Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘steel’

U.S. Steel lays off Michigan workers a week after Trump bragged 'business is thriving'

Wednesday, August 21st, 2019

Just last week, Donald Trump was bragging about the success of his steel tariffs. This week, U.S. Steel is laying off workers in Michigan—temporarily, but for as long as six months.

“Steel was dead. Your business was dead. Okay? I don’t want to be overly crude. Your business was dead. And I put a little thing called ‘a 25 percent tariff’ on all of the dumped steel all over the country. And now your business is thriving” Trump said, in the same Monaca, Pennsylvania, speech at which he had a coerced audience of workers told they’d lose pay if they didn’t attend. “And I’ll tell you what,” he added later, “Those steel mills—U.S. Steel and all of them, all of them—they’re expanding all over the place. New mills. New expansions. We hadn’t have—we didn’t have a new mill built in 30 years, and now we have many of them going up.”

This is, of course, false. There are not “many” new steel mills going up (and on top of it, there had been at least one built within the last 30 years). U.S. Steel is investing $1 billion in its Mon Valley Works facilities, but there’s no guarantee of new jobs there.

And now U.S. Steel is idling blast furnaces and laying off workers—temporarily, we very much hope—as steel prices have fallen significantly from a 2018 peak shortly after Trump announced his tariffs. The steel tariffs did at least temporarily lead to increased investment and jobs. But of course Trump had to lie about the scale of the improvements and you’re unlikely to see him admitting to the slump that’s hitting now.

This blog was originally published at Daily Kos on August 20, 2019. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.

Don’t Dawdle on Economic and National Security

Monday, July 31st, 2017

The future of the American steel and aluminum industries is not a matter for dithering.

Each mill and smelter that remains operating is too vital. Each is too crucial to the economic viability of a corporation, a community, and thousands of workers and their families.

Each also is too essential to national security, which relies on American-produced metals for critical infrastructure, from bridge construction to the electrical grid, and for munitions, from fighter jets to bullet-proof vests.

There is no more time for waiting. International trade law must be enforced now. Throughout his campaign, Donald Trump pledged his support to workers and these industries. And he followed through by launching within three months of taking office as president special investigations into the effects of steel and aluminum imports on national security.

Such inquiries may take as long as a year to conclude, but the administration expedited the process. Until it didn’t. Now steel and aluminum corporations, their communities and their workers are being told to wait. It’s a delay that could kill more American mills and smelters.

The nation lost nine aluminum smelters over the past six years, leaving only five in the entire country, and most of them are now operating at reduced levels. Beginning in January 2015, steel companies laid off 14,000 workers as they closed mills and sections of mills.

For example, Allegheny Technologies shuttered a plant that made grain oriented electrical steel in 2016, leaving only one U.S. company, AK Steel, now producing this component critical to electricity transmission.

As mills and smelters disappear, the military is further restricted in its ability to secure domestically produced essential metals in time of crisis.

The primary culprit in this scary scenario is overcapacity and overproduction in China, which overwhelms the world market with illegally subsidized, grossly underpriced aluminum and steel.

China has promised repeatedly to solve this problem. On Thursday it pledged again, this time contending it wanted to work globally to deal with the issue of aluminum overcapacity – a problem Beijing created. Over the past six years, using massive government subsidies, China quickly ramped up capacity to become the largest aluminum producer in the world.

China can’t be trusted on this because it never keeps its promises. It has never cut its steelmaking capacity after announcing again and again that it would.

In negotiations two weeks ago, Trump cabinet members could not even get a specific commitment out of China to do it. There’s no evidence China will stop overproducing steel or aluminum now. Waiting is useless. And destructive to American manufacturing.

The American steel and aluminum industries have fought back, filing and winning dozens of trade cases against imports of specific products. But the resulting tariffs and other penalties imposed by the U.S. Commerce Department and U.S. International Trade Commission (ITC) didn’t solve the problem.

Instead of paying U.S. tariffs, China shipped its government-supported excess of these products to other countries, artificially suppressing world prices and warping what is supposed to be a free market.

Also, this traditional process for seeking relief from unfair trade takes too long. More than a year may elapse before companies and workers get a final decision. And that will be for just one product, like aluminum extrusions, aluminum foil, welded stainless steel pressure pipe or corrosion-resistant steel, to name a tiny number of cases from recent years.

That’s part of what made the special investigations into steel and aluminum imports so attractive. If the U.S. Commerce Department determined under Section 232 of the Trade Expansion Act of 1962 that imports of steel and aluminum jeopardized national security, then the president could impose penalties broadly to ensure the country could meet its own needs. The effort might also spur allies to join the United States in finally pressuring China sufficiently to actually reduce capacity.

Although Section 232 allows for nine months of investigation, after which the President would have three months to determine a remedy, the administration promised quick action when it announced the inquiries in April. The steel report was to be completed by June 30, with a speedy decision by the president after that.

