Category: Research Library

Data Shows Only Two-Thirds of State’s Children Live in Traditional Married-Couple Households

  • August 20th, 2019
See accompanying chart.

Only about two-thirds of the children in Alabama under age 18 live in the traditional married-couple household, according to Annette Watters, manager of the State Data Center at The University of Alabama.

Watters said her figures are based on numbers just released by the U.S. Census Bureau which show that 64 percent of children under the age of 18 in Alabama live in a married-couple household, a percentage that is among the lowest in the nation.

Alabama is among several other Deep South, traditionally “Bible Belt” states that have large percentages of their children living in arrangements other than the traditional two-parent family, according to Watters. Alabama ranks 45th of 51 states (including the District of Columbia) for children who live in married-couple families.

One quarter, more than 278,000, of Alabama’s children live in a mother-only family, Watters said, which makes Alabama No. 5 in the nation for mother-only family groups.

“Fathers in Alabama are not nearly as likely as mothers to be the primary care-giver to their children,” Watters said. “In fact, only five percent, or somewhat over 57,000 children, live in a father-only family. This ranks Alabama 43rd in the nation for father-only family groups.”

Four percent of Alabama’s children, about 44,500, live in households with unmarried adult partners, Watters said.

“The data do not reveal if the partners are same-sex or opposite-sex unmarried partners,” she said. “This kind of living arrangement is not nearly as common in Alabama as it is in many other states. Alabama ranks 50th of 51 for children living in unmarried-partner households.”

Watters said in the case of children who live with their grandparents, the grandparent is often the primary care-giver, “but sometimes a mother and her child or children all live with Grandma. In those cases, the child is counted as living in a mother-only relationship and also counted as living in a grandparent’s household. Because children can be double-counted like that, the total percent of children in households in Alabama will sum to more than 100.”

Children in Alabama are much more likely to be living with a grandparent than with a father only or with a parent who is an unmarried partner, Watters said. More than 89,000 Alabama children are living with a grandparent, either with or without one of their parents also in the home. Alabama ranks sixth in the nation for grandparents who are taking care of grandkids.

In fact, the South has the highest percentage of grandchildren living with grandparents. In Alabama, 8 percent of children in households are living with a grandparent. The percentages are even higher for Mississippi (11 percent), Louisiana (10 percent) and South Carolina (9 percent). However, the District of Columbia (15 percent) and Hawaii (13 percent) have the highest numbers in this category.

With 64 percent of Alabama’s children living in households with two married parents, 36 percent are living in some other arrangement. Watters said the counties in Alabama that have the highest percentages of non-traditional household arrangements for children are Greene, Sumter, Perry, Dallas, Wilcox, Lowndes, Butler, Macon, and Bullock.

The data also shows that blacks are more likely to have households with grandchildren, foster children, and other relatives who are minor children.

States and counties that have consistently above-average proportions of children born out of wedlock have high concentrations of children in non-married-couple living arrangements.

The findings come from Census 2000. Watters said the Census Bureau has issued a special report on the social and economic characteristics of the nation’s 72 million children entitled Children and the Households They Live In: 2000. The study did not include people under the age of 18 who are the head of a household, a spouse, or the parent of a child when both the teen-aged parent and her child live in the household of an older family member.

See accompanying chart.

Pine Apple Grows Fastest, Huntsville Posts Largest Population Gains in Census Bureau Estimates

  • August 20th, 2019

The U.S. Census Bureau has released new population estimates for Alabama’s cities and towns that give the state its most recent indications of growth since the 2000 census, according to Annette Watters, manager of the Alabama State Data Center at The University of Alabama.

Which town grew the fastest? Clearly, the answer is Pine Apple in Wilcox County. Between 2000 and 2003 Pine Apple increased its population by 80 percent. That figure represents 136 people, moving Pine Apple’s total population from 171 to 307—a big population boom in a small town.

Measuring which place grew the fastest doesn’t tell the whole story. The other obvious question is, “Which city gained the most new residents?” The answer is Huntsville. Huntsville gained 5,719 new inhabitants between 2000 and 2003. Because Huntsville has a much larger population base than Pine Apple, those thousands of people represent not an 80 percent increase, but 4 percent. Nearby Madison gained 4,741 people, only about 1,000 less than Huntsville, but that gain represents a 16 percent increase for the smaller city.

According to the new estimates, seven cities in Alabama gained more than 2,000 people between 2000 and 2003: Huntsville (5,719); Madison (4,741); Auburn (3,861); Pelham (3,041); Prattville (2,354); Dothan (2,113); and Hoover (2,059). Both Calera (1,964) and Millbrook (1,957) came close to the 2,000 mark.

Watters noted that the estimates include the time period through July 1, 2003. If a city has experienced a growth spurt during the most recent 12 months, that will be reflected in future estimates.

“Birmingham remains Alabama’s largest incorporated place, despite continuing population losses,” Watters said. “Montgomery is the state’s second largest city, followed by Mobile, Huntsville, Tuscaloosa, Hoover, Dothan, Decatur, Auburn and Gadsden, in descending order of population size.”

