The steel industry, like all others in 2020, had plenty of issues to deal with related to the pandemic. And it was an election year, to boot.
Fuel tax revenue was down; decisions on large projects were delayed. Plus, federal funding and permanent tariffs on foreign competitors were hot topics.
But Grady Harvell, president and chief operating officer of W&W/AFCO Steel in Little Rock, believes steel held up well this past year despite the challenges.
AMP: How did the steel industry in Arkansas hold up in 2020?
HARVELL: I think our industry fared extremely well in 2020 considering the challenges of COVID-19 combined with a presidential election year. Owners/investors tend to delay large financial commitments needed for new projects due to the uncertainty of policy during the upcoming four years. The onset of the COVID-19 pandemic in March increased this level of uncertainty significantly.
COVID-19 also had a negative impact on our bridge market, which is usually the one sector in our industry not disrupted during an election year.
Revenue from fuel tax largely funds roadway improvements in most states. Across most of the U.S., fuel tax revenues were down 40 percent to 60 percent in the spring and early summer months. This, along with the lack of a long-term federal transportation budget, caused many states to significantly reduce, if not stop, awards of new work for much of this year.
Our facilities in Little Rock, Van Buren and San Angelo, Texas, were fortunate that the Arkansas, Oklahoma and Texas departments of transportation managed their budgets wisely and have been able to navigate these reduced budget challenges better than the eastern areas of the U.S. where we also fabricate steel bridges.
Due to the increase in online ordering, W&W/AFCO Steel, as well as the steel industry in general, was fortunate to see a large increase in the construction of warehouse distribution centers. We are currently in various phases of construction on four large distribution centers with locations ranging from Ontario, Canada, to Las Vegas. Our industrial market sector has been depressed for several years, due in large part to low oil prices and unfair competition from steel being produced in areas of the world that engage in unfair trade practices.
In spite of the challenges we faced in 2020, we have been able to achieve our primary goal of providing our employees good jobs with above-average benefits in a safe working environment. We are fortunate to have been included in the “essential business” group during the COVID-19 shutdowns that affected many other businesses.
We are happy to say we have endured this tumultuous year with no layoffs or hour reductions in any of our 17 manufacturing facilities in seven states and 11 cities across the U.S. Our biggest challenge this year has been and continues to be keeping our employees as safe as possible from the virus so we can continue to deliver fabricated steel buildings and bridges to our customers.
AMP: What do the prospects for 2021 look like?
Harvell: I have never been much at making predictions, but I can point to a few things I think are key to improving our industry in 2021.
First, a long-term transportation budget must be approved by the federal government. The importance of states knowing the level of federal funding they can count on in the upcoming years is more important than ever as they try to recover from the lost fuel tax revenue from 2020. Many larger projects span several years, and stability in federal funding is key to these projects going forward. I commend the voters of Arkansas for the passage of Issue 1 in the recent election. This is a very positive step in ensuring Arkansans have safe roads and bridges for decades to come. We hope the majority of Congress can display the same level of common sense that Arkansas’ delegation has shown when it comes to agreeing to long-term infrastructure and transportation funding.
It was unfortunate the COVID-19 stimulus efforts implemented earlier this year did not include significant funds for transportation and infrastructure. There has been talk of an infrastructure bill in the magnitude of $1 trillion since the 2016 election, and still no concrete action has been taken.
Second, we must get all of our U.S. steel industry on a level playing field with steel imported from countries that engage in unfair trade practices. This has been a challenge the steel industry has been losing ground on for many, many years. In February of 2020, we had the opportunity to have permanent tariffs placed on much of the imported fabricated steel along with the tariffs on mill steel. Unfortunately, the tariffs on fabricated steel were narrowly voted down by the U.S. Trade Commission.
Many of our foreign fabricators are subsidized by their governments and do not provide their employees with a work environment or benefits and compensation comparable to U.S. standards. We support keeping our environmental and safety standards at the highest levels possible, but tariffs on most imported mill and fabricated steel must be utilized against those countries that engage in unfair trade.
Finally, and most importantly, we must see some type of control for the COVID-19 pandemic, whether this is a vaccine or just a universally accepted common practice for safe interaction in public. As long as the average person is not confident or comfortable that they can go out in public and live a somewhat normal life, there will be uncertainty in our economy. Uncertainty leads to reduced spending by owners and investors, which negatively impacts our industry as well as many others.
AMP: In what ways has the pandemic forced the industry to become more nimble?
Harvell: During the initial months of the pandemic, our corporate management team met daily to discuss local and national guidelines and recommendations, develop plans to implement a safe work environment for our employees, and most importantly stay in touch with how our employees were reacting to the rapidly changing developments in the COVID-19 data being published.
During these discussions, we developed procedures for providing our employees with a work environment in which they felt safe. As an example, in all my career, this is the first time we have had to consider vending machines and break rooms potential safety hazards! We are gratified all of our employees embraced the measures we adopted in our efforts to keep COVID-19 under control within our facilities. This was a difficult task considering our 17 manufacturing facilities are in seven states from Colorado to North Carolina, and we had active job sites from New York to Oregon.
More importantly, our employees’ opinions of how COVID-19 impacts them and what should be done to minimize their exposure to these risks varied greatly. All of this resulted in our company having to be extremely flexible with our W&W/AFCO Steel family members to ensure we were able to continue to maintain full employment while keeping positive attitudes and a safe work environment.
I am proud of how our team has reacted to the COVID-19 pandemic, and I am confident we will continue to be diligent in being safe until a vaccine is developed.