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Gerdau's Tampa chief sees opportunity in an evolving steel market

As head of North America operations for Brazilian steelmaker Gerdau, Mario Longhi is often on the road, spending fewer than 10 days a month at the company's Tampa headquarters. But he made sure to be in town this past week as Gerdau marked its 110th anniversary by unifying its units around the world under the Gerdau brand name. For the Tampa operation, Gerdau Ameristeel, that meant dropping "Ameristeel" from its name. The switch plays up Gerdau's Brazilian heritage and emphasizes that it's a single, global company supplying structural steel products to customers in 14 countries. Some countries stand out. Gerdau counts on North America for about half its revenue, and how well it does here is key to the company's future, Longhi said. After some anniversary festivities, Longhi talked with the St. Petersburg Times about why the name change was made, how Gerdau shifted focus after the meltdown in commercial real estate, and why he thinks the federal stimulus didn't work.

By dropping "Ameristeel," you lose a slice of American heritage. Is the change bittersweet for employees or customers?

I don't think that it is. We were considering doing this way before the recession. It's a very normal practice. … Every time you acquire a company, the name changes. This is very representative of who we are as a whole and how integrated we are. It's not anything new to our customers or our people. The name Gerdau has certainly served us well.

Does the change affect how the company does business in the U.S.?

Not at all. … It strengthens our message. When you have two names, sometimes people are confused. It doesn't focus on one (name) or the other. When you really hone in and say, "This is it," it brings a very important message to the company we have and the products we make and the people we serve. There is no confusion.

Gerdau has pledged to invest $320 million in expanding its specialty bar quality steel production in North America by 2014. Where is demand coming from?

If you look at the overall North American economy, there is one segment that has rebounded quite dramatically for the better: auto. During the recession, quite a bit of consolidation has occurred, and there's a transformation required to the types of vehicles that are being produced and will be produced. The amount of new products that all of the automakers are putting out with significantly new demand gave us the opportunity to respond to that. … We're seeing very strong orders.

What percentage of your revenue comes from the auto industry?

I can't give you a figure, but I can say it's very significant. Gerdau in North America is the leading supplier of specialty marketed quality products for the auto industry: engines, some structural and transmissions.

Historically, the construction industry provided much of your demand. Are you recovering from the falloff?

Construction has three major segments: the housing market that was never much of (our business); then you have nonresidential construction like a shopping mall; and then you have the real infrastructure.

As you know, housing is still finding its spot. On the nonresidential side, there is a significant slowdown that will require inventories to be cleared out first. Then you have infrastructure. You have some industries investing, like health. You also have private infrastructure investments in the form of (capital expenditures) from companies. Roads, bridges, water-treatment plants, airports, transportation in general has continued to be a core area of focus for any country if they want to have economic strength. That has not been addressed well.

The federal stimulus didn't help with infrastructure?

Not at all. If the stimulus effort had been serious about creating jobs, they would have poured half that money into infrastructure alone. There is no other investment that could create so many jobs than infrastructure. Yet, time and time again, money was invested in areas that didn't create any jobs.

What are your biggest projects currently?

We have a couple of nuclear projects that are ongoing. We're concluding a large project for the Panama Canal. A lot of work is being done in New Orleans. Then you have some areas in the country like Texas, which has fared fairly well, so there is activity there. There are little pockets but not a widespread level of economic activity.

What's your involvement in the Panama Canal expansion?

With trade evolving globally, there are some types of vessels that require more depth and more width to be able to cross (through the Panama Canal). For the very large ships to be able to travel through … they need to dig the canal deeper. We provide a (steel) product … to create the walls that allows them to contain the water and contain the earth. We were a key supplier of that.

Is infrastructure spending coming back in Florida?

In Florida and in general, I can assure you it will come back. I just think some things have to happen in the political arena. You remember when that bridge fell in Minnesota? There are a number of bridges that are in dire straits across the country and also here in Florida. It has to be addressed. We have this political quagmire where they can't decide how much money to spend and on the other hand we have this budget crisis.

So it's going to happen. It may take another year or so.

Where will Gerdau be 10 years from now?

Certainly better than we are today. North America is the key region for the company. We believe in this and we're going to keep focusing just as we have in the past few years that got us to where we are. Growth here will also be tied to how well the economy evolves. You can argue forever about when (recovery) will happen. But how many companies are actually investing to produce more jobs at this moment? We're essentially putting our money where our mouth is.

Gerdau's Tampa chief sees opportunity in an evolving steel market 05/22/11 [Last modified: Sunday, May 22, 2011 4:39pm]
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