Released on: November 27, 2007, 11:09 pm

Press Release Author: Alexandra Lewis

Industry:

Press Release Summary: The steel industry is likely to suffer the fall out of the
credit crunch in 2008, despite a buoyant outlook for most product groups over the
next couple of years. The spike in interest rates across the wider economy means
that steel users' finances will inevitably be squeezed and potentially bring about
an upward blip in insolvencies where least expected.

Press Release Body: The steel industry is likely to suffer the fall out of the
credit crunch in 2008, despite a buoyant outlook for most product groups over the
next couple of years. The spike in interest rates across the wider economy means
that steel users' finances will inevitably be squeezed and potentially bring about
an upward blip in insolvencies where least expected.

The boom in UK construction, including the Olympics, is helping to drive higher
prices and volume for the steel industry. However, as companies expand to meet
demand, they are facing interest rate hikes and restrained cash flow following the
sub-prime mortgage crisis. Suppliers are warned that customers could default on
payments as a result of unexpected insolvencies, especially among companies with
high gearing.

The risk of insolvency is also heightened by increasing pension deficits, parent
companies allowing subsidiaries to fail and accounting irregularities.

Phil Grey, steel specialist and account director at Aon Trade Credit, said: "The
credit crunch means it's harder to access capital and could ultimately lead to
increased bad debt in the steel industry. Credit insurers could respond by
increasing premiums due to the risks of the wider economy rather than any bad claims
history in this sector."

To protect your balance sheet and prevent the backlash from industry insolvencies,
Aon recommends taking the following actions:

*
keep a tight sales ledger and monitor for evidence of overdue payments
*
commit more time and energy to collecting payments
* review debtor book on a regular basis to assess reliable customers and decide
whether to sever links with those with poor payment histories.

Aon UK is ranked by A.M. Best as the number one global insurance brokerage based on
brokerage revenues and voted best insurance intermediary, offering classic car
insurance, high value home insurance, entertainment
and media liability insurance and construction insurance.


Web Site:
http://www.commercialservices.aon.co.uk/commercialservices/microsites/entertainment/


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