Manufacture This

The blog of the Alliance for American Manufacturing

What conclusions will it draw, and what recommendations will it make?

There’s a lot of news out there, man. A lot of news! And a lot of things going on. There’s a new Star Wars movie out (it was pretty good, made a lot of money) and a lot of college basketball (it was pretty good too, even though my team lost). Suffice to say: You’re excused if you missed the news that the Global Forum on Steel Excess Capacity has launched.

What? What’s this forum, you ask?

This forum is the result of all the grief world leaders laid on the Chinese government when it hosted a G20 meeting in eastern China back in September. The problem is: There’s entirely too many steel mills online around the world; they’re making more steel than market demand has asked for; and the result has been a flood of dirt-cheap steel into the market that has caused waves and waves of layoffs in the United States and Europe.

The forum is supposed to bring steelmaking countries together to do something about it.

We know what needs to be done about it, though.

Why did the Chinese government get such an earful on overcapacity at the G20? Because China has the world’s largest steel industry, and a huge part of it is propped up by the state. Simply put: China caused a big part of this mess.

The outgoing Obama administration issued a polite statement in response to the forum’s launch The American steel industry was happy to hear about it as well. China, for its part, seems to be earnestly trying to rein its steel industry in.

But please keep a lid on your excitement. As Scott Paul wrote back in September:

The Chinese leadership has made repeated promises to rein in production and shutter unneeded mills. But it has broken almost all of them, slow-walked the rest, and successfully lobbied to keep the G20's official language on steel overcapacity weak and vague. The only binding commitment China made on steel was its pledge to participate in an annual forum that will monitor excess capacity.

It's okay to roll your eyes. The world should manage expectations for success in that venue.