In addition to Birmingham, three other of Alabama’s largest cities have lost more than 1,000 people over the past three years–Birmingham (-6,170); Mobile (-5,727); Montgomery (-1,484); and Gadsden (-1,359).

The population totals for the year 2000 have had some enhancements since the 2000 Census was released. These newest estimates take into account corrections that have been made, either through the challenges that cities made to their census counts, or boundary annexations, or changes for any incorrect boundary information the Census Bureau may have been using.

“We need to remember that the population figures for 2003 are estimates, not a real count of people,” Watters said. “If the Census Bureau receives new, different information they can, and do, change the estimates. There is a standard procedure for city and town officials to submit the necessary documentation if they think their estimates are in error.”

She added that getting the estimate revised is not an adversarial process. Officials just provide the specified documentation the Census Bureau needs to make the correction.

Population Estimates for Alabama’s 20 Largest Cities and Towns, 2000-2003

Rank              Estimates
in                     Base*   Estimate  Percent   Number
2003  NAME             2000        2003   Change   Change
Alabama     4,447,100   4,500,752       1%   53,652
1  Birmingham    242,790     236,620      -3%   -6,170
2  Montgomery    201,607     200,123      -1%   -1,484
3  Mobile        199,191     193,464      -3%   -5,727
4  Huntsville    158,518     164,237       4%    5,719
5  Tuscaloosa     77,753      79,294       2%    1,541
6  Hoover         63,011      65,070       3%    2,059
7  Dothan         57,923      60,036       4%    2,113
8  Decatur        53,948      54,239       1%      291
9  Auburn         43,062      46,923       9%    3,861
10  Gadsden        38,978      37,619      -3%   -1,359
11  Florence       36,282      35,852      -1%     -430
12  Madison        29,339      34,080      16%    4,741
13  Vestavia Hills 30,399      30,909       2%      510
14  Bessemer       29,693      29,108      -2%     -585
15  Phenix City    28,307      28,444       0%      137
16  Prichard       28,633      27,983      -2%     -650
17  Prattville     24,303      26,657      10%    2,354
18  Alabaster      23,635      25,462       8%    1,827
19  Homewood       25,104      24,399      -3%     -705
20  Anniston       24,498      23,750      -3%     -748

*Includes additions and corrections to the original census 2000 data.   

Source: U.S. Department of Commerce, Bureau of the Census,
Population Estimates Division, Release date, June 24, 2004.

Under “Data” you will find a table with the 2003 population estimate of every Alabama city and town.

UA’s Data Center Sheds Light on Those Eschewing 9 to 5 Jobs in Favor of Stay-at-Home Work

  • August 20th, 2019

A national newspaper recently published an article about a woman who quit work to stay at home after her daughter was born. She became annoyed at having to rewind the toilet paper after the baby unraveled it onto the floor. The latch she invented to prevent the problem, along with some other inventions, is expected to net her about $1 million in sales next year and a book deal aimed at aspiring inventors.

All of which is a long-winded way of saying that having a stay-at-home job can be profitable as well as enjoyable.

Annette Watters, manager of the Alabama State Data Center at The University of Alabama, read the newspaper article and decided to take a look how many folks in Alabama have home-based jobs. Her research, based on 2000 information from the U.S. Census, turned up some interesting facts.

“Women are more likely than men to have a home-based job,” Watters said, noting that of people who work at home in Alabama, 54 percent are women.

Alabama’s home-based workers also are likely to be middle-aged. Sixty percent of them are between 35 and 60 years old, according to Watters.
“However,” she said, “having a job working out of one’s house is also something that some people do in their senior years. Eleven percent of home-based workers in Alabama are 65 years old or older.”

Lest you think that working at home is pretty much making “stuff” to sell or selling vegetables from a stand out front, think again.

“Working at home, possibly working for yourself, is something that appeals to well-educated people,” Watters said. “Sixty percent of Alabama’s home-based workers have at least some college. Twenty-nine percent of them have a bachelor’s degree or higher.

“These percentages are higher than the averages for workers who do not work at home. The national average educational attainment for home-based workers is even higher than the Alabama average.”

Watters also found that African-American Alabamians are much less likely than whites to be working at home. Blacks make up 8 percent of the work-at-home group, but 21 percent of the travel-to-the-workplace group.

Alabama home-based workers are most likely to be self-employed, with 45 percent operating their own non-incorporated business and another 12 percent running their own corporation . Another small group of people are unpaid family members working at home for the family business. About one-third of home-based workers are employees of some other kind of private for-profit company, and a few government workers are allowed to work from home.

The occupations that attract home-based workers are management, professional and related occupations – accounting, for example. Twenty-two percent of Alabamians working at home are in management or business and financial occupations. Another 15 percent offer professional services, most likely scientific, engineering, accounting or other financial services.

Computing, education, health, or social services are also among the professional services that might be offered by someone who works out of his or her home. Other occupations that lend themselves to home-based work are sales, personal care services and office/administrative support jobs.

But the down side to going to work in your pajamas and sipping a third cup of coffee is that home-based work isn’t necessarily lucrative. Forty-nine percent of Alabama home-based workers reported earning $15,000 a year or less in 1999. But, on the other hand, 4 percent of Alabama’s home-based workers earned $100,000 or more.

