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Lehner: U.S. Must Set Goals to Spur Growth

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The United States needs to modernize. The nation’s anemic growth is a product of its failures to adequately invest in its aging infrastructure, to nurture innovation and to deal with the challenges of shifting demographics, said Eddie Lehner, president and CEO of Ryerson, who spoke at last month’s CRU North American Steel Conference in Chicago.

“We have been in an era of imbalance and distortion since 2009. The only two things that are going to balance it are growth or recession,” Lehner said. “We’ve been ignoring the facts because they haven’t hit us in the head in a cast-iron-pan kind of way.”

Labor is a crucial component of economic growth, but the birth rate in the U.S. and other western nations has been on the decline since the last recession. Couples who feel insecure about their jobs and personal finances are reluctant to have children. Growth is still possible, Lehner said, with sensible immigration policies that effectively manage population growth, coupled with innovation. “We’re innovating, but we don’t have the growth drivers aligned for what our aspirations should be. The level of economic growth in the United States doesn’t pay today’s bills, let alone provide for our future,” he said.

The shortcomings in the U.S. economy are ample, he noted. Chief among them is a trade deficit that’s been running for decades. “Is it normal that the No. 1 economy would run a trade deficit for 41 consecutive years?” he asked. Under traditional economic theory, such an imbalance should lead to a weaker dollar, which would boost exports. But the dollar is the reserve currency for the rest of the world and foreign investment has kept it strong.

Industrial production is also a major issue, Lehner said. After rebounding sharply from the depths of the recession in 2009, production has been on a steady decline. Part of the reason is a lack of private investment in fixed assets, exemplified by a lack of government investment in infrastructure. Public spending on infrastructure has been running at about 1.5 percent of GDP in recent years, well below the long-term average of 2.3 percent. In a trillion-dollar economy, those small percentage points tote up to a big decline in spending. “When did we become a country that doesn’t invest in our future?” he asked. “We are not keeping our nation as competitive as it should be. We have been asleep at the switch.”

The decline in industrial production is evident in the Metals Service Center Institute’s long-range shipment data. From 1993-2008, service centers shipped an average of 4.2 million tons of product per month. Since then, the average has been less than 3.0 million tons. “Where did that demand go?” he asked, rhetorically.

China, of course, is one easy answer, and oftentimes a correct one. But rather than point fingers at the Chinese, Lehner said, it’s better to look at them as a source of inspiration. China is unmistakably looking out for its own national interests. Those interests are laid out in an ever-evolving five-year plan that guides the country’s modernization efforts. In contrast, the U.S. has no such set of overriding goals. Unlike in a communist country, it’s more difficult to reach a consensus given the American political system. Lehner offered up some suggestions. The U.S. should strive to be:
  • No. 1 in education.
  • No. 1 in skilled trades training and certification.
  • No. 1 in long-term investment and
  • public/private financing.
  • No. 1 in physical, information and neural networks.
  • No. 1 in robotics and energy.
His point wasn’t necessarily to promote these specific goals, but to emphasize the need for a clear set of objectives the nation’s leaders can agree upon. Benchmarking works in business, and it ought to be tested in the public sector, as well, he said. “I don’t want to go on another conference call and make excuses for the economy,” said Lehner of his publicly traded company. “But until we make the right choices, it’s all self-help.”