That suggested the administration understood this was urgent.

But June 30 came and went. Now there’s an official delay. The administration told the Wall Street Journal that the steel investigation is on hold until after health care reform, tax changes and infrastructure spending are accomplished.  “We don’t want to do it at this moment,” the president said last week of the steel case.

That’s devastating. Especially because steel imports have jumped 22 percent since Jan. 1, placing additional pressure on the American industry.

The delay occurs as efforts are made by a new company to reopen at least one potline at an aluminum smelter in New Madrid, Mo., that the now-bankrupt Noranda company idled last year. Postponing the Section 232 decision makes for uncertainty for these investors.

It also occurs as a Chinese company is trying to buy Aleris, an Ohio-based manufacturer that supplies aluminum for use in vital infrastructure and military applications. That Asian firm, China Zhongwang, is accused of dodging tariffs and is under civil and criminal investigation for possible smuggling, conspiracy and wire fraud by the Justice Department, Department of Homeland Security and Commerce Department.

Maybe the Aleris smelters would keep operating if China Zhongwang bought them, but at what risk to national security?

The delay occurs as companies that buy steel fear monger that tariffs or quotas would raise prices.

An expert, Stephen Koplan, chairman of the U.S. ITC under Presidents Bill Clinton and George W. Bush, says that’s hogwash. “Predictions of disaster were wrong 15 years ago when I chaired the ITC, and they are wrong again today,” he wrote in an op-ed in The Hill newspaper last week.

When President George W. Bush imposed tariffs and quotas on steel imports under Section 201 of the Trade Act of 1974, there was no price shock afterward, according to a study by the nonpartisan U.S. ITC.  Here is what Koplan, who also served as an attorney at the Small Business Administration, wrote:

“Downstream industries were not devastated by higher steel prices. Nor was the U.S. economy thrown into depression. The U.S. steel industry, however, earned a much-needed relief as the result of action taken by the president that allowed it to restructure and reinvest for the long term. In other words, the Section 201 measures worked as intended.

“We are facing similar challenges again today. . .Now, however, U.S. national security is at great risk if firm action is not taken immediately. The U.S. primary aluminum industry is on the verge of disappearing entirely, and the U.S. steel industry is not far behind.”

AK Steel Corp. CEO Roger Newport agreed with Koplan’s assessment that this is not a time for dawdling, telling the Commerce Department in his testimony on the steel case:

“High-end electrical steel is an incredibly difficult product to manufacture, as it requires a significant amount of dedicated, capital equipment and a sophisticated, well-trained workforce.

Therefore, if AK Steel were to exit the market, there would be no operational electrical steel manufacturing equipment in the United States, the specialized labor and related expertise in operations would be lost, and many of AK Steel’s talented operators and researchers would either relocate to other businesses, industries and/or foreign countries, or become unemployed.”

Workers’ and companies’ economic security is at risk. The nation’s security is at risk. Resolution of these cases should be speeded, not delayed.

This blog was originally published at OurFuture.org on July 31, 2017. Reprinted with permission.

About the Author: Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO

When Too Much is Terrible

Tuesday, March 1st, 2016

Leo Gerard

It’s lights out in Lorain on March 31. The town’s steel mill, site of a new electric arc furnace and $120 million investment, had given 1,200 Ohioans good middle-class jobs this time last year.

But by April, a relentless avalanche of underpriced Chinese steel will have shoved all but a fewof those workers into the street.

The same is true of steelworkers in Granite City, Ill., Lone Star, Texas, and Gary, Ind., and aluminum workers in New Madrid, Mo., Hannibal, Ohio, and Hawesville, Ky. It’s true of glass workers and paper workers in small towns across America.

The same catastrophe is slamming small towns across Europe. ArcelorMittal cited the Chinese avalanche when it closed its steel mill near Bilbao in northern Spain last month. Tata Steel cut 1,050 jobs earlier this month from its Port Talbot plant in South Wales. Two weeks ago, 5,000 steel and other workers and managers from 17 European nations gathered in Brussels to protest overwhelming, underpriced Chinese imports.

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China makes too much steel. And many other commodities. By providing government subsidies and other supports like currency manipulation that are illegal under international trade regulations, China sells those products overseas at prices below production cost, undercutting fair market manufacturers like U.S. Steel and Republic Steel in Lorain. Too much has been good for China until now. Now it wants “market economy” status in the World Trade Organization. So, suddenly, it has announced it will reduce its excessive steel production. That will cost 400,000 Chinese steelworkers their jobs. It turns out that too much is terrible for Chinese workers and Chinese towns as well.

To put this in perspective, last year, as American and European mills closed, workers lost their jobs, and prices for some steel products fell by 50 percent because of massive oversupply from China, China continued steelmaking full tilt. It made half the steel in the world. And itsexports rose by 50 percent.

