Geneva Steel, Wheeling-Pittsburgh, and LTV, have joined over 20 other steel related companies in declaring bankruptcy. In addition, most of the industry incurred significant losses in 2001.

"Now, with fewer American players, less production, and high tariffs for foreign steel," says Mazur, "imports will be available, but at more realistic price levels."

Costs Going Up

With the new tariffs, "the costs will absolutely go up," adds Mazur.

By mid-year of 2002, Mazur believes that garage door and rolling door manufacturers will face steel cost increases of $60 - $80 per ton. By year end, he adds, steel costs could increase as much as $120 - $140 per ton.

"And if there is any increase in demand," warns Mazur, "my current projections could be viewed as conservative."

Since most garage doors are predominantly made of steel, garage door dealers may see cost increases from door manufacturers, especially on steel garage doors.

Quality Going Down?

Another related issue to the current steel crisis is the quality of steel. For several years, steel door manufacturers have enjoyed premium steel (called I.F. steel) at cheaper costs. LTV, however, a major supplier of I.F. steel, may be gone.

"Now, door manufacturers will have to pay the true premium cost for this premium grade of steel," adds Mazur, "and they may have a problem getting that steel." This premium I.F. steel, says Mazur, is typically used for steel skins on sectional doors.

Since the supply of I.F. steel has dwindled, "Door manufacturers may need to learn to run a lower grade of steel through their equipment, such as an FS type B or even a CS type grade," he says.

Either way, it appears that the door industry will be facing higher costs and a volatile market for steel in 2002.