Manufacture This

The blog of the Alliance for American Manufacturing

And the industry offers its opinions on the Trump administration's section 232 investigation.

Approximately seven weeks ago the Trump administration announced a Section 232 investigation into aluminum imports. Today, the Commerce Department held a public hearing on the topic.

Attendees heard testimony from representatives up and down the aluminum industry including presidents, CEOs, superintendents, managing directors, procurement directors, and more.  

An overwhelming majority of them said the aluminum industry is at a critical point, at risk of disappearing because of China’s unfair trading practices. 

Fingers were pointed at China for overproducing and underpricing its aluminum, leading dumping flood of unfairly priced aluminum in the global market and the inability of the U.S. aluminum market to normally function.

China is currently and has been increasing their production over the past 10 years, which has affected aluminum production tremendously in America. Of the 23 aluminum smelters in the United States in 2000, five remain; only two operate at full capacity.

John Donnan, an executive vice president at Kaiser Aluminum, said a deliberate Chinese industrial policy of overcapacity was behind the international market imbalance, and he hoped the 232 investigation would result in a more globally competitive atmosphere for which U.S. aluminum manufacturers to operate.

Heidi Brock, president and CEO of The Aluminum Association, used her time to note the importance of aluminum as an input in national defense industries, mentioning its use in jets, ground vehicles, and warships. Brock pointed out the U.S. Army use of blast-resistant aluminum in its HUM-V vehicles.

"It is not our position the U.S. should be self-sufficient. But the status quo is not sufficent." President and CEO Michael Bless, Century Aluminum

Bob Prusak, the CEO of Magnitude 7 Metals, put the industry’s complaint into real terms by providing examples of what the import flood has meant for aluminum-making communities in America. When the previous owner of Magnitude 7’s smelter in New Madrid, Missouri filed for bankruptcy while citing import competition, said Prusak, the local economy suffered greatly

“Roughly 900 high paying, high skilled jobs were lost when Noranda closed,” he explained, referring to smelter’s previous owner. “Many of these workers are still out of work today, more than a year later. When the smelter was operational, the company and its employees spread roughly $45 million throughout southeast Missouri.”

“With this money gone, everyone from local restaurants and businesses to the local school district felt the pain. New Madrid County, where the company is located, also took a big hit, losing millions of dollars of tax revenue annually,” continued Prusak. “As a result the local government was forced to delay projects, institute hiring freezes, slash infrastructure spending, and postpone wage increases. Community programs were negatively impacted, as well as the local police and ambulance services.

“Because the revenue from Noranda comprised nearly 17 percent of the entire budget of the school district, a deficit resulted, leading to layoffs, staff reductions and programs cuts.

“Six months after Noranda’s closure, the unemployment rate more than doubled.”   

At the end of the hearing, some representatives had called for the 232 investigation to result in expansive enforcement actions by the government; some didn’t. But every representative, whether for or against trade actions, was clearly eager for the investigation to conclude so they could adjust their respective industries to a changed marketplace.

“We at Century (Aluminum) recognize that imports are a necessary part of the U.S. supply chain. It is not our position that the U.S. should be self-sufficient,” said Michael Bless, an industry executive. “But the status quo is not sufficient.”  

The Alliance for American Manufacturing hopes the Trump administration will take a move of significant impact to help domestic industries recover lost aluminum market share. You can find AAM’s take on the Section 232 Investigations here. And don’t forget to make your voice heard.

This blog post was written by AAM interns Erica Maddox and Kami Demirag.

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