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May 28, 2014

Report: Steel Imports Threaten Up to Half-Million U.S. Jobs
 
The United States economy is seriously threatened by steel imports, according to a report from the Economic Policy Institute and the law offices of Stewart & Stewart. The report contends that surging steel imports threaten up to 500,000 U.S. jobs.

Leaders from the Washington-based American Iron and Steel Institute and the United Steelworkers expressed concern about the report’s findings.

"This report should be a wake-up call to Congress and the Obama administration," says United Steelworkers International President Leo W. Gerard. "The U.S. steel sector supports up to half a million U.S. jobs, which are at risk without strong action against rising excess global capacity and a flood of unfairly-priced and traded steel imports swamping our market. Our economic and national security interests are at risk, and policy leaders appear to be sitting on their hands."

According to the report, the U.S. steel industry is facing its worst import crisis in more than a decade. In the aftermath of the Great Recession, steelmakers in other countries, backed by aggressive government support, continued to add production capacity as demand stagnated. The open and large U.S. market became the prime target for the massive excess supply stemming from this excess capacity. Since 2011, U.S. steel imports have surged and import unit values have plummeted.

Global excess steel capacity is now over half a billion metric tons, more than twice the volume of excess capacity in the last steel import crisis that followed the Asian financial crisis more than a decade ago, the report claims. While China accounts for more than a third of global excess capacity, there is also significant overcapacity in South Korea, India, and elsewhere. With more additions planned overseas and a continued slow recovery in demand, the excess capacity problem is not projected to be resolved any time soon.

"The report clearly documents how many foreign competitors, often supported by their governments, are building up capacity well beyond domestic needs and shipping their products around the globe and, all too often, targeting the U.S. market. They know too well that the steel sector is an engine of economic growth and job creation, and the technology it develops and the products it produces are critical components for a strong national defense. U.S. steel imports are rising while domestic production, corporate profitability and industry employment is declining. Our nation's economic recovery is at further risk if this trend is not stopped," Gerrard says.

The glut of exports from global excess steel supply is targeted in particular at the U.S. market. From 2011 to 2013, U.S. steel imports increased 12.3 percent to 32.0 million net tons. Imports have increased not only in absolute terms, but also relative to domestic production and consumption, seizing more of the U.S. market and thwarting the domestic industry’s efforts to recover from the Great Recession, the report claims.

Additionally, the problem is getting more severe. U.S. steel imports 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. Domestic shipments declined 0.9 percent over the same period.

Evidence that imported steel prices are falling, and falling unfairly, can be found in the declining sales price of imports and the rapid growth in the number of unfair trade complaints filed in the past year, according to the report's authors. The average unit value of imported steel declined $259 per ton, or 23.1 percent, between 2011 and January/February 2014. U.S. steel producers filed 40 antidumping and countervailing duty petitions in 2013 and the first two months of 2014, the largest volume of trade cases in steel since 2001.

While U.S. steel output has begun to recover from the depths of the Great Recession, domestic producers have experienced declining shipments since 2013, and sharply declining revenues since 2012. As a result, the U.S. steel industry had net losses of $388 million in 2012 and $1.2 billion in 2013, and it has now posted net losses in four of the past five years. A large, capital-intensive industry cannot long survive in its present form when subject to such chronic financial losses, the report claims.

Additionally, an estimated 4,184 steel workers in eight states have been certified for Trade Adjustment Assistance because imports or shifts in production contributed to their job loss since 2012. More layoffs have been announced in recent months. Nearly 1,000 steel jobs have been lost due to surging imports in the first three months of 2014.

U.S. steel production supported 583,600 jobs in 2012, including 123,400 direct jobs in steel production. About 255,500 of the jobs supported were in manufacturing, accounting for 43.8 percent of all jobs supported by the industry.

"As noted in the report, it is critical that policymakers work to ensure that the trade laws are strictly enforced. We will continue to advocate for the government to go after unfair trade practices whenever and wherever they occur, and for policy initiatives that address the state-controlled and subsidized foreign steel industries that are fueling this surge that is adversely impacting our workers and our industry," says Thomas Gibson, president of AISI.

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