More than a quarter
of the finished steel sold in the U.S. last year was made in foreign mills.
As the American
Iron and Steel Institute reported late in January, imports captured fully 29
percent of the domestic finished-steel market in 2015--a record--even though
total finished-steel imports were down by 7 percent.
That’s because the
total net tonnage produced by U.S. facilities last year was itself down by
fully 9 percent, with domestic mills operating at only an anemic 70
percent or so of their capacity.
countries like South Korea, China, Turkey, and Brazil have grabbed
troublingly large swathes of the market formerly served by ArcelorMittal and
U.S. Steel Corporation because at least some of them appear to be selling
their product--underselling it--at prices not only well below the cost of
making it in the States but below their own cost of making it back home.
The practice is
called dumping and it’s the sort of thing a foreign steelmaker can do if
it’s being subsidized--illegally--by its government. Domestic producers
being injured by subsidized imports can seek relief in several ways, under
the World Trade Organization’s Agreement on Subsidies and Countervailing
Measure, but in practice it may take months, it may take years, for a
negotiated settlement or trade investigation to conclude in a domestic
producer’s favor. And by that time the damage has been done.
Certainly a great
deal of damage was done to Arcelor and USS in 2015. Both companies watched
helplessly, hemorrhaging, as they got low-balled by overseas competitors,
former customers began buying the cheap foreign stuff, and average realized
prices plunged, ending the year down 13 percent. Thousands of the companies’
employees were laid off, had their hours cut, or watched their facilities
shuttered for good, while shareholders took it on the chin: Arcelor posted a
$7.9-billion net loss last year; USS, a $1.5-billion net loss.
Meanwhile, up to
their knees in this bloodbath, the United Steelworkers and Arcelor still
haven’t negotiated a new contract, nearly six months after the old one
expired. The company, citing “record high import levels” and “global steel
overcapacity,” calls the current operating environment “unsustainable” and
is seeking to “align (its) cost structure with the economic realities of the
industry,” reportedly by putting the squeeze on active and retiree benefit
plans and forcing other penny-pinching concessions.
The USW is having
none of that but to date has made little progress.
Gipson--for 30 years the president of USW Local 6787--can’t believe what
he’s hearing from Arcelor. Gipson retired in June 2015 but has been keeping
tabs on the progress, or lack thereof, being made by the union’s negotiating
team. And his message to the company is a simple one: betraying labor is
hardly the right approach to what is, basically, a foreign-trade problem
demanding legislative and executive solutions.
needs to stop going after the union’s benefits,” Gipson told the
Chesterton Tribune last week. “The Steelworkers earned those benefits
and deserve them. And it’s just cutting corners anyway. The real issue is
dumping, subsidies. It’s almost economic warfare, what China’s doing.
Turkey. And the enemy isn’t the union.”
“The smart thing to
do is work with the United Steelworkers, not against them, and put
ArcelorMittal’s considerable clout to work,” Gipson said. “It’s time for the
company to stand with and next to the union and together push for political
action. And it’s time for Congress and the Administration to stand up for
On Thursday the
U.S. Senate voted 75-20 to approve the Trade Facilitation and Enforcement
Act, a bill aimed at giving U.S. Customs and Border Protection (CBP) the
necessary teeth to enforce trade laws. Among other things, the bill requires
CBP to accurately assess and collect antidumping and countervailing duties
at the border as well as to bring cases of alleged evasion to a definitive
conclusion within one year. It also forbids CBP from “opting out” of the
act’s provisions. And it makes all CBP rulings on alleged evasions
appealable to the Court of International Trade.
Which, for Gipson,
is all well and good. Yet even reducing the time lag to 12 months--or, say,
as few as to nine or six months--is still giving foreign steelmakers too
much time to do incalculable damage, he said.
A more aggressive
legislative strategy is necessary, Gipson offered, something along the lines
of a bill which U.S. Rep. Rick Nolan, D-Minn., has championed: one which
would impose a five-year moratorium on all steel imports.
Nolan is also on
the record urging President Obama to impose tariffs high enough to make
subsidized dumping unprofitable for a foreign steelmakers.
Gipson said he would support.
unlikely to garner much support in Congress without a full-court press by
Arcelor, USS, and the USW. “Arcelor’s got to stop wasting its time and
energy trying to chip away at the Steelworkers,” Gipson said. “The
Steelworkers are solid. They’re united. And they’ve got the company’s back
if they feel like the company’s got theirs. With the union’s help Arcelor
can get Congress to drive a stake through these predatory trade practices.”