Chinese steel firms could accomplish that only with subsidies such as “loans” that don’t have to be paid back, free land and free utilities. These are not companies operating in a market economy. These are government-subsidized entities. And that’s fine if all of the products are sold domestically. But these subsidies are illegal when the products are sold overseas because the falsely underpriced products distort what is supposed to be a fair market.

Chinese government interference in the international market is damaging corporations like U.S. Steel and ArcelorMittal, the largest steel company in the world.  It reported a staggeringloss of nearly $8 billion for 2015. U.S. Steel’s 2015 loss was $1.5 billion.

That’s what Chinese steel overcapacity looks like on Wall Street. What it did to Lorain is more visceral.

“You could see the concern in our members’ faces,” Louise Zimmerman, President of United Steelworkers (USW) Local Union 2354, told me. After Republic Steel announced the layoffs, she said these workers as well as members of USW Local 1104 at the plant wondered, “What am I going to do? How am I going to pay my bills when my unemployment runs out?”

The steel mill is split, with Republic and U.S. Steel using parts of it. Both firms have furloughed workers over the past year. In March, U.S. Steel sent 600 home and Republic 200.In July, Republic furloughed another 125 when it had to shut down its brand new electric arc furnace.

Then, on Jan. 7, Republic announced it would idle its side of the plant and lay off 200. The next day, U.S. Steel said it would virtually shut its end, laying off 261. Lights out.

For Lorain workers laid off last year, unemployment benefits already have run out.

“Driving around the city of Lorain is pretty heartbreaking,” Louise told me the other day. “You see people with signs saying, ‘Please help me with food for my family.’”

“When I go to the grocery store or stop at a Kmart, normally, there would be a lot of traffic in those stores. Now it is incredibly quiet. Some clerks were folding spring clothes, and they told me they had no place to put the stuff because no one was buying the stuff from the racks from last season. No one is even going to the discount stores,” she said.

As the two big employers began shuttering operations, they paid less taxes to the city and the school district. Now the city faces a huge deficit and may have to cut services and lay off workers. That would be more people without jobs. And even less taxes paid. And less clothes sold at Kmart. Then fewer people employed there.

Louise’s brother owns a used car lot, and normally at this time of year, when workers get their income tax refunds, his business picks up. But he told his sister he has barely sold a car since the first of the year. In Lorain, people can’t even afford a cheap car now.

And public transit isn’t going to help, she said. The USW represents Lorain’s bus drivers, so she knows the situation well. Because of the town’s budget problems, the transit system is unable to add routes. So there may be no way for a person without a car to get to a job.

“I grew up here in Lorain. And I am very afraid of what is going to happen to this town and to the members of my union,” Louise said.

“And all of this,” she said, “is because of overcapacity and dumping and currency manipulation thousands of miles away in China.”

All of it is devastating lives in Gary, Granite City, Lone Star, New Madrid, Hannibal, Hawesville, Port Talbot, Bilbao, and myriad places across the United States and Europe. And now China too.

National leaders, who closed their eyes, clicked their heels and wished China were a market economy, gave workers and communities and commodity producers – not just steel companies – this disastrous result.

While they kept their eyes shut, China massively overbuilt its steel capacity. China is throwing unemployed workers and bankrupted communities a bone now, saying it will reduce capacity by up to 150 million tons. That’s not nothing. And it will certainly be painful to the 400,000 Chinese steelworkers who will lose their jobs.

But China’s overcapacity is 2.26 times that – 340 million tons.  After 150 million tons is cut, the remaining 190 million tons of overcapacity is still way too much. The remaining overcapacity is nearly 2.5 times the 78.9 million tons produced in 2015 in the United States, the world’s fourth largest steel producer.

China maintains that overcapacity with government supports and currency manipulation. Otherwise it wouldn’t exist. And those interventions in the steel industry and other industries mean that China is not a market economy.

Granting China that status would make it even harder for workers and corporations to get the tariffs that are the only measures keeping some industries alive now. American and European workers have known for a long time that Chinese overcapacity is terrible. Now, unfortunately, Chinese workers also will soon find out that too much is terrible. But that limited and calculated ploy by China does not justify granting market economy status to a clearly non-market economy.

This blog was originally posted on ourfuture.org on March 1, 2016. Reprinted with permission.

Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO. Gerard, the second Canadian to lead the union, started working at Inco’s nickel smelter in Sudbury, Ontario at age 18. For more information about Gerard, visit usw.org.

The Lesson of Pittsburgh for G-20: Manufacturing Matters

Wednesday, September 23rd, 2009

The revival of Pittsburgh, site of the G-20 summit this week, can provide valuable lessons for the world’s leaders. Among them: Manufacturing matters and poor trade policies hurt everyone.

