Some steel talk:
Steel
Steel will be a very significant issue for 2004. Steel prices announced for April and May of 2004 are nearly double what the company was paying only a few months ago. At this time, it is unclear when pricing will moderate. Additionally, steel deliveries are being delayed, some orders are being cancelled and obtaining enough steel to supply our needs is an issue. "We are highly focused on the steel situation," said Dunham. "In Tubular Products, we are analyzing our product lines and focusing available steel towards our higher margin products. We are continuing to work diligently with our customers to pass on these increased costs. As long as we are successful at this, we can expect to see Tubular Products margins continue to improve as the efficiency improvements we have made begin to pay off."
Steel issues are also impacting the Water Transmission Group. Historically, we have had firm quotes or at least clear expectations of steel costs when we bid on individual projects. In the current environment, it is not always clear what the steel price will be several months after the bid when steel is actually delivered. The company is working with its vendors and modifying its bidding practices in order to manage this issue. "We are adjusting to this changing environment as quickly as possible," said Dunham. "We have had limited negative impacts from changing prices to date. How well we manage this issue today and into the future will be key to our 2004 results."
"Additionally," Dunham continued, "we are concerned about supply issues in the Water Transmission Group. It is important to our profitability to run at relatively high utilization levels, and we will not be able to maintain this without an adequate steel supply. Supply issues, like pricing, have already had some impact on us. As we look ahead, we expect our supply situation to stabilize. However, this situation is very dynamic and predictions are difficult."
From NW pipe |