One reason for small incomes for some home-based businesses is their owners don’t intend to work at these jobs full-time. And of course, working at home means you don’t leave the office like most workers. Watters said about two-thirds of the at-home workers reported that they work more than 34 hours a week. A substantial percentage works no more than 14 hours a week at their home business. And some home-based businesses are seasonal. Some Alabamians work at their home business only a few weeks a year. Only about two-thirds of at-home jobs involve year-round work. Overall, only a little more than 2 percent of Alabama workers are allowed to wear their bunny slippers when they start their work day, but Watters says she expects that percentage to increase as time passes.

UA’s State Data Center Indicates There’s a Pickup for Every Five Folks, an SUV for Every 10

  • August 20th, 2019

A court in Maryland recently ruled that a homeowners association’s ban on parking pick-up trucks in their community was unenforceable. A lot of Alabama residents would applaud that decision, because Alabamians love their trucks.

Annette Watters, manager of the Alabama State Data Center at The University of Alabama’s Center for Business and Economic Research, recently discovered while sorting information from the U.S. Census that Alabama has about one pickup for every five people and about one sport utility vehicle for every 10 people.

“It also has approximately one pickup for every four licensed drivers and about one SUV for every eight licensed drivers,” Watters said. That translates to 1.7 million private and commercial trucks registered in Alabama during 2002, up approximately 12 percent from 1.5 million trucks in 1997.

Fifty-six percent of the registered trucks were pickups, 26 percent were SUVs, and 8 percent were minivans. The remaining 6 percent were specialized trucks for commercial or industrial use, such as dump trucks, tank trucks, flatbeds and the like.

In 2002, an estimated 7 percent of all large trucks in Alabama carried hazardous materials, which may seem a bit low to those who travel the state’s interstates regularly.

“I think it is interesting that about three-fourths of all the trucks in the state were used for personal transportation,” Watters said, “while 18 percent were operated for business, including for-hire use.”
The use of the remaining 6 percent was not reported. Utility companies and other service providers were the single largest category of businesses using trucks in Alabama. Agriculture and construction are the next biggest truck-using industries in the state.

And if it seems to you that most of the trucks you see are older models, you’re right, according to Watters.

“Seventy-two percent of the trucks on Alabama’s roads are five years old or older,” she noted. “Seventeen percent are three or four years old. Only 11 percent are two years old or less.”

Watters said the federal government conducts the truck survey every five years. “The data are important in studying the future growth of transportation and are needed in calculating fees and cost allocations among highway users,” Watters explained.

“The data also are important in evaluating safety risks to highway travelers and in assessing the energy efficiency and environmental impact of the nation’s truck fleet. Businesses and others make use of these data in conducting market studies and evaluating market strategies. This survey is also useful to businesses for calculating the longevity of products and determining fuel demands.”

The survey does not include vehicles owned by federal, state and local governments. Other vehicles excluded are ambulances, buses, motor homes, farm tractors and unpowered trailer units. “Off-highway” trucks, used exclusively on private property, are not required to be registered and are not included in this study.

Watters said registration practices for commercial vehicles differ greatly among the states. Some states register a truck-tractor semi-trailer combination as a single unit; others register the tractor and the semi-trailer separately. Only the truck-tractors are included in the registered truck counts for this study.

See www.census.gov/svsd/www/02vehinv.html, the 2002 Vehicle Inventory Survey, for more information about truck use in Alabama.

The State Data Center is part of the Culverhouse College of Commerce and Business Administration’s Center for Business and Economic Research. The Center for Business and Economic Research was created in 1930 and since that time has engaged in research programs to promote economic development in the state while continuously expanding and refining its base of socioeconomic information.

Census Shows One County in Alabama Without Double-Digit Poverty; State’s Poverty Grows

  • August 20th, 2019

Shelby County, Alabama’s fastest growing county, can now add another superlative to its bragging list: In the poverty estimates released Monday by the Census Bureau for the year 2002, Shelby County is the only county in Alabama that doesn’t have double-digit poverty rates, according to the State Data Center at The University of Alabama.

“The Census Bureau estimates an overall poverty rate in Shelby County of about 6.5 percent in 2002,” said Annette Watters, manager of the state data center. “Shelby County’s poverty rate has not moved up or down much since the late 1990s.”

Alabama’s counties with the highest poverty rates continue to be primarily in Black Belt counties with small populations, Watters said. Perry, Wilcox and Bullock counties have poverty rates over 30 percent. That means, Watters said, that nearly one in three persons in each of those counties is living below the poverty line. Fourteen other counties have poverty rates above 20 percent.

The numbers released by the Census Bureau are estimates, and each county is assigned a range. For example, the percent of Perry County’s population living in poverty could be as low as 24.7 percent or as high as 39.9 percent, Watters said. The Census Bureau uses information from the current population survey, the food stamp program, summary data from federal income tax returns, and data from the 2000 census to derive the estimates.

“A low poverty rate doesn’t reveal some important information about poverty in a county,” Watters said. “A densely settled county can have a poverty rate that is not alarmingly high, yet that county can have a great many poor people. For example, Jefferson County’s poverty rate is 13.7 percent. But because Jefferson County has such a big population, that 13.7 percent represents 87,670 people—there are more poor people in Jefferson County alone than in all the counties of the Black Belt put together.”

