Manufacture This

The blog of the Alliance for American Manufacturing

How economic turmoil in China gets imported to the United States.

We’ve spent lots of time talking about the global overcapacity problem facing the American steel industry. This morning, a story on the front page of the Washington Post illuminates it. Writes Ylan Mui:

In the United States, China’s hand is most obviously felt on Wall Street, which booked the worst start to a year in its history. But the country’s influence is also reshaping many corners of the U.S. economy. ...

Whether these pockets of distress can tip the rest of the country back into recession remains an open question. But in (Minnesota), the worst-case scenario is already a reality.

Three of the six iron ore mines here have been idled, forcing roughly 2,000 workers out of a job. Unemployment in Itasca County, in the heart of the range, has shot up to 8 percent over the past year. Many miners will run out of health and unemployment insurance this month.

The mine workers on Minnesota’s Iron Range who are out of jobs are counted among the 15,000 American steelworkers – up and down the steel supply chain – who were laid off in 2015. Their loss of livelihood is attributed, in large part, to a surge of low-cost steel imported into the United States from China.

But don’t get it twisted. That steel isn’t incredibly cheap because Chinese mills figured out an ingenious way to cut costs and pass the savings along to consumers; it was “dumped” here. Just straight ol’ dumped. Here’s Mui again:

China’s state-controlled steel mills didn’t slow down even when its economy did, as government officials kept the plants running to boost growth. The overproduction has created a worldwide glut of steel. In the mid-1990s, China manufactured just 93 million tons. Last year, it produced more than eight times that amount, though officials have said they plan to taper off this year.

Much of the excess supply has ended up on U.S. shores, with the nation importing a record amount of cheap steel from overseas. That has forced American steel companies to idle their mills and lay off thousands of workers. Trade lawsuits against China are winding their way through international courts.

A few weeks ago we spoke to Dan Hill, a miner from the range who was featured in the Post story, while he was in Washington for the State of the Union address. He was very clear about what these layoffs will mean for communities in Minnesota:

Read that Post story, and then stand with Dan. Make sure our government holds China accountable on trade.

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