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STEEL GETS A SOFT SELL

THE ORANGE COUNTY REGISTER - February 21, 1998
By Andre Mouchard

The business that once sparked uplifting phrases such as "smokestack industry" and "rust belt" is pushing a feel-good advertising campaign aimed squarely at a group that generally can't buy its product: consumers.

The trade group behind the ads, the Steel Alliance, doesn't expect consumers to start buying steel by the ton. Instead, they figure that if they tout steel on television relentlessly, consumers eventually will demand it in everything from toasters (where they get steel already) to houses (where they don't).

The ads evoke simple messages. Steel is strong. Steel is clean.

"Steel is the material for the next century," gushed Klaudia Flanigin, an account executive at GSD&M, the Austin, Tex.-based agency behind the push to tout what her agency has dubbed "The New Steel."

"The steel industry has been quiet for at least 30 years," Flanigin said. "They have a great story to tell."

The message is so strong that Flanigin and others see just one hurdle for their five-year, $100 million ad campaign.

Big Plastic. And Big Aluminum.

In fact, for reasons ranging from opportunity to fear, makers of many of the materials that dominated this century are courting public opinion so they can survive in the next.

Though sales of all three materials have jumped recently, in tandem with the skyrocketing economy, the future is filled with potential problems.

Computers are small enough that they don't represent a huge market for anybody. Cars also could get smaller again or use different materials. Even coffins are being replaced by nonmanufactured products such as straw.

"The world isn't so competitive yet that anybody is advertising to the detriment of anybody else," said Mary Anne Hanson, director of advertising for the American Plastics Council. "But every (materials maker) is concerned about maintaining what they have."

Hanson's trade group is spending about $19.5 million in its current fiscal year to tout plastic to consumers. The theme of the campaign? "Plastics make it possible."

But Mark Stephenson, executive director of the Steel Alliance and a former strategist in the Reagan administration, says his and other basic materials are fighting for their future.

"Right now, (the steel) industry is OK. Sales have been good the past few years. The primary goal of our campaign is pretty friendly. We're saying 'Hey, steel is hip.' and 'It's OK to like steel,' " Stephenson said.

"But getting that message out over the next few years ... that's critical," Stephenson said.

CHANGE IS HERE

In some ways, Orange County, with a couple of million eager consumers and thousands of companies that make stuff out of steel and aluminum and plastic, is ground zero in the materials war.

Next month, drivers on the Costa Mesa (55) Freeway will see an American first: a billboard touting steel-frame houses.

Steel was pushed as a residential building material after World War II. But the strength of carpenters unions, plus an abundance of cheap lumber, killed that trend in the early 1950s.

Now, with unions less influential in home construction and with lumber quality reduced by environmental restrictions on logging, conditions are ripe for steel to edge its way into what has been a closed market.

Jeffrey Prostor is banking on it.

His company, Brookfield Homes in Costa Mesa, is the nation's biggest maker of steel-frame houses, with an estimated 270 such houses (about 90 percent of Brookfield's total) expected to be built this year.

Using galvanized steel beams instead of two-by-fours and other framing lumber, Brookfield houses, in places such as Irvine and Coto de Caza, will be priced from $160,000 to $700,000.

Nearly as important for steel makers, Prostor is touting steel as a wonder material to its customers. The company's brochures note that steel-frame houses are more resistant to fire and termites, and less inclined to warp, than wood-frame homes.

"About half the people we survey are predisposed to like it," Prostor said. "It's seen as futuristic and sensible."

Oddly, man-made steel is also billed as more environmentally friendly than natural wood.

"A steel stud is made out of recycled products," Prostor said. "It takes about three recycled cars to build a house."

Prostor likes it for two reasons: Steel prices tend to be more stable than wood, making it easier to project building costs, and steel-beam construction tends to be straighter and stronger than wood.

Prostor isn't the only local manufacturer with a stake in the materials war.

Santa Ana-based GT Bicycles, for example, makes bikes with frames extruded from steel, aluminum and, in some cases, comparatively exotic materials such as titanium.

Generally, the idea is that frames made out of aluminum and the exotics are lighter and, therfore better, than steel. The downside, depending on your point of view, is that aluminum and other materials cost more than steel.

But those rules are changing. Increasingly, consumers are able to choose their bikes based on the perceived performance of each material, not just price.

The price of GT's cheapest aluminum bike has dropped in recent years from $1,000 to about $600. Meanwhile, prices for some of GT's steel bikes products with frames made of lighter steel alloys have jumped, becoming as expensive as GT's mid-priced aluminum bikes.

"Some customers prefer aluminum. It's lighter, and they like that," said GT spokesman Bob Hadley. "But there are a lot of bike customers who say, 'Steel is real.' And they're not going to buy an aluminum bike no matter what.

"It's very interesting to us," Hadley added, "to see how these ads for (steel) work. It could change what we do to some extent."

RUST NEVER SLEEPS

The stakes in this battle are huge. North American steel makers, for example, spent about $50 billion over the past two decades upgrading everything from manufacturing plants to new products.

If, after all that spending, some other material should jump into one of steel's traditonal markets, the results could be financial catastrophe.

"God help us if aluminum or plastic should somehow start to dominate more of the auto business," Flanigin said. "That would be trouble."

Last year, about the time the first "New Steel" spots were shown on television, German automaker Audi began advertising its new luxury model, the A8.

The big selling point of the $65,000 car? Its frame, extruded from a special aluminum that, in the commercial, was billed as being both light and strong.

But steel spokesman Stephenson also offers a success story: Porsche will introduce a low-weight steel frame this year.

And Ford, which has used recycled plastic in its bumpers for years, recently undertook a long-term plan to create a car entirely of recycled materials, much of it plastic.

"Now, that's the kind of change we like to see," laughed Hanson of the American Plastics Council. "They should use even more plastic."