Watters said Alabama’s overall poverty rate (15.4 percent) is higher than the national average (12.1 percent).

Other states with high poverty rates also tend to be in the South, with the exception of New Mexico, whose poverty rate is 18.0 percent. Louisiana, Mississippi and West Virginia have poverty rates higher than Alabama’s. Texas and Arkansas have rates that are roughly similar.

The poorest group in Alabama is its children, according to Watters. More than one in five (21.6 percent) of all children between the ages of birth and 17 in Alabama live below the poverty line. In some counties, more than one out of every three children is living in poverty.

“The discouraging news is that there are more people in poverty in Alabama now than there were in 2000,” Watters said. “In 2000 the estimate was that 637,119 Alabamians were poor and the poverty rate was 14.6 percent. In 2002 the estimate was 679,856 and 15.4 percent.”
The State Data Center is part of the Culverhouse College of Commerce and Business Administration’s Center for Business and Economic Research. The Center was created in 1930, and since that time it has engaged in research programs to promote economic development in the state while continuously expanding and refining its base of socioeconomic information.

One-Third of State’s Counties See Population Growth, According to Census Estimates

  • August 20th, 2019
Just more than one-third of Alabama’s counties have experienced population growth since 2000, according to the latest estimates released by the U.S. Census Bureau and analyzed by the manager of the Alabama State Data Center at The University of Alabama.

Center manager Annette Watters said the estimated figures, made public Thursday, indicate the state’s 24 growing counties are a mix of urban and rural counties.

“All of Alabama’s growth rate since 2000 has occurred in 24 of the 67 counties,” Watters said. “Since the turn of the century, other counties have had populations that neither grew nor declined, and the others have lost population.”

Shelby, Baldwin and Elmore Counties, have grown the fastest of any counties in Alabama since the turn of the century.

“Since 2000, Shelby County has added 22,384 people, a 15.6 percent growth rate,” Watters said. “Baldwin County has added 16,286, an 11.6 percent growth rate. These are the only two counties in the state with double-digit growth rates.” Elmore showed a 9.2 percent growth rate.

Although Shelby County is the fastest-growing county in Alabama, it does not make the list of the Top 100 Fastest Growing Counties in the country since 2000, Watters said. To make that list, Watters said, a county had to have a population of at least 10,000 and a minimum growth rate of 15.9 percent.

Jefferson County remains Alabama’s largest county, but it has lost 3,552 people since 2000, according to the figures. Much of the population loss is from the city of Birmingham, Watters said.

“Although Jefferson County is not growing, the Birmingham metropolitan area is,” Watters said. Four of the seven counties in the metro areas (Shelby, St. Clair, Blount, and Bibb) are among the top 10 in Alabama for growth rates, and a fifth, Chilton, ranks 11th.

“Three of the 24 growing counties in Alabama are in areas usually thought of as very rural,” Watters said. Cherokee, Cleburne and Randolph counties, sit one atop the other on the eastern border of the state. “Each of these three counties has gained a few hundred people over the last four years.”

It’s helpful to remember the distinction between growth rate rankings and total number of people added, Watters said.

“A small population county may have a large growth rate if it adds even a small number of people,” Watters said. “A large population county can add thousands of people and still have a lower growth rate.

“All counties have had births, deaths, and people moving in and out,” Watters said. “Sometimes the net effect is population growth; sometimes it is population loss; sometimes it’s a wash.”

Four of the 24 counties that have grown during the 21st century are part of the new concept of micropolitan area, Watters said. DeKalb County is the Fort Payne Micro Area; Marshall County is the Albertville Micro Area; Cullman County is the Cullman Micro Area; Coffee and Dale counties together are the Enterprise-Ozark Micro Area. “The new terminology of micropolitan area recognizes that the designated counties anchor a small, but important, local economy centered around a city that is sizeable, but not large enough to be considered a metropolitan area,” Watters said.

Alabama Counties that Have Added the Most Number of People Since 2000

County

1. Shelby
2. Baldwin
3. Madison
4. Elmore
5. Lee
6. St. Clair
7. Houston
8. Blount
9. Autauga
10. Limestone

Number Added

22,384
16,286
16,121
6,068
5,622
5,503
4,160
3,964
3,797
3,711

Source: U.S. Department of Commerce Bureau of the Census, Population Estimates Division, Release date, April 14, 2005.


Alabama Counties with the Fastest Growth Rates

County

1. Shelby
2. Baldwin
3. Elmore
4. Autauga
5. St. Clair
6. Blount
7. Bibb
8. Madison
9. Limestone
10. Lee

Growth Rate (%)

15.6
11.6
9.2
8.7
8.5
7.8
7.2
5.8
5.7
4.9

  View larger map     Download high-resolution map

Source: U.S. Department of Commerce Bureau of the Census, Population Estimates Division, Release date, April 14, 2005.


