Chesterton Tribune

 

 

Former 6787 chief Gipson urges Arcelor to work with union against dumping

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By KEVIN NEVERS

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.

Steelmakers in 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.

Meanwhile, Paul 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.

“ArcelorMittal 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 steel.”

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.

Both measures Gipson said he would support.

But they’re 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.”

 

Posted 2/15/2016

 

 
 
 
 

 

 

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