Steel execs address strengths, challenges of North American industry

2013-05-18T21:30:00Z 2013-08-08T09:50:11Z Steel execs address strengths, challenges of North American industryLu Ann Franklin Times Correspondent
May 18, 2013 9:30 pm  • 

To stay competitive globally and to grow, the North American steel industry needs reasonable, streamlined and effectively enforced policies from the U.S. and Canadian governments, top steel executives said.

Speaking on a Thursday conference call from the American Iron and Steel Institute’s annual meeting in Colorado, the five presidents/CEOs of major steel producers focused on the use of North American-made steel in consumer products and for needed infrastructure upgrades.

They also called on the U.S. government to establish comprehensive, market-driven energy policies and to enforce current fair trade laws while avoiding excessive government regulations.

“Transformation” and “renaissance” were words frequently used by the steel executives to describe how steel has contributed to an economic recovery through an uptick in usage and what still needs to be done.

The role of steel in economic recovery

The North American economy is improving, although at a slow pace, said Michael T. Rehwinkel, AISI chairman and president and CEO of Chicago-based Evraz North America, adding that steel has been a major player in that recovery in some markets such as consumer products.

“Domestic capacity (for steel production) is at 77 percent, up from 70 percent,” Rehwinkel said.

The use of steel in the auto industry and appliance manufacturing has helped boost steel production, other steel executives said.

Today’s steel used in auto production is meeting the government-mandated challenge of creating more fuel-efficient vehicles, said Michael Rippey, AISI vice chairman and president and CEO of ArcelorMittal USA.

“The Environmental Protection Agency’s CAFE (Corporate Average Fuel Economy) set a goal of 54.5 miles per gallon for vehicles by 2025,” Rippey said. “Using advanced steel we have demonstrated that 54.5 mpg is already possible.”

The steel being produced at facilities such as ArcelorMittal is strong, light weight and affordable, he said.

As the economy improves, people have more disposable income. Some of that income is now being used to buy vehicles and appliances which use steel, Rippey said.

Residential and non-residential construction that uses steel also has seen moderate increases since the economy tanked in 2008-09, Rehwinkel said.

The steel industry also is “environmentally committed to sustainability,” said Sergei A. Kuznetsov, an AISI director and CEO of Severstal North America, which has facilities in Michigan and Ohio.

About 92 percent of all steel is now being recycled, and last year more than 85 million tons of scrap steel was recycled from appliances, steel containers and steel structures, Kuznetsov said.

The challenges ahead

The steel executives addressed what they see as challenges facing the U.S. and the steel industry, and the symbiosis that could provide a stronger economic recovery.

One is the nation’s energy policy, said Chuck Schmitt, AISI vice chairman and president of SSAB Americas, which has steel facilities in North America and Latin America.

The discovery of natural gas supplies in North America’s outer continental shelf needs to be tapped and transported via steel pipelines, Schmitt said. “The greater demand for steel, the more jobs will be created.”

However, federal EPA regulations threaten to keep that from happening, he said.

Without that source of energy that fuels utility production, the cost of electricity for industry will increase, causing the steam to run out of economic recovery, Schmitt said.

There also needs to be a national program to fix the nation’s crumbling roads and bridges, Rehwinkel said. Those projects will increase steel production and create new jobs, he said.

Another major roadblock is the dumping of foreign steel that is produced in countries that own the steel-making facilities and fix prices, said John J. Ferriola, AISI director and CEO and president of Nucor Corp., which has plants in Indiana and Illinois.

Foreign imports have surged by double-digit amounts in the last two years.

“While America is a free market, countries such as China, India, Brazil and Egypt are state-owned and are trade-restrictive,” Ferriola said.

China is “by far the worst offender. The country is closed to outside competition. Their mills produce 970 million metric tons of capacity compared with 120 million tons of capacity in the U.S.,” he said.

“The U.S. can successfully compete on a level playing field (with foreign imports),” Ferriola said.

The solution is strong trade enforcement of laws already on the books, he said.

“We need to use trade laws to address dumping,” Ferriola said. “We have a tremendous opportunity to strengthen our economy, to be a nation that makes and builds things.”

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