U.S. steelmakers have collectively lost $3.6 billion over the past five years. They are getting slammed by imports from state-bankrolled foreign competitors that are so heavily subsidized they don't have to worry about turning a profit.
A recent study by the Economic Policy Institute and Law Offices of Stewart and Stewart found the U.S. steel industry "is facing its worst import crisis in more than a decade" and steel dumping threatens 583,600 jobs nationwide. Indiana and Illinois could be two of the hardest hit states if the flood of imports results in more idled plants. Illinois could lose up to 28,400 jobs, while 26,000 jobs are at risk in Indiana.
The estimates include jobs in the steel industry, as well as those supported by the sector and the wages of steelworkers.
"The excess capacity plaguing the steel industry is a result of massive government support for the steel industry in other countries," said Terence Stewart, managing partner of Stewart and Stewart. "Half of the world's top steel companies are state-owned. These companies have ramped up capacity and are producing much more steel than the market demands. The U.S. steel market is the No. 1 target for offloading excess supply."
Steelworkers have held rallies across the country — including in Illinois, Ohio and Texas — to urge federal action against the deluge of cheap imports. A Save our Steel Jobs rally took place Monday at U.S. Steel Fairfield Works and Tubular Operations in Alabama.
Bipartisan groups of 56 senators and 153 congressmen have sent letters to the U.S. Department of Commerce asking it to impose duties on pipe and tube imports from South Korea. The federal agency decided in February not to level tariffs to discourage South Korean dumping of steel pipe, and it will reach a final decision by July 10.
Overall, steel imports rose to 32 million tons last year, up from 28.5 million in 2011. But that surge is not the result of market demand, the study found.
Half of the world's 46 top steelmakers are state-owned, and those companies account for 38 percent of steel production worldwide. They get tax breaks, grants, forgiven debt and subsidized loans that enable them to sell steel below market rates, often in the United States.
Foreign steelmakers, especially in Asia, have increased capacity without having any sound economic rationale grounded in sales or expected demand. Global overcapacity, or the difference between the amount of steel that could be produced by all the existing mills and the amount that is actually made, has soared from 228 million tons in 2000 to 517 million tons last year.
The subsidized foreign companies keep making more steel than they need and unload what they cannot sell in the United States at below-market prices. The average unit value of imports has fallen by $259 per ton, or 23.1 percent, since 2011. U.S. steelmakers have been forced to cut prices, hurting their profitability.
Shipments fell slightly last year from 95.9 million tons to 95.4 million tons, but sales dropped off significantly from $52 billion to $49.4 billion since U.S. steelmakers were forced to sell their products for less. The diminished revenue already has taken a toll, leading U.S. Steel to idle tubular plants in Pennsylvania and Texas.
The indefinite closures put 260 people out of work.
"The steel industry is hugely important to the U.S. economy," said Robert Scott, director of Trade and Manufacturing Policy Research for the Economic Policy Institute. "It directly supports half a million jobs, and those jobs are in imminent danger. The import surge has led to sharp declines in income in the steel industry, layoffs for thousands of workers, and reduced wages for many more."