New York (Platts)--6Feb2009

President Barack Obama Friday named members to an advisory board to help
oversee his economic stimulus package, including General Electric CEO Jeff
Immelt and Caterpillar CEO Jim Owens. And while US steel industry backers may
not be thrilled with such appointments, they are not worried about Buy
American provisions in the legislation being threatened.

"This [Buy American] is a message that sells well in the heartland of the
country," Thomas Danjczek, president of the Steel Manufacturers Association
told Platts Friday.

Both GE and Caterpillar are member companies of the US Chamber of
Commerce, which has come out strongly opposing any more Buy American
provisions in economic stimulus legislation.

In a letter sent to the president Wednesday, the coalition of US Chamber
companies expressed support for a robust economic stimulus package but also
urged President Obama to "ensure that stimulus legislation not include the
unnecessary and trade-restrictive Buy American expansions currently being
considered." GE and Caterpillar were among the letter's signatories.

Earlier this week, steel industry leaders in the US and steel union
officials told Washington lawmakers that the Buy American clause in the
economic stimulus package -- which requires infrastructure-rebuilding to use
only US-made iron and steel -- is the quickest route to creating thousands of
new jobs to jump-start the sputtering US economy.

"At this critical juncture, the United States must lead the world out of
protectionism, not into it," noted the US Chamber of Commerce in its letter to
the White House. "The proposed House and Senate expansions of already robust
Buy American laws send the wrong message at the worst possible time to our
trading partners around the world and to markets nervous about rising trade
barriers."

The European Confederation of Iron and Steel Industries (Eurofer) also
warned Thursday that the US Senate's vote to soften the controversial Buy
American clause in the $900 billion-economic stimulus bill does little to
remove the negative effects on the EU steel industry.

DOES CAT HAVE ITS CLAWS OUT?

Caterpillar, in particular, has recently bemoaned steel pricing. The
company said two weeks ago that its 2008 manufacturing costs were almost $1.7
billion more than in 2007--and cited steel and freight cost escalation last
year as chief drivers. When releasing its 3Q earnings, the company was even
more direct. "Higher material costs, especially for steel, were the most
significant headwind we faced in the quarter," Owens said in late October,
after steel prices had peaked globally and in the US.

"Cat, regrettably has a multinational optimizing philosophy which does
not always benefit US enterprises and workers," Danjczek said. "I may be
wrong, but I do not believe Buy American is specifically in trouble since it
passed both houses and the joint conference is likely not to alter it too
much," he added. "Actually, I suggest the Buy American dialog has been helpful
in flushing out the Chamber and NAM [National Association of Manufacturers]
for what they are...for not always supporting American enterprises by locating
plants offshore, and the politicians saw through that," Danjczek said.

The SMA consists of 36 North American companies that operate 130 steel
plants and employ approximately 40,000 people. The SMA claims its members
account for more than 70% of US steel production, as it is the primary trade
association for scrap-based electric arc furnace steelmakers and re-rollers.

--Joe Innace, joseph_innace@platts.com