Pittsburgh, G-20 and the New Economy: Lessons to Learn, Choices to Make,” a report released today by the Campaign for America’s Future (CAF), makes clear that the renaissance of Pittsburgh after the collapse of the steel industry was cut short because of the lack of a national industrial policy and the nation’s trade policies.

During a telephone news conference, CAF Co-Director Robert Borosage said some manufacturing jobs in Pittsburgh were replaced by high-end jobs in education or medicine.

But many were replaced by jobs in hotels and food services—jobs that never paid as well and proved even more vulnerable in the recent downturn. Some manufacturing jobs were never replaced at all. That helps explain why the city’s population is declining, especially among youth, who seek opportunity elsewhere.

That idea was echoed by more than 400 people who marched through the streets of Pittsburgh on Sept. 20 calling for an economic recovery that includes jobs for the unemployed.

The march set out from a local church where some 25 people slept overnight in tents to symbolize the poverty that lies behind the glitz of the renewed downtown Pittsburgh.

During the news conference today, Sen. Sherrod Brown (D-Ohio) said trade policies were at the core of the steel industry decline. He praised President Obama’s recent decision to provide relief to the domestic consumer tire industry in response to surging tire exports from China.

Obama’s action was significant, Brown said, because it is the first time a president has really enforced trade rules. He said he hopes it leads to even more complaints as U.S. industries see that their government cares about fair trade.

Brown added that the country “cannot tolerate” trade policies that spawn low wages and allow illegal trade subsidies in China and other countries to decimate our economy.

Economist Jeff Madrick of the New School’s Schwartz Center for Economic Policy Analysis, said the nation’s manufacturing sector has been the victim of deliberate neglect by policymakers. It is clear, he said, that union manufacturing jobs pay better wages and have more benefits than service jobs.

The G-20 summit is a perfect time for U.S. officials to take a hard look at what has happened to workers over the past decades. For example, the median wage for males is less today than it was in the 1970s when you take inflation into account. And workers’ wages have not kept up with productivity for 25 years.

We need new policies to stimulate manufacturing. This [decline] has gone on too long.

The report specifically proposes an industrial policy that promotes manufacturing. Eric Lotke, author of the report, writes:

We need to dispel the notion that America has moved beyond the production of goods. From cars to computers to refrigerators, a country needs things. If we don’t make those things here, then someone else gets our money.

The report also says the experience with the steel industry in Pittsburgh should spawn new trade policies that reflect the truce functioning of the market. It cites Obama’s decision in the tire case as a first step in this new direction.

Read the CAF report here.

Lotke also says the G-20 summit provides an opportunity to examine American patterns of production and consumption. Even when the economy was growing, America ran a combined trade deficit and interest payments of more than $700 billion every year, he said.

We borrowed $2 billion every day to cover the difference. That might have worked well for the countries we bought and borrowed from—but it worked less well for America. It was never sustainable anyway.

As the G-20 leaders plan a recovery from the global downturn, they should not assume that the United States will remain the world’s consumer—spending more than we earn and paying for it with personal and national debt. The G-20 must chart the process by which the global economy that emerges from the crisis is more balanced, and less dependent on U.S. consumption. Growth must be sustainable in Pittsburgh as well as Beijing.

One avenue to create more manufacturing jobs is through the green revolution. Tomorrow, the Alliance for Climate Protection’s Repower America campaign, the USW and the Blue Green Alliance will conclude their Clean Energy Jobs Tour with a rally in Pittsburgh.

The Jobs Tour, a monthlong campaign with more than 50 events in 22 states, is highlighting how a transition to a clean-energy economy will create jobs while reducing harmful carbon pollution and breaking our dependence on foreign oil.

Says David Foster, executive director of the Blue Green Alliance:

We can create millions of jobs building the clean energy economy—whether it’s manufacturing the parts for windmills, building hybrid car batteries or weatherizing homes to make them more efficient. By transitioning to a clean-energy economy, we can revitalize America’s manufacturing sector and boost our economy for the long run by creating jobs here at home.

“Building a clean energy economy can revitalize American manufacturing, but only if we commit to using domestically produced components,” said USW President Leo Gerard.

In confronting the challenges of recession, global warming and energy independence, we have an opportunity to transform our economy and create good jobs that truly are Made in America.

About the Author James Parks: had his first encounter with unions at Gannett’s newspaper in Cincinnati when his colleagues in the newsroom tried to organize a unit of The Newspaper Guild. He saw firsthand how companies pull out all the stops to prevent workers from forming a union. He is a journalist by trade, and worked for newspapers in five different states before joining the AFL-CIO staff in 1990. He has also been a seminary student, drug counselor, community organizer, event planner, adjunct college professor and county bureaucrat. His proudest career moment, though, was when he served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections.

This article originally appeared in the AFL-CIO blog on September 22, 2009. Re-printed with permission by the author.

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