July 1, 2006

The Quest for Understanding

“There is a great difference between knowing and understanding: You can know a lot about something and not really understand it.”
–Charles Kettering (1876-1958), engineer, inventor.

Ten issues ago, for the launch of Forward magazine in January 2005, I said that the goal of this publication was “to help you understand the world just a little bit better” so that all of us in the metals industry—mills, distributors, fabricators and others—can thrive together. Our intent is to offer thought-provoking articles, outside of the mainstream of the metals media, that provide insight to help you run your business better now and in the future.

The cornerstone of that effort, in this 10th issue and in all issues of the magazine, is information that goes well beyond superficial analysis to get to the heart of those factors that influence your markets, suppliers, customers and competitors.

Our cover story is an example. For the last several years, as the Metals Service Center Institute has advocated steps to create a level playing field in global trade, we’ve heard complaints about the apparent lack of will on the part of U.S. trade enforcers. Do our global trade watchdogs fail to use readily available and wholly legal remedies to combat unfair and illegal trade practices? The answer is yes, yes, yes—yes, there is less vigor today in U.S. trade law enforcement; yes, the laws on the books are cumbersome and very difficult to use; and yes, some of the most egregious trade practices aren’t covered by any U.S. law or international agreement.

Another article in this issue is an engaging dialog among some of the investment banking community’s foremost experts on the metals industry on valuations, capital structure and the current consolidation cycle.

We also offer an unusual interview with Xie Qihua, the woman who built Baosteel (as Shanghai-based Baosteel Group is known) into the largest steel producer in China. Our article provides a sense of Baosteel’s role in development of the world’s oldest economy and the company’s hopes for global growth.

At Forward, we strive to provide a broad perspective on issues that confront our members and their customers today. Our article with Xie is provided in that spirit, and with it, we hope to offer a little more insight into the business approach of China’s largest steel company. At the same time, we are keenly aware that Baosteel is not simply a business in the North American sense. It is an extension of China’s industrial policy, and as such, its actions are a reflection of not just market concerns, but also of public policy. There are significant differences and, at times, inherent conflicts between a market-based economy and a centrally controlled economy.

What we do know is that companies based in free markets face significant challenges when competing globally against state-owned enterprises. That’s why countries that are part of the global economy have agreed to rules that make free and fair trade possible. It is incumbent upon all nations to follow those rules.

As our colleagues at Forbes magazine say, “With all thy getting, get understanding.” We could not agree more. May you find in these articles the insight, ideas and information that help hone your own understanding of business in today’s environment.