Alabama’s Largest Population Counties

County

1. Jefferson
2. Mobile
3. Madison
4. Montgomery
5. Tuscaloosa
6. Shelby
7. Baldwin
8. Lee
9. Morgan
10. Calhoun

2004 Population

658,495
400,526
293,072
222,559
167,104
165,677
156,701
120,714
113,211
112,425

County’s Metropolitan Status
Birmingham-Hoover
Mobile
Huntsville
Montgomery
Tuscaloosa
Hoover
Daphne-Fairhope
Auburn-Opelika
Decatur
Anniston-Oxford

  View larger map     Download high-resolution map

Source: U.S. Department of Commerce Bureau of the Census, Population Estimates Division, Release date, April 14, 2005.

 

U.S. and Global Iron and Steel Industries

  • August 20th, 2019

Iron and Steel Industry Overview

The iron and steel industry is defined to include iron and steel mills; electrometallurgical ferroalloy product manufacturers; and iron, steel, and steel investment foundries (NAICS codes 33111 and 33151). Iron and steel mills comprise integrated producers and mini-mills. Integrated steel producers generally begin the process by reducing iron ore to molten pig iron in a blast furnace, although some buy slabs and coke on the open market to reduce costs. The pig iron is then combined with scrap in a basic oxygen furnace to make molten steel. Mini-mills convert scrap metal into molten steel in an electric arc (EAF) furnace. Output from either type of mill is solidified into semifinished shapes and rolled, drawn, cast, or extruded to make flat-rolled, structural, and tubular products. EAF producers have a cost advantage, leaving integrated producers to focus on higher quality, more complex products. Foundries make metal mold or die castings from molten metal which are then subject to further manufacturing, such as machining, assembling, and finishing.

Demand for steel is highly dependent on both global and national economies. Development of sophisticated technology has improved both product quality and worker productivity. Capital requirements are very high in the integrated mills and all mills are greatly affected by commodity prices. Environmental regulations are also a major focus and cost. Productivity improvements have greatly reduced labor demands, with some U.S. producers cutting the number of man-hours required to produce a ton of steel by 90 percent over the last 25 to 30 years.

The Global Steel Industry

China dominates the global steel industry, with 2006 estimated pig iron production of 380 million metric tons amounting to 44.3 percent of the worldwide total and 420 million metric tons of raw steel accounting for 35 percent of global production. The country’s capacity is seeing fast growth; pig iron production increased 15.2 percent from 2005 to 2006 and raw steel production rose 20.3 percent during the year. While Chinese steel consumption has grown rapidly, production has increased faster and in 2006 China moved from a net importer of steel to the world’s largest exporter. Chinese exports have continued to increase rapidly in the first half of 2007; net exports to the U.S. were almost double exports during the same period in 2006. The country’s heavy government ownership and subsidization and its effect on production have caused concern about overexpansion in global steel capacity, given the cyclical nature of the industry. And the rise in consumption is pushing up the price of raw materials used in steelmaking.

Japan was the second largest producer of both pig iron and raw steel in 2006, claiming close to 9.5 percent of each market. U.S. raw steel production of around 96 million metric tons of raw steel ranked third, while 39 million tons of pig iron placed the United States fourth. The United States accounted for 4.5 percent of world pig iron production and 8.0 percent of raw steel during 2006. While U.S. output of pig iron increased 5.6 percent from 2005 to 2006, raw steel production rose a meager 1.6 percent. Russia was also a major player in world steel, with the third highest pig iron and fourth highest raw steel output in 2006.

2006 marked the fifth straight year for output and demand growth in the global steel market. The strong world economy and infrastructure and other investment in developing countries is helping drive global demand. The American Institute for International Steel forecasts steel consumption growth of 5.2 percent in 2007, or 2.6 percent if China is excluded.

The Steel Industry in the United States

In 2006 about 59 companies in the United States with around 106 plants were capable of producing approximately 112 million metric tons of raw steel. Also, in 2006 eight companies produced pig iron at 18 integrated steel mills. About 1,100 ferrous foundries contributed to 2006 steel industry output valued at approximately $150 billion. Primary steel-manufacturing states in 2006 included Indiana with 24 percent of production, Ohio (16 percent), and Pennsylvania and Michigan, each with around 6 percent. Major users of U.S. steel were the construction industry (16 percent), and transportation (mainly automotive producers) with a 13 percent share. Warehouses and steel service centers received 22 percent of steel shipments, much of it for further processing by industries that manufacture products including iron and steel pipes and tubes, bars, shapes, powder, and wire from purchased steel.

The U.S. steel industry is seeing significant consolidation, restructuring, and new capital investment in the 21st century. The number of companies producing raw steel declined by 24 between 2003 and 2006 and the number of plant locations was cut in half. Integrated steel mill locations with blast furnaces producing pig iron fell from 33 in 2003 to 18 in 2006. International Steel Group, U.S. Steel, and Nucor are among companies that have expanded significantly by acquisition. Technological developments have helped labor productivity to more than triple since the early 1980s, with the average number of man-hours per finished ton dropping from 10.1 to about three in 2004; many plants are able to produce a ton of finished steel in less than one man-hour. As a result, despite significant reduction in the number of plants and modest attrition in the workforce, production capacity rose from 103 to 112 million metric tons between 2003 and 2006.

