Over the past few months, I have written several times about the amazing profits being racked up by some (but not all) of America's steel companies. Firms such as Reliance Steel
In fact, some of these companies have felt so much in control of their destiny that they threw caution to the wind and risked the ire of America's famously litigious corporate citizens by imposing surcharges on their products. This, even when their supply contracts with their customers clearly specified set prices for their goods.
Big mistake. Huge mistake.
So learned Dutch steel maker Ispat International's
Moreover, Whirlpool's TRO win bodes ill for two companies imposing similar surcharges on steel and steel parts supplied to General Motors
Were I a betting man, I would be placing my money on both Whirlpool and GM being the ultimate winners in their respective lawsuits. As for the losers, those would include not just Steel Dynamics, Textron, and Ispat, but all the other steel makers (and shareholders in those steel makers) currently signed to supply contracts. They would be forced by court judgments, or fear of court judgments, to drop their surcharges and excess profits and agree to be compensated at the previously agreed rates.
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Fool contributor Rich Smith owns no shares in any of the companies mentioned in this article.