NEW REPORT: Surge in Steel Imports Puts More Than Half a Million Jobs at Risk

Surge in Steel Imports Puts More Than Half a Million Jobs at Risk

Strong Trade Enforcement Critical, Says New Report

In the aftermath of the Great Recession, steelmakers around the globe, backed by aggressive government support, have targeted the large and open U.S. market to offload excess supply. The resulting surge of unfairly dumped and subsidized imports poses a serious threat to domestic steel producers and the half million jobs they support, says a new report co-authored by the Economic Policy Institute (EPI) and the Law Offices of Stewart and Stewart.

Global excess steel capacity is now more than twice the volume of excess capacity that followed the 1998 Asian financial crisis. This glut of supply produced largely by state-backed steelmakers has made its way onto America’s import ledgers. The report findings show that the American steel industry risks long-lasting damage unless the U.S. government fully enforces its established trade remedy rules, said U.S. Senator Sherrod Brown (OH).

“American steelmakers and workers can compete with anyone in the world with a level playing field,” said U.S. Senator Sherrod Brown (D-OH). “But American producers are increasingly losing sales to foreign competitors like Korea because OCTG imports are being dumped into the U.S. market. Full enforcement of our trade laws is critical for the future of this industry and its workers.”
Perhaps nowhere is the need for strong trade enforcement more apparent than in the market for oil country tubular goods (OCTG), the pipe and steel infrastructure used for energy exploration. The report observes that OCTG imports from nine countries, chief among them South Korea, more than doubled between 2010 and 2012. As the surge continued, domestic steelmakers’ production, capacity utilization, shipments, and sales all fell in the first quarter of 2013, and they slashed operating income by nearly $191 million. The more than 7,000 U.S. OCTG workers worked more hours but saw their combined wages fall.

The harm to domestic steel producers in the OCTG market sparked a petition for trade remedy relief in July of 2013, one of 38 individual petitions filed by steel producers and workers that year. However, the Department of Commerce’s preliminary analysis gave South Korea a free pass on its dumping and a final determination from Commerce is due on July 8th.

“We’re exploring natural gas and oil in this country for the promise of energy independence,” said Scott N. Paul, President of the Alliance for American Manufacturing. “But if our government doesn’t act, we’ll head down a path of swapping our dependence on foreign oil with a dependence on foreign energy infrastructure.”

More broadly, the report shows that significant damage to the wider industry has largely already been done. Domestic steel imports increased by 12.8 percent from 2011 to 2013, and surged even more sharply in the first two months of 2014, hitting 6.4 million net tons, an increase of 24.5 percent over the same period in 2013. The loss of market share has translated into depressed domestic steel production and revenues, leading to sharp declines in net income in the U.S. steel industry over the past two years, as well as layoffs for thousands of American workers.

“The surge of unfairly traded steel products into the United States has undercut American manufacturing and made the country a dumping ground for foreign competitors,” said Brent Sansing, plant manager, U. S. Steel's Lone Star Tubular Operations in Lone Star, Texas.  U. S. Steel Corporation is the largest fully-integrated tubular products producer in the United States, offering a broad range of oil country tubular products for the American energy industry. “Our nation's opportunity to become a more energy independent country while growing good paying jobs and invigorating our economy is being threatened by these unfair trade practices.  We need decision makers in Washington to take action, enforce our trade laws and support American manufacturing."

The report documents that all 583,600 steel-related jobs are at risk if the U.S. does not effectively enforce its established trade remedy laws, which have historically been vital to the steel industry’s health. Already, an estimated 4,184 workers in eight states have lost their jobs to the import surge since the beginning of 2012 and resulting shifts in production. Nearly 1,000 steel jobs have been lost in the first three months of 2014.

"As a United Steelworker and a small business owner, I personally experience how the plant's ups and downs create a ripple effect throughout the community," said Ralph Mercado, expediter at U. S. Steel's Lorain Tubular Operations. "It's not just those of us who work at U. S. Steel who are affected by unfair trade – it's our families, neighbors, and other business owners. We all suffer when the mill can't operate because of unfair trade."