Domestic raw steel production in 2007 totaled 56,437,000 tons through mid-July, with average capacity utilization at 84.1 percent compared to 90.2 percent for the same period in 2006. Imports of finished steel mill products amounted to 14.4 million tons, up 14.3 percent on an annualized basis from 2005, but 19.9 percent below record-high imports of 17.8 million tons in the first half of 2006. Canada, followed by China, South Korea, Mexico, and Brazil were the largest sources of U.S. imports. While U.S. imports of steel mill products exceed exports, the country is a net exporter of iron and steel scrap. Weakness in the U.S. housing industry and constrained consumer spending are negatively impacting domestic demand for steel. Global Insight’s industrial production index for iron and steel products is forecasted to dip from 116.9 in 2006 to 114.2 in 2007, but then rebound to 118.6 in 2008 and continue to climb steadily to 126.9 in 2012.

International investment in the U.S. Steel industry is growing, with Russia’s Evraz Group buying Oregon Steel, Brazilian steel producer Gerdau in the process of acquiring Chaparral Steel, Swedish subsidiary SSAB Canada purchasing IPSCO, German steel-producer ThyssenKrupp AG beginning work on a U.S. plant, and Russia’s Severstal involved in a joint venture in Mississippi. Industry analysts expect intercontinental mergers and acquisitions to continue.

Tariffs are an important concern for both U.S. steel producers and industries that utilize significant amounts of steel. Undertaking a five-year review, the U.S. International Trade Commission (ITC) voted to leave antidumping orders on steel concrete reinforcing bars from seven countries, including China and Ukraine, in place. Countervailing and antidumping duties on hot-rolled carbon steel imports from 11 countries are currently being reviewed.

Alabama’s Iron and Steel Industry

Industry beginnings. The iron and steel industry has a storied history in Alabama. With ample supplies of iron ore, coal, and limestone, north Alabama, and in particular the Birmingham area, was well-positioned to be a center for iron and steel manufacturing. The industry began to flourish around Birmingham in the late 1800s, with southern investors and northern bankers coming together to finance the large capital investments required, while northern and midwestern engineers provided technological expertise. The largest of these blast furnace complexes were owned by the Tennessee Coal, Iron, and Railroad Company and the Sloss-Sheffield Steel and Iron Company. Industry development brought new rail lines to Birmingham and enabled the rapid post-Civil War growth that earned it the “Magic City” label and spawned the cities of Bessemer and Fairfield. Cast iron production flourished as well, with the raw materials in the area good for certain types of pipe—American Cast Iron Pipe Company (ACIPCO) was founded in Birmingham in 1905. Ultimately, however, the phosphorus content of the iron supply limited the area’s ability to produce high-quality steel products, although they were ideal for foundry pig iron, to the extent that in 1940 Birmingham provided 40 percent of the U.S. supply. Early iron and steel production also spread northeast of Birmingham to Gadsden, where Gulf States Steel began integrated steel mill operations around 1904.

Steel Mill Developments. The integrated steel mill founded in 1886 by the Tennessee Coal, Iron, and Railroad Company was acquired by Pittsburgh-based U.S. Steel in 1909 and continues operation today as U.S. Steel-Fairfield Works. It is the state’s largest iron and steel mill with about 2,200 workers and a capacity of 2.4 million tons of raw steel and 640,000 tons of seamless tubular products annually. Gulf States Steel in Gadsden declared bankruptcy and closed in August 2000, idling about 1,700 employees. Despite local attempts to restore some operations, purchasers of the site dismantled the mill and shipped the equipment to a buyer in China.

With the growing use of electric arc furnace technology to produce steel in a mini-mill environment, location of a plant became more dependent on ease of transportation of scrap metal rather than on availability of basic raw materials. The earliest mini-mills were located in the Birmingham area, however. Birmingham Steel was incorporated by AEA Investors in 1983 and began operation with the acquisition of Birmingham Bolt Company’s rebar and merchant product mini-mills. Nucor bought its Birmingham operations after bankruptcy in 2002; Nucor-Birmingham has capacity for 600,000 tons of carbon steel reinforcing bars used in the construction industry annually. Also in 1983 CMC Steel Alabama became the second steel mini-mill for the Commercial Metals Group, producing structural steel materials in Birmingham; the plant’s workforce in 2006 numbered about 400.

Tuscaloosa Steel was created in 1984 as a joint venture of Tippins, O’Neal Steel, ACIPCO, and British Steel. British Steel (now Corus) became the sole owner in 1991. The plant began as a steckel mill using imported steel slabs, but the addition of an electric arc furnace in 1996 expanded capabilities and boosted capacity to 0.8 million tons annually. Corus Tuscaloosa was purchased by Nucor Steel in July 2004 and employed 345 in 2006. Trico Steel, a joint venture of LTV, Corus, and Sumitomo Metals Industries, constructed a $465 million plant in Decatur that became operational in 1997, with 300 employees and capacity of about 1.9 million tons of finished sheet steel per year. However, Trico filed for bankruptcy just four years later and in 2002 Charlotte-based Nucor purchased the assets of the company for over $116 million. Renamed Nucor Steel-Decatur LLC, the mill was upgraded and currently employs more than 600. The plant was named Alabama’s large Manufacturer of the Year in 2007. Nucor also purchased the adjacent former Worthington Industries cold rolling mill in 2004. IPSCO’s $425 million Mobile Steelworks mini-mill began production in April 2001, making discrete plate and hot rolled coil for machinery, rail car, ship, bridge, and other industrial products; capacity is 1.25 million tons per year. IPSCO was recently acquired by a Canadian subsidiary of Swedish company SSAB.

