In an article published in Wall Street Journal on October 7th, 2013 where a report on world’s leading steel manufacturers Arcelor Mittal and Algerian State owned company, Sider is planning to increase their production capacity to double considering the rising demand from North Africa’s car manufacturing sector. The senior management of the Joint owned company, declared that the decision was taken to invest $763 Million in their jointly owned complex in order to increase thri production capacity in the Algerian Plant as the company invest heavy demand from African buyers who are now increasing their supply capacity and thus boosting steel demand.
The new product: The expansion plan of the company will look forward to make long and flat steel products especially for automobile industry.
In an overview of the economic analysis of their decision to expand their production capacity, the decision seems justifiable considering the decision of european car makers to shut down their unprofitable plants citing strict environmental regulations, economic downturn and high energy prices in euro zone and are thus moving out of europe to boost their profit figures. For Instance, Renault SR is working on its plan to build up a manufacturing unit in Algeria and so does Peuogot Citreon.
Thus, on an initial analysis although it seems that the decision to invest a humongous amount in their plant production and new steel products is encouragin but the actual scenario shall be disclosed after we conduct the economic analysis of the steel industry.
Objective of the Paper: My objective of the paper will be to analyze the expected demand for steel from India preferably from the State Owned Entities.
Introduction:
Present status of Indian Steel Industry and its performance during the 11th Five Year Plan (2007-12)
1.1 Global Status of Indian Steel Industry
1.1.1 Indian Iron and steel industry with its strong forward and backward linkages contributes significantly to overall growth and development of the economy. As per official estimates, the Industry today directly contributes 2 per cent of India‘s
Gross Domestic Product (GDP) and its weightage in the official Index of Industrial Production (IIP) is 6.2 per cent. Globally also, over the last two decades, the industry has been able to carve out a niche for itself. From a
country with a fledgling status of one million tonnes of capacity at the time of Independence, it has today become the world‘s 4th largest producer of crude steel preceded only by China, Japan and USA as shown below:-
Also, the competition between existing players in this industry is high. There are about 619,000 metal enterprises in the USA in 2005 (IBISWorld, 2007).There are many companies that produce different kinds of metal products in the market. Besides, the bargaining power of buyers is high because product difference for the buyers of the metal products is small. It is not easy to differentiate the quality of one metal product from another. In addition, the cost of switching for the buyers is low. The number of substitutes of metal products is also high thus the buyers have great bargaining power.
For decades, the steel industry has been one of the toughest markets on a global scale with most steel corporations ending up in bankruptcy. Foreign and domestic competitors, management issues, environmental issues, political agenda’s and technology have had much to do with the demise and more so of the success of the steel industry. The issues that this case focus on Nucor Corporation was of:
Hoerr, J. P. (1988). And the wolf finally came : the decline of the American steel industry. Pittsburgh, PA: University of Pittsburgh Press.
He states that the country has been facing significant crisis in “Berlin and Southeast Asia.” In a time where the country just finished a war and it is starting to face another war, steel is a valuable resource that is need it to build weapons and defend the country. Kennedy also says that increase in prices would make it harder to pay for “national security and other purposes” (Kennedy). The nation’s security and economy is also in problems due to the increase in prices from the steel companies. He shows that all the efforts that were made may be worthless because of the selfishness of these
Evaluate the results and determine whether the selected steel grade is viable in meeting Objective 3
Industry Analysis – Nucor has established itself as a leader in the steel industry through efficiency and innovation.
The extraordinary power of the steel industry to shape the life of its communities and the people in them remain...
...k, John. "US Steelmakers in Continuing Crisis." Challenge.Vol. 47, no. 1, January/February. M. E. Sharp, INC. 2004. 86-106.
...fferentiation of fields like production, transportation, consumption and so on. Change in them with respect to time indirectly determines the increase in the dependency on machines which in turn gauge the industrial growth of a nation. With reference to above measures, it can be observed that the onset of Industrial Revolution in India was early but very sluggish. India is neither a developed, nor an underdeveloped nation. The ongoing ‘industrial revolution’ has classified it as a developing nation.
American corporations continued to strive economically with no one else in their lane. They realized that they could make major profit off of steel since it was well needed. JFK explains that the “ profit rate .. can be expected to rise sharply this year in reduction in idle capacity.” JFK used logos to vividly explain the expected profit of the steel industry and to raise questions to why the price was increased in a time of
be the increase in jobs. Creation of new jobs will take place in the manufacturing
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
The group is also one of the largest manufacturers of small and medium sized steel forgings and the second largest forgings manufacturer in India.
To become leading alloy castings producer in India by providing qualitative products to customers and create value towards
Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda could avoid the restrictions on the import quota by assembling cars locally, because these cars would be considered locally produced. Moreover, a local partner could assumedly offer a better insight of the market.