The report further notes that:

  • The excess capacity plaguing the industry stems largely from state support for – and direct government involvement in – the steel industry in other countries. In 2011, half of the world’s 46 top steel companies were state-owned, and they accounted for nearly 40 percent of global production.
  • U.S. imports of unfairly traded products are increasing as countries such as China and others deceptively sell subsidized basic steel products to companies in third-party countries, who in turn finish these products, like pipes, for sale in the American market.
  • Aggressive government support, coupled with the steel industry’s capital-intensive nature, leads to the kind of import surges now threatening the American market. Strong trade remedies have been critical to the health of domestic industry during previous periods of trade distortions, and are necessary now if the industry is to avoid long-term damage.   

The report concludes that unless policymakers insist established trade rules remain strictly enforced, the consequences for domestic steelmakers and their workers will be dire. In the OCTG market, both management and workers warned about the long-term effects of overcapacity.

Members of Congress in reaction to the report (ordered by states most affected): 

Said Congressman Ralph Hall (R-TX-04): 

“I represent nearly 900 people making steel at Lone Star Tubular Operations. They are some of the most productive workers anywhere, but the surge of illegally dumped steel imports threatens their jobs.  To allow our manufacturers to compete and grow, our government must enforce our trade laws.”

Said Congressman Gene Green (D-TX-29):

“An alarming surge of steel imports threatens to undermine U.S. companies and workers at a time when they should be benefitting from our nation’s energy boom. Our trade remedy laws are the last line of defense for the 59,800 at-risk workers in Texas, including those in Houston.” 

Said Senator Bob Casey (D-PA):

“This report shows the consequences of willful violation of international trade laws on Pennsylvania’s economy. Failing to get our trade policy right costs jobs and harms economic growth. This is an area where we need more aggressive action to combat unfair trade practices. Our competitors shouldn’t be allowed to cheat our businesses without consequence.” 

Said Congressman Mike Doyle (D-PA-14):

“We’ve been in this situation before, and thousands of American steelworker families paid the price for lax enforcement of our nation’s trade laws. Pressure from Congress and the public finally got results, but by then far too much damage had been done. I’m seeing the same pattern again. Illegal dumping of steel and steel products has been hurting U.S. steelmakers over the last two or three years. American steelmakers can’t afford to wait much longer for the ITC to do its job and enforce our trade laws against unfairly priced steel imports.”

Said Congressman Bill Enyart (D-IL-12):

“My first job was standing alongside my father at the Caterpillar plant in Illinois.  A job that provided for our family, as we proudly built American-made farm and construction equipment.  As a Congressman I fight to keep these jobs right here in the United States, so that men and women can earn an honest day’s pay for their families.  We simply cannot afford to send more of these good paying jobs overseas in violation of our laws.  Enforcing our trade laws will ensure we keep that American dream intact, and over 28,000 jobs safe in Illinois.”  

Said Congressman Rodney Davis (R-IL-13):

“I have been fighting and will continue to do all I can to keep steel jobs in Illinois. We know that 95 percent of the world’s customers are outside of the United States, so we must ensure other countries are playing by the rules. I will be sure to carry our workers’ voices to Washington.”

Said Senator Joe Donnelly (D-IN):

“We all know good trade policies create jobs, fuel economic growth, and benefit consumers, but trade only works when everyone plays by the same rules. When I meet with Hoosier workers, they do not ask me for preferential treatment under the law—they ask for fair and equal treatment. It is important to have strong enforcement of existing trade laws to protect the livelihoods of Hoosier and American workers from unfair trade practices.”

Said Senator Debbie Stabenow (D-MI):

“Our American workers and businesses can out-compete anyone in the world when there is a level playing field. When other countries cheat, it costs us jobs. We must enforce our trade laws and stand up for American workers and manufacturers, who are helping drive our economic growth.”

Said Congressman Gary Peters (R-MI-14):

“American workers and manufacturers are the best in the world, but in order to remain competitive, we must enforce fair trade practices. I am proud to have led the fight to create and support the Interagency Trade Enforcement Center (ITEC) which works to aggressively challenge unfair trade practices around the world. The ITEC has successfully challenged illegal Chinese duties on U.S. steel exports. We will protect good paying, U.S. jobs by supporting trade enforcement, and these jobs will grow our economy and strengthen our middle class.”