Foundry Developments. Birmingham’s iron and steel production continues to have a strong foundry emphasis. American Cast Iron Pipe maintains the headquarters it set up in Birmingham in 1905 and employs about 2,400 at its steel pipe and ductile iron pipe operations there. The 2,100 acre site with almost 60 acres of plant is the world’s largest iron pipe casting plant. U.S. Pipe’s Bessemer operation, which was founded as the Howard-Harrison Iron Company in 1889, is one of the original plants acquired by the company incorporated in 1899 as the United States Cast Iron Pipe and Foundry Company. After merging with the Sloss-Sheffield Steel and Iron Company in 1952, U.S. Pipe relocated its headquarters to Birmingham. U.S. Pipe was acquired by Jim Walter Corporation in 1969. The Bessemer plant employed over 300 in 2006 and another 200 employees work at the company’s Anniston plant. Jim Walter was renamed Walter Industries in 1991; Walter spun off Mueller Water Products in 2006, with operations including U.S. Pipe and a plant that employs around 600 in Albertville manufacturing fire hydrants. Sloss Industries continues operation under the Walter umbrella and produced 400,000 tons of furnace and foundry coke in 2006.

The Birmingham-based McWane Corporation was founded as McWane Cast Iron Pipe in 1921 by former American Cast Iron Pipe Company president, J.R. McWane. The company’s cast iron pipe operations in Birmingham employed about 300 in 2006. M and H Valve Company was acquired by McWane in the 1980s—the company had begun its history in 1854 in New York City; its cast iron valve operations relocated to Anniston in 1925 and employed almost 440 in 2006. Also headquartered in Birmingham, Citation began operation in 1974 with the purchase of Jones Foundry Company in Bessemer. Through acquisition, Citation also has metal components foundries in Brewton, Marion, and Columbiana and employs more than 1,200 at its Alabama foundry operations.

Looking to the Future. Although Alabama is not among the largest iron and steel producing states, the industry is a significant part of the state’s economy. In 2006 Alabama’s iron and steel industry had sales of almost $2.4 billion from approximately 47 iron and steel mill operations, four ferroalloy manufacturers, and around 37 foundries. Employment totaled more than 10,500. About 18 plants in the state that purchase iron and steel to manufacture pipes and tubes, rolled steel shapes, and steel wire provide a market for some of these iron and steel products. Largest among these companies are Hanna Steel, Southland Tube, and Tubular Products. Alabama’s industrial consumer base for steel products has grown markedly over the last decade with the state’s burgeoning auto industry and a strong commercial construction sector. The National Alabama Corporation railcar manufacturing plant to be built in the Florence-Muscle Shoals area will also be a heavy consumer of steel. The state’s solid base in the industry has helped attract new iron and steel producing companies and expansions of existing firms.

Current development includes ongoing construction of Nucor’s $167 million sheet steel galvanizing facility in Decatur. With capacity for about 500,000 tons annually, the plant will employ about 100 at completion in mid-2008 and utilize another 100 contract workers. In May 2007, U.S. Pipe announced that it will invest $45 million in a new, state-of-the art ductile iron pipe plant adjacent to its existing facility in Bessemer. The operation could come online early in 2009 with close to 100 jobs; it is the first new ductile iron pipe plant built in the United States in over 55 years. Alabama’s steel pipe production capacity will expand with construction of a Berg Spiral Pipe Corporation plant in Mobile. A venture of Panama City-based Berg Steel Pipe, the $75 million facility will employ more than 100 making spiral pipe used by the oil and gas industry. The state’s growing steel industry is bringing a related business to Millport in Lamar County—Steel Dust Recycling expects to recycle 110,000 tons per year of steel mill dust that is a byproduct of the EAF process. The plant should be operational in the second quarter of 2008 and employ 40.

Alabama’s iron and steel industry will see significant expansion with the state’s most recent economic development recruitment success—the massive $3.7 billion plant to be built by German steelmaker ThyssenKrupp AG in northern Mobile County. Slated for completion in 2010 with employment of 2,700, the plant will manufacture and process carbon and stainless steel for high-end manufacturers, including the automotive, construction, utility, appliance, and machinery manufacturing industries. Steel slabs will be imported for further processing from a ThyssenKrupp plant under construction in Brazil. The Alabama plant is expected to have a capacity of 4.1 million tons of carbon steel end products annually. Location of the plant in the United States gives a boost to the country’s steel industry outlook—prior to its announcement, industry analysts had thought a project of this magnitude unlikely for the foreseeable future.

Alabama Iron and Steel Industry 2006 (revised)


Employment
Business Sales
(millions)
Iron and steel mills
4,760
$1,390
Ferroalloy manufacturers
285
$77
Iron and foundries
5,460
$907
Total
10,505
$2,374

Source: Dun and Bradstreet.

