WASHINGTON, D.C. | Northwest Indiana’s steel mills have had a rough year, but it could get worse.
Steelmakers warned the Congressional Steel Caucus the industry faces a crisis worse than in the early 2000s, when more than 30 steel manufacturers across the country went bankrupt.
Top industry executives and the United Steelworkers union called on federal lawmakers to take action against an unprecedented surge of imports, which have seized a third of U.S. market share so far this year. They said layoffs and plant idlings were unavoidable, and warned more would come if the government doesn’t intervene.
“It’s sobering… and alarming,” said U.S. Rep. Tim Murphy, R-Pa., the chairman of the Congressional Steel Caucus.
Murphy and U.S. Rep. Pete Visclosky, D-Merrillville, led the caucus’s annual State of Steel hearing Thursday, just a day after U.S. Steel announced it would lay off 2,000 when it idled the Granite City Works, only the second time production at the St. Louis area mill has been slowed down in a century.
After thousands of layoffs nationwide, including nearly 1,100 job losses in Northwest Indiana, there was an urgency in the crowded committee hearing room at the Rayburn House Office Building just steps from the U.S. Capitol. Steel executives said the sector is in "extremely difficult times" and suggested another wave of bankruptcies could be coming, pointing out that imports have captured a higher market share than they did when long-standing companies like Inland Steel and Bethlehem Steel disappeared. They repeatedly used the word “crisis.”
“I live in Northwest Indiana and have seen the devastation, working at Inland Steel,” said Michael Rippey, chairman of ArcelorMittal USA. “Thirty-one steel companies went bankrupt, and it meant the loss of jobs in so many communities. We’re doing OK, but with the presence of surging imports, the future’s not bright for us.”
Steel executives decried imports that they said would not be cheaper than American-made steel if it were not heavily subsidized by foreign governments and then sold here for less than what it costs to produce. Countries like China build steel mills with the political aim of providing jobs even if there’s no market rationale for more steelmaking capacity. They can’t sell the steel they make at home, so they dump it in the United States at a loss while they’re propped up by government subsidies U.S. steelmakers don’t get.
Their long-term goal is to undermine the U.S. steel industry, and they’ve been cannily exploiting the system, knowing that tariffs are only imposed after economic injury has been inflicted, U.S. Steel Chief Executive Officer Mario Longhi said.
“Foreigners know the limits we have,” Longhi said. “They have a strategy. They know how long it takes, and how difficult it is to prove injury. They know they can cripple us, and it inhibits our ability to invest in new technology. We've curtailed our production during this period of time.”
Longhi said after the hearing East Chicago Tin, which employed 397 workers, would remain idled until market conditions improved. He doesn’t see improvement happening unless the U.S. government takes action such as imposing tariffs, more aggressively enforcing trade laws and fixing the system to stop an inundation of foreign steel from entering the country in the first place. Retroactively imposing duties years after the damage has been done and the jobs have been lost doesn't work.
Federal policy has contributed to the woes in the domestic steel industry, which shed 38,000 jobs in Northwest Indiana between the late 1970s and the late 1990s, Visclosky said. He lamented the lack of a “Buy America” policy, pointing to a recent U.S. Department of Defense purchase of heavy rocket engines from Russia.
“Russia just invaded a European country last year,” he said. “The next carrier or attack submarine should be made with parts from the United States of America.”
The U.S. steel industry is vital to the country’s defense, Visclosky said. U.S. Steel for instance made 90 percent of the metal used in helmets during World War II.
“When it comes to national defense, you need a country to defend first,” Visclosky said.
Congressional Steel Caucus members, who mostly represent districts with steel mills, said it’s been an uphill fight to try protect the domestic steel industry from the onslaught of imports. Murphy said many members of Congress didn't understand the difference between free trade and fair trade, where foreign steelmakers don't have unfair advantages like subsidies.
“I’ve been attending these hearings for over 20 years, and It’s like that movie ‘Groundhog Day,’” U.S. Rep. Mike Doyle, D-Pa., said. “Nothing ever changes ... We might as well shut the doors on manufacturing in this county. We’ve decided to not build anything anymore. Our industry doesn’t stand a chance the way these rules are rigged against us.”
Something has changed, said John Ferriola, Nucor chairman, chief executive officer and president. The United States has now shown that it will tolerate the steel dumping that has caused the loss of many good-paying jobs. Nucor has cut some workers’ pay in amounts ranging from 30 percent to 40 percent this year.
“I would submit they have become more brazen about violating our laws,” he said. “The percentage of market share is at a record high, and it’s getting worse.”