Tale of two factories: hope, anguish ahead of Trump's steel tariff call
13/07/2017 15:00
By David Lawder
GRANITE CITY, Ill., July 13 (Reuters) - The blast furnaces
and slab casters at United States Steel Corp's X.N Granite
City Works have been idle for 18 months, and laid-off workers
here are pinning their hopes on President Donald Trump imposing
broad new restrictions on imported steel.
Yet just across the Mississippi River, some manufacturers
worry that new tariffs and curbs Trump is weighing under a
"Section 232" national security review will raise their cost and
make it harder to compete with foreign rivals.
The inherent conflict between suppliers and buyers is at the
heart of a debate inside the administration that lobbyists and
lawmakers say could delay or weaken any protections recommended
by the U.S. Commerce Department. The review's findings,
originally expected by the end of June, could be unveiled in the
coming weeks.
The Cold War-era law that allows the president to restrict
imports of goods deemed critical to national defense pits an
iconic industry that has been struggling with imports for
decades against those that have benefited from China flooding
the world steel market with excess production. (Graphic: http://tmsnrt.rs/2oPeo1z)
According to Bureau of Labor Statistics data compiled by the
libertarian Cato Institute, steel mills and steel product
factories now employ about 140,000 people, compared to 6.5
million at steel-reliant manufacturers ranging from autos and
appliances to machinery.
HOPES AND CONCERNS
In Granite City, where about 1,200 of the U.S. Steel plant's
1,800 workers remain laid off despite the recent restart of some
rolling mill operations, there is an air of keen anticipation.
"We're waiting on the 232 to get us back to work," said
Chris Bragg, who was laid off in November 2015 when steel
imports surged and oil prices cratered, slashing demand for the
mill's main product, hot-rolled steel for oil and gas drilling
pipe.
The 46-year-old father of three has been working in home
construction since then, making less than half of the $55,000 he
earned in his last year working on U.S. Steel's basic oxygen
furnace, which melts iron and alloys into steel.
There were few dinners out, no vacations and no high school
graduation presents for Bragg's twin sons last year.
TJ's Place, a bar across the street from a plant gate,
canceled its fish fries and taco nights and could close if more
workers are not called back, said bartender Diane Valerius. "If
that mill shuts down, this town is dead."
Idled steelworkers Reuters interviewed in this factory
suburb see the "Section 232" probe as a key test of Trump's
commitment to campaign promises to revive U.S. manufacturing and
curb imports from China and South Korea.
"I voted for Trump because the Democratic Party was going to
kill the coal industry and the steel industry in one fell
swoop," said Bill Wiley, 50, a laid-off apprentice millwright.
"Somebody has to stick up for us. We're just asking for a level
playing field."
Across the Mississippi in north St. Louis, factory managers
at Bachman Machine Co worry new tariffs and curbs could raise
steel prices, putting the 90-year-old maker of stamped steel
auto parts at a disadvantage against Mexican suppliers.
"Anything that is out of the norm in terms of a price change
is going to be a negative factor for us. If we can't pass that
on, then that hurts us," said Jerry Ernsky, Bachman's head of
sales and marketing.
The 100-employee company buys from steel distributors and
often does not know the origin of the steel it uses to make
parts for seats, airbags, door mechanisms and other components,
Ernsky said. These are sold to larger auto suppliers such as
Toyoda Gosei 7282.T in Perryville, Missouri, and ultimately
find their way to the U.S. assembly plants of Toyota 7203.T ,
Honda 7267.T , Ford F.N and other automakers.
Kei Pang, chief executive of Ferguson, Missouri-based Nidec
Motor Corp, the former Emerson Electric EMR.N motors unit now
owned by Japan's Nidec Corp 6594.T , warned Commerce Secretary
Wilbur Ross in a letter that import curbs on certain electrical
steels "would cause serious and material harm to our companies,
our employees, and our customers."
AK Steel AKS.N is the only remaining U.S. manufacturer of
electrical steel, a specialty product with precise magnetic
properties used in transformers and motors. It has argued that
it needs protection because domestic supplies are needed to
safeguard the U.S. electrical grid.
TUBULAR TARGET
In similar public comments, U.S. Steel has called for
import restrictions on tubular goods for the oil and gas
industry as a way of safeguarding U.S. energy independence, a
critical national security goal.
Foreign steelmakers now supply half the oil and gas drilling
and extraction pipe used in the United States.
Direct imports from China were largely cut off by successful
anti-dumping cases in recent years, only to be replaced by pipe
imports from South Korea, which since April have been subject to
increased duties. urn:newsml:reuters.com:*:nL1N1HK01K
But as U.S. energy firms boost production, foreign-made
steel pipes are still flooding into U.S. ports. Based on June
import permit data, The American Iron and Steel Institute
estimates that imports of steel pipes for the oil and gas
industry are up 237 percent in the first half of 2017 from a
year earlier.
Ross, the Commerce chief, has indicated he might support
protection for U.S. makers of pipes and their suppliers. He told
a congressional hearing in June that steel was a "genuine
national security issue" and pointed out how a U.S. tubular mill
made the body of the massive conventional bomb dropped on
Islamic State militants in Afghanistan in April. urn:newsml:reuters.com:*:nL1N1J515V
The 79-year-old billionaire is best known for his work
restructuring several bankrupt U.S. steel companies in the early
2000s, selling them to what is now Arcelor Mittal MT.AS .
He is formulating trade policy alongside U.S. Trade
Representative Robert Lighthizer, a veteran trade lawyer who
represented U.S. Steel in anti-dumping cases.
On the other side of the argument, steel users have enlisted
dozens of industry trade groups to make the case against broad
steel import restrictions.
The American Petroleum Institute and 10 other oil and gas
trade groups urged Commerce to narrowly define national security
and "to consider the potential negative effects of U.S. tariffs
or quotas or other measures that would raise the cost of steel
inputs for the oil and natural gas industry."
It remains unclear what actions Ross will recommend, whether
Trump will implement that.
U.S. Steel has not indicated how the Trump administration's
review may alter its production plans, saying in a statement
that it was "interested to review the results of the 232
investigation."
Idled workers say the uncertainty is gnawing at them.
"There's nothing that Trump's done as of yet" for
steelworkers, said Paul Morris, 55. "All we can do is sit back
and wait."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. Steel Imports http://tmsnrt.rs/2oPeo1z
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by David Lawder; Editing by David Chance and Tomasz
Janowski)
((David.Lawder@tr.com; +1 202 354 5854; Reuters Messaging:
david.lawder.thomsonreuters.com@reuters.net))
Keywords: USA TRADE/STEEL