 

Avoid Fear During The Economic Downturn

  • August 20th, 2019
AVOID FEAR DURING THE ECONOMIC DOWNTURN
February 16, 2009


Samuel N. Addy, Ph.D., Center for Business and Economic Research
Culverhouse College of Commerce, The University of Alabama

So what is a business to do in an economic downturn, especially one that is as severe and complicated as what we are currently experiencing? The business cycle includes downturns, recessions, recoveries, expansions, booms, busts, and stagnation. Downturns and recessions are painful, but they occur less frequently and are of shorter duration. As a result, firms are usually unprepared for them. There is justifiably more focus on maximizing profits in the more frequent or longer periods of economic growth. Clearly, the strategy should switch to loss minimization during downturns without excluding the possibility of making some profit.

Business conduct and actions in a downturn typically run counter to those in economic recoveries or expansions for good reason. But should that always be the case? After all, the downturn affects industries and firms differently and there are still economic opportunities to be had. Fortunately, at least two guiding principles of business conduct apply in good times and bad: optimality and sustainability. The first, optimality, deals with doing what is best always because that is how payoff is guaranteed. The second principle helps in business decision making as regards right-sizing, exit, or entry. The suggestions provided in the rest of this article are guided by these two principles and borrow from five steps used in policy analysis as shown below.

Steps in Policy Analysis General Business Actions
1. Define the problem 1. Assess the situation realistically
2. Identify policy options 2. Identify possible actions (responses to assessment)
3. Estimate the impacts 3. Estimate the impacts of possible actions
4. Value the outcomes 4. Value the outcomes of each action
5. Make recommendation 5. Take preferred action(s)

Assess the situation realistically. Information and insight are necessary for this first step. It is important to know what is going on globally, nationally, regionally, and locally irrespective of the geographic coverage of the business’ market. For example, it is important to know that the United States, Europe, Japan, and several large developed countries are in recession. Many developing countries economies are slowing; including Brazil, Russia, India, and China. Commodity prices are falling and deflation is now the new focus of many central banks, at least for 2009. The U.S. economy was already slowing before the worst of the financial crisis hit in Sept/Oct 2008. Households, businesses, and governments are facing tighter credit and experiencing huge wealth (home value and equity) losses with high debt levels. Assessment is essential because increased uncertainty during economic downturns makes leadership and decision-making particularly difficult.

Market research, including communication with suppliers and customers, should be ongoing. Networking, including membership in associations and attendance at events, must continue. These activities do not cost much, but many businesses, especially small ones tend to reduce or eliminate them in a downturn. Ironically, this is when businesses have more time to engage in such activities and they are crucial to making realistic assessments. Information needs to be gathered on economic forecasts, industry projections, input price trends, demand projections, financial health of customers and suppliers, workforce issues, expected length of the downturn, company contracts in effect, etc. Two questions that must be answered in the assessment step are; (i) can the company withstand the downturn and (ii) what are the company’s prospects long term? The answers to these two questions will help with the second step.

Identify possible actions. In response to the assessment, possible actions that may need to be considered include closing shop, filing for bankruptcy, continuing business as usual, and restructuring. Business-as-usual is one case of restructuring which includes improving internal processes (to increase efficiency, reduce costs, and enhance productivity), expanding and diversifying clientele, and right-sizing. It may be necessary to consider downsizing permanently, downsizing followed later by an expansion, or a permanent expansion. The possible actions to consider are influenced by whether or not the company is service-providing or goods-producing as well as the downturn’s effects on company operations and prospects. It is important to consider different options. For example, downsizing may involve laying workers off, reducing hours, or furloughs.

Estimate the impacts of possible actions. This step is essentially an estimation of the costs and benefits of each possible action and must recognize both quantitative and qualitative benefits and costs. As an example, if downsizing requires laying off workers, the intangibles those workers provided (e.g., team-building, leadership, productivity, institutional knowledge) must be listed. Wrong estimates of the true costs and benefits of each possible action can have devastating consequences as regards the preferred action(s) taken in the final step.

Value the outcomes of each action. Here, the net quantitative benefits of each possible action are determined and some value is placed on qualitative impacts (e.g., lost team-building and leadership skills, lost productivity and institutional knowledge, loss of unproductive workers). Valuing qualitative outcomes is especially critical to identifying the preferred action(s).

Take preferred action(s). The best action(s) is(are) selected here. The decision is also made as to the pace of taking these actions. For example, a downsizing could be undertaken gradually if certain contracts so require and so as to keep customers satisfied.

So what should businesses do in this downturn? Don’t just hunker down or retreat. Be wise in facing the challenges. Do not be afraid to spend. Expand networking and gather information. Determine if you can withstand the downturn. Diversify and expand revenue base and streams, if possible. Your workers are your ultimate resource; if you ask them to make sacrifices, assure them of rewards (e.g. profit-sharing, bonuses) when things get better. Thoroughly reconsider and make changes to the business plan. Try to stem losses and close shop if that is the best thing to do. One certainty is that so long as businesses are guided by optimality and sustainability principles, whatever actions they take will be the right ones.